Govt gives go ahead to Mandiri to buy Indover

Ika Krismantari ,  The Jakarta Post ,  Jakarta   |  Tue, 09/30/2008 10:15 AM  |  Business

The government has welcomed Bank Mandiri's proposal to acquire Netherlands-based Indover Bank from the central bank, saying the nation's largest bank would benefit from the move to expand its operations abroad.

"I think it will be good for Mandiri, as opening branches in foreign countries is considered to be very difficult nowadays," Said Didu, secretary to the State Minister for State Enterprises, told The Jakarta Post last week.

Mandiri is a state-owned lender.

Indover, which has branches in Amsterdam, Hamburg, Hong Kong and Singapore, helps Indonesian exporters avoid payment delays and lengthy banking procedures by paying for their goods in advance.

The central bank, or Bank Indonesia (BI), is in the process of selling its stake in Indover to comply with a 2004 law stating that BI may not own stakes in companies that do not compliment its efforts as the country's central bank to control money supply and interest rates beyond Jan. 15, 2009.

According to the central bank, Mandiri made an undisclosed bid for Indover last February.

Said said Bank Mandiri and the central bank were currently in negotiations over the purchase.

"As long as the deal is good, i think there is no reason for Mandiri to leave the negotiation table."

Last year, Indover posted a net profit of 2.3 million euros having posted deficits for three consecutive years prior.

In the first half of the year, the bank posted a net profit of 1.3 million euros, with income from interest payments at 25.8 million.

Mandiri president director Agus Martowardojo said the bank was currently determining whether the takeover was feasible.

BI deputy governor Ardhayati said recently he hoped Mandiri would be able to complete the deal by the end of the year.

In the first semester, Mandiri booked a net profit of Rp 2.6 trillion (US$286.14 million), up 22 percent from Rp 2.1 trillion in the same period last year.

Assets rose to Rp 304.7 trillion from Rp 265 trillion.

Aside from Indover, BI is also required to sell its two other units -- insurance firm PT Asuransi Kredit Indonesia (Askrindo) and financial services group PT Bahana Pembinaan Usaha Indonesia (BPUI).

BI -- which fully owns Indover, in addition to a 55 percent stake in Askrindo and a 82.2 percent stake in Bahana.

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