Bank Jabar revives IPO plan

Bank Jabar Banten, plans to join the top ten lenders in Indonesia by offering 20 percent of its stake to the public via an initial public offering (IPO).

Bank Jabar is currently the nation's biggest regional development bank.

The IPO, planned for September or October, is expected to generate a minimum of Rp 800 billion (US$78.4 million) in proceeds, president director Agus Ruswendi said on Tuesday.

"The proceeds from the IPO will be used to strengthen the bank's capital as part of our efforts to make the bank one of the nation's top ten biggest lenders," Agus said.

Currently, in term of assets, the bank is the country's seventeenth biggest bank with total assets amounting to Rp 26.1 trillion.

The bank had planned the IPO launch since last year, delaying implementation due to earlier unfavorable market conditions, but the climate is now improving.

Finance director Tatang Sumarna said that the proceeds target now being set is higher than the original target of Rp 720 billion.

Corporate secretary Endang Ruchiyat said that the bank was now selecting the underwriters for the public offering.

In support of business expansion plans for this year, the bank is setting aside a budget of Rp 245 billion from its internal cash to build 75 new branches across Indonesia. The number of new branches will be much higher than established last year, when the bank built 22 new branch offices.

The bank currently has a total of 209 branches across the country.

It also plans to spin off its sharia subsidiary in October, Endang said, adding that the bank will partner with a regional company called Global Banten Development (GBD) for the spin-off process.

From the partnership, Bank Jabar will have a share ownership of 99 percent in the new sharia subsidiary, contributing Rp 495 billion to its initial capital base, while GBD will contribute Rp 5 billion for the remaining 1 percent stake.

As regards lending growth, Bank Jabar Banten forecasts 20 percent growth this year to reach Rp 19.68 trillion this year, as compared to Rp 16.4 trillion in the previous year.

In addition to the spin-off and IPO plans, the bank is also planning to issue bonds worth Rp 1.5 trillion (US$147 million) this June and the remaining funds for expansion will be secured from the bank's third part funds.

The bank's third party funds stood at Rp 18.3 trillion as of December last year.

Last year, the bank, which is owned by the provincial governments of West Java and Banten, booked a net profit Rp 556 billion, or up by 47.8 percent as compared to Rp 376 billion in 2007.

Largest Banks (as of Dec. 31, 2008)

Name-----------------Assets
1. Bank Mandiri------Rp 338.4t
2. BRI---------------Rp 246.1t
3. BCA---------------Rp 244.7t
4. BNI---------------Rp 200.4t
5. Danamon-----------Rp 104.8t
6. CIMB Niaga--------Rp 103.2t
7. Panin-------------Rp 62.8t
8. Permata-----------Rp 53.9t
9. BII---------------Rp 53.8t
10. Citibank---------Rp 52.3t