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CIMB Niaga to launch rights issue, bonds in fourth quarter
CIMB Niaga will launch a rights issue and a bond issuance later this year to raise its capital adequacy ratio (CAR), said Arwin Rasyid, president director of Indonesia’s fifth largest bank by assets
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CIMB Niaga will launch a rights issue and a bond issuance later this year to raise its capital adequacy ratio (CAR), said Arwin Rasyid, president director of Indonesia’s fifth largest bank by assets.
CIMB Niaga corporate secretary Harsya Denny Suryo told The Jakarta Post that the bank needed to maintain its capitalization to remain prudent.
“Currently, our capital adequacy ratio is 13-14 percent. We aim to up our CAR by about 1 percent to 14-15 percent,” Harsya said recently.
CIMB Niaga vice president director Catherine Hadiman previously said that the bank must collect Rp 1 trillion (US$111 million) for each percentage point increase in the capital adequacy ratio.
According to Bank Indonesia (BI) data, the average CAR for the nation’s banks, a measure of a bank’s capital to its risks, was 18.06 percent for the period ending on June 30 — higher than CIMB Niaga’s CAR.
Arwin added that bonds would be prioritized and issued first, and the rights issue would follow. “Therefore, there will be two bond issuances in a year.”
CIMB Niaga collected Rp 1.38 trillion in a subordinated bond offering in June, which was less than its target of Rp 1.5 trillion.
The bond issuance was carried out by Bahana Securities, CIMB Securities and Mandiri Sekuritas and received an AA-rating with a stable outlook from Fitch Ratings.
Arwin said he aimed to complete the bond issue and rights issue before the end of the year to take advantage of bullish stock market conditions. The Jakarta Composite Index has advanced 34 percent to date this year, making it Asia’s second best performer and one of the leaders amongst major indexes.
CIMB Niaga shares (BNGA) have risen about 70 percent this year, outperforming a broader benchmark index jump of more than 30 percent. Shares traded at Rp 1,220 in trading on Wednesday, up 6.08 percent, or 70 points, from the previous day.
Other banks are also planning to launch rights issues later this year, including state-owned Bank Mandiri and Bank Negara Indonesia (BNI), which aim to raise Rp 14 trillion and Rp 10 trillion respectively.
The country’s two largest lenders are now seeking approval from the House of Representatives for the corporate actions, which are expected to be executed between November and December. (est)
