Bukopin, Permata issue bonds to lift capital

Mid-sized lender PT Bank Bukopin Tbk (BBKP) plans to raise Rp 2 trillion (US$222 million) through a gradual issuance of subordinated debt (subdebt) papers starting in the first semester of this year to strengthen the bank’s capitalization.

PT Bank Permata Tbk (BNLI), owned by Indonesia’s business conglomerate Astra Group and foreign lending giant Standard Chartered Bank, plans to do the same thing later this year to collect just under Rp 1 trillion.

Bukopin, controlled by state logistics firm Bulog’s labor groups, has appointed three underwriters for the bond offering, corporate secretary Tantri Wulandari said Wednesday without disclosing the securities houses’ names.

“We have enough sources of funds with LDR [loan-to-deposit ratio] accounting for 85 percent, so in terms of liquidity, we have no problem. But we want to strengthen our Tier 2 capital, so we will prepare a certain period of time to issue between Rp 1 trillion and Rp 2 trillion in subdebt,” Bukopin’s finance director Tri Joko told a limited press briefing. Capital market regulator Bapepam-LK recently announced a new rule which allows financial companies to collect funds through multiple-year
issuances.

Many financing firms have taken advantage of the facility, including PT Astra Sedaya Finance’s Rp 8 trillion bonds, and those of PT Adira Dinamika Finance Tbk (ADMF), PT Sarana Multigriya Finance and PT BCA Finance, as they expect a lift in investors’ confidence in local papers after the new investment grade ratings from Fitch Ratings and Moody’s Investors Service.

“There’s a foundation for developing growth, like an increase in CAR [capital adequacy ratio],” Tri Joko said, citing the 13 percent CAR figure as of last December after it had soared to 16 percent following the Rp 1.1 trillion rights issuance early in 2011.

Bukopin needs a 14 percent CAR to ensure it channels loans prudently — higher than Bank Indonesia’s (BI) 8 percent minimum requirement — aiming to grow overall lending by 15 to 20 percent this year from the Rp 38 trillion outstanding loans as of 2011-end, he added.

The lender, with a loans portfolio dominated by micro, small, and medium enterprises (MSMEs) and little exposure to consumer loans, also eyes higher net profits than the overall banking industry.

Capturing the possibility of cheaper borrowing costs, Permata also plans to issue subdebt to maintain its CAR at 12 percent so that it can book a less-than 20 percent loan growth to develop the business. “Strong capital is needed to grow bigger. With little capital, growth will be small. We are still calculating the capitalization needs, the lender’s vice president director Herwidayatmo said on Tuesday.

As of last December, Permata’s CAR was at 14.1 percent. The lender will focus on consumer loans to offset a potential slowdown in MSME and corporate loans due to global economic uncertainties that might affect business and investment climate.