Headlines

Mandiri, BRI may acquire
BTN as part bank consolidation

Lenders Bank Mandiri and Bank Rakyat Indonesia (BRI) are looking into the possibility of taking over Bank Tabungan Negara (BTN) as part of the government’s program to consolidate state-owned banks, a source has said.

The Jakarta Post’s source at the State-Owned Enterprises Ministry said on Tuesday that the government was planning to establish two state anchor banks with large assets and capital that would enable them to compete at the regional level, ahead of Southeast Asia’s banking integration in 2020.

According to the plan, the anchor banks will consist of Mandiri and BRI, while the other two state banks, BTN and Bank Negara Indonesia (BNI), will merge with Mandiri and BRI.

Both Mandiri and BRI were expected to come up with their own proposals for the BTN bid in the near future, the source, who refused to be named due to his familiarity with the issue, said.

When contacted, Mandiri president director Budi Gunadi Sadikin acknowledged that it was on the hunt for a new subsidiary and that BTN would make an interesting choice.

“We are looking for a new unit that will complement our existing business. We already have units in sharia banking, insurance, multi-finance and securities. Another banking unit will be nice for us this year,” he told the Post on Wednesday.

Budi said that Mandiri — currently the largest bank by assets — had not appointed a financial advisor for its upcoming acquisition, even though it had allocated a certain amount of funds for that purpose in its 2014 banking business plan.

Mandiri finance and strategy director Pahala N. Mansury previously said that as much as Rp 10 trillion (US$820.07 million) to Rp 11 trillion had been set aside in the business plan.

About Rp 1.05 trillion of the funds have been earmarked for the purchase of a 60 percent stake in life insurer PT Asuransi Jiwa InHealth Indonesia. The InHealth acquisition is now pending approval from Mandiri’s shareholders.

Meanwhile, a BRI official, who wished to remain anonymous, confirmed BRI’s participation in the BTN bid. Similar to Mandiri, BRI — which is now the most profitable lender in the country — has not assigned any institution as its financial advisor.

Last November, BRI finance director Achmad Baiquni said that it was setting aside between Rp 2 trillion and Rp 10 trillion in its 2014 banking business plan to acquire related businesses.

“We hope we can realize the acquisition in 2014,” Baiquni said.

BTN president director Maryono could not be reached for comment on Wednesday. The bank, which controls the biggest share of the home loan market, is currently listed as one of the top-10 banks in terms of asset size.

Its latest financial report, which ended on Sept. 30, 2013, showed that the lender had Rp 123.32 trillion in total assets, Rp 112.26 trillion in liabilities and Rp 11.06 trillion in equities.

During the first nine months of 2013, its outstanding loans and financing stood at Rp 96.54 trillion and its third party funds amounted to Rp 88.54 trillion. It booked Rp 1.06 trillion in net profits from its January to September operations.

BTN is now 60.1 percent owned by the government and 34.7 percent owned by the public. The remaining 5.2 percent of its shares are controlled by other shareholders.

No official valuation of BTN is available at the moment, but in the national banking industry, a bank’s average price-to-book value (PBV) is set at about three times its equities or book value.

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