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BRI delays acquisition plan until next year with new scheme
State-owned lender Bank Rakyat Indonesia (BRI) will move its acquisition plan forward to 2015 as it is unlikely the bank will be able fully realize it this year, the bankâs senior executive said
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tate-owned lender Bank Rakyat Indonesia (BRI) will move its acquisition plan forward to 2015 as it is unlikely the bank will be able fully realize it this year, the bank's senior executive said.
BRI finance director Achmad Baiquni said in Jakarta on Thursday that the bank would revise all of its inorganic growth plans for 2014 and come up with a new scheme.
'We will still continue with our assessments, but we don't think we can realize any of the plan this year. Even if we find the right company [to acquire], gaining approval from the regulator will take time and it's already September,' he said after attending the 2014 Investor Summit and Capital Market Expo on Thursday.
BRI, the second-largest bank by assets in Indonesia, has been looking to expand its business and assets inorganically, such as through acquisition or joint venture.
- BRI has been looking to expand its business and assets through acquisition
- The bank has allocated around Rp 3 trillion this year to finance its acquisition plan
- Several financial companies on its wish list
Several types of companies are on its wish list: a bank, an insurance company and a securities firm. State-run insurance company Jiwasraya and state financial services firm Bahana Pembinaan Usaha Indonesia (BPUI) have been said to be on the list.
The bank also participated in the auction of Bank Mutiara, but the Deposit Insurance Corporation (LPS) recently announced Japan's J Trust Group as the final bidder.
The publicly listed BRI had allocated around Rp 3 trillion (US$249.38 million) this year to finance its acquisition plan. It might allocate the same amount of funds for acquisition or for the establishment of a joint venture for 2015, but a higher budget was not out of the question, Baiquni said.
'What we are looking for is a company that fits our core business segment, which is micro, small and medium. It will be best if the company operates in areas in which we don't have a large presence yet, so it can complement our network,' he added.
At present, BRI's subsidiaries include sharia lender BRISyariah, agribusiness-focused lender BRI Agro and remittance office BRI Remittance Co. Ltd. in Hong Kong.
It also has a 45 percent stake in financing firm PT BTMU-BRI Finance, a joint venture with Japan's Bank of Tokyo-Mitsubishi UFJ.
Acquisition is apparently not the only growth scheme that has gone south this year. BRI's plan of operating two boats as floating banks has had to undergo a revision as well since the lender will most likely operate one boat only in 2014.
'Some things must be put on hold due to our inexperience in this new business. We will only receive one boat from the shipyard before year-end,' Baiquni said.
As previously reported, BRI hopes to reach people in coastal areas that have little access to banking by using boats. The initial plan was to deploy the boats ' which will be equipped with teller counters and automated teller machines ' to the waters around Kalimantan and Maluku.
Meanwhile, commenting on the new standard operating procedure on hedging, Baiquni said that the lender was ready to facilitate any hedging needs from state-owned enterprises (SOEs).
He said that BRI would take 'proactive' steps to approach the SOEs. 'We hope to facilitate their forward transactions now that SOEs are allowed to carry out hedging mechanisms,' he added.
BRI's shares are offered on the Indonesia Stock Exchange under the code 'BBRI'. They closed at Rp 10,500 apiece on Thursday, 1 percent higher than the previous day.
