Taiwan firm to buy 40% Mayapada stake for Rp 3.5t
Grace D. Amianti
The Jakarta Post
Indonesian publicly listed private lender Bank Mayapada Internasional has agreed to sell 40 percent of its shares to a unit of Taiwan's Cathay Financial Holding Co. Ltd. as part of efforts to strengthen its capital and expand its business.
The purchase of Bank Mayapada's stake by Cathay Financial's Cathay Life Insurance Co. Ltd. will be worth about Rp 3.52 trillion (US$278 million) as part of the Taiwanese company's push to expand out of its home country, according to Reuters on Monday.
Bank Mayapada president director Hariyono Tjahjarijadi confirmed the report that shareholders from both institutions had signed the first phase of the purchase agreement for 24.9 percent of shares on
the same day.
'Several foreign shareholders in Bank Mayapada agreed to sell their shares to Cathay Financial Holding,' he told The Jakarta Post.
As of Dec. 29 last year, one of the foreign shareholders of Bank Mayapada was J Trust Asia Pte. Ltd., a Singapore-based subsidiary of Japan's J Trust Co. Ltd., which also acts as the major shareholder of Indonesia's Bank Mutiara.
Hariyono said the deal was based on both parties' vision to create a synergy, as Cathay Financial ' including its lending subsidiary Cathay United Bank ' has been acknowledged as a successful institution with a positive reputation in its home country and on a regional level.
'Our shareholder decided to take this step because we want to grow and compete better amid the upcoming integration of the ASEAN financial industry. Indonesia's banking industry should take concrete steps to face the tightening competition in the region,' he said.
Taipei-based Cathay Financial Holding Co. Ltd. was founded by Taiwan's Tsai tycoon family with a total $918 million investment in overseas acquisitions in the past six months, including the Monday purchase.
Cathay Financial's banking subsidiary Cathay United Bank ' one of the largest commercial banks in Taiwan with 160 branches ' has a capital value of TW$52 billion ($1.7 billion) and owns overseas offices in China, Cambodia, Malaysia, Philippines, Singapore, Thailand, Vietnam and the US.
Meanwhile, Bank Mayapada's major shares are controlled by Indonesian tycoon Dato Sri Tahir through his business empire the Mayapada Group, which also includes businesses in retail, property and health-care sectors.
Hariyono said the bank's controlling shareholder has been committed to strengthening capital through issuing subdebt papers worth Rp 300 billion and conducting rights issue worth Rp 500 billion last year as it plans to enter in 2017 the BUKU II group of banks that have core capital of between Rp 1 trillion and Rp 5 trillion.
In November last year, Bank Mayapada issued a Rp 700 billion subordinated bond with a maturity of up to seven years to boost its capital adequacy ratio (CAR) to 14.8 percent. The lender's CAR, which is a measure of capital strength, stood at 11.5 percent at the end of last year.
Bank Mayapada amassed a total Rp 2.85 trillion in core capital in the third quarter of 2014, as a result of its previous Rp 500 billion rights issuance and last year's Rp 700 billion bond sale.
The bank posted Rp 377 billion in net profits in the third quarter of 2014, up 4.4 percent from last year's Rp 352 billion. The net profit growth was a result of the 29.5 percent year-on-year growth in loans amounting to Rp 22.9 trillion. Hariyono has previously said Bank Mayapada planned to reach a credit growth of 20 percent this year from Rp 26 trillion next year.
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