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ank Madiri, Indonesia’s largest bank by asset value, said it supported the government’s decision to put the Bank Negara Indonesia (BNI) rights issue ahead of its own, Mandiri’s chief financial officer Pahala N. Mansury said Sunday.

Pahala assured that there would be no problems for Bank Mandiri to launch its Rp 14 trillion (US$1.6 billion) rights issue after BNI.

“What worries us is that if the BNI [rights issue] is delayed until after December, which in turn would also mean a delay for us,” he said.

Pahala said BNI needed to file its rights issue documents with the capital market regulatory authority (Bapepam-LK) by Oct. 15 to list if it is committed to its rights issue in February, 2011.

State-Owned Enterprises Minister Mustafa Abubakar previously said the ministry had decided to put BNI’s Rp 10 trillion rights issue ahead of Mandiri’s because BNI needed to strengthen its capitalization.

BNI’s capital adequacy ratio (CAR) stood at 13.3 percent for the first half of this year, and Pahala expects Mandiri’s CAR is between 12.8 and 13 percent by year-end.

Without the rights issue, Mandiri’s CAR could slide to below 12 percent and loan growth could become “worrisome,” he said,

BNI and Mandiri had previously expressed their firm commitment to launch rights issues before the end of 2010 to bolster capital positions and boost lending.

National bank loan growth is one of the government’s top priorities to help businesses spur economic growth in Southeast Asia’s largest economy.

“If we want lending to grow, we have to be ready with capitalization strategies,” Pahala said.

According to Pahala, Mandiri’s year-to-date consolidated outstanding loans stands at Rp 230 trillion, a 21 percent growth compared to the same period last year.

“And the number keeps increasing,” he said.

In Mandiri’s case, every Rp 1 trillion of loans absorbs 0.07 percent of its CAR, he said, but added that
“We have to do something to maintain our CAR at a manageable level of 12 percent.”

Mandiri expects its rights issue process will be completed by the first week of February — if BNI’s own process proceeds on schedule, Pahala said. Mandiri is also considering the potential of high market traffic and subsequent overlap caused by the actions of similar strategic investors.

“But investor overlap is estimated to be only 16 percent, leaving an 84 percent margin for other investors,” Pahala said.

Eighty percent of Mandiri’s public shareholders are foreign investors, and about 70 percent of foreign funds are expected to absorb the bank’s new shares via the rights issue, he added. “Besides, the market is at its best. The benchmark IHSG [Jakarta composite index] is at a historic high of 3,547,” Pahala said.

Mandiri’s net profit stands at Rp 6.3 trillion through the third quarter of this year, up 30 percent from the same period last year, Pahala said. (est)