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Indonesian bank's sale proceeds to next stage with 11 potential buyers

Publication Date : 02-05-2014


The auction of Bank Mutiara, formerly known as Bank Century, has entered the next stage after 11 potential buyers, including state-owned Bank Rakyat Indonesia (BRI), handed in their dossiers at the last minute.

Deposit Insurance Corporation (LPS) corporate secretary Samsu Adi Nugroho said the LPS started receiving a large number of documents from the potential buyers just two days ahead of the deadline, which was set for April 29.

“Four investors submitted their documents on Monday afternoon [April 28] and seven more followed suit a day later,” Samsu said on Wednesday.

Among the documents that the investors were required to hand in were financial statements, a confidentiality agreement statement and a law compliance statement.

LPS divestment team head Poltak L. Tobing said  it would study all the dossiers to short-list potential investors.

“Hopefully we will complete this process in a week. The short-listed investors will then be required to submit their preliminary bids,” he said.

After that, Poltak added, the LPS would establish a “data room” to enable the investors to access Mutiara’s internal information as part of their due diligence on the bank.

The 11 investors came from various countries, according to data from the LPS, such as China, Indonesia, Japan, Malaysia and Singapore.

BRI, the nation’s most profitable lender, is among those interested in purchasing Mutiara.

The LPS currently holds a 99.9-per cent stake in Mutiara after it rescued the bank in a controversial bailout in 2008 that cost 6.7 trillion rupiah (US$579.47 million).

It spent another 1.25 trillion rupiah last year to jack up Mutiara’s capital so that it would comply with a Bank Indonesia regulation on banks’ minimum capital requirements.

Contacted separately, BRI finance director Achmad Baiquni confirmed that the state-owned bank had delivered its dossiers.

The number of prospective buyers fell from what the LPS recorded during the auction’s initial stage — that of submissions of letters of interest (LoIs).

Last week, as many as 18 parties — composed of banks, non-financial institutions and private equities — submitted their LoIs.

Meanwhile, LPS executive chairman Kartika “Tiko” Wirjoatmodjo said LPS had submitted a request to the Constitutional Court to conduct a legal interpretation process on Law No. 24/2004 on LPS.

The LPS needs legal certainty to ensure that when Mutiara is actually sold under its bailout price, the auction will not stir up controversy, according to Tiko.

“The law does say that we must sell any bank that the LPS has rescued in the sixth year after it is bailed out under its optimal price, but it’s not expressed explicitly and may be interpreted differently,” he said.

The legal interpretation process is being carried out concurrently with the Mutiara auction.

Information on the court’s website shows that delegates from the government and the House of Representatives are scheduled to appear at the court on May 5 to give their views on the matter.

The latest 1.25 trillion rupiah capital injection to Mutiara became the subject of an audit by the Supreme Audit Agency (BPK), which claimed that there was foul play involved.

However, Tiko denied any wrongdoing in the handling of the bank and said that the capital was needed because the previous restructuring of Mutiara’s assets and bad loans was not sustainable.


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