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Indonesia setting up team for bank sale



By Alex Frew McMillan
CNN Hong Kong

JAKARTA, Indonesia -- The Indonesian government is setting up a team to evaluate the bids for Bank Central Asia, the country's largest retail bank.

"A special team will be formed to determine the BCA winner," State Enterprises Minister Laksamana Sukardi told Reuters news agency on Monday.

He said the team was particularly important to ensure "transparency," or the openness and fairness of the bidding. The group hopes to make a decision this week.

Sukardi is also the minister who oversees the Indonesian Bank Restructuring Agency (IBRA), which controls 60.3 percent of BCA and had been running the sale.

Selling off a majority of the bank is a cornerstone of Indonesia's economic reforms. The sale has been repeatedly postponed but looks now to be moving ahead.

Two bidders still in the running

Final bids were submitted on January 28 and are now under review. Of four bidders, two have been ruled out after failing to pass the central bank's suitability standards.

That leaves two bidders: a team led by British-based bank Standard Chartered and one headed by U.S.-based investment company and money managers Farrallon Capital Management.

Both have said they will let the bank run under its current name. With employees worried they will lose their jobs, both bidders have also pledged to work with BCA staff. Farrallon has made a promise not to lay anyone off for two years.

Whereas Standard Chartered has extensive Asian banking operations, Farrallon has no retail banking business of its own. Critics have painted the U.S. company as a "vulture capitalist" looking to pick up cheap assets.

The sale is a touchy topic in Indonesia, where BCA has around 8 million customers.

The International Monetary Fund has repeatedly pushed the Indonesian government to offload majority stakes in both BCA and Bank Niaga.

"Banking reform remains a key element of the government's economic program," the IMF wrote on January 29, in a report reviewing its loan program to Indonesia.

It approved a $341 million loan disbursement, part of its three-year $4.5 billion overall program.

Controversial issues still undecided

But before it approves the next disbursement, the IMF has demanded more progress on six issues, the BCA sale among them.

Another of the six points is highly controversial in Indonesia. The government is mulling an extension of debts made to bankers during the Asian financial crisis.

Much of the money was abused -- by some estimates, 96 percent of the loans made, or around $13.3 billion.

The government is deciding whether to extend the repayment deadline to 10 years, from four. As it now stands, that deadline would come due this year. But the vast majority of repayments remain unmet.

The main Indonesian stock index, the Jakarta Stock Exchange composite, was up 0.4 percent at 453.953 in afternoon trade on Monday.

But most Asian indexes were much higher, with Tokyo's Nikkei closing up 5.9 percent at its highest level in six months.



 
 
 
 


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