Standard Chartered seeks slice of Indonesian bank

The London-based bank Standard Chartered is competing with four other lenders to acquire a majority stake in PT Bank Permata, Indonesia's seventh-largest bank, which the country hopes could be the most successful of its bank asset sales.

The London-based bank Standard Chartered is competing with four other lenders to acquire a majority stake in PT Bank Permata, Indonesia's seventh-largest bank, which the country hopes could be the most successful of its bank asset sales.

Today is the deadline to submit final bids for 51 per cent of Permata, which has been valued at about $260m (£150m) by the state asset disposal agency. Standard Chartered has teamed up with Indonesia's largest car retailer, PT Astra International, to make the bid more palatable to Indonesians, who blocked two of the bank's previous offers for local banks.

The other four shortlisted bidders are Malaysia's Bumiputra Commerce Bank, Singapore's United Overseas Bank, Indonesia's Bank Panin and Malayan Banking. Permata is the last bank to be privatised under a divestment plan for banks that were taken under the government's wing during the Asian financial crisis in the late 1990s.

The preferred bidder will be chosen tomorrow. Laksamana Sukardi, the State Enterprises Minister, told reporters that he hopes the sale could reach possibly 2 to 2.5 times book value.

The asset disposal agency's estimate is based on a guide price of 1.8 to 2.39 times the bank's June 2004 book value. The government is selling banks and other assets to plug a widening budget deficit.

Standard Chartered's decision to make a joint bid with PT Astra "should help" win over Indonesians, said Simon Maughan, an analyst at Dresdner Kleinwort Wasserstein in London. He noted that Permata is a small bank, saying "it's not going to significantly move the dial" for Standard Chartered if it succeeded in its bid. But he thought a deal would be significant in that the bank was previously forced out by local staff who opposed foreign ownership of an Indonesian bank.

In 2002, Standard Chartered lost out to Farallon Capital Management, a US hedge fund, in its quest to buy PT Bank Central Asia, a defeat that mirrored a similar failure in 1999 to acquire PT Bank Bali. Both deals collapsed amid protests by Indonesian workers, who went on strike amid concerns about job losses. Standard Chartered then decided to focus on Hong Kong, Singapore and other Asian markets, which account for about two-thirds of its profits.

A spokesman for Standard Chartered said yesterday: "We've been in Indonesia for a long time. We have got a strong local business in our own name there which we've been expanding recently."

Permata, which has more than 300 branches, was formed by a merger of five defunct banks after the Asian crisis prompted the government to inject about 650 trillion rupiah (£40bn) in recapitalisation bonds in many local banks, one of the world's costliest bank bail-outs.

The state has recovered about 170 trillion rupiah, some of it from selling majority stakes in the five banks taken over during the crisis.