Kresna Securities

STARVED of cash and facing a ballooning budget deficit, the Indonesian government has restarted its privatisation programme and is offloading its remaining stakes in the country's listed banks to take advantage of high share prices.

After selling a 10.5 per cent stake in Bank Danamon last week, the government is looking to offload its remaining bank stakes over the next few months in order to raise about 7 trillion rupiah (S$1.2 billion).

'We will divest all our bank stakes this year, except in Bank Permata, which still needs approval from the House of Representatives,' finance ministry official Anggito Abimanyu told reporters. The government intends to sell its remaining 5.09 per cent stake in Bank Central Asia, 5.53 per cent stake in Bank Internasional Indonesia (BII), and 5.24 per cent stake in Bank Niaga.

Market analysts told BT that was a good time for the government to sell its remaining stakes in the banking sector.

'It is a good time to sell banking shares now because they did very well last year in terms of net profits and banking shares have gone up significantly,' said David Chang, director of Sales at Kresna Securities.

He added, however, that the government might not be able to command a premium for its stakes given that Indonesian banking stocks were already trading at higher values than those of other regional banks.

The country's banking stocks are currently trading at between 0.9 times cent and 2.9 times book value.

Kelvin Long, senior market strategist at Samuel Securities, also agreed that the timing was good for the government to sell down its stakes in the banking sector. He noted that going forward, interest rates are expected to rise and in the process bank profits may get squeezed.

'We expect the central bank to adopt a tighter monetary policy in the coming months and banking stocks will not do as well as they have in the past six months,' said Mr Long. 'So if the government waits any longer, it may not get such a good price.'

Meanwhile, State Enterprises Minister Sugiharto yesterday announced that the government is looking to sell part of its stake in PT Bank Tabungan Negara (BTN) through an initial public offering or find a partner for the lender this year to help expand its mortgage business. The plan will help Bank Tabungan 'fulfil a mandate from the government to help finance the construction of one million houses in five years', he said.

'So far it has financed 20,000 homes.'

Indonesia is trying to strengthen a financial sector it rescued with a 450 trillion rupiah bailout after the 1997 Asian financial crisis. Bank Tabungan, which is fully state-owned, had 26.74 trillion rupiah of assets and 18.46 trillion rupiah of deposits at the end of 2004.

A likely partner for the lender could be PT Bank Negara Indonesia, Mr Sugiharto said. Bank Negara, Indonesia's third-biggest bank, has proposed a takeover of BTN to the government, chief executive Sigit Pramono said in June. The two state-owned lenders need government approval for talks to start.

Bank Negara has set aside as much as 3 trillion rupiah to buy Bank Tabungan, Mr Pramono told reporters yesterday. Bank Negara will meet Bank Indonesia, the nation's central bank, to discuss the proposed purchase, he said.

Indonesia needs to move now or it may not get best price for the shares

By SHOEB KAGDA
IN JAKARTA

Market Info

Reksa Dana
	06/09/10	05/09/10
Pasar Uang
MRS CASH KRESNA	1,000.0000	1,000.0000
Pendapatan Tetap
MRS BOND KRESNA	1,209.6147	-
Campuran
IPB Syariah	2,027.4403	2,009.9098
IPB-Kresna	2,586.3854	2,580.3578
MRS FLEX KRESNA	1,426.2590	-
Indeks
Kresna Indeks 45	2,654.3303	-

Kresna Indeks 45