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Maybank offers $1.2bn for 56% stake in Indonesia’s BII


March 27, 2008

Maybank offers $1.2bn for 56% stake in Indonesia’s BII

Malayan Banking Bhd (Maybank) Wednesday said it would pay $1.5 billion for 56 percent of Bank Internasional Indonesia (BII), reported Reuters.

Malaysia's biggest bank was quoted by Reuters news agency as saying that it was buying the stake from Singapore state investor Temasek and South Korea's Kookmin Bank. Maybank also planned to spend an additional $1.2 billion to buy the remaining 44 percent of BII from minority shareholders.

BII operates in all major banking segments in Indonesia, with a network of more than 230 branches and 700 ATMs, Internet banking and call centre operations.

The combined company, which would have a market value of over $16 billion, would be Southeast Asia's fourth-largest bank by assets after Singapore's DBS Group , United Overseas Bank and Oversea-Chinese Banking Corp.

Global banks such as HSBC are eyeing expansion in the world's fourth-most populous nation to take advantage of economic growth running at over 6 percent, which is spurring loan demand and potential earnings for its financial sector.

Many banks in Indonesia predict loan growth of 20 percent or more this year while lenders in much of the rest of the world are bracing for an expected economic slowdown and wrestling to squeeze profits from volatile equity and credit markets.

But the Indonesian economy also faces risks from the global downturn and high oil prices, which have fueled inflation, while foreign businesses have faced regulatory problems, analysts said.

Temasek, which has stakes in two Indonesian banks, is selling its stake in BII to comply with a new Indonesian central bank rule that bars foreign investors from owning more than one bank. Temasek also owns a controlling stake in Bank Danamon.

Maybank edged out Bank of China in the race to buy Temasek's 42 percent stake in BII after Europe's biggest bank HSBC pulled out as a potential bidder.

However, it was unclear if Kookmin would agree to sell its stake given it had been a contender to buy the bank.

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