(Aug 19): Oversea-Chinese Banking Corp is weighing a bid for Standard Chartered’s Indonesian bank, people with knowledge of the matter say, a move that may create the country’s fifth-largest lender.
OCBC is considering an offer for almost 90% of Bank Permata, which has a market value of about $1.9 billion, say the people, asking not to be named as the deliberations are private. OCBC is interested in the stakes held equally by Standard Chartered and Astra International, the people say.
Shares in Permata jumped, while those in OCBC fell. Buying Permata would add to OCBC’s presence in Southeast Asia’s largest economy, where it already owns about 85% of Bank OCBC NISP, according to data compiled by Bloomberg. Under Indonesia’s single-presence rule, the two banks may have to merge, although regulators recently signalled intentions to relax that requirement.
Speculation that OCBC is getting ready for another acquisition has been fuelled by its less generous dividend policy when compared with Singapore’s two other major banks. Permata and Bank OCBC NISP have combined assets of IDR326 trillion ($31.7 billion), the fifth highest in Indonesia, data compiled by Bloomberg shows.
Permata surged as much as 11% in Jakarta on the morning of Aug 15, the most in a month. OCBC fell as much as 3% in Singapore, more than the benchmark Straits Times Index’s 1.1% decline.
London-based Standard Chartered said in February that its Permata investment was no longer considered core, signalling it may be getting ready to sell the stake. It also named Indonesia among four countries where the bank was focused on reducing costs and engineering a long-awaited turnaround.
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Standard Chartered and Jakarta-listed Astra each own about 44.6% of Permata, data compiled by Bloomberg shows.
OCBC’s deliberations are still at an early stage and may not result in a deal, the people say. Representatives for OCBC, Bank Permata, Astra and Standard Chartered declined to comment.
OCBC has also been looking at expanding its presence in China. CEO Samuel Tsien said in April he would look at increasing the bank’s 20% ownership of China’s Bank of Ningbo Co once regulators allow foreign banks to hold a larger stake in local lenders.
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Acquiring Permata would probably be a better deal, according to Bloomberg Intelligence analyst Diksha Gera. Buying the Indonesian lender at current prices would be “more accretive” than raising its stake in Bank of Ningbo at a “significant premium”, she writes in a note.
Permata reported net income of IDR711.4 billion for 1H2019, up from IDR288.8 billion a year earlier.
OCBC purchased Wing Hang Bank in Hong Kong for US$5 billion in 2014, and in 2016 it paid $227.5 million for the wealth assets of Barclays in Singapore and Hong Kong. — Bloomberg LP
