CCB to buy controlling stake in Bank Windu

China Construction Bank is the country's second-biggest lender by assets. The Indonesia Financial Services Authority said in June that the bank would be permitted to own more than 40 per cent of an Indonesian bank, should it buy stakes in two separat
China Construction Bank is the country's second-biggest lender by assets. The Indonesia Financial Services Authority said in June that the bank would be permitted to own more than 40 per cent of an Indonesian bank, should it buy stakes in two separate lenders and combine them into a single entity.PHOTO: REUTERS

Chinese bank given rare permission to own more than 40 per cent of Indonesian lender

JAKARTA • China Construction Bank (CCB) is buying a controlling stake in Jakarta-based Bank Windu Kentjana International, in a rare case of a foreign bank being allowed to own more than 40 per cent of an Indonesian lender.

The Indonesian financial regu- lator's move to give an exemption to the country's 40 per cent foreign ownership cap could pave the way for more acquisitions by foreign banks eager to tap growth in South-east Asia's biggest economy.

"The agenda is to support the consolidation process, so the supervisor can give more leeway, for more than 40 per cent," Mr Nelson Tampubolon, a banking supervisor at the Indonesia Financial Services Authority (OJK), told Reuters in a text message yesterday.

The country of 250 million people has about 120 commercial banks.

The ownership cap has acted as a stumbling block to deals in the past, with some foreign banks unwilling to take a minority stake in Indonesian lenders as that is seen as punitive for capital under new global rules. Because of the cap, Singapore's DBS Group Holdings dropped its takeover bid for Indonesia's Bank Danamon in 2013.

OJK's Mr Tampubolon said in June that CCB would be permitted to own more than 40 per cent of an Indonesian bank, should it buy stakes in two separate lenders and combine them into a single entity.

Indonesian tycoon Johnny Wiraatmadja owned 61.2 per cent of Bank Windu as of June, according to Thomson Reuters data.

Under the proposed deal, Bank Windu, which has total assets of nearly 10 trillion rupiah (S$1 billion), will merge with Bank Antardaerah, Mr Wiraatmadja told a media briefing.

It will then raise around 1 trillion rupiah from a rights issue, with CCB getting a stake of more than 50 per cent and Mr Wiraatmadja's stake reduced to 20 per cent to 25 per cent.

The deal is expected to be completed this year, said Mr Wiraatmadja.

Officials of the state-owned CCB, China's second-biggest lender by assets, declined to comment when asked at the briefing.

Bank Windu is likely to expand into infrastructure and trade finance once CCB becomes its controlling shareholder, said Mr Luianto Sudarmana, president director of the Indonesian lender.

Shares of Bank Windu, which surged 22 per cent on Thursday, fell 7 per cent yesterday.

REUTERS

A version of this article appeared in the print edition of The Straits Times on September 19, 2015, with the headline 'CCB to buy controlling stake in Bank Windu'. Print Edition | Subscribe