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Two favored in BCA bid process

A suitor for BCA must pass the central Bank Indonesia's "fit and proper" test first  

By CNN's Yenni Kwok

JAKARTA, Indonesia (CNN) -- Only four of the original nine bidders short-listed are still in the race to buy a stake in Indonesiašs Bank Central Asia, with two seen as favorites.

The four are the U.S.-based investment bank Farallon Capital consortium, the U.K.-based Standard Chartered Bank consortium, and two domestic groups, Bank Mega consortium and GKBI consortium.

The first two are the favourites to take 51 percent of BCA, which the Indonesian government took over from the Salim Group after it fell into grave financial difficulties during the Asian financial crisis in 1998.

The four submitted their final bids before the deadline set by the Indonesian Bank Restructuring Agency (IBRA) on 5 p.m. Monday.

IBRA chairman I Putu Gede Ary Suta told reporters the final bidders have to go through IBRAšs two evaluation stages and the central Bank Indonesiašs "fit and proper" test before the government decides on a winner.

He said he did not know when a decision would be announced.

Five dropped out

At a glance: Indonesia

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The five group who have dropped out of the race are the Malaysian Plantation Group, Thailand's Dynamic Choice, Indonesia Recovery Fund Ltd, Trimegah Consortium and Berca Consortium.

In the first stage of IBRA's evaluation, the bidders must warrant that they have no links, directly or indirectly, with the Salim Group.

"If it turns out not to be so afterwards, the transaction will be cancelled and we will hold the money," Ary Suta said.

There have been fears that the Salim Group, founded by Liem Sioe Liong, a long-time backer of ex-president Suharto, would regain control of the bank after the sale.

The Minister of State-Owned Enterprises Laksamana Sukardi said he would not let the Salim group come back, but admitted he could not prevent it from gaining control through the secondary market.

In the second stage of the evaluation, IBRA will look at the prices and other qualities offered by the remaining investors.

Bids to be evaluated

IBRA will evaluate bids based on the offer price (worth 50 percent of the evaluation), the structure of the consortium (20 percent), the terms and conditions (25 percent), with the remaining 5 percent for the future business plan.

UK-based Standard Chartered Bank is one of the favourites, but had a bitter experience some years ago when it failed to acquire Bank Bali.

Still, it may stand a good chance now. In an analysis of the BCA sale, Kompas daily says there are "indications" that Laksamana Sukardi and Ary Suta personally favor Standard Chartered.

Its consortium members include Berca -- which originally was a bidder but withdrew to join Stanchart -- Prudential Insurance and Government Investment Corp., the investment arm of the Singaporean government.

The other overseas bidder is US investment firm Farallon Capital, which is led by Sarindo Holding Mauritius. A consortium member is Alaerca Investment Ltd, in which the Indonesian cigarette company, PT Djarum, holds shares.

Big retail bank

According to banking analyst Mirza Adityaswara, the two overseas bidders, Stanchart and Farallon, seem to fit the IBRAšs criteria better than the local bidders, Bank Mega and GKBI.

"Now, it is up to the governmentšs smartness, to choose a good investor with a good price," Mirza said.

BCA is one of Indonesiašs biggest retail banks, with 8 million customers and a country-wide network of branches and ATMs.

"Whoever gets the (majority) share of BCA, it will be powerful," said economist Faisal Basri.

The Indonesian government now holds nearly 60 percent of BCA, while the Salim Group has about 7 percent and the remaining 33 percent are public shares.

BCA shares traded 25 rupiah or 1.33 percent lower at 1850 rupiah in Wednesday trade, after it touched a high of 1875 rupiah on Tuesday.


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