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CIMB ironing out merger plan for Indonesian banks  

Monday, 14 January 2008

KUALA LUMPUR: CIMB group, which is currently conducting a feasibility study on Khazanah Nasional Bhd’s proposed merger of its Indonesian banks, PT Bank Niaga and Lippo Bank, expects to announce “something firm” in the first quarter this year.

Group chief executive Datuk Nazir Razak said details such as the execution process needed to be ironed out.

“The idea (merger) has been agreed on and we have also informed Bank Indonesia. The study shouldn’t take long.

“You will be hearing something from us within the first quarter of this year,” he said after the launch of the CIMB Islamic Dynamic Market Rider NID-i yesterday.

Last month, Khazanah proposed to merge its 93%-owned Lippo Bank with CIMB’s Bank Niaga to comply with Indonesia’s bank ownership rules.

From left: CIMB group treasurer Lee K. Kwan, Datuk Nazir Razak, CIMB Islamic Bank Bhd chief executive officer Badlisyah Abdul Ghani and CIMB Investment Bank senior vice-president and head of structured products and derivatives, balance sheet management Chu Kok Wei at the launch of the CIMB Islamic Dynamic Market Rider NID-i
Indonesia’s Single Presence Policy (SPP) requires those who control two or more banks in the country to merge their banks, sell their stakes or form a holding company for their banks by end-2010.

The policy applies to Khazanah because it owns Lippo Bank and has a 64% indirect stake in Bank Niaga via CIMB group.

Bank Niaga is the seventh largest lender in Indonesia by assets with 247 branches, while Lippo Bank ranks 10th with 151 full-fledged branches and 247 smaller branches.

As at Dec 26, Bank Niaga had a market capitalisation of 10.88 trillion rupiah (RM3.88bil). Its issued and paid-up capital as at Sept 30 stood at 965 billion rupiah. Lippo Bank has a market capitalisation of 8.91 trillion rupiah while its paid-up capital as at Sept 30 totalled 812 billion rupiah.

Nazir said CIMB group was excited about the merger of both banks as this would enlarge the group’s footprint in Indonesia.

To a question, he said the group had always been on the lookout for opportunities and would be looking everywhere for expansion.

The proposed merger of the Indonesian banks at face value was an attractive proposition, he said.

“This proposed merger was even contemplated by previous shareholders of the two banks without the SPP.”

Meanwhile, CIMB Islamic Bank Bhd is targeting at least RM500mil sales from its newly launched structured product.

Nazir said the bank was confident the figure was achievable based on sales of the structured products it launched last year.

“NID-i will offer investors the opportunity to invest in and benefit from highly volatile market conditions and maximise returns,” he added.

NID-i is referenced to a benchmark index, the CIMB Millennium Excess Return Index, which covers the world’s most representative equity indices from Europe, the US, Japan and China and alternative asset classes such as currencies, commodities and real estate.

Source : The Star,

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