Bank Mandiri set to wrap up Tunas acquisition soon

Ika Krismantari ,  The Jakarta Post ,  Jakarta   |  Thu, 09/18/2008 10:37 AM  |  Business

Publicly listed PT Bank Mandiri, the nation's largest lender, plans to finalize the purchase of a controlling stake in automotive financing company PT Tunas Financindo next month after securing approval from shareholders.

Bank Mandiri is set to spend Rp 290 billion (US$30.74 million) for a 51 percent stake in the company, a unit of publicly listed financing giant PT Tunas Ridean -- 37 percent owned by Singapore-based Jardine Cycle & Carriage Limited.

The acquisition of Tunas will expand Bank Mandiri's network by tapping the booming demand for consumer loans in the automotive market.

During the first half of the year, the bank experienced outstanding growth in the consumer (37 percent) and small business (60 percent) sectors.

Bank Mandiri president director Agus Martowardojo on Tuesday said the bank's management would seek approval for the purchase during a shareholder meeting scheduled for September 23.

Bank Mandiri chief financial officer Pahala N. Mansyuri told The Jakarta Post the bank had targeted the deal to be wrapped up within one month.

"Next week, Bank Mandiri and Tunas will hold shareholder meetings, after which we can proceed with the purchasing plan," he said.

Tunas has a financing portfolio of Rp 2.04 trillion, with a net profit of Rp 84.7 billion last year.

Bank Mandiri is lagging behind compared to its smaller rivals in acquiring financing companies to tap the huge potential in the consumer sector, especially in the automotive segment.

Bank Danamon, the country's fifth largest bank, acquired Adira Finance in 2004, while Bank Internasional Indonesia took control of PT Wahana Ottomitra Multiartha in 2005.

In unrelated news, Agus said Bank Mandiri had cut its gross lending growth target to 18 percent from a previous target of 22 percent, in the wake of higher interest rates and a possible slowdown in the economy.

Bank Mandiri's outstanding loans are estimated to reach Rp 164.02 trillion by the end of this year, up from Rp 139 trillion a year earlier.

Currently, the bank's corporate sector still accounts for the largest total lending portfolio with 45 percent, followed by commercial and micro businesses (43 percent), and consumers (13 percent).

This month, Bank Indonesia raised the benchmark interest rate for the fifth consecutive time, to 9.25 percent. The step encourages local banks to adjust their lending interest upwards, dampening demands for loans.

Bank Mandiri also plans to settle bad loans in cement producer PT Semen Bosowa within the year. Semen Bosowa is owned by Aksa Mahmud, Vice President Jusuf Kalla's brother-in-law.

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