Market Authority Concerned Over Acquisition by Foreign Banks
Tuesday, 12 December, 2006 | 13:05 WIB

TEMPO Interactive, Jakarta: The Jakarta Stock Exchange (JSX) is concerned over the many acquisitions of national banks by foreign banks. Director of Listing at the JSX Eddy Sugito stated that the acquisition will lessen the share liquidity at the market. “This can be a new problem at the market,” he said when Tempo called yesterday (12/11).

According to him, share liquidity is threatened since public share ownership at the banks is less. The reason is that, in line with capital market regulation, in every acquisition that changes the company's controller, the new owner must hold a tender offer. Tender offer is a purchase offer of all public shares by the controller.

Eddy stated that every tender offer makes the new investor set a high price which is above market price. As a result, public shareholders will release their shares. “This will be the dilemma when foreign parties are interested in public banks,” he said.

In addition to alleviating liquidity, the impact of bank acquisition is that more public companies will withdraw from the market and go private. “New shareholders are inclined to de-listing,” he said. So, Eddy said, “this is the kind of a situation that the market dislikes.”

Bank analyst Fendy Susyanto stated that it is best for foreign investors to acquire national banks that are yet to enter the market or those with shares that aren’t liquid. However, he said, the problem is that foreign investors prefer public banks because of their companies' transparency and guarantee of their financial report.

Frendi stated that the acquisition will result in diverting economic value abroad. The reason is that the dividends will be taken by the new owner. He said that it will possibly enable foreign parties to control the strategy of national banks.

Acquisition is the most possible strategy for banks to gain a capital injection. This is in line with the conditions of capital minimum limit in the design of National Banking Architecture. “Nonetheless, the problem is that acquisitions have so far been carried out by foreign parties,” said Fendi.

WAHYUDIN FAHMI | AGOENG WIJAYA