Bangkok Bank vying with SMFG for StanChart's Indonesia bank: sources

[HONG KONG] Bangkok Bank is emerging as a leading bidder for control of Standard Chartered's Indonesian bank, according to people familiar with the matter.

The Thai lender is competing with Sumitomo Mitsui Financial Group in the final race for almost 90 per cent of PT Bank Permata, a stake with a market value of about US$2.3 billion, said the people, asking not to be identified as the deliberations are private. A winner could emerge as soon as next week, though negotiations could drag on longer, the people said.

Bangkok Bank is looking for a new market in the region as interest rates in Thailand remain low. Indonesia, where the economy is forecast to expand 5 per cent in 2020, offers more growth potential for the Thai lender, one of the people said.

Shares of Permata rose as much as 4 per cent in Jakarta on Thursday, outperforming the country's benchmark index, which was little changed. Shares of Bangkok Bank fell as much as 5.3 per cent in its biggest decline since April 2018.

Hopes that Bangkok Bank will increase dividend payments would likely be hurt if the lender acquires Permata, Citigroup Inc analysts Kritapas Siripassorn and Robert Kong wrote in a note.

"We expect a rather negative reaction from investors if this deal were to come through," the analysts wrote. Bangkok Bank has sufficient capital to buy the Indonesian lender, but could find it difficult to manage a mid-sized bank in a market dominated by the top four, they added.

Standard Chartered earlier this year said that its Permata investment is no longer considered core and named Indonesia among four countries where the bank is focused on reducing costs. Selling the Permata stake would free up cash for a stock buyback, Goldman Sachs Group Inc analysts wrote in November.

Standard Chartered and Jakarta-listed PT Astra International each own about 44.6 per cent of Bank Permata, data compiled by Bloomberg shows. Permata previously attracted interest from other potential suitors including OCBC Bank and DBS Group Holdings Ltd, people familiar with the matter have said.

There hasn't been a final decision and other bidders could still emerge, the people said. Representatives for Bangkok Bank, Bank Permata and Sumitomo Mitsui declined to comment, while a representative for Standard Chartered didn't immediately respond to requests for comment.

Astra declined to comment on a local media report about a merger deal between Sumitomo Mitsui and Permata, the Indonesian conglomerate said in a stock exchange filing on Wednesday.

BLOOMBERG