StanChart Reported to Have Eye on Controlling Stake in Bank Muamalat

By webadmin on 10:11 pm Jun 20, 2011
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Francezka Nangoy & Reuters

British-based Standard Chartered is planning to bid for a controlling stake in Bank Muamalat, the oldest Islamic bank in Indonesia, after its local affiliate, Bank Permata, withdrew from the race, sources with direct knowledge of the matter have said.

Qatar Islamic Bank and Bank Mega were among suitors that submitted second-round bids ahead of last week’s deadline.

The decision by StanChart, which has been operating in Indonesia for more than 150 years, to pursue as much as a 51 percent controlling stake, valued at almost $300 million, by itself underscores its desire to tap growing demand for Islamic banking business in the world’s most populous Muslim nation.

Muljono Pringgoharjono, StanChart’s country chief risk officer in Jakarta, said the bank would not comment on the news. “We do not comment on market speculation,” Muljono said in an e-mail to the Jakarta Globe.

H. Arviyan Arifin, president director of Muamalat, meanwhile, said the stake purchase rested in the hands of the shareholders. “Definitely, the decision rests in the hands of the top shareholders, not with the management, not with us,” he said.

Bank Danamon — controlled by Singapore state investment company Temasek Holdings — and Bank Tabungan Pensiunan Nasional — backed by US private equity firm Texas Pacific Group — also plan to expand their Shariah business.

StanChart’s decision to make a move on its own came as a surprise because the emerging market-focused lender already has a presence in Shariah banking through its affiliate Bank Permata, a commercial lender.

StanChart can pursue the stake in Muamalat because central bank rules allow majority owners of commercial lenders to have control of Shariah-based banks too. StanChart and Astra International, the country’s largest auto retailer, each own a 45 percent stake in Bank Permata.

It was unclear whether StanChart would merge Muamalat with Permata’s existing Shariah banking operations should it win with its bid.

Banking analysts in Jakarta were also caught off guard by the news. “It was a surprise move,” said Joseph Pangaribuan, a banking analyst at Samuel Sekuritas.

Top shareholders of Muamalat, the country’s second-biggest Shariah lender, were planning to sell at least 51 percent of the unlisted bank for about $300 million, sources said previously.

StanChart was continuing with due diligence and was likely to submit a bid soon, a source with direct knowledge of the matter said.

StanChart and Indonesia’s Para Group, which owns Bank Mega, both declined to comment. A QIB executive also declined to comment. Morgan Stanley, which is running the auction, was not available for comment.

There are 11 Shariah-compliant banks in the country, controlling a combined total of Rp 97.47 trillion ($11.31 billion) in assets, or around 3.3 percent of the banking system, as of the end of last year.