Indonesia’s Largest Private Bank Denies Allegations of Manipulation in 2003 Share Sale

JAKARTA, KOMPAS.com - PT Bank Central Asia Tbk (BCA), Indonesia’s largest private lender, has denied allegations that the 2003 sale of a 51 percent stake to cigarette and consumer giant Djarum Group was manipulated and undervalued.

The deal, valued at around 5 trillion rupiah (about $330 million at the time), has long been questioned by critics who argue that BCA’s market value then was closer to 117 trillion rupiah.

BCA rejected that claim, saying the 117 trillion rupiah figure referred to the bank’s total assets, not its market capitalization.

“The 117 trillion rupiah often mentioned in this narrative refers to total assets, not market value,” BCA Corporate Secretary I Ketut Alam Wangsawijaya said in a disclosure to the Indonesia Stock Exchange on Wednesday.

Market capitalization, he explained, is calculated by multiplying the share price on the exchange by the number of shares outstanding. At the time of the strategic private placement in 2003, BCA’s market capitalization based on average trading prices was around 10 trillion rupiah.

The acquisition was carried out by the FarIndo consortium under the supervision of Indonesia’s Bank Restructuring Agency (BPPN), which was set up to manage failing banks in the aftermath of the Asian financial crisis.

“The tender process was transparent and accountable, and the purchase price reflected market conditions at the time,” Ketut said.

BCA also denied separate claims that the bank owed the government 60 trillion rupiah, allegedly paid back in annual installments of 7 trillion rupiah. The figure, Ketut clarified, referred instead to government bonds held by BCA, which were fully settled in 2009 in line with prevailing laws and regulations.

“Allegations of legal violations in the acquisition of BCA shares are not true. The process complied with market mechanisms and regulations,” he added.

The clarification comes amid renewed speculation that the government could seek to take over BCA’s controlling stake, linking the issue to unresolved debts from the Bank Indonesia Liquidity Assistance program (BLBI), a controversial bailout scheme during the late 1990s financial crisis.