ANZ Said to Be in Talks to Sell Bank Panin Stake to Mizuho

Australia & New Zealand Banking Group Ltd. (ANZ) is in talks to sell its 39 percent stake in PT Bank Pan Indonesia (PNBN) to Mizuho Financial Group Inc. (8411), a person with knowledge of the matter said.

The discussions are at an early stage, the person said, asking not to be named as the talks are private. The Melbourne-based bank’s stake in Bank Panin is valued at about $618 million, based on yesterday’s closing price.

ANZ Bank Chief Executive Officer Mike Smith said on April 30 that stricter capital rules may force the lender to review minority partnerships. Tokyo-based Mizuho is seeking acquisitions in Asia to make up for limited expansion opportunities in Japan, where the population is falling and low interest rates make loans the least profitable in the region.

“Investing in Bank Panin would help Mizuho increase both Japanese and non-Japanese clients while entering the local retail market,” said Natsumu Tsujino, a Tokyo-based analyst at JPMorgan Chase & Co.

Paul Edwards, a spokesman for ANZ in Melbourne, said the bank doesn’t comment on market rumors. Mizuho’s Tokyo-based spokeswoman Masako Shiono declined to comment, as did Jasman Ginting, a spokesman for Jakarta-based Bank Panin. The talks were first reported by Reuters yesterday.

Bank Panin jumped 16 percent to 790 rupiah at 2:52 p.m. in Jakarta trading. The stock has surged 25 percent in the past two sessions, the biggest two-day gain since November 2008. ANZ closed 0.9 percent higher at A$30.15 in Sydney. Mizuho climbed 0.5 percent to 211 yen at the close in Tokyo.

Catching Up

Mizuho, Japan’s third-largest bank by market value, is looking to catch up to its bigger Japanese peers Mitsubishi UFJ (8306) Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. (8316) in stepping up acquisitions in Southeast Asia.

Mitsubishi UFJ in July offered to buy a majority stake in Thailand’s Bank of Ayudhya for $5.6 billion. Sumitomo Mitsui struck a deal to buy 40 percent of Indonesia’s PT Bank Tabungan Pensiunan Nasional (BBTN) for about $1.5 billion in May.

Monetary easing to fight deflation has dragged down interest rates in Japan, shrinking loan profitability. The country’s three megabanks have an average net interest margin of 1 percent, compared with 2.3 percent at the 24 biggest Asia-Pacific banks by assets, data compiled by Bloomberg show. Bank Panin’s margin is 4.5 percent, the data show.

Panin, ranked seventh largest by assets out of the country’s 120 commercial banks, is currently traded at 1.1 times its book value. That compares with 2.3 times for the Jakarta Finance Index and at least 2.6 times for the country’s three biggest lenders, according to data compiled by Bloomberg.

Foreign Ownership

Indonesia in July 2012 introduced a rule that limits foreign banks’ stakes in local lenders to 40 percent. That prompted Singapore-based DBS Group Holdings Ltd. to end its $6.5 billion bid for PT Bank Danamon Indonesia (BDMN) this month.

ANZ Bank owned minority stakes in six Asian companies valued at A$3.3 billion ($3 billion) as of September 2012. New banking rules require the Australian lender to subtract the entire value of the overseas investments from Tier 1 capital. Formerly, only half of the value of the investment was deducted.

ANZ has its own Indonesian unit with 28 branches and 1,100 employees spread across 11 cities, it said in a presentation last year. It valued the Panin stake at A$668 million in 2012, according to its annual report.

To contact the reporter on this story: Narayanan Somasundaram in Sydney at nsomasundara@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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