Mizuho Said to Face Board Seat Hurdle in ANZ Panin Stake Talks

Australia & New Zealand Banking Group Ltd.’s (ANZ) attempt to sell its 39 percent stake in PT Bank Pan Indonesia to Mizuho Financial Group Inc. (8411) is being held up by a dispute about board representation, three people familiar with the matter said.

The Gunawan family, which controls the lender known as Bank Panin, is resisting Mizuho’s demand for a board seat should it buy ANZ’s holding, valued at about $520 million, said the people, who asked not to be named as the talks are private. Mizuho and ANZ are also negotiating other terms for a deal, one person said without elaborating.

Mizuho lags behind bigger competitors Mitsubishi UFJ Financial Group Inc. (8306) and Sumitomo Mitsui Financial Group Inc. (8316), who have both announced acquisitions in Southeast Asia in the past year. ANZ Chief Executive Officer Mike Smith said in April that stricter capital rules may force the lender to review minority partnerships.

ANZ doesn’t have any representation on Panin’s four-member Board of Commissioners, according to the Indonesian lender’s website. Spokesmen for ANZ, Mizuho and Panin declined to comment or weren’t immediately available.

ANZ bought 10 percent of Panin in two stages in 1999. A decade later, the Australian lender paid $114 million to boost its stake in a transaction that valued Panin at 745 rupiah a share. Panin closed yesterday at 670 rupiah in Jakarta. ANZ also owns a separate Indonesian unit with 28 branches spread across 11 cities, according to its website.

Japan Shrinking

Panin, the ninth-largest by assets of the country’s 120 commercial banks, trades at 0.9 times its book value. That compares with 2.2 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.

Panin’s shares have climbed 14 percent in in the past 12 months, giving the company a market value of 16.1 trillion rupiah ($1.3 billion). The Gunawan family controls 46 percent of the Jakarta-based lender through PT Panin Financial Tbk.

Japan’s biggest banks have relied on overseas takeovers as a shrinking population and benchmark interest rates near zero constrain loan profitability at home. 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 (BBTN) Pensiunan Nasional for about $1.5 billion in May.

Limiting Indonesia’s appeal, the country 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) in August.

ANZ owned minority stakes in six Asian companies valued at a combined A$4 billion ($3.5 billion) as of September 2012. It valued its Panin stake at A$692 million in 2013, according to its annual report. New banking rules require the Australian lender to subtract the entire value of the overseas minority investments from Tier 1 capital, up from 50 percent before.

To contact the reporters on this story: Narayanan Somasundaram in Sydney at nsomasundara@bloomberg.net; Joyce Koh in Singapore at jkoh38@bloomberg.net

To contact the editors responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net; Chitra Somayaji at csomayaji@bloomberg.net

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