This Tycoon Wants to Create an Indonesian Bank Giant

  • Bank Mayapada founder Tahir wants to acquire rival Permata
  • Merger would create biggest non-government bank after BCA

Indonesian business tycoon Tahir is keen to gain control of PT Bank Permata, a larger rival to his PT Bank Mayapada International, as he seeks to put his lender in the ranks of the nation’s biggest banks.

Tahir’s Mayapada Group wants to buy the 90 percent of Permata that is owned by Standard Chartered Plc and PT Astra International and merge it with Bank Mayapada to create Indonesia’s largest non-government bank by assets after PT Bank Central Asia, he said. The group has been buying shares of Permata from the market since November, said Tahir, who uses only one name. Standard Chartered and Astra own 45 percent each in Permata.

A merger will help Tahir, whose businesses range from health care to media and real estate, to expand Bank Mayapada’s footprint and compete more effectively with state-run lenders and BCA. Tahir is betting financial services will be among the businesses best placed to benefit from the expansion in Southeast Asia’s largest economy, and said he’s confident of tackling a surge in bad loans at Permata that has weighed on the stock’s performance.

“Permata, in my guess, is facing a tough time on the nonperforming loans,” Tahir said in an interview at his office in South Jakarta. “I don’t see the reason why Standard Chartered needs to keep Permata. My strategy is, if the shareholders of Bank Mayapada can have a chance to buy out Bank Permata, then it must be merged with Bank Mayapada.”

A spokesman for Standard Chartered declined to comment on Tahir’s interest in Permata and said the U.K. bank is committed to Indonesia, a market that it considers to be strategically important. Tira Ardianti, head of investor relations for Astra, said it will continue to support Permata. A spokesman for Permata didn’t respond to e-mailed request for comments.

Bad Loans

Permata is Indonesia’s fifth-largest private-sector bank, with assets of 171 trillion rupiah ($12.8 billion). Its gross non-performing loans ratio was 4.9 percent in the quarter ended Sept. 30, according to its website. That’s higher than the 3.2 percent average among the nation’s top banks, Financial Services Authority data show. Mayapada’s ratio stood at 2.4 percent at the end of September, according to Indonesia Stock Exchange figures.

Moody’s Investors Service said on Feb. 9 that pressure on Permata’s negative outlook remained because of deteriorating asset quality and profitability, as well as uncertainties over future support from its existing key shareholders.

“Mergers between smaller banks can help them speed up their growth rate and bolster their books,” said Andy Ferdinand, head of research at PT Samuel Sekuritas Indonesia. “By moving into the top tier, they will be allowed to do more businesses” by the regulator, he said.

At least three banks have offered to finance Mayapada group in an acquisition of Permata, Tahir said. If it fails to complete a takeover, the group will scout for another lender, he said.

Bank Mayapada is Indonesia’s 11th-largest non-state bank, with assets of 53.8 trillion rupiah. A merger with Permata will spawn an entity with about 400 branches and more than 10,000 employees. Bank Mayapada had a market value of 12.3 trillion rupiah as of Friday, less than Permata’s 16.1 trillion rupiah. Permata rallied as much as 5.4 percent to 785 rupiah on Monday, the highest intraday level since May 11, before ending 1.3 percent lower at 735 rupiah in Jakarta. Mayapada shares fell 4 percent to 2,400 rupiah.

Shares of Permata have gained 32 percent this year after sliding at least 35 percent in each of the previous two years. Mayapada is 25 percent lower in 2017 following two years of advance.

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