CIMB, J Trust among suitors for Indonesian bank

SINGAPORE: Malaysian bank CIMB and Japanese finance company J Trust are among firms vying to buy Indonesia’s PT Bank Commonwealth, a deal that could value the lender at US$400mil to US$500mil, according to two sources with knowledge of the matter.

Bank Commonwealth, which is 99% owned by Australia’s biggest lender Commonwealth Bank of Australia (CBA), focuses on retail lending as well as corporate banking services for small and medium enterprises.

Morgan Stanley, the financial adviser on the sale, has asked bidders to submit binding offers by early November, the sources added, declining to be identified as the planned sale has not been publicly disclosed.

CIMB, Malaysia’s No. 2 bank, and J Trust have expressed interest and are looking at submitting binding bids, the sources said.

Both companies have banking units in Indonesia.

CIMB, J Trust, CBA and Morgan Stanley declined to comment.

Bank Commonwealth did not respond to a Reuters request seeking comment.

The lender, which also provides wealth management services, had total assets of 18.39 trillion rupiah (US$1.1bil) last year, according to its annual report.

It logged a loss of more than 350.77 billion rupiah in 2022, more than double a year earlier, the report said, citing challenges posed by the Covid-19 pandemic.

It was first established in 1997 as a CBA venture with Bank International Indonesia. CBA became its controlling shareholder in 2002 and changed its name to Bank Commonwealth.

Interest in Bank Commonwealth comes at a time when growth in Indonesia, South-East Asia’s largest economy, is expected to slow after accelerating at its highest rate in three quarters in the April to June period.

Merger and acquisitions activity in South-East Asia dropped 34% to a seven-year low of US$88.9bil for the first nine months of this year with activity for the region’s financial sector sliding 66% to US$9.8bil, LSEG data showed.

Most Australian retail banks have been doing away with non-core operations to focus on services at home.

CBA sold a 10% stake in China’s Bank of Hangzhou last year for about A$1.8bil to entities controlled by the Hangzhou municipal government. — Reuters