Bangkok Bank Plc is emerging as a leading bidder for control of Standard Chartered Plc’s Indonesian bank, according to people familiar with the matter.
The Thai lender is competing with Sumitomo Mitsui Financial Group Inc in the final race for almost 90% of PT Bank Permata, a stake with a market value of about US$2.3 billion, said the people, asking not to be identified as the deliberations are private. A winner could emerge as soon as next week, though negotiations could drag on longer, the people said.
Bangkok Bank is looking for a new market in the region as interest rates in Thailand remain low. Indonesia, where the economy is forecast to expand 5% in 2020, offers more growth potential for the Thai lender, one of the people said.
Shares of Permata rose as much as 4% in Jakarta on Thursday, outperforming the country’s benchmark index, which was little changed. Shares of Bangkok Bank fell as much as 5.3% in its biggest decline since April 2018. They closed 161.50 baht, a drop of 7.50 bath or 4.44% after the break.
Hopes that Bangkok Bank will increase dividend payments would likely be hurt if the lender acquires Permata, Citigroup analysts Kritapas Siripassorn and Robert Kong wrote in a note.
“We expect a rather negative reaction from investors if this deal were to come through,“ the analysts wrote. Bangkok Bank has sufficient capital to buy the Indonesian lender, but could find it difficult to manage a mid-sized bank in a market dominated by the top four, they added.
Standard Chartered earlier this year said that its Permata investment is no longer considered core and named Indonesia among four countries where the bank is focused on reducing costs.
Selling the Permata stake would free up cash for a stock buyback, Goldman Sachs Group analysts wrote in November.
Standard Chartered and Jakarta-listed PT Astra International each own about 44.6% of Bank Permata, data compiled by Bloomberg show. Permata previously attracted interest from other potential suitors including Oversea-Chinese Banking Corp and DBS Group Holdings Ltd, people familiar with the matter have said.
There hasn’t been a final decision and other bidders could still emerge, the people said. Representatives for Bangkok Bank, Bank Permata and Sumitomo Mitsui declined to comment, while a representative for Standard Chartered didn’t immediately respond to requests for comment.
Astra declined to comment on a local media report about a merger deal between Sumitomo Mitsui and Permata, the Indonesian conglomerate said in a stock exchange filing on Wednesday.