Business / Corporate

Japan's largest bank said to enter fray for Bank Panin stake

Bloomberg

Mitsubishi UFJ Financial Group Inc. has entered the running for a 39 percent stake in PT Bank Pan Indonesia, people with knowledge of the matter said, potentially setting up a battle between two of Japan’s largest banks.

Japan’s biggest lender and its competitor, Mizuho Financial Group Inc., are among short-listed bidders for Australia & New Zealand Banking Group Ltd.’s holding in Jakarta-based Bank Panin, according to the people, who asked not to be identified, as the information is private.

Taiwan’s CTBC Financial Holding Co. and Fubon Financial Holding Co. were also invited to submit second-round offers for the stake, which is worth about 8.84 trillion rupiah ($648 million) at the current share price, the people said.

Any bidder would need to overcome an impasse with Bank Panin’s controlling Gunawan family, whose reluctance to give a board seat to an incoming investor has stymied on-and-off negotiations with Mizuho since 2013. Japanese banks are looking for growth in Indonesia, the world’s fourth-most populous nation, to help counter an aging population and declining lending profits.

The first-round offers received by ANZ value Bank Panin at less than two times its net assets, two of the people said, far lower than in comparable banking deals in Indonesia. The lender’s stock currently trades at 1.04 times historical book value, according to data compiled by Bloomberg.

Sumitomo Mitsui Financial Group Inc.’s 2013 acquisition of a stake in PT Bank Tabungan Pensiunan Nasional valued the company at 4.57 times book value. Deals for Indonesian banks since the start of 2013 were priced at a median 3.04 times, the data show.

Private-equity firm CVC Capital Partners Ltd. also submitted a first-round offer for the Bank Panin stake, according to three of the people. Spanish lender Banco Bilbao Vizcaya Argentaria SA, which was earlier weighing a bid, didn’t make it to the next stage, two people said.

Jun Watanabe, a spokesman for Mitsubishi UFJ, and Masako Shiono, a spokeswoman for Mizuho, both declined to comment. Representatives for ANZ, Bank Panin, CVC and Fubon also declined to comment, while a representative for CTBC said she could not comment at that time. Representatives for BBVA did not immediately answer phone calls and emails seeking comment outside regular business hours in Spain.

ANZ is seeking to sell the stake in Bank Panin after Australian regulators introduced rules in 2013 requiring banks to subtract the entire value of overseas minority investments from Tier 1 capital.

Since the beginning of August, the Melbourne-based lender has raised AU$3.2 billion ($2.3 billion) selling shares as it seeks to shore up capital.

Mitsubishi UFJ spent about $5 billion in acquiring Bangkok-based Bank of Ayudhya Pcl in 2013 and said in June it is considering similar investments in Asia.

Mizuho bought 15 percent of Vietnam’s largest lender, Joint-Stock Bank for Foreign Trade of Vietnam, or Vietcombank, in 2011. It was also negotiating earlier this year over a controlling stake in Philippine lender Bank of Commerce until the talks broke down, people with knowledge of the matter said in October.