Australia & New Zealand Banking Group Ltd (ANZ) is said to have reoffered 38.8 percent of its shares in PT Bank Pan Indonesia Tbk (PNBN). The long road since 2013 is part of the company’s strategy to downsize its business to comply with tighter banking policies in its home country. With the help of Morgan Stanley, ANZ is looking for strategic investors and private equity firms interested in taking over their share ownership in the bank.
Based on Bloomberg report, there are several potential investors, including two Japanese banks: Mizuho Financial Group Inc and Mitsubishi UFJ Financial Group Inc. The value of 38.8 percent of ANZ’s shares in Bank Panin is estimated to reach US$ 578 million (Rp 8.38 trillion).
PT Bank Central Asia Tbk (BBCA) was once mentioned as one of the potential investors interested in entering Bank Panin. The share price of the PNBN-coded issuer jumped 4.12 percent when the rumours about BCA’s interest to enter private bank circulated on 3 September. It then soared 8.24 percent on 19 September 2018 when Morgan Stanley was reportedly appointed as the divestment advisor of Bank Panin.
Bank Panin President Director Herwidayatmo said the company did not know about the rumours in the mass media. “The news published by the media did not come from our bank management, so we cannot confirm the validity or invalidity of some or all of the information,” he said in a letter to Indonesia Stock Index (IDX). Furthermore, he also said the share divestment plan by ANZ has not been submitted to the management.
ANZ has revealed the plan to divest its shares in Panin Bank since 2013. It is done to meet the Single Presence Policy (SPP) from Bank Indonesia (BI). ANZ also owns 99 percent shares in PT Bank ANZ Indonesia. Based on the policy, the majority shareholders must consolidate banks that are under its ownership or form a holding company. At the time, ANZ only planned to release 14 percent of its share ownership in Bank Panin.
However, the development of banking regulations from the Reserve Bank of Australia (RBA) is forcing the company to continuously increase reserves and add capital to its subsidiaries abroad. This condition is not favourable for ANZ, which is only a minority shareholder in Bank Panin. The bank with the third largest market capitalization in Australia is releasing non-core business assets to focus more on running its business there and in New Zealand.
ANZ Chief Executive Officer Shayne Elliott has downsized ANZ’s business by releasing wealth management, insurance, and pension funds. At the end of 2017, ANZ sold all of its shares in life insurance company Australia OnePath to Zurich Insurance for US$ 2.1 billion. As a result of this acquisition, Zurich Insurance became the largest life insurance company in Australia. ANZ also divested its pension fund unit to IOOF Holdings for US$ 766 million in October 2017.
ANZ released its wealth management businesses in Hong Kong, Singapore, China, Taiwan and Indonesia to DBS Bank Singapore. In Indonesia, the transfer of ANZ’s wealth management business to PT Bank DBS Indonesia was completed on 12 February 2018. The company also divested 55 percent of its shares in ANZ Royal Bank (Cambodia) to J Trust in May 2018. The value of ANZ assets released in Asia is estimated to reach US$ 3 billion.
Elliott said ANZ’s shares in a number of financial institutions in Asia are pre-financial crisis products and have passed the best time in its purchases, so the company will gradually release its ownership. “There is no need to rush because [investment in Asia] is still good and makes a profit,” he said as quoted by the Financial Times.
In addition to Mizuho and Mitsubishi UFJ, the offering of ANZ’s shares in Bank Panin a few years ago attracted the interest of Fubon Financial Holding Co Ltd (Taiwan) and Banco Bilbao Vizcaya Argentaria SA (Spain). However, the bidding process did not reach an agreement because the Gunawan family, which owns 46.04 percent of Bank Panin’s shares through PT Panin Financial Tbk, was reportedly reluctant to give a position to new investor representative on the board of directors.
When calculated from the beginning of this year until 21 September 2018, the share price of the 10th largest bank in Indonesia in terms of assets has fallen 17.1 percent from the level of Rp 1,140 per share to Rp 945 per share. Based on analyst consensus, PT BCA Sekuritas recommends holding PNBN shares with a price target of Rp 850 per share, while RHB Sekuritas recommends selling with a target of Rp 725 per share.