This article first appeared in The Edge Malaysia Weekly on January 27, 2025 - February 2, 2025

THERE have been strong expressions of interest for a sizeable stake in Bank Pan Indonesia (Panin Bank) that is reportedly up for sale, but whether a deal eventually comes through remains to be seen as the sellers have high expectations on pricing, sources say.

“Bids are coming in at around one time book value,” says one source, adding that non-binding offers were due last month.

A second source says the same thing, adding: “Valuations are not meeting the sellers’ expectations, so a deal might not happen.”

According to the second source, CIMB Group Holdings Bhd (KL:CIMB), two Japanese banks and two Singaporean banks were among those that submitted non-binding offers. The two Japanese lenders are understood to be Sumitomo Mitsui Banking Corp (SMBC) and Mitsubishi UFJ Financial Group (MUFG), while the Singapore lenders are said to be Oversea-Chinese Banking Corp (OCBC) and DBS Group Holdings Ltd.

“CIMB is still in the mix, while Maybank (Malayan Banking Bhd) (KL:MAYBANK) did not [bid],” the second source says.

CIMB and Maybank declined to comment.

Reuters first reported on Dec 10 last year that OCBC and CIMB had submitted non-binding offers for the stake in Panin Bank offered by Australia-based lender ANZ and Indonesia’s Gunawan family. Other interested buyers included MUFG and SMBC, the report said, citing people familiar with the matter.

ANZ owns a 38.82% stake in Panin Bank, while the Gunawan family — who founded the Indonesian bank in 1971 — holds 46.04%.

Shares of Panin Bank have risen about 66% over the last 12 months to close at IDR1,850 (50 sen) on Jan 24, giving the bank a market value of IDR44.56 trillion. At that price, ANZ and the Gunawan family’s combined 84.86% stake is valued at IDR37.81 trillion. Bloomberg data shows that the bank is trading at a price-to-book value of 0.85 times.

ANZ has long been reported to be keen on selling its stake in Panin Bank, while the Gunawan family is said to be willing to sell only if they fetch a price that matches their high expectations.

“The family has signed off on this process, but whether they’ll agree on a price is anyone’s guess,” says another source, noting that ANZ and the family need to come to an agreement on an acceptable price at which to sell before anything can really move.

Selling ANZ’s stake alone will not garner as much interest from suitors as the stake is relatively small and offers no board representation, the source adds.

When contacted, ANZ said “it does not comment on market speculation”.

ANZ has been cutting back on its presence in Asia to focus on its home market. Last year, the lender offloaded a 21.67% stake in AMMB Holdings Bhd (KL:AMBANK) via two block trades at a discount to its then market price, and finally exited the group. It had, for years, been looking for a buyer to take on the entire stake. 

The strong interest in Panin Bank is not surprising, as it is rare that a controlling stake is available for sale in the world’s fourth-most populous nation.

“The key attraction is really the size and scarcity of such a stake. Hence, it won’t come cheap. The shares have already run up,” a banking analyst tells The Edge.

CIMB’s interest in Panin Bank is ostensibly to have the latter merged with its Indonesian subsidiary, Bank CIMB Niaga, the analyst says. “It’s likely to want a merger to gain scale,” he says.

As it stands, CIMB Niaga is understood to be the sixth- or seventh-largest lender by assets in Indonesia, with total assets of IDR353.3 trillion as at Sept 30 last year. Panin Bank, on the other hand, is thought to be the 11th largest, the analyst says. 

“Should there be a merger, CIMB Niaga’s ranking by assets could probably move up by one notch,” he notes.

Maybank’s Indonesian subsidiary, Maybank Indonesia, had total assets of IDR189.32 trillion as at Sept 30. 

For the first nine months of last year, Panin Bank reported a lower net profit of about IDR2.3 trillion, compared with IDR2.83 trillion in the same period a year earlier. Its total assets stood at IDR230.59 trillion as at Sept 30 last year.

Panin Bank’s return on equity was at  6.04%. Its gross non-performing loan ratio improved to 3.17% from 3.70% a year ago, while net interest margin deteriorated to 4.44% from 5.06%. Its cost-to-income ratio — a measure of efficiency — was at 54.08%.

The last major bank M&A in Indonesia was in May last year when OCBC’s Indonesian arm, Bank OCBC NISP, acquired Bank Commonwealth for IDR2.2 trillion in a move that brought 1.2 million customers into its fold.

Earlier this month, state-owned Bank Tabungan Negara said it plans to fully acquire a shariah lender — Bank Victoria Syariah — as part of further expansion into Islamic finance. 

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