Bank Tabungan Negara at 3-Week High on Share Sale Plan
Dion Bisara & Ivan Dasa Saputra
Shares of Bank Tabungan Negara, a state mortgage lender, rose 4.7 percent to the highest in more than three weeks on Wednesday, after the House of Representatives approved the lender’s plan to raise Rp 2.25 trillion ($236 million) from selling shares in a rights offer.
The approval would allow the lender to boost its lending while reducing its taxes.
“We agreed on the BTN rights issue,” said Emir Moeis, chairman of House Commission XI, which oversees fiscal and financial affairs. “This would be good way for BTN to improve its service to the public.”
Shares of BTN rose to Rp 1,350, the highest since Aug. 28, on the Indonesia Stock Exchange.
BTN, Indonesia’s largest mortgage lender, plans to sell more than 1.5 billion new shares, or 14.6 percent of the extended total shares, with proceeds from the sales estimated to be at Rp 1.76 trillion to Rp 2.25 trillion, Finance Minister Agus Martowardojo said on Wednesday.
The proceeds from the sale would help BTN increase its capital adequacy ratio — a bank health measure that reflects the extent of the bank’s capital that can cover its total loans — to 19 percent by 2016, Agus said.
BTN’s CAR stood at 15.6 percent as the first half ended, higher than the central bank’s minimum requirement of 8 percent. The ratio dropped from 15.9 percent in the same period a year earlie, as bank loans grew to Rp 72.1 trillion in the six-month period. That was an increase of 28 percent from Rp 56.5 trillion in the same period last year. Housing makes up 86 percent of the bank’s loans.
Agus said that the agreement could dilute the government’s stake in the lender to just 60 percent, from the current 71.9 percent. The rest is held by private shareholders.
“That will reduce the amount of [income] tax that BTN has to pay,” Agus said.
A company that sells at least 40 percent of its shares to the public gets a 20-percent income tax rate, lower than the normal rate of 25 percent, according to the 2008 tax law. That law encourages companies to sell their shares in the bourse.
BTN will offer the shares from the fourth week of October until the first week of November to gauge demand by investors.
The lender plans to set the final price by the end of November, so as to have the funds by December.