The sale process for PT Bank Commonwealth, the 99%-owned Indonesian banking subsidiary of Commonwealth Bank of Australia (CommBank) [ASX:CBA], is now down to two suitors after Indian non-banking financial firm Bajaj Finance [BOM:500034] withdrew its bid, two sources familiar with the situation said.
Japanese financial services provider J Trust [TYO:8508] is now up against Cathay Financial [TPE:2882], Taiwan’s second largest financial group by assets, as the sale is almost in the home stretch, they said.
This news service reported in March that Cathay Financial submitted a non-binding bid for Bank Commonwealth and Morgan Stanley is serving as the sell-side adviser.
According to both sources, Bajaj Finance decided to pull out of the race since the Financial Services Authority (OJK) has yet to approve the bidders submitted by the sell side. Because of this, the sale process could not proceed with the submission of binding bids for Bank Commonwealth.
Cathay Financial declined to comment. Bajaj Finance, J Trust, OJK, CommBank, and Bank Commonwealth did not respond to requests for comment.
J Trust and Cathay Financial already have a presence in Indonesia through PT Bank JTrust Indonesia Tbk [IDX:BCIC] (formerly known as Bank Mutiara) and Bank Mayapada Internasional [IDX:MAYA], respectively. J Trust acquired 99% of JTrust Indonesia from Indonesia Deposit Insurance Corp for JPY 39.7bn in 2014, while Cathay Financial holds a 19.98% stake in Bank Mayapada.
As of 31 December 2022, Bank Commonwealth’s loss widened by 135.9% to IDR 440.3bn (USD 29.3m) from IDR 186.6bn (USD 12.4m) in the previous year. The Indonesian lender said 2022 was a challenging year as many of its retail and small and medium enterprise (SME) customers have been negatively impacted by the pandemic and some customers have yet to return to pre-pandemic conditions.
As disclosed in its annual report, the bank’s total liabilities stood at IDR 14.3trn (USD 951.1m), while its total assets amounted to IDR 14.8trn (USD 984.3m). Its capital adequacy ratio (CAR) was 31.71%, which is above the industry average of 25.63% in December 2022, while its gross non-performing loan ratio was 2.08% (vs the industry average of 2.44%).
For 2023, Bank of Commonwealth aims to continue innovating its suite of products and services, including its bancassurance partnership with PT FWD Insurance Indonesia and investment products offered through its smartphone app CommBank SmartWealth.
Excluding multi-finance clients, the bank has 1.39m customers as of 2022, as disclosed.