Cathay Life to acquire stake in Indonesia bank
2015-01-06 15:31:46

    Taipei, Jan. 6 (CNA) Taiwan-based Cathay Life Insurance has agreed to acquire a stake in PT Bank Mayapada Internasional of Indonesia as part of the insurance company's efforts to expand its presence in the Association of Southeast Asian Nation (ASEAN) economic bloc.

    It is the second acquisition by Cathay Life in ASEAN in less than a month after its purchase of a 20 percent stake in Rizal Commercial Banking Corp. (RCBC) of the Philippines.

    Under its latest acquisition agreement, Cathay Life will pay about NT$8.7 billion (US$272 million) to obtain a 40 percent stake in the Indonesian bank, which is owned primarily by the Mayapada Group, according to Cathay Financial Holding Co., the parent company of the life insurer.

    The purchase price represents a price-to-book value ratio of 3.15, which is in line with other mergers and acquisitions in Indonesia, Cathay Financial said in a press release.

    The acquisition deal will be completed in two stages, starting with Cathay Life's purchase of a 24.9 percent stake in Bank Mayapada, which is expected to be completed in the first quarter of the year, the statement said.

    In the second stage, pending approval from Indonesia's Financial Services Authority, Cathay Life will acquire the other 15.1 percent stake in the bank, according to the statement.

    A foreign buyer in Indonesia does not require regulatory approval to acquire a stake of less than 25 percent in an indigenous bank.

    When the deal is completed, Cathay Life will become the second largest shareholder in the bank after Mayapada Group, which operates financial, retail, property, medical and media businesses in Indonesia, Cathay Financial said.

    It said Cathay Life could secure two seats on the Indonesian bank's six-member board of directors, and one of the five supervisor seats in the bank.

    Founded in 1989, Bank Mayapada is a mid-sized commercial bank with total assets of US$2.5 billion as of the end of September last year, according to the statement.

    It said the bank specializes in corporate banking and operates 175 branches and offices throughout Indonesia, about 80 percent of which are in major cities.

    For the period 2011-2013, the bank recorded a 14.7 percent return on average equity, the statement said.

    It said that at the end of September last year, the bank's non-performing loan ratio stood at only 0.83 percent.

(By Tien Yu-pin and Frances Huang)