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Bank Negara Indonesia Confirms Talks to Sell Insurance Stake

The CEO of Bank Negara Indonesia, Indonesia’s fourth-largest lender, says it’s searching for suitable buyers for a 25 percent stake in its life insurance business. He was responding to recent reports the bank is in talks with Japanese investors.

A man walks past PT Bank Central Asia automatic teller machines (ATM), photographed with a tilt-shift lens, at the company's headquarters in Jakarta, Indonesia on Wednesday, July 27, 2011. Indonesia's loan growth will probably surpass the central bank's estimate this year as low interest rates help drive demand in Southeast Asia's biggest economy, the nation's largest lender said.
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A man walks past PT Bank Central Asia automatic teller machines (ATM), photographed with a tilt-shift lens, at the company's headquarters in Jakarta, Indonesia on Wednesday, July 27, 2011. Indonesia's loan growth will probably surpass the central bank's estimate this year as low interest rates help drive demand in Southeast Asia's biggest economy, the nation's largest lender said.

“I think, we are willing to give up around 25 to 30 percent stake in that. So negotiation is still going on. And a number of prospective investors are still approaching. So the Koreans are coming in. Even a Singaporean I think,” Gatot Suwondo, President and CEO of PT Bank Negara Indonesia said in an interview on CNBC.

Suwondo said closing a deal for a stake in PT BNI Life Insurance is not only about the price, but also about the vision. “We have to have the same vision going forward as being a partner.”

He said talks with Japanese buyers were ongoing and could take some time, since it involved building a relationship.

“Dealing with the Japanese businessman is more on the personal [level], so we cannot just right away [come to an agreement]… Once we get a good feeling, then we’ll have a good price,” said Suwondo.

Last April, BNI sold a 25 percent stake in its brokerage arm to Japan’s SBI Securities, a unit of investment firm SBI Holdings, in a 114 billion rupiah ($13 million) deal.

Suwondo told CNBC Japanese, Chinese and Middle Eastern investors were chasing the bank’s assets the most aggressively. He sees the potential for overseas investment as an opportunity for BNI to do more for Indonesia’s domestic industry.

“BNI, going forward, will focus on two businesses. One we call business banking, second is consumer & retail banking. Our business banking approach will be, we are going to be to facilitate the development of domestic industries.”

Indonesia’s fourth-largest lender by assets is targeting a 30 percent growth in earnings this year, on the back of a fast growing economy.

“This year I’m quite optimistic, despite this global economic situation. I don’t see any significant impact to our country’s (economy),” said Suwondo.

Suwondo also said the bank was seeing a lower cost of borrowing after Indonesia’s credit rating was upgraded by two ratings agencies in recent months.

He said the bank is considering issuing U.S. dollar denominated bonds, given the lower cost of funding.

“Almost 15 percent to 20 percent of our loan portfolio is in U.S. dollars. And given this market situation, there is an opportunity for us, for matching our funding needs.”

It’s been reported in local media the bank is planning to issue bonds worth between $200 and $500 million in the second-half of this year, ahead of planned acquisitions.