OCBC makes first acquisition under CEO Wong with Indonesia deal
By Chanyaporn Chanjaroen
(Bloomberg) — Oversea-Chinese Banking Corp. (OCBC) agreed to buy Commonwealth Bank of Australia’s Indonesian banking unit, marking Chief Executive Officer Helen Wong’s first takeover since she took the helm two years ago.
Australia’s largest bank will sell its 99% stake for about A$220 million (US$142 million), CBA said in a statement Thursday. Completion of the deal, subject to regulatory requirements, is expected in the second or third quarter of next year, the bank said.
The agreement ended years of speculation over OCBC’s acquisition strategy in Indonesia, one of its four key markets. It also addresses an issue raised by analysts about how the lender would deploy its strong capital buffers to compete against peers United Overseas Bank Ltd. and DBS Group Holdings Ltd. that have been much more active in dealmaking.
“This deal will strengthen OCBC’s presence in the Southeast Asian region, and will allow it to capitalize on Indonesia’s growth prospects,” said Bloomberg Intelligence analyst Sarah Jane Mahmud.
OCBC, Southeast Asia’s second-largest bank by assets, counts Singapore, Indonesia, Malaysia, and Greater China as its core markets. The proposed transaction will beef up its franchise in Indonesia, the Singapore-based lender said in a stock exchange filing.
PT Bank OCBC NISP plans to acquire the remaining 1% stake of PT Bank Commonwealth from other shareholders and will be merged with Bank OCBC NISP, the Indonesian lender said in stock exchange filing.
Shares of Bank OCBC NISP jumped as much as 18% in early trading Thursday after the deal announcement, and currently trades about 8% higher. OCBC shares fell 0.2%, taking its year-to-date gain to 5.6%. CBA was little changed both on Thursday and so far this year.
CBA’s sale is in line with its strategy to focus on its banking business in Australia and New Zealand, the Sydney-based bank said. Australia’s largest bank said the transaction is likely to be neutral to its common equity Tier 1 ratio. CBA’s involvement with the Indonesian entity began in 1997.
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