TEMPO.CO, Jakarta - State-owned Bank Mandiri is not too enthusiastic to help finance the acquisition of Freeport Indonesia`s shares by Indonesia Asahal Aluminium (Inalum). Bank Mandiri said that the reason is related to today`s high exchange rate and market volatility.
Bank Mandiri president director Kartika Wirjoatmodjo said on Thursday, July 19, that the acquisition, which would be denominated foreign currency, is a challenge to local banks. He thinks that it might be best that the funding is offered to foreign banks first.
In semester one, Mandiri's loan to deposit ratio (LDR) tightened; increasing to 94.57 percent. This allows little room for the bank to carry out financing in foreign exchanges.
Read: SOE Ministry: 51 Percent of Freeport Stake Not Funded by SOE Bank
Nevertheless, Kartika admitted that the bank had discussed possibilities of providing financing for Inalum.
Another state bank, BNI, also said they would not finance the acquisition. BNI president director Achmad Baiquni said the company could not compete with the low loan rates offered by foreign banks. "The interest rate competition is tough," he said on Wednesday, July 18.
Inalum and Freeport Indonesia signed the head of agreement for last week; sealing a deal that Freeport McMoran will let go 51 percent stake at Freeport Indonesia to Inalum. The transaction is worth US$3.85 billion. Inalum will obtain the rights by purchasing Rio Tinto's 40-percent participating interest in Freeport Indonesia.
Another state bank, BRI, has not made significant comments about financing the acquisition. BRI corporate secretary said the plan must be discussed by directors first.
ADITYA BUDIMAN | GHOIDA RAHMAH
