HSBC to acquire 89 per cent in Indonesia's Bank Ekonomi for $680 million

21 October 2008

British banking giant HSBC will acquire an 89 per cent stake in Bank Ekonomi Raharja Tbk, Indonesia's number 12 bank by market value, for $680 million - a 33 per cent premium to its stock market value of $512 million.

HSBC, Europe's biggest bank by market cap, offered to pay 2,452 rupiah per share for Bank Ekonomi, valuing it at more than $680 million, slightly above four times its 30 June book value.

HSBC plans to make a tender offer for the remaining shares in Bank Ekonomi, but said it would like to keep the bank listed on the Indonesian exchange. 

The deal marks the second foreign acquisition of an Indonesian lender in recent weeks, after Malaysia's Maybank last month bought a 55.6 per cent stake in PT Bank Internasional Indonesia Tbk, the sixth-largest bank, for around $1.24 billion.

Foreign lenders are increasingly looking at Indonesia, which is generally considered underbanked, to benefit from the growth potential for the banking sector in Southeast Asia's biggest economy, where credit is forecast to grow 25 per cent this year even as a global liquidity crisis drives up interest rates.

Indonesia, the world's fourth-most populous country with a population of 226 million, has only around 80 million registered bank accounts.