Indonesia seeks Bank Rakyat - Bank Agro deal

Deal can boost BRI’s micro-credit business to 33% or more as it absorbs Bank Agro’s customers.

The State Enterprises Ministry has given its blessing to state-owned PT Bank Rakyat Indonesia’s bid to acquire PT Bank Agroniaga, and called for the deal to be completed quickly to spur lending to the agricultural sector.

“The study for the acquisition has been completed and I hope the process can be accelerated,” Agus Pakpahan, the deputy for agriculture, forestry, paper and printing at the ministry told reporters on Friday. “Bank Agro could be a medium for BRI to increase its lending to the agriculture and plantation sector.”

Micro lending is one of BRI’s core businesses and by buying Bank Agro it would acquire a large number of micro credit customers in the agro-business sector.

BRI expects its micro credit lending to grow 33 percent this year to Rp 71 trillion ($7.8 billion) compared with Rp 53 trillion ($5.85 billion) in 2009.

Agus said there were some foreign investors interested in acquiring Bank Agro but that the government would prefer BRI to buy the bank, which focuses on lending to the agricultural sector. However, he refused to disclose how big a stake BRI was looking to buy.

View the full story in the Jakarta Globe.