Taiwan's Cathay Financial to acquire majority stake in Indonesian bank: report

15, Jul. 2020

Image by Mohamad Trilaksono from Pixabay
Image by Mohamad Trilaksono from Pixabay

TAIPEI, NNA - Taiwan's Cathay Financial Holdings Co. plans to raise its stake in PT. Bank Mayapada Internasional to 51 percent through its insurance arm and to conduct financial due diligence over the deal next week, according to Reuters.

Cathay Life Insurance Co. acquired 37.33 percent stake in Bank Mayapada for NT$9.43 billion ($320 million) in April of 2015, a Taiwan media outlet Economic Daily News reported on Tuesday.

PT. Mayapada Karunia, a unit of Indonesian conglomerate Mayapada Group, was the second biggest stakeholder with 26.42% for the mid-sized Indonesian bank, according to a report by Reuters on Monday.

Stake increase in Bank Mayapada is subject to the decision of Cathay board as well as approval from Taiwan's Financial Supervisory Commission, according to the Economic Daily News report, citing Cathay Life Insurance Executive Vice President Lin Chao-ting.

On the prospect of the market potential and growth momentum of the Southeast Asian country, the Taiwanese insurer expects stable returns and to increase its international competitiveness through the deal.

Cathay Life Insurance injected capital of NT$950 million, NT$900 million, and NT$1.7 billion respectively in 2016, 2017, and 2018 into the Indonesian lender, driving its investment sum to nearly NT$13 billion, the Economic Daily News report said.

"Cathay has been my partner…At times like this, partners have to strengthen the capital, but we don't know how much capital will be injected yet," Dato Sri Tahir, the founder of Mayapada Group, told Reuters.

Bank Mayapada posted a 79.2 billion rupiah ($5.4 million) net profit in the first quarter of this year, down 44.5 percent from the same period of 2019. Its non-performing loan ratio was 6.94 percent as of the end of March, compared with a 2.77 percent industry average and threshold of 5 percent set by Indonesia's Financial Services Authority (OJK), according to the Reuters report.

Bank Mayapada, founded in Jakarta in 1989, mainly provides corporate financing through 175 outlets, nearly 80 percent of which are located in major cities on the Java island, the Taiwan media said.