CIMB and J Trust Enter the Fray: In the world of finance, the quest for the next big opportunity never ceases. Now, Malaysian banking heavyweight CIMB and Japanese financial firm J Trust have entered the ring, vying for the acquisition of PT Bank Commonwealth in Indonesia. The potential price tag? A cool $400-$500 million, according to insiders familiar with the matter.
PT Bank Commonwealth, predominantly under the ownership of Australia’s Commonwealth Bank of Australia (CBA), is known for its focus on retail lending and services for small to medium-sized enterprises in Indonesia. The deal is currently in its early stages, with Morgan Stanley playing the role of financial advisor, and the plan is to have binding offers on the table by early November.
Both CIMB and J Trust, boasting banking arms in Indonesia, have expressed their interest in this intriguing opportunity. However, the parties involved have maintained a tight-lipped stance, with CIMB, J Trust, CBA, and Morgan Stanley declining to comment on the matter. Bank Commonwealth itself has yet to respond to requests for comment from analyst.
For context, the lender offers wealth management services and reported total assets of around 18.39 trillion rupiah (approximately $1.1 billion) in the last year, as indicated in its annual report. Yet, it did face some challenges, recording a loss of over 350.77 billion rupiah in 2022, more than double the previous year, largely attributed to the impacts of the COVID-19 pandemic.
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Bank Commonwealth has an interesting history, initially established in 1997 as a collaboration between CBA and Bank International Indonesia. However, in 2002, CBA became its dominant shareholder and subsequently rebranded it as Bank Commonwealth.
This is happening amid an expected economic contraction in Indonesia, Southeast Asia’s largest country. This follows rapid growth in April-June. According to London Stock Exchange Group data, Southeast Asian mergers and acquisitions fell 34% to a seven-year low of $88.9 billion in the first nine months of this year. Financial activity in the region has dropped 66% to $9.8 billion.
This move from CIMB and J Trust aligns with a broader trend among Australian retail banks, who are streamlining operations by divesting from non-core assets, focusing their efforts on domestic services. A case in point: CBA’s decision to sell a 10% stake in China’s Bank of Hangzhou last year for approximately A$1.8 billion, with the proceeds going to entities controlled by the Hangzhou municipal government.