HSBC to pay $607m cash for Indonesian bank

HSBC Holdings plc, through its wholly-owned subsidiary HSBC Asia Pacific Holdings (UK) Limited, has entered into agreements to buy 88.89 per cent of PT Bank Ekonomi Raharja Tbk (Bank Ekonomi) for a consideration of $607.5 million to be paid in cash from its own resources, HSBC said.

The acquisition will enhance HSBC's commercial banking business in Indonesia, extend the group's presence in the retail banking sector, and almost double HSBC's network to over 190 outlets in 24 cities across the country.

Bank Ekonomi was established in 1989 and is listed on the Indonesian Stock Exchange. It has 2,200 staff with 86 outlets across Indonesia and assets of approximately $1.8 billion at the end of September.

Besides its retail banking operations, Bank Ekonomi is one of Indonesia's largest providers of commercial banking services.

At October 17, Bank Ekonomi had a market capitalisation of approximately $482 million and reported profit before tax for the nine months to September 30 of approximately $24 million.

"This acquisition underlines HSBC Group's strategy to invest in fast growing emerging markets," HSBC Malta chief executive officer Alan Richards remarked.

"The acquisition of Bank Ekonomi also doubles HSBC's footprint in the world's fourth most populous nation. GDP in Indonesia has grown at over 5.5 per cent in each of the past three years."