📒 Quick Take: 23 Years Later, Indonesia’s BCA Sale Reignites Debate
Indonesian conglomerate Djarum Group bought a 51% stake in the bank after the Asian financial crisis.
Several economists and a political party alleged that Indonesian conglomerate Djarum Group’s acquisition of a 51% stake in BCA back in 2002 was undervalued.
A perceived attempt to nationalize the bank would signal a state over-reach into the private sector.
Indonesia’s financial community has been baffled by the calls to nationalize Bank Central Asia (BCA), which is regarded as one of the best-run banks in the country.
Several local economists, led by Sasmito Hadinagoro of the Institute for the Study of State Finance and Economics, alleged that Indonesian conglomerate Djarum Group’s purchase of a 51% stake in BCA for around IDR 5 trillion (USD 306.4 million) in 2002 was far below the market value of IDR 117 trillion (USD 7.2 billion).
At a “public discussion” in Yogyakarta, they also accused the private bank of owing IDR 60 trillion (USD 3.7 billion) to the state.
A spokesman of the National Awakening Party (PKB), Ahmad Iman Syukri, echoed the sentiment, saying that his party “fully supports” the suggestion for President Prabowo Subianto to take over 51% of BCA to “save the state funds”.
The government would not need additional funds for the acquisition as BCA had received state assistance when it experienced a bank rush during the Asian financial crisis, he added.
PKB is not as big as PDI-P or Golkar, but the political party has been rising in the East Java province, a key battleground in Indonesian elections.
It’s unclear why the PKB official and the economists would raise concerns about the BCA deal more than two decades after it was signed, but the impact on the public discourse was material enough to prompt the Indonesia Stock Exchange to request a clarification from the bank.
In its statement, BCA refuted allegations that the 2002 acquisition was undervalued, saying that the narrative mistook total assets for market value.
BCA’s market value at the time of the private placement was around IDR 10 trillion (USD 612.8 million), not IDR 117 trillion (USD 7.2 billion), the bank said, adding that the tender was carried out via the Indonesian Bank Restructuring Agency (IBRA) in a transparent and accountable manner.
BCA also denied that it had IDR 60 trillion (USD 3.7 billion) of debt to the state that must be paid in IDR 7 trillion (USD 428.8 million) instalments every year. The bank said that it recorded government bonds as assets worth IDR 60 trillion (USD 3.7 billion) on its balance sheet, which were all settled in 2009 according to the prevailing regulations.
Historical Records
In the aftermath of the Asian financial crisis, the government took over BCA from Indonesian tycoon Liem Sioe Liong’s Salim Group and recapitalized the bank via IBRA to stabilize its operations.
BCA launched an initial public offering (IPO) in 2000 and a secondary share offering a year later, followed by the IBRA-run 51% stake sale to a strategic investor in 2002.
According to a book written by Richard Borsuk and Nancy Chng, BCA’s suitors were cut to four: 1) A group led by Standard Chartered Bank (whose partners included Singapore’s GIC), 2) A partnership between US investment firm Farallon and the Hartono family of Djarum, 3) An Indonesian consortium led by a cooperative of batik-makers, and 4) Bank Mega which was headed by local businessman Chairul Tanjung.
After conducting “fit and proper” tests, Bank Indonesia short-listed Standard Chartered and Farallon. However, Standard Chartered’s offer came with conditions such as keeping 15% of its purchase payment in an escrow account to guard against any problems in taking control of BCA, according to the book.
The Farallon consortium eventually won and the new owners of BCA became the Hartono family. “Under the new owners, BCA prospered, producing strong results,” Borsuk and Chng wrote in their book.
Professional Bank
By most accounts, the sale of BCA to the Hartonos was conducted professionally and the bank has earned the trust of its customers over the years.
BCA’s current and savings account (CASA) funds grew 8.3% to IDR 979 trillion (USD 59.9 billion) as of March 2025, accounting for around 82% of total third-party funds, according to its statement. This indicates the bank’s ability to secure low-cost funding by attracting customer deposits.
The recently circulating rumours that Indonesia may force a takeover of BCA via sovereign fund Danantara – which was denied by Danantara’s CEO Rosan Roeslani – stoked concerns in the market because a perceived attempt to nationalize the bank would signal a state over-reach into the private sector.
“If BCA is nationalized, then why should foreign investors invest in Indonesia?” a banker asked.