HSBC Helps Bank Ekonomi Shares Increase in Value

Shares soared in Ekonomi Raharja the Indonesian lender who lends to restaurants and traders, the shares shot up on news that HSBC Holdings PLC agreed to buy a controlling stake in the business for a 29 percent premium.

HSBC which are Europe’s largest bank by market value will pay $607.5 million in cash for 88.9 percent stake in Bank Ekonomi, which works out to be 2,452 rupiah (25 cents) a piece.

The Indonesian lender stocks closed in Jakarta up 190 rupiah to 2,090 at 4pm. This is the highest the stocks have been since January 7 2008.

Analysis predict that Indonesia’s economy will expand by 25 percent this year, this has sent overseas lenders flocking to buy some of Indonesia’s remaining 128 lenders, in the hope to tap into Asia’s third most populated nation. Companies such as Industrial & Commercial Bank of China have led the way for banks like HSBC to follow in buying in Indonesia even though the global financial crisis has driven up interest rates.

Indonesian economy forecasts look healthy to overseas buyers, with a predicted 6 percent growth next year. In the second quarter of 2008 the Indonesian economy surged 6.4 percent as demand for the nation’s rubber, palm oil and coal.

PT Bank International Indonesia which is Indonesia’s sixth largest bank sold a 56 percent share costing $1.19 billion to Malayan Banking Bhd, the Malayan bank have today offered to buy the remaining share of the bank which outlines that the Indonesian economy is extremely attractive for overseas investors.