HSBC completes acquisition of 88.89% of Bank Ekonomi

*** A controlling stake in one of Indonesia’s largest SME banks ***
*** Doubles HSBC’s footprint in the world’s fourth most populous nation ***


The Hongkong and Shanghai Banking Corporation Limited, through its wholly-owned subsidiary of HSBC Asia Pacific Holdings (UK) Limited, has completed its acquisition of 88.89 per cent of PT Bank Ekonomi Raharja Tbk (Bank Ekonomi) for US$607.5 million in cash, paid in US dollars.

Bank Ekonomi is one of the largest providers of SME banking services to the fourth most populous nation globally and will almost double HSBC’s presence in the country to 207 outlets in 26 cities. This will enable HSBC to deliver its full local, regional and international capabilities to an expanded Indonesian customer base.

Sandy Flockhart, Chief Executive Officer of HSBC Asia Pacific, said: “This acquisition is further evidence that HSBC can continue to execute its strategy even in a time of significant economic turmoil. Together with recent investments in Vietnam, Taiwan and India, Bank Ekonomi will increase our presence in the world’s fastest growing markets. Indonesia’s GDP is forecast to grow by 2.5 per cent this year and by 4.5 per cent in 2010 – bucking the global downturn and demonstrating the country’s emerging strength. Bank Ekonomi and HSBC can play a central role in this success story, helping Indonesia’s SMEs drive one of the world’s most exciting economies.”

Rakesh Bhatia, Chief Executive Officer of HSBC in Indonesia, said: “The HSBC Group has long viewed Indonesia as a market with substantial opportunities for growth. This acquisition allows us to increase our footprint in the country where, following this acquisition, we are now one of the top three foreign banks by assets.”

Under the terms of the agreements, which were originally announced in October 2008, and according to Indonesian law, HSBC will be required to make a Mandatory Tender Offer (MTO) for a further 10.11 per cent of Bank Ekonomi. Details of the MTO, when approved by the local regulators, will be published in the Indonesian press and distributed to Bank Ekonomi shareholders in accordance with local regulations.

Bank Ekonomi will operate as a separate entity to HSBC’s existing Indonesian business and remain listed on the Indonesian stock exchange. HSBC’s existing customers will continue to be served by HSBC through its existing network.

HSBC provides personal financial services, corporate, commercial banking, institutional banking, treasury capital markets and Amanah Syariah services in Indonesia. The business delivered a profit before tax of US$121 million in 2008.

HSBC was advised on the acquisition by the Global Banking and Markets division of the HSBC Group.