BCA shows the problems of financing Indonesian banks

Bank Central Asia has backing from foreign investors, but growing political and economic risks in Indonesia could derail the financing process for other capital-hungry Indonesian banks.

Indonesia's most watched initial public offering is off to a good start, with foreign investors buying an estimated 25% of the 662.4 million shares of Bank Central Asia. But analysts have voiced concerns that growing political storms in Indonesia may derail the fragile IPO process for other Indonesian banks.

BCA's IPO is important because it will set the standard for the IPOs of other Indonesian banks in the future, says Mehdee Reza, analyst at CSFB in Hong Kong. Indonesia's ravaged banking sector needs a strong IPO to set the groundwork for future capital raising by other banks, analysts say. BCA was the first choice among Indonesia's banks to be auctioned off by...

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