JAKARTA, April 3 (Reuters) - The Indonesian government is prepared to sell Bank Mutiara Tbk for less than the 2008 bailout cost to ensure it meets its year-end deadline, the head of the state deposit agency said on Thursday.
The government spent an estimated 6.7 trillion rupiah ($593.31 million) at the height of the global financial crisis to rescue what was then called Bank Century and prevent what officials feared could be broader damage to the country's banking system.
"We can sell it for less than the bailout if the incoming bids do not meet the target," Deposit Insurance Agency head Kartika Wirjoatmodjo told reporters. By law, the bank has to be sold by the end of the year.
At least seven investors, mostly foreign banks and private equity firms, have expressed interest in buying a majority stake in Mutiara, including from Japan, China and Malaysia, he said. He gave no details.
Mutiara is excluded from the 40 percent cap on foreign ownership of local banks which last year scuppered the drawn-out attempt by Singapore's DBS Group Holdings to take over PT Bank Danamon.
Last year, Bank Indonesia instructed the deposit agency to inject 1.25 trillion rupiah to lift Mutiara's capital adequacy ratio to 14 percent due to rising non-performing loans.
Preliminary bids will start in May and the deal should be closed before Nov. 20.
The bank's 2008 bailout continues to shake the political establishment with accusations flying that top officials and politicians diverted large chunks of the rescue money. The anti-corruption agency is investigating the issue.
Southeast Asia's biggest economy, backed by growing middle class consumers, has generated interest from foreign banks as the country offers high interest margins compared with neighbouring countries.
Japan's Sumitomo Mitsui Banking Corporation and South Korea's Woori Bank had won regulatory approvals to acquire Bank Tabungan Pensiunan Nasional Tbk and small size Bank Himpunan Saudara, respectively.
$1 = 11,292.5 rupiah Reporting by Fathiyah Dahrul; Editing by Jonathan Thatcher and Stephen Coates