BNI may raise up to $1.4 bln in rights issue

* Sets price range for rights at 2,300-3,700 rph per share

* May raise between 7.76 trln rph to 12.49 trln rph

* Plans to issue 3.374 bln new shares in rights issue

* Could be Indonesia's second biggest rights issue

PT Bank Negara Indonesia (BBNI), the nation's No.4 lender, may raise up to 12.49 trillion rupiah ($1.40 billion) in a December rights issue, based on the price range set by the bank on Tuesday.

The state-owned bank's capital raising could be the second biggest rights issues in Indonesia after PT Bakrie & Brothers (BNBR), controlled by the Bakrie Group, raised about 40 trillion rupiah in 2008.

Rival state-owned lender PT Bank Mandiri (BMRI), also plans a rights issue and could raise up to $1.5 billion but the government has decided to delay the Mandiri plans until 2011.

BNI set the price range for the rights issue at 2,300 to 3,700 rupiah, which represents a discount of between 6.3 percent to 42 percent of the closing share price on Monday at 3,950 rupiah.

It had previously planned to raise 6 to 7 trillion rupiah, but now sees greater demand from investors who have driven the Jakarta stock market to record highs this year seeking exposure to strong consumer demand in Southeast Asia's biggest economy.

BNI finance director Yap Tjay Soen said recently that the bank expects to sell new shares "above 3,000 rupiah a share."

The bank will issue 3.374 billion new shares through a rights issue, or equal to an 18 percent stake, and the government's stake will be diluted to 60 percent from 73 percent.

About 80 percent of the capital raising would be used to increase loan penetration, while the rest would be used to develop banking infrastructure, the bank said.

The government raised $153 million by selling a 3.1 percent stake in BNI in August at only a 3 percent discount to the share price at the time, with the sale heavily oversubscribed, reflecting the strong demand for bank stocks.

Shares in BNI, which has a market capitalisation of $6.7 billion, have risen 96 percent so far this year, out performing the broader market's 42 percent rise.

The bank has picked Goldman Sachs (GS.N) and UBS (UBSN.VX) as its joint global coordinators, with Credit Suisse (CSGN.VX), Morgan Stanley (MS.N) and Macqurie (MQG.AX) its global bookrunners. Source: Reuters