Bank BNI looks to restart lending soon<\/p>\n
JAKARTA (JP): Bank Negara Indonesia (Bank BNI) may resume
\nlending in September after the completion of its Rp 52.8 trillion
\n(US$775 million) recapitalization program, the state bank's
\npresident Widigdo Sukarman said on Wednesday.<\/p>\n
He cautioned that a resumption in lending by the country's
\nlargest bank would depend on its success in improving the quality
\nof its loan assets and the further decline in domestic interest
\nrates.<\/p>\n
\"We would initially lend to a select group of customers who
\nhave a good track record,\" he told a news conference following
\nthe bank's shareholders meeting.<\/p>\n
Widigdo said third party deposits in the publicly listed bank
\nsoared to Rp 69.4 trillion (US$1.02 billion) as of May from Rp
\n27.1 trillion at the end of 1997, but the funds could not be used
\nas income-generating loans because of the bank's negative capital
\nadequacy ratio (CAR).<\/p>\n
He attributed the increase in third party funds to the massive
\ntransfer of funds from banks closed by the government in the
\nsweeping bank restructuring program in April.<\/p>\n
Like most other major domestic banks, BNI has frozen lending
\nsince last year amid the continuing economic crisis. The credit
\ncrunch has caused most businesses to operate below capacity due
\nto a lack of working capital.<\/p>\n
Hopes the banking industry will resume lending have been
\nfanned by the government's recapitalization of all major private
\nand state banks and the significant drop in domestic interest
\nrates.<\/p>\n
Widigdo said the BNI's recapitalization program to achieve a 4
\npercent CAR level was expected to be completed in September.<\/p>\n
He added that the bank's shareholders approved plans to raise
\nabout Rp 52.79 trillion through a rights issue in the bid to
\nreach the CAR target.<\/p>\n
He said existing shareholders held the right to purchase 35
\nnew shares for every existing share at a price of Rp 347.58 each.<\/p>\n
\"The government will become a standby buyer for the remaining
\nnew shares that aren't bought by the existing shareholders,\" he
\nsaid.<\/p>\n
The government is set to finance up to 100 percent of the
\nbank's recapitalization cost.<\/p>\n
Widigdo believed the Rp 52.79 trillion additional capital
\nwould be sufficient to recapitalize the bank if it could regain a
\npositive interest rate spread margin in September.<\/p>\n
He said reaching the latter goal would depend on whether the
\nbank could restructure its problem loans as scheduled.<\/p>\n
BNI corporate loan director Agus Daryanto said the bank
\nshouldered about Rp 24.5 trillion in problem loans.<\/p>\n
In addition, it has transferred Rp 24.3 trillion in bad loans
\nto the Indonesian Bank Restructuring Agency.<\/p>\n
Agus said BNI expected to restructure 75 percent of problem
\nloans under its management by September.<\/p>\n
\"We started negotiating debt restructuring agreements with
\ndebtors in May and we have surpassed our target for June.\" He did
\nnot provide details on the agreements.<\/p>\n
Widigdo was convinced that the 75 percent target by September
\nand a goal for 80 percent by December could meet the pledge in
\nthe government's latest letter of intent with the International
\nMonetary Fund.<\/p>\n
Widigdo said prospects for lending were good if interest rates
\ncontinued to fall and \"I'm optimistic that the rates will further
\ndecline\".<\/p>\n
The benchmark interest rate of Bank Indonesia's one-month SBI
\npromissory notes fell on Wednesday to 18.80 percent from 20.34
\npercent last week.<\/p>\n
The central bank expects the rate to further decline to about
\n15 percent over the next couple of weeks.<\/p>\n
Meanwhile, president of listed Bank Internasional Indonesia
\nIndra Wijaya announced a resumption in lending.<\/p>\n
The private bank is set to lend between Rp 3 trillion and Rp 4
\ntrillion in excess liquidity over the next six months, he said
\nfollowing a shareholders meeting on Wednesday.<\/p>\n
He added it was prudent for the bank to lend its excess
\nliquidity as SBI rates decline.<\/p>\n
The bank is one of the country's largest private institutions
\nto be recapitalized by the government.(rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bank-bni-looks-to-restart-lending-soon-1447893297",
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