Bank Mandiri to sell written-off assets<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
State-owned Bank Mandiri, the country's largest bank, is
\nplanning to auction off up to 40 percent of the non-performing
\nloans (NPLs) that were recently been written off as part of loss-
\ncutting efforts, the management said here on Tuesday.<\/p>\n
Alexander Roemongkoy, Mandiri's credit recovery division group
\nhead, told a media gathering that a blockbuster auction might
\nbecome an option if ongoing restructuring efforts failed.<\/p>\n
"Of the total (written off NPLs), we expect to auction around
\n40 percent. From this, we are targeting around a 20 percent to 30
\npercent recovery rate," Alexander said.<\/p>\n
As of Sept. 2002, the bank's loan write-offs reached Rp 20
\ntrillion (about US$2.2 billion). Writing off a loan means
\nremoving it from the balance sheet, although the bank still
\nmaintains its rights to recover such loans. The recent move was
\npart of a strategy to clean up the bank's balance sheet.<\/p>\n
Alexander refused to give a breakdown of the loans.<\/p>\n
He said that the recovery target was based on debts that the
\nbank had managed to collect annually over the last three years.<\/p>\n
In 2000, 2001 and 2002, Mandiri managed to recover loan write-
\noffs amounting to Rp 0.9 trillion, Rp 1.9 trillion and Rp 1.1
\ntrillion respectively.<\/p>\n
Mandiri was formed in 1999 after the merging of a number of
\nailing state-owned banks, and has now transformed itself into the
\ncountry's largest bank in terms of assets. As of September last
\nyear, the bank's total assets stood at Rp 251.6 trillion.<\/p>\n
Alexander also said that the bank had always seriously
\nattempted to restructure debts write-offs as a way of raising
\ncash, with the proceeds to be later used to further strengthen
\nthe bank's capital base.<\/p>\n
A clean balance sheet and strong financial position is crucial
\nfor Bank Mandiri as the government plans to privatize the bank by
\nselling 30 percent of its shares through an initial public
\noffering (IPO).<\/p>\n
However, after having being delayed several times, the
\ngovernment has said that it will push ahead with its IPO plan,
\nwhich it expects to be completed in the first half of this year.<\/p>",
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