Bank Niaga recapitalization cost soars<\/p>\n
JAKARTA (JP): The recapitalization cost of publicly listed
\nBank Niaga is estimated to soar to around Rp 9.3 trillion
\n(US$1.23 billion) from an earlier estimate of Rp 8.6 trillion,
\naccording to senior deputy chairman of the Indonesian Bank
\nRestructuring Agency (IBRA) Arwin Rasyid.<\/p>\n
Arwin said the higher cost was due to a delay in the
\nrecapitalization of the bank.<\/p>\n
He said the delay had caused Bank Niaga an additional monthly
\nloss of around Rp 100 billion due to a negative interest spread
\nproblem.<\/p>\n
\"We expect to be able to recapitalize Bank Niaga as soon as
\npossible,\" he told reporters at a media conference.<\/p>\n
Arwin said IBRA would first have to seek the approval of the
\nHouse of Representatives for the recapitalization of Bank Niaga
\ndue to the higher cost.<\/p>\n
He added that the agency would meet the House next month.<\/p>\n
IBRA, a unit of the finance ministry, nationalized Bank Niaga
\nin 1999 after its owners failed to come up with the necessary 20
\npercent cash requirement to help finance the recapitalization
\nprogram. The government was supposed to finance up to 80 percent
\nof the recapitalization cost.<\/p>\n
The government initially planned to recapitalize the bank in
\nAugust last year, but the outbreak of the high-profile Bank Bali
\nscandal, coupled with the country's political instability,
\ncaused the program to be delayed.<\/p>\n
The recapitalization program is aimed at bringing the bank's
\ncapital adequacy ratio (CAR) to more than 4 percent.<\/p>\n
Bank Niaga announced on Thursday its net losses in 1999 jumped
\nto Rp 5.6 trillion from Rp 3.98 trillion in 1998.<\/p>\n
The bank said the greater loss was primarily due to a bigger
\ninterest income loss of Rp 1.59 trillion, compared with Rp 1.26
\ntrillion in 1998.<\/p>\n
Arwin said a further delay in the recapitalization program of
\nthe other banks would also increase their recapitalization cost.<\/p>\n
\"IBRA will do its utmost to avoid a further delay in the
\nrecapitalization of the other ailing banks,\" he said.<\/p>\n
He said IBRA was determined to recapitalize the other seven
\nsmaller, nationalized banks this year.<\/p>\n
He said the recapitalization program of these seven banks
\nwould be made through a merger process, in which the much larger
\nBank Danamon would acquire the smaller banks.<\/p>\n
Arwin said Bank Danamon would be recapitalized for the second
\ntime once it had acquired the seven banks in order for the newly
\nmerged bank to have a minimum CAR level of more than 4 percent.<\/p>\n
The government earlier recapitalized Bank Danamon, another
\nnationalized bank.<\/p>\n
Arwin said the second recapitalization of Bank Danamon would
\ncost around Rp 30 trillion, but this cost would be greater if the
\nmerger process and the recapitalization program was delayed.<\/p>\n
He said the legal merger of the bank was expected to be
\ncompleted next month, while the operational merger would be done
\nby early October.<\/p>\n
Arwin also said the government was determined to recapitalize
\nBank Bali.<\/p>\n
He reconfirmed that the former owner and president of Bank
\nBali Rudy Ramli had dropped his lawsuit against the agency and
\nBank Indonesia, which decided last year to nationalize the bank.<\/p>\n
Meanwhile, Bank Indonesia deputy governor Subarjo Joyosumarto
\nsaid the recapitalization program of Bank Bali should be
\ncompleted in May.<\/p>\n
The country's banking authority has ruled that all of the
\ncountry's banks have a CAR level of at least 4 percent by June.<\/p>\n
And by the end of 2001, the industry must have CAR level of at
\nleast 8 percent. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bank-niaga-recapitalization-cost-soars-1447893297",
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