BNI still seen as poorly capitalized<\/p>\n
NEW YORK (Dow Jones): Moody's affirmed Monday the ratings of
\nPT Bank Negara Indonesia at Caa2 for long-term deposits and
\nsenior debt, Not Prime for short-term deposits and E for
\nfinancial strength.<\/p>\n
The affirmation follows the injection of an initial tranche of
\ngovernment bonds, commencing the bank's recapitalization.<\/p>\n
Moody's commented that \"although the injection of funds was a
\npositive sign, many challenges remain for the bank.\"<\/p>\n
\"After some delay, BNI has received an initial injection of 30
\ntrillion rupiah (US$3.9 billion) in government bonds, under
\nIndonesia's bank recapitalization scheme. It is scheduled to
\nreceive another Rp 31.8 trillion by end June, 2000. The bank has
\nalso transferred Rp 34 trillion of deeply impaired loans to the
\nIndonesian Bank Restructuring Agency's asset management unit.<\/p>\n
\"These combined actions are due to bring the bank's capital
\nadequacy ratio to above the current regulatory minimum,\" the
\nratings agency said.<\/p>\n
However, Moody's believes that on a risk-adjusted basis, BNI
\nwill remain poorly capitalized. Much of the bank's remaining loan
\nbook continues to show signs of impairment or potential
\nimpairment, the ratings agency added, with the resolution of such
\nproblem loans is likely to be made more difficult by continuing
\nuncertainties over the implementation of Indonesia's new
\nbankruptcy law.<\/p>\n
\"Further capital raising is likely to be constrained for some
\ntime by continuing poor investor sentiment.<\/p>\n
\"The bank is likely to face continuing earnings constraints. A
\nlarge portion of BNI's assets is now made up by government bonds.
\nIt will be difficult for the bank to sell these bonds to expand
\nits more profitable loan business, given the low liquidity of
\nthese instruments and the additional capital requirements for
\nloans, which threaten to reduce its capital adequacy ratio once
\nmore.<\/p>\n
\"Nevertheless, the current modest economic recovery in
\nIndonesia could lead to a reduction in banks' problem loans as
\nwell as increase the prospects for loan growth,\" Moody's added.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bni-still-seen-as-poorly-capitalized-1447893297",
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