BPK examines bank intermediary role in ongoing IBRA audit<\/p>\n
P.C. Naommy, The Jakarta Post, Jakarta<\/p>\n
The Supreme Audit Agency (BPK) said an ongoing audit into the
\nIndonesian Bank Restructuring Agency (IBRA) was taking place to
\nexamine its performance in rehabilitating the country's troubled
\nbanking sector.<\/p>\n
\"The point is we want to know whether IBRA has been able to do
\nwhat it was meant to do in restructuring insolvent banks,\" BPK
\nauditor Bambang Wahyudi told reporters on Friday.<\/p>\n
Bambang said that BPK would try to finish the audit before
\nFeb. 27.<\/p>\n
He said that BPK was using 12 indicators in the performance
\naudit work. Three of the main indicators are capital adequacy
\nratio (CAR), non-performing loans (NPL) level and bank
\nintermediary roles.<\/p>\n
BPK is conducting the performance audit as IBRA is set to be
\ndiscontinued on Feb. 27. IBRA, which was set up in 1998 following
\nthe Asian financial crisis, was mandated primarily to restructure
\ntroubled banks. The agency took over or acquired majority stakes
\nin several banks following the crisis, in what analysts have
\ndetermined was the country's most costly government bailout of
\nbanks. But IBRA has now sold majority stakes in many of the
\nbanks and merged others.<\/p>\n
While many of the banks now have a higher CAR level and lower
\nNPL ratio, many analysts said that most of the country's banks
\nhave yet to resume a crucial intermediary role as lending to the
\ncorporate sector remains slow.<\/p>\n
CAR is the ratio between a bank's capital and risk-weighted
\nassets including loans. Most of the banks have CAR ratios above
\nthe central bank's 8 percent minimum requirement.<\/p>\n
NPL is the ratio between a bank's bad debt level and total
\noutstanding loans. Many of the banks' NPL ratios are now below
\nthe central bank's 5 percent limit.<\/p>\n
Most banks have yet to resume their lending activities to the
\ncorporate sector as they still see a huge risk in the latter due
\nto the slow progress in the restructuring of debts owed by the
\ncorporations. One of IBRA's main tasks was to restructure
\ncorporate debts.<\/p>\n
The central bank has been aggressively decreasing its
\nbenchmark interest rate in a bid to encourage banks to also lower
\ntheir lending rates so they will be more affordable to the
\ncorporate sector, which will lead to greater domestic investment.<\/p>",
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