Govt targets Rp 6.2 trillion from BII divestment<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The government is targeting some Rp 6.29 trillion (about
\nUS$630 million) from the sale of its majority stake in the
\npublicly listed Bank Internasional Indonesia (BII) at the end of
\nthis year.<\/p>\n
A document from the Indonesian Bank Restructuring Agency
\n(IBRA), a copy of which was made publicly available, showed IBRA
\nplanning to sell BII after first raising its stake in the bank to
\n85 percent from 57 percent through a right issue in June.<\/p>\n
The right issue will shore up BII's narrow capital adequacy
\nratio (CAR) to the minimum required level of 8 percent - a
\nnecessary move to bring the bank into better financial health
\nahead of its planned divestment process.<\/p>\n
\"Based on early estimates, the cost of improving BII's health
\nto reach an 8 percent CAR will amount to Rp 3.97 trillion,\" the
\ndocument said.<\/p>\n
The proceeds of Rp 6.29 trillion assumed a price of Rp 25 for
\neach of BII's 252 billion shares, it said.<\/p>\n
Early this month, IBRA sold a 51 percent stake in one of its
\ntop banks, Bank Central Asia (BCA), for approximately Rp 5.3
\ntrillion.<\/p>\n
Selling BII will help recoup some of the taxpayer money spent
\nto prevent the bank from collapsing.<\/p>\n
In 1999, IBRA injected some Rp 6.6 trillion to acquire a 57
\npercent stake in BII to replace bad loans the agency assumed.<\/p>\n
Last year, the agency assumed another Rp 14.4 trillion in
\nloans from BII-affiliated Sinar Mas Group that were at risk of
\nturning sour.<\/p>\n
Overall, the cost of bailing out BII would hit Rp 24.97
\ntrillion once the right issue was completed.<\/p>\n
But letting the bank collapse is not an option as it would set
\nthe government back to the tune of some Rp 53 trillion, mostly to
\npay back BII's customers under the government's blanket guarantee
\nscheme for bank deposits.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-targets-rp-62-trillion-from-bii-divestment-1447893297",
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"sponsor": "Okusi Associates",
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