House members support plan to recapitalize BRI, BTN<\/p>\n
JAKARTA (JP): Majority members of the House of
\nRepresentatives commission IX on banking and state budget
\napproved the government's proposal to recapitalize state Bank
\nRakyat Indonesia (BRI) and Bank Tabungan Negara (BTN).<\/p>\n
But until midnight on Friday, the final approval on BRI and
\nBTN recapitalization had not yet been given as debates over the
\npublicly listed Bank Bali still proceeded.<\/p>\n
Finance Minister Bambang Sudibyo met with the commission late
\non Friday to get House approval for the recapitalization of the
\nthree banks.<\/p>\n
The approval will allow the government to entirely complete
\nthe country's crucial bank recapitalization program.<\/p>\n
The director general of banking and financial institutions at
\nthe Ministry of Finance, Darmin Nasution, said earlier at the
\nmeeting with the commission that the government would
\nrecapitalize BRI in two tranches at a total cost of Rp 29.15
\ntrillion (US$3.22 billion).<\/p>\n
He said the first tranche would be completed by the end of
\nthis month and cover 70 percent of the bank's total
\nrecapitalization cost. He said the remaining 30 percent would be
\ncompleted by the end of October.<\/p>\n
The government will inject bonds to finance the
\nrecapitalization of the banks.<\/p>\n
Darmin was speaking at the hearing session which was also
\nattended by Indonesian Bank Restructuring Agency chairman Cacuk
\nSudarijanto and senior officials of BRI, BTN and Bank Bali.<\/p>\n
Darmin also said the government would issue hedge bonds in
\nOctober to protect the open net position of BRI in case of
\ncurrency fluctuations.<\/p>\n
The government recently reshuffled BRI's top management, a
\nprecondition for the recapitalization demanded by the
\nInternational Monetary Fund, which is providing a multibillion
\ndollar bailout package to help finance the country's economic
\nreform program.<\/p>\n
Darmin said that under BRI's business plan, the bank would now
\nfocus on micro and retail financing. He said that by the end of
\n2000, the bank must increase its micro and retail financing to
\nmore than 80 percent of total lending, while corporate lending
\nmust be below 20 percent from the current level of more than 25
\npercent.<\/p>\n
Micro and retail financing is defined as providing loans of
\nless than Rp 50 billion.<\/p>\n
He said BRI would still be allowed to lend to the corporate
\nsector, but only to the agribusiness industry.<\/p>\n
BRI had total assets of Rp 29.69 trillion as of the end of
\nlast year, with assets expected to increase to Rp 60.1 trillion
\nby the end of 2001.<\/p>\n
The recapitalization of BTN also will take place in two
\ntranches at a total cost of around Rp 14 trillion. The first
\ntranche is to be completed by the end of this month and the
\nsecond in October. The government also will issue hedge bonds for
\nthe recapitalization of BTN.<\/p>\n
The secretary-general at the Ministry of Finance, Noor Fuad,
\nsaid BTN would now focus solely on its original core business,
\nwhich was providing loans to develop middle to low-cost housing.<\/p>\n
The government initially planned to recapitalize BRI and BTN
\nin May, but the program was delayed. In the case of BRI, the
\ndelay was due to a dispute between the government and Bank
\nIndonesia in appointing the bank's new top management. BTN's
\nrecapitalization was pushed back to restructure the bank's core
\nbusiness.<\/p>\n
Meanwhile, the cost of recapitalizing Bank Bali will be
\napproximately Rp 5.3 trillion, up from the initial estimate of Rp
\n4.9 trillion. (rei)<\/p>",
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