IBRA pessimistic on bad bank loans<\/p>\n
JAKARTA (JP): The banking sector's huge number of non-
\nperforming loans (NPLs) cannot be fully recovered due to the
\nseverity of the economic crisis that has plagued the country
\nsince the middle of last year, according to a key official of the
\nIndonesian Bank Restructuring Agency (IBRA).<\/p>\n
IBRA's asset management unit director Eko Budianto said on
\nWednesday that the rupiah would have to strengthen to Rp 3,000 to
\nthe U.S. dollar -- a level deemed impossible -- in order for the
\nbanks to fully recover the NPLs.<\/p>\n
"We just have to be realistic," he told reporters on the
\nsidelines of a seminar on banking when asked whether all the bad
\nloans could be salvaged.<\/p>\n
He said IBRA's mission was to recover as many bad loans as
\npossible and minimize the cost of doing so.<\/p>\n
The rupiah closed at Rp 8,800 to the dollar on Wednesday. It
\nhit its lowest ever level, of 17,000 to the dollar, in January,
\nfalling from Rp 2,450 in July last year before the crisis
\nstarted.<\/p>\n
IBRA was set up by the government early this year with a
\nmission to recover the central bank's liquidity support given to
\ntroubled banks and to help restructure the ailing banking
\nindustry.<\/p>\n
Under the government's bank recapitalization plan, IBRA's
\nasset management unit will absorb all the bad loans of the
\nrecapitalized banks.<\/p>\n
Some analysts estimate the NPLs account for 50 percent of the
\nmore than Rp 600 trillion in banks' outstanding credit.<\/p>\n
Analysts have said that salvaging the NPLs would require a
\nrecovery in the real sector which has been badly hit by the
\ncurrent high interest rate environment.<\/p>\n
Eko said that another problem hindering recovering the NPLs
\nwas the legal hurdle of selling debtors' assets given as
\ncollateral.<\/p>\n
He pointed out that the transfer of collateral assets
\nbelonging to publicly listed companies to IBRA required approval
\nfrom the minority shareholders. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/ibra-pessimistic-on-bad-bank-loans-1447893297",
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