S&P puts some Indonesian banks under review<\/p>\n
HONG KONG (AFP): U.S. ratings agency Standard and Poor's
\nyesterday put four Indonesian banks under review for a possible
\ndowngrade of their credit rating, citing concerns the country's
\nbanking system was deteriorating.<\/p>\n
The four banks put under credit watch with \"negative
\nimplications\" were PT Bank Negara Indonesia, PT Bank Danamon
\nIndonesia, PT Bank Internasional Indonesia and PT Bank Umum
\nNasional.<\/p>\n
A fifth bank, PT Bank Niaga, remained on creditwatch with
\nnegative implications.<\/p>\n
\"In addition, Standard and Poor's intends to review for
\npossible downgrade all existing public information ratings on
\nmajor Indonesian banks,\" the New York-based agency said in a news
\nrelease.<\/p>\n
Bank Negara Indonesia is one the country's seven state-owned
\nbanks.<\/p>\n
Bank Danamon is owned partly by business tycoon Soedono Salim,
\nand Bank Internasional Indonesia is a subsidiary of the Sinar Mas
\ngroup.<\/p>\n
Bank Umum Nasional counts Muhammad \"Bob\" Hasan as one of its
\nmain shareholders.<\/p>\n
All four banks are listed in the Indonesian stock exchange.<\/p>\n
The rating agency also said that it was currently undertaking
\na major review of the Indonesian banking sector.<\/p>\n
The rapid fall of the rupiah against the dollar in recent
\ndays, following nearly four months of continued exchange rate
\ndepreciation, \"has exacerbated the asset quality and
\nprofitability difficulties that the Indonesian banking system is
\nfacing,\" Standard and Poor's said.<\/p>\n
The tight liquidity in the banking sector and the resulting
\nhigh interest rates, following government moves to prop up the
\nrupiah, had also affected the ability of borrowers to service
\nrupiah-denominated debt.<\/p>\n
Standard and Poor's estimated the banking sector's non-
\nperforming loans at double the pre-crisis level of 8 percent by
\nthe end of 1998.<\/p>\n
While the major banks themselves may have avoided significant
\nforeign exchange losses, a substantial portion of their corporate
\nand commercial clients are likely to be in difficulties and some
\nare beginning to come into default, Standard and Poor's said.<\/p>\n
It added that the fact the property market was currently being
\nhit hard by the crisis was starting to be reflected in a
\ndeterioration in the banks' asset quality and impact negatively
\non their collateral values.<\/p>\n
The U.S. dollar has gained more than 100 percent against the
\nIndonesian rupiah in the currency contagion which erupted after
\nthe Thai baht's float on July 2.<\/p>\n
It was trading at 5,800 rupiah to the dollar early yesterday
\ncompared to the 2,450 rupiah in July.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/sp-puts-some-indonesian-banks-under-review-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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