11 banks to help debt restructuring

11 banks to help debt restructuring

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA)
has appointed 11 foreign and local banks to assist it in
restructuring some Rp 6.7 trillion (US$875.82 million) in bank
nonperforming loans, according to a senior executive of the
agency.

The agency's deputy chairman for asset management credit,
Irwan Siregar, said on Thursday that the 11 banks would start
working at the end of May or early June.

"They will submit to us a loan restructuring proposal," he
announced following a meeting with senior government and Bank
Indonesia officials.

Irwan said the agency had appointed the 11 banks out of some
70 banks which participated in a tender to become the agency's
debt restructuring "agents".

He said the Rp 6.7 trillion nonperforming loans were owed by
some 670 debtors.

He explained that the appointment of the 11 banks was the
first round of the agency's plans to outsource the restructuring
process of medium-sized nonperforming loans with individual loan
sizes of between Rp 5 billion and Rp 50 billion.

Irwan said the agency would also outsource the restructuring
of another Rp 23.3 trillion in nonperforming loans falling under
the above category.

"This will be divided in two stages," he said.

He said another tender would be opened to appoint bank agents
to help in the restructuring of the loans.

"We hope that we can appoint the bank agents by June," he
added.

IBRA controls over Rp 200 trillion worth of nonperforming
loans received from closed down banks, recapitalized banks and
nationalized banks.

The agency has a mandate to restructure and recover the loans
in a bid to help finance the government's bank restructuring
costs, estimated at more than Rp 500 trillion.

The agency raised more than Rp 17 trillion in the fiscal year
ending March 2000, in which IBRA's asset management credit unit
contributed some Rp 7.2 trillion to the state budget.

IBRA is targeted to raise some Rp 18.9 trillion in the 2000
fiscal year.

Asked how much the asset management credit unit would
contribute this time, Irwan said: "As much as possible."

IBRA also raised cash from the sale of various bank assets.

Meanwhile, another IBRA senior official, Hendro Santoso, said
on Wednesday that the agency expected to be able to restructure
about Rp 27 trillion in nonperforming loans soon.

"We expect we can reach a restructuring deal in two or three
months," he said.

Hendro did not provide details.

IBRA has been criticized for its slow progress in the
restructuring of nonperforming loans, particularly large loans
owed by powerful businesspeople.

IBRA is determined to take recalcitrant debtors to the
commercial court, but so far its earlier attempts have mostly
failed. (rei)