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)