ABN still eying Indonesia cautiously

ABN still eying Indonesia cautiously

AMSTERDAM (Reuters): Dutch bank ABN AMRO said yesterday its only major concern in Asia was its exposure in Indonesia, but that it believed it had made sufficient provisions to cover any losses there.

ABN AMRO said nine percent of its total risk weighted assets of 460 billion gilders (US$224.6 billion) were in Asia and one percent were in South Korea, Indonesia, Malaysia and Thailand.

"These are the countries with the worst bouts of Asian flu," chief executive Jan Kalff told a results news conference.

He also said that he was less concerned now about general Asian turmoil than in January, although Indonesia was a worry.

Kalff said the bank had little to fear from its lending in South Korea, Thailand and Malaysia in which most of the money had been lent to the government or banks, many with state guarantees.

He said private sector risks were minimal. In South Korea, he said ABN AMRO had restricted itself to the best businesses in the corporate sector.

In Thailand, the private sector loans were mainly to large multinationals or local export finance companies. In Malaysia, where ABN AMRO had lent to local companies these loans were mainly denominated in ringgits.

But the company had provided total extra provisioning for Asia in 1997 of about 500 million guilders, reflecting larger exposure to the private sector in Indonesia.

"There is some reason to be concerned here," Kalff said. "...in the corporate sector there is the figure of 1.7 billion guilders outstanding."

He said a large part of the bank's lending to Indonesia's private sector was in U.S. dollars while the borrowing companies' revenue was in rupiahs.

"Their debt in rupiahs has increased, so we have taken provision of about 500 million guilders, but we think that will be enough" Kalff said.

He also said a lack of clear policy was hampering negotiations in Indonesia and hoped that elections in March could help towards a solution.