Bank liquidation costs revealed
JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) revealed on Thursday that it has so far cost US$226 million to overhaul beleaguered banks under its supervision.
The agency's chairman Glenn S. Yusuf said that the total costs consisted of Rp 1.67 trillion ($222 million) denominated in rupiah and $4 million.
He said liquidating 10 banks in April and August cost Rp 1.61 trillion.
"Costs associated with liquidating the banks stemmed largely from the blanket guarantee scheme under which the government meets all of the banks' obligations," Glenn told House of Representatives' Commission VIII for the state budget and finance.
The 10 banks liquidated in April and August were Bank Dagang Nasional Indonesia, Bank Umum Nasional, Modern Bank, Bank Surya, Bank Subentra, Bank Kredit Asia, Bank Pelita, Hokindo Bank, Deka Bank and Centris International Bank.
A further Rp 11.7 billion was spent on consultants fees, along with Rp 13.4 billion for administration and office costs, Rp 35 billion in accountants and lawyers' fees, and for communications consultants and advertising, he said.
All funds denominated in rupiah were provided by the government through the state budget.
Glenn said the World Bank has so far provided $4 million of the $10.8 million it pledged following an IBRA request for $20 million in assistance.
The $4 million was used to pay five consulting companies to conduct due diligence on the 24 banks under IBRA supervision along with a further seven state banks, adding that the remaining $6.8 million would be disbursed in the near future.
There are currently 24 banks under IBRA's supervision, including Bank Central Asia, Bank Danamon, Bank Tiara Asia and Bank PDFCI, which were taken over by the government last August.
Glenn said that BCA, which was formerly owned by the Salim family and some of Soeharto's children, has repaid almost Rp 12 trillion of Rp 35 trillion in liquidity support it received from Bank Indonesia (BI).
"The money that BCA used to repay the loan came solely from the public. Depositors have returned to the bank because it has proved itself to be reliable," he said.
Glenn said Danamon, which was formerly controlled by Usman Admadjaja, had repaid just over Rp 1 trillion of Rp 25.8 trillion it received in liquidity support.
Glenn said that a holding company formed by IBRA to manage assets relinquished by banks as collateral for the liquidity support had faced some difficulties since coming into operation.
Transferring assets linked to publicly-listed banks has been particularly problematic because the process requires the approval of 75 percent of minority shareholders, he explained.
Bank Indonesia has yet to hand over some assets received from troubled banks as collateral on liquidity support, he added.
Glenn said that collateral put forward by several banks included assets which were "legally flawed", making it impossible for IBRA to take control of them.
"If we did take over these assets, we would face legal action," he said, adding that 90 percent of the assets used as collateral by Bank Centris and Bank Kredit Asia fell into this category. (das)