Sat, 01 Apr 2000

Bank Mandiri shifts all bad loans to IBRA

JAKARTA (JP): State-owned Bank Mandiri has transferred its remaining bad loans of Rp 16.5 trillion (US$2.2 billion) to the Indonesia Bank Restructuring Agency (IBRA), Bank Indonesia governor Sjahril Sabirin said on Friday.

Sjahril said the central bank had issued a new ruling that enabled IBRA to take over the bad loans from the already recapitalized Bank Mandiri.

"We've changed the existing ruling to allow healthy banks to transfer their bad loans to IBRA," Sjahril told reporters.

He estimated that IBRA would need between two to three days to complete the loan transfer process, after which Bank Mandiri would have a clean balance sheet.

Under the recapitalization program, the government last year injected Bank Mandiri with Rp 178 trillion in bonds to raise the bank's capital adequacy ratio (CAR) to 12.44 percent.

Bank Mandiri, then transferred some Rp 78 trillion in category five (bad) loans to IBRA, but for unknown reasons, failed to surrender all of its bad loans.

The previous ruling of the central bank only allowed banks with CAR of below four percent to surrender their bad loans to IBRA.

Furthermore, according to the ruling, banks could transfer their bad loans to IBRA, only if they were already under the agency's supervision.

Sjahril said the new ruling allowed the transfer of bad loans from healthy banks. He did not elaborate how much the transfer would increase Bank Mandiri's present CAR.

Bank Mandiri president Robby Djohan said last week that he expected the bank to book a net profit of Rp 725 billion this year, compared to a loss of Rp 36.86 trillion last year.

Robby said the projected turnaround in the bank's profit performance would be partly due to the transfer of its bad debts to IBRA.

Bank Mandiri was formed last year by merging four ailing state banks, Bank Bumi Daya (BBD), Bank Expor Impor Indonesia (Exim), Bank Dagang Negara (BDN), and Bank Pembangunan Indonesia (Bapindo).

BNI recapitalization

The government has received an approval from the House of Representatives to go ahead with its plan to recapitalize state- owned Bank Negara Indonesia (BNI), the bank said.

The recapitalization cost is expected to reach some Rp 61.8 trillion, higher than an earlier estimate of Rp 52.8 trillion as the bank still suffered from a negative spread between lending and deposit interest rates, the bank's corporate secretary Sudirman said.

"The recapitalization will allow BNI to achieve the government minimum required CAR of four percent this June," Sudirman said after a meeting on Thursday night with House Commission IX, which oversees financial affairs.

The government will issue Rp 30 trillion worth of bonds in the first tranche, while the remaining Rp 31.8 trillion is expected to be issued in June 2000.

Sudirman said that following the House's approval, the bank would sign a performance contract to meet targets as set by Arthur Anderson consulting.

The contract contains financial and operational restructuring targets as well as provisions for implementation of good corporate governance.(bkm)