Wed, 15 Mar 2000

Bank Mandiri to launch IPO in January 2001

JAKARTA (JP): State Bank Mandiri will launch an initial public offering (IPO) either at the end of this year or in January 2001 to raise about US$1.5 billion, president Robby Djohan said.

Robby said on Tuesday that the IPO proposal would be submitted to the Ministry of Finance within the next two weeks.

"We have received the green light from the Ministry of Finance," he told reporters on the sidelines of the bank's business gathering.

Robby declined to provide details on the IPO plan, which was originally to have been implemented last October.

Robby said he was optimistic that the market would welcome the bank's IPO as the country's economic condition was improving, adding that he was leaving for Tokyo on Wednesday to "test" the market.

He said Bank Mandiri had become healthy after its recapitalization program late last year, which increased its capital adequacy ratio (CAR) to 12.44 percent, much higher than the minimum 4 percent requirement.

He added that the bank was set to transfer its remaining Rp 16.5 trillion in bad loans or category five loans to the Indonesian Bank Restructuring Agency (IBRA).

Banks joining the government bank recapitalization program must transfer all of their bad loans to IBRA to have a clean balance sheet.

Robby said the category five loans were written off the bank's balance sheet but had not yet been legally transferred to the agency.

Bank Mandiri was formed last year out of a merger of four state banks -- Bank Ekspor Impor Indonesia (Bank Exim), Bank Bumi Daya (BBD), Bank Dagang Negara (BDN) and Bank Pembangunan Indonesia (Bapindo).

The government had injected a total of Rp 178 trillion worth of bonds to recapitalize the bank.

The bank transferred Rp 76 trillion in bad loans to IBRA last year before the government recapitalized the bank.

According to the existing ruling, a bank can legally transfer its bad loans if the debtors agree or if the bank is under the supervision of IBRA. But a bank can be put under IBRA supervision only if its CAR is below 4 percent.

There appears to be a "technical" problem with the existing ruling on the transfer of Bank Mandiri's remaining bad loans.

Bank Mandiri managing director Agus Martowardojo said the country's financial authority could either issue a "intermediary policy" or revise the existing ruling to facilitate the transfer of the category five loans.

It is not clear why Bank Mandiri delayed the transfer of its remaining bad loans. (rei)