Bank Niaga to unload more recap bonds
Bank Niaga to unload more recap bonds
The Jakarta Post, Jakarta
Bank Niaga announced on Thursday its plan to unload some Rp 1
trillion (around US$110 million) worth of recapitalization bonds
this year either through the secondary bond market or by
exchanging them with restructured loans held by the Indonesian
Bank Restructuring Agency (IBRA).
Bank Niaga president Peter B. Stok said that the move was
necessary to enable the bank to expand its loan assets.
"It's not healthy when the composition of a bank's assets is
made up largely of recap bonds, therefore the move was
necessary," he told reporters on the sidelines of the bank's
annual shareholders meeting.
The government injected the bonds in the late 1990s to
recapitalize the bank.
The bank currently holds more than Rp 9 trillion-worth of
bonds, which represents some 40 percent of its assets which
totaled Rp 22.9 trillion as of December 2001.
Peter said that Bank Niaga wanted to expand its loan assets to
between Rp 9 trillion and Rp 10 trillion this year from Rp 7.9
trillion last year.
The bank also reported, during 2001, it had sold off around Rp
700 billion-worth of bonds in the secondary market.
Bank Niaga and other recapitalized banks enjoy interest rate
revenue from the bonds. Last year, this revenue was a major
contributor to local banks' profit as lending activity remained
subdued amid the overall weak economic condition.
The plan to unload more recapitalized bonds comes as the
government is trying to sell a 51 percent stake in the publicly
listed bank.
Peter dismissed the suggestion that unloading the bonds would
make the Bank Niaga stake less attractive to investors, saying
that interest revenue from the bonds was only one contributing
factor to profit, and the bank would also enjoy more revenue by
expanding its loan asset.
IBRA shortlisted four bidders on Wednesday competing for the
Bank Niaga stake; two of them foreign-led consortia.
The four going through to the next bidding stage are consortia
led by Australia & New Zealand (ANZ) Banking Group Ltd.,
Malaysian financial group Commerce Asset-Holdings Berhad, Bank
Victoria International and Batavia Investment Fund.
In a bid to lure investors into Bank Niaga, the government has
recently converted 40 percent of the bank's fixed-rate bonds into
variable rate bonds.
The fixed-rate bonds carry an interest rate of 12.8 percent,
while the variable rate bonds are linked to the interest rate of
Bank Indonesia SBI promissory notes currently hovering at more
than 16 percent.