Bapindo regains confidence after scandal: Mar'ie

JAKARTA (JP): Minister of Finance Mar'ie Muhammad says the scandal-hit Bank Pembangunan Indonesia (Bapindo) has recovered business confidence after a series of financial and management remedies.

"The heavy bleeding at the wounded bank has already stopped and we are now trying to remedy it," Mar'ie told members of the House of Representatives (DPR) in a hearing yesterday.

He told the hearing, which attracted over 50 journalists, that the monetary authority is now involved in improving the bank's management in cooperation with foreign banking agencies.

Bapindo lost somewhere over Rp 1.3 trillion (US$600 million) in a series of highly questionable loans made to businessman Eddy Tansil. Collusion between executives of the bank and Tansil's Golden Key Group has been alleged.

Mar'ie said the authority has introduced a restructuring scheme to improve Bapindo's finances.

He said that the government has allowed Bapindo to forego paying interest on its government loans, reducing the troubled bank's debt burden.

Bank Indonesia has also lowered the interest rate on its liquidity credits to Bapindo, he added.

"If the converted funds are still insufficient, the authority will likely sell Bapindo's certificates and various bonds to generate funds for the payment of its obligations," he said. "Some of the bank's assets can also be sold to tackle its debts."

Optimism

The minister said he was optimistic that the capitalization scheme will be enough to help improve the bank's financial conditions.

"And, you see, the government never asks any financial assistance from private sector parties or inject fresh money from its budget to help the bank," he said.

To improve the bank's portfolio, Mar'ie said that the authority also has summoned the bank's 50 biggest borrowers and asked them to make reports on the utilization of the funds provided by Bapindo and, if necessary, reduce their outstanding borrowing.

"I honestly say that I have summoned and interviewed them one by one to have their support for the settlement of the bank's financial fiasco," he said, adding that some of them are committed to reducing their outstanding credits soon.

He said cooperation between the borrowers and the management of Bapindo has in fact helped ease the settlement of the tragedy at the bank.

To maintain confidence of foreigners over the country's banking services, he said that the government has given priority to paying all the Bapindo credits which have reached maturity.

Tracing

Mar'ie said that the authority is also tracing all assets and investments which were put by executives of the scandal-hit Golden Key Group at any business activities overseas.

"We have appointed Kroll, an investigating agency of the United States, to help trace all the group's funds and assets abroad," he said, adding that the agreement on the tracing services was signed here last month.

He conceded that the tracing was not so easy, considering that the activities should deal with various banking rules of foreign countries.

"But I hope that by the middle of this month, the second phase of the tracing, including the identification of the countries where Golden Key has made investment and the amount of its assets and investments will be soon reported to us," he said.

The minister said that the authority is also now negotiating with five prominent foreign banks which will provide technical assistance for Bapindo.

"Early next month, I hope the negotiations will be finalized," he said.

Mar'ie said the foreign banks will train the personnel of the bank as to how to manage and supervise its activities.

"In the future, we plan to set up a center of banking services and consultancy for state banks," he said.

He said foreign professionals actually have praised the government's measure to cope with the banking scandal.

The current management of Bapindo, therefore, has no difficulty to make letters of credit with foreign banks and beneficiaries overseas, he said.

He said that on June 3, Bapindo also obtained a transferable term loan of US$50 million from Arab Bank Plc. in Singapore.

The loan, with a maturity of two years and interest rate of 1.2 percent above the Singapore Interbank Offered Rate, will be used as working capital in Bapindo's branch office in Hong Kong.

Bapindo yesterday also reported a 54 percent increase in its after-tax profit to Rp 33.62 billion last year from Rp 21.82 billion in 1992. (fhp)