BCA's plan to buy IBRA assets must be monitored: Bappenas

BCA's plan to buy IBRA assets must be monitored: Bappenas

The Jakarta Post, Jakarta

Plans by Bank Central Asia (BCA) to purchase bank loans held by
the Indonesian Bank Restructuring Agency (IBRA) must be closely
monitored as the transaction could only benefit the new owners of
the bank at the expense of taxpayers, according to a statement
issued late on Wednesday by the Office of the State Minister of
National Development Planning/Bappenas.

The statement said that the public must be made aware that if
IBRA sold the loan assets at a huge discount, it was the taxpayer
who would shoulder the loss.

It added that IBRA must disclose the selling price of the
loans.

The management of publicly-listed BCA announced earlier this
week that it intended to exchange some Rp 10 trillion worth of
government bonds held by the bank with the IBRA loan assets.

BCA is now controlled by a consortium led by U.S. investment
firm Farallon Capital, which bought a 51 percent stake in March
from the government for Rp 5.3 trillion.

BCA currently holds nearly Rp 60 trillion-worth of government
bonds, which was injected in the late 1990s to recapitalize the
giant retail bank. The state budget covers the interest rate of
the bonds, which has been one of the main source of revenue for
the bank.

The government had been previously criticized for selling the
nationalized bank to a new private owner without first unloading
the huge bonds.

"The value of (the government) bonds transferred into the
hands of the private buyers of BCA is six times the price of the
BCA acquisition," the Bappenas statement said.

"These bonds can be used to purchase the IBRA (loan) assets at
a price much lower than the book value of the assets when first
transferred to IBRA."

"So the assets bought by BCA could potentially multiply in
value at the expense of IBRA because (the latter) has sold them
to BCA at a very low recovery rate. The difference is a loss
borne by the people."

IBRA took over more than Rp 200 trillion-worth of
nonperforming loans from ailing banks in the late 1990s. The
agency is mandated to restructure and sell back the loans to
raise cash to help finance the state budget deficit.

The agency said on Tuesday that it planned to sell up to Rp
150 trillion-worth of bank loans this year.