BI to issue new bank restructuring ruling
BI to issue new bank restructuring ruling
JAKARTA (JP): Bank Indonesia Governor Sjahril Sabirin said on
Wednesday that the central bank was designing a new policy aimed
at accelerating the restructuring process of the country's ailing
banking sector. Bank Indonesia supervises the country's banking
industry.
Sjahril said that the new ruling would include measures to
accelerate the transfer of bad loans from recapitalized banks to
the Indonesian Bank Restructuring Agency.
"The new ruling is expected to be completed before the end of
this month," he told a small group of reporters.
Sjahril said that the new ruling would allow the central bank
to surrender a healthy bank to IBRA to legally enable the latter
to seize the category five loans from a recapitalized bank.
Sjahril said that the new ruling was not merely designed to
facilitate the transfer of the remaining bad loans of the giant
state-owned Bank Mandiri to the agency, but other qualified banks
as well.
Bank Mandiri which was recapitalized by the government last
year to boost its capital adequacy ratio (CAR) level to 12.44
percent has not transferred its remaining Rp 16.5 trillion in bad
loans to IBRA.
But 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.
The ruling also stipulates, that Bank Indonesia can only place
a bank under IBRA supervision if its CAR level was below the 4
percent minimum requirement.
The transfer of all bad loans of a recapitalized bank is
central to the restructuring of the bank as it will clean the
balance sheet.
The government has stipulated that banks joining the
recapitalization program must transfer all of their bad loans to
IBRA.
It's not clear why Bank Mandiri has not transferred all of its
bad loans. Last year the bank transferred some Rp 76 trillion in
category five loans to the agency.
The government is scheduled to recapitalize more banks this
year including the state-owned Bank Rakyat Indonesia (rei).