BI to transfer Texmaco loans to IBRA

BI to transfer Texmaco loans to IBRA

JAKARTA (JP): Bank Indonesia Governor Sjahril Sabirin said on
Friday that Texmaco Group's bad loans owed to the state-owned
Bank Negara Indonesia (BNI) would be "immediately" transferred to
the Indonesian Bank Restructuring Agency (IBRA).

Sjahril said that the transfer of the category five bad loans
was part of the requirements of the government bank
recapitalization program.

"They will be transferred immediately," he told reporters
following Friday prayers.

The newly independent central bank is supervising the
country's banks until the government forms a special supervisory
body for financial institutions within the next year.

Sjahril declined to mention the exact date of the transfer
and the size of Texmaco's loans.

"You can come again to me next week to check," he said.

The transfer of the Texmaco loans from BNI to IBRA became a
controversy last year not only because the group was accused of
using its connections with former president Soeharto to get a
huge Rp 9.6 trillion (US$1.29 billion) loan from BNI, but also
because there was speculation that the group was trying to
prevent the loan transfer.

Bad loans transferred to IBRA would have to be either
restructured under the agency's tough terms or risk litigation
measures.

Texmaco is the country's largest integrated textile group. It
also owns large stakes in the truck, tractor and engineering
goods industries.

Then BNI president Widigdo Sukarman said in November 1999 that
the Texmaco loans were category four or substandard loans. It is
not clear how many of the loans have since been classified as
category five bad loans.

Banks joining the government recapitalization program must
transfer all of their category five loans as well as loans with
provisions of more than 50 percent to IBRA.

BNI is one of the state banks to be recapitalized this year
that has boosted its capital adequacy ratio (CAR) to beyond the 4
percent minimum level.

The bank needs around Rp 52.8 trillion in recapitalization
funds. It launched a rights issue last year to facilitate the
recapitalization program, but it only managed to raise around Rp
238 billion from public shareholders, leaving the government to
purchase the remainder.

In a January letter of intent to the International Monetary
Fund, the government said it planned to recapitalize BNI by Feb.
29.

Asked about the delay, Sjahril said, "It's only because of a
technical problem." He declined to elaborate.

Meanwhile, Sjahril also said that Bank Indonesia would
continue its efforts to divest its 100 percent ownership of the
Amsterdam-based Indover Bank.

Bank Indonesia has to divest its ownership in the bank because
it has become an independent central bank focusing on monetary
policy.

"We expect the divestment program to be completed this year,"
he said.

Sjahril said that Bank Indonesia had nearly completed a deal
with a buyer in 1998, but it was dropped following the financial
crisis in the region.

Indover has also operations in Hongkong.(rei)