Govt expects banks to repay liquidity debts in cash

Govt expects banks to repay liquidity debts in cash

JAKARTA (JP): The government expects owners of failed and
troubled banks to repay in cash at least 30 percent of their
liquidity debts to the government within one year.

The Association of Young Indonesian Businessmen's chairman,
Harjadi Sukamdani, quoted President B.J. Habibie as saying that
the remaining 70 percent could be repaid later, or repaid with
assets.

"Bapak President said they have only repaid 0.7 percent in
cash. He wants at least 30 percent or 40 percent, not 0.7
percent. The rest could be rescheduled, or something," Harjadi
said after meeting with Habibie.

"He actually wants it all in cash. But he is being realistic
because selling assets is difficult now. It's okay to reschedule
but at least 30 percent goes into the government's coffers during
the first year."

Defunct and troubled banks, currently under the control of the
Indonesian Bank Restructuring Agency, owe the government Rp 140
trillion (US$17.5 billion).

This is the amount the government pumped into the banks as
part of its blanket guarantee to all depositors and creditors of
local banks.

As liquidity supports could not be recovered accordingly, the
government closed seven small and medium banks in April and three
large banks -- Bank Dagang Nasional Indonesia (BDNI), Bank Umum
Nasional and Modern Bank -- in August.

Also in August, the government nationalized the country's
largest private banks, Bank Central Asia (BCA) and Bank Danamon,
and also Bank Tiara Asia and Bank PDFCI.

Owners of those banks were given until Sept. 21 to repay the
liquidity funds as well as their credits channeled to companies
in the same groups. But only BCA and BDNI met the deadline, by
ceding assets in more than 100 companies to the government.

But then the government changed its mind and required all
banks to repay all the liquidity funds in cash.

The government then required owners of all failed and
nationalized banks to present concrete programs by Oct. 31 to
repay their debts in cash within one year.

Last week, Finance Minister Bambang Subianto hinted that the
government might change the scheme again of how to recover the
liquidity funds. (prb/rid)