Govt makes repayment deal with bankers
JAKARTA (JP): The government clinched a new repayment deal on Tuesday with owners of five troubled banks over Rp 96.53 trillion ($12 billion) in liquidity support injected by the central bank, but has yet to decide on penalty clauses for failure to meet the new repayment format.
Finance Minister Bambang Subianto said the bank owners would repay 27 percent of the loans in cash in the first year, and the balance in equal installments over the next three years.
The repayment would come from the sale of fixed assets in the form of shares in various companies surrendered by the owners of the banks as collateral in September.
"We have reached an agreement with five groups," Bambang announced at a press conference, citing the Salim Group, owner of Bank BCA, the Gajah Tunggal Group, owner of Bank BDNI, Mohamad 'Bob' Hasan, co-owner of Bank Umum Nasional (BUN), Sudwikatmono, owner of Bank Surya and Bank Subentra, and Usman Admadjaja, owner of Bank Danamon.
"Negotiations with the owners of the other distressed banks are still in progress," he added.
The new repayment scheme revised the Oct. 1 deal in which President B.J. Habibie demanded the owners of the closed and nationalized banks repay the loans in cash in one year.
The IMF Asia-Pacific director Hubert Neiss urged in an Oct. 18 letter to Habibie that the government should be flexible on the repayment terms as a fire sale of assets amid depressed economic conditions would only result in low prices.
Bank Indonesia injected more than Rp 141 trillion in liquidity support to help banks in meeting massive withdrawals from panicked depositors who ran on the banks early this year.
The largest recipients of the liquidity support are two of the country's largest private banks: BCA, and Danamon which were nationalized in August, and 10 banks closed down in April and August including BDNI, BUN, Bank Surya, and Subentra, all of which breached the 20 percent legal lending limit by channeling more than 70 percent of their money to affiliate business groups.
Bambang said the bank owners would be freed from criminal charges for their intra-group lending activities if they repaid the liquidity support as scheduled and if they reduced the related-party lendings to the tolerable limit within three months of signing up to the new liquidity support repayment terms.
Salim Group, Indonesia's largest conglomerate, had to repay a total of Rp 47.75 trillion in obligations while owners of BDNI, Danamon, and Bank Surya and Subentra had to repay Rp 28.41 trillion, Rp 12.31 trillion, and Rp 1.89 trillion, respectively.
Timber tycoon Bob Hasan had a total debt of Rp 6.16 trillion.
The Ongko Group, the other co-owner of BUN had a total debt of Rp 7.84 trillion, while the owners of Bank Modern, Bank Hokindo, Bank Deka, Bank Centris, Bank Pelita and Bank Kredit Asia, respectively owed Rp 2.50 trillion, Rp 347 billion, Rp 206 billion, Rp 735 billion, Rp 2.59 trillion, and Rp 539 billion.
Under the new repayment framework, a holding company would be established by the bank owners to control and sell the fixed assets surrendered as collateral.
"If the sale of assets fails to meet targets due to carelessness on the part of the holding company, then IBRA (Indonesian Bank Restructuring Agency) will promptly take the necessary measures to correct this," Bambang said.
IBRA will work together with an International Review Committee to oversee the asset sale and loan repayment process.
The committee will have five members. Three of them -- Brian Quinn, a former executive of the Bank of England, Stephen Grenville, deputy governor of the Reserve Bank of Australia and Akira Nagashima, former deputy governor of the Bank of Japan-- were appointed by the IMF, World Bank and Asian Development Bank. The other two are Rachmat Saleh, former Bank Indonesia governor, and Soeksmono B. Martokoesoemo, former Bank Indonesia director. (rei)