Govt targets Rp 6.2 trillion from BII divestment

Govt targets Rp 6.2 trillion from BII divestment

The Jakarta Post, Jakarta

The government is targeting some Rp 6.29 trillion (about
US$630 million) from the sale of its majority stake in the
publicly listed Bank Internasional Indonesia (BII) at the end of
this year.

A document from the Indonesian Bank Restructuring Agency
(IBRA), a copy of which was made publicly available, showed IBRA
planning to sell BII after first raising its stake in the bank to
85 percent from 57 percent through a right issue in June.

The right issue will shore up BII's narrow capital adequacy
ratio (CAR) to the minimum required level of 8 percent - a
necessary move to bring the bank into better financial health
ahead of its planned divestment process.

"Based on early estimates, the cost of improving BII's health
to reach an 8 percent CAR will amount to Rp 3.97 trillion," the
document said.

The proceeds of Rp 6.29 trillion assumed a price of Rp 25 for
each of BII's 252 billion shares, it said.

Early this month, IBRA sold a 51 percent stake in one of its
top banks, Bank Central Asia (BCA), for approximately Rp 5.3
trillion.

Selling BII will help recoup some of the taxpayer money spent
to prevent the bank from collapsing.

In 1999, IBRA injected some Rp 6.6 trillion to acquire a 57
percent stake in BII to replace bad loans the agency assumed.

Last year, the agency assumed another Rp 14.4 trillion in
loans from BII-affiliated Sinar Mas Group that were at risk of
turning sour.

Overall, the cost of bailing out BII would hit Rp 24.97
trillion once the right issue was completed.

But letting the bank collapse is not an option as it would set
the government back to the tune of some Rp 53 trillion, mostly to
pay back BII's customers under the government's blanket guarantee
scheme for bank deposits.