Govt to sell bankers' assets through IPO

JAKARTA (JP): Some of the fixed assets in the form of companies surrendered by owners of troubled banks to the government to repay debts will be sold through initial public offerings (IPOs) in the capital market, said chairman of the Indonesian Bank Restructuring Agency (IBRA) Glenn S. Jusuf.

But, he added on Thursday, strategic investors would be sought first before IPOs would be offered on the market.

"Because the current capital market condition is not ripe for an IPO, the best solution is to invite strategic investors first," he told reporters after speaking at the Indonesian Forum conference.

He explained that strategic investors would not be discouraged by the current economic crisis because they had a long-term investment plans in the country.

He added that strategic investors had the capability to maintain and increase the value of the companies before launching them for an IPO.

Bank Indonesia has injected more than Rp 140 trillion in emergency liquidity support since early this year to help out during bank runs by panicked depositors in the wake of plunging confidence in the industry.

The government on Nov.10 clinched a repayment deal with owners of five troubled banks over some Rp 96.53 trillion in liquidity support.

The bank owners will repay 27 percent of the loans in cash in one year, and the balance in equal installments over the following three years.

Glenn said the Salim Group, owner of the country's largest private bank Bank BCA, had repaid 25 percent of its obligation.

The group has a total obligation of Rp 47.75 trillion, including payments to reduce the bank's intra-group lendings to the 20 percent legal limit.

Other businesspeople who have agreed on the repayment format include Usman Admadjaja, owner of Bank Danamon; Sjamsul Nursalim, owner of closed down Bank BDNI; Sudwikatmono, owner of closed down Bank Surya and Bank Subentra; and Mohamad "Bob" Hasan, co- owner of Bank Umum Nasional.

The tycoons have repaid their obligations partly in cash, but mostly by ceding fixed assets including their share ownerships in various listed companies.

The government has yet to reach a deal with owners of nine other troubled banks.

The government has established a holding company to manage the fixed assets.

Glenn said that selling the fixed assets through IPOs would also provide an opportunity to the investing public in owning part of the conglomerates' assets.

"This is also a means of wealth distribution," he added.

There have been rumors that certain parties in the government have been pressing IBRA to redistribute the assets, which are mostly controlled by Chinese-ethnic businessmen, to indigenous people.

Glenn, however, denied any such pressure.

"The sales of assets will be transparent, so there can't be any government interference," he pointed out.

IBRA was established early this year with a mission to recover the liquidity support and help in restructuring the country's ailing banking sector.

Under the government's bank recapitalization program, IBRA's asset management unit will takeover the nonperforming loans of banks joining the recapitalization program.

Glenn said the nonperforming loans would be restructured into packages which then would be sold to investors.

"We'll start selling these loan packages in the first quarter of next year," he said.

Glenn declined to mention the size of the loan package, arguing that financial audits on the whole banking population had yet to be completed. (rei)