HK investors look at Bank Tiara shares

JAKARTA (JP): Several investors from Hong Kong have shown an interest in buying a stake in the financially troubled Bank Tiara, the bank's president said yesterday.

Eksir Mahfujana said the investors were attracted to the publicly listed Bank Tiara because of its good track record before the crisis and because it was considered to have better prospects than the other five troubled banks taken over by the Indonesian Bank Restructuring Agency (IBRA).

"Several investors are currently negotiating with IBRA," he said, adding that he had held a meeting with the potential investors at the end of last week.

IBRA was established by the government in January to restructure the country's ailing banking sector. The agency took over six publicly listed banks in April because they had received liquidity support from the central bank equivalent to more than 500 percent of their capital.

The agency recently announced the results of audits by international accounting firms of the six financially troubled private banks. Four were reported to have far fewer assets than originally reported by their management. The banks also must quickly find a large amount of cash in order to meet the new 4 percent capital adequacy ratio (CAR) requirement, or may have to be closed down or forced into a merger.

"In order to meet the 4 percent CAR requirement, Bank Tiara needs Rp 2.88 trillion, the smallest amount compared to the other IBRA-managed banks," Eksir said, adding that this was one of the positive factors seen by the potential investors.

He also said that the bank's assets, which are 48 percent of the pre-audit total assets, are proportionally greater than those of any of the other troubled banks.

In addition, the size of Bank Indonesia's liquidity credit on the bank had been reduced by Rp 33 billion, he said.

The ratio of the liquidity credit against total assets was 118 percent, which was also the lowest compared to the other banks which ranged between 140 percent and 200 percent, he claimed.

"With the improving financial condition, Bank Tiara has the opportunity to continue its operations," he said.

In addition to Bank Tiara, IBRA had made public the audit results of Bank Danamon, Bank Umum Nasional, and Bank PDFCI. The agency postponed announcing the results of the two other banks, Bank BDNI and Bank Modern.

IBRA said that in order to meet the 4 percent CAR requirement, Bank Danamon needed Rp 28.3 trillion, Bank PDFCI Rp 3.2 trillion and Bank Umum Nasional Rp 10.47 trillion.

In a June 24 agreement with the International Monetary Fund, the government said it would take action to freeze, merge, or recapitalize the six banks for which audits have already been completed.

The action is expected to start in the middle of this month. (rei)