Holding company to manage IBRA's unsold asset

Holding company to manage IBRA's unsold asset

Fabiola Desy Unidjaja and Dadan Wijaksana, The Jakarta Post,
Jakarta

The government will set up one holding company, instead of
three as previously reported, to take over assets that remain
unsold by the Indonesian Bank Restructuring Agency (IBRA) by the
time its term expires next month.

"The remaining assets, worth Rp 40 trillion or 5 percent of
the total, will be handed over to the company, called the assets
management company," Coordinating Minister for the Economy
Dorodjatun Kuntjoro-Jakti said on Thursday, adding that the
company would be under the supervision of the Office of the State
Minister of State Enterprises.

Dorodjatun was speaking to reporters after attending a Cabinet
meeting discussing, among other things, affairs related to IBRA.

He added that the government was determined to move ahead with
its plan to close the agency in February, as it would send a
signal that the economy had made significant progress and was
leaving behind the scars resulting from the late 1990s financial
crisis.

"We have completed the special program with the IMF. We have
also closed down JITF and all else related to the crisis. All
that's left is IBRA," Dorodjatun said, referring to the Jakarta
Initiative Task Force, which helped mediate restructuring talks
between the corporate sector and foreign creditors.

IBRA is tasked with cleaning up the country's messy banking
sector, saddled with huge bad debts following the 1998 crisis.
In total, it took over more than Rp 600 trillion worth of assets
from bankrupt or ailing banks.

It is mandated to restructure and sell those assets -- in the
form of nonperforming loans and fixed assets -- to raise funds to
help finance the state budget, which is ironically burdened by
the huge cost of the government bank bailout program.

About a month away from its closure, the agency has sold the
majority of the assets under its control with an average recovery
rate of about 28 percent, excluding the remaining assets.

IBRA chairman Syafruddin Temenggung has said the new holding
company would not be burdened with fiscal targets, so that it
could focus on "restructuring" rather than on selling assets.

Aside from that, Dorodjatun added, a new institution would
also be set up, this one under the Ministry of Finance, to take
over the role of IBRA in implementing the government's blanket
guarantee program on bank deposits.

The institution would operate on a temporary basis -- pending
the establishment of a permanent unit called the deposit
guarantee agency (LPS), which requires a law as its legal basis.

The government is currently drafting the law.

In addition to all that, various government agencies and
instruments would also tighten the coordination in dealing with
unfinished business related to IBRA's big debtors (former bank
owners), said Dorodjatun.

"This matter, after IBRA's dissolution, will be jointly dealt
with by the FSPC, the National Police, the Attorney's General
Office, the Ministry of Justice and Human Rights," he said.

FSPC is the Financial Sector Policy Committee, a powerful
grouping consisting of senior economics ministers.

"The message is clear: debtors deemed uncooperative (in
settling their debts) will face litigation."

Of 39 debtors who signed debt settlement agreements with IBRA
in the late 1990s, only 13 former bankers have been declared
cooperative.