House approval for BCA, Niaga divestment needed

House approval for BCA, Niaga divestment needed

JAKARTA (JP): The government is seeking approval from the
House of Representatives (DPR) to divest ownership of publicly
listed Bank Central Asia (BCA) and Bank Niaga this year.

Secretary of the Financial Sector Policy Committee (FSPC)
Syafruddin Tumenggung said here on Monday that the Finance
Ministry and Indonesian Bank Restructuring Agency (IBRA) would
meet with House members later this month to obtain approval for
the divestment plans.

Syafruddin said that divestment of the two publicly listed
banks was in line with the government letter of intent to the
International Monetary Fund.

FSPC, which groups several senior economic ministers, oversees
the country's bank restructuring program.

Syafruddin said that the divestment plan would assist IBRA in
achieving its target of raising Rp 18.9 trillion (US$2.26
billion) this year through sales of surrendered assets.

IBRA, a unit under the finance ministry, has nationalized BCA
and Bank Niaga. The agency sold 28.5 percent of BCA through an
initial public offering (IPO) in May raising some Rp 900 billion.

The agency's divestment of interest in a number of banks
joining the government-sponsored recapitalization program is
projected to raise some Rp 3 trillion this year.

IBRA previously announced it expected to raise some Rp 1.92
trillion from the upcoming BCA and Bank Niaga divestment program.

Asked about the size of the BCA and Bank Niaga divestment
plan, Syafruddin said that the size of the divestment would
depend on the market appetite.

"If the market makes it possible for us to divest 100 percent
ownership, we'll do it," he said.

IBRA has said that it also planned to divest ownership in the
publicly listed Bank International Indonesia and Bank Universal
this year.

But Syafruddin said there was no decision yet whether IBRA
would proceed with the plan or delay.

Syafruddin said that IBRA was confident of being able to raise
the Rp 18.9 trillion targeted for this year.

So far the agency has only raised a little more than Rp 4
trillion.

The agency is responsible for raising the cash to assist the
state to fulfill its interest rate requirements for the
government bonds issued to finance the bank recapitalization
costs.

Syafruddin said that the interest costs for this year alone
totals Rp 76 trillion.

He said the government had been determined to reduce the state
burden by swapping the bonds with performing loans held by IBRA.

He said that the finance ministry was still designing the new
measure. (rei)