Tue, 15 Aug 2000

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)