IBRA broke guarantee: Bond holders
JAKARTA (JP): Fixed-income investors in banks liquidated by the government last year have complained about the difficulties imposed by the Indonesian Bank Restructuring Agency (IBRA) to recover their government-guaranteed investments.
Nathaniel Tanaya, who holds Rp 3 billion (about US$375,000) of bonds issued by the now defunct Bank Modern in 1995, said on Saturday that he and many other investors were experiencing problems trying to exercise their rights.
"Most of them are institutional investors, including provincial development banks, who are afraid to complain openly about this problem," he told reporters.
Bank Modern was one of the 10 ailing private banks closed down by the government in 1998 as part of the restructuring program for the country's beleaguered banking industry.
Prior to the banking closures, a presidential decree was issued in which the government guaranteed depositors' money and bonds.
The blanket guarantee system, which started in January 1998 and is to end on January 31, 2000, has managed to prevent widespread panic in the shaky banking system.
The decree stipulates that IBRA is in charge of managing the guarantee system.
"I have demanded the central bank and IBRA return my money but they ignored me," Nathaniel said. He showed reporters the authentic bond documents issued by Bank Modern.
He said that the bonds were due on Oct. 25, 2000, but under a stated option term, investors had the right to cash in their investments on Oct. 25, 1998.
"How can you expect people to trust the financial authorities if they can't even keep their word," he said.
The return of confidence is an essential factor in rebuilding the country's battered economy, particularly the financial sector, as the government has been expecting investors to participate in financing the bank restructuring program.
The government plans to issue bonds worth about Rp 500 trillion to finance the restructuring program.
IBRA has assumed over US$10.4 billion worth of fixed assets surrendered by owners of the 10 liquidated banks to repay their obligations to the government.
IBRA chairman Glenn S. Yusuf and several other senior officials visited five world financial centers last week attempting to gauge foreign interest in the IBRA controlled assets.
IBRA plans to sell these assets in four years' time.
IBRA also controls over Rp 220 trillion in non-performing loans taken from state banks, major private banks, and 38 banks closed down in March.
The agency also holds banks' non-core assets, including paintings, cars and office equipments, worth trillions of rupiah.
The agency aims to raise at least Rp 17 trillion in the current 1999/2000 fiscal year to help finance the coupon rate of the bank recapitalization bonds. (rei)