IBRA: Danamon needs Rp 28.3t to survive

JAKARTA (JP): Auditing results by independent internationally- accredited accountants on cash-strapped Bank Danamon show a very big difference to those presented by the bank's old management.

The Indonesian Bank Restructuring Agency (IBRA) said yesterday the new auditing of Bank Danamon found that the bank's total assets were only Rp 9.3 trillion as of the end of March 1998, compared to Rp 25.5 trillion reported by the bank's management.

IBRA deputy chairman Maulana Ibrahim said that the different figures on the bank's assets were due to an adjustment from the deterioration on the quality of its loans.

"The adjustment has resulted in the creation of a negative net worth of Rp 27.9 trillion and a decline in its assets to Rp 9.3 trillion from Rp 25.5 trillion," he said after an extraordinary shareholders meeting here yesterday.

The meeting also approved the appointment of Untung Purwito of state-owned Bank Rakyat Indonesia as its new president.

The old management reported that the bank's performing loans totaled Rp 17.61 trillion, while IBRA's auditors downgraded them to only Rp 3.86 trillion as most of the reported performing loans turned out to be sour.

The auditors reported that the bank's debts to Bank Indonesia (BI), the central bank, totaled Rp 18.62 trillion as of March 31, compared to only Rp 7.3 trillion reported by the management.

Danamon was among the six banks put under the management of IBRA in April after it obtained liquidity support worth Rp 18.4 trillion from BI, Maulana said.

In that situation, IBRA would need at least Rp 28.3 trillion to recapitalize Bank Danamon, including the payment of its debts to the central bank and to meet the minimum capital requirement of 4 percent by the end of this year.

The money needed to recapitalize the bank would be much higher as the bank had continued to absorb liquidity credits from BI since it was taken over by IBRA early April.

Maulana reported yesterday BI's liquidity support to Bank Danamon totaled Rp 25.2 trillion as of June 22.

If IBRA could not get enough money to recapitalize Bank Danamon, Maulana said other possible options would be merger and acquisition or transferring the bank's problem assets to the IBRA asset management unit or closure and liquidation.

The asset management unit, which will start operations next month, is a debt recovery agency for troubled assets under IBRA.

"IBRA does not have the right to decide the fate of the bank. It is the government which will decide it," Maulana said.

He said that the new quasi-management assigned to manage Bank Danamon since April had been successful in arresting deposit runs on the bank.

"Despite its crisis, Bank Danamon managed to lure new deposits worth around Rp 1 trillion since early May," he said.

Bank Danamon's new president, Untung Purwito, said that the bank showed promising signs of recovery for the future.

He said that the bank managed to survive because it had most of the qualities a sound bank needs, such as exceptional human resources, extensive networking and good technology.

"Bank Danamon has met all the requirements a sound bank needs," he said.

He added Bank Danamon has an extensive network, credit card franchises and a diverse customer base.

"The only thing that it doesn't have is public confidence which is a vital element in the banking business," he said. (aly)