IBRA expects to assume Rp 220t in NPLs
JAKARTA (JP): The asset management unit of the Indonesian Bank Restructuring Agency (IBRA) is expected to receive Rp 220 trillion (US$25.3 billion) in nonperforming bank loans (NPLs) by the end of this month, a senior official at the agency said on Tuesday.
Head of IBRA's loan resolution department Irwan Siregar said that 70 percent of the loans were categorized as corporate loans with individual loan sizes of more than Rp 5 billion.
He said the agency received more than Rp 158 trillion in NPLs from 10 banks liquidated in 1998 (Rp 35 trillion), seven state banks (Rp 100 trillion) and Bank Danamon and Bank Tiara (Rp 23.2 trillion).
Danamon and Tiara were among four banks taken over by the government last year.
But Siregar did not mention the amount assumed from Bank Central Asia and Bank PDFCI, the other institutions taken over last year.
"We expect to receive the remaining credit assets (NPLs) from nine more banks already taken over, 38 closed banks and nine recapitalized banks by the end of this month," Siregar told a news conference.
The government closed down 38 banks, took over seven banks and decided to recapitalize nine banks on March 13.
IBRA deputy chairman Eko S. Budianto said the agency would try to design a loan resolution program for the corporate debtors.
He said that in the initial stage, about 20 of the largest debtors would be encouraged to join a government-backed debt restructuring program, details of which are set to be announced on Friday.
Eko added that the largest debtors included PT Chandra Asri Petrochemical Center, Tirtamas Group, PT Semen Cibinong, Bank Papan Sejahtera Group and PT Timor Putra Nasional.
He declined to make other disclosures, reasoning that it might be counterproductive to restructuring efforts and recovery of the loans.
"We have to adopt a positive approach," Eko said.
It's an open secret that most of the corporate debtors, particularly at state banks, are politically well-connected businesspeople, including siblings of former president Soeharto and the family's associates.
Irwan said IBRA would group the corporate debtors into "those with integrity and those without integrity".
He explained there would be restructuring for debtors with positive cash flow and negative cash flow but who showed integrity or good faith in repaying their debts would be restructured. Those with no economic value despite and with integrity would be liquidated.
He said those with no integrity would face foreclosure and liquidation of their assets.
Irwan said the remaining 30 percent of the Rp 220 trillion in NPLs were categorized as loans to small and medium-sized enterprises and retail loans, whose management would be assigned to third parties.
"We will adopt an outsourcing strategy but with tight monitoring from IBRA," he added.
IBRA also reported that it raised a total of Rp 35.64 billion from the auction of noncore assets of the 10 banks liquidated last year.
Head of the noncore asset department at IBRA, Gotlieb, said that the agency was preparing more auctions of various vehicles and furniture between this month and June 5.
He said that the agency was still in the process of verification of the noncore assets of the 38 banks closed in March.
Eko said IBRA appointed Bank Central Asia as the agency's bank to administer debt payments from the debtors of the 38 closed banks. (rei)