IBRA needs bank help to restructure loans

IBRA needs bank help to restructure loans

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA)
will soon appoint two banks to help the agency restructure some
Rp 8.4 trillion (US$976.44 million) of bank bad debts under its
management, a senior official at the agency says.

Anton Napitupulu said on Tuesday that this would be the third
and final tranche of the agency's program to outsource the
restructuring of some Rp 20 trillion in nonperforming loans.

IBRA recently announced it had shortlisted 11 financial
institutions to bid for the third tranche of the outsourcing
program.

The 11 candidates include Bank Central Asia, Bank Lippo, Bank
Niaga and Bank Universal, Bank Panin and ANZ, Sakura Merchant
Bank, Bank Artha Graha and Grant Thornton, Bank Internasional
Indonesia, Bank Buana Indonesia and Sidharta Consulting, Bank
Bukopin, DBS Buana, and Deutsche Bank and Bank Rakyat Indonesia.

Bank Danamon earlier won the first tranche with a mandate to
restructure some Rp 6.6 trillion of bad debts, and Bank Negara
Indonesia (BNI) recently won the second tranche to restructure
some Rp 5.42 trillion in bad loans.

IBRA manages around Rp 220 trillion worth of bad loans
transferred from closed-down banks, nationalized banks and
recapitalized banks.

The agency has a mandate to restructure and collect the loans
as part of the country's overall bank and corporate restructuring
programs, and to raise cash to help finance the state budget.

IBRA has said it would outsource the restructuring of some Rp
20 trillion of the loans to third parties to accelerate the
restructuring process.

IBRA signed an agreement on Tuesday with Bank BNI and Delloite
Touche Tohmatsu, a consortium that won the second tranche of the
outsourcing program.

Anton said that according to the contract, BNI was given two
years to restructure the loans.

He said that BNI received a fixed management fee and a success
fee for its work.

Eko Budiwiyono of BNI expressed confidence that the bank would
be able to meet the target.

But analysts have warned that the current increasing domestic
interest rates would become an obstacle to the debt restructuring
efforts.

Since last month, domestic interest rates have started to rise
again amid continuing weakness in the exchange rate of the rupiah
against the U.S. dollar.(rei)