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)