IBRA optimistic on loan asset sales
Dadan Wijaksana, The Jakarta Post,Jakarta
The Indonesian Bank Restructuring Agency (IBRA) expressed optimism it would be able to get a relatively good price for the huge bank loan assets that it's trying to sell, saying that it would not accept low bids.
IBRA Chairman Syafruddin Temenggung said on Monday that he would not tolerate unfair price valuations, even if they came from reputable financial advisors.
"IBRA will use the FAs (financial advisors) only as a back up for our internal team. And if the financial adviser's valuation is lower than our valuation, I will use ours," Syafruddin told reporters during a ceremony held to officially launch the sale of some Rp 150 trillion (US$17 billion) worth of loan assets.
"If the bids are too low, we will cancel the sale and repackage it. We will not open another session."
Coordinating Minister for the Economy Dorodjatun Kuntjoro- Tjakti and State Minister for State Enterprises Laksamana Sukardi did not attend the ceremony as initially expected. There was no explanation for this.
IBRA took over more than Rp 200 trillion worth of non- performing loans (NPLs) from troubled banks in the late 1990s. The agency is mandated to restructure the loans and sell them to raise cash to help finance the state budget deficit.
IBRA is targeting a recovery rate of around 30 percent from the loan sale.
But there has been concern that the agency might get a much lower recovery rate of between 8 percent and 12 percent because it combines the sale of restructured loans and unrestructured ones.
Rejecting such concerns, Syafruddin guaranteed he would not be intimidated by investors offering low prices. "We will welcome any investors, both domestic and international. But if they are offering a recovery rate of eight to ten percent, they had better go home."
"Just as in the case of Bank Niaga, we will refuse to sell if the price is not right," he said, referring to the agency's plan to sell the government's 51 percent stake in Bank Niaga to strategic investors, which might be canceled due to the very low bids submitted by the bidders.
Meanwhile, the loan assets, which are made up of commercial and corporate loans, will be sold via either a direct selling system or tender mechanism. The sale process is expected to be completed by Aug. 22, 2002.
Commercial loans are loans worth between Rp 5 billion and Rp 50 billion, while those above Rp 50 billion are categorized as corporate loans.
The process itself is designed to be open for investors, both local and international, in the most transparent and competitive manner, Syafruddin said.
As for the original debtors, IBRA has put in place a rule that prohibits them from buying back the assets.
Those who buy the assets must also not be affiliated with the debtors and must sign a letter stating that they are not affected by a conflict of interest.