IBRA plans to meet Rp 26 trillion target
The Jakarta Post, Jakarta
The Indonesian Bank Restructuring Agency (IBRA), explaining how it would meet its revenue target of Rp 26 trillion (US$2.9 billion) for this year, said Tuesday it expected to rake in some Rp 4 trillion from the divestment program.
IBRA Chairman Syafruddin Temmenggung said on Tuesday that the proceeds would mostly come from the sales of majority stake in Bank Danamon and Bank Lippo.
The agency was assigned by the government to raise Rp 26 trillion in funds to help plug this year's budget deficit, which is estimated at Rp 34.4 trillion or 1.8 percent of the country's gross domestic products (GDP).
"Apart from that (the divestment program), IBRA also plans to raise Rp 16 trillion from the sales of non-performing loans, and Rp 6 trillion from the sale of other assets," Syafruddin said Tuesday during a hearing with the House of Representatives' Commission IX for financial affairs.
Some of the revenues would also be in the form of bonds under the assets-to-bonds swap, he added.
Other banks included in the agency's divestment program for this year are Bank Internasional Indonesia (BII) and Bank Permata.
Aside from filling the deficit gap, the banks sales were aimed at restructuring the banking sector. The new owners are expected to improve the banks' performance and as such revive the banking sector's intermediary role.
Last year, IBRA sold two banks, that is the Bank Central Asia (BCA) in March and Bank Niaga in November.
As far as Danamon is concerned, on the approval from the House of Representatives, IBRA plans to sell 71 percent stake in the bank in two stages. First, it will sell up to 20 percent of the stake via the stock market, before selling another 51 percent to strategic investors.
The process is slated to be completed before mid-year.
The first round sale is aimed at testing the market interests, as well as obtaining a benchmark price for the subsequent sale of a majority stake to strategic investors.
IBRA becomes the majority owner of the bank after bailing it out in the wake of the late 1990s banking crisis. IBRA holds 99.4 percent stake in the bank in return for around Rp 47 trillion worth of bailout funds, while the public owns the remainder.
Elsewhere, Syafruddin also said IBRA would move ahead with plans to launch another round of massive sales of assets program, in which more than Rp 80 trillion worth of non-performing loans would be on offer.
If all the preparations run as scheduled, IBRA would launch the program in the first week of next month, he said.
The program would be the third, following the completion of the first and the second rounds last year.
In the last round of the program, the agency managed to generate about a mere Rp 2.7 trillion in proceeds, a disappoint result compared to the assets' total face value of almost Rp 70 trillion.
IBRA had repeatedly argued such a program was crucial so as to accelerate its assets sales and debts restructuring, which has been progressing slowly so far.
Established in 1998 and controls hundreds of trillions worth of bad loans taken over from the ailing banking sector, IBRA is mandated to restructure the loan assets first before returning them to private sector.
However, the assets restructuring has proved to be difficult and time-consuming such that IBRA decided to sell the loan assets even if most of them have not yet restructured.