IBRA plans to meet Rp 26 trillion target

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.