IBRA plans to sell four more banks

IBRA plans to sell four more banks

The Jakarta Post, Jakarta

The Indonesian Bank Restructuring Agency (IBRA) plans to sell
government shares in the publicly-listed Bank Danamon and Lippo
Bank in the second half of this year, and in two other banks next
year.

The agency said in a document distributed during a meeting
with the House of Representatives Commission IX on state budget
and finance on Thursday that it would sell the government's 51
percent stake in Bank Danamon next month, while the sale of the
Lippo Bank stake would take place in December.

The government controls 99.36 percent of Bank Danamon, and 57
percent stake in Lippo Bank.

IBRA recently launched the sale of the government's 51 percent
stake in Bank Niaga to strategic investors, but this sale might
be canceled because of the low bids offered by the bidders. The
government may seek another sales mechanism for the publicly-
listed bank including via a private placement and secondary
offering.

The government owns a 97.15 percent stake in Bank Niaga.

The sale of the government shares in these three banks this
year is part of an asset sales program demanded by the
International Monetary Fund (IMF), which is sponsoring the
country's economic reform program.

The IMF has also demanded the government privatize the giant
Bank Mandiri in the third quarter of this year. The privatization
program was initially expected to be completed in June, but was
delayed due to various problems including weak market sentiment.

In March, IBRA managed to sell the government's 51 percent
stake in Bank Central Asia, the country's largest retail bank, to
a consortium-led by U.S. investment firm Farallon Capital.

The government via IBRA nationalized and recapitalized several
ailing banks in the late 1990s. The agency is mandated to
restructure the banks and sell them back to the private sector to
raise cash to help finance state budget deficit. IBRA is targeted
to raise more than Rp 35 trillion in cash this year to help plug
the 2002 budget deficit projected at more than Rp 42 trillion or
around 2.5 percent of gross domestic product (GDP).

The IBRA document also said that it would sell government
ownership in Bank Internasional Indonesia (BII) sometime in the
first quarter of next year.

It added that another bank would be sold in the third quarter
of 2003. This bank will be the result of the planned merger of
five smaller banks which include Bank Bali, Bank Universal, Bank
Patriot, Bank Arthamedia, and Bank Prima Express.

The merger process is expected to be completed in September
this year.

IBRA said that the remaining government shares in Bank Niaga
and Bank Danamon would also be disposed in 2003.