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.