IBRA prepares holding companies to manage unsold assets

IBRA prepares holding companies to manage unsold assets

Fitri Wulandari, The Jakarta Post , Bogor, West Java

The Indonesian Bank Restructuring Agency (IBRA) said it has
started preparations to form a number of holding companies to
manage its remaining unsold assets when it is disbanded in
February 2004.

"Preparations to form holding companies have been ongoing for
some time. We are now working on the legal basis for the
establishment of holding companies," IBRA deputy chairman for
asset management credit Mohammad Syahrial told The Jakarta Post
over the weekend.

"The remaining assets will be more administratively
accountable when IBRA reports them to the government," he said.

IBRA will become temporary shareholders but the government
will have the final say about what to do for the remaining
assets.

Syahrial did not specify the time frame for establishment of
the holding companies.

Set up in 1998 in the wake of the financial crisis, IBRA
main's task is to restructure assets from troubled banks and
their former owners, and to raise cash to help finance the state
budget deficit.

The agency is set to be disbanded in February 2004. However,
controversy persist over whether the agency's existence should be
prolonged or not. IBRA chairman Syafruddin Temenggung had said
earlier that IBRA would not be extended.

Dissolving IBRA would be a sign of a recovery in the country's
economy.

IBRA finance director Harry A.S. Sukadis said unsold assets
under the agency were projected to be around Rp 71.84 trillion by
December 2003.

They comprise Rp 4.54 trillion-worth of shares in banks, fixed
assets worth around Rp 24 trillion (currently under the asset
management investment division) and Rp 43 trillion-worth of bank
nonperforming loans (from the asset management credit division).

Syahrial explained that IBRA would carry out an appraisal on
these remaining assets before they were transferred to the
holding companies.

"If the assets were transferred at book value, the holding
companies would not make a profit because the assets would be
sold at a market price lower than the book value," he said.

Harry added IBRA had started preparations for its planned
closure, which included preparing accountability reports on its
five years of operation, as well as carrying out financial and
performance audits.

The Supreme Audit Agency (BPK) is still auditing IBRA's
performance, Harry said.

From 1999 to July 2003, the agency contributed some Rp 149.49
trillion to the government's coffers from the sale of assets.

The asset management credit unit managed to restructure some
Rp 256.45 trillion-worth of nonperforming loans of the total Rp
340.72 trillion in bad loans taken from troubled banks.

Syahrial said debt restructuring within IBRA was on track.

"Most of the debts have been returned to the market and the
businesses are now starting to run normally," Syahrial said.