IBRA raises another Rp 1t from corporate loan sale

IBRA raises another Rp 1t from corporate loan sale

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA)
said on Thursday that it had raised some Rp 1 trillion (US$88.07
million) from the latest sale of corporate debt assets.

Head of IBRA loan asset disposal division Mohammad Syahrial
said in a press statement that the corporate loan assets, which
consisted of dollar and rupiah assets, were sold to foreign and
local buyers via an open tender.

Syahrial said that the Rp 1 trillion proceeds from the third
tranche asset sale reflected a recovery rate of 40.09 percent,
which was lower than the 70 percent recovery rate in the first
tranche and 50 percent in the second.

"The lower recovery rate of the third tranche sale is greatly
influenced by the current unfavorable Indonesian macroeconomic
conditions," he said.

Indonesia's current economic woes and political instability
have deterred foreign investors from investing their money in the
country. The plan by the People's Consultative Assembly (MPR),
the country's top legislature, to impeach embattled President
Abdurrahman Wahid at a special session scheduled for August 1 has
created concern of possible conflict between the President's
fanatical supporters and opponents.

IBRA, a unit under the finance minister established in early
1998 in the wake of the 1997 regional financial crisis, received
around Rp 260 trillion worth of non-performing loans (NPLs) from
ailing domestic banks. The agency is tasked to restructure the
loans and sell them to the market to raise cash to help finance
the state budget deficit.

In addition to the loan assets, IBRA had also received various
forms of fixed assets from banks and former bank owners worth
hundreds of trillion of rupiah. The agency must also dispose of
these assets to raise cash.

IBRA is targeted to raise some Rp 27 trillion this year. As of
the end of last month, the agency had raised some Rp 11.12
trillion. The agency said that it planned to raise another Rp 2
trillion this month.

Elsewhere, Syahrial said that there were around 10 foreign and
local buyers for the third tranche loan sale including Lazard
Freres & Co., Rabo Bank, Deutsche Bank AG, Credit Suisse First
Boston, local Bank Central Asia and Bank Danamon.

"The remaining unsold portfolios may be offered for sale in
future tranches," he said.

IBRA has been criticized for its slow progress in the disposal
of assets. Finance Minister Rizal Ramli said recently that out of
the Rp 540 trillion worth of assets managed by the agency, only
20 percent had been sold so far.

President Abdurrahman Wahid recently installed I Putu Ary Suta
as the new chairman of IBRA in a bid to accelerate the asset sale
program. The government has planned to dissolve the agency in
February 2004.

The previous IBRA chairman, Edwin Gerungan, planned to form
two joint ventures with foreign financial institutions in a bid
to help accelerate the restructuring and sale of its loan assets.

Asked whether the agency would proceed with the plan, Ary Suta
said that he had to review the plan first before deciding whether
to proceed or not.

Some senior officials at the finance ministry had earlier
opposed the plan, arguing that IBRA's highly-paid staff were
already more than sufficient to implement its mandate.(rei)