IBRA raises Rp 7.3t in cash in 2001: Edwin

JAKARTA (JP): Chairman of the Indonesian Bank Restructuring Agency (IBRA) Edwin Gerungan said on Wednesday that the agency had so far managed to raise around Rp 7.3 trillion (US$637 million) in cash of the targeted Rp 27 trillion this year.

Speaking during a hearing with the House of Representatives commission IX for financial and development planning affairs, Edwin said that the agency's asset management credit (AMC) division contributed around Rp 4.6 trillion, asset management investment (AMI) division Rp 1.5 trillion, with the remainder from the bank restructuring unit (BRU).

He said that IBRA had transferred around Rp 6.2 trillion into the government's coffers at the finance ministry.

IBRA, a unit of the finance ministry established in early 1998, controls various forms of assets worth more than Rp 600 trillion. The assets were transferred from closed or recapitalized banks, and former indebted bank owners.

One of IBRA's mandates is to sell the assets to raise cash to help finance the state budget deficit. Earlier this year the agency was asked to raise Rp 27 trillion in cash and to restructure around Rp 10 trillion worth of bank non-performing loans (NPLs) to be swapped with government bonds held by recapitalized banks.

The 2001 state budget deficit could widen by up to 6 percent of gross domestic product (GDP), compared with the initial projection of 3.7 percent of GDP, due to a weaker rupiah and rising domestic interest rate; this has prompted plans to revise upward the IBRA cash target to help limit the deficit at the initial projection level.

The AMC division holds some Rp 260 trillion worth of bank NPLs transferred to IBRA from both closed and recapitalized banks. The agency must restructure the loans and sell them back to the banking sector to raise cash.

But the government has also asked IBRA to restructure some Rp 10 trillion of NPLs, to be exchanged with government bonds held by the recapitalized banks. The measure is aimed at trying to encourage banks to resume lending to the business sector and to allow banks to earn greater revenue.

The government has injected about Rp 430 trillion worth of bonds to recapitalize around 27 banks. The assets of local banks are dominated by government bonds, which is not good for the banks.

The agency has said that it plans to form joint ventures, possibly with leading international or domestic banks, to help accelerate the restructuring of the huge NPLs.

The AMI division holds various forms of fixed assets, including shares in companies transferred by former bank owners to repay obligations to the government. IBRA is mandated to sell these assets to raise cash. The agency announced recently that the AMI division planned to sell shares in around 35 companies this year.

One of IBRA's major asset disposals this year is the plan to sell a majority of government shares in the publicly listed Bank Central Asia (BCA) and Bank Niaga, a sale which is expected to be completed in July or August.(rei)