IBRA raises Rp 7.3t in cash in 2001: Edwin

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)