IBRA scrambling for House support in bank sale
The Jakarta Post, Jakarta
The Indonesian Bank Restructuring Agency (IBRA) said it was working hard to win legislators' support for the sale of a majority stake in Bank Danamon, highlighting again the problems behind meeting reform targets amid an assertive legislative.
IBRA chairman Syafruddin Temengung said progress was slow and that he had asked State Minister for State Enterprises Laksamana Sukardi to send a letter to seek the support of the legislature.
"In total we've sent them (legislators) three letters seeking support," Syafruddin said on Tuesday.
Although state asset sales do not require the House of Representatives' approval, the government prefers to secure the House's approval to avoid a political backlash for selling national assets.
The government plans to sell this year a 71 percent stake in Bank Danamon, in which it owns a 99.36 percent stake under IBRA.
Selling the bank is part of the government's reform targets as outlined under its Letter of Intent (LoI) to the International Monetary Fund (IMF) last year.
Compliance with the LoI targets is mandatory to obtain the IMF loans, worth in total some $5 billion under a four year contract.
Based on the LoI, the government should have sold Bank Danamon to strategic investors by July. Preparations however have just begun, and Syafruddin said IBRA had yet to appoint financial advisors for the sale.
The late start has been blamed on the long process behind the sales of Bank Niaga and Bank Central Asia (BCA), the latter of which took almost two years to complete.
While BCA was sold last March, IBRA is still working on the sale of Bank Niaga with a final bidder however already selected.
The process has been prolonged mainly due to objections from a number of legislators who have resisted foreign ownership in these banks.
Last month though, several legislators admitted that they and their colleagues were offered money by IBRA to agree to the sale, charges the agency has denied.
Bank Danamon, Bank Niaga, BCA, and another bank slated for sale, Bank Lippo, were nationalized after the government injected them with billions of dollars worth of recapitalization bonds to prevent them from folding during the 1997 economic crisis.