IBRA scrambling for House support in bank sale
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.