IBRA seals deal with owners of closed banks

IBRA seals deal with owners of closed banks

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA)
secured this week a debt settlement deal with the owners of four
closed banks, agency senior official Lungguk Gultom said late on
Friday.

Lungguk said in a press statement that the agreement was
reached with former president Soeharto's daughter Siti Hardijanti
Rukmana (owner of now defunct Bank Yama), Hendra Liem (Bank Budi
International) Hartawan Sarjito and The Ning Kong (Bank Baja
International), and Suparno Ardijanto (Bank Bumi Raya).

Under the agreement, called the shareholders settlement
program, the bank owners must repay their obligation to the
government including by surrendering their personal assets.

Lungguk said that IBRA expected to be able to complete debt
settlement deals with the owners of 20 other closed banks by the
end of the first week of next month.

IBRA had initially expected to conclude deals with the owners
of 24 closed banks by the end of this month.

The banks were part of the 39 banks closed down by the
government last year due to insolvency or violation of bank legal
lending limits. Prior to the closures, the banks received
emergency loan facilities from the government to help them stay
afloat amid massive bank runs at the time. The bank owners must
now repay these debts.

The owners of eight of the 39 banks have already settled their
obligation through other mechanism within IBRA, while the owners
of three banks had made cash repayment.

IBRA had also handed over its case with the owners of four
closed banks because they have been uncooperative. The banks
included Bank Dewa Rutji, Bank Aspac, Bank Orient and Bank
Central Dagang.

Lungguk didn't mention the total obligation of the 24 closed
banks, but IBRA said in July that the obligation was around Rp
10.5 trillion (US$1.2 billion).

Lungguk said that IBRA would take legal action to bank owners
who were uncooperative in settling their obligation.

Press reports said Thursday that many of the owners of the
closed banks had recently expressed their reluctance to sign the
debt settlement deal because IBRA forced them to surrender assets
worth 150 percent of their debt.

The reports said that IBRA had been under strong pressure
because of the widespread criticism of the controversial Master
of Settlement and Acquisition Agreement (MSAA) it made in 1998
with the owners of five larger banks, which had also been the
largest recipients of the emergency government loans.

It turned out that the value of the assets surrendered by the
former bank owners had been less than their total debts.

The government has demanded that the former bank owners inject
more assets.

Separately, IBRA chairman Cacuk Sudarijanto said on Friday
that he was optimistic that the agency could meet its target of
raising Rp 18.9 trillion in cash this year.

He said that the agency had so far raised around Rp 10.5
trillion in cash.

Cacuk was speaking to reporters after a meeting with Vice
President Megawati Soekarnoputri.

IBRA will sell the assets surrendered by the former owners to
help meet the cash target.

Later this year, the agency is expected to sell its stake in
the publicly listed Bank Central Asia and Bank Niaga.

The agency will also raise cash by restructuring and
recovering the huge non-performing loans under its
management.(rei)