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)