IBRA seizes Rp100t in bad bank assets

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) took over Rp 100 trillion (US$11.5 billion) in nonperforming loans from the seven state banks.

"The bad loans belong to some 1,200 debtors at Bank Bumi Daya, Bank Dagang Negara, Bank Pembangunan Indonesia, Bank Tabungan Negara, Bank Ekspor Impor Indonesia, Bank Rakyat Indonesia and Bank Negara Indonesia," IBRA deputy chairman Eko S. Budianto said on Thursday.

Bad debts have pushed the state banks into technical bankruptcy, but they remain in operation because of the government's deposit guarantee and liquidity support from the central bank.

Budianto said the financial restructuring would remove bad assets from the banks' loan portfolios so they could concentrate their resources on managing their productive assets.

However, he added that the transfer of the bad assets to IBRA would not automatically lead to the liquidation of corporate debtors.

"Debtors who show good faith and still have good business prospects will be helped to continue their operations through credit restructuring."

Collect

He said that IBRA would attempt to collect the debts, adding the agency would vigorously pursue debtors.

"We will not write off the debts of certain corporate borrowers as some people have suspected."

A large number of the biggest debtors at state banks are politically well-connected businesspeople.

Recent media reports listed former president Soeharto's sons and cronies among the largest debtors at four state banks: Bank Bumi Daya, Bank Dagang Negara, Bank Ekspor Impor Indonesia and Bank Pembangunan Indonesia. These four banks are in the process of being merged to form Bank Mandiri.

The reports said Soeharto's youngest son, Hutomo Mandala Putra, owed $400 million and Rp 1.7 trillion to the four banks, and Soeharto's second son, Bambang Trihatmodjo, and his associates owed the banks $2.7 billion and Rp 1.9 trillion. Businessman Prajogo Pangestu, a Soeharto crony, owes the banks Rp 2.6 trillion, according to the reports.

Budianto said IBRA also would take over the bad assets of the nine private banks which had qualified for the government's bank recapitalization program. (vin)