Sat, 12 Apr 2003

IBRA set to gain little from bank assets

A'an Suryana, The Jakarta Post, Jakarta

The Indonesian Bank Restructuring Agency (IBRA) said on Friday that the recovery rate of collateral assets surrendered by indebted former bank owners was very low.

The head of the agency's asset management investment division, Edi Sinaga, said that the commercial value of the assets was only about Rp 10.5 trillion, compared to the Rp 107 trillion book value of the assets when they were surrendered to the government.

The government, via the central bank, injected Rp 144.5 trillion in liquidity support into a number of ailing banks to help them deal with the massive bank runs during the late 1990s banking crisis.

The former bank owners had to repay the emergency loans, but most of them could only surrender assets.

The commercial value of the collateral assets was estimated when the central bank transferred the loan account to IBRA in February 2002.

Many previously stated that IBRA was likely to obtain little from the assets surrendered by the former bank owners as most of the assets had been marked up and their value had deteriorated during years of economic crisis.

There have been strong public pressure on the government to force the former bank owners to surrender additional assets to full repay their debts. Some bankers have complied to the demand.

One of IBRA's mandates is to sell the assets to raise cash to help finance the state budget deficit. This year alone, the agency is targeted to raise around Rp 18 trillion in cash.