IBRA sets rights issue of Bank Bali by end of January

IBRA sets rights issue of Bank Bali by end of January

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA)
wants to launch Bank Bali's rights issue by the end of this month
because a further delay would inflate the cost of the bank's
recapitalization.

IBRA deputy chairman Farid Harianto said his agency was
consulting with various parties, including the Capital Market
Supervisory Agency (Bapepam), on how to speed up the process
toward recapitalization.

"If you ask me when we want the right issues to be held, I
would say by the end of this month. But everything would depend
on Bapepam," he said.

Bank Bali's rights issue, initially scheduled for last
October, was delayed until early January due to the high-profile
scandal.

The plan again met a hurdle when Bapepam refused late last
month to approve Bank Bali's rights issue plan due to inadequate
disclosure of information.

Bapepam contended that Bank Bali and IBRA failed to provide
necessary details on Bank Bali's shareholders, especially
Deutsche Boerse Clearing AG (DBC) of Germany which reportedly
controls up to 40 percent of the bank.

But Farid said neither IBRA nor Bank Bali knew about DBC and
who was behind the investor. He argued that Bapepam was amiss in
not being aware of DBC's involvement in the bank.

"Bapepam should have used its authority regarding the
acquisition of Bank Bali's stake by DBC, which was conducted
without a tender offer process," he said.

Farid said IBRA's main interest was to see a speedy
recapitalization of Bank Bali because a further delay would be
costly to the government.

He said President Abdurrahman Wahid, in an earlier meeting
with IBRA chairman Glenn Yusuf, also expressed his wish to see
the recapitalization of Bank Bali done at "full speed".

If Bapepam does not clear the process of Bank Bali's rights
issue by the end of this month, the issue would have to be
delayed until the end of March.

If that happened, Farid said, Bank Bali would not be allowed
to use its June financial report as the basis for the rights
issue. The bank would have to use its September financial
statement due to the delay, requiring a further three months for
the completion of the audit.

"The cost of Bank Bali's recapitalization will definitely
increase. But we don't know yet how much it will cost until a
further due diligence is conducted."

The cost of Bank Bali's recapitalization to bring its capital
adequacy ratio to 4 percent was initially estimated at Rp 4.1
trillion (US$585 million).

Meanwhile, Bank Bali's acting president Henry Koenaifi said
the bank currently suffered a loss of around Rp 30 billion per
month from negative spread, which is when the bank's interest
expenses are much higher than its investment.

Before his entrance, he said, the bank suffered between Rp 60
billion and Rp 70 billion from negative spread.

Farid also revealed on Tuesday that two foreign investors and
one investor linked to a local company expressed interest in
acquiring IBRA's stake in Bank Niaga.

The agency will open bidding for the stake next week, Farid
said without giving a specific date.

The total cost of recapitalizing the bank is estimated at
around Rp 7 trillion.

Farid said IBRA may have to merge Bank Niaga with Bank Danamon
if the agency failed to find investors for Bank Niaga, or if the
bids presented by the interested investors were considered too
low by the government. (rid)