IBRA to auction bad loans to meet asset sales target

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) would soon auction part of the non performing loans it took over from state and nationalized banks to help meet its asset sales target of Rp 18.9 trillion (US$2.1 billion), Coordinating Minister for the Economy Rizal Ramli said on Monday.

Speaking to reporters at the state palace, Rizal said that foreign banks were invited to participate in the sales of the agency's non-performing loans.

According to him, the auction is expected to bridge the revenue gap caused by the delay in the divestment in of IBRA's stake in publicly listed PT Bank Central Asia (BCA) and PT Bank Niaga.

IBRA is short of another Rp 6.86 trillion to meet the Rp 18.9 trillion asset sales target. As of Sept. 30, the agency booked only about Rp 12.04 trillion from its asset disposal program.

Initially IBRA planned to divest the two banks this year, but it lacked the approval of the House of Representatives.

The House argued that current negative market sentiment, would lower the two bank's actual sales value.

Rizal said that the government would divest its stakes in BCA and Bank Niaga sometime in the early part of next year. Saying that preparations for the sales were already underway, Rizal downplayed the impact of the delay.

The sale of the two banks this year is part of the fulfillment of the principles laid out in the letter of intent (LoI) signed by the government and the International Monetary Fund (IMF).

The IMF has expressed its disappointment over the delay, as the divestments were expected to raise market sentiment for future sales.

Separately, IBRA's head of the division for asset disposal, Dasa Sutantio, estimated that half of IBRA's remaining sales target, or about Rp 3 trillion, would come from the sale of loans.

The agency on Monday placed advertisements in several national newspapers, announcing the auction of over Rp 3.7 trillion in small and medium sized loans and auto loan portfolios. (bkm)