IBRA to control US$10.4b in fixed assets by June

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) expects all US$10.4 billion worth of fixed assets pledged by conglomerates to repay debts, to be transferred to the government's holding company by June.

IBRA deputy chairman Farid Haryanto said on Thursday he expected 75 percent of the assets would be recovered. More than Rp 140 trillion (about $16.5 billion) in Bank Indonesia liquidity support was injected last year into banks owned by the conglomerates.

"Assets pledged by Usman Admadjaja and Sudwikatmono have all been transferred (to the holding company)," he said.

Usman is the former owner of Bank Danamon, now under government control, and Sudwikatmono is the owner of Bank Subentra and Bank Surya, which were closed down last year.

Farid said processing of the transfer of the remaining fixed assets was still underway, to prevent legal problems resulting from claims made by other parties.

He said only 80 percent of fixed assets surrendered by the Salim Group had been transferred, because processing the assets took time, due to their value and quantity.

The Salim Group was the former controlling shareholder of Bank Central Asia, also now in government hands.

"Assets pledged by Mohamad Bob Hasan, the Ongko Family, the Gadjah Tunggal Group, and the Modern Group are all expected to be transferred before the June general election," Farid said.

Bob Hasan and the Ongko Family were the former controlling shareholders of the now defunct Bank Umum Nasional, while Gadjah Tunggal and Modern Group were the former owners of closed down Bank Dagang Nasional Indonesia and Bank Modern.

Farid said IBRA had managed to sell three of the assets with a total value of $21 million. including a ceramics maker owned by the Ongko Group and a private jet belonging to Bob Hasan.

He said the agency would not conduct a fire sale of the assets.

"We have four years to dispose of the assets."

He said the majority of the assets are companies operating in chemical, auto, food, property and agriculture industries.

He said 35 percent of the assets were in the agriculture sector and included palm oil plantations and the pulp and paper industry.

The second largest distribution was in the property sector with hotels in Jakarta, Bali and Singapore.

He said the agency was studying various options on how to dispose of the assets, including offering them through an initial public offering on the stock market.

"For joint-venture assets, foreign shareholders will be given preemptive rights to purchase the assets at the transfer value."

Farid was optimistic the agency would raise the targeted Rp 17 trillion from asset sales in the 1999/2000 fiscal year to help the government refinance the bank recapitalization program.

"With 200 working days in a year, this means that we have to raise more than Rp 50 billion per day or Rp 1 billion each to be raised by my 50 staff members," said Farid, who is the head of IBRA's asset management investment program.

The government plans to finance up to 80 percent of the recapitalization program of nine private banks, which may need more than Rp 21.3 trillion in funds. The government will issue bonds, for which the interest rate cost is estimated to amount to Rp 34 billion in the current fiscal year, and Rp 17 trillion will be covered by the state budget.

The program is part of the overall bank restructuring program designed to clean up the country's ailing banking sector.

The government closed down 38 banks in March after closing down 10 banks last year. It has also taken over 11 banks.

Farid said the end result of the program would mandate the activities of eight to 10 large banks, including private, state and foreign banks.

He said some small banks would be allowed to operate in several parts of the country to cater to established markets. (rei)