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

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)