IBRA to float BCA in bid to regain funds

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) plans to float Bank Central Asia (BCA) on the stock market in December or early next year in a bid to recover part of the huge sum the government has spent on the national bank restructuring program.

IBRA Chairman Glenn S. Yusuf said on Thursday the public offering of the country's largest private bank would help IBRA raise a Rp 18.2 trillion (US$2.71 billion) target of revenue for the state budget in the current fiscal year ending March 2000.

"BCA will go public either in December or January," he said at a regular media briefing.

Glenn said, however, the realization of the plan would depend on the market's condition.

"Timing here is very important because we want to maximize the (proceeds) result," he said.

He added the size of the public offering would depend on the market demand.

"But normally it is about 30 percent," he said.

Glenn also said BCA's capital adequacy ratio would be doubled to 8 percent at an estimated cost of Rp 28.48 trillion before the bank was floated.

IBRA took over 99 percent ownership in BCA last August after the bank breached the legal lending limit and its owners, the Salim Group and former president Soeharto's children, failed to repay Rp 48 trillion in emergency liquidity support from the central bank.

Glenn said BCA would acquire smaller Bank Risjad Salim Internasional, which was also previously owned by the Salim Group and now in the hands of the agency, prior to the public offering.

The Salim Group has pledged its stakes in some 78 companies to repay its debt to the government. This includes a 2.5 percent stake in the world's largest instant noodlemaker, PT Indofood Sukses Makmur, and a 8 percent stake in Hong Kong listed First Pacific Co.

Glenn said the Salim Group was currently arranging a road show to sell 12.5 percent of its shares in Indofood in a bid to repay part of its debts to IBRA and other creditors.

Glenn said the agency was also planning to sell its 8 percent stake in First Pacific in the current fiscal year.

He added IBRA would also divest its 44 percent ownership in the publicly listed giant automaker, PT Astra International, during the same period.

IBRA received the Astra stake from several owners of closed banks who had debts to the government.

IBRA was asked by the government to raise Rp 17 trillion this fiscal year to help finance the interest cost of treasury bonds issued to fund the bank restructuring and recapitalization program.

But IBRA set its internal revenue target at Rp 18.2 trillion.

Finance minister Bambang Subianto said on Wednesday the total bank restructuring and recapitalization cost was estimated at Rp 550 trillion, or as large as half of the country's 1998 gross domestic product at current prices.

The government plans to issue bonds worth over Rp 351 trillion this year, out of which Rp 157 trillion were floated recently.

The interest cost of the Rp 351 trillion bond issue for the current fiscal year was estimated at Rp 34 trillion. Half of the cost would be provided by IBRA and the other half by the state budget.

Bambang said the interest cost of the bond issue next fiscal year would be even higher, particularly if the country's monetary authority failed to further lower domestic interest rates or IBRA faced difficulties in recovering the various assets now in its hands.

IBRA currently controls over Rp 600 trillion worth of assets including some Rp 200 trillion in debts owed by former bank owners to the government, Rp 230 trillion in non-performing loans (NPLs) owed by over 1,600 debtors and Rp 103 trillion in recapitalization investments in several major private banks.

IBRA's Glenn was optimistic the agency could raise the targeted Rp 17 trillion this fiscal year.

He said some Rp 13 trillion was expected from the sales of its stakes in 200 companies surrendered by indebted bank owners. This includes stakes in BCA, Indofood, First Pacific and Astra.

He added the remaining 5.2 trillion would be derived from the restructuring of NPLs assets or asset liquidation.

Glenn had earlier said the major source of revenue from its various assets was expected to come from its investment in recapitalized banks.

He pointed out the current market value of several publicly listed banks already recapitalized by the government had surpassed the government investment in the banks.

The government has recapitalized Bank Lippo, Bank Internasional Indonesia and Bank Universal.

He also said the interest of investors participating in the recapitalization program was huge as reflected in the higher-than-expected rights issues bought by independent investors of the banks.(rei)