IBRA to sell all SME debts before year-end

IBRA to sell all SME debts before year-end

A'an Suryana, The Jakarta Post, Jakarta

The Indonesian Bank Restructuring Agency (IBRA) will auction off
the remaining nonperforming loans (NPLs) owed by small and medium
enterprises (SMEs) before the end of this year, an agency
official said.

The official, who declined to be named, said that some 39,000
loan accounts worth Rp 3.5 trillion would be put up for sale.

"The timetable is not yet clear, but it will be before the end
of this year," he said.

IBRA took over a huge amount of NPLs from ailing banks at the
height of the late 1990s financial crisis. The NPLs include
those owed by SMEs, comprising some 172,000 debt accounts worth
around Rp 10.1 trillion.

The agency has a mandate to restructure the loans and sell
them back to the banking sector. In the case of NPLs owed by the
SMEs, IBRA has been selling the loans since 2000. Loan assets
have been sold to ANZ Panin Bank, Bank Danamon and Bank
Arthagraha at a huge discount.

The SMEs will now have to repay the loans to the three
institutions.

The government has recently issued a decree stipulating that
the SMEs are entitled to a 25 percent debt discount if they make
a one-time cash settlement.

The government defines SME loans as loans with an individual
size of less than Rp 5 billion, meaning that consumption loans or
credit card loans owed by individuals also fall under this
definition.

But IBRA spokesman Raymond van Beekum said that credit card
loans or consumption loans categories would not be eligible for
the debt haircut facility.

In total there are some Rp 39 trillion worth of NPLs including
those owed to IBRA and banks.

Separately, a source at the agency said that SMEs could still
make repayments via IBRA before their debts were sold to
investors.

He said that the agency would accept registration for debt
repayment until Jan. 29, next year.

If the debtors are unable to make repayments by the above
deadline, the loans will be sold to other financial institutions
through public auction, the source said.