IBRA to sell loans worth Rp 150 trillion

IBRA to sell loans worth Rp 150 trillion

The Jakarta Post, Jakarta

The Indonesian Bank Restructuring Agency (IBRA) announced on
Tuesday that it would launch next month the sale of bank loans
with a total book value of between Rp 130 trillion and Rp 150
trillion (US$16.57 billion).

IBRA deputy chairman Mohammad Syahrial said the loans were
owed by some 2,500 debtors.

He added that the loans included those owed by large debtors
with individual loan sizes of more than Rp 50 billion.

The agency took over more than Rp 200 trillion worth of non-
performing loans from ailing banks in the wake of the 1998
financial crisis.

IBRA is tasked with restructuring the loans and selling them
to the market to raise cash to help finance the state budget
deficit. For this year, the agency has targeted the raising of
more than Rp 35 trillion.

Syahrial said that the loans to be sold included those which
had not been restructured.

The agency has been criticized for the slow progress made thus
far in the restructuring and sale of the bank loans.

IBRA is also mandated to redeem some Rp 10 trillion worth of
government bonds from the banking sector to help reduce the
burden on the state budget. The agency is expected to swap the
restructured loans for bonds held by the banking sector.

The government issued around Rp 430 trillion worth of bonds to
help finance the recapitalization of several ailing banks. The
state budget covers the interest on the bonds.

So far, the agency has not started the loan-to-bond swap
program.

Several banks, however, have said that they would not be
interested in exchanging the bonds for the IBRA loans because of
the high risk factor associated with the loans, unless the agency
agreed to sell them at a large discount.

Reuters quoted Syahrial as saying that the recovery rate from
the loan sale would likely be about a fifth of the total book
value.

Syahrial said the agency hoped to achieve a recovery rate of
22 percent from the loan sale.