IBRA to unload 27% of assets under its control

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) plans to unload 27 percent of the Rp 96 trillion (US$12.8 billion) in assets taken over from banks under its control this year.

IBRA chairman Glenn Yusuf said at a dinner with journalists here on Wednesday that the agency would hold a roadshow next month to market the assets.

Returns from asset sales are expected to be at least Rp 16 trillion, which would be used by the government to help finance the interest payment on its bonds issued to fund the bank recapitalization program.

"What is best for us would be to get funds from offshore. So, we will sell the assets to foreign buyers. But we will still give the opportunity to domestic investors.

"We don't have a priority, though. What is important is that they are able to manage the assets and the workforce. Our concern is to save employment," he said.

Glenn said the assets, including tens of companies, currently employ over one million people.

The Rp 96 trillion worth of assets were ceded by owners of Bank Central Asia, Bank Danamon, Bank Dagang Nasional Indonesia, Bank Surya, Bank Modern and Bank Umum Nasional.

The first two banks were taken over by the government last August and are still running, while the last four banks have been closed.

Glenn, however, declined to reveal details of the assets, saying that the agency was currently compiling a list of these assets.

He promised to make public the list in the next couple of weeks.

"Those assets will be disclosed, be they in the form of securities or companies."

They basically consist of non-core assets like vehicles and computers, core assets like bank loans and obligations and quasi- cash assets like stocks and other securities.

IBRA, set up in January 1998, has formed the Asset Investment Management to sell off the assets and banks' non-performing loans which have been transferred to it.

Glenn said IBRA was in the process of taking over the non-performing loans of the four banks that have been taken over by the government and 10 that have been shut down.

Most of the loans had been collateralized by those troubled banks to Bank Indonesia when they secured massive liquidity credits from the central bank.

The legislation to regulate the transfer is set to be passed early this year.

The Asset Investment Management would also take over non- performing loans of banks which would join the government's bank recapitalization program.

IBRA would also become the investor acting for the government in the recapitalized banks.

Glenn said IBRA is currently preparing new government obligations to fund the bank recapitalization program, which is expected to be completed by the end of the first quarter of 1999.

The government has said that the bonds would be sold to Bank Indonesia, but not to the public.

In 1998, Glenn said, the government sold Rp 80 trillion worth of bonds to Bank Indonesia to fund bank recapitalization. Nevertheless, the distribution of the proceeds from the bond issue has yet to be clarified.

The government also sold another Rp 20 trillion worth of bonds to Bank Indonesia to recapitalize the state-owned Bank Ekspor Impor Indonesia.

The government has said that it would need a total of Rp 257.5 trillion to recapitalize 70 undercapitalized banks in order to improve their capital adequacy ratio to 4 percent. (rid)