Japan's banks reopen offices

Japan's banks reopen offices

TOKYO (Nikkei): Bank sources said Japanese banks planned to resume business operations in Indonesia yesterday, expecting the social unrest to subside with the resignation of President Soeharto, the Nihon Keizai Shimbun said in its yesterday morning edition.

But other Japanese companies remain wary of the situation and were eagerly awaiting a televised speech due to be given by the new president B.J. Habibie on Thursday evening.

Soeharto resigned after almost 32 years in power on Thursday morning and was replaced by Habibie who was immediately sworn in as president.

Speaking of the exposure of Japanese banks in Indonesia, a Sumitomo Bank executive said, "Politics and economics are closely linked in the country. We cannot predict the outcome of negotiations on debts owed by Indonesian borrowers."

Sumitomo's balance of outstanding loans to Indonesian borrowers totaled some $1.2 billion as of the end of March, only 19 percent of which was covered by the bank's bad-loan reserves.