Mandiri moves to speed up bad debts recovery
Mandiri moves to speed up bad debts recovery
Urip Hudiono, The Jakarta Post, Jakarta
To cut the number of its non-performing loans (NPLs), state-owned
Bank Mandiri plans to auction through the finance ministry assets
put up as collateral by some of its loan defaulters.
The plan was affirmed on Monday with the signing of an
agreement for the auction between the bank's president director
Agus Martowardojo and the Ministry of Finance's director general
of state claims and auctions, Machfud Sidik.
"This is part of our efforts to take stern action and give a
lesson to uncooperative debtors, after all our attempts to
restructure, reschedule and recondition their loans failed," Agus
said.
"We expect this effort will help reduce our NPL ratio, as
all the auction proceeds will be used to recover the defaulted
loans."
The signing of the agreement, which is the first of its kind,
was witnessed by Minister of Finance Jusuf Anwar, State Minister
for State-Owned Enterprises Sugiharto and Bank Indonesia governor
Burhanuddin Abdullah.
The assets that will be auctioned include a total of 380 plots
of land and other properties located throughout the country, from
140 Mandiri loan defaulters.
Agus declined to specify how much the total assets would be
worth pending their complete assessment, nor the recovery rate
that Mandiri expects from the auction. He said, however, that the
auction process was expected to be completed within the next one-
and-a-half months.
Sugiharto said the directorate general would start the auction
by offering Rp 259 billion (US$25.9 million) worth of assets. He
expected that other state banks would also consider auctioning
collateral assets of their loan defaulters in order to recover
debts and as a lesson to unscrupulous debtors.
Machfud explained that the auction would be held through an
open tender, with independent auditors assessing first the value
of the larger assets, while other smaller assets would be
determined according to their official taxable valuation (NJOP).
As of September, the directorate general was managing a total
of Rp 22.7 trillion worth of assets, of which Rp 20.5 trillion
alone came from the banking industry. The directorate general
usually manages to recover some Rp 1 trillion per year, and
expects to be able to recover only 3 percent this year.
Mandiri's gross NPLs as of June amounted to Rp 25.2
trillion (25.9 percent), as compared to Rp 6.7 trillion (8.2
percent) as of June 2004. Its net NPLs has also been on the rise,
reaching 15.4 percent from 1.8 percent in 2004.
Bank Indonesia requires banks to maintain a maximum net NPL at
5 percent, which it has also set as a requirement to become an
anchor bank that will lead the banking sector's consolidation
through mergers and acquisitions.
Mandiri said it aims to reduce its ratio of non-performing
loans to below 5 percent by 2007.