Minimum provisions set for RI loan

Minimum provisions set for RI loan

AMSTERDAM (Dow Jones): Nederlandsche Bank has put a number of Asian countries, including Indonesia, on a list of countries for which banks need to have a minimum amount of provisions for outstanding loans.

Other countries on the list, which came into effect June 30 and were set after negotiations with banks, are South Korea, Pakistan, Thailand, the Philippines and Turkey.

Thursday, the Belgian Banking and Finance Commission said it had asked banks to boost the provisions for potential losses in Indonesia to cover 20 percent of their outstanding loans.

The Dutch central bank declined to say how high the minimum percentage is. The bank operates a system of low, middle and high range loans.

The 'low' range is roughly from zero to 30 percent, the middle is from 30 percent to 60 percent, and the high from 60 percent to 100 percent.

The central bank declined to say in which range the countries have been placed.

Leading Dutch bank ABN Amro Holding NV (AAN) has about NLG1.7 billion worth of outstanding loans in Indonesia, mainly in the private sector.

The bank, which will release its six-month results Thursday, has taken a total NLG500 million in provisions for Asia.

However, if loans are "high quality," meaning for instance loans to units of Western companies, banks can negotiate the percentage of provisions needed with the central bank.

Another large financial institute, ING Groep NV (ING), has made provisions totaling NLG900 million. However, the group upped the provisions during the presentation of its first-quarter results.