Moody's reviews, upgrades RI banks

Moody's reviews, upgrades RI banks

JAKARTA (Dow Jones): Moody's Investors Service Inc. has placed Bank Danamon Indonesia's Caa3 rating for long-term deposits and senior debt, and its E financial strength rating on review for possible upgrade.

Moody's said it has also upgraded from stable to positive the outlook for Bank Negara Indonesia (BNI) and Bank Rakyat Indonesia (BRI).

It said the upgrades were due to an easing of systemic volatility in Indonesia's banking industry.

However, Moody's said it has changed the outlook for Bank Bali from stable to developing due to the growing uncertainty about its future.

The agency said the review of Bank Danamon will focus on its absorption of eight other nationalized banks, and its role as a government-designated "core" institution in the country's banking system.

The review will also look at Bank Danamon's capacity to develop a meaningful franchise, and the prospects for the bank's eventual re-privatization.

The agency said the positive outlook for Bank Negara Indonesia and Bank Rakyat Indonesia is based on progress in the reconstruction of both banks as potentially viable and commercially oriented institutions.

Bank Negara Indonesia has already received a significant capital injection from the government, and is due to receive further funds soon. Bank Rakyat Indonesia is undergoing restructuring and is expected to receive government funding later this year.

Moody's said the prospects for Bank Bali are increasingly uncertain due to a number of pending lawsuits against and concerning the bank.

The Indonesian government is expected to decide soon whether to recapitalize Bank Bali or close it down.

The government's plan to recapitalize Bank Bali was torpedoed in March after an Indonesian court said the authorities' takeover of the bank was illegal.

The government has filed an appeal against the ruling, but a new decision hasn't been made.