More banks will be sold to foreign investors

More banks will be sold to foreign investors

SINGAPORE (Dow Jones): The Indonesia Bank Restructuring Agency expects several domestic banks to be sold to foreign investors before the upcoming parliamentary elections in June, said Farid Harianto, IBRA deputy chairman and head of asset management.

"We believe that foreign banks provide the best practices in which to break from past bad habits," he said, before IBRA's country roadshow kicked off in Singapore Wednesday.

Citing the recent Standard Chartered Bank PLC's acquisition of Bank Bali, he said such sales are important before the election to give any new government a platform to build upon.

He would not give details on potential bank acquisitions, but said several transactions were in the works.

Farid said IBRA's country roadshow -- which hits Singapore, Hong Kong, London, New York, Boston and Tokyo -- is also an important pre-election event. He said it is aimed at raising awareness about Indonesia's economic potential and buying opportunities for foreign investors.

"We want to push the case of our progress in restructuring our financial sector to date," he said.

He noted the government has so far closed 66 banks, taken over 11 banks and placed nine others in a recapitalization program.

IBRA has also been given the task of dealing with Rp 220 trillion worth of problem loans associated with the banks to be recapitalized, he said.

He does not expect any of the problem loans to be packaged and sold during the roadshow, but said the country meetings are an important first step in beginning the process of revitalizing the corporate sector.