New bank loan repayment plan to be unveiled

JAKARTA (JP): The government is to unveil a new format on Tuesday for the repayment of Bank Indonesia liquidity support injected to troubled banks since January.

Indonesian Bank Restructuring Agency chairman Glenn S. Yusuf said on Monday that the loan repayment system might be discussed first with IMF Asia Pacific director Hubert Neiss prior to the announcement.

Neiss is scheduled to arrive in Jakarta on Tuesday to conduct a regular monthly review of the country's economic reform program.

Glenn was speaking to reporters following a meeting with several economic ministers. He declined to give further details.

The government injected more than Rp 141 trillion (about US$16.5 billion) in liquidity support to help banks meet massive withdrawals from panicked depositors in the wake of plunging confidence in the industry.

President B.J. Habibie demanded on Oct. 1 that bank owners repay the loans in one year in cash, despite a September agreement in which bank owners could give IBRA their fixed assets as the repayment for their debts.

The Salim Group, owner of Bank BCA, the country's largest private bank, the Gajah Tunggal Group, owner of Bank BDNI, and Sudwikatmono, controlling shareholder of Bank Surya, pledged to surrender a large chunk of their assets in 120 companies as the repayment of their debts worth Rp 79.9 trillion on Sept. 21, the original deadline for the repayment.

Owners of 11 other indebted banks, including those owned by timber tycoon Mohamad "Bob" Hasan, who co-owned Bank Umum Nasional (BUN), and property mogul Usman Admadjaja who controlled Bank Danamon, failed to meet the Sept. 21 deadline.

The government has closed down 26 banks since last November, including Bank BUN and BDNI, and nationalized four others including BCA and Danamon, in an effort to restructure the country's ailing banking sector.

The government was forced to change the repayment format following an Oct. 18 letter from Neiss to Habibie demanding "flexibility" in the repayment system because a "fire sale" of the assets in the current depressed economic situation would result in lower than justified prices. The letter was leaked to the Asian Wall Street Journal.

Sources said that the new repayment format would allow the bank owners to pay in cash a certain percentage of the loans in one year, and the remainder would be paid according to a schedule by selling the assets over the following years.

They said that the bankers might be given five years to repay the loans in full. (rei)