New firm to manage ailing banks' assets

JAKARTA (JP): The government plans to establish a new company to manage the assets of ailing and suspended banks, Minister of Finance Fuad Bawazier said.

The company, which will be under the supervision of the Indonesian Bank Restructuring Agency (IBRA), will handle the assets, including bad loans, of both private and state commercial banks, Fuad told reporters Monday.

Fuad did not say when the company would be incorporated.

One of the first tasks of the new company, if and when it is established, will be to handle the assets of seven banks whose operational licenses were suspended by IBRA on Saturday.

The seven -- Centris Bank, Deka Bank, Hokindo Bank, Bank Kredit Asia, Bank Pelita, Bank Subentra and publicly listed Bank Surya -- were deemed insolvent in spite of massive injections of liquidity credits from Bank Indonesia.

Besides the seven, IBRA also took over the management of six private banks -- Bank Danamon, Bank Dagang Nasional Indonesia, Bank Umum Nasional, Bank Tiara Asia, Modern Bank and Bank PDFCI -- and of state Bank Ekspor-Impor Indonesia. These seven had also received massive liquidity credits from the central bank.

IBRA is also closely monitoring the performance 40 other banks at the recommendation of Bank Indonesia.

Fuad renewed government assurances that it would continue to guarantee the safety of all rupiah and foreign currency deposits in the 14 banks.

He said the government would also soon set up a company to manage a deposit insurance scheme.

"With this policy, depositors will feel secure because they'll know that their money is insured," said Fuad after attending an Economic and Monetary Resilience Council meeting, chaired by President Soeharto, at Bina Graha presidential office.

Bank Indonesia Governor Sjahril Sabirin said separately that the monetary authorities had not set a deadline of how soon the 40 banks currently under IBRA supervision should recover.

"Obviously, the sooner the better," Sjahril said as reported by Antara.

Fuad said it was too early to discuss what sanctions awaited the owners of the seven suspended banks.

These, he said, must await the result of "due diligence" performed on the seven banks. (prb/emb)