Niaga under blanket scheme: IBRA

The Jakarta Post, Jakarta

The Indonesian Bank Restructuring Agency (IBRA) said that Bank Niaga would remain under the government blanket scheme, despite objections by Malaysia's Commerce Asset Holding Bhd during talks for selling the latter a 51 percent stake in the bank.

IBRA denied a report by The Jakarta Post on Wednesday that said negotiations had led to Commerce's exemption from the blanket guarantee scheme.

"Commerce will abide by the deposit guarantee scheme," IBRA spokesperson Franklin Richard said.

The blanket guarantee scheme, introduced in 1999, requires the government to cover bank liabilities in the event of a massive run. Its presence has helped bolster public confidence in a banking sector still reeling from the 1997 economic crisis.

Commerce originally rejected the scheme, but Franklin said the investor later accepted it after it was told that the scheme was mandatory on all local banks.

Disagreement over the scheme was one of the four outstanding issues IBRA and Commerce managed to resolve before coming to a deal for selling Rp 1.06 trillion (about US$115.21 million)-worth of shares in Bank Niaga.

Franklin said the agency planned to sign a deal this Friday.