President asks IBRA chief to speed up bank restructuring

JAKARTA (JP): President Abdurrahman Wahid asked on Wednesday the Indonesian Bank Restructuring Agency (IBRA) to accelerate the recapitalization of financially distressed banks in order to support the economy's recovery.

IBRA chairman Glenn Yusuf said after a 30-minute meeting with Abdurrahman that the President's request also included speeding up the recapitalization of Bank Bali.

The government-sponsored recapitalization of state and private banks, which was started in late May, has suffered a delay of more than two months, partly because of the furor over the Bank Bali scandal in which several IBRA executives are implicated.

The delay has steadily increased the recapitalization costs from the May estimate of Rp 351 trillion (US$50 billion) to the current figure of about Rp 550 trillion.

The ballooning cost of the program is the result of the banks financial distress worsening due to losses from negative spread and deteriorating assets.

The recapitalization needs of state Bank Mandiri alone, which were estimated in September at Rp 137.8 trillion, have increased to between Rp 150 trillion and Rp 160 trillion, the bank's president, Robby Djohan, said last month.

Glenn said that in addition to working to restructure debts and maximize the sales of assets of closed banks to support the state budget, IBRA was also geared up to complete the bank recapitalization.

When asked whether Abdurrahman had requested his resignation, Glenn said: "No, the President only asked me to keep on with my work."

Due to the implication of IBRA executives in the Bank Bali scandal, speculation was keen over the past few weeks about a possible replacement for Glenn.

However, Coordinating Minister for Economy, Finance and Industry Kwik Kian Gie has confirmed that the government has no plans to replace the IBRA chief.

The government has set IBRA the task of raising Rp 17 trillion for the state budget in the current fiscal year ending in March.

Glenn added that IBRA was still restructuring the debts of about 800 large and medium-scale companies, including those owned by family members of former president Soeharto.

"The companies owned by the Soehartos have shown good cooperation in restructuring their debts, apparently a result of the end of their political backing," he said.

However Glenn said other major debtors who considered their political support not to have waned had stubbornly refused to negotiate debt restructuring. (vin)