Rp 6.6t for merger, BII's rights issue: IBRA
Rp 6.6t for merger, BII's rights issue: IBRA
The Jakarta Post, Jakarta
The Indonesian Bank Restructuring Agency (IBRA) has set aside
Rp 6.6 trillion (some US$660 million) worth of bonds to finance
the planned merger of five banks and a Bank Internasional
Indonesia (BII) rights issue.
The agency's chairman I Putu Ary Suta said on Wednesday the
bonds in question were part of the Rp 20.5 trillion
recapitalization bonds collected from three banks as part of the
agency's assets-to-bonds swap throughout 2001.
"Those are the remaining bonds that we took over from Bank
Mandiri, Bank Danamon and Bank Internasional Indonesia (BII) in
2001," he said.
He did not elaborate on the value of bonds to be allocated to
the five banks and BII, saying the agency was still calculating.
Ary Suta was speaking to reporters on the sidelines of a
hearing with the House budget commission.
IBRA plans to merge five banks under its supervision, namely
Bank Prima Express, Bank Patriot, Bank Bali, Bank Universal and
Bank Artha Media.
The five banks are among the 11 private banks under the
control of IBRA, which is responsible for leading the banks back
into good financial shape before returning them to the private
sector.
The merging of local banks is seen as part of the effort to
restructure the country's faltering banking sector, widely blamed
for the country's lingering economic crisis.
The government injected liquidity support to local banks after
most of their loans turned sour at the peak of the 1997 financial
crisis. In return, the government, via IBRA, took them over.
As for the bonds for BII, the agency said it would use them to
buy the bank's shares in case its rights issue failed to attract
buyers.
"The recycle bonds will be used by the government as a standby
buyer (to buy BII's shares) when the rights issue plan is
realized," said the agency's deputy chairman Soebowo Musa, who
was also present the hearing.
A rights issue means selling part of the bank's shares to
raise cash to help strengthen its capital, thus improving the
bank's capital adequacy ratio (CAR).
CAR measures a bank's capital against its risk-weighted
assets, including loans.