S&P revises BCA's rating to triple-Cpi

S&P revises BCA's rating to triple-Cpi

HONG KONG (JP): Standard & Poor's revised on Wednesday its
counterparty credit rating, based on public information, on Bank
Central Asia (BCA) to triple-'Cpi' from 'R'.

The removal of the `R' rating reflects the re-emergence of the
bank from regulatory supervision following the recapitalization
and subsequent sell-down by the Indonesian government, the rating
agency said.

The government's ongoing program to return the bank to the
private sector kicked off with an initial public offering that
involved the sale of 22.5 percent of the government's holding in
the bank in May 2000, and an additional divestment of 36 percent
scheduled to take place in the first half of 2001.

Standard & Poor's assigned an `R' rating on BCA in January
1999 reflecting the placement of the bank under the regulatory
supervision of the government's Indonesian Bank Restructuring
Agency (IBRA).

The triple-`Cpi' rating indicates that, while BCA's asset
quality has been supported by the preponderance of government
recapitalization bonds that it received as capital infusion, the
ratio of these bonds to assets is likely to decline significantly
over the medium to long term as the bank seeks to rebuild its
loan portfolio.

At the same time, BCA continues to operate in a challenging
environment, and suffers from weak operating profitability and an
impaired capital generating capacity. BCA may also need to
consider enhancing its provisioning as the loan book grows.

A capital injection by the government of Rp 60.87 trillion
(US$6.38 billion) in the form of long-term, illiquid bonds in May
1999 returned the bank's equity to positive figures and following
the transfer of a substantial portion of nonperforming loans to
IBRA, its asset quality improved significantly.

However, BCA's capital position remains vulnerable to
potential losses as it faces tight interest margins and suffers
from a lack of income generating assets, Standard & Poor's said.