The buying of IBRA's credit

The buying of IBRA's credit

The banking crisis in 1997 was followed by the transfer of
non-performing loans worth hundreds of trillions of rupiahs to
the Indonesian Bank Restructuring Agency (IBRA), in the hope that
the bad credits would be restructured first by the agency before
they are returned to concerned banks.

IBRA has since last year sold its already-restructured credit
assets through some programs of the Corporate Core Asset Sales.
Some of the credit assets had been bought by banks.

The number of credit assets restructured by IBRA however, is
very small compared to the volume of credit assets the agency has
been managing.

No wonder IBRA has since mid-2002 sold some credit assets
which have yet to be restructured. The biggest non-performing
credit asset sold through the Credit Asset Selling Program (PPAK)
was worth Rp 135 trillion.

It can be said that most of IBRA's credit assets, including
the unrestructured ones, have been returned to the banks as 70
percent of PPAK buyers were local investors and banks.

To refrain from running into (the central bank) Bank
Indonesia's policy on non-performing credit assets, some banks
along with security companies and investment managements have
formed consortium.

Hence, it is better for the central bank, IBRA and the banks
to have a dialog on their interests in the business. The banks
should be allowed to buy IBRA's credit assets without ignoring
the principle of prudent banking. -- Bisnis Indonesia, Jakarta