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I B R A. The Indonesian Bank Restructuring Agency. 3 rd Forum on Asian Insolvency Reform (FAIR) Seoul, Korea, 10-11 November 2003. Agenda :. Overview. Economic Crisis and Banking Sector Vision & Mission IBRA's Scheme. Performance to Date. Macro Economic Indicators

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I B R A

The Indonesian Bank Restructuring Agency

3rd Forum on Asian Insolvency Reform (FAIR)

Seoul, Korea, 10-11 November 2003


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Agenda :

Overview

Economic Crisis and Banking Sector

Vision & Mission

IBRA's Scheme

Performance to Date

Macro Economic Indicators

Indonesian Banking Landscape Pre and Post Crisis

Bank Restructuring Unit (BRU)

Asset Management Credit (AMC)

Asset Management Investment (AMI)

Contribution to Fiscal Support

Plans for Going Forward

Economics Policy Package after IMF Termination

Recently Closed Transactions

Timeline of Remaining Disposal Programs in 2003

Lippo Bank & BII Disposal Plan

Investment Asset Disposal Program (PPAI 3)

Closure of IBRA


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Plans for Going Forward

Performance

to Date

Overview

  • Economic Crisis and Banking Sector

  • Vision & Mission

  • IBRA's Scheme


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Economic Crisis and Banking Sector

EconomicCrisis: started with drastic devaluation of Rupiah, followed by banking and economic crisis

  • In mid 1997 Rupiah drastically depreciated following the depreciation of regional currencies

  • Rupiah depreciation led to liquidity crisis and in turn banking crisis

  • Banking crisis led to Bank Run (Rush)

GovernmentResponse

  • In order to install trust in the banking system, the government issued blanket guarantee program

  • In order to prevent capital flight, very high interest policy was put in place that led to the collapsed of the real sector

  • Lender of the last resort function of The Central Bank was executed

  • IBRA was established in January 1998


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IBRA Vision

To build a strong Government Agency

in supporting the Indonesian economic recovery

Bank Restructuring

and Divestment

Loan Restructuring

and Disposal

Shareholder Asset

Settlement

  • Consolidate, restructure, and divest IBRA administered banks.

  • Support Government in preparation for the establishment of Financial Services Authority and Deposit Insurance Corporation.

  • Conduct Loan Assets Sales Program (PPAK).

  • Finalize ATK administration problem.

  • Accelerate restructuring and follow up litigation cases.

  • HoldCos establishment process and/or asset securitization process.

  • Shareholder settlement of frozen banks, closed banks and taken over banks (BBO, BBKU, BTO).

  • Former shareholders assets possession by IBRA

  • Continue asset sales of former shareholders.

IBRA Mission

To promote economic recovery through banking sector and corporate debt restructuring

and to optimize the recovery of government funds in order to alleviate the burden

of the recapitalization bonds on the Government budget


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IBRA's Scheme

BI Liquidity

Assistance

Rp. 144.5 T

Recap Bonds

Rp. 425.5 T

Guarantee

Rp. 73.8 T

MoF

Advancement

Rp. 4.9 T

"Non IBRA Affairs"

FAILED BANK

Non Performing Loan

Shareholder Settlement

Program

Bank Shares

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"IBRA Affairs"

  • Shareholder Settlement

  • Investment

  • Bank Shares Divestment

  • Interbank

  • NPL

  • Non Core Asset

  • NPL

Marketable Securities

Treasury

AMC

Litigation

AMI

BRU

Rp. 13.50 T

Rp. 130.72 T

Rp. 123.34 T

Rp. 361.19 T

Rp. 65.81 T

Notes : as of August 2003 (Finance Accounting)


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Plans for Going Forward

Performance

to Date

Overview

  • Indonesian Macro Economic Indicators

  • Indonesian Banking Landscape Pre & Post Crisis

  • Bank Restructuring Unit (BRU)

  • Asset Management Credit (AMC)

  • Asset Management Investment (AMI)

  • Contribution to Fiscal Support


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Indonesian Macro Economic Indicators

….inflation rate is decreasing significantly after 1997 economic crisis ...

… while exchange rate is stabilizing continuously

… short term interest rate is steadily declining ...

… interest rate spread is moving from negative during the crisis to positive spread ...

Source: Bank Indonesia


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Indonesian Banking Landscape Pre and Post Crisis

Massive bank runs and loan defaults

forced closure of commercial banks

72 banks failed, then administered by IBRA

Banks under IBRA

Number of banks

The Commercial Banks in Indonesia

Number of banks

238

72

52

164

151

JV and

foreign

44

Foreign

40

10

JV

Public

domestic

34

38

15

43

46

3

Private

domestic

160

81*

57

2

1997

1999

2000

  • BCA

  • Niaga

Failed

Banks

Closed

Recap-

italized

Recap & Merged

to

Danamon

and

PermataBank

*Almost half of private domestic banks were either closed or taken over by the government


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Bank Restructuring Unit

Banks Indicators under IBRA

…..in general, banks performance have been improving, especially on CAR, NPL and LDR....

After BCA, Bank Niaga in April and November 2002, and Bank Danamon in July 2003, IBRA is currently proceeding with divestment of Bank Lippo and Bank Internasional Indonesia.

Note :

- June 2003 figures are unaudited report


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Bank Restructuring Unit

Divestment of IBRA’s Bank Shares

…..The divestment of IBRA’s majority bank shares at BCA, Niaga Bank and Danamon Bank to Strategic Investor was mainly intended for continuous improvement of those Banks’ performance


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Core Asset by type of obligor


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Core Asset by Line of Business


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Asset Management Credit

Loan Disposal

(IDR. Trillion)

CLS : Corporate Loan Sale

CCAS : Corp. Core Asset Sale

CULS : Corp. Unrestructured Loan Sale

PPAK : Loan Asset Disposal Program

PPAK - PPL : Loan Asset Disposal Prog. - Direct Selling Program

P3AK : Loan Asset Portfolio Disposal Program

PPAS : Strategic Asset Disposal Program


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Asset Management Investment

Equity Divestiture


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Contribution to Fiscal Support

Since FY 1999/2000 ‘til 2002 IBRA always able to meet its fiscal target ...

… FY 2000 (9-mo), 2001 and 2002 IBRA even surpassed the target

Note : IBRA’s achievement in 2003 is per Sept 2003


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Plans for Going Forward

Performance

to Date

Overview

  • Economics Policy Package after IMF Termination

  • Recently Closed Transactions

  • Timeline of Remaining Disposal Programs in 2003

  • Lippo Bank & BII Disposal Plan

  • Investment Asset Disposal Program (PPAI 3)

  • Closure of IBRA


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Economic Policy Package after IMF Termination

IBRA’s Tasks

Financial Safety Net

The Establishment of Deposit Insurance Agency (LPS)

  • Bank Divestment & Other Asset Disposal Programs

  • Divestment of IBRA's Majority Bank Shares

  • Divestment of Credit Assets, Equity and Quasi Equity (PPAS & PPAK)

  • Divestment of Property Assets (PPAP)

  • Divestment of Share Holder’s Assets (PPAI)


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Recently Closed Transactions

  • Loan Asset Disposal Program (PPAK 4)26 Sept

  • Block Sale 20% of Bank Niaga shares16 Sept

  • Strategic Asset Sale Program (PPAS) 219 Sept

  • Investment Asset Sales Program (PPAI) 3 Batch 124 Sept

  • Treasury Asset (PPSBM) 317 Sept


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Timeline of Remaining Disposal Programs in 2003

2004

July

Aug

Sept

Oct

Nov

Jan

Feb

June

Dec

51% share divestment of Bank Lippo

Conclude

all remaining

transactions

& prepare for

IBRA closure

51% share divestment of Bank BII

Investment Asset Sales Program 3

(Batch 2 : Share & Receivable)

Property Asset Sales Program 4

(Batch 1 - Batch 5)

Ongoing JV Property


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Investment Asset Disposal Program (PPAI 3)

The offered assets in Investment Asset Disposal Program Phase 3 (‘PPAI 3) are mostly Shares,Convertible Bond, Receivables in companies and Properties directly or indirectly owned by IBRA

Assets Offered on PPAI 3 Batch 2


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The best funding structure in the industry. Its low-cost fund (checking and saving accounts) comprised 70% of its total funding, compared to the industry average at 40%

  • Bank Lippo enjoyed low-cost of fund from its checking and saving accounts.

  • One of the leading ATM service providers in Indonesia with a network of over 600 ATMs

Strong in trade financing and consumer banking (card business)

  • BII is one of the leading credit card operator in Indonesia (currently aggregates to over 450.000 and controls 30% of market share) and is well positioned to become one of the leading domestic consumer banking franchise (customer base in excess of 2 million)

Bank’s Shares Disposal Program

IBRA plans to dispose its 52.04% stake in Bank Lippo via strategic sale and 71% of its shares in BII via strategic sale (51%) and market placement (20%)


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Ongoing Joint Venture Program for Property

IBRA plans to dispose its property assets in several main locations in Jakarta and Surabaya via Joint Venture program, during October 2003 - January 2004


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Closure of IBRA

IBRA's Task Achievement and Future Plan

Near Future Plan

IBRA'S Task

Achievement

  • No more Recapitalization Program

  • Most of the Bank Divestment Programs are Completed.

  • Minority Ownership at banks

Bank Restructuring

Establishment of Holding Companies to Manage Remaining Assets of IBRA

Asset Settlement

  • 50% of Asset has been Restructured

  • The Remaining Assets still 20%

Recovery of State Funds

Accumulated Contribution (Cash & Bond) is IDR 140 trillion

Administration of Deposit Insurance Program

  • No More Banks Closed for the last two years

  • No More New Claims

Establishment of Deposit Insurance Agency


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Closure of IBRA

Flow of IBRA's Remaining Assets

Type of Asset

Divestment

Program

Remaining Assets

Management Plan

Real/Fixed

Asset

Property Asset

Sales Program

Holdco

Property

Property Assets

Property Compaies Equity

Financial Asset:

Loan, Equity &

Quasi equity

Loan Assets Sales

Program,

Investment Assets

Sales Program &

Strategic Assets

Sales Program

Holdco-

Non Property-

Loan Assets

Loan

Equity , Quasi Equity

Bank Shares

Bank

Divestment

Holdco-Non

Property-

equity

Remaining Bank Share


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For further information please visit our website :

http://www.bppn.go.id

I B R A

The Indonesian Bank Restructuring Agency


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