Presentation

BPPNBadan Penyehatan Perbankan NasionalThe Indonesian Bank Restructuring Agency (IBRA)

IBRA : Bridging The Future

I B R A3rd Forum on Asian Insolvency Reform (FAIR)

Seoul, Korea, 10-11 November 2003

The Indonesian Bank Restructuring Agency

2BPPNBadan Penyehatan Perbankan Nasional

The Indonesian Bank Restructuring Agency (IBRA)


Agenda :Agenda :Overview

Performance to Date

Plans for Going Forward

Economic Crisis and Banking SectorVision & MissionIBRA's Scheme

Macro Economic IndicatorsIndonesian Banking Landscape Pre and Post CrisisBank Restructuring Unit (BRU)Asset Management Credit (AMC) Asset Management Investment (AMI)Contribution to Fiscal Support

Economics Policy Package after IMF Termination Recently Closed Transactions Timeline of Remaining Disposal Programs in 2003Lippo Bank & BII Disposal PlanInvestment Asset Disposal Program (PPAI 3)Closure of IBRA




• Economic Crisis and Banking Sector• Vision & Mission• IBRA's Scheme

OverviewPlans for

Going Forward

Performanceto Date




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

Economic Crisis: 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)

•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)

Government Response Government Response

•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

•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

Economic Crisis and Banking Economic Crisis and Banking SectorSector Economic Crisis and Banking Economic Crisis and Banking SectorSector




Bank Bank RestructuringRestructuring

and Divestmentand Divestment•Consolidate,

restructure, and divest IBRA administered banks.

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

Loan Loan RestructuringRestructuringand Disposaland Disposal

•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 Shareholder AssetAsset

SettlementSettlement•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 VisionTo build a strong Government Agency

in supporting the Indonesian economic recovery

IBRA MissionTo promote economic recovery through banking sector and corporate debt restructuring

and to optimize the recovery of government funds in order to alleviate the burdenof the recapitalization bonds on the Government budget




IBRA's Scheme IBRA's Scheme

I B R AI B R A

FAILED BANKFAILED BANK"Non IBRA

Affairs"

"IBRA Affairs"

• Shareholder Shareholder SettlementSettlement

• InvestmentInvestment

AMI

•Bank Shares Bank Shares DivestmentDivestment•InterbankInterbank

BRU

•NPL NPL •Non Core AssetNon Core Asset

AMC

Non Non Performing Performing

LoanLoanBank SharesBank Shares

Recap Bonds

Rp. 425.5 TGuarantee

Rp. 73.8 T

BI Liquidity AssistanceRp. 144.5 T

Shareholder Shareholder Settlement Settlement

ProgramProgram

Rp. 130.72 T Rp. 123.34 T Rp. 361.19 T

MoF Advancement

Rp. 4.9 T

Marketable Marketable SecuritiesSecurities

Treasury

Rp. 13.50 T

Notes : as of August 2003 (Finance Accounting)

•NPL NPL

Litigation

Rp. 65.81 T




OverviewPlans for

Going Forward

Performanceto Date

• 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




Inflation Rate

0

10

20

30

40

50

60

70

80

90

97 98 99 00 01 02 Juli'03 Sept'03

%

Exchange Rate

2000

4000

6000

8000

10000

12000

Short term interest rate (SBI)

0

10

20

30

40

50

60

70

1997 1998 1999 2000 2001 2002 Jul' 03 Sept'03

%

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

… while exchange rate is stabilizing continuously

… short term interest rate is steadily declining ...

Indonesian Macro Economic IndicatorsIndonesian Macro Economic Indicators

Interest Rate

10

15

20

25

30

35

40

45

50

96 97 98 99 00 01 02 Jul' 03 Sept' 03

% p

a

Loan

Deposit

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

Source: Bank Indonesia




Indonesian Banking Landscape Pre and Post Indonesian Banking Landscape Pre and Post CrisisCrisisIndonesian Banking Landscape Pre and Post Indonesian Banking Landscape Pre and Post CrisisCrisis

Massive bank runs and loan defaults forced closure of commercial banks

Massive bank runs and loan defaults forced closure of commercial banks

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

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

72 banks failed, then administered by IBRA

72 banks failed, then administered by IBRA

160160

4444

34344040

4343

81*81*

2382387272

1515

5252

22

33

The Commercial Banks in IndonesiaNumber of banks

The Commercial Banks in IndonesiaNumber of banks

Banks under IBRANumber of banks

Banks under IBRANumber of banks

19971997

FailedBanks

FailedBanks Closed

ClosedRecap & Merged

to Danamon

and PermataBank

Recap & Mergedto

Danamonand

PermataBank

•BCA•Niaga

•BCA•Niaga

Recap-italized

Recap-italized

164164

5757

4646

19991999

20002000

JV andforeign

JV andforeign

Public domestic

Public domestic

Privatedomestic

Privatedomestic

151151

38381010

JVJV

ForeignForeign




Banks Indicators under IBRA

2002June '03

2002 2002June '03

Niaga 45.06 12.72 12.53 6.16 4.07 60.23 64.13

Danamon 48.13 25.33 24.17 4.40 3.40 51.50 66.18

Lippo 54.84 21.10 23.21 12.40 3.02 22.70 23.68

BII 93.49 33.21 25.88 9.02 3.50 20.04 29.32

Permata 97.67 10.40 10.50 27.20 4.90 40.50 36.20

BCA 8.50 32.19 38.25 3.47 2.33 20.44 21.70

LDR (%)

BANK

IBRA

OWNERSHIP

(%) June 2003

CAR (%) NPL (%)*

June '03

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

Note :- June 2003 figures are unaudited report

Bank Restructuring UnitBank Restructuring Unit

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.




Bank Restructuring UnitBank Restructuring UnitDivestment 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

Bank Date Proceed (Rp. Trillion)BCA - IPO 22% May/ 00 0.93 - Secondary Offering 10% July/ 01 0.50 - Strategic Sale 51% April/ 02 6.90 - Market Placement 1,6% September/ 03 0.28

Sub Total 8.61Bank Niaga - Strategic Sale 51% November/ 02 1.06 - Market Placement 20% July - Sept 2003 0.44

Sub Total 1.50Bank Danamon - Strategic Sale 51% May/ 03 3.02 - Market Placement 20% May - July 2003 1.20

Sub Total 4.22




Type of Obligor %

Corporate 83.60%

Commercial 7.80%

SME/Retail 8.60%

Total 100.00%

Core Asset by type of obligorCore Asset by type of obligor




Group Line of Business %

Property / Infrastructure 25.4%

Basic & Chemical Industry 23.6%

Various Industry 11.6%

Trading / Service 8.9%

Agriculture 6.3%

Holding Company 6.4%

Financial Institutions 4.7%

Consumer Industry 1.1%

Mining 0.3%

Other 11.7%TOTAL 100%

Core Asset by Line of BusinessCore Asset by Line of Business




Asset Management CreditAsset Management Credit

(IDR. Trillion)

CLS : Corporate Loan Sale

CCAS : Corp. Core Asset Sale

CULS : Corp. Unrestructured Loan Sale

Loan Disposal

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

Year Disposal Program Loan Principal Disposal Proceeds Recovery Rate

1999 Credit Card 0.08 0.04 50.00%

2000 CLS I, II & SME 7.49 2.90 38.72%

2001 19.74 9.33 47.26%

2002 109.26 27.93 25.56%

2003 PPAK3,PPAS2, PPAK IV-1 55.69 5.47 9.83%

Total 192.26 45.67 23.75%

CCAS III, IV-1,2, Direct Selling

CCAS IV-3, CCAS V,CULS, Direct Selling, PPAK,PPAK-PPL,P3AK




YearAcquisition Value

(IDR Trillion)

Proceeds

(IDR Trillion)Recovery

1999 0.419 0.538 128%

2000 6.259 5.715 91%

2001 24.740 10.383 42%

2002 4.247 2.335 55%

2003 * 6.786 0.739 11%

TOTAL 42,451 19,710 46%

* Until August 2003

Equity Divestiture

Asset Management InvestmentAsset Management Investment




17.00 17.15 18.90 20.7127.00

41.91 42.82

55.12

26.00

15.29

131.72

150.18

-

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0 Rp. Tn

1999/2000 2000 2001 2002 2003 Total

Year

State Budget Target for IBRA (Cash & Bond)

IBRA's Achievement (Cash & Bond)

Contribution to Fiscal SupportContribution to Fiscal SupportSince 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




OverviewPlans for

Going Forward

Performanceto Date

•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




Economic Policy Package after IMF TerminationEconomic Policy Package after IMF Termination

IBRA’s Tasks IBRA’s Tasks

Financial Safety NetFinancial Safety NetThe Establishment of Deposit Insurance Agency (LPS)

Bank Divestment & Other Asset Disposal ProgramsBank 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)




Recently Closed Transactions Recently Closed Transactions

• Loan Asset Disposal Program (PPAK 4)26 Sept

• Block Sale 20% of Bank Niaga shares 16

Sept

• Strategic Asset Sale Program (PPAS) 2

19 Sept

• Investment Asset Sales Program (PPAI) 3 Batch 1

24 Sept

• Treasury Asset (PPSBM) 3

17 Sept




JuneJune JulyJuly AugAug SeptSept OctOct NovNov DecDec JanJan FebFeb

20042004Timeline of Remaining Disposal Programs in Timeline of Remaining Disposal Programs in 2003 2003

51% share divestment of Bank Lippo51% share divestment of Bank Lippo

Conclude all remaining transactions & prepare for IBRA closure

51% share divestment of Bank BII51% share divestment of Bank BII

Investment Asset Sales Program 3Investment Asset Sales Program 3 (Batch 2 : Share & Receivable)(Batch 2 : Share & Receivable)

Property Asset Sales Program 4Property Asset Sales Program 4 (Batch 1 - Batch 5)(Batch 1 - Batch 5)

Ongoing JV PropertyOngoing JV Property




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

Investment Asset Disposal Program (PPAI 3)

No SectorsNo. of

Companies1 Property 372 Finance & Securities 383 Timber 134 Edible Oil 35 Ceramics 26 Distribution 27 Mining 28 Others 20

Assets Offered on PPAI 3 Batch 2




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%)

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)

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

Bank’s Shares Disposal Program




Ongoing Joint Venture Program for Property

Location Approximate Area (ha.)

Central Jakarta 3.7

Central Jakarta 0.8

East Jakarta 39.5

Surabaya 3.7

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




Bank Restructuring

Asset Settlement

Recovery of State Funds

Administration of Deposit

Insurance Program

• No more Recapitalization Program

• Most of the Bank Divestment Programs are Completed.

• Minority Ownership at banks

• 50% of Asset has been Restructured

• The Remaining Assets still 20%

Accumulated Contribution (Cash & Bond) is IDR 140 trillion

• No More Banks Closed for the last two years

• No More New Claims

Establishment of Holding Companies to Manage Remaining Assets of IBRA

Establishment of Deposit Insurance Agency

IBRA'S Task Achievement Near Future Plan

IBRA's Task Achievement and Future PlanIBRA's Task Achievement and Future PlanClosure of IBRA




Flow of IBRA's Remaining AssetsFlow of IBRA's Remaining Assets

Type of AssetDivestment

ProgramRemaining Assets Management Plan

Real/Fixed Asset

Financial Asset:Loan, Equity &Quasi equity

Bank Shares

Property AssetSales Program

Loan Assets Sales Program,

Investment Assets Sales Program &Strategic Assets

Sales Program

Bank Divestment

HoldcoProperty

Holdco-Non Property-Loan Assets

Holdco-NonProperty-

equity

Property Assets

Property Compaies Equity

Loan

Equity , Quasi Equity

Remaining Bank Share

Closure of IBRA




http://http://www.bppn.go.idwww.bppn.go.id

I B R AThe Indonesian Bank Restructuring Agency

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