<Indonesia>To recapitalize 61 banks,let 43 fail-Our man reports from Davos.
Lee:
How is this for good news,I see CRB at 200 soon.Best news I heard all day.
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Indonesia Will Recapitalize 61 Banks and Let 43 Fail
Davos--Jan. 29--Indonesia's central bank has determined that 61 undercapitalized banks are to be recapitalized if they pass two tests, while 43 others have been deemed not viable and will be allowed to fail, Bank Indonesia Managing Director Subarjo Joyosumarto told Bridge News today at the World Economic Forum's annual meeting here. He said the central bank considers an additional 62 Indonesian banks to be healthy enough to survive without new capital injections.
The recapitalization will be done in four phases, with the process beginning for the first 12 banks at the end of January, the central bank cheif revealed. Those 12 banks will include only two private-sector banks, the larger of which is Lippo Bank, according to Subarjo Joyosumarto. He did not identify the smaller one. The other 10 banks are regional development banks. He said these were included in the first phase to satisfy parliament.
Banks deemed viable enough to survive with recapitalization must submit a business plan that both the central bank and the consultancy McKinsey and Co. consider acceptable, and they must have "fit and proper" ownership and management as determined by a study of their track record, Subarjo Joyosumarto said.
He said the recapitalization will be financed 80% by the government, which will cover the cost through bond issues, and 20% by the banks' owners, which in the case of the regional development banks would be regional administrations.
By Michael J. Strauss, BridgeNews
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