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For Indover Bank, a specialized wholesale bank fully owned by
Bank Indonesia (BI) but based in the Netherlands, it seems that few
achievements have been made over the years other than the discrediting
of its own name.
Years of inefficiency and allegations of the laundering of funds
belonging to corrupt Indonesian officials, politicians and businessmen
have long clouded the image of the bank.
But efforts are now in place to try turn things around, thanks largely
to renewed commitment from the central bank and the government to
maximize the functions of Indover and to prevent any past wrongdoings
from reoccurring.
Bank Indonesia is currently in the process of transferring the
ownership of Indover to the government through a state-owned bank, as
required by the Central Bank Law, which bans BI from owning any
business entities or subsidiaries.
The transfer must be completed by the 2009 deadline.
And with new management on board, the Amsterdam-based Indover is now
slowly finding its feet as a financier for Indonesian trade-related
businesses, especially exporters.
"To do this, improvements in financial performance are surely needed.
We will attain this by turning around our business orientation by
focusing more on supporting Indonesian exporters. That is actually our
main objective," Indover's managing director, Chairy Hakim, told The
Jakarta Post recently.
Chairy explained that getting the business back on track was necessary
in order to address the bank's financial losses, its past performance,
its main function and other past problems.
Indover, which now has assets worth some 800 million euros, was close
to collapse following the Asian financial crisis. That was before BI
intervened by injecting some Rp 3.5 trillion (US$370 million) as a
provision to cover the bad loans the bank had extended.
Indover's non-performing loan (NPL) condition has since improved and
now stands at less than 1.5 percent, lower than the 5 percent cap set
by the central bank.
However, it still recorded a 10 million euro loss in 2005 and is
pending completion of an audit of its 2006 books. Despite this, the
bank has projected it will make a profit this year on the back of
higher lending, of which corporate lending is estimated to grow by 110
million euros.
In another sign of improvement, the bank has recently gained the
confidence of financial investors after securing US$100 million in
syndicated loan facilities, which is aimed mostly at expanding its
trade financing to Indonesian exporters.
The loans also mark Indover's attempts to reduce its prolonged
dependency on the central bank, which has been pouring in expertise and
trillions of rupiah in funding support.
"The bank should be able to raise funds from the public to be less
dependent on BI funds. We have to get into the market and make
ourselves known," said Chairy, who is a former executive of state-owned
Bank Export Indonesia.
The loans, provided by nine international banks under lead organizers
Bayern LB, Natixis, Commerzbank Aktiengesellschaft and Overseas-Chinese
Banking Corporation Limited, have a one-year maturity period with
interest rates of 50 basis points above LIBOR (London interbank-offered
rate).
Chairy said the bank would raise more funds this year to refinance its
matured debts and expand its intermediary functions. For instance in
July, the bank plans to raise more than US$100 million in new
syndicated loans in July.
Indover has an extensive network in the exporting gates of Europe and
Asia, with branches in Hamburg, Hong Kong and Singapore.
Recently, Indover facilitated major trade financing for state-owned
miner PT Timah, where it managed to help the company penetrate new
markets in Hungary and arranged the payment for the Bangka-based firm.
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