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Analysts have urged the government not to be too hasty in selling Bank Mutiara, formerly Bank Century, as it would be unlikely to recoup the Rp 6.7 trillion ($784 million) in state funds used to bail out the troubled lender in 2008.

The Deposit Insurance Agency (LPS), which took total control of Bank Century after its collapse, said on Friday that it planned to complete the divestment of its shares in the rebranded Bank Mutiara by November. Under the state plan, the government will offer the stake to strategic investors from July through August.

According to the Law on the LPS, it must sell bailed-out banks after three years, but the deadline can be extended by two years.

Aviliani, an economist from the Institute for Development of Economics and Finance (Indef), said it was too soon to sell Bank Mutiara because its assets would not fetch a high enough price.

“The LPS should wait for another two or three years until Bank Mutiara’s condition has improved,’’ he said.

According to data from Bank Mutiara, the value of its assets surged 44 percent to Rp 10.8 trillion last year, with outstanding loans up 31 percent to Rp 6.3 trillion. Its gross non-performing loan ratio last year, however, was a troubling 24.8 percent, against an industry average of around 5 percent to 10 percent, but still down from 38.3 percent in 2009.

The LPS took over Bank Century in November 2008 following the massive bailout to keep the lender afloat after its owners looted its accounts. The rescue drew massive criticism from lawmakers and economists alike who said the midsize bank’s collapse did not pose a threat to the economy.

“There is still time to improve it. Forcing a sale right now will only spark new controversy,” Aviliani said. “I don’t believe they can raise even Rp 2 trillion if they sell it now.”

Prasetyantoko, an economist from Atma Jaya University, also urged caution.

“More time is needed to repair the bank so it can be sold at the optimal price,” he said. “If the LPS insists on selling it in July or August, I’m sure they cannot raise Rp 6.7 trillion.”

“I guess the July target is not fixed,” he said. “To be honest, it is hard to say when is the right time, considering the global economic condition is unstable, especially with the high oil prices.”

Firdaus Djaelani, head of the LPS, said it had appointed Danareksa Sekuritas, Bahana Securities and Mandiri Sekuritas to help arrange the sale, but added that there were no potential investors on the radar.