Aditya Wikrama

Bank Ekspor to Convert Time Deposits Ahead of Its Shift to Export Financing

The state-backed trade finance bank PT Bank Ekspor Indonesia, will convert its customers’ time deposits into either bonds or promissory notes in line with the upcoming change in its status to an export finance agency, Arifin Indra, the bank’s president director, said on Friday.

Arifin said that 40 percent of the bank’s Rp 500 billion ($48.5 million) in time deposits consisted of collateral from its customers, 80 percent of which were denominated in foreign currencies.

The bank is due to be converted in July into a sovereign export finance agency, to be called Indonesia EximBank, as stipulated in the new Export Finance Law, which was enacted in January.

Under the law, Bank Ekspor is required to have a capitalization of Rp 4 trillion, which Arifin said it expected to reach later this year, as the bank was only Rp 1 trillion short of the target at the end of 2008.

“We expect to have another Rp 1.3 trillion in retained earnings from last year and this year, so that we won’t have to turn to the government for further capital,” Arifin said.

The bank, he said, would also secure external financing to fund its lending during the rest of year, as it planned to issue its fourth bond in July. He said that the issue would be upsized from Rp 2 trillion to Rp 2.5 trillion, due to strong demand from investors. The bond, he added, will be the biggest corporate issue this year, exceeding the Rp 2.2 trillion bond issued by state power utility PLN in January.

The coupons on the Bank Ekspor bond will range from 10 percent to 12.75 percent for the four tranches of one-, three-, five- and seven-year maturities.

“It means that the market is confident about our long-term prospects,” Arifin said.

The bank’s outstanding loans stood at Rp 9.3 trillion at the end of 2008, and rose to Rp 9.6 trillion as of end of March. Arifin said that the bank had originally expected its total outstanding loans to reach more than Rp 12 trillion by the end of the year, but that this target would be increased in line with a request from the Finance Ministry. He said the bank was confident it would have sufficient funds to support the higher lending target, as it still had financing options from a number of foreign lenders.

Bank Ekspor assets rose to Rp 12.01 trillion as of the end of March, up almost Rp 1 trillion from the end of 2008.

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