•    HOME   
•    NEWS   
•    BUSINESS   
•    INTERNATIONAL   
•    TECH   
•    SPORTS   
•    LIFE & TIMES   
•    OPINION   
•    MY JAKARTA   
•    BLOGS   
•    EYEWITNESS   

Bank Indonesia on Friday warned the management of finance minnow PT Bank Eksekutif Internasional to resolve its bad loans problem by the end of March or risk stern action from the central bank.

“We have given them [Bank Eksekutif] a deadline of March 31 to settle the problem or we will strictly penalize them,” said central bank Deputy Governor Darmin Nusution, without elaborating on the possible sanctions.

Darmin also advised Lunardi Widjaja, the majority owner of publicly listed bank, to look for new investors to inject fresh funds into the bank.

Bank Eksekutif had been “an issue” for quite some time, he said. The central bank put it under special supervision for two weeks in December after its capital adequacy ratio, a measure of a bank’s ability to manage risk, fell below the 8 percent minimum.

The Widjaja family injected fresh funds into the bank at the end of last year to improve its CAR. Its level of non-performing loans, however, was still a serious problem, at 15 percent in January, or triple Bank Indonesia’s maximum level of 5 percent, so the central bank put the lender under supervision.

Bank Eksekutif is a small-scale lender with 13 branches. Lunardi Widjaja owns 51 percent of the bank, Lusiana Widjaja holds 15 percent, and the remainder is owned by other members of the Widjaja family as well as small shareholders.

Mubarakah, Bank Indonesia deputy director of banking supervision, urged the lender’s depositors to remain calm. Bank Eksekutif’s condition has been gradually improving since it has been placed under the central bank supervision, she said, pointing out that the NPL level had dropped from its peak of 29 percent in November.

“Bank Eksekutif has set an action plan to solve the problem by seeking new investors,” Mubarakah said.

“They’re going to fix the NPL problem before the end of March and give certainty about the new investor by the end of May,” she said, adding that the central bank will closely monitor developments because it was more expensive to close down a bank than rescue it.

Bank Eksekutif president director Tonny Antonius said the bank was optimistic it could solve the problems before the March 31 deadline. The bad loans problem had been caused by late repayment of loans, he said.

The bank mainly lends to the retail sector and to consumers for house and vehicle purchases.

“We are going to solve it by restructuring the bad loans and seeking new investors to increase provision,” Tonny said. “We are currently in talks with two serious buyers but I cannot mention their names,” he said, adding that the Widjaja family is willing to sell all its shares in the bank.

Bank Indonesia said that private equity firm PT Recapital Advisers was one of the interested buyers.