Report on equity plan helps lift bank stock

PUBLISHED : Saturday, 04 April, 1998, 12:00am
UPDATED : Saturday, 04 April, 1998, 12:00am

Indonesia's central bank may demand equity in return for credit liquidity for ailing private banks, a move that could lead to their nationalisation.

Banking stocks soared yesterday on expectations an announcement could be made as early as this weekend.

The Bisnis Indonesia newspaper yesterday quoted a source as saying the initiative would be targeted at the 54 banks under the recently established Indonesian Bank Restructuring Agency (Ibra). Eleven of these are listed.

Bank Indonesia liquidity credits and money market certificates granted to banks under Ibra's care would be converted into equity stakes to be held by the government, the report said.

Central bank governor Sjaril Sabirin declined to confirm or deny the report but said: 'Funds that are transferred to anyone are dependent on the party transferring the funds.

'If the funds are government funds - like from a government bank - that belongs to the country.'