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The Sun - Danaharta Interview
By Kapal Berita
25/9/2000 6:04 pm Mon
Sudah dijelaskan oleh Kim Quek.
Apakah istimewanya anda rakyat Malaysia?
Danaharta clarifies purchase of Hottick non-performing loan
KUALA LUMPUR: National debt rehabilitation agency Pengurusan Danaharta
Nasional Bhd issued a statement yesterday to clarify recent news reports on
Hottick non-performing loan (NPL) and its attached collateral - the Philippines'
National Steel Corporation (NSC).
In a response to criticism of bailout on that loan, Danaharta gave answers to
frequently-asked questions on that loan.
Q: How much did Danaharta pay for the Hottick NPL?
A: For certain large loans, where fair value was difficult to determine at the
point of acquisition, Danaharta would buy such loans for a nominal amount (say
RM1) and undertake the resolution of such NPLs on behalf of selling financial
institutions (FIs). The FIs would bear full risks of recovery and would be
consulted in deciding the resolution strategies to be applied. The Hottick NPL
was purchased under this approach and four FIs were paid RM1 each by
Danaharta. Thus, any losses to be suffered by Danaharta (and taxpayers)
would be limited to RM4.
Q: Were the banks bailed out by Danaharta?
A: No, the banks received RM4 in total. The gross value of the loan was RM3.1
billion, thus the banks concerned had to suffer a significant write-off in value.
The arrangement did not pose a moral hazard to the banks.
Q: Were the shareholders of Hottick bailed out by Danaharta?
A: No, their investment in Hottick is subject to a complete write-off. At present,
NSC is facing a liquidation scenario that would obviously result in no returns for
Q: Was the NPL specially bought by Danaharta so that Hottick need not
repay the loan promptly as the banks would have moved quickly to
recover? Why did Danaharta acquire the NPL when it knew it was outside
Malaysian jurisdiction? What was the benefit to the banks?
A: Danaharta made offers to all banks to buy all NPLs above RM5 million. It
was up to banks to choose which NPLs they wanted to sell. Danaharta did not
pick and choose. In so far as speed of resolution is concerned, the
arrangement that was entered into between the banks and Danaharta in respect
of the Hottick NPL called for the banks to bear full risks of recovery.
This also meant that the banks concerned had a full say in the pace and
manner in which the NPL was to be resolved.
At the point of acquisition, Danaharta was aware that it was outside Malaysian
jurisdiction. However, it would still be able to pursue any legal course of action
permitted under Philippine law - similar to any bank.
The main benefit of selling the NPL to Danaharta was that it relieved the selling
banks of the distraction that managing NPLs posed to management. In fact, one
of Danaharta's objectives is to remove enough NPLs from the banking system to
allow it to go back to its primary function of providing funding to viable
businesses and borrowers.
Q: What is Danaharta's stance on the NSC resolution efforts?
A: Danaharta made a press statement dated Aug 25 on this matter. It had
requested that any workout proposal to restructure the NSC must follow the
process of transparency and the underlying principle of competitive bidding, in
line with international best practices.
Source: The Sun, 22 September 2000