THE delisting of financially stressed companies under the PN4 sector will affect Pengurusan Danaharta Nasional Bhd's assets in eight of these companies, said chairman Datuk Azman Yahya.
We have loans to these companies, and when they are delisted, our recovery will be limited to the assets that these companies have,'' Azman said at a media briefing organised by the National Economic Action Council (NEAC) yesterday.
If the companies are still listed, we can get the listing premium, which is something we can give to the creditors and shareholders of restructured companies,'' he said, adding that even in the case of capital reduction there would be some shares left.
The KLSE has initiated delisting procedures against six main board and 10 second board companies, serving them notices and giving them 14 days to make a case as to why their shares should not be delisted.
In its recovery efforts, Danaharta pays top priority to speed and ease of operations. Obstacles and complications only serve to lengthen the recovery process, which becomes drawn-out and expensive. In the end, it is the taxpayers who bear the burden.
The restructuring of the banking sector, for which Danaharta was primarily set up, has been achieved at a low cost, estimated at less than 5% of gross domestic product (GDP). Danaharta buys non-performing loans (NPLs) of banks and works towards maximum recovery of their value.
There were estimates that it would (take) 20% to 30% of GDP to restructure the banking sector. We have minimised the cost to less than 5% of GDP by setting up these debt restructuring agencies in a pre-emptive manner,'' Azman said.
It is like a car that must be serviced regularly. Even international agencies like the International Monetary Fund (IMF) were quite surprised,'' he added.
Overheads at Danaharta are kept relatively low; as per the last annual report, at RM73mil a year. Financing costs for its bonds are a high RM558mil a year.
Appointment of lawyers and administrators are at rates set by Danaharta.
Danaharta was set up with RM3bil initial capital from the government, and bonds worth a total of RM11.14bil were issued for the purchase of NPLs.
Currently, it has RM800mil in the form of loans from the Employees Provident Fund and Khazanah Nasional Bhd.
As of Sept 30, 2002, Danaharta had received RM18.49bil in recovery proceeds, while RM11.55bil was pending implementation. It had distributed RM10.59bil (representing NPLs of Bank Bumiputra and Sime Bank) to the government and Bank Negara, and RM338.4mil to 28 financial institutions.
Danaharta managing director Datuk Abdul Hamidi Hafiz said the agency's progress was monitored through key performance indicators, which so far had been good.
Along with other restructuring and recapitalisation agencies, Danaharta has played its role in helping to avert a banking crisis. In the wake of the financial crisis in 1997, a lot of bankers and analysts had expected the NPL ratio be over 20% of total loans, he said.
In reality, the NPL ratio of Malaysian banks, at the highest, was probably below 15%.,'' Azman recalled. Our loans over GDP were among the highest, over 200%. But when the crisis came, people still went to finance companies to borrow money and continued to write cheques.''
We were behind the scenes, working flat out to make sure that they didn't feel it.
It's true that we closed Sime Bank and Bank Bumiputra...We bought large loans, took out all the bad assets, and sold these assets through Bank of Commerce and RHB Bank. The whole spectrum of banks acted very fast and we even had some loan growth. In some countries, during the crisis, loans growth was negative,'' he added.
Azman said that as an agency Danaharta acted with a lot of safeguards in place. These may come in the form of an oversight committee, independent adviser, approval of creditors, and open tenders.
Hamidi added that Danaharta, which employs 250 people, aimed at closing operations in 2005 and the management did not wish to prolong its life anymore, as that could be expensive for the government.