Final 58% recovery for Danaharta

NATIONAL asset management company Pengurusan Danaharta Nasional Bhd has recorded a final recovery rate of 58%, which managing director Datuk Zukri Samat described as being probably one of the best in the region and even in the world. 

“We are happy with the recovery rate of 58%. It can be compared with the experiences of other similar agencies in Asia whose recovery rates ranged between 20% and 50%,” he said. 

As of Sept 30, the company had resolved all the non-performing loans (NPLs) it had carved out from the banking system during the Asian financial crisis and had met its projected lifetime recovery target of RM30.35bil – RM26.69bil in the form of cash and RM3.66bil worth of residual recovery assets. 

Residual recovery assets are non-cash assets that Danaharta had received as recovery for NPLs but have yet to be converted into cash. 

Speaking at an analysts and media briefing in Kuala Lumpur yesterday, Zukri said Danaharta, which will wind up operations on Dec 31, projected to continue to reduce total residual recovery. 

By Dec 31, residual recovery assets are expected to be further reduced to RM2.88bil while total cash will increase to RM27.47bil. 

Datuk Zukri Samat

Of the RM2.88bil of residual recovery assets, RM1.52bil would be attributable to acquired NPLs and RM1.36bil to managed NPLs, Zukri said. 

Acquired NPLs refer to those that the company had acquired at a discount from about 70 financial institutions while managed NPLs are from the defunct Sime Bank Bhd group and Bank Bumiputra Malaysia Bhd that the company managed on behalf of Bank Negara and the Government respectively. 

Zukri said upon Danaharta’s closure of operations, control of these assets would revert to the agency's shareholder, Minister of Finance Inc (MoF). 

He said this entailed a conversion mission, which is to convert the residual recovery assets into cash at the best possible value. 

Prokhas Sdn Bhd, a wholly-owned subsidiary of MoF, has been appointed a collection agent for the residual recovery assets. 

Zukri said Danaharta would remain a dormant company. 

In a statement, the company said the entire seed capital of RM3bil to establish Danaharta was expected to be a sunk cost; however, after retiring all liabilities, it was on track to turn over about RM2.05bil worth of assets to MoF. 

By amassing the RM2.05bil of assets, the company would effectively reduce the lifetime cost of operating the agency to only about RM1bil, the statement added. 

Asked whether the banking sector was prepared to face another crisis such as the Asian financial crisis, Zukri said it was – if seen in terms of NPL, which has gone down. He said with the deposit insurance scheme, the banking sector was in a position to weather difficult times. 

Danarharta was part of the Government’s three-pronged strategy to restore stability in the banking system during the Asian financial crisis. 

The strategy led to the setting up of Danaharta, Danamodal Nasional Bhd and the Corporate Debt Restructuring Committee.