Collaborating with the KPK, PLN saves 960 billion state assets

Illustration of the Red and White House of the Corruption Eradication Commission (KPK) on Jalan Kuningan Persada, South Jakarta. (Source: Tribunnews.com)

JAKARTA, KOMPASTV – A total of more than IDR 960 billion state assets was saved by PLN, NCP and the Ministry of ATR / BPN.

Rescue state assets worth hundreds of billions spread across Indonesia since the beginning of 2020.

President Director of PT PLN Zulkifli Zaini explained that one of the assets that had been identified was more than 90,000 parcels of state land entrusted to PLN.

Also Read: Getting ready! PLN Will Soon Reduce Electricity Rates for Several Groups of Customers

This program has been carried out in several provinces, including Central Java 609 assets, Gorontalo 117 assets, Jambi 737 assets and North Sumatra 1105 assets.

According to Zulkifli, without the support of the KPK and the ATR / BPN Ministry, PLN would have had difficulty moving in the field.

“With the full support from the KPK, we identify these assets, manage them, administer them, thereby reducing the potential for misuse by other parties. So, this support is an important step in efforts to prevent corruption which is worth hundreds of trillions of rupiah, “said Zulkifli after meeting KPK Chairman Firli Bahuri at the KPK’s Red and White House, Jakarta, Monday (7/9/2020).

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Collaborating with the KPK, PLN saves 960 billion state assets

Illustration of the Red and White House of the Corruption Eradication Commission (KPK) on Jalan Kuningan Persada, South Jakarta. (Source: Tribunnews.com)

JAKARTA, KOMPASTV – A total of more than IDR 960 billion state assets was saved by PLN, NCP and the Ministry of ATR / BPN.

Rescue state assets worth hundreds of billions spread across Indonesia since the beginning of 2020.

President Director of PT PLN Zulkifli Zaini explained that one of the assets that had been identified was more than 90,000 parcels of state land entrusted to PLN.

Also Read: Getting ready! PLN Will Soon Reduce Electricity Rates for Several Groups of Customers

This program has been carried out in several provinces, including Central Java 609 assets, Gorontalo 117 assets, Jambi 737 assets and North Sumatra 1105 assets.

According to Zulkifli, without the support of the KPK and the ATR / BPN Ministry, PLN would have had difficulty moving in the field.

“With the full support from the KPK, we identify these assets, manage them, administer them, thereby reducing the potential for misuse by other parties. So, this support is an important step in efforts to prevent corruption which is worth hundreds of trillions of rupiah, “said Zulkifli after meeting KPK Chairman Firli Bahuri at the KPK’s Red and White House, Jakarta, Monday (7/9/2020).

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Bad Bank FMS doubles profit

Munich Dealing with the financial market crisis can still make money around a decade later. Last year, FMS Wertmanagement generated an annual surplus of EUR 236 million, more than twice as much as in 2018. The sale of hybrid capital bonds by the Irish subsidiary Depfa and a high dividend payment from a British subsidiary led to the gratifying result.

The Federal Government founded FMS Wertmanagement in 2010 in order to solve its biggest problem from times of the financial crisis in 2008 and 2009. The real estate financier Hypo Real Estate (HRE), which had even made it among the top 30 German companies in the Dax at that time, had started to roll.

A business model based on long-term financing in the real estate sector was responsible, but was only refinanced in the short term. When If the HRE threatened to run out, the state stepped in and ensured the orderly liquidation of the huge stock of securities via the newly founded FMS.

Of the approximately 175 billion euros with which the Munich-based settlement agency started in 2010, 69.3 billion euros were still in the portfolio at the end of last year. The company, which still has a total of 500 employees, announced on Tuesday.

Unusual: The portfolio increased slightly in 2019 compared to 2018. This was due to assets acquired by companies of the Irish subsidiary Depfa. On the other hand, the appreciation of the pound and dollar led to an increase in the nominal value of the euro-based portfolio. This resulted in a currency gain for FMS.

However, inventories of around five billion euros were also reduced. “2019 was a very successful year,” said the new CEO, Christoph Müller. He had taken over the management position last year when his predecessor Stephan Winkelmeier changed to BayernLB’s chairmanship.

Further figures illustrate how complex the complete liquidation of the huge securities portfolio from the portfolio of the scandal bank HRE is. Of the once 66 countries worldwide where the resolution agency had papers, 42 are still left after ten years of work.

“These are often products that were launched before the financial crisis and that no longer exist in this form today,” explains the new board member Carola Falkner. Almost three quarters now come from Great Britain, Italy and the USA. Almost half of the papers have terms that end between 2030 and 2040. Some complex financing goes beyond 2060.

Project “Next” started

However, FMS ‘business model from a shrinking portfolio paired with a high level of specialty should inevitably lead to red numbers for the processor in the coming years.

General administrative expenses were reduced by around four percent in 2019, but the total was still € 138 million. Management believes that the high costs will remain in the coming years, even if the shrinking portfolio’s profits are likely to decline.

That is why they started the “Next” project last year. The goal is to restructure the portfolio by 2025 so that it can be continued elsewhere and FMS Wertmanagement can be dissolved.

A lot will depend on the further effects of the corona crisis. Possible failures or deferrals of interest payments on certain papers are already becoming apparent. The sale of the Irish subsidiary Depfa planned for this year, which was already well advanced with the help of the British Barclays Bank, is currently stalling.

CEO Müller left it open whether a model like FMS Wertmanagement would also fit the current crisis: “The bad bank concept worked very well after the financial crisis in Germany. Whether it is a model at European level has to be assessed in individual cases “.

More: The ECB thinks about the time after the corona rise and works on a bad bank.

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After the corona exit, the state should not rely on the watering can principle

restaurant

Catering businesses are particularly hard hit by the corona crisis.


(Photo: dpa)

According to Bavaria’s Prime Minister Markus Söder, the state should add a billion-dollar economic stimulus program in the form of tax cuts after the extensive economic rescue programs. Specifically, the CSU boss calls for a faster and complete abolition of the solo for everyone.

The question of whether and how the state should stimulate the economy, which was weakened by the corona lockdown, is absolutely justified. It is at the core of an exit plan that the Federal Government has not yet delivered. But general stimulus programs and wide-ranging tax cuts are not the right tools. While lower taxes improve citizens’ purchasing power, it is completely uncertain whether the additional money will be used for additional consumption in this situation.

What is needed to overcome this economic crisis are sector-specific solutions. Tailor-made instruments that not only ensure the viability of the companies particularly affected by the pandemic, but also make sales easier. It is obvious that hotels and restaurants that had to be closed on instructions from the state (and will probably remain closed for a long time to contain the number of infections) need special help.

Companies that are allowed to produce, but whose sales markets at home and abroad have collapsed, need support to boost demand. Reviving the scrapping premium for cars is an instrument. A temporary reduction in VAT rates can also be advisable.

Sector-specific sales promotion also reduces the risk that the state will support companies that had no future before the corona crisis. A targeted anti-crisis policy is more effective and at the same time protects the state budget.

More: Euro finance ministers are looking for a compromise on crisis aid: the EU is likely to decide on a comprehensive emergency program. It is also about economic stimulus measures for the period after the crisis.

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KfW chief Bräunig prefers to work in the background

Frankfurt KfW CEO Günther Bräunig knows his way around crises. During the financial crisis, the 64-year-old bank manager jumped as an interim boss at the Mittelstandsbank IKB when the then KfW subsidiary threatened to collapse in the summer of 2007 under the burden of worthless US mortgage papers. And he still heads the supervisory board of the Pfandbriefbank, which was created from the remains of Hypo Real Estate, which was nationalized at the time.

The crisis expertise of Bräunig and KfW has been in greater demand than ever since the outbreak of the corona pandemic. The development bank’s cheap aid loans, for which the state is largely liable, are an important component of the federal government’s efforts to combat the economic consequences of the corona crisis. The state development bank steps in where banks and savings banks shy away from new loans.

9728 applications have been submitted to KfW by Tuesday, the loan volume is 22.9 billion euros. At KfW, Bräunig subordinated everything to coping with the flood of applications, “because the whole Republic will see how fast and effective we will be,” he said in a video message to the employees at the start of the programs.

The recognition of Bräunig is great in the financial scene. He is a “very accessible and knowledgeable banker with whom you enjoy working,” said the corporate client manager of a large German bank.

The assessments in Berlin sound very similar. “In the corona crisis, Günther Bräunig proves himself to be an accomplished and pragmatic crisis manager, with whom I exchange ideas non-stop,” said State Secretary in the Federal Ministry of Finance, Jörg Kukies, the Handelsblatt.

“He is fully committed day and night so that we can achieve our common goal of guiding Germany through this crisis well.” The KfW boss made a decisive contribution to this.

Praise from the Federal President

Federal President Frank-Walter Steinmeier (SPD) has also contacted Bräunig and thanked the state development bank for its commitment. He “expressed his respect for the responsibility that now lies on our shoulders with the assumption of Corona aid for the German economy”, Bräunig wrote to KfW employees at the end of March.

This is a lot of praise for a person who is actually not in the spotlight. For a good two years now, Bräunig has been the third largest German bank in terms of total assets. Few employees know the institute as well as the person from Wiesbaden, who spent almost his entire professional life at the development bank.

But when Bräunig moved up to the top in January 2018, he refrained from making the big appearance. When asked at his first press appearance as KfW boss which fragrance brands he wanted to set at the state development bank during his term in office, he decided: “In my opinion, there is no need for your own signature.” at most he wants to set new accents.

Braunig prefers to work in the background. Public spikes against the government are not known. This differentiates him from his predecessor Ulrich Schröder. One senses that Bräunig is not comfortable with everything that is decided in Berlin, rather than being heard by him.

This applies, for example, to the state’s 100 percent liability for KfW quick loans. Prior to this, Bräunig had emphasized that he considers it important that the banks also retain at least a small part of the liability for a loan.

But he made it clear that it was ultimately a political decision. When something is decided politically, Bräunig doesn’t sulk, but makes the best of it, says someone who knows him well.

This characteristic should contribute to the appreciation that he enjoys across all parties in Berlin. In the past, the political smell of the barn played an important role in filling the KfW main post. At least Braun’s political preferences are not on record. Nevertheless, he was the preferred candidate of both coalition partners in his freestyle.

More: Corona help: KfW eases conditions for fast credit

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KfW eases conditions for quick credit

KfW

KfW quick loans have been available since Wednesday.


(Photo: dpa)

Frankfurt The conditions for obtaining the new KfW loans with full state liability have been softened again. Companies can now also receive the so-called KfW quick loan, which only made their way into the profit zone in 2019.

Originally, only companies should be able to receive money that made a profit in the sum of the years 2017 to 2019. “By applying to the house bank without further risk assessment, the aid quickly reaches the companies and thus helps to alleviate the severe effects of the corona pandemic,” said the head of the state development bank Günther Bräunig on Wednesday.

The loans are available to medium-sized companies with more than ten employees who have been active on the market since at least January 1, 2019. The federal government assumes the entire risk for loans of up to EUR 800,000.

KfW quick loans have been available since Wednesday (April 15). The first funds should flow to the companies this week. KfW has given the banks and savings banks a general commitment so that they can make an advance payment and pay the loans if the application conditions are met.

From April 22, the first funds will flow from KfW to the house banks. Then the necessary IT system should be in place. So far, this was only expected at the end of April.

Experts anticipate a high demand for the new quick loans. “We expect a large number of consulting requests and requests from our corporate customers in the coming days and weeks,” said one Commerzbank-Speaker. “We are well prepared to support our customers.”

With an interest rate of three percent, the quick loans are somewhat more expensive than the KfW aid loans launched at the end of March, in which part of the risk remains with the house banks and a credit check is carried out.

As of Tuesday evening, there were 9728 applications for these loans with a total volume of 22.9 billion euros, according to KfW. Around 90 percent of the applications were for loans under EUR 800,000. KfW will probably not be able to provide information on the demand for the new quick loans until next week.

More: The head of the supervisory board of Deutsche Börse calls for more help for start-ups.

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Condor sale to Polish LOT burst

Condor flyer

The holiday plane now needs a new buyer.


(Photo: dpa)

Warsaw The sale of the holiday plane Condor to the owner of the Polish airline LOT has failed. A spokeswoman for the state PGL confirmed the withdrawal. PGL informed Condor of this on Monday. She didn’t want to say more about it.

The move had emerged in the face of the corona crisis, as the Reuters news agency had previously reported. A good week ago it was said that LOT itself needed state aid. “In the case of the Lot, we certainly cannot do without public help,” Poland’s Treasury Minister Jacek Sasin had recently told TVN24. He was in constant contact with the airline’s board of directors. This prepared a rescue plan in the event that the flight connections would be interrupted for many months.

The protective shield plan of the insolvency specialist Lucas Flöther provided for the sale of the Condor with more than 50 aircraft and around 4,900 employees to PGL. No information was given on the price.

Spokesmen for Condor and administrator Lucas Flöther did not want to comment on the cancellation from Poland any more than the Federal Ministry of Economics.

PGL had won the contract for Condor in January with the former parent company for around 300 million euros Thomas Cook had gotten into trouble. According to insiders, the Poles had recently made the takeover dependent on far-reaching state guarantees. With the withdrawal, a temporary nationalization of Condor should come closer. The company is currently financed with a EUR 380 million bridge loan from the State Bank KfW, which will expire this week.

More: Lufthansa converts passenger to freight jets.

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Saudi State Fund buys shares in European oil companies

Salman bin Abdelasis al-Saud, King of Saudi Arabia

With the sovereign wealth fund, Saudi Arabia wanted to position itself more independently of oil.


(Photo: dpa)

Bangalore Saudi Arabia’s sovereign wealth fund PIF has been loud “Wall Street Journal” Secured stakes in four major European oil companies totaling approximately $ 1 billion.

It is about Equinor from Norway, the British-Dutch energy giant Royal Dutch Shell, Total from France and Italy EniCorporation reports, citing individuals familiar with the matter.

A Saudi government official is quoted as saying that similar transactions could also be carried out in the future. Initially, no one was available to comment on the companies.

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Applications for KfW loans are skyrocketing

The state development bank KfW

KfW loans amounting to EUR 20.8 billion had been applied for by Tuesday evening.


(Photo: dpa)

Frankfurt Corporations’ applications for corona relief loans to the KfW state development bank are skyrocketing. KfW loans totaling EUR 20.8 billion had been applied for by Tuesday evening – an increase of almost EUR 8.8 billion compared to the previous day, as KfW announced on Wednesday.

The main reason for the strong increase are twelve large applications for over 100 million euros, the total volume of which now amounts to 17.2 (previous day: 12.1) billion euros.

The tourism group TUI announced on Wednesday that it had signed a contract with KfW for a bridging loan of EUR 1.8 billion.

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Sale of Commerzbank subsidiary M-Bank is a long way off

Another major project of the “Commerzbank 5.0” strategy, on the other hand, has come to a standstill: Negotiations to sell the majority stake in the Polish M-Bank are on hold, according to the Handelsblatt. Experts believe that the goal set by CEO Martin Zielke in December of completing the sale by the end of 2020 can hardly be achieved.

Because of travel restrictions and barring contacts, it is currently impossible to conduct negotiations in Poland, said several people familiar with the subject. Many things like a tightened book check could not be done by video conference. In addition, Commerzbank currently needs a large part of its resources to deal with the crisis in Germany.

Commerzbank has not yet given up its goal of selling M-Bank. The team put together for this continues to exist.

Nevertheless, according to insiders, doubts are growing at the Frankfurt headquarters whether a successful sale can still succeed. The sales revenue originally targeted by Commerzbank could no longer be realized after the corona crisis, several people familiar with the negotiations told Handelsblatt.

A look at the Polish stock exchange underpins this assessment: M-Bank’s market value there has almost halved since the beginning of the year – from 3.9 to 2.1 billion euros. The value of Commerzbank’s 69 percent stake has thus fallen to 1.45 billion euros.

Just one bidder

In addition, M-Bank sales were difficult even before the outbreak of the corona crisis. Initially, a large number of institutions expressed interest in the fifth largest Polish bank, which is considered to be one of the most innovative financial institutions in Europe. These included the Polish subsidiaries of the major European banks BNP, Santander and ING as well as the Austrian Erste Group.

However, given the positioning of the national conservative government in Warsaw, which is committed to the “repolonization” of the financial system, foreign buyers have now said goodbye to the sales process.

The only serious bidder left, according to financial circles, is the second largest Polish bank, Pekao. The Polish state is indirectly involved in this through the insurer PZU. That other Polish institutes like Alior and PKO BP have not made an offer, was probably a political decision because the state also participates in these institutions, says banking expert Filip Mazurek from the consultancy firm Sollers.

The development is anything but encouraging for Commerzbank. Due to the lack of competition, negotiations had been difficult for the people of Frankfurt before the outbreak of the crisis, several insiders report. “Of course, if you only have one bidder, you won’t get the price you want,” said one of them. Commerzbank and Pekao were far apart in their ideas.

Speakers from Pekao and Commerzbank did not want to comment on the topic. CFO Bettina Orlopp said in mid-March that Commerzbank was still trying to sell M-Bank, but not at any price.

When its new strategy was announced in September, Germany’s second largest private bank assumed that it would have to sell M-Bank in order to finance its upcoming restructuring. Since the capital situation of the institute has improved, according to Orlopp this is no longer the case. “It still makes sense to sell M-Bank – but only if we can achieve the target price and if the transaction structure is right,” said the CFO. “Otherwise there will be no deal.”

“Sales process impossible at the moment”

The transaction structure is primarily about dealing with a multi-billion dollar loan portfolio in Swiss francs. M-Bank, like other Polish institutions, had awarded these on a large scale before the financial crisis. Because the Polish zloty subsequently depreciated significantly against the Swiss franc, the borrowers’ loans became unexpectedly expensive.

In October 2019, the European Court of Justice (ECJ) ruled that such loan contracts could become ineffective if they contained unfair terms. Polish courts have to decide in each individual case whether this is the case.

Since the ECJ ruling, the number of lawsuits and the number of cases in which Polish courts have ruled in favor of customers has increased significantly. M-Bank therefore had to significantly increase its provisions for these loans.

According to financial circles, Commerzbank hopes that it will be able to sell the franc loan portfolio in the course of an exit from M-Bank. In previous sales processes, the Polish regulator KNF had forced foreign banks to keep the franc loans.

Handelsblatt Morning Briefing - Corona Spezial

Consultant Mazurek does not believe that an agreement can be reached in the foreseeable future. “In my view, there are little to no chances that the transaction will advance in 2020,” he says. The prices are in the basement, the problems with franc loans are getting bigger.

The corona crisis would also pose many additional challenges for the banks. “There will be economic problems, bankruptcies and debates about loan extensions,” Mazurek said. “That makes a sales process impossible at least at the moment.”

The rating agency Fitch also has doubts as to whether Commerzbank can implement its strategy as planned. “Commerzbank is in the middle of a substantial restructuring that we believe could be thwarted by the ongoing crisis,” warned Fitch at the end of March.

From the perspective of those involved, it is difficult to predict how the M-Bank sale will continue after the end of the corona crisis. It would be no problem for Commerzbank to keep M-Bank, some say. However, this option is not particularly attractive because the Polish authorities have forbidden the M-Bank to transfer a dividend to Frankfurt for several years.

In addition, there is hope in Poland that Commerzbank will need the sales proceeds and the risk relief associated with an M-Bank sale sooner or later – and will therefore return to the negotiating table. “It is all just a matter of time,” predicts a person familiar with the negotiations.

More: Commerzbank board members warn – “The peak of the crisis is still ahead of us”

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