BI operates normally despite resignation: Official<\/p>\n
JAKARTA (JP): Bank Indonesia (BI) is operating normally
\ndespite the recent resignation of key members of its board of
\ngovernors, central bank spokesman Halim Alamsyah said on
\nWednesday.<\/p>\n
Halim said the top management reshuffle would not disrupt the
\noperation of Bank Indonesia because the central bank had
\nstandard operating procedures.<\/p>\n
He also said the members of the board of governors who
\ntendered their resignation would still be in office until
\nsuccessors were appointed.<\/p>\n
\"We continue to monitor the rupiah, and we continue to do our
\ndaily job according to standard operating procedures,\" Halim told
\na news conference.<\/p>\n
Sjamsul Arifin of Bank Indonesia's research and monetary
\npolicy division said in the monetary field, the central bank
\ncontinued to hold the weekly auction of its SBI promissory notes.<\/p>\n
The auction resulted in an increase in the Bank Indonesia
\nbenchmark interest rate to 14.02 percent from 13.98 percent at
\nthe previous week's auction.<\/p>\n
Sjamsul also said the central bank was capable of taking
\nnecessary measures to help stabilize the rupiah.<\/p>\n
Joko Sarwono of the central bank's supervision division said
\nthe management reshuffling process at the central bank had not
\naffected the operation of commercial banks.<\/p>\n
\"Everything is running normally, the banks are safe,\" Joko
\nsaid.<\/p>\n
The resignation of senior deputy governor Anwar Nasution and
\nfour other deputy governors last week created jitters in the
\nfinancial market as it was feared it would cause a leadership
\nvacuum in Bank Indonesia, which would make the central bank
\nunable to create a clear policy.<\/p>\n
The rupiah ended relatively flat late on Wednesday at Rp 9,450
\nto the U.S. dollar compared to Rp 9,455 on Tuesday.<\/p>\n
The government has nominated Anwar Nasution and two other BI
\nexecutives as the new governor of the central bank. But there are
\nsigns now that the appointment may take longer than initially
\nanticipated amid interference by politicians.<\/p>\n
The House of Representatives agreed to the government proposal
\nto amend the Central Bank Law, approved by the legislature in May
\n1999, to abolish the legal obstacle in the plans to replace Bank
\nIndonesia Governor Sjahril Sabirin.<\/p>\n
Sjahril is now under house arrest for his alleged involvement
\nin last year's Bank Bali scandal.<\/p>\n
The government has called for the reshuffling of the top
\nmanagement of the troubled central bank, but it could not be
\nimplemented because the Central Bank Law stipulates that the
\nmembers of the board of governors can not be replaced unless they
\nare proven to have committed a crime, they are incapacitated or
\nvoluntarily step down.<\/p>\n
But the amendment process may be delayed because the House has
\ndecided it must go through the normal debating process, while the
\nlegislature will take a recess from next month until early next
\nyear.<\/p>\n
Elsewhere, Joko said the performance of the country's banking
\nsector was expected to be able to meet the minimum 8 percent
\ncapital adequacy ratio (CAR) requirement by the end of 2001.<\/p>\n
He said the central bank had made a simulation based on the
\nlatest data, and concluded that only a few banks would fail to
\nmeet the new CAR requirement.<\/p>\n
Bank Indonesia senior official for banking supervision Siti
\nFadjriah said only about 10 banks would be unable to meet the
\nrequirement.<\/p>\n
She said it would be better if the banks merged with stronger
\nbanks, but she stressed that the central bank would not force a
\nmerger process.<\/p>\n
\"We suggest that the weaker banks seek a partner. But we won't
\npush them into it. They have to do it on their own initiative,\"
\nshe said.<\/p>\n
Joko said Bank Indonesia had set up an exit policy for banks
\nthat would likely fail to meet the CAR requirement, by
\ntransferring them to the special surveillance unit of Bank
\nIndonesia for six months.<\/p>\n
He said if the banks failed to improve their condition, Bank
\nIndonesia would close the banks.<\/p>\n
Joko also said the central bank, the government and the
\nlegislature had agreed that there would no longer be another
\nrecapitalization program.<\/p>\n
He said if the government launched the second recapitalization
\nprogram it would only harm the confidence levels in the country's
\nbanking sector.<\/p>\n
The government completed the costly bank recapitalization
\nprogram earlier this month, allowing banks to have a minimum CAR
\nlevel of 4 percent.<\/p>\n
But a minimum CAR level must reach 8 percent by the end of
\nnext year to meet international standards.<\/p>\n
The level of non-performing loans (NPLs) must also drop below
\n5 percent by the end of 2001.<\/p>\n
Joko said as of September, the level of NPLs had dropped to
\n17.9 percent compared to 32 percent in June. (rei)<\/p>",
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