City-owned bank to become limited liability company<\/p>\n
JAKARTA (JP): The Jakarta administration will change the
\nstatus of city-owned Bank DKI into a limited liability company
\nstarting early next year to enable it to be more competitive and
\nflexible, the bank's president, Soeharto, said on Monday.<\/p>\n
Soeharto said the change was expected to shorten the lengthy
\nand arduous bureaucratic system currently adopted by the banks'
\nmanagement.<\/p>\n
"After the status change, the bank's policies will be in the
\nhands of shareholders at their general meetings and the most
\nimportant thing is that the bank will have a greater chance to
\nincrease its capital," he said after attending a meeting on the
\nbank's status at City Council.<\/p>\n
"Under its current status, if the bank changes or passes a
\ncertain policy its management must submit a proposal to several
\ninstitutions\/people: the governor, the Ministry of Home Affairs,
\nBank Indonesia and the Ministry of Finance, head of City Council
\nCommission C for financial affairs Amarullah Asbah.<\/p>\n
"If it is a limited liability company, the policymakers are
\nthe bank's shareholders," he said.<\/p>\n
All other 26 provincial banks throughout the country will also
\nbecome limited liability companies, he said.<\/p>\n
Amarullah said the council welcomed the plan as it would
\nenable the bank to be more flexible in line with the market law.<\/p>\n
He said the change in status had been approved by the Ministry
\nof Home Affairs, which had also instructed all local
\nadministrations to submit drafts on provincial banks' bylaw early
\nnext month.<\/p>\n
Bank DKI, which was established in 1961, has 11 branches
\nthroughout the city. The city administration is the sole
\nshareholder.<\/p>\n
Compared to other provincial banks, Bank DKI has the biggest
\nfinancial capital with Rp 358 billion, according to Amarullah.<\/p>\n
He said the bank's change in status would not reduce its
\nobligations to the administration.<\/p>\n
"The bank will still be obliged to contribute to city
\nrevenues," he said, adding that in the 1998\/1999 fiscal year the
\nbank was expected to contribute Rp 40 billion.<\/p>\n
He also said Bank DKI should have made preparations for the
\nnew status, including involving its manpower, management and
\ncapital.<\/p>\n
In a related development, Soeharto repeatedly refused to
\ncomment on media reports about his role in Rp 172 billion in bad
\ncredit at the bank.<\/p>\n
"There will be a party which will determine whether I have
\ndone something wrong," he said.<\/p>\n
Governor Sutiyoso said on Thursday he would soon replace Bank
\nDKI's three top officials, including Soeharto, due to the bad
\ncredit.<\/p>\n
The other two to be replaced are director of general affairs
\nDjunaidy Albaghdady and director of marketing Bassar Soetardjo,
\nwho is also in charge of channeling loans.<\/p>\n
The bank has been under scrutiny ever since the extent of its
\nbad loans was uncovered mid last month.<\/p>\n
It is believed the bad loans were mainly caused by the bank
\npresident's alleged authoritarian management style, especially in
\nthe process of granting loans, and his reported disregard of a
\ncompany's accountability or credibility. (ind)<\/p>",
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