Dismiss Bank Lippo's management: Indef<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
The Institute for Development of Economics and Finance (Indef)
\nurged the Indonesian Bank Restructuring Agency (IBRA) to dismiss
\nthe management and board of commissioners of Bank Lippo to avoid
\nfurther losses to the state.<\/p>\n
The private think thank said Wednesday they should be held
\nresponsible for not only giving misleading reports to investors,
\nbut also for their systematic attempts to allow the bank's former
\nowner to regain control of the bank cheaply.<\/p>\n
"The bank's board of directors and commissioners who had
\neither been involved in this attempted looting or let this
\n(fiasco) happen, should be removed," Indef executive director
\nIman Sugema said. He was delivering a report composed by the
\ninstitution during a press gathering.<\/p>\n
Iman went on to say that the banking authority, in this case
\nBank Indonesia, should prohibit the bank's former owner, led by
\nMochtar Riady, from ever owning a bank again.<\/p>\n
All these measures needed to be carried out immediately as the
\naffair had not only hurt investors' confidence in Indonesia's
\nbanking industry, but had also caused the value of the bank to
\ndrop markedly, he said.<\/p>\n
"What they have done, in a deliberate way, has led to a
\nmassive decline in the value of the bank's shares, which has
\nalready cost the state dearly," he said.<\/p>\n
He was referring to the fact that, under the current price,
\nthe government's 59 percent stake in the bank would only be worth
\naround Rp 600 billion, compared to the about Rp 7.2 trillion the
\ngovernment spent when it recapitalized the bank in 1999.<\/p>\n
Lippo's shares are currently traded at about Rp 250 per share.<\/p>\n
Meanwhile, another Indef economist, Faisal Basri, hit out at
\nthe country's financial authorities for failing to react swiftly
\nover this case.<\/p>\n
"These have once again proved that the financial authorities,
\nfrom Bank Indonesia, Bapepam, the JSX (Jakarta Stock Exchange) to
\nIBRA, are toothless when it comes to dealing with powerful
\nbankers," said Faisal.<\/p>\n
Bapepam is the country's capital market watchdog.<\/p>\n
Lippo's management has been under fire lately for allegedly
\nconducting manipulations intended to worsen the bank's financial
\ncondition.<\/p>\n
Critics have said the management has deliberately lessened the
\nvalues of the bank's foreclosed assets, so the bank was forced to
\nset aside a huge amount of provisions to cover that, a move which
\neventually dropped the bank's capital.<\/p>\n
By providing about Rp 1 trillion in provision, the bank's
\ncapital adequacy ratio (CAR) -- a ratio between a bank's capital
\nagainst its risk-weighted assets -- has dropped to around 4
\npercent, well below Bank Indonesia's minimum CAR requirement of 8
\npercent.<\/p>\n
Many said that such maneuvers only aimed to justify the bank's
\nplans for a rights issue, issuing new shares to raise capital,
\nwhich will then allow the former owner to repurchase the bank at
\na very cheap price.<\/p>",
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