Govt should take over recapitalized banks<\/p>\n
JAKARTA (JP): The Center for Banking Crisis and the Indonesian
\nExporters Association urged the government on Thursday to take
\nover all large recapitalized banks and revamp their management to
\nminimize risks.<\/p>\n
Deni Daruri, president of the center, said the government
\nwould control 90 percent of Bank Internasional Indonesia (BII),
\nBank Lippo and Bank Universal under the multibillion dollar
\nrecapitalization program but was still reluctant to take over the
\nmanagement.<\/p>\n
\"I suspect there is something wrong going on. I suspect that
\nis only a move from Bank Indonesia to protect certain groups of
\nbankers. We can not accept that,\" Deni said.<\/p>\n
\"So, why not just take over these banks?\"<\/p>\n
Rudy Lengkong, executive director of the exporters
\nassociation, added that the government's decision to inject a
\nhuge fund into the private banks must be challenged.<\/p>\n
Otherwise, people would again bear all the burdens if the
\nbanks' managements misuse the funds.<\/p>\n
\"That kind of decision is not helping educate bankers because
\nthey have made their banks go under, but the government still
\nbails them out.\"<\/p>\n
\"Does Bank Indonesia have the mechanism to control that huge
\namount of money. What if the money goes out of Indonesia? What if
\nthe management and\/or owners use the money to finance their cash-
\nstrapped projects? All of it is so unclear to me.\"<\/p>\n
The government announced on Wednesday that it would start
\nrecapitalizing eight private banks later this week, including
\nBII, Bank Lippo and Bank Universal.<\/p>\n
BII would receive the largest government privatization funding
\nof Rp 8.7 trillion (US$1.1 billion), followed by Bank Lippo with
\nRp 7.73 trillion and Bank Universal Rp 4.59 trillion. With that
\nfunding, the government would control 90 percent shareholding of
\neach of the three banks.<\/p>\n
In addition, the government would also inject recapitalization
\nfunds of Rp 2.34 trillion into Bank Bali, Rp 380.8 billion into
\nnon-listed Bank Bukopin, Rp 615.4 billion into Bank Prima
\nExpress, Rp 130 billion into Bank Artha Media and Rp 52 billion
\ninto Bank Patriot. The government's shareholding of these banks
\naverages 20 percent.<\/p>\n
Bank Indonesia governor Sjahril Sabirin said at a banking
\nseminar on Thursday that the government's 90 percent capital
\ninjection into the three banks would not translate into a
\ntakeover of the banks management.<\/p>\n
\"Only the ownership changes, not the management,\" he said,
\npointing out that a recapitalized bank is different from a bank
\nthat has been taken over because in the latter case the
\ngovernment also takes over the management.<\/p>\n
Judging from its decision, Deni said, Bank Indonesia was still
\nnot independent, as it was still strongly influenced by
\ngovernment officials which had political connections with owners
\nof the banks.<\/p>\n
\"Renaming Bank Indonesia's board of directors into the board
\nof governors is not enough. Even establishing a law which
\nguarantees the independence of Bank Indonesia also is proven not
\nenough. It needs the will of all parties concerned to make Bank
\nIndonesia independent.<\/p>\n
\"If it is really independent, it would pursue the best
\nsolution for all the people of Indonesia, not for certain groups
\nof bankers.\"<\/p>\n
Deni said the track records of some people at BII and Bank
\nLippo management weren't good, but nobody knows why the
\ngovernment still entrusted them to manage the government's money
\nthrough the banks.<\/p>\n
Rudy Lengkong agreed and said that some people sitting in the
\nboard of management at BII were from the Widjaja family
\ncontrolling the Sinar Mas Group, while those in Bank Lippo were
\nfrom the Riady family controlling the Lippo Group.<\/p>\n
\"The Sinar Mas Group has their own projects and the Lippo
\nGroup has their own projects also which currently lack funding.
\nSo, it is logical if we suspect that the money is likely to be
\nused to finance their projects.\"<\/p>\n
Therefore, he said, the injection of huge funds into the
\nprivate banks would not automatically drive up significant
\neconomic activities in Indonesia.<\/p>\n
He said that the government should prioritize the
\nrecapitalization of state banks, as they had no business group
\ninterests, and the establishment of a state-owned financial
\ninstitution specializing in export financing. (rei\/rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-should-take-over-recapitalized-banks-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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