Liquidation of banks hailed<\/p>\n
JAKARTA (JP): Businesspeople and economists hailed the
\ngovernment's bold move to liquidate 16 insolvent banks, but urged
\ntougher measures against existing troubled banks.<\/p>\n
Sofjan Wanandi, chairman of the Gemala Group, said the move
\nshould serve as shock therapy for the country's debt-plagued
\ncommercial banks.<\/p>\n
\"It sends a strong message to owners and managers of surviving
\nill-fated banks to improve their performance by abiding by
\nprudent banking practices,\" Sofjan said.<\/p>\n
The government must also convince the public that remaining
\nbanks were sound so that depositors would not rush existing local
\nbanks, he said.<\/p>\n
He predicted, nevertheless, that there would be more mergers
\nand acquisitions among banks to survive the tight competition.<\/p>\n
Economist Sri Muljani from the University of Indonesia also
\nwelcomed the move but said the government still needed to work
\nharder to reform the banking sector.<\/p>\n
\"This is a good start for Bank Indonesia to complete its
\ndifficult assignment to make all banks healthy,\" she said.<\/p>\n
But she warned that it would not be easy to salvage existing
\ndebt-ridden banks amid the current economic downturn.<\/p>\n
She suggested that the government impose strong penalties on
\nbank owners who directed funds placed in their banks to their own
\nbusinesses.<\/p>\n
\"Look, some bank owners can even enjoy money after they spend
\ntime in jail. Banking is about public trust. We cannot let such
\npeople continue to suck up public funds for their own benefit,\"
\nSri said.<\/p>\n
But she warned that liquidation of the 16 banks might have a
\nnegative impact, like public panic and a run on other banks.<\/p>\n
\"The government must avoid this by issuing a transparent
\npublication on bank ratings because even the most sound bank
\ncould go bust if it is rushed by its depositors,\" she said.<\/p>\n
Anwar Nasution, also from the University of Indonesia, hailed
\nthe liquidation, but said it was late.<\/p>\n
He contended that some of the liquidated banks had absorbed a
\nlarge amount of funds from Bank Indonesia; nevertheless, they
\nfailed to perform.<\/p>\n
\"We have always raised this issue. Those banks should've been
\nliquidated a long time ago, but instead they were maintained
\nuntil last week. They had so many arguments, which were usually
\nmade in the name of the people.<\/p>\n
\"But reality is that there were many scandals and much
\ncollusion in spending the people's money to salvage those dying
\nbanks. We must stop this,\" he said.<\/p>\n
Citing an example, Anwar said he had long proposed that Bank
\nPacific be liquidated. But instead of stopping its operation,
\nBank Indonesia injected fresh funds into it and placed its people
\nat Bank Pacific, which eventually went bankrupt.<\/p>\n
\"The question is, how much of the people's money has been
\nwasted at Bank Pacific?\" Anwar queried.<\/p>\n
Nevertheless, he hailed the government's brave decision to
\nliquidate the 16 banks.<\/p>\n
He called on the government not to play favorites in
\nliquidating banks and to maintain tough measures against banks
\nwhich were not managed prudently.<\/p>\n
Christianto Wibisono, chairman of the Indonesian Business Data
\nCenter, said the move to close insolvent banks would teach the
\npublic to place their meager incomes in healthy banks.<\/p>\n
\"This will improve public trust in the government. But the
\ngovernment must be firm and say that there will be no second
\nphase of liquidation. Otherwise, the public will think that there
\nwill be liquidation of additional banks,\" he said.<\/p>\n
He suggested that the government expedite the creation of a
\nfund to reimburse small depositors in case a bank was liquidated.<\/p>\n
Hashim<\/p>\n
Meanwhile, Hashim S. Djojohadikusumo, chairman of the Tirtamas
\nGroup, expressed yesterday his regret over the closure of Bank
\nIndustri in which he owns a 4 percent equity stake.<\/p>\n
Hashim explained in a statement that Bank Industri is 60
\npercent owned by the Pension Fund Foundation of Bank Rakyat
\nIndonesia, 24 percent by Herry Widjaja, 8 percent by Mrs. Siti
\nHediati Prabowo, 2.4 percent by Okie R.Lukita and 1.6 percent by
\nThe Tje Min.<\/p>\n
The statement said Hashim and Mrs. Prabowo had at various
\ntimes offered to increase their capital in the bank but other
\nshareholders were reluctant to accept the gesture.<\/p>\n
The statement quoted Hashim and Mrs. Prabowo as confirming
\nthat they had fulfilled all obligations and did not have any
\noutstanding debts to the institution (Bank Industri).<\/p>\n
The statement added that all banks controlled by the Tirtamas
\nGroup -- Bank Niaga, Bank Papan Sejahtera, Bank Kredit Asia and
\nBank Pelita -- had been certified by Bank Indonesia (central bank)
\nas healthy. (08\/icn\/rid\/vin)<\/p>\n
Police -- Page 3<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/liquidation-of-banks-hailed-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }