State banks' outlook<\/p>\n
HONG KONG (Reuter): Moody's Investors Service said yesterday
\nit was revising its ratings outlook for Indonesia's state banks
\nto uncertain from stable pending a decision on planned mergers
\namong the seven institutions.<\/p>\n
Moody's said its existing ratings for the state banks remained
\nunchanged and it did not expect the mergers, however implemented,
\nto affect the debt or deposit ratings of the banks, which are
\nbased largely on their status as government banks.<\/p>\n
The Bank Financial Strength Ratings (BFSR) of the surviving
\nbank or banks will depend on which institutions are combined and
\non the terms of the mergers, Moody's said.<\/p>\n
Indonesia's Ministry of Finance announced on June 20 that the
\ngovernment plans to merge the state banks to improve
\ncompetitiveness.<\/p>\n
Two issues are key for future rating actions, Moody's said.<\/p>\n
First, the very high level of problem loans at the two banks
\nwith \"E\" BFSR ratings -- Bank Bumi Daya and Bank Pembangunan
\nIndonesia -- will need to be addressed if they are not to bring
\ndown the ratings of the banks with which they merge.<\/p>\n
Second, the banks' ability to achieve operating efficiencies
\nwill depend on whether the government constrains or assists the
\nbanks in handling redundant personnel, Moody's said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/state-banks-outlook-1447893297",
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"sponsor": "Okusi Associates",
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