Bank Mandiri told to improve image

The Jakarta Post, Jakarta

Beleaguered Bank Mandiri needs to repair its tarnished image and regain the public trust it lost after the unveiling of a high- profile loans scandal there, a top minister says.

"Bank Mandiri should put an end to all outstanding issues, especially in reducing its potential bad debts," State Minister of State Enterprises Sugiharto said after his first meeting with the bank's new board of commissioners and directors on Friday.

"The bank's management should rebuild its image because current perceptions ... have been influenced by the news regarding its bad credit," Sugiharto said.

He said the government, as the bank's majority owner with a 70 percent share, viewed the healthy operation of Mandiri as crucial to the nation's economy.

"The bank is instrumental to the success, and failure, of the economy," he said, adding that the bank's assets worth Rp 248 trillion (US$26.26 billion) represented 22 percent of all Indonesian bank assets, the largest single share of any bank.

Sugiharto reiterated to potential investors that despite the investigations, Mandiri, remained financially sound.

"Based on the latest report from Bank Indonesia, Mandiri is still classified as a healthy bank," the minister said. "However, the bank must increase the quality of its productive assets."

Newly elected Bank Mandiri president director Agus Martowardojo said the new management would fully cooperate with investigators in probing 28 troubled accounts in the bank.

Agus replaced former president director ECW Neloe, who was declared a suspect this week along with two other directors by the Attorney General's Office in the alleged lending scam.

After the meeting, corporate secretary Nimrod Sitorus said 22 creditors were currently being investigated by the Supreme Audit Agency (BPK) for irregularities in their accounts worth an estimated Rp 12 trillion.

Agus said the bank would take necessary measures to reduce potential bad loans by improving its assessment methods, internal controls, compliance supervision and risk management system.

"We will also improve our human resources to make sure (the scandal) doesn't happen again," he said.

He added that management would carefully study all the plans put in place by the previous directors, including future acquisitions and bond issues. (002)