Banking woes caused by poor integrity

Banking woes caused by poor integrity

JAKARTA (JP): The lack of integrity of banking executives and
shareholders is the major cause of the country's banking crisis,
says a former banking chief.

Rachmat Saleh, a former governor of Bank Indonesia (the
central bank), said yesterday that bank executives often abuse
banking norms for their own interests while their shareholders
often pressure their executives for such a purpose.

"It is a matter of poor integrity within the banking
management," Rachmat, also a former trade minister, said at the
closing of the Institute of Indonesian Bankers' special training
for senior banking executives.

The special training program was attended by 22 executives of
both state and private banks.

Rachmat, who is also deputy chairman of the institute's
national council, said that it is high time for both bank
executives and shareholders to improve their professional
integrity. Otherwise, the public will have no more confidence in
the banking system.

He did not mention specific banks in his statement but it was
obviously in reference to the country's state-owned banks, which
recorded a great amount of bad debts over the past two years.

The problem of the banking industry, he said, is also partly
caused by "over confidence" on the part of bank executives
concerning the country's economy and their clients.

"Bankers should have the capacity to forecast the economic
outlook as the business climate is not always rosy," he said.

Rachmat, however, said that the decline in business
performance has not been suffered only by Indonesian banks as the
same phenomena of incurring losses, falls in profits and massive
write-off measures have also occurred in many overseas
banks.(hen)