BCA workers to strike if sale plan proceeds

BCA workers to strike if sale plan proceeds

The Jakarta Post, Jakarta

Some 80 percent of Bank Central Asia (BCA) employees will stage a
massive strike if the government goes ahead with its plan to sell
a majority stake in the bank to a new strategic investor,
according to an official of the BCA labor union.

"We are committed to staging a massive strike. About 80
percent of the total 21,000 employees will stop work during the
strike," union spokesman Bilal Idries told reporters following
the union's meeting with State Minister for National Development
Planning Kwik Kian Gie on Wednesday.

The union has been staging protests against the sale plan over
the past couple of weeks amid fears that a change of ownership
would lead to massive layoffs. There has also been xenophobic
sentiment against the taking over of the country's largest retail
bank by foreigners.

The government is now in the process of finalizing the sale,
which is expected to be completed sometime next week. Four
bidders are vying for the government's 51 percent stake in BCA.
Two of the bidders are foreign-led consortia, including the
Standard Chartered Bank consortium and the Farallon Capital-led
consortium. The latter is a giant U.S. investment firm.

Both the foreign bidders earlier said that they would not lay
off staff if they succeeded in acquiring a stake in the bank.

The government nationalized BCA in 1998 after it suffered
massive runs at a time when confidence in the industry was at its
lowest ebb.

The sale of the BCA stake is seen as being crucial not only
for raising cash to help cover the state budget deficit, but also
for helping revive investor confidence, including that of
multinational donors. Previous attempts to sell the bank had been
block by politicians and legislators.

Meanwhile, Kwik questioned the planned sale of BCA, because
the bank was heavily reliant on government bond interest for its
revenue.

BCA owns some Rp 58 trillion worth of recapitalization bonds
from which it earns interest of some Rp 7 trillion a year.

That compares to the Rp 5 trillion or Rp 6 trillion the
government hopes to net from the sale of the 51 percent stake in
the bank.

According to Kwik, the government should have rid BCA of the
bonds before returning the bank to private hands.

For its part, BCA is better off having the government bonds
replaced with loans as they carry higher interest rates than the
coupon rates.

State Minister for State Enterprises Laksamana Sukardi said
earlier that a number of BCA bidders wanted the bank to replace
the bonds.

Responding to this, the Indonesian Bank Restructuring Agency
(IBRA) is now mulling over redeeming the bonds with loan assets
that it took over from sick banks during the financial crisis in
the late 90s.

Kwik called the plan unrealistic, "if we give BCA the loans,
which IBRA is supposed to sell, with what are we going to cover
our state budget deficit?" he said.

IBRA is slated to raise some Rp 42 trillion from asset sales
to help plug the hole in the 2002 budget.

According to Kwik, this plan is no different than spending
cash to redeem BCA's Rp 58 trillion worth of government bonds.

The sale of the BCA shares is also part of the reform targets
set out under a lending agreement with the International Monetary
Fund (IMF).

A delay in the sale of BCA shares in late 2000 prompted the
IMF to protest, which contributed to an eight-month suspension of
its loan program. As yet there have been no complaints from the
IMF this time around.