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.