BI welcomes 'InfoBank' magazine's ratings

JAKARTA (JP): Bank Indonesia, the central bank, welcomes InfoBank magazine's rating of Indonesia's 239 commercial banks, and says it hopes it will encourage banks to publish their financial records.

Bank Indonesia's director of supervision of commercial banks, Hendrobudiyanto said here yesterday the ratings should give the public general information on the health of the country's commercial banks.

"I appreciate the media's efforts to educate people with things like the ratings," Hendro said at his office.

When asked about the accuracy of the ratings, Hendro said they were close to the central bank's assessment.

Earlier this week, InfoBank announced its ratings. For the first time they named badly-performing banks and unhealthy banks as well as sound banks.

The magazine used ratio analyses and trends to rate the banks. The ratios it used were adopted from the central bank's soundness rating ratios, excluding that on management quality.

Ratings were based on the 239 banks' published financial reports for 1994, 1995 and 1996.

M. Rivai, corporate secretary of joint-venture Bank Societe Generale Indonesia which was rated by InfoBank a poorly- performing bank, said the rating system contained some flaws.

He said although the magazine claimed to adopt the central bank's soundness rating ratios, they could mislead the public. He said that published financial statements alone could not be used to judge a bank soundness.

"If a bank reports low profit, it does not mean the bank is unsound. The bank could be pursuing conservative banking to keep their assets in good health," Rivai said.

He said most foreign banks and joint-venture banks would have difficulties achieving the required loan to deposit ratio of 90 percent because they were not in the retail sector.

But Hendro said that these types of ratings could help the public choose the right bank for them, as the central bank, by law, was not allowed to disclose the banks' soundness.

In addition, these ratings should encourage banks to improve their performance and disclosure, Hendro said.

He said banking disclosure in Indonesia was still below par compared to international disclosure standards.

"One day, we will definitely use international standards in banking disclosure. If we do not do it now, it's a matter of time only," Hendro said.

According to InfoBank's rating, Bank Mashill, Bank ANZ Panin and Bank Hanil Tamara were the country's best large, medium and small banks respectively.

The magazine's rating listed 20 badly performing banks. They included Bank Utama and state-owned Bank Bumi Daya.

There were 19 poorly performing medium banks including American Express Bank, Bank Societe Generale Indonesia and Bank Susila Bakti.

Unhealthy big banks included state-owned Bank Pembangunan Indonesia, Bank Pacific, Bank Yama, Bank Uppindo and Bank Perniagaan.

Unhealthy medium banks were Bank Dana Asia, Bank Industri and Bank Pinaesaan.

Unhealthy small banks included Bank Umum Majapahit Jaya, Bank Arta Prima, Agrobank, Bank Dewa Rutji, Bank Intan, Bank Anrico, BPD (provincial development bank) Kalimantan Barat, BPD Maluku, BPD Lampung and Bank Asta.

On Bank Arta Prima, Hendro yesterday confirmed that it had been transferred to the Artha Graha Group and the central bank had given its approval.

The bank's new shareholders are waiting for the finance minister's approval.

Minister of Finance Mar'ie Muhammad said earlier that if the central bank had no problem with Bank Arta Prima's acquisition by the Artha Graha, he would approve the deal.

Hendro said the central bank had issued a cease and decease order to Bank Arta Prima until all matters related to ownership were resolved.

Under the order, Bank Arta Prima is not permitted to lend funds but is still allowed to handle depositors' banking. (rid)