BII forced to shake up management

BII forced to shake up management

JAKARTA (JP): Bank Internasional Indonesia (BII), one of the
country's largest private banks, is reshuffling its boards of
directors and commissioners amid rumors they do not meet the "fit
and proper" criteria of the central bank.

"We wish to clarify that changes in the boards of directors
and commissioners are being proposed to the central bank," the
publicly listed bank said in a media statement on Tuesday.

The bank did not provide further details.

But BII commissioner G. Sulistiyanto said the bank's president
Indra Widjaja was among those removed.

The management shake-up comes amid rumors the government will
take over the bank. BII has flatly denied the speculation as
groundless.

Sulistiyanto declined to confirm reports that Indra and the
other directors and commissioners were removed because they
failed to meet Bank Indonesia's criteria on suitable bank
administrators.

"You can make your own conclusions," he told The Jakarta Post
by phone.

Officials at the central bank could not be reached for
comment.

BII, which will hold a general shareholders meeting on Sept.
1, said that it appointed Goldman Sachs Group Inc. as its
financial advisor "for a long-term strategic plan".

Sulistiyanto said that with the reshuffle, BII's founding
shareholders would only be represented by one director on the
bank's board of directors, compared to three previously.

BII has been recapitalized, making the government the majority
shareholder with 59.2 percent, while the founding shareholders
retain about 20 percent.

BII was founded by the Eka Tjipta Widjaja family, who also
controls the Sinar Mas Group, the country's second largest
diversified conglomerate.

Shares on BII dropped Rp 25 to close at Rp 175 on the Jakarta
Stock Exchange on Tuesday amid reports of the management
reshuffle.

The government has promised it would not change the management
team of a government-sponsored recapitalized bank except if the
management failed to meet the fit and proper criteria.

Under the bank recapitalization program, the government will
provide up to 90 percent of recapitalization costs.

The country's banking authority has devised a list of criteria
for fit and proper individuals which is designed to prohibit
corrupt bankers from managing local banks.

Bank owners who committed a banking crime or violated banking
regulations also would be forced to sell their ownership.

Corrupt bankers and bank owners have taken much of the blame
for the banking crisis, which has resulted in the closure of
about 66 banks and the nationalization of 13.

Restructuring and recapitalization costs are estimated to
amount to some Rp 550 trillion (US$80 billion), or about half of
the country's gross domestic product.

The Center for Banking Crisis (CBC), an independent banking
watchdog, said in a statement that it met with central bank
executives on Monday and briefed them on details of documented
evidence that implicated the Widjaja family in a banking crime.

CIC said Bank Indonesia set up an investigation team to look
into the matter.

CIC also took issue with a BII internal memo dated Aug. 3 and
signed by Indra Widjaja, which stated the bank would offer Rp 500
million in rewards to informers who could identify those
responsible for leaking confidential information about the bank.

"Given the strong indication that a banking crime has been
committed by the Widjaja family, CBC strongly recommends that
Bank Indonesia ban the family from running BII," it said.

The management shake-up at BII appears to validate concerns
that serious obstacles remain for the massive banking
restructuring program.

BII is one of the few private banks in the country to have won
international recognition for good management. It also was
considered among the blue-chip banks on the stock market.

BII posted a loss of Rp 1.02 trillion in the first half of
1999, compared to a loss of Rp 5.41 trillion in the same period
last year. (rei)