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)