Equality urged in deciding 'anchor bank' criteria

Equality urged in deciding 'anchor bank' criteria

Urip Hudiono, The Jakarta Post, Jakarta

Local private banks want Bank Indonesia (BI) to consider them
along with larger state lenders when casting about for "anchor
banks" during its planned consolidation of the banking industry.

Speaking during a discussion on Tuesday, the head of the
National Private Banks Association's research unit, Cyrillus
Harinowo, suggested BI take into account as many factors as
possible in determining the criteria for anchor banks, to create
a level playing field among lenders in the country -- be they
state or private.

"The criteria, for example, should not be based mainly on the
size of a bank's assets, but also on whether the bank can serve
as a a role model for other banks," he said, arguing against a
growing view that only large state banks are fit to become anchor
banks.

Cyrillus, who is an independent commissioner at both private
Bank Central Asia and state Bank Rakyat Indonesia, said the
opportunity to become an anchor bank should be open to any bank
with a large customer base, adequate infrastructure, a variety of
banking services and solid human resources management.

"Most important is a strong commitment from the bank's
management in taking on the public responsibilities of being an
anchor bank," he said.

In an attempt to create a stronger and healthier banking
industry in the country, BI introduced last year the Indonesian
Banking Architecture (API).

Its grand aim is to streamline the country's banks -- there
are currently about 130 -- through so-called "anchor banks",
which will act in acquiring, or consolidating, other banks
through mergers and acquisitions.

Under the API, BI expects that by 2010 the country will have
three solid international banks with capital of over Rp 50
trillion (US$5.2 billion), five national banks with capital of
between Rp 10 trillion and Rp 50 trillion, and 50 regional,
cooperative and retail banks with capital of between Rp 100
billion and Rp 10 trillion.

Other banks with capital below Rp 100 billion will become
rural credit banks and limited lenders.

The central bank plans to announce its criteria for anchor
banks at each banking level next month.

BI governor Burhanuddin Abdullah earlier said anchor banks
would be those that are "well managed, well capitalized, healthy
and useful to society".

In terms of private banks, Cyrillus said there was currently
one local private bank that fell into the national bank category,
49 into the regional, cooperative and retail bank class, and 40
banks that fell into the limited lender class.

Meanwhile, the chairman of House of Representatives Commission
XI for financial affairs, Paskah Suzetta, warned the central bank
to consider all possible risks in implementing the anchor bank
concept.

"There could arise resistance from bank owners during the
mergers and acquisitions, and a public misperception of banks
that do not fit the criteria of anchor banks, both of which could
have a negative effect on the country's banking industry," he
said.

Paskah also mentioned the potential risk of the anchor banks'
assets growing too large to be covered under the government's
blanket guarantee, which starting this year will be implemented
by the Deposit Insurance Agency.