Government divided over plans to expose bad bankers

Government divided over plans to expose bad bankers

JAKARTA (JP): The government is still undecided whether to go
ahead with plans to expose the central bank's list of bad bankers
on March 13, according to Bank Indonesia (BI) Governor Sjahril
Sabirin.

He said on Wednesday that disclosing the "black list" of bad
bankers to the public had its benefits and disadvantages.

"We also have to look at the legal aspects so that we won't be
sued," he told the press on the sidelines of a debate session
with the House of Representatives on the central bank bill, which
had to be postponed as Finance Minister Bambang Subianto failed
to show up.

Bambang vowed to the House on Monday he would reveal the names
of bad bankers sometime in the middle of this month in a bid to
regain credibility for the government's costly bank restructuring
program.

He said that the announcement of the bank recapitalization
program, which was delayed last week for at least two weeks,
would include such details as the names of blacklisted bankers,
banks that had gone into trouble due to unsound practices,
bankers' debts, legal lending limit violations, and other
breaches of prudential regulations.

Sjahril said that bankers who had caused their banks to go
bust through unsound banking practices would be entered into Bank
Indonesia's black list.

"They can be the bank's management or owners," he added.

However, he said that disclosing the list to the public had
its merits and disadvantages.

"Announcing the list will help advise the public and
businesses on which men to avoid," he said.

"But it will also be a disgrace to the (blacklisted) bankers,"
he added.

The country's financial authority has received strong
criticisms over its handling of the bank restructuring program,
which will require total financing of Rp 300 trillion (US$35
billion) from the government.

The Coordinating Minister for Economy, Finance and Industry
Ginandjar Kartasasmita announced last week that the bank closures
scheduled for Feb. 27 had been delayed by at least two weeks to
give the authority enough time to review the business plans
proposed by some banks which needed to be recapitalized.

Speculation has circulated that the delay was caused by
government concerns that the closure of so many banks, with the
resultant large number of layoffs, would be politically risky in
the run-up to the June general election.

Another rumor said that bank owners had been lobbying senior
government officials to prevent their banks from being
liquidated.

The government earlier said that a total of 40 banks would
risk being closed if they failed to be recapitalized.

Banks with a capital adequacy ratio (CAR) of between minus 25
percent and less than 4 percent would be recapitalized by the
government if the owners could provide at least 20 percent of the
recapitalization funds, and the owners and management passed BI's
"fit and proper test" and submitted a viable business plan.

At the end of January, 38 banks had CAR levels below the
cutoff limit for recapitalization, and 66 banks had met the
necessary CAR requirement.

Sjahril said on Wednesday that since Friday some banks had
managed to inject fresh capital to lift their CAR to the level
qualifying them to join the recapitalization program, and some
others boosted their CAR levels over the 4 percent requirement.

"The funding came from foreign investors," he said, but
declined to give further details.

The government has said that the delay in the bank liquidation
announcement was also to give some banks more time, until March
9, to inject more fresh money to avoid closure.(rei)