Govt move on banks 'not enough'

Govt move on banks 'not enough'

JAKARTA (JP): Banking analysts and economists cautiously
hailed the government's move to suspend the operation of seven
commercial banks and take over the management of seven more,
saying it could eventually restore the health of the banking
sector.

However, they argued, the new move alone would not restore
public confidence in the banking industry unless the government
follows it up with stern punitive measures against people
responsible for the failed banks.

"Although it is quite late, I welcome this government move,
through the Indonesian Bank Restructuring Agency (IBRA), to
suspend the operation of some problem banks," economist Kwik Kian
Gie said after attending the government's announcement of the
move at the Ministry of Finance.

IBRA chairman Iwan R. Prawiranata announced Saturday that the
agency froze the operations of Bank Kredit Asia, Centris
International Bank, Deka Bank, Bank Subentra, Bank Pelita,
Hokindo Bank and publicly-listed Bank Surya.

The move was effective immediately.

Iwan said the agency had also taken over the management of
Bank Danamon Indonesia, Bank Dagang Nasional Indonesia (BDNI),
Bank Umum Nasional, Bank Tiara Asia, Bank PDFCI, Modern Bank and
state-owned Bank Expor-Impor Indonesia (Bank Exim).

Kwik said there must be people who had recklessly managed
public funds collected through their banks.

"One of the major reasons why the operations of those banks
were suspended is probably because depositors' money had been
taken away by the owners (of the banks) or by people colluding
with the banks' managements," Kwik said.

Therefore, he suggested that the government investigate the
owners and all people involved in the management of the problem
banks.

"If the government does not want to do this, it means an
injustice to the public and a generous privilege to some members
of our society," Kwik said.

Former legislator Tadjuddin Noer Said supported Kwik's
observations, saying that public confidence in the banking system
would not return until the government followed up its action by
having police investigate all of the people responsible for the
bank funds.

"The central bank's officials who are in charge of supervising
the problem banks, members of the banks' management boards as
well as the owners should be questioned," Tadjuddin said.

"The police have to bring them to trial if they find
indications that those people have committed crimes."

PT Pentasena Arthasentosa bank analyst Edwin Sjahruzad
suggested that the government disclose all of the problem banks'
bad loans and their debtors, which had forced the banks into
insolvency.

He said he suspected that most of the insolvent banks' problem
loans were those allocated to groups related to the banks'
majority shareholders.

Banking analyst Laksamana Sukardi said disclosing bad loans
would be difficult for the government because most large problem
loans, especially at all state banks, belonged to politically
connected groups or individuals.

Research director at PT Socgen Crosby Securities Indonesia
Goei Siauw Hong added that the government's new move was far from
adequate since there were still many problem banks which remained
afloat only because Bank Indonesia steadily injected funds into
them.

"I think there are more than just seven banks which are
currently insolvent," Hong told The Jakarta Post.

Minister of Finance Fuad Bawazier promised that the
government, through IBRA, would continue its efforts to
strengthen the banking industry.

He also urged the public not to panic and withdraw their funds
from banks because the government currently stood behind all
domestic banks, including the problem banks.

He said all depositors at the seven suspended banks should now
do banking businesses with state-owned Bank Negara Indonesia
(BNI) which had been assigned to handle all liabilities --
deposits, savings and checking accounts -- of the suspended
banks.

BNI said in a statement yesterday that it had assigned 36
branches across the country, 22 of which in Jakarta, to service
the customers of the seven suspended banks.

The 22 Jakarta branches include those in Harmoni, Pasar Baru,
Tanah Abang, Melawai (Kebayoran Baru), Jakarta Kota, Tanjung
Priok, Jl. Rasuna Said and Pondok Indah.

The 14 branches outside Jakarta include those in Bogor and
Bandung in West Java, Surabaya (Jembatan Merah) in East Java,
Musi Palembang in South Sumatra, Medan in North Sumatra and
Ujungpandang in South Sulawesi.

All of the addresses of the BNI branches providing service to
customers of the seven suspended banks can be obtained at any BNI
branch and at the branches of the seven suspended banks.

Bank Exim president Kodradi said in a statement yesterday that
its customers should continue to do business with Exim since the
bank would continue to operate as usual.

Kodradi said IBRA would still allow the current management to
run the bank. (08/jsk/aly/rid)