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)