Govt to announce state bank shake-up

JAKARTA (JP): The government is poised to announce a major shakeup in the management of three state banks joining the government's recapitalization program, a minister said here on Monday.

State Minister of Investment and State Enterprises Development Laksamana Sukardi said the change in management could effect most of the banks' boards of directors and commissioners.

"The announcement is coming soon," he said at his office.

Laksamana, who took up his ministerial post two months ago, said the shakeup was necessary to ensure transparency in the management of banks joining the government-sponsored bank recapitalization program.

"This has become standard measure in the country's bank restructuring program," said the banker-turned-politician.

Members of the boards of directors and commissioners at several recapitalized private banks also have been replaced to ensure the success of their recapitalization, he said.

Laksamana said a major factor in the success of the bank recapitalization program was transparency.

"We will create transparency by changing the boards of directors and commissioners of the recapitalized banks," he said.

Four of the country's seven state banks -- Bank Pembangunan Indonesia, Bank Bumi Daya, Bank Dagang Negara and Bank Ekspor Impor Indonesia -- were merged to form Bank Mandiri. The move was part of the government's effort to beef up the operations of state banks.

The other three state banks -- Bank Negara Indonesia (BNI), Bank Rakyat Indonesia and Bank Tabungan Negara -- have been allowed to continue to operate independently.

Laksamana said the shakeup in the management of the state banks was necessary to ensure the old directors and commissioners did not attempt to conceal any misdeeds and errors committed by the previous management.

"We definitely need fresh blood to create the transparency we need," he said.

While he said he would not replace the entire boards of directors and commissioners, he hinted there would be significant changes.

He said he met on Monday with the management of BNI, the only state bank listed on the Jakarta Stock Exchange, to discuss the planned shakeup.

Laksamana expressed his pleasure with statements made by the boards of directors and commissioners of BNI.

"They understood and are ready to step down for the sake of the bank's future," he said.

Laksamana also said the government will look to raise funds for the 1999-2000 budget through dividend payments it will receive from its state companies, rather than by the privatization of such companies.

He said the government will also raise funds for the current budget by selling assets in taken-over and frozen banks managed by the Indonesian Bank Restructuring Agency.

Instead of raising funds as previously planned by privatizing state-owned companies, Laksamana said he would prefer to see state-owned companies more profitable and give the government higher returns from dividends. (udi)