IBRA installs new management team for BII

IBRA installs new management team for BII

The Jakarta Post, Jakarta

The Indonesian Bank Restructuring Agency (IBRA) installed on
Friday a new management team for ailing Bank Internasional
Indonesia (BII) as one of the conditions set by the House of
Representatives for a government-sponsored bailout program.

"We hope that the legislators in House Commission IX will give
their full support (to the bailout plan)," IBRA Chairman
Syafruddin Temenggung told a news conference.

He added that the reshuffle was also aimed at improving public
confidence in the bank.

Legislators earlier demanded that IBRA, which controls 75
percent of the publicly listed bank, unseat senior executives
still linked to the Widjaja family, the founder of BII, who has
been faulted for the near-bankrupt status of the bank.

The new management team of BII is now chaired by Sigit Pramono
from state Bank Mandiri. The team members are: Armand Arief (from
Bank Danamon), Sukatmo Padmosukarso (Bank Mandiri), Halim Sutanto
(BII), Judi Sujono (BII), Rudi Hamdani (BII) and Dira Mochtar
(IBRA).

IBRA also installed a new supervision team for BII,
spearheaded by Soedarjono, the former commissioner of Bank
Danamon. Members include Putu Antara, the former commissioner of
Bank Danamon, Sumantri Slamet, IBRA deputy chairman, Pradjoto, a
legal banking expert, and Fuad Rahmani, a senior official at the
Ministry of Finance.

IBRA, an agency under the office of the State Minister of
State Enterprises, has proposed for BII to launch a rights issue
to raise some Rp 4.3 trillion (US$466 million) in funds to boost
its capital adequacy ratio (CAR) to 17 percent from minus 47
percent at the end of last year.

The agency is planning to meet with the House on May 23 to
seek approval of the controversial plan.

Some legislators and analysts have called on the government to
stop using taxpayers money to bail out BII.

The government first injected bonds worth Rp 6.6 trillion in
1999 into the bank to boost its CAR level to beyond the minimum 4
percent requirement. The CAR is the ratio between capital and
risk-weighted assets. The higher the CAR the better the condition
of the bank.

Until now, the government has injected some Rp 21 trillion
worth of bonds whose interest rate is covered by the already
strained state budget.

Under the third bailout program, the bank will offer new
shares to the public to raise the necessary funds. But in case no
investors are willing to exercise their rights, the government
will purchase all the new shares.

IBRA has repeatedly said that salvaging the bank through a
rights issue would be the best and cheapest option on the table
compared to other choices, such as a merger, acquisition or
liquidation.

Given the huge sum that the government has to allocate for the
rights issue plan, debates have been rife whether the plan is
indeed the best alternative in terms of funding requirements.

Some have suggested that BII should instead be included in the
planned merger of five weak banks to minimize the costs on the
part of the government.

The five banks to be merged are Bank Bali, Bank Universal,
Bank Artha Media, Bank Patriot and Bank Prima Express.

They argued that merging six banks would definitely cost less.