IBRA promises full compensation

JAKARTA (JP): Around 12,000 employees who will lose their jobs as a result of the closure of three badly managed banks will receive twice as much compensation as they are entitled to under existing labor regulations, the Indonesian Bank Restructuring Agency (IBRA) announced yesterday.

It said in a letter sent to all employees of Bank Dagang Nasional Indonesia (BDNI), Bank Umum Nasional (BUN) and Bank Modern that the banks would pay them compensation in accordance with Ministry of Manpower regulations.

IBRA would then ask the owners of the three banks to match the compensation paid to employees by the banks.

"In fact, the terms offered to the employees are substantially better than the minimum specified in the regulations," IBRA said in a statement.

It said the compensation package was intended to ensure the needs of individual employees were met while at the same time not placing too great a burden on the taxpayer.

In addition to the compensation, all employees of the frozen banks will get their salaries for August and September, IBRA said.

IBRA called on the employees who had just lost their jobs and other people in the banking industry to "step back and look at the bigger picture."

It said suspending the operations of troubled banks would lead to recovery in the banking industry.

Despite the closures, IBRA said employment opportunities would be found in the sector once better managed banks began to benefit from a "flight to quality" deposit move and expanded their operations.

It cited state Bank Negara Indonesia (BNI) and privately-owned Bank Bali and Bank Lippo as examples.

It quoted BNI president Widigdo Sukarman as saying the bank needed to recruit new personnel capable of offering a high level of service as more and more new accounts were opened.

"We are also looking closely at plans to open new outlets," Widigdo added.

IBRA cited Bank Bali president Rudy Ramli as saying that it too needed more staff to support a planned expansion, and Bank Lippo president Eddy Sindoro, who recently said: "We have been reviewing our resources, our existing network will need to be strengthened and service levels raised to meet the upswing in demand." (rid)