Layoffs at state banks to be decided this month

Layoffs at state banks to be decided this month

JAKARTA (JP): Finance Minister Bambang Subianto said on
Tuesday that the policy governing the fate of the thousands of
employees of four state banks which are to be restructured and
merged would be decided at the end of this month.

He said that downsizing would be needed to boost the banks'
efficiency before they are brought together in the newly formed
bank.

"Personnel policy issues will be decided at the end of this
month," he told the House of Representatives commission VIII on
state budget and finance during a debate on the 1999/2000 state
budget proposal.

The government is planning to merge Bank Dagang Negara, Bank
Pembangunan Indonesia, Bank Bumi Daya, and Bank Export Import
Indonesia into a newly established Bank Mandiri.

The four ailing banks have a total workforce of more than
26,000, of which some 10,000 may be laid off.

The government has admitted that the contentious issue of the
need for massive layoffs from the ailing banks is slowing the
restructuring effort of the four.

The government plans to transfer the non-performing assets of
the four banks into the asset management unit of the Indonesian
Bank Restructuring Agency (IBRA).

Bambang said that the bad loans of the banks would be
transferred to IBRA at the end of this month, while the non-
performing assets would be transferred at the end of March.

He said that performing loans will be transferred to Bank
Mandiri in June.

He added because the four banks had poor capital adequacy
ratios, Bank Mandiri will be recapitalized to boost it to the
prudential level.

The four ailing banks have capital adequacy ratios of much
less than 25 percent.

The government has said that the recapitalization of Bank
Mandiri will be completed by the end of this year. (rei)