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)