Major banks welcome ruling on transparency

The Jakarta Post, Jakarta

Major banks welcomed on Friday the new ruling issued by Bank Indonesia which requires private banks to publish their financial reports every month, saying the ruling is in line with the promotion of good corporate governance.

Soeswidijono, head of Bank Mandiri's communications division, told The Jakarta Post on Friday he hailed the new ruling as beneficial to the country's banking sector.

"This is positive. I even suggest that such a level of transparency should also be applied in other sectors, such as publicly listed companies," he said.

In a bid to provide the public with greater access to information on their banks' performance, the central bank issued new rulings on Thursday on, among other things, transparency of a bank's financial condition.

Instead of publishing its financial reports every three months, the new regulation requires banks to do so on a monthly basis.

The regulation will come into effect on Dec. 31.

Soeswidijono was optimistic the new ruling would have a positive effect on the bank's performance. Bank Mandiri is currently the largest bank in the country in term of assets.

Eko Gindo, Bank Danamon's spokesman, also praised the new regulation, saying it would enable the public to keep a close eye on the country's banking system.

"And in terms of workload, this won't be an additional burden, since we've been doing so all this time," he added.

The central bank's previous ruling also required banks to submit a financial report every month, but Bank Indonesia did not report it to the public.

As of September, the capital adequacy ratio (CAR) for Bank Mandiri and Bank Danamon stood at 29.33 percent and 39 percent, respectively, which was way above the minimum requirement of 8 percent set by Bank Indonesia.

CAR, a ratio between a bank's capital and its risk-weighted assets, is one of the main indicators used to measure a bank's financial condition. --JP