Management reshuffle at four banks

JAKARTA (JP): The government reshuffled on Friday the management of four ailing state banks that are to be merged into Bank Mandiri by placing private bankers in all the top positions.

Bank Mandiri's chief commissioner, Mar'ie Muhammad, said that the reshuffle marked the start of the consolidation process of the four banks, Bank Bumi Daya (BBD), Bank Ekspor Impor Indonesia (Bank Exim), Bank Dagang Negara (BDN) and Bank Pembangunan Indonesia (Bapindo).

"Bank Mandiri has decided to appoint only professional managers and those who can work together to smooth the consolidation process," Mar'ie told journalists.

Bank Bali director Agam Napitupulu was appointed president of Bapindo, Bank Bumiputra director Agus Martowardojo was named president of Bank Exim,

Peter B. Stok, a former director at Bank Niaga, was appointed to lead BBD, and Kodradi, a former Bank Exim president, was chosen to chair BDN.

Bank Mandiri president Robby Johan was appointed chief commissioner of three of the four banks: BBD, BDN and Bank Exim.

The equivalent position for Bapindo was entrusted to Djunaedi Hadisumarto, a deputy chairman of the National Development Planning Board.

The restructuring of the four state banks was seen by analysts as another bold attempt on the part of the government to improve the country's flagging banking industry.

Following the management reshuffle, Mar'ie said Bank Mandiri would pursue financial restructuring and operational consolidation strategies at the four banks before merging them into Bank Mandiri some time in the next two years.

The government decided in early October to merge the four ailing state banks into Bank Mandiri, which is expected to become the locomotive to drive the country's economy out of its worst crisis in decades.

Mar'ie said the merger process would start with the financial consolidation of Bapindo and Exim, which should be completed by June next year.

"Similar plans will be followed by the other two banks," he said, referring to BBD and BDN.

During the merger process, Mar'ie said, Bank Mandiri would act as a holding company, overseeing the operations of the four banks as subsidiaries.

Mar'ie, dubbed Mr. Clean during his tenure as finance minister from 1993 to 1998, explained that Bank Mandiri's main agenda in the short-term would be to restructure the credit portfolios of the four banks and confine their business expansion to financing trade and small and medium businesses.

"In the longer term, Bank Mandiri is expected to evolve into a retail bank... This will be pursued gradually without abandoning our corporate banking business."

The new megabank will then focus on financing and supporting small and medium enterprises, exporters, industrial services providers in addition to nurturing its corporate banking.

Bank Mandiri president Robby Djohan, who was snatched from the country's flag carrier Garuda Indonesia early last month, said the bank would need between Rp 4 trillion (US$533 million) and Rp 6 trillion in fresh funds to meet the 4 percent capital adequacy ratio (CAR) requirement set by the government.

CAR is the ratio between equity capital and risk-weighted assets.

"In order to meet the 4 percent CAR requirement, we will need at least Rp 4 trillion... or it could be between Rp 4 trillion and Rp 6 trillion," he said.

The government has required all banks to meet the minimum 4 percent CAR requirement by the end of 1998.

Robby, however, said that as a result of the management restructuring, there would be massive layoffs of up to 15,000 employees.

"In order to be efficient, we will only need between 8,000 and 10,000 employees when Bank Mandiri is fully operational," he said.

The four state banks currently have a combined staff of about 25,000 people.

But he stressed that the government would settle the layoffs problem with golden handshakes in a win-win manner.

Robby, a former president of Bank Niaga, said Bank Mandiri's primary job in the short term would be to channel trade financing and standby credit facilities to the country's exporters.

"For this matter, we cannot wait until Bank Mandiri starts fully operating in the next two years... We hope we can provide such trade financing facilities by the end of this month," he said.

"This has become our main priority," he said, stressing the importance of the facilities to help boost exports, arguing that exporters at present lacked the necessary liquidity to finance the imports of raw materials and to run their operations. (aly)