Management reshuffle at four banks

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)