Mar'ie wants govt to close ailing banks

Mar'ie wants govt to close ailing banks

YOGYAKARTA (JP): Former finance minister Mar'ie Muhammad urged
the government yesterday to close down ailing banks which could
no longer be maintained without further financial help.

"Banks which are in the worst shape are better off closed.
Their assets could be given to state banks," Mar'ie told a
symposium of economic students at Yogyakarta's Gajah Mada
University.

"If the government continues to help them, it would be a waste
of public funds, when money for food supplies is more pressing
right now," he said.

Mar'ie, who has become a staunch government critic since he
left his ministerial post in March, said the government must also
begin nationalizing some troubled banks to avoid a collapse in
the banking industry.

He said the government had put a lot of money into the ailing
banks.

The government, through the Indonesian Banking Restructuring
Agency (IBRA), has injected Rp 102.5 trillion (about US$10.25
billion) into ailing banks as of May 22 since its establishment
in January, according to Bank Indonesia, the central bank.

"Don't close the door on the possibility of nationalizing the
banks, like those which have had massive runs on them but which
are still relatively healthy," he said.

But the government must be cautious in determining which banks
are still healthy, which need to be nationalized and which are no
longer salvageable, he said.

"Like a dying person, some troubled banks can no longer be
worked on by being placed in intensive care when they are
eventually going to die anyway," he said.

Hordes of customers of the country's largest private bank,
Bank Central Asia (BCA), have been withdrawing their money,
following three days of riots two weeks ago which severely
damaged many of its branches and automatic teller machines.

Yesterday IBRA took over the control of BCA, owned by the
giant Salim Group and two of Soeharto's children, after financial
assistance from both owners and the central bank failed to calm
jittery depositors.

Earlier this year, IBRA shut down seven commercial banks and
placed another seven under its management, including large Bank
Danamon and Bank Dagang Nasional Indonesia,

Later, 26 other banks were put under its supervision as part
of efforts to overhaul the country's frail banking sector.

Earlier in his speech, Mar'ie called on intellectuals,
especially the campus community, to keep alive the campaign for
overall reform because the drive was in danger of being shattered
by vested groups with their own agenda.

"We should keep up the momentum for reform, otherwise the new
administration will be able to establish a power base and
maintain the status quo," added Mar'ie, who was known as
"Mr.Clean" in the 1993/1998 Cabinet. (23/das)