Mulyohardjoko, Mar'ie to head Bank Mandiri

Mulyohardjoko, Mar'ie to head Bank Mandiri

JAKARTA (JP): The government officially established PT Bank
Mandiri on Friday to take over the shareholdings of Bank Ekspor
Impor Indonesia (Exim), Bank Dagang Negara (BDN), Bank Bumi Daya
(BBD) and Bank Pembangunan Indonesia (Bapindo), four of the seven
state banks.

State Minister of the Empowerment of State Enterprises Tanri
Abeng named Mulyohardjoko as the bank's president and former
finance minister Mar'ie Muhammad as chief commissioner.

Mulyohardjoko is currently president of state-owned pension
fund PT Taspen.

Tanri also appointed Sudaryono as a commissioner and I Wayan
Pugeg as a director.

For the time being, Bank Mandiri will provide banking services
through its four subsidiaries in their own names.

It will start providing banking services in its own name after
the process of integrating the four banks into its operation is
completed, which is expected by 2000.

"When it is in full operation, the bank is expected to become
one of the strongest and most professionally managed banks in the
region," Tanri said.

Bank Mandiri has authorized capital of Rp 16 trillion and
paid-up capital of Rp 4 trillion.

The latter amount consists of Rp 2.4 trillion worth of
government equity in the four banks and Rp 1.6 trillion in fresh
funds, including from the four banks' retained earnings.

Tanri appealed to depositors in the four banks to not panic
because their deposits were fully guaranteed by the government.

"The owners of savings, checking accounts and deposits in the
four banks should not be worried because the government stands
behind them," he said.

"The government will also guarantee payment of all the
obligations of the four banks to their creditors."

Employees of the four merged banks will be retained for at
least two years to support the banks' management in the transfer
process. Their rights will be protected by existing rules, he
added.

"The government guarantees that there will be no layoffs
during the two-year process or integration."

Tanri qualified that statement by stating that Bank Mandiri
would not be able to accommodate all employees or maintain the
entire network of branch offices if Bank Mandiri began full
operation in the next two years.

"We will have to cut the number of branch offices and,
consequently, some top executives of the banks will have to
quit."

He declined to mention how many branches would be closed or
the number of layoffs.

Bank Exim has 75 branches nationwide with 6,500 employees, BDN
150 with 8,500 employees, BBD 216 with 7,500 employees and
Bapindo 41 with 3,000 employees.

Tanri said the government had formed a team headed by
Coordinating Minister for Development Supervision and State
Administrative Reform Hartarto Sastrosoenarto to supervise the
process of integration.

The team, whose members include Tanri, Minister/State
Secretary Akbar Tandjung and Bank Indonesia Governor Sjahrir
Sabirin, would appoint other members for the board of directors
and the supervisory board next week.

The government has been assisted by Deutsche Bank AG of
Germany in the process of bank restructuring, including
integrating the four state banks into Bank Mandiri.

Tanri noted the four banks had combined total assets of Rp 269
trillion, including a large amount of nonperforming loans.

"But we do not know the total amount of nonperforming loans
they have so far," he contended.

He said due diligence on the consolidation process, which was
expected to be completed within the next two months, would
eventually provide a clear picture on the amount of nonperforming
loans in the banks.

He said the nonperforming loans would either be transferred to
the asset management unit (AMU) of the Indonesian Bank
Restructuring Agency (IBRA) or managed by the banks.

"We could transfer their bad assets to AMU or leave them to
the management of the banks," he said, stressing the importance
for the government to eliminate bad assets to allow Bank Mandiri
to operate under a sound financial condition in 2000.

AMU was founded with the specific task to absorb the bad
assets of the country's troubled banks.

The establishment of AMU, IBRA and Bank Mandiri is part of the
agreement with the International Monetary Fund (IMF), which
arranged a multibillion dollar bailout package for Indonesia.
(aly)