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)