New bylaw allows change of status for Bank DKI

JAKARTA (JP): The City Council endorsed on Monday a new bylaw allowing the change of status of city-owned Bank DKI into a limited liability company to enable it to be more flexible and competitive.

The council speaker, Edy Waluyo, said that with the new status the bank was expected to have greater flexibility to bring in more investors as shareholders to help raise its capital.

"I also hope that Bank DKI will be more autonomous and professional so that it can be more competitive in the market," he said.

The bank's new status would not lessen its obligation to contribute to the city's revenues, he said, adding that the bank's contribution in the 1998/1999 fiscal year was expected to reach Rp 40 billion.

Under the new status, the bank, which previously belonged solely to the city administration, is now owned by two other parties, namely city-owned market management company PD Pasar Jaya and Bank DKI's pension fund.

"In the near future we will go public and a part of the bank's shares will be offered to our employees," said Maman Soelasman, the bank's new director of general affairs.

Bank DKI, which was established in 1961, has 11 branches throughout the city.

According to head of Commission C for financial affairs Amarullah Asbah, the status change would shorten the lengthy and arduous bureaucratic system previously adopted by the bank's management which meant that any changes of policy the bank carried out had to be endorsed by several institutions and people: the governor, Bank Indonesia (the central bank), representatives of the Ministry of Home Affairs and the Ministry of Finance.

"In the form of a limited liability company, the policy makers are the bank's shareholders themselves," he said.

Maman said that he would soon establish a special team to be assigned to investigate the bank's bad credits which were currently estimated at Rp 172 billion.

"The team's main task is to appraise mortgages of parties believed to have bad loans from the bank," he said, without any elaboration.

Maman just said that the most important thing was that former Bank DKI's president Soeharto had been under intensive investigation at the Jakarta Prosecutor's Office in connection with the bad loans.

It was believed that the bad loans were mainly caused by Soeharto's alleged authoritarian management style, especially in the process of granting loans, and his disregard of company accountability or credibility.

Moreover, he also reportedly granted most of the bank loans to certain parties without any acknowledgement of the board of supervisors, which is chaired by Governor Sutiyoso. (ind)