No massive job cuts for BCA: StanChart
The Jakarta Post, Jakarta
Britain's Standard Chartered Bank Plc (StanChart) said on Tuesday it had no plans for massive job cuts as it rushed to assuage thousands of Bank Central Asia (BCA) employees protesting the sale of the bank to a foreign consortium, who they fear may streamline operations and cut jobs.
Monday's mass demonstration by BCA employees has already forced the government to further delay the announcement of the winning bid, which was scheduled to be done on Tuesday.
But StanChart chief executive in Indonesia, Ray Ferguson was unfazed by the delay, saying StanChart remained committed to its bid.
"We fully understand the attachment that Indonesians and BCA employees have to BCA," Ferguson said in a press statement.
StanChart's only other competitor, the U.S. investment firm Farallon Capital Management could not be reached for comment.
On Monday thousands of BCA employees took to the streets in protest against plans to sell the bank to foreign investors. Some of them said there were rumors being spread of job losses and lower benefits.
"There will be no massive job cuts and no changes to employee benefits and pay," Ray said adding that there were also no plans for branch closures, fundamental changes to management structure, nor integration of BCA into StanChart.
"The BCA brand name and identity will be maintained," he said.
Farallon, in an earlier press statement cited similar promises, saying there would be no layoffs within the first two years.
But with the delay it remains to be seen whether the government can keep its own promise to announce a winner this week.
State Minister for State Enterprises Laksamana Sukardi said he had received the last assessment results on the two final bidders.
"But in the short term we will assess the latest development like these labor protests which we have to watch out for," he told reporters.
Monday's mass protests again highlights the painstaking processes the government must endure to prove to investors that it is committed to privatization.
Much is at stake as investors and international lenders will determine their next moves in Indonesia, or lack thereof, only after the BCA deal is done.
Founded by the Salim Group, BCA is the country's largest retail bank, which the government took over after bailing it out from the impact of the 1997 financial crisis.
Some US$5 billion was spent on recapitalizing the bank, and it still costs another Rp 7 trillion (about $700 million) a year to keep BCA, with its thousands of employees, afloat.
Despite the huge public burden to keep it afloat, BCA employees demand the government not sell the bank, especially, it seems, to a foreign consortium.
However, their plight has received backing from at least one influential voice within the government.
State Minister for National Development Planning Kwik Kian Gie also opposes the divestment, but for reasons other than job losses.
Kwik is concerned with the Rp 7 trillion in taxpayers' money BCA would still receive while owned by foreign investors.
That money is part of approximately Rp 60 trillion the government spends each year on banks that it bailed out with recapitalization bonds.
As yet, the government has no immediate solution to reclaim the bonds from other recapitalized banks before divesting them.
On the currency market, the latest snag appears to have had little impact as players have become desensitized to problems surrounding BCA.
The rupiah weakened slightly to 9,970 against the U.S. dollar from 9,960 on Monday.
Stock traders, however, dumped their BCA shares on news of a delay, prompting the main index to lose 4.6 points to end Tuesday trading at 469.36.