Tighter control for state banks
Tighter control for state banks
JAKARTA (JP): Minister of Finance Mar'ie Muhammad said
yesterday that consolidation measures in state-owned banks will
continue despite improvement in their performance in the last two
years.
The minister said the consolidation measures, introduced in
1993 following a disclosure of their massive bad debts, are aimed
at turning them to professional business entities.
Following the appointment of new senior officials of state-
owned companies, the minister said that supervision over the
state-owned banks' operations will be also strengthened in a bid
to minimize red tapes.
The newly appointed officials include Arifin, installed as
chief commissioner of Bank Dagang Negara (BDN), Sarmono as chief
commissioner of Bank Negara Indonesia (BNI), Umar M. Said as
chief commissioner of Bank Bumi Daya (BBD) and Mursabdo as chief
commissioner of Bank Ekspor Impor Indonesia (BEII).
The other new appointees are Hardjono and Mursono
Siswohardjono, who were installed respectively as chief
commissioner and president of PT Kawasan Berikat Nusantara, an
industrial bonded zone managing company.
"Commissioners of banks should restrain from interfering the
administrative task of the executive boards, despite the stricter
control commitment," he warned.
Losses
State banks reported great losses in 1993 due to an increase
in their bad debts as a large amount of their credits had been
extended to unfeasible projects.
Sources said the massive amount of bad debts occurred as many
executives of the state-owned banks plotted with borrowers to
default the credits, while commissioners, mostly comprising of
senior government officials, often compelled the management board
to provide credits according to their favor.
The activities of the state-owned banks are likely to remain
stagnant on the impact of the consolidation measures.
The state banks, comprising of BDN, BNI, BBD, BEII, Bank
Tabungan Negara, Bank Rakyat Indonesia and Bank Pembangunan
Indonesia, control around 50 percent of the lending market.
The credit expansion of the state-owned banks, which reached
over 10 percent in 1991 and 1992, declined to eight percent in
1993 and around eight percent last year, as compared to the
growth between 20 and 25 percent recorded by private banks.
The combined expansion of total bank credits, for a
comparison, reached around 22 percent last year.
Subagyo Karsono, the president of BDN, said the consolidation
measures in his bank would last for another two years.
"The measures are important to give the bank more room for
future expansion," he said, adding that the improvement of
information technology and human resources are priorities of the
bank's restructuring program.(hen)