Management of Bank’s Holding Company Separated from State
Friday, 15 December, 2006 | 15:40 WIB

TEMPO Interactive, Jakarta: A circle of bankers said that the management of a holding company of state-owned banks must be separated from the government bureaucracy.

Head of the National Banks Association Sigit Pramono explained that the formation of a holding company becomes the main option of the government to comply with a single presence policy. The reason is that the option does not have an impact on the socio-economic situation.

However, the government's intervention in managing a holding company of state-owned banks will enlarge the political aspect compared with a commercial one. As a result, the government's intervention will instead hamper the objective of setting up a bank holding company to form an international-class bank. “The holding company must be managed professionally so that the intention of establishing a bank that can control the regional market can be fulfilled,” he said yesterday (12/14) in Jakarta.

Sigit, who is also Managing Director of PT Bank Negara Indonesia , cited Temasek—a large Singapore holding company—as separately managed from the government.

This year, Bank Indonesia will issue a single presence policy, which will ban bank owners from controlling more than one bank. The policy that will be imposed to all private and state banks will be realized in 2010. By the end of 2007, all owners or bank controllers must have reported each bank's policy in order to comply with a single presence policy.

According to him, the government is not yet ready to comply with the policy. The reason is that the government owns shares in some large banks. The government is not accustomed to merge healthy banks as well. “The merger has always been done with an unhealthy bank,” he said.

Agoeng Wijaya