In response to concerns raised by legislators and analysts, BI deputy governor Halim Alamsyah said Friday that as the supreme banking authority, BI guaranteed the eligibility of a person or an institution to acquire a bank.
“If the person or institution has a negative track record, they will not be allowed to own a bank, the plan will fall through. I guarantee that,” Halim said.
Legislators and analysts raised doubts after BI last week granted a license to Kharisma Buana Nusantara (KBN) and Pikko Group to acquire shares in Bank Nationalnobu. Lippo controls 60 percent shares in KBN, with the rest held by Yantony Neo, CEO of Pikko Group.
Lippo will spend Rp 60 billion for a 60 percent stake in the bank while Pikko will hold the remainder.
Pikko is the founder of Bank Pikko, which later merged with Bank Danpac and Bank CIC to become Bank Century — later renamed Bank Mutiara after receiving a Rp 6.76 trillion bailout in 2008.
Critics said the comeback of Riady’s empire reminded them of the country’s worst banking crisis following the 1997 Asian financial crisis, which led to the government injecting Rp 144.5 trillion in bailout funds and BI blacklisting more than 400 bank owners, commissioners and executives for unscrupulous practices.
Riady’s Lippo Bank was among the domestic banks receiving Rp. 6 trillion in government sustenance in exchange for a 59 percent stake in the bank. Although considered by many to be responsible for the bank’s failure, Riady’s remained commissioner until 2005.
In 2008, after series of acquisitions, Malaysia’s CIMB Group undertook the merger of Bank Niaga with Lippo into CIMB Niaga, the country’s fifth largest bank by assets.
BI deputy governor Muliaman Hadad gave assurances that Riady was not among the individuals on BI’s blacklist. BI spokesman Difi Johansyah told The Jakarta Post that Riady passed the test for eligibility to own a bank “but with conditions”. He did not elaborate further.
The fit and proper test procedures answered previous concerns by observers and economists who worried that Mochtar’s history with Lippo Bank could repeat itself with Bank Nationalnobu.
“It is important for the central bank to let people know the criteria when it grants a license to a person who did not have a positive record in the past. The central bank must be tough with the criteria, because it relates to customers’ trust in the bank,” economist Yanuar Rizky said.
Legislator Nusron Wahid said BI had to be cautious of the comeback of conglomerates with negative track records in the banking business.
“They deserve a second chance, but in this case, the central bank must closely watch their activities with the new bank they are setting up given their past record,” he said.
Nusron said he trusted that the central bank may have its own justification to grant the “troubled” bankers a license to own banks, but the public also had the rights to know the reason why BI let them re-enter the business.
In 2005, BI granted Sinarmas Group a license to acquire Bank Shinta, transforming it from a lender with Rp 250 billion in assets to a bank with assets of up to Rp 8.4 trillion in the first half of this year.
Sinarmas was founded by Eka Tjipta Widjaya, the former owner of Bank Internasional Indonesia, which also received a government bailout in 1999.
