Indonesia banking: Time to revisit the sins of the fathers
The southeast Asian country was brought to its knees 20 years ago because of the failure of its biggest banks. A generation on, the same clans are back in banking and the regulator says he isn’t fussed.
If you cast your gaze over any recent banking crisis and look at what is left, one question worth asking is whether or not the regulators who cleaned up the multi-billion-dollar mess should allow those responsible, or their heirs, or even their loyal lieutenants, to remain involved in the financial industry.
That question is particularly pertinent in Asia where family-owned empires dominate commerce, and where it is common for the younger generations to defer to the elderly founder-patriarchs.
In the case of Indonesia, where the banking mess took years to clean up, it seems that’s fine. Just ask Wimboh Santoso, the 61-year-old head of Indonesia’s independent financial services authority, known as Otoritas Jasa Keuangan (OJK).
He says he doesn’t see any problem with the re-entry into Indonesian banking of the same business clans whose mismanagement of family-owned banks contributed to the collapse of the country’s economy two decades ago thanks to their flouting of basic banking rules, such as restrictions on related party transactions.
Three of the dynasties associated with banks that failed in the crisis are involved in new banks, as revealed by Asiamoney last year.