3/11/09 Read also, SME Bang!
with updates ...
The SME Bank is in dire need of a total shake-up, people in the banking sector have been telling me. It suffers from high NPL, major losses due to bad investment decisions, and high turnover. This has affected bottom line and hampered the bank's goal of helping SMEs, especially the Bumi ones. Profits stated in SME Bank's accounts are cosmetic and not derived from the bank's core business.
When the contract of the bank's Managing Director ended last month, these concerned people in the banking sector sighed in relief and allowed themselves to hope that changes were imminent.
But now they hear that the government may renew the contract of the well-connected ex-MD, who still comes to the office and behaves as if he's still the Boss even though his contract has been terminated. This ex-MD, I hear, has recommended himself highly for an extension and is using his powerful cables that go right up to a former MoF ll to ensure the job doesn't go to anyone else.
Certainly something to watch closely in the coming weeks.
Notes on merger-demerger: The SME Bank is a product of an acquisition exercise of Bank Industri by Bank Pembangunan. The idea, which was mooted by the MoF 2 during the Badawi administration, was for the SME Bank to continue the role of Bank Pembagunan. But it was an idea not well thought of and after just 3 years, the government was forced to demerge SME Bank from Bank Pembagunan. This merge-then-demerge exercise was very costly, needless to say, not least for the Bumiputera business community these institutions were supposed to be assisting. In the event of a shake-up, according to the people in the banking sector I spoke to, the government should consider going back to basics i.e. return the original roles of these institutions as envisioned by the Razak administration.
Read immediate commentary at www.semasa.net
h e r e.