BCA put under IBRA control after massive run<\/p>\n
JAKARTA (JP): The country's largest bank, Bank Central Asia
\n(BCA), has finally surrendered to the power of its depositors,
\nwho have been frantically withdrawing money, and been placed
\nunder the tutelage of the Indonesian Bank Restructuring Agency
\n(IBRA).<\/p>\n
Bank Indonesia Governor Sjahrir Sabirin told journalists
\nyesterday evening that the continuing run on BCA since May 18 had
\nresulted in liquidity problems and dried up its reserves at the
\ncentral bank.<\/p>\n
As lender of the last resort, the central bank continued to
\nprovide liquidity support to BCA to meet all fund withdrawals,
\nSjahril said.<\/p>\n
\"As of today (yesterday), the liquidity support has exceeded
\n200 percent of BCA's capital and, therefore, BCA meets the
\ncriteria to be managed and supervised by IBRA.\"<\/p>\n
Sjahril, however, declined to reveal the amount of funds the
\ncentral bank had injected into BCA. He only said that the
\ncalculation on BCA's capital had included half of the promised Rp
\n1 trillion (about US$100 million) to be injected by the majority
\nshareholder, the Salim Group.<\/p>\n
According to InfoBank, BCA's paid-up capital stood at Rp 2.83
\ntrillion as of June 1997 and its total assets reached Rp 41.24
\ntrillion.<\/p>\n
Before giving liquidity credits to BCA, Sjahril said, Bank
\nIndonesia had asked the owners and management of the bank to
\nincrease capital and subordinate loans, raise funds from the
\nmoney market, halt credits and prevent fund withdrawals by
\naffiliated parties.<\/p>\n
However, those measures failed to save the bank from a
\nliquidity mismatch, which prompted the central bank to lend a
\nhelping hand.<\/p>\n
Bank Indonesia then placed BCA under IBRA's management with
\ndecree No. 31\/Kep\/Dir dated May 28.<\/p>\n
Maulana Ibrahim of IBRA said the agency would soon take the
\nnecessary steps to restructure BCA by conducting due diligence
\nand placing a supervisory team to monitor the operation of the
\nbank.<\/p>\n
IBRA has appointed state-owned Bank Rakyat Indonesia and Bank
\nNegara Indonesia as twinning banks, Maulana said.<\/p>\n
IBRA also takes over the powers and authority of the existing
\ndirectors and commissioners and forms a proxy directors' team
\nheaded by D.E. Setyoso of BRI until the bank's shareholders
\nmeeting is conducted to choose new directors and commissioners.<\/p>\n
\"During the restructuring process, BCA will operate as normal.
\nAll customers and the public can still enjoy BCA's products and
\nservices,\" Maulana said.<\/p>\n
Minister of Finance Bambang Subianto said there was no need
\nfor people to worry about their deposits at banks, including BCA,
\nbecause they were fully secured by government guarantees.<\/p>\n
\"It also needs to be reiterated here that the main task of
\nIBRA is to nurse banks back to health. So, banks under IBRA,
\nincluding BCA, will not die. Instead, they will be made healthy
\nagain,\" Bambang said.<\/p>\n
\"Therefore, I call on the people to remain calm because if the
\npeople continue to withdraw their money from banks, it would
\ncomplicate our efforts to restructure our banking sector.\"<\/p>\n
Sjahril Sabirin also called on people to remain calm and
\nrestrain from withdrawing funds excessively so that all banks
\ncould continue providing services to their customers.<\/p>\n
\"Bank Indonesia would like to reiterate that all deposits,
\nincluding those in BCA, are fully guaranteed by the government,\"
\nhe said.<\/p>\n
Yesterday, depositors were still queuing at BCA branches and
\nautomated teller machines (ATMs). Many of the bank's branches and
\noffices were closed in the morning.<\/p>\n
BCA, the country's largest privately owned bank, is 70 percent
\nowed by the Salim Group, chaired by Liem Sioe Liong, while former
\npresident Soeharto's eldest daughter, Siti Hardijanti Rukmana,
\nand eldest son, Sigit Hardjojudanto, hold the remaining 30
\npercent stake.<\/p>\n
A backlash against businesses owned by family and friends of
\nSoeharto has led many Indonesians to believe BCA will be shut.
\nThat, in turn, has prompted runs on Bank Central Asia branches
\nand automated teller machines since Soeharto's resignation last
\nweek.<\/p>\n
BCA said 122 of its offices were damaged, including 17 which
\nwere set on fire. Dozens of ATMs were also attacked.<\/p>\n
Sjahril said the rioting in Jakarta and other cities on May 13
\nand 14 had destroyed some 500 bank branches and many more ATMs.
\n(rid)<\/p>",
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"sponsor": "Okusi Associates",
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