BI imposes ceiling on forex deposits and liabilities<\/p>\n
JAKARTA (JP): The central bank, Bank Indonesia, introduced
\nyesterday ceilings on banks' foreign exchange deposits, foreign
\nexchange nontrade and trade related liabilities, including
\nletters of credit.<\/p>\n
Ceilings on credit growth and interest rates have also been
\nimposed, the Bank Indonesia (BI) and the Indonesian Bank
\nRestructuring Agency (IBRA) said in a joint statement yesterday
\non initial measures for Indonesian bank restructuring.<\/p>\n
The measures were taken to prevent irregularities that might
\nresult from the government's decision last week to guarantee
\ndomestic banks' obligations to depositors and creditors, they
\nadded.<\/p>\n
\"BI and IBRA demand that bank managers behave responsibly,
\nkeeping in mind the interests of the country,\" said the statement
\nsent to The Jakarta Post yesterday.<\/p>\n
The two institutions also asked banks to thoroughly review
\ntheir assets and contingent liabilities and assess realistically
\nall the losses they contained.<\/p>\n
BI and IBRA warned that any transaction designed to abuse the
\nguarantee scheme would be equivalent to embezzlement of the
\npublic's money.<\/p>\n
In an effort to rebuild faltering confidence in the country's
\nbanking industry, the government last week announced a blanket
\nguarantee of deposits and debts of all banks incorporated in the
\ncountry, including joint venture banks, and set up IBRA in charge
\nof rehabilitating the banking sector.<\/p>\n
Both IBRA and BI had been working closely together to define a
\ncomprehensive restructuring strategy to rectify the condition of
\nthe banking sector.<\/p>\n
They added that after introducing the guarantee scheme the
\nfirst priority was to improve understanding of the condition of
\nthe banking sector, including the impact of the current difficult
\nmacroeconomic conditions on banks' balance sheets.<\/p>\n
\"The assessment will be completed shortly,\" the two
\ninstitutions said.<\/p>\n
A twofold resolution strategy had also been defined:
\nrectifying the damage of the past, and preparing for the future,
\nadded the statement, which was signed by BI's managing director
\nMukhlis Rasyid and IBRA's chief Bambang Subianto, who is also
\ndirector general of financial institutions at the finance
\nministry.<\/p>\n
They said the process of rectifying the damages to banks'
\nfinancial structures would involve two measures.<\/p>\n
First, making fully apparent and then allocating the assets
\naccumulated by the banks. The losses would be distributed first
\nto the banks' owners and the holders of subordinated debts and
\nthereafter to IBRA.<\/p>\n
Second, preparing for the future. IBRA would review the
\nprospects of the banks placed under its responsibility, and
\ndecide on the best approach for restructuring each of them, the
\ninstitutions said, adding that external help might be used when
\nappropriate.<\/p>\n
\"IBRA will foster the merger of clusters of banks presenting
\nsynergies and will also attract new investors, including from
\nabroad,\" they said.<\/p>\n
Following the sharp fall of the rupiah against the U.S. dollar
\nand the closing down of 16 banks in November, confidence in the
\ncountry's banking sector waned. The public withdrew deposits, and
\nforeign banks became increasingly reluctant to accept letters of
\ncredit issued by Indonesian banks.<\/p>\n
Some 70 banks were reported to have signed the government's
\nguarantee scheme to lure back depositors.<\/p>\n
The banks had to pay a half-year fee of 0.05 percent of total
\nguaranteed deposits and debts. Loan growth would also be limited
\nto 2 percent per month, while interest rates for rupiah would be
\nbased on Jakarta interbank offered rate (Jibor) and foreign
\nexchange deposits on Sibor (Singapore interbank offered rate).
\nb(08)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bi-imposes-ceiling-on-forex-deposits-and-liabilities-1447893297",
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