New bank liquidation rules aim to protect depositors<\/p>\n
JAKARTA (JP): The government's new regulation on bank
\nliquidation, announced by Bank Indonesia (the central bank)
\nyesterday, provides better protection for depositors if a bank is
\nshut down.<\/p>\n
The long-awaited regulation also gives legal certainty for
\ndepositors, directors, commissioners and shareholders alike
\nregarding the manner and procedure of a bank's liquidation.<\/p>\n
Heru Supraptomo, a director at Bank Indonesia, said that,
\nwhenever a bank was liquidated, depositors must be paid after an
\nappointed liquidation team pays all salaries owed, court fees,
\nauction fees, taxes and administrative costs.<\/p>\n
\"Before this regulation, a bank's depositors were considered a
\ncompany's non-preferred creditors. With this regulation,
\ndepositors are treated as preferred creditors. Thus, whenever a
\nbank is liquidated, they will have a better position,\" Heru said.<\/p>\n
The previous rules on liquidating limited liability companies
\n-- including banks -- were very general. The banks needed a
\nspecial liquidation ruling because they differed from other
\ncompanies, he said.<\/p>\n
\"This ruling is lex specialis. Therefore banks must abide by
\nthis ruling, not other rulings on liquidation,\" Heru said.<\/p>\n
Hendrobudiyanto, another director at Bank Indonesia, said the
\nregulation was timely. The previous rules had often complicated
\nbank liquidation.<\/p>\n
Complexity<\/p>\n
Banking analysts often cite Bank Summa and Bank Umum Majapahit
\nwhich failed in 1992 as examples of this complexity. Their
\nliquidations are still proceeding.<\/p>\n
Bank Summa, which was owned by the Soeryadjaya family, was
\nclosed in 1992 because of bad loans worth around $500 million.<\/p>\n
Before the new regulation, bank liquidation was based on the
\n1995 Companies Law, which stipulates that companies -- including
\nbanks -- can be dissolved three ways: by resolution of the
\ncompany's shareholders, expiry of the company's operational life
\n(as stipulated in its incorporation deeds) or by a court
\ndecision.<\/p>\n
But the regulation on bank liquidation does not let
\nshareholders dissolve a bank even it they pursue it through court
\nproceedings.<\/p>\n
Instead it empowers the finance minister to close an insolvent
\nbank, after advice from the central bank, and the Capital Market
\nSupervisory Agency if the bank is publicly listed.<\/p>\n
After a bank's operating license is revoked by the finance
\nminister, an extraordinary shareholders meeting must be called to
\ndissolve the bank as a legal entity and appoint a liquidation
\nteam within two months of the license being revoked.<\/p>\n
Bank Indonesia must approve the liquidation team. Two thirds
\nof the team's members are not allowed to have sat on the bank's
\nboard of directors, board of commissioners or be shareholders in
\nit.<\/p>\n
If shareholders fail to appoint a liquidation team, the
\ncentral bank will appoint it.<\/p>\n
The team must completed the liquidation in five years.<\/p>\n
The regulation stipulates that members of the boards of
\ncommissioners and directors become inactive when their bank is
\nliquidated. But they may not quit their positions without Bank
\nIndonesia's consent.<\/p>\n
They must stand ready to provide information to the
\nliquidation team.<\/p>\n
The regulation on bank liquidation also refers to the Company
\nLaw, especially on matters related to the responsibility of
\nshareholders, commissioners and directors.<\/p>\n
In the case of bank failure due to the mistake or negligence
\nof the board of directors or commissioners, all members of the
\nboard are jointly responsible if the bank's assets are inadequate
\nto cover the liabilities, Heru said.<\/p>\n
If a liquidation team member abuses his authority for personal
\ninterest, he may be held responsible.<\/p>\n
Hendrobudiyanto said the regulation aimed to complement the
\ncentral bank's efforts to cope with problem banks.<\/p>\n
But Hendrobudiyanto dismissed suggestions that many banks
\nfacing serious problems should be dissolved.<\/p>\n
\"If we suspect that a bank has problems and -- based on our
\nevaluation -- would be unable to meet its obligations or might
\nendanger our banking system, we will propose that the finance
\nminister revoke its license and dissolve it,\" Hendrobudiyanto
\nsaid. (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/new-bank-liquidation-rules-aim-to-protect-depositors-1447893297",
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