Andromeda's last effort fails to avoid liquidation axe

Andromeda's last effort fails to avoid liquidation axe

JAKARTA (JP): Bank Andromeda, one of 16 banks closed by the
government over the weekend, said yesterday it tried to save the
bank at the last minute with Rp 350 billion (US$100 million) in
new funds, but the effort fell short of the deadline.

Pieter Gontha, one of Andromeda's shareholders, said at a news
conference the bank had put up the funds to Bank Indonesia (the
central bank) Saturday morning to prevent the bank from being
liquidated, but the decision had already been made.

"By the time we arrived at Bank Indonesia at 9:45 a.m., the
central bank governor and the finance minister had already made
the decision, although it was not announced until 1 p.m. that
day," added Gontha, who represented Andromeda's board of
commissioners.

"This is ironic since Andromeda's shareholders all tried their
best to solve and fulfill the requirement to save the bank. We
were in a hurry to deliver Rp 350 billion to save the bank, but
we were too late," he said.

The government announced Saturday it had closed 16 ailing
private banks as part of an International Monetary Fund-assisted
reform package to restore confidence in the country's economy.

Gontha said the central bank notified Andromeda's management
Thursday about the Saturday meeting at Bank Indonesia's head
office. But the letter from the central bank only said the
meeting was to discuss matters about Andromeda.

"We will announce the implementation of Andromeda's
liquidation process on Nov. 13, after further discussion with a
'caretaker' team from Bank Indonesia," he said.

Gontha admitted Andromeda had violated several banking
regulations, such as exceeding the legal lending limit.

He said Bank Andromeda had violated the legal lending limit by
providing loans totaling $75 million to some of its shareholders
who later used the loans to put up equity in PT Chandra Asri
petrochemical company.

Several Andromeda shareholders are also main shareholders in
PT Chandra Asri.

"However, we (the shareholders) have repaid the loans to Bank
Andromeda," Gontha added.

The bank also failed to meet the minimum reserve requirement
several times, although it had always paid the fine imposed by
the central bank for violating the rule, he said.

"But Bank Andromeda had fulfilled the minimum 8 percent
capital adequacy ratio (against assets)," Gontha pointed out.

Andromeda is 50 percent owned by Prayogo Pangestu of Barito
Pacific, 25 percent by Henry Pribadi, chairman of the Napan
Group, and the remaining 25 percent by President Soeharto's third
son Bambang Trihatmodjo.

Gontha said Chandra Asri and other companies owned by
Andromeda's shareholders were the biggest depositors at
Andromeda.

Andromeda, established here in 1990, has about 9,000 customers
and 20,000 accounts in 13 branches across Java.

The bank's president, Nico Mailangkai, said the bank's assets
totaled about Rp 1.2 trillion.

The bank had Rp 860 billion in third-party deposits, and its
total credit reached almost Rp 900 billion, Nico said.

Nico said Andromeda's debts through the interbank market were
between Rp 30 billion and Rp 40 billion. (das)