Bank Jakarta defies govt's closure order

Bank Jakarta defies govt's closure order

JAKARTA (JP): Probosutedjo, half-brother of President Soeharto
and owner of Bank Jakarta, kept his bank open yesterday, ignoring
the government's closure order.

The bank said yesterday it had begun to repay customers up to
Rp 2 million from ordinary savings accounts and up to Rp 5
million from checking accounts.

Some depositors at the bank said they received part of their
money, though the amount was not as much as expected, on the
second floor of the Tedja Buana building on Jl. Menteng Raya.

Probosutedjo, also Bank Jakarta's chief commissioner, said his
bank had to stay open to reimburse part of its customers' money
despite the central bank's closure order to protect the interests
of cash-strapped depositors.

"This is to support our depositors. Most of them are small-
scale entrepreneurs who need cash. I've repaid them with my own
money because Bank Jakarta's accounts are still frozen by Bank
Indonesia (the central bank)." he said.

The government ordered the closure of 16 ailing banks Saturday
as part of financial reforms supported by the US$23 billion in
standby loans from the International Monetary Fund and several
other multilateral institutions.

But Probosutedjo, until yesterday, refused to sign the
liquidation documents submitted by the central bank's caretaker
team.

The government has set aside Rp 2.3 trillion as an advance
reimbursement to depositors of the 16 liquidated banks, with a
maximum reimbursement of Rp 20 million per depositor.

The reimbursement will be made by three designated state banks
-- Bank Dagang Negara, Bank Rakyat Indonesia and Bank Negara
Indonesia -- starting Nov. 13.

Depositors who have more than Rp 20 million at the liquidated
banks will receive the remainder of their funds after the
liquidation team sells the assets of the banks.

Probosutedjo acknowledged that he deliberately defied the
government's closure order to show his objection to the
liquidation measure.

He contended that his bank was not bankrupt and did not
deserve to be closed.

He also contended that his bank had not violated any rules,
adding that its capital adequacy ratio was 9.45 percent (higher
than the minimum required by the central bank), but he did not
elaborate on the quality of his assets.

When asked about the legal lending limit and connected loans,
Probosutedjo was quoted by Antara as saying that "all banks
practiced that and it did not matter as long as the public's
interest was unaffected."

Probosutedjo, chairman of the diversified Mercu Buana Group,
boasted that Bank Jakarta was backed up by assets amounting to
trillions of rupiah.

He cited several of his personal assets, including Hotel Le
Meridien in Jakarta worth Rp 350 billion, 900 hectares of land in
Hambalang near Bogor worth Rp 540 billion, 1,200 hectares of
cacao estates in North Sumatra worth Rp 40 billion, 800 hectares
of rubber plantations worth Rp 30 billion, General Motors Buana
Indonesia worth Rp 50 billion, five hectares of land in Jakarta
worth Rp 100 billion and a $200 million equity stake in the
Kedaung glassware plant.

Probosutedjo demanded that the government cancel the closure
and liquidation of his bank. "I also ask all depositors to stay
calm. I guarantee that Bank Jakarta will keep their money safe."

He stressed that he would take the government to court if his
bank was not officially reopened.

"This is for the public's interest," he said.

Before the closure, he said, he had tried several times to
meet with the monetary authorities, but they were unavailable.

A shareholder of Bank Andromeda, Bambang Trihatmodjo --
President Soeharto's second son -- said he would also bring the
case to the State Administrative Court against the minister of
finance, who he accused of unilaterally closing his bank.
(icn/vin)