Bank liquidations

Bank liquidations

Take your pick between doing business with hundreds of unsound
banks, or dealing with a handful of sensible operations - the
second option is of course preferable.

The government offers a similar choice. Its banking
recapitalization program empowers impaired institutions which
still have prospects and liquidates inept ones.

The term "liquidation" haunts the community due to the bank
liquidation program of 1997-1998. Confidence in the banking
sector plummeted as the masses withdrew their savings.

However, the community should not panic because the government
has guaranteed their savings and accounts. To assuage fears, the
government's activities should be transparent in the
recapitalization and liquidation programs.

The assessment of banks in C category (those whose Capital
Adequacy Ratio is less than minus 25 percent), needs to be
clarified. While many are mismanaged, the current economic
downturn should also be taken into account.

Banks dogged by the prevailing economic climate should not be
processed in the same way as the corrupt mismanaged ones. Only
banks unwilling to save their own institutions should be
liquidated and their owners brought to court.

-- Republika, Jakarta