Bank Putera's future in IBRA's hands

JAKARTA (JP): The fate of Bank Putera now lies in the hand of the Indonesian Bank Restructuring Agency (IBRA), with representatives of the two parties holding a close-door meeting on Thursday.

No explanation was given on the results, but a reliable government source said the talks between IBRA and Bank Putera -- the financial arm of the heavily indebted Texmaco Group -- failed to produce a resolution.

Bank Indonesia (BI) Deputy Governor Aulia Pohan confirmed the talks between IBRA and Bank Putera and said rescue measures would be taken soon.

"They are discussing what could be done with Bank Putera and what legal procedures are available to be taken to save the bank," Aulia said.

Bank Putera faced liquidity problems after a run on Monday and Tuesday by its depositors following a weekend Internet media report that supervision of Bank Putera would be transferred to IBRA. The report was denied by the bank's president Masyhud Ali.

The run amounted to Rp 592.3 billion (US$82 million), drying up the bank's reserves at Bank Indonesia on Tuesday and putting its account in the central bank in the negative position. It prompted the central bank to temporarily suspend the clearing activities of Bank Putera.

"We had to suspend the clearing activities of Bank Putera when the bank's reserve requirement hit minus Rp 278.5 billion on Tuesday," Aulia said.

All banks operating in Indonesia must have a deposit account, also known as a reserve requirement, at the central bank in the amount of 5 percent of the total third party rupiah funds the bank receives, according to a central bank regulation.

For the third party's funds in foreign exchange, each bank has to maintain a reserve requirement of 3.5 percent at the central bank.

Aulia said the central bank would not lift the clearing suspension until Bank Putera provided the required Rp 278.5 billion to fix its negative account.

However, Aulia said Bank Putera had interbank receivables totaling Rp 342 billion at three closed banks: Bank Uppindo, Bank Aspac and Bank Papan Sejahtera.

"Bank Putera's account in the central bank could turn into positive again if it could recover these receivables from IBRA," he said.

Under the government blanket guarantee program, all obligations of closed banks, including interbank claims, are guaranteed by IBRA.

But the agency suspended the payment of interbank claims owed by closed banks after the high-profile Bank Bali scandal.

IBRA is auditing the remaining unpaid interbank claims to prove that they are eligible to be included in the guarantee scheme.

Bank Putera's total assets as of November 1999 stood at Rp 2.9 trillion with net equity of Rp 440 billion.

The medium-size bank was relatively untouched by the country's worst banking crisis. The bank has a capital adequacy ratio of more than 4 percent, which frees it from the government-sponsored bank recapitalization program.

The government has so far closed 66 banks, nationalized 11 and recapitalized eight. (udi)