Bank Putera's future in IBRA's hands

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)