BCA put under IBRA control after massive run

BCA put under IBRA control after massive run

JAKARTA (JP): The country's largest bank, Bank Central Asia
(BCA), has finally surrendered to the power of its depositors,
who have been frantically withdrawing money, and been placed
under the tutelage of the Indonesian Bank Restructuring Agency
(IBRA).

Bank Indonesia Governor Sjahrir Sabirin told journalists
yesterday evening that the continuing run on BCA since May 18 had
resulted in liquidity problems and dried up its reserves at the
central bank.

As lender of the last resort, the central bank continued to
provide liquidity support to BCA to meet all fund withdrawals,
Sjahril said.

"As of today (yesterday), the liquidity support has exceeded
200 percent of BCA's capital and, therefore, BCA meets the
criteria to be managed and supervised by IBRA."

Sjahril, however, declined to reveal the amount of funds the
central bank had injected into BCA. He only said that the
calculation on BCA's capital had included half of the promised Rp
1 trillion (about US$100 million) to be injected by the majority
shareholder, the Salim Group.

According to InfoBank, BCA's paid-up capital stood at Rp 2.83
trillion as of June 1997 and its total assets reached Rp 41.24
trillion.

Before giving liquidity credits to BCA, Sjahril said, Bank
Indonesia had asked the owners and management of the bank to
increase capital and subordinate loans, raise funds from the
money market, halt credits and prevent fund withdrawals by
affiliated parties.

However, those measures failed to save the bank from a
liquidity mismatch, which prompted the central bank to lend a
helping hand.

Bank Indonesia then placed BCA under IBRA's management with
decree No. 31/Kep/Dir dated May 28.

Maulana Ibrahim of IBRA said the agency would soon take the
necessary steps to restructure BCA by conducting due diligence
and placing a supervisory team to monitor the operation of the
bank.

IBRA has appointed state-owned Bank Rakyat Indonesia and Bank
Negara Indonesia as twinning banks, Maulana said.

IBRA also takes over the powers and authority of the existing
directors and commissioners and forms a proxy directors' team
headed by D.E. Setyoso of BRI until the bank's shareholders
meeting is conducted to choose new directors and commissioners.

"During the restructuring process, BCA will operate as normal.
All customers and the public can still enjoy BCA's products and
services," Maulana said.

Minister of Finance Bambang Subianto said there was no need
for people to worry about their deposits at banks, including BCA,
because they were fully secured by government guarantees.

"It also needs to be reiterated here that the main task of
IBRA is to nurse banks back to health. So, banks under IBRA,
including BCA, will not die. Instead, they will be made healthy
again," Bambang said.

"Therefore, I call on the people to remain calm because if the
people continue to withdraw their money from banks, it would
complicate our efforts to restructure our banking sector."

Sjahril Sabirin also called on people to remain calm and
restrain from withdrawing funds excessively so that all banks
could continue providing services to their customers.

"Bank Indonesia would like to reiterate that all deposits,
including those in BCA, are fully guaranteed by the government,"
he said.

Yesterday, depositors were still queuing at BCA branches and
automated teller machines (ATMs). Many of the bank's branches and
offices were closed in the morning.

BCA, the country's largest privately owned bank, is 70 percent
owed by the Salim Group, chaired by Liem Sioe Liong, while former
president Soeharto's eldest daughter, Siti Hardijanti Rukmana,
and eldest son, Sigit Hardjojudanto, hold the remaining 30
percent stake.

A backlash against businesses owned by family and friends of
Soeharto has led many Indonesians to believe BCA will be shut.
That, in turn, has prompted runs on Bank Central Asia branches
and automated teller machines since Soeharto's resignation last
week.

BCA said 122 of its offices were damaged, including 17 which
were set on fire. Dozens of ATMs were also attacked.

Sjahril said the rioting in Jakarta and other cities on May 13
and 14 had destroyed some 500 bank branches and many more ATMs.
(rid)