BI completes liquidations of 52 banks

The Jakarta Post, Jakarta

The central bank has officially revoked the licenses of two banks, Bank Ratu and Prasidha Utama Bank -- the remaining two of the 52 banks the government decided to close down at the height of the crisis in the late 1990s.

The closure of the two banks was stipulated in two decrees of Bank Indonesia's governor dated April 29.

The liquidation of the two banks was delayed as the central bank had to wait for decisions of the Supreme Court giving the go-ahead, Antara reported on Friday.

The operations of the 52 banks were frozen during the financial crisis as part of the efforts by the government to clean up the banking sector and save it from systemic collapse.

The effort proved costly, with the now-defunct Indonesian Bank Restructuring Agency (IBRA) -- which took charge of the assets surrendered by the banks whose operations were frozen -- saying the government had only managed to recover a small portion of the funds it spent to cover the frozen banks' obligations.

Of some Rp 30 trillion in total state funds used to cover all the financial obligations of the banks, only Rp 770 billion has been repaid to the state.

This figure represents a recovery rate of only 23 percent.

Under banking legislation, the closed-down banks have to hold extraordinary shareholders' meetings to establish liquidation teams to oversee the disposal of all the assets belonging to the banks.