IBRA may take control of BCA

IBRA may take control of BCA

JAKARTA (JP): Bank Central Asia (BCA), the country's largest
bank, may soon be put under the control of the Indonesian Banking
Restructuring Agency (IBRA) following days of fund withdrawals,
banking sources said yesterday.

The banking sources said IBRA could take over control of the
bank as early as today, as its liquidity had fallen below
acceptable levels.

Central bank sources said the documents to authorize the move
were being drawn up yesterday,Dow Jones Newswires reported.

"My banking colleagues believe that the bank may be put under
IBRA tomorrow (today), but it could also be on Saturday, as
crucial moves are not usually done on a weekday," a state bank
executive told The Jakarta Post.

IBRA is a government body set up in January to help
rehabilitate the banking sector. A number of criteria are used
to determine which banks are placed under its direct supervision.

Banks are, for example, suspended if they have received
liquidity credits from the central bank equivalent to more than
five times their total equity, or equal to 74 percent of their
total assets.

If they have received government liquidity credits in excess
of Rp 2 trillion, or an equivalent sum equal to more than five
times their total equity, their management are put under the
control of IBRA.

Banks are put under supervision of IBRA, if they have received
liquidity credits equivalent to more than 200 percent of their
capital and which have a capital adequacy ratio below 5 percent.

The source said BCA's "severe bleeding", which increasingly
worsened over the last 10 days, could no longer be covered by
financial injections from either the central bank or the bank's
owner, the Salim Group.

"The central bank's liquidity assistance has already met the
tolerable limit," the source said.

The Salim Group owns 70 percent of the bank, while former
president Soeharto's children Sigit Hardjojudanto and Siti
Hardijanti Rukmana own the remaining 30 percent.

Bank Indonesia said Tuesday it would extend liquidity
assistance to BCA of up to 200 percent of its paid-up capital.
The bank's owners earlier pledged to inject about Rp 1 trillion
in fresh funds into the bank after the run on it began last week.

BCA, the country's largest bank, has long been susceptible to
rumors. Early this year, it was rumored that Salim Group's
founder and owner, Liem Sioe Liong, had died, prompting massive
cash withdrawals from the bank.

Customers began to line up outside the bank's branches and
automatic teller machines (ATMs) on May 19, following massive
riots in the city, during which many of BCA's branches and ATMs
were destroyed. The queues grew over the days.

Yesterday, several of the bank's branches and ATMs were still
swamped by customers taking out their money.

The Matraman Branch in East Jakarta was inundated with
customers yesterday morning, causing a traffic jam in the area.

By late afternoon, however, there were fewer customers at some
of branches.

The bank installed nine additional machines next to the three
existing ones at its drive through ATM center on Jl. Sudirman.
The additional machines were only for withdrawals.

A security guard there said there were queues of only four or
five people at each machine throughout whole day. (das)