Thu, 27 Apr 2000

Rudy Ramli agrees to drop lawsuit

JAKARTA (JP): Former controlling owner and president of Bank Bali Rudy Ramli agreed on Wednesday to drop his lawsuit against the central bank and the Indonesian Bank Restructuring Agency (IBRA).

Rudy made the decision after he obtained a guarantee from the government that the bank would be recapitalized.

"I will drop the lawsuit if I can obtain a guarantee that Bank Bali will be recapitalized," he told reporters earlier before he entered a meeting with Bank Indonesia and IBRA officials at the central bank.

Rudy declined to provide further comments after the meeting, but said that he had been assured that Bank Bali would be recapitalized.

"There's no need for a legal battle. We need to cooperate to have Bank Bali recapitalized," he said briefly.

Meanwhile, Bank Indonesia deputy governor Subarjo Joyosumarto said after the meeting that the Bank Bali recapitalization program was expected to be completed before the end of May.

He said that the bank would have to go through another due diligence process if the recapitalization program was not completed by the end of next month.

IBRA, a unit of the finance ministry, nationalized Bank Bali in late July after the Ramli family failed to provide financing to recapitalize the bank or to invite foreign investors to help the financing.

The agency was supposed to have recapitalized the bank last year but the program was delayed after the bank was hit by a high profile scandal involving senior government officials and politicians.

Rudy latter filed a lawsuit against the nationalization of his bank by the central bank and IBRA.

The Jakarta Administrative Court last month surprisingly ruled that the takeover of Bank Bali was illegal.

The central bank has since vowed to make an appeal against the ruling.

"Bank Indonesia, IBRA, and Rudy Ramli have agreed to drop the lawsuit. We have agreed to recapitalize Bank Bali," said IBRA senior deputy chairman Arwin Rasyid following the same meeting at the central bank.

Arwin said that the decision to recapitalize Bank Bali was also supported by the Financial Sector Policy Committee, which groups several senior economics ministers.

Arwin said that the government decided to recapitalize Bank Bali because it was a good bank with extensive networks and more than 6,000 employees.

The government earlier demanded that Rudy drop his lawsuit as a prerequisite for the recapitalization of Bank Bali.

Bank Bali will need about Rp 4.7 trillion (US$587 million) in recapitalization funds to boost its capital adequacy ratio (CAR) to at least 4 percent, the minimum required level set by the banking authority.

Meanwhile, Subarjo said that IBRA would "return" Bank Central Asia's (BCA) supervision to Bank Indonesia on Thursday because the bank had turned healthy.

Based on the bank restructuring program, ailing banks are put under IBRA's management and supervision while sound ones fall under the central bank's supervision until a completely new banking supervisory agency is set up sometime in 2001.

"BCA is now healthy and in good condition, so starting on Thursday the bank will be under the supervision of Bank Indonesia again," Subarjo said.

IBRA, which owns 98 percent of BCA, plans to sell between 15 percent and 30 percent of the bank through an initial public offering next month.

The bank booked a net profit of about Rp 641.29 billion in 1999 compared to a loss of some Rp 28.40 trillion in 1998.

IBRA is slated to start an overseas roadshow (promotion) on Thursday, covering Singapore, Hong Kong, New York and London. (rei)