Troubled Bank Putera put under IBRA management

JAKARTA (JP): Bank Indonesia put the management of Bank Putera Multikarsa under the Indonesian Bank Restructuring Agency (IBRA) on Saturday after the bank's owners failed to raise the funds to settle the bank's negative account at the central bank.

IBRA said in a statement the move was immediately followed by the appointment of a new management team for the bank.

"On Dec. 11, 1999, IBRA received PT Bank Putera Multikarsa from the governor of Bank Indonesia," the agency said, but adding that the move was not a takeover but simply a contingency measure to allow the bank to solve its temporary liquidity crunch.

IBRA said the new management team consisted of people appointed by the agency and several members from the previous management team.

The agency said the transfer of the bank was in accordance with the government's blanket guarantee program on deposits.

Bank Putera's clearing activities were suspended by the central bank on Dec. 7 after it suffered a negative balance with Bank Indonesia amounting to Rp 278.5 billion following a run on the bank.

The run amounted to Rp 592.3 billion, drying up the bank's reserves at the central bank and putting its account in Bank Indonesia in negative territory.

The run on the bank was prompted by a report on the Internet that the bank would be taken over by IBRA in the wake of the revelation of 'politically-directed loans' for Bank Putera's parent company, the Texmaco Group.

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 total third party rupiah funds the bank receives.

For third party funds in a foreign currency, each bank must maintain a reserve requirement of 3.5 percent at the central bank.

IBRA said that before being allowed to resume its clearing activities, Bank Putera would be audited by Bank Indonesia and the agency.

The agency said Bank Putera would continue normal operations, although its clearing activities would remain suspended until the completion of the audit.

IBRA said depositors could make transactions at Bank Putera, including withdrawing their money from the bank, beginning on Dec. 15.

"On Tuesday and Wednesday the management team will work on the verification process, which is expected to be completed in two days," IBRA said.

"Depositors don't have to rush to get their money because all deposits are fully guaranteed by the government," the agency added.

The government launched the blanket guarantee program early last year amid plunging confidence in the country's banking sector. Under the program, the government guarantees all deposits at closed banks.

Bank Indonesia's Governor Sjahril Sabirin asserted earlier on Friday that Bank Putera suffered only a temporary liquidity crisis due to the massive deposit run and the bank remained in the Category A or the group of banks with capital adequacy ratio of more than 4 percent.

"As soon as the bank resolves its liquidity crunch it will be released from IBRA direct supervision and management," Sjahril told reporters.

Texmaco

Bank Putera's parent company, textile and engineering giant Texmaco Group, was hit by a controversy after State Minister of Investment and the Empowerment of State Enterprises Laksamana Sukardi revealed late last month that the group received loans totaling US$754.1 million and Rp 1.9 trillion through the personal intervention of former president Soeharto.

The bulk of the funds came from state Bank Negara Indonesia (BNI).

The government later disclosed that Texmaco owed a total of Rp 15.9 trillion ($2.2 billion at the current rate) in over due loans to Bank BNI and the other three state banks-- Bank Rakyat Indonesia, Bank Mandiri and Bank Tabungan Negara-- as well as to IBRA.

Separately, President Abdurrahman Wahid said on Friday that while the due process of law should proceed against Texmaco owners, both bank BNI and Texmaco businesses should be helped to continue normal operations.

"We should separate the owners from their businesses. Entrepreneurs suspected of violating the law should be prosecuted but their business entities should be allowed to continue operations, otherwise hundreds of thousands of workers will be thrown out of their jobs," the President said.

On the other hand, Bank BNI, which employs tens of thousands workers, should also be protected from bankruptcy, Abdurrahman said, adding "this is what I call a win-win solution."

"Texmaco should settle its debts to BNI, and I am glad to learn that they have so far made two debt installments," the President said, pointing out Texmaco's capability to export textile and garments, machinery and trucks.

Earlier last week, Finance Minister Bambang Sudibyo said the four state banks and IBRA had set up a lenders club to work out a restructuring package for the debts.

Bambang assured, however, that the loans were adequately secured because Texmaco's total assets were estimated at Rp 23.25 trillion, meaning that the group's loan-to-asset ratio was 68.7 percent. (rei/vin)