Bi To Hunt Century Assets Kept Overseas

Source: The Jakarta Post (23-11-2008)

Rendi A. Witular ,  The Jakarta Post ,  Jakarta   |  Mon, 11/24/2008 9:06 AM  |  Headlines

The central bank is demanding shareholders of ailing Bank Century take the fall for its condition, vowing to repatriate bank assets stashed in Singapore and the United Kingdom by bank shareholders.

Bank Indonesia (BI) deputy governor Siti Chalimah Fadjrijah said Sunday BI would send letters to banking watchdogs in the two countries to help repatriate Century assets needed to save the bank.

"To prevent any moral hazards, the shareholders should be held responsible. If they are not, we will send letters to the watchdogs in Singapore and the United Kingdom," she said.

"If necessary, we will seek assistance from Interpol."

According to Fadjrijah, the bank's assets stored in the two countries could be worth around US$123 million in the form of securities portfolios.

Fadjrijah said Century's controlling shareholders included Rafat Ali Rivsi and Hesham Alwarraq, representing First Gulf Asia Holding, and local businessman Robert Tantular.

The government prohibited Robert and seven other Century executives from traveling abroad after the government took control of the bank last Friday, the first such move since the 1997-1998 financial crisis.

Century is now under the management of the Deposit Insurance Agency (LPS), after the bank's capital adequacy ratio (CAR) plunged to negative 2.3 percent on Nov. 21 from around 18 percent as of September. The CAR is a gauge of a bank's health, with the mandatory minimum set at 8 percent.

Century's CAR began to decrease when the bank's largest depositors pulled out after the bank defaulted on a $56 million loan payment on Oct. 30. The loan is part of the remaining $140 million which will reach maturity late 2009.

"Century could have paid the debt if our interbank loans ran normally. The problem is that no bank wants to lend the money to Century because of these liquidity jitters," Fadjrijah said, adding that the loan was an "inherited problem" within the bank.

She said shareholders had taken out the loan in 2006 in exchange for high-risk Republic of Indonesia Credit Link Note (CLN-ROI) bonds worth $225 million, which the bank's management purchased in 2002. Century has been paying off the loan since the trade.

LPS president commissioner Rudjito said the agency would inject Rp 1 trillion ($83 million) into Century to boost its liquidity and to enable the bank to resume operations Monday.

The agency will eventually sell Century to other banks.

Sinar Mas Group is said to have been ordered by the central bank to purchase Century.

BI deputy governor Muliaman Hadad said BI was increasing its surveillance of the country's 126 banks to detect rises in bad loans in anticipation of fallout from the global liquidity crisis.

"BI is now deploying its resources at every branch of small and big banks to ensure they are operating under normal conditions," he said.

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