Since November 13, 2008, PT Bank Century, Tbk is becoming the center of attention of government, politicians and Indonesian society. Bailout funding from government to Bank Century has drawn criticism from various parties. The House of Representatives would use the weapon, the right questionnaire, to probe the swollen stream of bailouts from Rp 630 billion to Rp 6.7 trillion. In late October 2008, Bank Century, the 13th largest bank in Indonesia, was declared insolvent by the Committee for Financial System Stability (Komite Stabilitas Sistem Keuangan - KSSK) because it defaulted on several large loan payments. KSSK itself led by former Finance Minister, Sri Mulyani and Bank Indonesia (Central Bank of Indonesia) Governor (now Vice President, Boediono) was one of the member. It had been under supervision by Bank Indonesia (BI) since 2005. What was actually happened in the Bank Century? Who should be responsible for this case?
Bank Century Formation
The Tantular families began to enter the banking business when communism still exists in Indonesia. In 1965, Hashim Tantular formed Bank Central Dagang (BCD), which eventually folded in 1998. In 1989, Hashim Tantular transformed his financial business of Century Intervest Corporation into Bank Century Intervest Corporation (Bank CIC), which was controlled by Hindarto Tantular and later Robert Tantular.
Bank CIC, Bank Pikko and Bank Danpac have their own unique business competency. PT Bank CIC is the only bank in Indonesia which has core competence in the field of export financing, bank notes, and 26 foreign currency trading. Meanwhile, PT Bank Pikko already has a strong network on the Sumatera Island. Whereas PT Bank Danpac has strength in retail and corporate banking.
PT Bank CIC obtained a license as a commercial bank from the Ministry of Finance of the Republic of Indonesia on April 16, 1990 and started operating on May 1, 1990. On April 22, 1993, with 38 networks in 15 major cities, PT Bank CIC obtained the new status as a foreign exchange bank from Bank Indonesia (BI). Its total Paid-In Capital has reached 1,1 trillion rupiah, with Capital Adequacy Ratio (CAR) [1] of 15.95 %, Non Performing Loan (NPL) [2] 4.59 % and net income amounted to 10.8 billion rupiah. By the end of 2003, total assets of PT Bank CIC was recorded at 6.5 trillion rupiah. PT Bank Pikko was established on January 11, 1968 and obtained new status as a foreign exchange bank since 1996. Its total assets reached 1,4 trilliun rupiah at the end of 2003. PT Bank Danpac was established on July 10, 1991 and now has 11 branch offices. This bank has a Capital Adequacy Ratio (CAR) recorded 25.33%, Non Performing Loan (NPL) 0.53%, and net income 10.7 billion rupiah.
Of the three banks, PT Bank Pikko had the most serious financial problem. Its CAR position was minus 9,6% (required minimum CAR was 8%) and NPL was more than 5% (required maximum NPL was 5%) [3] and Bank Indonesia grouped it into bank in Special Surveillance Unit (SSU). Chinkara Capital Limited (CCL) as a potential investor willing to deposit the funds amounting to USD $ 12 million and become the majority owner. Chinkara Capital Limited (CCL) is an investment holding company with legal status in the Bahamas [4] and has registered office in Singapore. Then CCL and Morgan Stanley International Nominees Ltd bought Bank Danpac's shares on the stock market and became the majority owner. Bank Danpac was a bank with a small business volume and no serious problems concerning capital or others. On October 21, 2001, CCL Morgan Stanley International Nominees Ltd bought
The PT Bank Century itself was formed in October 22, 2004 upon the merger of three banks with financial trouble PT Bank CIC, PT Bank Pikko, and PT Bank Danpac which droped steeply in late 2008 and enjoyed another crucial save from the government. Bank Indonesia (BI) announced that the government through the LPS [5] will take over PT Bank Century. Bank Century's management was taken over, and the government put Maryono, which is the Head Group of PT Bank Mandiri [6] , as the new CEO of PT Bank Century. The main shareholder in those three banks is Chinkara Capital Limited (CCL). Ownership of shares in three banks was 16,27 % in PT Bank CIC, 85 % in PT Bank Pikko and 55 % in PT Bank Danpac.
The result of audit investigation performed by the Badan Pemeriksa Keuangan (BPK) [7] concluded that the collapse of PT Bank Century was an accumulation of indecision Bank Indonesia from the first merger of PT Bank CIC, PT Bank Pikko and PT Bank Danpac to become PT Bank Century. In October 3, 2009, PT Bank Century changed its name into PT Bank Mutiara.
The Chronology of Bank Century Case
Beginning with the problem of housing credit payment default (subprime mortgage default) in the United States of America, the crisis then spread and destroyed the banking system not only in the United States but extended into Europe and Asia. This incident continued and caused a successive effect on the solvency and liquidity of financial institutions in this country, such as causing the bankruptcy of hundreds of banks, securities firms, mutual funds, pension funds and insurance which eventually spread to Asia, including Japan, Korea, China, Singapore, Hongkong, Malaysia, Thailand and Indonesia.
On November 13, 2008, for the first time the Minister of Finance knew PT Bank Century liquidity problem after the Bank Indonesia requested for a consultation meeting with the Minister of Finance. After several meetings held, Bank Indonesia indicated the need for the Emergency Financing Facility for PT Bank Century. Bank Indonesia indication also included analysis of banking condition that there are 23 peer banks potentially experiencing financial distress (liquidity and solvency) if the PT Bank Century closed. Bank Indonesia also conveyed Systemic Risk Analysis of the Indonesian Banking System. PT Bank Century's financial condition was deteriorating. On November 20, 2008, meeting of the Board of Governors (RDG) Bank Indonesia finally set PT Bank Century as a bank failure, suspected systemic impact. On that day Bank Indonesia informed the latest condition of PT Bank Century and requested KSSK to held a meeting on the same day because PT Bank Century has been detected to have clearing default and tend to bankrupt on November 21, 2009, which could threaten the entire system of national payment and banking stability.
PT Bank Caentury Transactions that Make Bankrupt
Underwriting capital disbursement of Rp 6.76 trillion to Bank Century based on the results of discussions and decisions held by KSSK ultimately cause problems.
Various awkwardness found in the Bank Century case. Even the Corruption Eradication Commission planned to ambush a police officials who allegedly received bribes from the case. Awkwardness has become strengthened since eight pages initial report of the Badan Pemeriksa Keuangan report on as many as of Century Bank circulated widely in the community.
