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View all search resultsBank Century was ineligible for rescue, says expert
Economist Hendri âRiniâ Saparini has said Bank Century did not deserve to receive either the short-term assistance (FPJP) facility or bailout funds because the bank was not eligible and had been dealing with problems from the start of its operation
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E
conomist Hendri 'Rini' Saparini has said Bank Century did not deserve to receive either the short-term assistance (FPJP) facility or bailout funds because the bank was not eligible and had been dealing with problems from the start of its operation.
'Bank Century, which was not eligible for a rescue, was nonetheless rescued,' said Rini, on Monday as quoted by kompas.com.
She was speaking as an expert witness at a hearing in the trial of former Bank Indonesia (BI) deputy governor Budi Mulya for his role in the Century bailout at the Jakarta Corruption Court.
Rini was one of three economists, including Ichsanuddin Noorsy and former coordinating economic minister Kwik Kian Gie, presented by the KPK to share their expertise on the case in today's hearing.
Rini said one of FPJP requirements was that the bank must have a capital adequacy ratio (CAR) of 8 percent. The bank's assets that could be used as a guarantee for the FPJP must meet a collectability criterion of 'swift' during the last 12 months.
In fact, the economist said, Bank Century had a CAR of only 2.35 percent in September 2008. Moreover, many Century assets were severely problematical. Despite the problems, BI had instead decided to change its regulation on CAR requirements for the FPJP, allowing Bank Century to receive the facility.
Rini said as a small bank, Century would have had less significant impact compared to other banks.
'The most proper duty in the 2008 crisis that the government had to carry out was ensuring that national banks and the Indonesian macro economy were not disrupted, instead of rescuing a small, unhealthy bank. Even if Bank Century had to be closed, it would not have been a problem,' she said.
On May 9, Vice President Boediono, who is also a former BI governor, said the central bank decided to bail out Bank Century for fear that letting the bank fail would cause an economic crisis similar to that which occurred in 1998.
Rini said Indonesia's economic situation in 2008 was different to that of 1998. 'Our banking industry [in 2008] was not facing problems, the country's macro economy also remained stable despite the global crisis,' she said. (fss/ebf)
