SINGAPORE, March 9 (UPI) -- Indonesia's banking sector is still fragile despite the closure of the Indonesian Bank Restructuring Agency, the Economist Intelligence Unit said.
"Much still needs to be done to restore the banking sector to health and many of IBRA's duties will be taken up and quietly continued by other bodies, probably for at least another 12 months," the EIU report said.
The agency was set up at the height of a crisis in 1998 when the banking sector had all but collapsed. Its task was to take over the huge amount of debt accumulated by the banks and restructure assets, including corporate assets, before selling them off to recoup part of the $78 billion the country has spent to bail out those lenders. It was closed last month.
The EIU warned although borrowing was starting to revive, there were concerns over the quality of due diligence. It cited a scam at a Bank Negara Indonesia branch in which $200 million in supposed export credits to local companies disappeared, Singapore's The Business Times reports.
