| Summary: | The Bank Century case comprised many violations since the first day the three
banks (Bank CIC, Bank Pikko, and Bank Danpac) merged into Bank Century. It was
caused by the management�s moral hazard and ignorance/negligence by the central
bank as the authorized institution in conducting supervision. Customers� money
reassigned to low quality assets, causing the commercial papers� risk higher so that the
bank had to set up a provision expense. This caused the bank CAR turn negatively. The
condition eventually made the Bank Century a failed bank. This research shall study: 1)
any kind of wrongdoings carried out by the Bank Century management that lead to
banking crimes, 2) supervision performed by the Bank Indonesia in responding to the
violations carried out by the Bank Century, 3) protection to customers� rights when the
Bank Century declared as a failed bank.
This research is a normative empirical study on the violation against prudential
banking principles. Data collected in this study were primary and secondary data. The
primary data were collected by conducting interviews and on site research, while the
secondary data were collected by doing library studies. The data were analyzed by using
a qualitative descriptive method.
The research has come up with conclusion that the wrongdoings carried out by
the Bank Century management that led to banking crime were the violation against
prudential banking principles (violation against minimum lending limit, recklessness in
managing the bank assets quality as well as the capital adequacy ratio) and banking
crimes (lending transaction, L/C and false costs, deceiving customers� deposit,
manipulating deposit amount split). Inadequate supervision by the Bank Indonesia has
become a dominant external factor on the failed Bank Century. Lack coordination
between relating financial institutions has caused there were no action carried out in
responding to the potential wrongdoings that being executed. When the Bank Century
declared as a failed bank, there was no protection against customers needs. The
customers complain to reclaim their money could not be fulfilled by any institution.
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