Analysis of The Causes of PT. Bank Rabobank International Indonesia Stopped Operating: Policy Risk Assessment

This research seeks to investigate the main causes of the ceasing operation of PT. Rabobank Internasional Indonesia from the financial statements. Using descriptive research methods, case studies, and document studies over ten years, starting from 2009 to 2018. The results of this study conclude that changes in the company's strategic focus that follow Rabobank Group's strategy are only serving customers from the food and agriculture sectors as one of the weakening of the causes of the company's financial performance. .


INTRODUCTION
Risk management error is becoming a disaster for companies that are unresponsive to environmental changes. Adjustments to changes in the dynamics of consumers' wishes and changes in public income sources must be predictable by the company's well. Companies that impose their desire to focus only on one particular field will have difficulties, considering that each region has its diverse characteristics and supply resources. The same explanation was conveyed by Apostolik, Donohue, and Went (2009) and Zedda (2017) which states that operational risk is present in almost all bank transactions and activities are the primary concern of bank supervisors, regulators, and bank management. Failing to understand operational risk increases the likelihood that the risk will not be recognized and uncontrolled, thus potentially inflicting harm to the bank. There have been many studies relating to bank risk management and errors in the operation of the company, causing risk management activities to fail (Bouheni, Ammi, and Levy, 2016;Ghosh, 2012a;Girling, 2013;Lukason and Hoffman, 2014;Zedda, 2017).
Stop operating PT. Bank Rabobank Internasional Indonesia (RII), which has total assets of 13.82 trillion rupiahs in 2018 and has been established since 1990 and has as many as 33 branch offices throughout Indonesia, is a question. What happened? Is it for reasons that it is not in line with the Indonesian market conditions that are more towards the retail business than to wholesale banking and the changing focus of companies that only choose in the field of food and agriculture is the main reason for the company's closing? Are the debt of 12.71 trillion rupiahs in 2018 and the ratio of loans to customer deposits of 139.66% in 2018 is also one of the causes? A large amount of the rate of loans to customer deposits which have exceeded the safe limit is implicitly following research conducted by Zedda (2017) which states that each economic activity implicitly encompasses risk, as the financial framework always includes uncertainty. But bank activity is centered at risk because its core business is in lending money.
Logically, companies that have high profitability will continue to be maintained and developed to be better. On the contrary, companies with meager profitability and even continue to lose will stop their operational activities because it is undoubtedly considered unprofitable. Whatever the reason, the company which has been established for 29 years and is a merged bank between Rabobank, Haga bank and Bank Hagakita should be able to adapt very well and be responsive to any changes, but which have happened in the last ten years (2009 -2018) the company's operations reached 975.62 billion rupiahs. There is an exciting sentence to be reviewed 'There are no rich farmers here' (Akbar, 2019) delivered by Joseph F.P. Luhukay as the newly appointed President Director on January 16, 2018 (after passing the feasibility and compatibility by the OJK) but 16 months after his leadership the company with a vision of banking for food stated that it stopped operating activities gradually starting April 2019, to be officially closed on the month June 2020.
In general, this study consists of, preliminary which discusses the development of previous research and research background, then continues with a literature review explaining various definitions of risk and different other explanations related to the company's operational failure, followed by the research methods used, then discussion related to the research objectives and finally the conclusions and research recommendations.

LITERATURE REVIEW
Banking risk is the probability of an actual return on an investment will be lower than the expected return. Financial risk divided into many categories: capital risk, state risk, default risk, shipping risk, exchange rate risk, interest rate risk, liquidity risk, system risks, political risk, market risk, credit risk, risk of refinancing, risk of reinvestment, risk of settlement, state risk, risk of underwriting, etc. (Bouheni et al., 2016). According to Lesmana and Surjanto (2004), signs that can be seen against a company that has difficulty in its business. First, sales or revenues have experienced a significant decline. Second, a decrease in profits and cash flow from operations. Third, a reduction of total assets. Fourth, stock prices declined significantly. Fifth, the possibility of failure in industry, or an industry with high risk. Sixth, young companies that generally experience difficulties in the early years of their operations, so that if not supported by a reliable source of capital, there will be severe financial difficulties and end in bankruptcy. Seventh, significant deductions in dividends.
The bank's operational risk continues to evolve, along with the progress and complexity of the environment and society. The definition of operational risk has proliferated over the last few years.
First, it is usually defined as any uninsurmountable risk faced by a Bank. However, further analysis has refined the definition. Operational risk has been determined by the Basel Committee on Banking Supervision Risk of low internal loss or failure to Processes, people and systems or from external events. This definition including legal risk but excludes strategic and reputation risks. These 89 definitions are based on underlying causes of operational risk. He sought to identify why losses occur and at the broadest level include parsing four purposes: people, processes, systems, and external factors (Huertas, 2016). According to Siahaan (2009), the potential for financial losses due to triggers from outside the organization, in the form of four exogenous factors that are outside the organization's ability to control it. The first is the interest rate, which is the risk of loss due to changes in interest rates. The second is a foreign exchange, namely the risk of loss due to changes in foreign exchange rates. The third is credit, that is a risk because there is a party who is injured in the promise so that it cannot fulfill its obligation to repay the loan on time. Fourth is liquidity and cash flow, and this risk is triggered by the inability of internal organizations to provide cash, this risk is caused by internal factors or called endogenous factors.
The risk of business operational activity and the controlling risk itself requires an adequate ability to run it. It is not easy to manage risk, considering that the customer funds deposited must be able to be accountable by the bank. Banks are required to provide low-risk analysis but can offer substantial benefits for banks and customers., banks are faced with two big risk categories (Ghosh, 2012b), namely business risk and controlling risk. First, business risk is the risk inherent in business and arising from such incidents of some expected or unexpected events in the economy or financial markets, causing erosion in asset value and consequently a decrease in the intrinsic value of the bank.
Secondly, the risk of control refers to inadequacy or failure of power that is intended to examine the intensity or volume of business risks or prevent the spread of operational risk. According to Siahaan (2009), the threats that disrupt the company's operations consist of the company's internal and external risks. Internal organizational risk is triggered by weak accounting controls that cause errors or omissions in the financial accounting process. The external risk of an organization is influenced by three componentsfirst, regulations in the form of new rules that cause losses. Second, cultural changes from the outside can cause harm. Third, changes in the composition of the board of directors or supervisors from outside the organization can cause losses. Other operational risk triggers, namely the failure of the recruitment process that causes counter-productive or inefficiency and disruption of the organization's raw material entry channels.
Banks should be able to manage risk well; the prudence in making strategic decisions is vital in minimizing errors. Errors due to confusion in the determination of the strategic policy of the company causing losses should immediately be promptly handled properly. Otherwise, it will cause the bankruptcy of the company. A brief explanation of the type of risk conveyed by Fahmi (2010) stated that there are two types of threats, namely pure risk and risk of speculation. Absolute risk can be grouped into three types. That is the risk of physical assets such as fire-earthquakes, employee risks such as workplace accidents, and legal risks that are not following the plan. Meanwhile, the risk of speculation is grouped into four types. That is the market risk that experiences a decline in stock prices, credit risk that fails to fulfill its obligations to the company, low liquidity risk, so it is unable to meet cash needs, and finally, operational risks that do not run smoothly.
Bank institutions actually cannot avoid risks, but risks can be minimized by proper management standards. Bank risks explained at a glance by researchers Fahmi (2010) who argue that banking is an institution that is the most vulnerable or close to danger, especially the risk associated with money, banking position as mediation, namely the party that connects parties who have excess and lack of funds has always maintained good relations with both parties. Banking decisions must always be moderate in that they consider the desires of both parties, so that customer funds (deposits) and customer loan flows (credit) must always be balanced. Banking risk is the risk experienced by the banking business sector as a form of various decisions made in various fields such as credit distribution decisions, issuance of credit cards, foreign exchange, collections and various other types of financial decisions that cause losses to these banks, and the losses are in financial form.
Credit risk, market risk, operational risk, and liquidity risk are four critical risks that the bank must handle adequately and correctly, following the risk handling process. Understandable and straightforward explanation conveyed by Fahmi (2010), who stated that there are four banking risks defined or required by Bank Indonesia to be managed. First, credit risk caused by the inability of debtors to fulfill their obligations. Second, market risk (such as exchange rates and interest rates) caused by market movements from normal conditions to abnormal conditions that cause losses. Third, operational risks arising from internal bank factors. Fourth, liquidity risk arises because of the inability to fulfill short-term obligations. Of the four risks, the results of the research state that the most significant threat is a credit risk.
The company's bankruptcy situation is a situation that occurs due to mistakes in financial management, resulting in a higher company burden and a lower company's profitability. A brief explanation is conveyed by Darsono and Ashari (2005), bankruptcy is a situation where the company's liabilities are higher than the value of its assets. In contrast, financial difficulties can be interpreted as the inability of the company to pay its obligations at maturity, which causes the company's bankruptcy. Other explanations relating to the impact of the financial ratios on the company's performance, expressed by Azis and Hartono (2017) on the effect of good corporate governance, capital structure, and leverage on the company's financial performance. The sample of this research is 28 mining companies listed on the Indonesia Stock Exchange from 2011 to 2015. This study draws conclusions which include the ratio of debt ratios to company assets negatively influencing company performance.
The higher the reserve of funds to overcome losses, the more it shows that the company is in a weak position, because of course, the funds used will affect the cash flow of the company. A simple explanation is conveyed by Febriati (2013) who argue that reserves for Impairment Losses are reserves that must be formed by a bank if there is objective evidence of impairment of financial assets or groups of financial assets as a result of one or more events that occur after the initial recognition of the asset (adverse event) and impact on estimated future cash flows. The amount of the allowance for losses is measured as the difference between the carrying amount of the financial asset and the present value of the estimated future cash flows discounted using the financial asset's original effective interest rate.

RESEARCH METHODS
The research method used in this study is descriptive. Descriptive analysis is an analytical method that serves to reveal a systematic picture and collect any existing facts, for phenomena that occur in companies or organizations to be analyzed further. This study uses a type of quantitative data in the form of secondary data obtained from the documentation of the company's annual financial statements for a period of 10 years, from 2009 to 2018.
The documentation and analysis of the company's financial statements are presented, then analyzed and interpreted very carefully one by one. There are several financial components ( Table 1) that the author chooses to become a reference and to measure the company's financial performance.
Comparison of financial report data with references related to research subjects on related websites is also carried out to obtain better and more comprehensive data.

Figure 1. Bank's Operational Processes
Source: Vysya and Gill, 2018 Circulation and cycle of the bank's operational (risk) system is shown in figure one, in figure one explanation starts from the bank's internal processes related to complex internal processes, communication constraints for cross-functional teams, problematic information technology and conflicts of interest between employees, which in turn causing the loan to be approved without checking collateral. Then the next stage about business growth, this stage is related to the process of increasing business growth, people and systems that are under pressure, errors in sales of products and services, complex products, which in turn lead to meeting sales targets and opening new accounts achieved without knowing consumers. The next stage is an external factor consisting of errors in economic predictions, financial instability, and malfunctions from ATMs. Furthermore, the consumer preference stage is the high expectations of consumers who are incompatible with the products and

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services available, differences in products and services offered by public financial sources, differences in environmental models, and types of consumer preferences with the products and services provided.
Finally, there are stages of the regulatory landscape, namely stringent regulations, increased licensing requirements from government regulations, licensing requirements that are difficult to achieve, and complicated rules.
The author will try to connect with the process of operational activities at PT. Bank Rabobank Internasional Indonesia, where the author argues that the biggest mistake in risk management activities is the mistake of adjusting to consumer preferences, where Indonesian consumers are more dominated by retail business than corporate business, then exacerbated by the change in focus of companies that only choose consumers who are engaged in the food and agriculture sector has made narrower and smaller consumer selection segmentations. It is undeniable that following the focus of the strategy of the group of companies is mandatory to do, but keep in mind that each region has different characteristics of consumers, the attention of the approach to increase corporate profits should be adjusted to the needs and models of consumers in each area. Furthermore, the author will try to connect with the business growth of PT. Rabobank Internasional Indonesia, for the past ten years, as presented in Table 1.

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2011 financial report, Rabobank again continued to focus on only serving customers from the food and agribusiness sectors which caused a decrease in the company's operating cash flow of 57.26% to 509.5 billion rupiahs, which of course affected the company's net profit by 55.88% to 41.58 billion rupiahs.
For Rabobank's financial statements in 2012 there was an increase in the credit ratio to customer savings, from the previous 97.16% up to 104.7% and also the increase in the Non-Performing Loans (NPL) to 1.14%, the two components causing an increase in the value of loss financial assets rose by 75.4% to 131.7 billion rupiah. This caused the company's net profit to decline to 51.24% to 20.27 billion rupiahs. Then, in the 2013 financial statements, there was a decrease in the company's net profit by 2.92% to 38.16 billion rupiah, this was due to a reduction in the company's net interest income by 3.81% to 589 billion rupiah and a decrease in the company's operating profit by 85.54% to only 11.68 billion rupiah. Furthermore, in the 2014 financial report, there was a decrease in net profit of 39.4% to 23.1 billion rupiahs, this was due to the decline in the amount of other operational income by 2.85% to 586.87 billion rupiah and a non-operating net burden of 345.66% or a loss of 20.05 billion rupiah. The company's financial discussion of PT. Bank Rabobank International Indonesia demonstrates that the company over the last ten years has undergone financial distress, causing it in the last year (2018) financial reporting self-proclaimed to cease operation in Indonesia. This demonstrates the tremendous impact of financial distress that gradually causes the company to bear ever greater losses every year. These results are in line with the research done by Ufo (2015), stating the financial condition distress in the form of circumstances in which the cash flow of the company's operations is insufficient or even less to close the current debt payments and companies are forced to take corrective action. The financial distress in the company greatly affects the company's performance, and results cause the company to repay debt. It can be said that the company's ability to pay the timely debt is negative, and the early stages of financial difficulties can be a reduction in revenues. Which, in turn, leads to profitability and the liquidity ratio of the company decreases due to high company debt.

CONCLUSIONS AND RECOMMENDATIONS
In the 2018 financial report. With a total debt of 12.7 trillion rupiahs and total assets of only 13.8 trillion rupiahs, the credit to customer savings ratio is 139.96%, with a total net loss of 704 billion rupiahs. Of course, we can very easily imagine what will happen to this company going forward. No company will be able to survive if the business strategy run by the controlling shareholders is not in line with the needs and circumstances in which the company operates.
The change in Rabobank's strategy in focusing more on the food and agriculture sector made this not in line with market conditions in Indonesia, which tended to retail business, thus causing this business strategy to be complicated to implement. The continued weakening of Rabobank's financial performance since the customer's focus on this sector has been carried out has made the company's operating expenses increase, which in turn has recorded a tremendous loss due to the imbalance between operating income and operating expenses.
Indonesia, as a maritime country with more than 17 thousand islands, makes the fisheries, sea and air transportation business one of the sectors that have the potential to grow. The foresight of the company is looking at business potential, and business opportunities that are adjusted to the state of nature and the economic situation of a country is very vital. Because the characteristics of each country are different, so they cannot be equated. However, in the global context, if you look at Rabobank Group's very good and stable in terms of financial performance, choosing to focus on this sector (food and agriculture) is the right decision that has been chosen. With the value of A + as a