ABN Amro has shut down its 600-strong Indonesian operations, and Deutsche Bank has temporarily closed its two branches in the region. John Ellis, senior vice president at BankAmerica, said: "The panic buttons were hit this morning." The US bank has begun to evacuate staff from Indonesia.
An ABN Amro spokesperson said evacuation was an option for the Dutch bank, one of the largest foreign banks in the region. "We will do whatever we feel is necessary to protect our staff," he said. The bank was monitoring developments "minute-by-minute".
Staff were reportedly sent home early from both Merrill Lynch and Bangkok Bank. HSBC, Standard Chartered and ING Barings said they hoped to open for business today, but were keeping the situation under review.
A spokesman for one of the foreign banks said: "I understand staff were watching cars burning from the bank's window." Another said: "We've advised our staff not to travel and some have started moving their families out of the country."
The banks said their primary concern was for the safety of their staff, Most were unwilling to discuss their contingency plans, saying that could endanger their employees.
Both BankAmerica and Standard Chartered are understood to have around 500 staff in the region. ING Barings has about 160.
Other foreign companies are believed to be preparing evacuation plans.
Meanwhile, the financial markets virtually ground to a halt yesterday but not before the local currency suffered yet another 10 per cent sell- off, resulting in its value falling by 25 per cent since the latest round of trouble began on Tuesday.
Many local broking houses closed for business, followed by banks and other financial institutions. Some brokers stopped taking orders because of fears that they would never be settled.
A spokesman for Credit Lyonnais Securities said the situation was being reviewed on an "hour-by-hour" basis. Ethnic Chinese, who have borne the brunt of the looting and burning, are disproportionately represented in the finance industry. For that reason many employees left to be with their families. Micael Lim, the treasurer at Standard Chartered Bank in Jakarta, was quoted as saying, "I can't find my wife. I am very depressed."
The house of Liem Sioe Liong, Indonesia's most prominent Chinese businessman, was looted and burned yesterday. Mr Liem controls the Salim group and has a 40 per cent share in the regional conglomerate First Pacific.
Meanwhile shares in companies such as the Humpass group and Biamantara Citra, controlled by members of President Suharto's family, saw their prices plunge by as much as 25 per cent.
The Jakarta Post reported Tanri Abeng, the state enterprise minister, as saying that foreign buyers have withdrawn from two privatisation projects in light of the current situation. That cast doubt on 12 other projects high on the list of requirements laid down by the International Monetary Fund (IMF) in return for Indonesia's $43bn (pounds 24bn) bailout.
Earlier in the week Indonesia indicated that even that amount was insufficient. Ginandjar Kartasasmita, the economic co-ordinating minister, said: "We'll definitely need more." Negotiations with creditors over the nation's $80bn private sector foreign debt are still under way but making little progress. A meeting in Frankfurt on 26 May will see if further repayment extensions can be agreed.
Although the troubles in Indonesia sent shares prices down in other parts of the region earlier in the week, there was little response yesterday although the Singapore market, which has the closest connections with Indonesia, fell by 2.3 per cent.
Nevertheless the situation in Indonesia is adding to a general gloom which refuses to lift from Asian markets. "Most of the markets are going to revisit the low points of February and January," said Hong Kong based Peter Churchouse of Morgan Stanley, which is advising clients to be "underweight in equities right now".
Russell Jones, of Lehman Brothers in Hong Kong, said: "It's a very negative environment. The momentum is likely to remain downward for some time."