Netherlands-based Indonesische Overseeze Bank N.V. (Indover), a unit of Indonesia's central bank, is heading for bankruptcy after a Dutch court approved the bankruptcy application, said governor Boediono, Bank Indonesia (BI).

"The bank filed for bankruptcy on Dec. 1 in a Dutch court. The proposal has been accepted and the bank is currently undergoing a bankruptcy process according to Dutch legal system," Boediono, was quoted by Antara news agency.

Indover linked trade between Indonesia and European countries. The bank suffered a liquidity shortage a few months back leading to the bank's assets being frozen on Oct 6 by the Dutch court.

Bank Indonesia then tried to save Indover with a $702.22 million (Rp 545.65 million euro) bailout package, but the central bank failed to secure written approval for the bailout from legislators before a deadline set by the Dutch authorities.

Boediono said that regarding the liabilities, we will comply with the Dutch laws.

Bank Indonesia had said earlier that it would take responsibility for the losses suffered by banks exposed to Indover.

Several foreign-owned and state-run banks had put their money in the sick Indover thinking that their money would be safe as Bank Indonesia in an earlier statement gave comfort assurance which was understood to be taken as Bank Indonesia would guarantee the safety of Indover's client funds.