Bank Bali heeds clients' concerns
JAKARTA (JP): Head of Bank Bali's new management team Douglas K. Beckett acknowledged on Wednesday that the high profile scandal at the bank was a "source of concern" to its customers.
He declined to confirm whether there was a run on the bank.
"We realize that the allegations are a source of concern to our customers. However, as the new Bank Bali remains a local bank, all depositors' funds are guaranteed by the Indonesian government," Beckett told a news conference.
Since the outbreak of the Bank Bali scandal late last month, the new management team has been aggressive in its image- enhancing efforts in local media.
It also has conducted mass mailings to its customers in a bid to maintain their confidence.
Judging from the interest rate offered by the bank on its time deposits, however, there seems to have been no massive withdrawal of money from the bank.
The bank offered a 13 percent interest rate for a one-month time deposit, compared to the 15 percent interest rate ceiling set by the government, for the Aug. 16 to Aug. 22 period, in order to be eligible for the government deposit guarantee scheme.
Banking law expert Pradjoto revealed to the media in early June details of Bank Bali's payment of a Rp 546 billion "commission". The news has continued to grab headlines in the local mass media amid speculation that the money, allegedly transferred to several high-ranking officials and Golkar leaders, was used to help secure the election of President B.J. Habibie in November.
UK's Standard Chartered Bank, which promised the government in April that it would buy a 20 percent stake in Bank Bali, discovered the transaction on July 20 after conducting a due diligence audit.
The Indonesian Bank Restructuring Agency (IBRA) nationalized the bank on July 23 after the Ramli family, the then owner, failed to come up with funds to finance 20 percent of the bank's recapitalization program by the July 22 deadline.
IBRA signed an investment agreement with Standard Chartered on July 26, in which the UK bank will buy a 20 percent stake in Bank Bali to help finance the recapitalization program.
As part of the agreement, Standard Chartered was given the chance to lead a new management team of the bank for three years. Beckett is from Standard Chartered.
He said that the Bank Bali scandal would not cause Standard Chartered to drop its plans to invest in the bank.
"Nothing that has occurred in recent days has in any way detracted from Standard Chartered's commitment to invest in and develop the 'new' Bank Bali," Beckett said.
Recapitalization of Bank Bali was estimated at Rp 4.3 trillion as of June, compared to the initial estimate of Rp 2.4 trillion based on the due diligence audit made by international accounting firm KPMG in March.
KPMG is still in the process of auditing Bank Bali to decide the final cost of the recapitalization program, which will boost its capital adequacy ratio to the minimum 4 percent level from the current negative capital condition.
Bank Bali will offer a rights issue in October to finance the recapitalization program. Standard Chartered will buy 20 percent of Bank Bali's enlarged capital, while the government through IBRA would become a standby purchaser of the remaining 80 percent.
"The rights issue is on track," Beckett said.
"Standard Chartered's commitment is already apparent, with 70 staff members already working as part of, or with, the new management team.
"A recapitalized Bank Bali, with access to Standard Chartered's strength, will be well positioned to become a leading bank in Indonesia."
Beckett also said that Standard Chartered held a call option in the investment agreement to purchase all the shares held by IBRA over the next five years.
"Our ambition is to develop the leading bank in Indonesia," Beckett said, citing Standard Chartered's 136 years in the country, its strong worldwide sales and marketing network and Bank Bali's distribution network of over 280 branches. (rei)