Bank Bali heeds clients' concerns
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)