Deutsche Bank prepared for the worst in Indonesia

Deutsche Bank prepared for the worst in Indonesia

FRANKFURT (Reuters): The head of Germany's largest bank said on Wednesday that the situation in Indonesia had worsened significantly since the end of 1997, when it made a large risk provision to cover its exposure to the Asian crisis and it was now prepared for the worst.

Rolf Breuer, chief executive of Deutsche Bank AG said "We can't make forecasts in the current chaotic crisis situation (in Indonesia) but we are prepared for the worst,"

Deutsche announced last week it had evacuated its staff in Indonesia to Singapore and closed its operations there.

"We still believe in Asia overall, but we don't believe the Tiger economies will be able to return to their former economic growth rates in the next two or three years," Breuer told shareholders at the bank's annual shareholders meeting.

Breuer noted that Deutsche's industrial clients were on the lookout for acquisition opportunities and joint ventures in Asia but that Deutsche's own strategy there was one of consolidation.

The bank co-chairs the steering committee of Indonesia's bank creditors and will host the next round of talks on rescheduling Indonesia's $80 billion private sector debt in Frankfurt in the first week of June.

Deutsche last year set aside a total of 1.4 billion marks ($788 million)in additional risk provisions to cover its exposure to the Asian crisis.

"Now, after half a year, we cannot sound the all-clear and we are extremely worried," Breuer said. Thailand and Malaysia had made progress and Korea had found a solution to its financial crisis but the situation in Indonesia had worsened, Breuer said.