IBRA to decide on SCB deals for Bank Bali soon

IBRA to decide on SCB deals for Bank Bali soon

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA)
said on Friday the fate of its management and investment
agreements with Standard Chartered Bank (SCB) for Bank Bali would
be known next week after the completion of the latter bank's
financial and legal audit.

However, the head of bank restructuring at the agency,
Gustiono Kustianto, said at a media conference the British bank
had no intention of pulling out of its commitment to buy a stake
in Bank Bali.

The Indonesian Bank Restructuring Agency replaced the SCB-
appointed management team at Bank Bali earlier this week
following protests by the bank's local staff against what they
called SCB mismanagement, extravagant spending and the poaching
of Bank Bali's best customers for the SCB Indonesian branch.

"IBRA replaced the Bank Bali management team to expedite the
process of its recapitalization through a rights issue next
month," Gustiono said.

The media conference also was attended by Bank Indonesia
senior deputy governor Anwar Nasution, Bank Bali supervisor J.B.
Sumarlin and the chief of Bank Bali's new management team, Henry
Koenaifi.

IBRA signed management and investment contracts with SCB in
late July after Bank Bali was taken over by the government
following the failure of its then majority shareholders, the
Ramli family, to raise 20 percent of the bank's total
recapitalization costs.

However, about two days after the signing of the contracts,
Bank Bali was rocked by the disclosure of a scandal centering on
the dubious transfer of Rp 546 billion from the bank to a company
connected to a Golkar official. The money was said to have been a
commission for the company's services in helping Bank Bali recoup
interbank loans to closed banks.

Gustiono said that as long as neither party breached any
clauses of the contracts, the management and investment
agreements would remain legally binding.

"We cannot unilaterally terminate the agreements if Standard
Chartered does not break any provisions of the contracts," he
said.

Bank Bali's new eight-member management team consists of IBRA
officials and outside professionals, and is led by Henry
Koenaifi, formerly the caretaker of nationalized Bank Jaya.

Gustiono said the appointment of the new management team was
aimed at maintaining the value of Bank Bali until the completion
of its recapitalization.

"We had to replace the previous management team because of
allegations of Standard Chartered's mismanagement of the bank.
But these allegations have yet to be proven," he said.

Nasution appealed to Bank Bali employees to cooperate with the
new management team to prevent further damage to the bank.

He also assured Bank Bali customers their savings were safe
because the bank's deposits were fully guaranteed by the
government.

Gustianto said Bank Bali's recapitalization cost was estimated
at Rp 4.1 trillion, which is similar to the figure cited by
auditors from Arthur Andersen.

He added, however, that IBRA auditors were still assessing the
validity of the estimate in light of allegations by Bank Bali
employees that the recapitalization cost had been marked up by
SCB.

Koenaifi said his team was receiving good cooperation from
Bank Bali's employees and the bank was operating as normal.
(udi)