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)