SCB denies conspiring with IBRA over Bank Bali
SCB denies conspiring with IBRA over Bank Bali
JAKARTA (JP): London-based Standard Chartered Bank (SCB)
denied accusations by former Bank Bali president Rudy Ramli that
it conspired with the Indonesian Bank Restructuring Agency (IBRA)
to take over the scandal hit Bank Bali.
The take over was ordered by Bank Indonesia after the British
bank informed IBRA its due diligence audit of Bank Bali uncovered
two questionable transactions by the bank's management.
SCB said it found large interbank loans which were guaranteed
by IBRA written off in Bank Bali's June accounts. This accounts
for the payment of Rp 546 billion to PT Era Giat Prima (EGP) by
Bank Bali for its help in retrieving some Rp 3 trillion in loans
from three closed banks.
The second questionable action was Bank Bali's attempt to sell
a package of large bad loans, which should have been transferred
to IBRA under the recapitalization program.
In a hearing with the House of Representatives last week, Rudy
accused SCB of using its own accounting standards in its due
diligence audit, resulting in Bank Bali's recapitalization costs
increasing significantly.
By marking up the recapitalization costs, SCB was able to buy
Bank Bali shares at reduced prices, Rudi said at the hearing.
SCB denied the charge, saying the due diligence audit carried
out by public accounting firm KPMG was conducted according to
Bank Indonesia's standards.
The increase in recapitalization costs was a result of the
further deterioration of the quality of Bank Bali's loan
portfolio, it said.
In its due diligence audit, KPMG estimated Bank Bali's
recapitalization costs at Rp 4.3 trillion, much higher than the
Rp 2.5 trillion estimate of its March audit.
KPMG audited the bank in March on the behalf of Bank
Indonesia, while in July it audited Bank Bali at the behest of
the British bank.
SCB also said that until Bank Bali was recapitalized through a
rights issue, there were likely to be continuing operating losses
which needed to be included in the recapitalization amount for
the months of April to October.
Bank Bali's payment to EGP would have increased the
recapitalization cost to Rp 4.8 trillion from Rp 4.3 trillion if
it was not identified by Standard Chartered, it added.
SCB said that with the prompt take over of Bank Bail by Bank
Indonesia, the sale of assets could be prevented and the
interests of the government protected.
The IBRA entered into a strategic partnership with Standard
Chartered Bank in July, whereby the SCB will head Bank Bali's new
management team.
Bank Bali will soon offer a rights issue to raise some Rp 4.3
trillion to lift its capital adequacy ratio (CAR) to the
government-set 4 percent minimum.
IBRA also signed an investment agreement with Standard
Chartered, allowing the British bank to purchase part of the
rights issue and take a 20 percent stake in Bank Bali, while IBRA
would purchase the remaining rights shares. (02)