SCB pulls out of Bank Bali deal

JAKARTA (JP): The UK-based Standard Chartered Bank (SCB) has withdrawn its plan to invest in Bank Bali following strong opposition from the local bank's staff, according to an official at the Indonesian Bank Restructuring Agency (IBRA) who asked for anonymity.

The official said on Wednesday SCB had backed down on its earlier plans due to the protests and to allow Bank Bali's recapitalization program to proceed.

"Standard Chartered sent a letter on Dec. 8 informing us that it had decided to withdraw from the deal," he told the Jakarta Post.

IBRA nationalized Bank Bali on July 23 after its founding owners, the Ramli family, had failed to provide the necessary cash requirement to help finance the recapitalization of the bank.

Later in the month, the agency signed an investment agreement with SCB, allowing the foreign bank to initially buy a 20 percent stake in Bank Bali from the government.

IBRA also agreed to allow SCB staff to manage the bank for three years after the signing of the investment agreement.

But strong opposition from Bank Bali staff forced the agency to cancel the management agreement and put its own people in the bank.

Separately, Bank Bali's former majority owner Rudy Ramli welcomed SCB's decision, saying it was the best option it had after the opposition the British bank received from Bank Bali employees between September and November, and the major controversy caused by its deal with IBRA.

He dismissed the public's fear, fanned up by the government and IBRA, that foreign investors would be unwilling to enter the country's banking industry if SCB's deal with Bank Bali failed.

"There are many other foreign investors interested in having stakes in Bank Bali, but they are deterred by the management and investment agreements between IBRA and SCB," Rudy told The Jakarta Post on Wednesday.

He said SCB was not his choice in the first place.

"IBRA forced the British bank down my throat," Rudy said, recalling the agreement he and SCB signed in April allowing SCB to initially have a 20 percent stake in Bank Bali.

Rudy has launched a lawsuit at the State Administrative Court alleging the takeover of his bank by Bank Indonesia and IBRA on July 23 was improper.

The case is still pending at the court.

Rudy accused IBRA of conspiring with SCB to acquire Bank Bali and questioned the very quick manner in which the agency concluded a management and investment agreement with the British bank on July 26, only three days after the takeover. (rei/vin)