SCB sees Bank Bali confidence return

SCB sees Bank Bali confidence return

BANGKOK (Dow Jones): The group chief executive of Standard Chartered Bank PCL (SCB) said Friday that Indonesian public confidence in Bank Bali has returned despite a major political scandal involving the bank.

The U.K.-based bank's agreement to take a 20 percent stake in Bank Bali, which it is co-managing with Indonesian authorities, has been set back by a scandal involving alleged illegal transfers of funds from the bank, Rana Talwar said.

"This scandal hasn't helped," he told Dow Jones Newswires in an interview.

"(But) we continue to believe that Bank Bali is an excellent brand in the eyes of the Indonesian consumer," Talwar added.

Standard Chartered's chief said Bank Bali's deposit levels were back above those before the scandal broke earlier this year.

Some Indonesians moved deposits to other banks following the scandal, which centers around the transfer of around $80 million out of Bank Bali in June to a company controlled by the then- ruling Golkar party.

An international audit of the Bank Bali scandal obtained by Dow Jones Newswires Friday recommends further investigation of several senior government officials, including the central bank governor Sjahril Sabirin.

Talwar made his comments before the contents of the international audit were obtained.

Asked whether he thought Bank Bali's recapitalization cost - which will determine how much Standard Chartered will pay for its 20 percent stake - has risen in recent weeks, Talwar said, "We haven't come up with any major surprises (while managing the bank."

He added that the "quality of (Bank Bali's) portfolio has stabilized."

When the Indonesian Bank Restructuring Agency, or IBRA, took over Bank Bali in July it estimated its recapitalization needs at Rp 2.345 trillion.

That figure jumped to Rp 4.3 trillion after Standard Chartered completed a three-month due diligence into the bank. Standard Chartered discovered a hole in the books during the due diligence which led to the Bank Bali scandal.

IBRA said Friday it will hold the rights issue for recapitalizing Bank Bali in early December. The agency had originally scheduled the rights issue for October but has twice postponed the date.

It said the final recapitalization cost of Bank Bali has yet to be decided, pending the completion of the independent audit.

Standard Chartered has agreed to buy its 20 percent after the rights issue and has an option to buy the entire bank over the next five years. Some staff at the bank have protested Standard Chartered's management of Bank Bali.

Bank Bali's former president director has filed a lawsuit against Indonesia's central bank, accusing it of discrimination by allowing Standard Chartered to take over the bank.

"It's understandable...it was a good bank. They have high caliber staff who were proud of working for Bank Bali," Talwar said.

"But I do believe that after the rights issue is sorted out...people will welcome working for a professional bank which isn't family-owned," he added.