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.