Societe Generale bank still gloomy on RI's prospects

Societe Generale bank still gloomy on RI's prospects

PARIS (Dow Jones): French bank Societe Generale said yesterday
that it fears the worst about Indonesia's political and economic
prospects, despite having made large provisions already to cover
its exposure to the country.

"We have every reason to fear the worst there," Jean-Pierre
Marchand, Societe Generale's managing director for international
operations, said in an interview with Dow Jones.

Indonesian President Soeharto has resisted many of the reforms
requested by the International Monetary Fund, which has led to
the suspension of IMF emergency funds to the country.

However, Indonesia has signed a proposal to restructure its
private foreign debt, which it will present to the IMF, a senior
Indonesian government official said earlier Thursday.

Societe Generale provisioned a total of FRF4 billion (US$653
million) for Asian risks in its 1997 accounts. The company has
about $4 billion in South Korean exposure and $800 million in
Indonesian exposure.

However, the bank has made it clear that it sees future risks
emerging in Indonesia rather than in any other Asian countries
which have been hit by the region's financial woes.

Chairman and Chief Executive Daniel Bouton said in the
interview that he expects South Korea to rebound quickly, once
its outstanding foreign debts have been reorganized.

Societe Generale represented French banks in the recently
completed rollover of short-term bank debt between international
creditor banks and their South Korean counterparts.

Of other countries in the region which have accepted IMF aid
packages or undertaken IMF-style reforms, Thailand is "being a
good student for now, but the Philippines and Malaysia are still
under observation," Bouton said.

As a result, the bank has less to fear about its business in
those countries. Societe Generale's newly acquired Asia Credit
PCL unit in Thailand could be profitable immediately, Bouton
said.

Bouton said: "If we provisioned enough, (our Thai operations
are) profitable immediately because...despite a significant drop
in banking volumes, margins are much higher."

Societe Generale took majority control of Asia Credit PCL in
early March and said it will inject 2.75 billion baht into the
Thai bank.