Standard Chartered Bank still eying Indonesian banks

JAKARTA (JP): British-based Standard Chartered Bank (SCB) is continuing to look at local banks being sold by the Indonesian Bank Restructuring Agency (IBRA), despite the bank's arduous and unsuccessful attempt to buy the publicly listed Bank Bali.

SCB chief executive for Indonesia Ray Ferguson said that because the bank failed to acquire Bank Bali, SCB remains on the lookout for other banks under IBRA.

"Following the end of that (the Bank Bali experience), we continue to look at different opportunities here," Ferguson told reporters after a business luncheon held by PT Golf Linkindo Nusa.

"There are some banks that IBRA wants to sell and we take a look at what they are proposing," he said.

SCB was the first foreign bank to agree to investing in a local bank after the 1997 economic crisis left the industry crippled.

In July 1999, SCB agreed to buy a 20 percent stake in Bank Bali from IBRA, to provide financing for the local bank's recapitalization program.

However, the acquisition encountered difficulties after SCB's due diligence examination of Bank Bali uncovered transactions made with persons linked with the then-ruling Golkar Party.

Things got worse for SCB, with Bank Bali employees rejecting the acquisition, due in part to alleged irregularities found in the process.

In one incident, angry employees expelled SCB expatriates from Bank Bali's office, charging that they were overpaid.

SCB then decided to withdraw from Bank Bali.

Ferguson said that his bank did not have any immediate investment plans, and declined to name the banks SCB had looked into.

But, he acknowledged that some of the banks under IBRA were attractive targets, including Bank Central Asia (BCA), once the largest privately owned bank.

So far, 10 strategic investors have lined up to bid for a 30 percent stake in the publicly listed bank.

Ferguson said the banks IBRA was offering should be attractive since the agency had already offloaded their bad loans.

" ... leaving infrastructure, deposit base, some good technology, the question is then what price one would want to pay for that," he explained.

According to him though, the gloomy economic outlook which has been preventing the banking industry from resuming its lending role has left many investors doubtful.

Ferguson said that banks were still cautious about financing the real sector, which had not yet fully recovered despite strong export growth.

He said changes in the political landscape had been slowing down the economic recovery and, at the same time, the banks' confidence in the real sector.

At present, the country's political instability is still holding the economy hostage, he said.

"The economy is still functioning, but the question is how long can we continue with this situation." (bkm)