Standard Chartered Bank to confirm NISP's L/Cs

Standard Chartered Bank to confirm NISP's L/Cs

Zakki Hakim, The Jakarta Post, Jakarta

Bank NISP signed a trade facility agreement on Tuesday with
Standard Chartered Bank (Stanchart) in which the foreign bank
pledged to confirm letter of credit (L/C) facilities extended by
the former.

But the deal will only cover up to US$125 million worth of
L/Cs to be issued by NISP.

The International Finance Corporation (IFC), the investment
arm of the World Bank, will also guarantee the trade facility.
IFC owns a 15.05 percent stake in the publicly-listed NISP, a
medium-sized bank.

Following the late 1990s financial and banking crisis, local
banks have been unable to issue L/Cs due to a lack of confidence
in the banking sector. The government had to issue a blanket
guarantee to help revive confidence. Nevertheless, a confirmation
from a leading international bank is still crucial for local
banks to be able to issue L/Cs given the country's high risk
rating.

Tuesday's agreement was signed by NISP president Pramukti
Surjaudaja, IFC Indonesia's country manager German A. Vegarra and
Stanchart chief executive officer Stewart Hall.

Pramukti said that the deal would help facilitate
international trade activities among NISP customers.

"Indonesia is a big country with an enormous potential. We
believe the trade facility guarantee program will open
opportunities for international trade development between
Indonesia and other countries," Hall said during a press
conference.

He added that Stanchart was planning to provide similar L/C
guarantee facilities to other banks.

"Last year we extended $1.5 billion (as part of the trade
facility program), and this year we are looking to between $1.5
billion and $2 billion," he said.