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StanChart non-committal about Indonesian plans

ANI
15 Oct 2018, 16:18 GMT+10

By Lee Kah Whye

Singapore, Oct 15 (ANI): Amidst persistent rumours that British lender, Standard Chartered Bank PLC, is looking to change its business structure in Indonesia, the bank is keeping its cards close to its chest with regards to plans for world's fourth most populous country.

Chief Executive Bill Winters said when speaking to Reuters this week that the bank is "actively working on finding a solution". Winters was at the annual meeting of the Institute of International Finance held on the Indonesian resort island of Bali. This meeting is held adjacent and at the same location as the larger annual meeting of the International Monetary Fund and World Bank Group.

Winters further added that the bank is doing well and that "the bank needed to be fixed up, it's now fixed up. Now we can talk about what we need to do."

In Indonesia, StanChart has a 45 per cent stake in the larger Bank Permata as well as runs a smaller wholly owned operation. There has been recent speculation that the ownership structure of Bank Permata could change and that StanChart is looking to consolidate its business in the country.

Winters stated in an interview with the Financial Times in February 2017 of their intention to end up with only one Indonesian entity at the end of 2018. The possible options then were to sell one or the other of its two operations in Indonesia and investing the proceeds in the other, or to acquire control of Bank Permata and merging the two entities.

StanChart and Indonesia conglomerate PT Astra International has jointly controlled Permata since taking it over from the government in 2004, each owning slightly less than 45 per cent. Astra is owned by the Hong Kong trading house Jardines.

Bank Permata was created 16 years ago in the merger of five smaller lenders by a state restructuring vehicle after the Asian financial crisis.

Government reforms in recent years had prompted widespread increase in bad debts for Indonesian lenders. This resulted in a loss of US$215 million for StanChart in 2016 due to a large increase in bad loan provisions in the fourth quarter as well as restructuring costs. The bank's financial performance has improved since then.

StanChart makes the bulk of its revenue in Asia, Middle East and Africa and its wealth management division is the bank's fastest growing business. Hong Kong and Singapore, Asia's major wealth management centres, are among its biggest wealth management markets and it sees opportunities to increase its market share in China, India and the rest of Southeast Asia.

Quoting CapGemini, the Reuters report further adds that the number of high net-worth individuals - those with at least US$1 million to invest - rose by 12 per cent in 2017 in Asia Pacific, exceeding growth rates anywhere in the world.

Standard Chartered PLC is a British multinational banking and financial services company with a primary listing on the London Stock Exchange and is a component stock of the FTSE 100. Although headquartered in London, it does not have a retail banking presence in the UK. It is active in over 70 countries around the world and has over 1,700 branches and 5,800 ATMs.

In Indonesia, StanChart is among the top 5 international banks with 27 branches in 8 cities and a network of over 49,000 shared ATMs. It employs over 2,200 people in the country.

Bank Permata is the tenth largest bank in Indonesia by assets with US$10.9 billion total assets at the end of 2016. It employs more than 7,500 staff, has more than 330 branches and over 80,000 ATMs. It is estimated that in Indonesia, its operations are four times larger than that of StanChart's. (ANI)

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