JAKARTA (TheInsiderStories) – British lender Standard Chartered PLC (Stanchard) has considers to eliminate residual drags on returns from low-returning markets, including India, Korea, the UAE and Indonesia. The planned is part of the bank’ refreshed strategic priorities to improve the profitability.

Stanchard joined with local conglomeration company PT Astra Internasional Tbk (IDX: ASII) owned 44.56 percent shares at PT Bank Permata Tbk (IDX: BNLI). As the partner Astra has right to buy first before offer to other parties.

“Over the last three years we have fundamentally overhauled the bank, It is now a solid platform of which we can grow profitability and sustainability to deliver double digit return on tangible equity by 2021,” said Bill Winters, the Group CEO of Stanchard in a written statement today (02/26).

The refreshed priorities and related actions are expected to deliver a return on tangible equity of at least 10 per cent by 2021 and generate significant surplus capital, he added.  The program focus on investing to accelerate growth in the Group’ differentiated network and affluent client businesses, optimizing performance in lower-returning markets, driving productivity, and building on existing digital credentials to innovate.

Winters revealed, these actions will position Stanchard as the leading bank for clients based or doing business in Asia, Africa and the Middle East.

The refreshed actions and priorities for 2019-2021, he explained, lik invest to accelerate growth in our differentiated international network and affluent client businesses, eliminate residual drags on returns from low-returning markets, including India, Korea, the UAE and Indonesia.

Then, streamline operations to enhance client satisfaction and drive productivity, embrace digitisation and partnerships to reinforce competitive advantage and profitably disrupt and embed a performance-orientated and innovative culture emphasizing conduct and sustainability.

Previously, American investment company Farallon Capital Management L.L.C. is reportedly seeking to buy a 44.6 percent stake in local lender Bank Permata from U.K’s Standard Chartered PLC, local media reported. Before Farallon, local tycon Tahir–who’s owned PT Bank Mayapada Tbk (IDX: MAYA)–has shown its interest to buy the bank’s shares.

Bank Permata is jointly owned by Stanchard and local conglomerate firm Astra with ownership of 44.56 percent each, while the remaining 10.88 percent is owned by the public. In purchases in 2004 and 2006, both parties jointly bought a total of 89 percent of Permata for US$548 million.

Apart from owning some stake in Bank Permata, the British’ bank also has local a local branch operating in Indonesia. StanChart has incurred heavy losses in the country from writing off large exposures to heavily indebted clients, such as Indonesian businessman Samin Tan, the owner of PT Borneo Lumbung Energy Tbk (IDX: BORN) with total amount $1 billion.

The situation is increasingly urgent as Bank Permata slumped to a loss last year after a big increase in loan loss provisions in the fourth quarter pushed bad debts up to 14 per cent of its total loan book. This resulted in a $215m loss for StanChart.

Bank Permata is the result of a merger five banks, PT Bank Bali Tbk, PT Bank Universal Tbk, PT Bank Prima Express, PT Bank Artamedia and PT Bank Patriot  in 2002. The bank with branded name PermataBank, has aspirations to become a leading financial services provider indonesia, with a focus on consumer and commercial segment.

Last year, the Financial Services Authority (FSA) has issued a regulation on Financial Holding Companies that requires financial conglomerates to have holding companies.

This regulation, which concerns the establishment of financial holding companies and amendment to definition of financial conglomerates, marks an effort to complement and strengthen policies of integrated supervision on financial conglomerates, based on feedback from the financial services industry and results of the researches conducted on prevailing practices in several countries.

The financial holding company can be one of the financial services companies under a financial conglomerate. Alternatively, the financial holding company can also be an existing or a newly established non-financial services company entity.

Furthermore, the agency will impose additional capital for systemically important banks based on their size, interconnectedness with the financial system, and the complexity of their business to protect against any failures.

FSA told the country’s systemically important banks to create a tier-1 capital surcharge of between 1 per cent and 3.5 per cent of risk-weighted assets, depending on the size and perceived riskiness of the lender, the regulator said in a statement on its website Tuesday. Banks have until Jan. 1 to meet the additional requirement, it said.

The “capital surcharges” are in addition to capital adequacy ratio (CAR) requirement, which is set at a minimum of 8 percent of risk-weighted assets. The FSA may impose an additional 1 per cent surcharge if a bank is found to be even more systemically important than FSA’s current classification.

The regulation is part of Indonesia’s move to fully adopt Basel III, a global regulatory framework for banks’ capital adequacy norms, the FSA said. The methodology used to identify systemically important banks will be revised at least once every three years, the authority added.

by Linda Silaen, Email: linda.silaen@theinsiderstories.com

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