B

ritish lender Standard Chartered Bank will not divest itself of a nearly 45 percent stake in PermataBank, as the local lender has provided positive business returns so far, the former'€™s executive has said.

Lim Cheng Teck, Standard Chartered CEO for Southeast Asia, dismissed earlier reports that said the bank would sell its shares in Permata.

'€œWe did not say that [we wanted to sell the shares]. This is market speculation,'€ he told The Jakarta Post in an interview on Tuesday.

News about the possible divestment broke early this year, when Reuters reported that Standard Chartered was mulling over slimming down its Asian operations. Part of the effort might have included selling its shares in Permata, according to Reuters.

However, Lim insisted that Standard Chartered had no plan whatsoever to withdraw its investment from the publicly listed lender, citing Permata'€™s business focus that actually complements that of its Indonesia branch.

Permata '€” the sixth-largest lender in terms of bank-only assets in 2014 '€” relies on retail banking for its business, while Standard Chartered'€™s Indonesian branch is more focused on serving the upper level of the banking segment, including small and medium enterprises (SMEs).

'€œIt [Permata] is a strategically important investment for us. Indonesia is a huge market and it has served us well, giving us a good return on our investment,'€ said Lim, who serves as Permata'€™s president commissioner as well.

He added that Standard Chartered had a good partnership with major diversified conglomerate PT Astra International in Permata and that there was no reason to believe that Standard Chartered would do otherwise with its investment.

Both Standard Chartered and Astra currently hold an equal 44.6 percent stake in Permata. They took over ownership of the bank in 2004 and gradually upped their stakes until 2006.

At the time, the takeover was reportedly worth around US$548 million in total. Standard Chartered'€™s 44.6 percent stake is valued at about $660 million.

Meanwhile, Standard Chartered is optimistic about expanding its own business in the SME sector, which it claims is a important growth driver for Indonesia'€™s economy.

'€œIf you look across ASEAN, I'€™d say that 95 to 96 percent of all enterprises there are what we call SME. This a sector that I believe has got significant growth potential,'€ Lim said.

According to Lim, Standard Chartered has created a special division, including in Indonesia, to cater to its SME clients that are ready to venture internationally.

The bank itself had Rp 440.89 billion ($34.07 million) in outstanding SME loans by December 2014, rising by 43.6 percent year-on-year. However, they still represented a fraction of its total lending portfolio with only a 1.5 percent contribution.

Besides improving its SME segment, it is also looking to enhance its advisory service business to balance its lending operations, especially as the banking industry'€™s average net interest margin has slowly compressed.

'€œYou see that in other markets as well. It forces you to be more innovative, to come up with services that will be demanded by the businesses as well as by the consumers,'€ he said.

'€œSome of these things are like M&A [mergers and acquisitions] advisories and debt capital market advisories. It goes beyond basic banking,'€ he said.