28 September 2001

STANCHART BRANCH CLOSURE

LETTER TO BANK NEGARA

***************

Tan Sri Dato' Dr. Zeti Akhtar Aziz
Governor
Bank Negara Malaysia
Jalan Dato' Onn
50480 Kuala Lumpur

28 September 2001


Tan Sri,

CLOSURE OF STANDARD CHARTERED BANK BRANCHES IN SARAWAK

We express our serious reservations and grave concerns on the approval by Bank Negara Malaysia to allow SCB to close down Bandar Sri Aman and Sarikei Branch and open new Branches in High Growth areas in West Malaysia

1. SCB is sacrificing the interest of customers in small towns in its cruel and relentless drive to generate more and more profits. This is not in line with the Sarawak government policy in setting up rural growth centres in Sarawak. The bank's move will further accelerate the rural urban migration. We also note that there are other small branches in West Malaysia that the Bank could have closed, instead of those in Sarawak.

2. SCB has demonstrated that it need not have physical branches in any particular location to be able to service a particular populace. Further, given the Bank's policy on direct marketing through outsourcing and use of marketing agents, the need for new branches in high growth areas will be redundant; especially in West Malaysia where communication and infrastructure are much more advanced.

3. The Branches that the bank intends to close are long-existing branches that are viable and generating reasonable profits. Branches in Sarawak are crucial deposits gathering branches.

4. SCB's, Sarawak Branches account for 26.55 % of total liabilities but only 5.9% of the total assets (year 2000). Balance per account in Sarawak for S/A, C/A, and credit cards are higher in Sarawak compared with Bank Wide, indicating lower cost of deposits. Total deposit per employee in BSA and Sarikei at RM7.5 Million and RM10.2 million respectively are much higher than the Malaysian average of less than RM5 million.

5. The figures clearly show that the deposits gathered in Sarawak generate profits for the Bank in West Malaysia.

6. With the Financial Sector Master plan, there is no urgent need to sacrifice existing Branches to open up new branches, as Foreign Branches should be able to open new branches in 2004.

7. The bank is only interested in profits, not service to the community in which it has made and repatriated, so much profits over last 77 years of operations in Sarawak. (RM210 million repatriated in 1999 alone and retain profits of over RM600 million as at 31 Dec 1999).

8. It is shocking that Bank Negara can disregard national and State policy and succumb to the whims and fancies of foreign Banks. Your decision will further put local banks at a disadvantage. The Financial Sector Master plan is designed to prepare local banks for competition when the sector opens up in 2005. What BNM is doing is to allow foreign Banks in the Country to have a head start.

We therefore call on you to rescind your approval.


Thank you.


Yours faithfully



(signed)
ANDREW LO KIAN NYAN
GENERAL SECRETARY

CC
YAB Dato' Seri Dr. Mahathir Bin Mohamad
Prime Minister / Minister of Finance, Malaysia

YAB Datuk Patinggi Tan Sri Haji Abdul Taib Mahmud
Chief Minister, Sarawak