Bank Permata cut NPLs from 8.8% to 4.7% and sold 89% to Bangkok Bank

Bank Permata, jointly owned by Standard Chartered and Astra International, fell into deep trouble in 2016 under swelling costs and rising non-performing loans. Troubled credit reached Rp9.61tn at the end of 2016 and the NPL ratio hit 8.83%, while the bank lost Rp835.67bn in the first half alone.

The owners chose cleanup over growth. In March 2017 Permata sold Rp1.12tn of bad loans, and in June both shareholders injected Rp3tn of fresh capital, lifting the capital adequacy ratio from 15.6% to 18.9%. Management deliberately cut lending by 23% in the first half of 2017 to focus on asset quality, selling or writing off distressed credit.

The discipline worked fast: net profit for H1 2017 was Rp620.56bn against the Rp835.67bn loss a year earlier, with total troubled loans down 53.7% to Rp4.45tn and the NPL ratio cut to 4.72%. By end-2019 the bank reported net profit of about Rp1.5tn and an NPL ratio of 2.8%.

In December 2019 Standard Chartered and Astra agreed to sell their combined 89.12% stake to Bangkok Bank at 1.77x book value, a deal worth about US$2.7bn; the price was adjusted to 1.63x book if it closed by June 2020. Regulatory approval followed and the sale closed in 2020, making Permata a Thai-owned lender with about 330 branches across 62 cities.

Permata swung from an H1 2016 loss of Rp835.67bn to an H1 2017 profit of Rp620.56bn, cut NPLs from 8.83% to 4.72%, and sold 89.12% to Bangkok Bank at 1.63-1.77x book.

Cleaning the book first — selling Rp1.12tn of bad loans and shrinking lending 23% — restored profitability within a year.

The Rp3tn capital injection from both shareholders kept the bank above regulatory minimums through the cleanup.

Exiting at 1.63-1.77x book turned a distressed asset into a profitable disposal that funded Standard Chartered's own restructuring.

Bangkok Bank gained a ready-made retail and digital banking platform in Southeast Asia's largest economy.

When a bank's book is broken, shrink before you grow: Permata sold bad loans, wrote off losses, took a Rp3tn capital injection from both shareholders, and became saleable at a premium to book value.

Under Bangkok Bank, Permata kept its franchise as one of Indonesia's 12 largest lenders and continued expanding its retail and digital business. For Standard Chartered, the roughly US$1.3bn it received for its 44.56% stake helped fund a global cost and restructuring program, while the case became a template for how foreign-Asian bank joint ventures exit cleanly.