JAKARTA (Reuters) - Indonesia Friday slapped long bans of Citibank (c.n.r.) credits business card and management of wealth in case of an allegation of misappropriation of funds and the death of a client after interrogation by the debt collectors.
Central Bank of the Indonesia barred Citigroup adding new customers of credit card for two years and new customers for its wealth of premium for a year service.
If no crime were found, it would revoke the license of the American Bank in the largest economy of Southeast Asia.
"Sanctions do not appear to be severe, but it could also be an element of criminal responsibility." Banks must be concerned by the agents that they engage and the message that they use in their services, "said Wilson Ang, a lawyer of Norton Rose to Singapore dispute resolution."
Citigroup said it was working closely with the Central Bank of the Indonesia to respond to its concerns and had strengthened it its debt collection process in the country.
"Bank of Indonesia found on the regulation on international banking and the weakness of the violations in risk management," said s. Budi Rochadi, a Deputy Governor of the Bank of Indonesia at a press conference.
"The Central Bank is to take measures that protect customers and the credibility of the banking industry", he said, adding said Citibank to suspend executives involved in both cases.
PROHIBITION OF INDUSTRY
Last week, Central Bank of the Indonesia also asked 23 banks to stop the search of rich new customers a month.
The wider shot, which came into force on 2 may, could prove a setback in the short term a banking industry private floating seeking to capitalize on rich Indonesians.
There are 60,000 millionaires in Indonesia and the total wealth in the country amounted to 1.8 billion in 2010, according to credit Switzerland world wealth report published last year in.
CITI, one of the main managers wealth on Earth in Indonesia with UBS (UBSN.)(VX) and Credit Switzerland (CSGN.)(VX), said he discovered suspicious transactions in its Indonesian operations but did not give the size of the loss.
Indonesian police have said the case consists of approximately $ 2 million and took into custody Melinda Dee, a 47-year Manager former Citi wealth.
An Indonesian woman filed a lawsuit against the local unit of Citigroup civil, seeking 347 million in damages, after her husband died on 29 March after interrogation by collectors of debt on bills run on a Citi credit card.
CITI has already said that it cooperates fully with the police to determine if the external agency staff had acceded to its code of conduct on the recovery of claims and that it did not believe physical damage has been done to the client when he arrived at the Office of the Bank.
CITI has about 15 percent of the market for credit cards of the Indonesia, according to the association of the country's credit card.
"For me, the sanction is hard," said Timur Sukirno, associated with Hadiputranto, the Hadinoto and partners. "I assumed that the Monetary Authority put or expects a higher standard of Citibank as one of the major banks in the world."
SETBACK FOR CITI
Indonesia Bank, said that the U.S. lender shall use collectors of external debt for three years. CITI, said last week that it recruits identified 1 400 staff of Indonesia, which were previously outsourced debt collection.
The Central Bank had already suspended Citibank Indonesia recruit new clients to its premium Citigold services, where clients have usually more than $50,000 in savings, as police investigate suspected embezzlement to his wealth management unit.
The suspension is the latest run-in with regulators in Asia for Citi, which attempts to push the affairs are booming emerging markets. CITI recently compensated customers alleged fraud in India and paid a fine to the Japan on deposits of shareholders.
CITI has also a strong presence in debt and loan markets in Indonesia, but was not a big player in underwriting initial public offerings or advising on acquisitions, in a country see interest strong investment and capital market float.
"I do not think that this will make sell them their business and get out of the Indonesia.". It can promote banks such as HSBC and Standard Chartered, but this does not mean customers will be provided to local banks, said Nick Cashmore, country head of CLSA, Indonesia.
(Other reports by Janeman Latul JAKARTA and Rachel Armstrong and Harry Suhartono to Singapore;) (Editing by Lincoln feast)
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