Standard Chartered's Kay, overseer of $1 billion Indonesia loan, resigns

HONG KONG Wed Oct 17, 2012 7:38am BST

A staff member walks inside a priority banking service area of a Standard Chartered bank in Hong Kong August 1, 2012. REUTERS/Bobby Yip

A staff member walks inside a priority banking service area of a Standard Chartered bank in Hong Kong August 1, 2012.

Credit: Reuters/Bobby Yip

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HONG KONG (Reuters) - Standard Chartered's head of leveraged finance syndication has resigned to pursue other interests, the bank said on Wednesday.

Peter Kay's departure comes amid a reshuffle in its debt business and as the lender struggles to sell down a $1 billion loan to Indonesian businessman Samin Tan, the chairman of troubled Bumi Plc BUMIP.L.

Tan used the funds to buy a stake in the coal firm last year, and his investment crumbled as the company's shares fell sharply.

Kay resigned at the end of September, according to StanChart spokeswoman Valerie Tay. Calls to Kay's mobile phone were not returned.

He joined StanChart in December 2009 and had over 20 years' experience in leveraged financing across Europe, the United States and Asia. He reported to Philip Cracknell, global head of loan syndications and deputy head of capital markets.

As the leveraged finance syndication head, Kay and his team were responsible for, among other things, selling on a portion of a corporate loan to other institutions to reduce the risk of holding the entire amount.

Among other projects, Kay was tasked with distributing the $1 billion loan that the bank wholly underwrote almost a year ago on behalf of Tan's Borneo Lumbung Energi (BORN.JK), after it bought a 23.8 percent stake in Bumi Plc from Indonesia's Bakrie Group.

The size of the Borneo loan is a small fraction of the bank's overall lending book, but is one of the single largest underwritten loans by any bank in Asia in 2011.

Standard Chartered has since been able to sell down only $230 million of the loan, leaving $770 million worth of risk on the UK-listed bank's books.

Basis Point, a Thomson Reuters company, reported that general syndication for the loan closed on Tuesday, citing a source close to the deal, with only two other lenders joining.

StanChart ended up with $770 million at the close of primary syndication, with First Gulf Bank of the United Arab Emirates coming in as mandated lead arranger and bookrunner with $200 million, and Dutch pension fund PGGM Vermogensbeheer BV taking $30 million, according to Basis Point, who first reported Kay's departure.

The launch of the general syndication period for the loan had been delayed as the deal languished in the market, Basis Point reported.

The share price of Bumi Plc has tumbled 72 percent this year on a mixture of debt concerns, tensions between shareholders and weakening demand growth globally for coal.

In September, the shares took another tumble when Bumi Plc commissioned a London law firm to look into alleged financial irregularities in more than $500 million of funds at its Indonesian subsidiaries. The Bakrie family, which originally held a controlling interest in Bumi Plc, has proposed a plan to bring back Bumi's coal assets under its roof.

British financier Nat Rothschild, who owns 12 percent of Bumi, resigned from the company's board this week.

Kay's departure follows a series of changes in the bank's debt capital markets business made since the appointment of former Credit Suisse banker Carsten Stoehr as head of global capital markets in June.

(Additional reporting by Kelvin Soh; Editing by Michael Flaherty and Raju Gopalakrishnan)