The government will provide the rest through the issuance of bonds. The government also agreed to cede management control to Standard Chartered. The purchase by the British-based concern is the first by a major financial player in an Indonesian bank since the economic crisis broke in 1997, and the government is hailing it as a breakthrough in its efforts to revitalize the financial sector.

The sale "represents a landmark transaction in terms of structure and process," said Farid Harianto, deputy chairman of the Indonesian Bank Restructuring Agency, or IBRA.

Bank Bali is one ofIndonesia's leading consumer retail banks, with 10 trillion rupiah ($1.15 billion) in assets. It has non-performing loans of around 50 per cent in the overall banking sector, non-performing loans stand at about 70 per cent. The bank's management is considered relatively strong in two regards: It's credited with developing one of the strongest local brand names, and has been innovative in bringing new technology, such as automatic teller machines, to the market.

Right to buy remaining stake Standard Chartered then holds the right to purchase the remaining 80 per cent of Bank Bali through a call option on the government's remaining shares.Standard Chartered plans to wholly own Bank Bali in three to five years, said David Hawkins, the British bank's chief executive officer in Indonesia. JP Morgan & Co, which advised Bank Bali on the sale, described the transaction with Standard Chartered as "a very, very important piece of work for the Indonesian] government and country.

"Stephen Berger, managing director ofMorgan's investment banking in Southeast Asia, said the sale shows that bank-restructuring is moving ahead and that foreign banks "see opportunities in Indonesia." He called Standard Chartered a "first-class name" and said that Bank Bali was "the right name" to start off the restructuring process. In all, eight banks entered into the government's bailout programme on Thursday. Among these are PT Bank Lippo and PT Bank Internasional Indonesia, respectively the banking arms of Lippo Group and Sinar Mas Group, both of Indonesia. (BII is the nation's largest bank, with assets of 34.3 trillion rupiah.) A ninth bank, PT Bank Niaga, opted out of the programme, saying it couldn't agree to the government's terms and will be nationalised.

Fast Pace Officials involved in structuring Bank Bali's sale say they are amazed by the pace in which it was concluded.