The Jakarta Post, Jakarta
The central bank has delayed implementing a regulation that prohibits shareholders from having a majority stake in more than one bank to give the affected companies more time to comply.
Bank Indonesia (BI) deputy governor Maman H. Soemantri said Friday the central bank would require the management of all banks to fully implement the single presence policy by 2010 instead of 2008 as initially planned.
He said that the banks should submit a detailed explanation of how they would reform by 2008 before the final compliance date of 2010.
""The policy is clear and is certainly in the pipeline. We expect banks will be able to fully implement it before 2010,"" Maman told Antara at a banking seminar in Bandung.
BI Governor Burhanuddin Abdullah hinted the possible extension of the deadline late Wednesday. He said that if the deadline is extended it would be still in line with the Indonesian Banking Architecture (API) blueprint, a framework drawn up to reform the country's historically shaking and corrupt banking system.
Consolidation in the sector is expected to create fewer, more robust institutions and make it easier for industry regulator Bank Indonesia to police banks.
Burhanuddin said the policy was not the central bank's only way to consolidate banks in the country. Other policies could include encouraging normal mergers and acquisitions and enforcing minimum capital requirements.
Burhanuddin said the industry should not think negatively about the single presence policy, as similar policies were also implemented in other countries to improve their banking industries.
BI spokesman Budi Mulya said Friday the central bank would issue a regulation on the policy within the next month.
""There will be a regulation for it soon, it is currently being discussed,"" he said. Neither Maman and Budi would not elaborate about what the regulation was meant to achieve.
The API blueprint is the grand design to overhaul and consolidate the country's banking industry.
Under its single presence policy owners of more than one bank will have to sell their shares in one interest, undertake a merger or acquisition or set up a holding company for their banks.
The government will also be affected by the policy, with Bank Mandiri, Bank Negara Indonesia, and Bank Rakyat Indonesia -- the country's top-three lenders in terms of assets -- still state-controlled.
Other lenders to be affected include Bank International Indonesia and Bank Danamon -- which are controlled by the Singaporean government holding company, Temasek.
