T

he Financial Services Authority (OJK) is expecting that Bank Tabungan Pensiunan Nasional (BTPN) and Bank Sumitomo Mitsui Indonesia, two subsidiaries of Japan'€™s Sumitomo Mitsui Banking Corporation (SMBC), will merge to strengthen their presence in the country.

OJK commissioner on banking supervision Nelson Tampubolon said on Thursday that the regulator would ask BTPN and Bank Sumitomo Mitsui Indonesia to include the consolidation arrangement in their 2015 banking business plan (RBB).

The request, Nelson said, was a follow-up from an earlier consolidation commitment by SMBC.

'€œIt [SMBC] has given us a letter of commitment to carry out the consolidation in the future, but it has not firmly defined a time frame,'€ he said in a text message.

Neither BTPN nor Sumitomo Mitsui Indonesia put the consolidation plan in their RBBs for 2014.

Currently, SMBC holds a 40 percent stake in BTPN, a medium-sized lender that focuses on disbursing loans to pensioners and micro-customers. SMBC initially acquired a 24.3 percent share in the bank from TPG Nusantara S.á.r.l., BTPN'€™s other shareholder, in May 2013.

SMBC, one of Japan'€™s largest banks, then increased its stake in BTPN by acquiring another 15.7 percent of TPG'€™s shares in March. Following the acquisition, TPG had a 25.9 percent share, while the public controls the remaining 34.1 percent.

According to BTPN'€™s first quarter financial results, it had Rp 67.35 trillion (US$5.82 billion) in consolidated assets as of March. Its outstanding loans amounted to Rp 41.1 trillion and its third-party funds reached Rp 46.62 trillion.

SMBC now has a 98.5 percent stake in Sumitomo Mitsui Indonesia. The remaining shares are held by private lender Bank Central Asia (BCA) and state-owned lender Bank Negara Indonesia (BNI), with 1 percent and 0.5 percent, respectively.

Unlike BTPN, Sumitomo Mitsui Indonesia currently channels most of its loans to corporate customers. It also provides trade financing for export and import activities, and offers cash management services.

The bank'€™s December 2013 financial statement shows that it had Rp 46.83 trillion in assets, Rp 34.35 trillion in outstanding loans and Rp 18.53 trillion in third-party funds.

Separately, BTPN compliance director and corporate secretary Anika Faisal confirmed that the lender'€™s management and shareholders would discuss the merger.

'€œThere are many things to consider, including the minor shareholders. We will definitely consult with the regulator as well,'€ she said.

While awaiting further decisions from its shareholders, BTPN is also looking forward to the OJK'€™s statement regarding the lender'€™s plan to convert its newly acquired subsidiary into a sharia lender.

As previously reported, it acquired a majority stake in Bank Sahabat Purba Danarta earlier this year from the Purba Danarta Foundation and PT Triputra Persada Rahmat, which is controlled by tycoon Theodore Permadi Rachmat.

BTPN plans on turning Sahabat into BTPN Syariah and merging it with its sharia business unit after the latter is spun off. It will move Sahabat'€™s headquarters to Jakarta from the current location in Semarang, Central Java, to better coordinate its future sharia business.