D

ubai Islamic Bank (DIB), the oldest sharia lender in the world, has officially submitted a request to Indonesia'€™s Financial Services Authority (OJK) to up its stake in Jakarta-listed Bank Panin Syariah (PNBS).

OJK sharia banking department head Edy Setiadi said on Friday that the OJK was currently processing the application DIB had recently submitted. '€œIt has expressed its intention to increase its ownership in Panin Syariah to 40 percent.'€

DIB currently owns a 24.9 percent stake in Panin Syariah, a subsidiary of private lender Panin Bank (PNBN).

The United Arab Emirates lender acquired Panin Syariah'€™s shares, reportedly worth Rp 251.79 billion (US$21.7 million), in two stages in May this year.

The rest of Panin Syariah'€™s shares are controlled by Panin Bank with 52.5 percent, Hesti Femi Nugraheni with 5.4 percent and the public with 17.2 percent.

No immediate information was available on how DIB would boost its ownership.

Edy said that while processing DIB'€™s request, the regulator would continue its talks with the Central Bank of the UAE.

'€œWe want to be able to have access to DIB'€™s finances and prudence, and its efforts to meet good corporate governance principles. This will be applied to other UAE lenders wishing to enter our banking industry as well,'€ he said.

The OJK expects to complete the talks and issue approval for DIB later this year, according to Edy.

When its stake increases to 40 percent, DIB will be considered a controlling shareholder in Panin Syariah and will have a voice in determining the lender'€™s board of directors (BoD) and board of commissioners (BoC).

Contacted separately, Panin Bank vice president director Roosniati Salihin said Panin Bank supported DIB'€™s intention to increase its ownership in Panin Syariah, but stressed that Panin Bank would not be releasing any more of its shares to the Middle Eastern lender.

'€œDIB will purchase the rest of the shares from the market '€” we will remain the majority shareholder with our existing stake,'€ she told The Jakarta Post.

At the end of the process, she added, public ownership of Panin Syariah was estimated to stay at around 8 percent.

No discussion is ongoing between Panin Bank and DIB regarding the subsidiary'€™s BoD and BoC, according to Roosniati. '€œThe boards are already complete with their existing members. Any changes will be discussed after DIB acquires the OJK'€™s approval,'€ she said.

Panin Syariah went public early this year and its latest financial report shows that it had Rp 4.69 trillion in total assets and Rp 1 trillion in core capital as of June.

Its outstanding financing and third-party funds stood at Rp 3.25 trillion and Rp 2.67 trillion, respectively, and the bank booked Rp 25.44 billion in net profits from its operations during the first half of 2014.

Panin Syariah, now the only sharia lender listed on the Indonesia Stock Exchange (IDX), saw its shares stay at Rp 168 apiece on the IDX on Friday, unchanged from the previous day.