T

he Financial Services Authority (OJK) is looking to sign several memoranda of understanding (MoUs) with foreign counterparts in China, South Korea and the United Arab Emirates in an effort to assist domestic banks to operate abroad.

According to OJK international director Triyono, the processes are ongoing and the financial regulator expects to complete all MoUs in 2015. '€œOur target is to reach agreements with our counterparts to facilitate our local banks,'€ Triyono said on Friday.

The MoUs will contain agreements on information exchange, capacity building and reciprocity, among other things, for the banking, non-banking and capital market sectors.

Triyono said that the regulators were committed to increasing cross-border supervision and to ease access for banks wanting to expand overseas, but he added that several things must first be considered on the matter of reciprocity.

'€œReciprocity is not always about numbers. We may not see as many Indonesian lenders expand overseas as foreign ones that are here because not all Indonesian lenders may want to operate abroad, but we want to at least have equal representation,'€ he added.

The priority now lies in the MoUs with China and South Korea as two Indonesian state banks '€” Bank Mandiri and Bank Negara Indonesia (BNI) '€” are hoping to increase their businesses in those two countries, according to Triyono.

At present, Mandiri wants to obtain full branch status for its branch office in Shanghai. It began its operations in Shanghai when it opened a representative office in 2004.

'€œOne part of the banking regulations in China stipulates that a representative office may obtain full branch status if it has posted profits for at least two years in a row and Mandiri'€™s office has done that. So we are optimistic about the new status,'€ Triyono said.

Mandiri'€™s first-half financial report shows that operating profits from its Shanghai office reached US$791,000 by the end of June, but no data were available on its past years'€™ financial performance.

When contacted, Mandiri president director Budi Gunadi Sadikin confirmed the plan for full branch status, saying that it would enable the lender to carry out more activities in China.

Meanwhile, as previously reported, BNI hopes to expand to South Korea next year. It already has a remittance partnership with South Korea'€™s Kookmin Bank and is on its way to establish a similar deal with another lender, Nonghyup Bank.

BNI international division deputy general manager Rahmad Hidayat said that the lender was assessing the business opportunities in South Korea to be included in next year'€™s banking business plan.

Meanwhile, the OJK also hopes to reach an agreement with its ASEAN counterparts this year on the ASEAN Banking Integration Framework (ABIF), which is expected to provide a level playing field for banks in all 10 ASEAN countries.

According to Triyono, the ABIF will pave the way for Indonesia to establish bilateral relations with other financial regulators, especially through the highly awaited talks with regulators in Singapore and Malaysia.

'€œWe have held discussions with the banking industry on ABIF and they have asked for higher ease of access and reciprocity as well, similarly as in other countries. Hopefully we can wrap things up before year-end,'€ he said.