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Bank Mandiri reviewing expansion plans in M'sia, S'pore
State-owned lender Bank Mandiri, the nationâs biggest bank by assets, is reviewing plans to expand in Malaysia and Singapore as Indonesian banks are expected to enjoy easier access to operating in neighboring countries as part of the so-called ASEAN Banking Integration Framework
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tate-owned lender Bank Mandiri, the nation's biggest bank by assets, is reviewing plans to expand in Malaysia and Singapore as Indonesian banks are expected to enjoy easier access to operating in neighboring countries as part of the so-called ASEAN Banking Integration Framework.
Indonesian financial regulators, the Financial Services Authority (OJK) and Bank Indonesia (BI), signed an agreement late last year with Malaysia's central bank, Bank Negara Malaysia (BNM), easing restrictions on Indonesian banks to operate in Malaysia and committing to reciprocal principles.
'We see the agreement as a positive step, which offers an opportunity for us to look deeper at our business potential as Bank Mandiri plans an expansion in neighboring countries,' Bank Mandiri vice president director Riswinandi said.
Bank Mandiri has limited access to serving its customers in Malaysia. The restrictive banking policy on foreign entities in the neighboring country has met with complaints from Indonesian banks, as Southeast Asia moves toward financial integration by 2020.
A locally incorporated foreign bank is required to have minimum capital funds of 300 million Malaysian ringgit (US$85.6 million) to set up a fully licensed branch, but the new bilateral agreement may see that requirement reduced.
Malaysia allowed Bank Mandiri to operate a remittance business through a local subsidiary, Mandiri International Remittance Sdn. Bhd., which Riswinandi categorized as 'a limited retail business'.
'There's a lot of factors to be considered before deciding to start investing in a new business there. We don't want to be hasty in this issue because we have to study the market potential of certain businesses in a country as well as their legal details,' he said when asked of plans to expand Bank Mandiri's business scope in Malaysia.
Riswinandi, however, was hopeful that the Indonesian and Malaysian financial regulators' agreement that was part of the ASEAN Banking Integration Framework would act as a model for similar agreements with other neighboring countries, including Singapore.
The agreement ' which is also expected to be a model for future bilateral deals with other Southeast Asian counterparts ' will enable banks with 'Qualified ASEAN Bank' (QAB) status to carry out their operations in neighboring countries and get equal treatment as local banks.
It also allows Indonesian QABs to pay their minimum capital requirement in installments for five terms, according to OJK commissioner on banking supervision Nelson Tampubolon.
Large state-owned lenders Bank Mandiri, Bank Rakyat Indonesia (BRI) and Bank Negara Indonesia (BNI) would likely have the chance to be the first Indonesian QABs, he added.
Bank Mandiri also plans to expand its business in Singapore, where the lender has a wholesale business through its Bank Mandiri Singapore Branch ' serving mainly Indonesian customers who have trade relations in the neighboring country.
Malaysian and Singaporean banks have established a presence in Indonesia via the acquisition of domestic banks.
