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outh Korean lender Shinhan Bank plans to acquire shares in a bank based in Bandung, West Java, a proposal for which has been submitted to the Financial Services Authority (OJK).

Shinhan Bank, part of South Korea'€™s Shinhan Financial Group, was the first bank established in the East Asian country under the name Hanseong Bank in 1897. In 2006, Shinhan Bank was merged with Chohung Bank.

'€œI have received a report that Shinhan Bank from South Korea wants to acquire a bank in Bandung. However, I do not remember exactly the bank'€™s name,'€ said OJK commissioner for banking supervision Nelson Tampubolon.

Currently, there are two foreign exchange (forex) banks and three non-forex banks based in Bandung. The two forex banks are Bank Nusantara Parahyangan (BNP) and regional development bank Bank BJB '€” previously named Bank Jabar Banten.

However, BNP is already owned by Japanese shareholder The Bank of Tokyo-Mitsubishi UFJ Ltd. '€” which holds 9.35 percent of shares '€” and Acom Co. Ltd., the Japanese bank'€™s consumer-lending affiliate, which controls 66.15 percent.

Meanwhile, the three non-forex banks are Bank Artos, Bank Bisnis Internasional and Bank Fama Internasional.

In 2013, Shinhan Bank announced that it planned to acquire 40 percent of Jakarta-based Bank Metro Express'€™ shares, but was not permitted to by Bank Indonesia, which served as the country'€™s banking regulator at the time, before the function was handed over to the OJK.

Nelson said at least two major requirements should be fulfilled by Shinhan Bank before the OJK would accept the proposal. For instance, Shinhan will be required to acquire at least two banks as stipulated in a specific OJK regulation.

The regulation is actually a supervisory action that requires foreign investors to acquire two banks when they plan to enter the Indonesian market, he said. Afterwards, the two acquired banks should be merged as required by a regulation on a single-presence policy in order to push the country'€™s banking consolidation.

'€œPrincipally, Shinhan is willing to acquire two banks, even though it does not know yet the second bank it will take. To be sure, we will push Shinhan to take over a bank with a small size of capital,'€ he said.

'€œI have received a report that Shinhan Bank from South Korea wants to acquire a bank in Bandung. However, I do not remember exactly the bank'€™s name.'€

Nelson said further that Shinhan should also wait for a bilateral agreement between the OJK and South Korea'€™s banking regulator that would be signed in the near future. The agreement will enable reciprocity between both countries, where Indonesian banks would also be allowed to enter South Korea without difficult requirements.

Currently, state-owned lender Bank Negara Indonesia (BNI) is waiting for a response from South Korean banking regulator the Financial Supervisory Service (FSS) regarding its proposal to open business in the East Asian country.

'€œWe do not know yet when we will sign the bilateral agreement with the FSS, but we are expecting that BNI will be ready when it is signed. BNI should ensure its preparation to enter South Korea, because Shinhan is so ready to enter Indonesia,'€ he said.

'€œWe will allow any investor to enter our domestic banking industry as long as they comply with our requirements, which can also push our consolidation program at the same time,'€ he said.

Currently, at least two banks that have a majority of shares controlled by South Korean investors are operating in Indonesia '€” PT Bank KEB Hana Indonesia and PT Bank Woori Indonesia.

Bank KEB Hana Indonesia is owned by Hana Bank and the Korean Exchange Bank (KEB), while Bank Woori Indonesia is owned by Woori Bank. Bank Woori Indonesia is waiting for the OJK'€™s approval to merge with Bank Himpunan Saudara 1906 following the acquisition of Bank Saudara'€™s shares by Woori Bank last year.