T

he Financial Services Authority (OJK) expects to see the establishment of a state sharia bank by 2017 at the latest, as revealed in its sharia banking road map.

In the road map, launched on Saturday, the OJK has established a timeline that runs from 2015 until 2017 for the creation of the state sharia lender.

It claims that such a bank will help the overall sharia banking industry strengthen its capital and improve its efficiency.

OJK chairman Muliaman D. Hadad said his agency was partnering with state banks and the State-Owned Enterprises (SOE) Ministry as related stakeholders to realize the plan.

'€œThe aim is to spin off existing sharia lenders from their [state banks] parent companies and to merge them into one. The state lenders will have stakes in the new entity and we will also expect the government to place a certain amount of funds as capital due to the entity'€™s status of a state bank,'€ he said.

Talks on the establishment of a large, state sharia bank are not actually new as they emerged in 2013.

The goal has remained the same, which is to consolidate all business aspects currently scattered in Bank Syariah Mandiri (BSM), Bank Negara Indonesia (BNI) Syariah, Bank Rakyat Indonesia Syariah (BRISyariah) and a sharia business unit under Bank Tabungan Negara (BTN).

BSM currently owns the largest amount of assets, followed by BRISyariah, BNI Syariah and BTN'€™s unit.

If combined, their assets would reach around Rp 119.63 trillion (US$8.98 billion), equal to 44.6 percent of the total assets of sharia banks.

However, when compared to the overall banking industry, the figure would only account to a tiny 2.1
percent.

Muliaman added the regulator was looking to see the new sharia entity have a position on the list of BUKU III lenders, those having core capital of Rp 5 trillion to Rp 30 trillion.

'€œIt will happen because BSM is already approaching the BUKU III capital benchmark,'€ he said.

When contacted, Gatot Trihargo, SOE Ministry'€™s deputy for business services, said it had not set up a plan to inject state capital into the new state sharia bank, adding that its priorities still lie in infrastructure, public housing and others.

Meanwhile, BRI president director Asmawi Syam said that BRI, which owns 99.99 percent of BRISyariah, would fully support the creation of the new sharia lender.

'€œBut we still have to sit together to discuss further details. Where will we start? BRI also has a plan to inject Rp 500 billion worth of additional capital into BRISyariah,'€ he said on Sunday.

BSM president director Agus Sudiarto said that any action would be the right of its shareholder, which is Bank Mandiri. '€œIn the meantime, we are improving the company, in terms of human resources, information technology, financing portfolio and financing quality,'€ he said.

According to Agus, BSM is in the middle of finalizing its 2016-2020 corporate plan as well and it
will explain the details in the next few weeks.

Separately, Dinno Indiano, president director of BNI Syariah that is controlled by BNI, said he welcomed the plan, but insisted that the owner'€™s commitment would be crucial to bringing the new entity to a more advanced level.

'€œIt'€™s not just a matter of combining existing assets and capital. I hope that the government will support it by providing enough additional capital to make the goal feasible,'€ he said.