Bank Mandiri’s dream of running a wider service in Malaysia is inching closer to realization after it bagged a Qualified ASEAN Bank (QAB) license.

With the license, the state lender will be able to establish a fully licensed branch that is treated the same as local Malaysian banks and expand services to wholesale and retail banking, from only offering remittance services at present.

Mandiri has set aside 300 million Malaysian ringgit (US$69.77 million) as capital for the branch — to be named Bank Mandiri Berhad — and has injected 30 million ringgit so far.

“We will add to the capital gradually,” Bank Mandiri president director Kartika “Tiko” Wirjoatmodjo said in a statement after meeting with Bank Negara Malaysia (BNM) Governor Muhammad Ibrahim in Kuala Lumpur on Thursday.

Mandiri has been trying to penetrate more deeply into the Malaysian banking market for several years and its chance “arrived” when then-BNM governor Zeti Akhtar Aziz signed an agreement with Bank Indonesia (BI) Governor Agus Martowardojo and Financial Services Authority (OJK) chairman Muliaman D. Hadad in Jakarta in December 2014.

The agreement — which promotes equal reciprocity among the two countries — was part of a larger ASEAN Banking Integration Framework (ABIF) that has been set up for the 10 member countries within ASEAN, namely Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

BNM and the OJK then detailed the QAB requirements in a bilateral agreement that was signed in August 2016.

Tiko said it was looking to bank on the growing economic and business ties between Indonesia and Malaysia, a sentiment shared by Ibrahim.

In his remarks, Ibrahim said Indonesian firms had started to increase their presence in Malaysia and that a significant step forward came last month when both countries’ trade ministers announced a target for bilateral trade of $30 billion in the coming years.

“This is double the $13.8 billion recorded in 2016. I strongly believe that this target is achievable and with a closer banking relationship our trade will further flourish,” he said.

Mandiri is looking to launch the branch’s operations by the end of 2017.

At present, the publicly listed lender has several overseas branches in the Cayman Islands, Timor Leste, Hong Kong, China and Singapore. It also has two subsidiaries, namely Bank Mandiri Europe Ltd. in London and Mandiri International Remittance (MIR) in Malaysia.

MIR was established in 2009 to meet the remittance needs of Indonesians, including migrant workers.

Mandiri is also exploring the possibility of widening its network in several other ASEAN countries such as the Philippines.

It is eyeing an annual rise of 11 percent to 13 percent in its outstanding loans to Rp 734.82 trillion ($54.98 billion) in 2017.

It has not officially published its first-half result, but its May report reveals that it had already booked 80 percent of the target within the first five months of the year.

Mandiri said it would see several changes to its loan composition. “The corporate and retail segment will grow higher,” Tiko said in a separate event. (dea/tas)

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