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OJK open to talks with Japanese lenders

The Financial Services Authority (OJK) has said it is open to discussing plans by major Japanese lenders Mitsubishi UFJ Financial Group (MUFG) and Sumitomo Mitsui Financial Group (SMFG) to acquire stakes in Indonesian banks

Winny Tang (The Jakarta Post)
Jakarta
Thu, January 4, 2018

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OJK open to talks with Japanese lenders

T

he Financial Services Authority (OJK) has said it is open to discussing plans by major Japanese lenders Mitsubishi UFJ Financial Group (MUFG) and Sumitomo Mitsui Financial Group (SMFG) to acquire stakes in Indonesian banks.

The OJK, however, has yet to approve the plans as the Japanese banks have not officially informed the financial regulator about them.

“They were still just plans. If they really wanted to acquire shares of more than 40 percent [in local banks], come to us and explain the reason why,” OJK chairman Wimboh Santoso told reporters during an event on Tuesday.

Japan’s largest lender MUFG acquired last Friday 19.9 percent shares of publicly listed lender Bank Danamon in a deal worth Rp 15.87 trillion (US$1.17 billion). The purchase was the initial step.

In its second step, MUFG intends to acquire an additional 20.1 percent to boost its stake in Danamon to 40 percent. Upon completion of the second step, MUFG would purchase more shares, until the company’s final stake in Danamon eclipses 73.8 percent.

A 2016 OJK regulation limits foreign ownership of Indonesian banks to 40 percent, but it would allow controlling stake under certain circumstances.

Recently, Japanese banks have shown an increased interest in working within Indonesia, citing vast opportunities in the country with a population of more than 260 million people.

Aside from MUFG, Japan’s second largest bank by market capitalization, SMFG, also announced interest in acquiring stakes of Bank Tabungan Pensiunan Nasional (BTPN) through its wholly owned subsidiary Sumitomo Mitsui Banking Corporation.

In an interview with Reuters recently, SMFG CEO Takeshi Kunibe said the company was keen on raising its stakes in BTPN. In 2013 and 2014, the bank spent a total of 150 billion yen to purchase 40 percent of BTPN’s shares.

SMFG proposed the corporate plan to expand its operations in emerging Asian markets. Kunibe, however, declined to provide additional details, saying that BTPN was a listed company.

Private lender BTPN, which provides most of its loans to pensioners and micro enterprises, booked Rp 1.37 trillion in net profit in the first nine months of 2017 and total sales of Rp 11.05 trillion.

In a letter addressed to the Indonesia Stock Exchange (IDX) on Tuesday, BTPN said it had not received a detailed explanation regarding Sumitomo’s plan to acquire stakes.

“As of now, BTPN management has not received a detailed explanation regarding the news from the shareholder, the Sumitomo Mitsui Banking Corporation,” BTPN director Arief Harris Tandjung said in the statement.

Responding to this, OJK chief executive for banking supervision Heru Kristiyana said no formal discussions had taken place regarding the corporate plan.

“I had yet to be informed about that plan […] We wouldn’t have any reason to reject it if they are able to comply with the OJK regulation,” he said.

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