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Asian lenders bank on Indonesia for growth
The increasing interest by Asian banks in Indonesia is a result of low interest rates in many countries on the continent, said Federation of Private Domestic Banks (Perbanas) chairman.
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Illustration of a bank (Shutterstock/Anton Violin)
A
sian banks in search of business opportunities are turning to Indonesia, with financial institutions from Japan, Korea and Singapore hoping to acquire domestic banks as the local authority finalizes a plan to relax foreign ownership in local banks.
Two Japanese lending giants earlier this year led takeovers of domestic banks.
Japan’s third-largest lender by assets, Sumitomo Mitsui Banking Corporation (SMBC), owns a 96.89 percent stake in private lender PT Bank Tabungan Pensiunan Negara (BTPN). SMBC bought BTPN’s shares for Rp 14.28 trillion (US$1.01 billion) under a tender scheme. It then merged BTPN with the group’s Indonesian subsidiary, PT Bank Sumitomo Mitsui Indonesia, in February.
One of the world’s biggest lenders and the largest by assets in Japan, Mitsubishi UFJ Financial Group (MUFG) also rocked the banking industry with this year’s biggest transaction on the stock market, acquiring PT Bank Danamon Indonesia for Rp 52.58 trillion. MUFG now owns 94.1 percent of Bank Danamon after merging the bank with its PT Bank Nusantara Parahyangan.
The mergers by the two Japanese banks were mandatory as the Financial Services Authority’s (OJK) single presence policy allows majority shareholders of local banks to own only one banking entity. However, the OJK is currently planning to relax the bank ownership regulation to enable more acquisitions in the local banking industry.
“The relaxation will act as a sweetener for bigger banks to consolidate with smaller banks,” said OJK banking supervisory division head Heru Kristiyana, declining to elaborate, including on the timeline of the policy revision.
The increasing interest by Asian banks in Indonesia is a result of low interest rates in many countries on the continent, said Federation of Private Domestic Banks (Perbanas) chairman Kartika “Tiko” Wirjoatmodjo before he was sworn in as deputy state-owned enterprises minister.
