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BTN to acquire Bank Victoria Syariah to spin off its sharia unit
According to Financial Services Authority (OJK) regulation, sharia banking units with assets exceeding Rp 50 trillion (US$3.04 billion) must either spin off into separate entities or merge their assets with other sharia banks within two years of crossing the threshold.
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A customer carries out a transaction at a BTN Syariah branch in an undated photo. (BTN Syariah/-)
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tate-owned lender PT Bank Tabungan Negara (BTN) signed a conditional sales purchase agreement on Wednesday to acquire a sharia unit of private lender PT Bank Victoria International.
The state-owned bank will merge its own sharia business unit, BTN Syariah, with PT Bank Victoria Syariah, creating a new full-fledged Islamic bank.
The deal will see BTN acquire all shares held by PT Victoria Investama, PT Bank Victoria International and the Jakarta Property and Heritage Agency (BHP) using the state-run lender’s internal funding.
“Indonesia’s sharia economy requires a player with a competitive advantage in banking services for the housing sector,” BTN president director Nixon LP Napitupulu said in a statement on Monday.
The Financial Services Authority (OJK) requires sharia business units with over Rp 50 trillion (US$3.04 billion) in assets to be spun off into separate entities from their parent banks or to merge with other sharia banks within two years of crossing the threshold.
The policy aims to address the lack of competitiveness in the local sharia banking industry despite Indonesia being the largest Muslim majority country in the world.
Currently, only five of 28 sharia banks and sharia banking units have assets exceeding Rp 40 trillion. And of those five, only state-owned Bank Syariah Indonesia (BSI) has more than Rp 100 trillion in assets.
