D

ubai Islamic Bank (DIB), the oldest sharia lender in the world, has officially acquired shares within publicly listed lender Bank Panin Syariah (PNBS) from the latter'€™s owner, Panin Bank.

A statement submitted to the Indonesia Stock Exchange (IDX) on Tuesday by PNBS shows the lender'€™s ownership structure had changed, with Panin'€™s stake declining to 64.01 percent from 87.51 percent.

Panin vice president Roosniati Salihin confirmed the deal, saying that Panin had officially sold its stake to DIB.

'€œThe agreement was made official about two weeks ago,'€ she said by phone.

DIB purchased the shares in two stages, which took place on May 21 and 22. The whole purchase was reportedly worth Rp 251.79 billion (US$21.33 million).

'€œNow DIB controls a 24.9 percent stake in PNBS, while Panin remains the majority shareholder with 64.01 percent,'€ she said, adding that the remaining shares were owned by various stakeholders.

Roosniati said that both Panin and DIB were still wrapping up several issues and it was expected that the Middle Eastern bank'€™s presence within PNBS would propel PNBS'€™ performance forward.

DIB previously issued a statement, in which it expressed interest in increasing its stake to 40 percent in PNBS. The action, however, will require approval from the Financial Services Authority (OJK).

Roosniati said that no definite time frame had been set for DIB to realize its plan.

PNBS'€™ first quarter results show that the bank had Rp 4.3 trillion in total assets and Rp 993.41 billion in core capital as of March. Its outstanding financing stood at Rp 1.92 trillion and its third-party deposits amounted to Rp 643.77 billion.

PNBS, which went public in January, managed to book Rp 10.64 billion from its operations between January and March.

Meanwhile, according to DIB'€™s first quarter financial report, its total assets reached 121.15 billion dirham ($32.9 billion) by the end of March. Its customer deposits were recorded at 86.13 billion dirham, while its financing amounted to 59.9 billion dirham.

OJK sharia banking department head Edy Setiadi previously acknowledged that foreign investors'€™ involvement in domestic sharia banking would be able to significantly boost the industry'€™s share.

Sharia banking currently only accounts for 5 percent of total banking assets.

There are 11 sharia lenders and 23 sharia business units operating in the country at present.

The OJK expects that further consolidation or share acquisition will increase the sharia share to 7 percent by year-end.

'€œThe potential is there because Indonesia has the largest Muslim population in the world. However, higher awareness is also needed to improve sharia banking,'€ Edy said.