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Jakarta Post

Speeding up bank consolidation

  • The Jakarta Post

Jakarta   /   Mon, February 11 2019   /  01:18 am

The Financial Services Authority (OJK) has said it is now designing new measures and incentives to accelerate bank consolidation because the industry is still too heavily crowded by small banks, which are highly vulnerable to financial distress.

The number of commercial banks remains large at 115, compared to 138 in 2004 when the national Banking Architecture plan was launched by Bank Indonesia (BI) to develop a leaner banking landscape. The plan, which was supposed to have been completed in 2014, was designed to develop three international-class banks with capital exceeding US$5.8 billion, three to five national anchor banks each with capital ranging from $1.5 billion to $5.8 billion and 30 to 50 smaller specialized banks. These banks were to be supplemented by thousands of rural or community banks.

The Indonesian Banks Association itself has admitted that 50 to 70 comme...