The move will combine Bank Syariah Mandiri (BSM), BNI Syariah (BNIS) and publicly listed BRI Syariah (BRIS) to form the country’s biggest sharia bank.

According to the banks’ joint statement on Wednesday, Bank Mandiri will hold the majority 51.2 percent shares of BRIS, the only surviving entity of the merger, considering BSM will contribute over half of the merged entity’s assets.

“We expect the merger to be positive for Bank Mandiri’s business profile,” S&P stated in a bulletin note published on Oct. 15. “The effect on the other two banks [BRI and BNI] will be broadly neutral, given the relatively small contribution of sharia assets and their smaller stakes in the merged entity.”

S&P added that the merger would reinforce Bank Mandiri’s dominant market position while boosting its performance. Bank Mandiri is currently Indonesia’s second-largest bank by asset value.

“[The merger will] help diversify its revenue profile and customer base, [as] the merged entity can leverage on the wide reach of the three banks and will be well-positioned to grow, considering Indonesia’s large Muslim population,” the note reads.

Read also: State-owned banks form biggest sharia bank in subsidiaries merger

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