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2017. further banking consolidation will continue

Selasa, 20 Desember 2016 / 10:53 WIB

2017. further banking consolidation will continue

JAKARTA. The profile of Indonesian banking may change in 2017. The trend of bank consolidation is likely to culminate in that year, in line with the regulator target to reduce the number of banks, as well as to encourage the state owned banks to consolidate.

Deputy Commissioner of Banking Supervision at Financial Service Authority (FSA) Irwan Lubis said that the institution encouraged the major banks to consolidate in 2017. In this case, FSA recommends the major banks to acquire minor banks.

“The number of banks is likely to decline by 4 banks-5 banks to about 110-113 banks,” Irwan said.

Irwan said that the banking consolidations will take a long period of time due to the large number banks that is 118. Previously, most of the consolidations were driven by the foreign investors. However, FSA encourages the local major banks to be more active in banking consolidation.

Some state owned banks are ready to launch inorganic expansion in 2017. For an example, PT Bank Rakyat Indonesia (BRI) has prepared Rp 2.5 trillion-Rp 3 trillion funds for this purpose.

“Rp 2 trillion will be allocated to the subsidiaries, while other Rp 1 trillion for acquisition,” said Financial Director of BRI Haru Koesmahargyo, Monday (18/12).

Haru continued, after the establishment of the holding of state owned banks, BRI will realize the plan to acquire Bahana Sekuritas. This plan has been included under the bank 2017 Business Plan. However, this matter is still being reviewed at Ministry of State Owned Enterprises (SOEs).

PT Bank Central Asia Tbk (BCA) will also allocate the capital expenditure up to Rp 3 trillion to acquire the minor banks. “Aside of the acquisition, there is also development plan,” said Corporate Secretary of BCA Jan Hendra.

Foreign Domination

In the next year, the trend of banking consolidation will likely be dominated with the acquisition of the local banks by foreign investors. At least, the authority will approve some merger and acquisition processes in 2017.

Recently, China Construction Bank (CCB) is still processing the merger between Bank Windu and Bank Anterdaerah (Bank Anda). Meanwhile, the South Korean investor Apro Financial is processing the merger of two banks, which have been acquired, namely Bank Andara and Bank Dinar.

“Next year, there will be another acquisition by a foreign investor and another merger of two banks,” Irwan said.

However, Irwan declined to specify the details. However, Irwan mentioned that the acquisition targets of local major banks and foreign investors are minor banks under the categories of Commercial Banks Group of Business Activities (BUKU) I and II, with the core capital as much as less than Rp 5 trillion.

Ahead of the end of this year, FSA has only approved the merger of Bank Shinhan Indonesia and Bank Centratama. (Muhammad Farid/translator

Reporter: Galvan Yudistira
Editor: Barratut Taqiyyah
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