Indonesia wants to merge top lender BRI with 2 state firms

STATE OWNED ENTERPRISE - JAKARTA. Indonesia's state-owned enterprises minister said on Wednesday the government is looking to merge state-controlled Bank Rakyat Indonesia (BRI) with two state financial firms in June, but the bank's CEO said a final decision on that was still pending.

BRI, the country's largest lender by assets, will be merged with pawnshop chain Pegadaian and Permodalan Nasional Madani (PNM), a financing firm focusing on micro businesses, SOE Minister Erick Thohir told an economic forum hosted by CNBC Indonesia.

"We had a meeting with BRI yesterday and I want to make sure in June there will be an extraordinary merger between BRI, PNM and Pegadaian," he said.

"This is so that there is no overlapping and BRI will be an extraordinary bank. Go buy its shares," he said.

BRI Chief Executive Sunarso, speaking on the sidelines of the forum, however, said the structure of any combination was not decided yet.

"We're tasked to synergise our works, but we're still discussing in what form," he told reporters, adding that cooperation between outlets and networks in the three companies was another option besides a merger.

The government has set a target to make a final decision by June, said Sunarso, who goes by one name.

Thohir has said he wants to cut back the number of state companies from about 140 by merging or closing underperforming firms and their units, to improve profitability.

The government owns a 57.3% stake in BRI, whose loan portfolio is dominated by financing for micro, small and medium enterprises. Pegadaian and PNM are fully owned by the state.

BRI shares were down 0.4% as of 0750 GMT on Wednesday, compared with a nearly 1.5% drop in the main index. They are up around 2% so far in 2020.