Indonesia wants top lender BRI, two state firms to work jointly: minister

BRI - JAKARTA. (This February 26 story has been refiled to correct throughout to reflect minister referring to synergies between the companies, not a merger.)

Indonesia’s state-owned enterprises minister said on Wednesday the government is looking at state-controlled Bank Rakyat Indonesia (BRI) working with two state financial firms by June to tap synergies and avoid overlaps.

BRI (BBRI.JK), the country’s largest lender by assets, will jointly work with pawnshop chain Pegadaian [PRPGD.UL] 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 extraordinary synergy 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 later told reporters: “We’re tasked to synergise our works, but we’re still discussing in what form.”

Options considered include cooperation between branches and networks in the three companies or a merger, he said.

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 .JKSE. They are up around 2% so far in 2020.