Indonesia encouraging small banks into M&As
(25 October 2012 – Indonesia) The governor of Bank Indonesia (BI), Darmin Nasution is encouraging smaller banks with weak capital to open their doors to mergers and acquisitions.
Many of the small banks that Nasution was addressing are reluctant to take merger and acquisition measures on fears that such consolidation would affect the ownership of their founders.
"The small banks are often selfish. They are not willing to perform mergers," Darmin said.
"If small banks are facing difficulties with their capital, then they should merge with other banks."
Supervision of the banking industry is generally difficult in Indonesia with 120 commercial banks operating in the country.
"Truthfully speaking, our banking industry is too diversified, a problem that was solved by our neighbouring countries in the 1998-1999 by building banking consolidation," explained Darmin.
He added that too much diversification in the banking industry made some of BI’s regulations difficult to implement or ineffective.
At present, Indonesia’s 10 largest banks, including Bank Central Asia, Bank Mandiri, Bank Rakyat Indonesia, Bank Negara Indonesia, CIMB Niaga and Bank Danamon, control about 60 percent of the banking industry’s total assets, which reached RP3,652 trillion or A$369 billion as of January, this year.
"The small banks are often selfish. They are not willing to perform mergers," Darmin said.
"If small banks are facing difficulties with their capital, then they should merge with other banks."
Supervision of the banking industry is generally difficult in Indonesia with 120 commercial banks operating in the country.
"Truthfully speaking, our banking industry is too diversified, a problem that was solved by our neighbouring countries in the 1998-1999 by building banking consolidation," explained Darmin.
He added that too much diversification in the banking industry made some of BI’s regulations difficult to implement or ineffective.
At present, Indonesia’s 10 largest banks, including Bank Central Asia, Bank Mandiri, Bank Rakyat Indonesia, Bank Negara Indonesia, CIMB Niaga and Bank Danamon, control about 60 percent of the banking industry’s total assets, which reached RP3,652 trillion or A$369 billion as of January, this year.
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