Indonesia reveals Islamic megabank plans
(17 June 2015 – Indonesia) The Indonesian government has revealed plans to create an Islamic megabank, following lenders in Malaysia and the Middle East abandoning their plans.
The government plans to merge the Shariah-compliant units of state-owned PT Bank Mandiri, PT Bank Negara Indonesia, PT Bank Rakyat Indonesia and PT Bank Tabungan Negara with paid-up capital of more than 15 trillion rupiah (A$1.5 billion) next year, Gatot Trihargo, deputy minister for government-run enterprises, told Bloomberg on 10 June in Jakarta.
Indonesia’s Financial Services Authority chairman Muliaman Hadad said in January that the plan could materialise this year.
In the Indonesian plan, the government will ask the four lenders to provide 5 trillion rupiah to 10 trillion rupiah of capital to their Shariah banking units before the planned merger, Trihargo said.
The combined entity will help manage about 70 trillion rupiah and this would be used to fund infrastructure projects, he said.
“Because of budget limitations, it’s hoped that the parents of the Shariah banks will inject capital,” said Trihargo.
The government also considered setting up a new state-controlled Islamic lender or converting an existing non-Islamic bank into a Shariah-compliant one.
The combined entity is expected to result in a quadrupling of Islamic banks’ share of total banking assets to 20 percent by 2018, compared with 10 percent without the merger, the Indonesia Islamic Banking Association said in February.
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