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Indonesia's Bank Agris to be acquired by Industrial Bank of Korea

Indonesia’s Bank Agris to be acquired by Industrial Bank of Korea

(5 February 2018 – Asia) Industrial Bank of Korea (IBK) is planning to acquire a majority stake in Indonesia's Bank Agris, the two lenders have announced.

According to a statement from Bank Agris, the state-run South Korean lender plans to buy an 87.3 percent stake from an investment vehicle controlled by Benjamin Jiaravanon, a member of the founding family of Thai conglomerate Charoen Pokphand Group (CP), as well as from minority shareholders.

While Bank Agris is owned by a member of the family behind CP, its business is "not directly affiliated [with the group]," said a spokesperson for the bank. The deal was confirmed by IBK.  

The Jakarta-based lender has both retail and commercial operations, and mainly provides small loans to poultry farmers and fishermen. It has more than 20 offices across the country and had 4.06 trillion rupiah (A$385 million) in assets as of 2016. 

IBK is a mid-sized lender whose business areas include banking and securities. It mainly caters to small and medium-sized enterprises and has expanded its retail operations over the last decade.

According to the bank, the acquisition is part of a strategy to expand across the Southeast Asia region. It currently has offices in China, India, New York, London as well as most of Southeast Asia.

Accepting IBK as majority shareholder would help “strengthen capital, increase access to domestic and international funding and transfer technology,” Bank Agris said.

The Indonesian government caps foreign ownership of banks at 40 percent, however that can be raised subject to the approval of the Financial Services Authority. 

A spokesperson for Bank Agris said it expects to obtain regulatory and shareholder approval by May and the transaction to be completed in June.

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