New regulations stifle BCAs expansion plans
(10 March 2016 – Indonesia) Bank Central Asia (BCA), Indonesia biggest bank by market value, has announced that it will not move forward with some expansion plans this year following a news of a regulatory measures that will lower banks' margins.
The Indonesian government is aiming to lower banks' lending rate for companies to nine percent (from an average of 12 percent) by the end of this year, including by capping the maximum rate banks pay for savings.
BCA President Director Jahja Setiaatmadja said the move will can pressure banks' margins.
"In a situation when [lending] rate is falling, it means margin is decreasing. We have to be more efficient in the sense that expansion ambition must be reduced," Setiaatmadja told Reuters.
Setiaatmadja added that the bank had planned to add 40 new branches and 2,700 ATMs this year but may have to halve the number of branches, and limit news ATMs to 1,700 as a result of the margin squeeze.
BCA is still in the process of acquiring two small banks this year as funding has been earmarked since 2014, he said.
The two banks will cater to a niche market that BCA does not serve under a "cheaper and more accessible brand", he said.
"Maybe we will start to look around in June.”
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