Indonesia is planning to ease regulations in a bid to encourage mergers in the banking industry and make it easy for foreign players to invest in local lenders.
As a part of the move, the country’s financial regulator OJK is set to issue a new revised regulation later this year.
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OJK chief banking supervisor Heru Kristiyana told Reuters that the regulator will revise the ‘single presence’ policy. The existing policy prevents a single investor from acquiring controlling interest in more than one bank.
The amended rule will enable an investor to acquire majority stake in any lender with less than IDR5trillion ($354.4m) in paid up capital.
The revised regulation will make no distinction between foreign or local investors.
Kristiyana was quoted by the news agency as saying: “This will open opportunities for big banks and foreign banks to consolidate.
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By GlobalData“These smaller banks, their capital is limited and their contribution (to the economy) is not optimal.”
However, the ‘single presence’ policy will continue to be applicable to any deal involving major banks.
Indonesia, which has more than 1,500 banks, is considering different avenues to encourage consolidation of the sector.
The ‘single presence’ policy, introduced in 2006, was one such move to push consolidation among local lenders.
However, the move was not effective to bring down bank numbers in the country.
According to Bloomberg, state-owned lenders dominate the Indonesian banking sector. Bank Rakyat tops the list in terms of assets, the publication added citing OJK data.
