ANT, Robert Sidauruk
Agus Martowardojo, Governor of Bank Indonesia, believes that consolidation in Indonesia’s banking sector is one of the most effective measures that could be taken by the Government to strengthen the national banking industry.
A similar example can be seen in the recent mega merger in Malaysia, where CIMB—the second largest bank in Malaysia— merged with RHB Capital, and Malaysia Building Society.
“Just like Malaysia, bank consolidation is crucial for Indonesia to establish a firm and sound banking system to expand into markets in other ASEAN countries,” said Mr. Martowardojo, during fast-breaking at BI’s office in Jakarta on Monday.
In light of the 2015 ASEAN Economic Community (AEC), Mr. Martowardojo sees banking sector consolidation as homework that needs to be properly addressed. Through bank consolidation, he believes that Indonesian banks will have sufficient preparation to compete with other foreign banks once the AEC commences.
“It is hoped that through consolidation, Indonesia’s banks can play an important role among other ASEAN countries when the AEC starts,” said Mr. Martowardojo.
To follow up this matter further, Mr. Martowardojo contends that BI will provide macro-prudential analysis to the Financial Service Authority (OJK) on bank consolidation in the future. This analysis will be incorporated in a banking architecture plan, which will be subject to further revision by the OJK.
On a different occasion, Sigit Pramono, Chairman of the Indonesian Bank Association (PERBANAS) also indicated he sees bank consolidation as an urgent matter to be discussed by the next administration. To support the banking regulators—both BI and OJK—in realizing a strong banking industry, PERBANAS will submit a blueprint on national banking industry development.
Commenting on Malaysia’s recent mega merger, Mr. Pramono said that the Malaysian merger represents an intriguing development in the banking industry as the bank consolidations were implemented despite the economic challenges.
Through the mega merger, Malaysia will establish the fourth largest bank in South East Asia. While the merger will not affect Indonesia in the short term, Mr. Pramono believes that to a certain extent it will encourage
inorganic developmentbetween national banks.
“Malaysia has been consistently reducing the number of their banks. This is one of their strategies for the ASEAN free market,” concluded Mr. Pramono.
(hot/kc)