Indonesia delays deadline for single bank ownership

Telly Nathalia & Neil Chatterjee

Indonesia will delay an end-2010 deadline requiring investors to own only a single bank in Southeast Asia’s largest economy, giving the government more time to work out what to do with its stakes in four banks.

The policy, originally set for 2008 but pushed back several times already, forced Singapore state fund Temasek to sell a stake in one of its two banks in Indonesia, and could bring about management changes at state-owned banks, officials have said.

The government owns controlling stakes in four major banks, including 66 percent of Bank Mandiri, 56 percent of Bank Rakyat Indonesia, 76 percent of PT Bank Negara Indonesia and 73 percent of the recently listed PT Bank Tabungan Negara.

The policy from the central bank requires all banks that share a major shareholder to merge, divest or create a single holding company.

Said Didu, secretary of the state enterprises ministry, did not give a new deadline for the policy, which aims to consolidate the banking sector and help improve transparency.

Didu said the government had to make the right moves over state-owned banks because any wrong decision could affect the banking system and the economy.

“We need to draft and do deep research about it, about its impact for state-owned banks,” Didu told Reuters on Tuesday.

Singapore’s state investor Temasek, which still owns 68 percent of Indonesia’s PT Bank Danamon, sold its majority stake in Bank International Indonesia to Malaysia’s Maybank in 2008 because of the policy.

Temasek profited from the deal, but investors have been pouring into Indonesian markets in the past year to get exposure to Southeast Asia’s strongest growth, a surge in the stock market and a buoyant rupiah.

Fitch Ratings gave the country a vote of confidence on Monday, upgrading its sovereign rating.

The policy also led to the 2008 merger of Bank Niaga and PT Bank Lippo Tbk to form CIMB Niaga.

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