ASEAN KEY DESTINATIONS
Bank Indonesia protects diversity
Bank Indonesia is evaluating a plan that would limit single ownership in a commercial bank, in a bid to improve corporate governance.
“The central bank is studying the idea,” central bank governor Darmin Nasution said on Friday.
Darmin made the comments in an effort to deny a Thursday report that BI had plans to block foreign investors from buying local banks. On that day, a BI official said the central bank would suspend issuing permits to purchase banks because it was preparing the new regulation, which it expects to complete by the end of this year.
“It does not have anything to do with limiting foreign investors,” Darmin said of the plan.
The governor said the proposal would affect ownership by both foreign and local investors. The policy is aimed at preventing a single investor dominating ownership of a local bank. Darmin said the policy could improve prudential practices.
Indonesia currently allows foreign lenders to hold a stake of up to 99 percent in a local lender. Indonesia’s banking system was liberalized under the International Monetary Fund to spur growth after the 1997 financial crisis, which led to the liquidation of about 80 banks.
Any single entity seeking to own more than 25 percent of a lender needs approval from the central bank. “This is really good for corporate governance,” Darmin said.
Any new rule would not be implemented retroactively, he said.
Among foreign companies owning large stakes in Indonesian banks, a joint venture between Singapore’s Temasek Holdings and Germany’s Deutsche Bank holds a 67.4 percent stake in Bank Danamon Indonesia. Texas Pacific Group controls 59.7 percent of Bank Tabungan Pensiunan Nasional.
Danamon shares rose 5 percent, or Rp 250, to close at Rp 5,350 on Friday. BTPN fell 1.3 percent to Rp 3,750.
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