Friday, October 06, 2006

Single Presence Policy & Bank Consolidation Sweeteners

Indonesia Central Bank had issued two important decrees that would accelerate consolidation in the banking industry. The first, Bank Indonesia Regulation No.8/16 on single presence policy and the second, BI Reg No.8/17 on incentive packages for bank consolidation. Which banks should merge under the new policy? What's happen to state-owned banks? How about foreign-owned banks? Small banks? What are the sweeteners?

Exerpts from SPP according to BI Reg No.8/16 are as follows:
1) Parties could only be controlling shareholder in one bank, except
(a) Controlling shareholders of two banks with different banking principles, ie, conventional and sharia. Banks fall into the category are Bank Mega with Bank Syariah Mega or Bank Mandiri with Bank Syariah Mandiri, etc
(b) Controlling shareholder in two banks in which one of them is a joint venture bank. Like in the case of Standard Chartered and Bank Permata (JV between Stanchart and Astra Group), or branches of foreign banks
(c) bank holding company established by controlling shareholder to control and manage directly the shareholdings in more than one bank,

2) There are options for those who controls more than one bank:
(a) Divest shares partly or in full,
(b) merger
(c) establish a bank holding company by establishing new company as the holding company or appoint one of the banks as holding company.
3) The bank holding company should be a company registered under Indonesian law.

What are the sweeteners for those who want to consolidate their banking business?
WRITING IN PROGRESS

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1 Comments:

Blogger Mark said...

HELLO, IT'S MY FIRST TIME TO BE BLOGGER. GOOD TO SEE U GUYS.

October 10, 2006 6:10 PM  

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