Race is on It looks like the race to acquire a chunk of Indonesia’s Bank Muamalat is narrowing, with British
bank Standard Chartered apparently in pole position.
bank Standard Chartered apparently in pole position.
Bank Muamalat was Indonesia’s first Shari’ah compliant bank, starting operations in 1992. It now serves about three million customers in Indonesia and Malaysia and had piqued the interest of Qatar’s largest Islamic bank, Qatar Islamic Bank and local operator Bank Mega, as well as Standard Chartered because of its strategic positioning in what many analysts regard as one of the most significant Islamic banking markets of the future. (source)
According to press reports, QIB, Bank Mega, owned by Indonesia’s Para Group and Standard Chartered all submitted second round bids for a 51% stake in the bank after Bank Muamalat’s three largest shareholders, the Islamic Development Bank, Boubyan Bank of Kuwait and Saudi Arabia’s Atwill Holdings put part of
their holdings on the block. In total this group of shareholders controls about 75.5% of Bank Muamalat.
Standard Chartered obviously rates the prospects of the Indonesian Islamic market highly, as it already owns 45% of local operator, Bank Permata and when its consortium of Permata, and rival Bank Mandiri
dropped out of the bidding, the British bank decided to go it alone; a move that could cost up to $300m. It was speculated that other possible bidders in the process were Bank Danamon, owned by Singapore sovereign wealth fund Temasek, the Indonesian Bank Tabungan Pensiunan Nasional, owned by US private equity shop Texas Pacific Group and Malaysia’s BIMB.
When The Islamic Globe contacted Afaq Khan, Chief Executive Officer, Islamic Banking, Standard Chartered Saadiq, he said that he was not able to comment on the speculation. QIB and Bank Mega did not return our calls and IDB, Boubyan and Atwill were unavailable for comment.
Standard Chartered’s standalone move caught many analysts on the hop, and it also raises the question as to the future of Permata. Will Standard Chartered try to consolidate its Shari’ah banking holdings in Indonesia by rolling Permata into Bank Muamalat if it wins the auction, or run them as two separate operations? As one
local banking analyst Joseph Pangaribuan of Samuel Sekuritas said to The Jakarta Globe: “It was a surprise move.”
Bank Muamalat, in its current guise, would be a good acquisition for any bank wanting to gain more than a toe-hold in the nascent Islamic banking sector in the world’s most populous Muslim nation. The government
of Indonesia recently targeted an increase in Shari’ah compliant banking assets of 35% this year and is sending a high-level outreach delegation to the GCC – primarily Saudi Arabia and Kuwait – to attract
inward investment.
It was reported that Bahrain’s biggest publicly traded bank, Albaraka was looking to make an acquisition in
Indonesia and could invest up to $100m in the country and Qatar National Bank, the country’s biggest bank, bought 69.6% of conventional bank, Bank Kesawan, in January.
Currently Indonesia has one-tenth of the Islamic banking assets of close neighbor Malaysia, despite
having more than eight times the population, and the Indonesian government is keen to divert some of the
funds headed to Malaysia to Indonesia instead. At the moment there are 11 Shari’ah compliant banks in the country, controlling a combined total of IDR97.5tr ($11.3bn) in assets, which is about 3.3% of total
assets in banking sector, as at the end of 2010.
Bank Muamalat Indonesia reported earnings IDR222bn ($25.9m) for 2010 and has forecasted profits of IDR350bn ($40.8m) for 2011, an increase of 57.7%.
Although Standard Chartered has nosed ahead in runnings, there is still time for the other hopeful bidders to come back to Bank Muamalat’s principal shareholder with a counteroffer in a saga that could run through the summer.
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