JAKARTA: The meeting of Board of Governors of Bank Indonesia is
finalizing the regulation that will limit the ownership in banks. Still,
there is no specified date when it will take effect.
The central bank has been reviewing the possibility to limit the ownership in banks at maximum 50%, or maybe less, to avoid single presence in a bank. (source)
The central bank has been reviewing the possibility to limit the ownership in banks at maximum 50%, or maybe less, to avoid single presence in a bank. (source)
“However, it is still being discussed by the technical team. As usual, there are many things to be considered and synchronized,” said Difi A. Johansyah, Public Relations Bureau Head at Bank Indonesia.
The statement has indirectly rebuffed Citigroup’s article titled Indonesia Equity Strategy: Still Bullish on the Structural Story – Marketing Feedback, which was published on Tuesday.
The article says that such limitation on Indonesian bank ownership is impossible to apply, quoting the result of a meeting between investors, including Citigroup, with a deputy governor of the central bank.
Citigroup in the article also views that the plan on limiting bank ownership is a backward step for reformation development in Indonesia.
Investors’ curiosity
Difi admitted that some foreign investors, including those from Malaysia and Singapore, are curious about the plan of limiting bank ownership. He added that the central bank would apply the regulation not only to foreign banks, or foreign investors.
“We announce that the regulation will apply to all banks operating in Indonesia. So the limitation is not only for foreign, all get the same treatment,” he affirmed.
However, he could not tell whether the regulation will take effect by this year, as there are some other regulations needed immediately.
“We have the draft regulation on card payment, regulation on outsourcing, and regulation on wealth management. They are also in progress,” he said.
Bank Indonesia at early August proposed the plan of limiting bank ownership to President Susilo Bambang Yudhoyono at a cabinet meeting. The Head of State in fact gave positive signal towards the plan.
It is reported that the central bank is considering the limit of bank ownership, either 30% or 40%. It has also been mentioned that the limit is not more than 50%.
Should the regulation take effective, bank shareholders having over-the-limit stake must divest within a certain period. (T04/NOM)
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