www.theindonesiatoday.com -JAKARTA, Indonesia Today - Central bank, Bank Indonesia
(BI), will not only restrict the ownership in banks with certain good
corporate governance (GCG) standars, but also strictly select the
foreign investors in controlling the local bank, Bisnis.com reported.
Mulya Siregar, executive director for banking research and management
department at Bank Indonesia, told in media briefin Tuesday night (June
12) that the strict selection is based on two considerations; first,
difficult to know foreign investors' performance or track record and
second, difficult to know foreign investors' source of funds. (source)
He said BI will implement 2 criteria for foreign investors that intend
to control local banks; first, foreign investors is required to
contribute to national economy and second, foreign investors must be the
financial institution including bank with minimum BBB+ rating. While
non financial institution must have minimum A rating.
Currently, investors both foreign and domestic, can own up to 99% shares in bank.
Under new BI regulation, the owners such as bank and financial
institutions will be allowed to own 40% ownership in local bank while
non financial institutions are allowed to hold 30% interest. Meanwhile,
the individual owner is allowed to own 20% shares in bank.
This restriction is common as other countries in Asia also implement the restriction on bank ownership. In SINGAPORE, foreign ownership in bank is restricted at maximum 25%, while Vietnam and Malaysia allow maximum 30% ownership. Other countries also limit the foreign ownership in domestic banks.
In Korea, the financial institutions are only allowed to own 10%
interest in domestic banks. Australia does not implement the ownership
restriction but 4 largest banks are prohibited to acquire each other,
aiming for competition among the banks. (hans@theindonesiatoday.com)
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