Indonesia Announces New Bank Ownership Rules

Jakarta Globe, July 18, 2012

This file photo taken in Jakarta on April 27, 2012 shows a Bank Danamon
 employee (L) serving a client in Jakarta. Indonesia's central bank announced
 new regulations limiting bank ownership to 40 percent on July 18. (AFP
 Photo/ Adek Berry)

               

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Indonesia’s central bank Wednesday announced new regulations limiting bank ownership to 40 percent.

The new rules limit ownership of new acquisitions by financial institutions to 40 percent, non-financial institutions to 30 percent and families or individuals to 20 percent, said Mulya Effendi Siregar, an executive director at Bank Indonesia (BI), the country’s central bank.

“The ownership of commercial bank shares will apply to foreign and domestic banks to improve the health of banks,” he said.

The bank said on its website that under new rules, financial institutions can own more than 40 percent of a domestic commercial bank only under specific criteria and approval from BI.

BI said the rules went into effect on July 13, and that state-owned banks and banks undergoing recovery are exempt.

The bank said in April it would issue new ownership regulations after DBS Group of Singapore made a $7.3 billion bid to acquire Bank Danamon Indonesia, the nation’s fifth-largest bank.

BI declined to approve that deal, saying it would have to wait until new rules on foreign ownership are in place.

It was unclear immediately following the announcement whether the new rules would permit the takeover or not.

The new rules replace regulations that allowed local and foreign investors to own up to 99 percent of Indonesian banks.

Agence France-Presse

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