Indonesia considers cap on foreign ownership of local banks
Indonesia is considering limits on foreign ownership of domestic banks at a time when private equity firms are keen to boost their exposure to the sector. Darmin Nasution, the central bank governor, said that the potential impact of the regulations is still being assessed with a view to finding a workable approach, Reuters reported.
At present, any investors - including foreigners - are permitted to own up to 99% of a local bank, although any single entity seeking to purchase a stake of 25% or more requires central bank approval. With loan growth of 20% a year and further consolidation expected in the sector, regulators are concerned that ownership could spiral out of control.
Temasek currently owns a 67.4% stake in Bank Danamon, Indonesia's sixth-largest lender, while TPG has a 59.7% interest in BTPN. It is unclear whether any restrictions on ownership could be implemented retroactively.
Banking section consolidation is prevalent throughout Southeast Asia, with both Maybank and CIMB conducting merger talks with Malaysia's RHB Capital in June. The banks ended their interest when Abu Dhabi-backed Aabar Investments agreed to pay MYR10.80-per-share - a premium on the most recent closing price - for a 25% stake in the Malaysian lender that had been put up for sale by Abu Dhabi Commercial Bank.
The Carlyle Group and TPG were previously touted as likely bidders for the RHB stake alongside Japan's Sumitomo Mitsui Banking Corporation.
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