Another Holding Company in the Works – SOEs on the Move

JAKARTA (TheInsiderStories) – Indonesia’s State-Owned Enterprises (SOEs) Ministry is targeting to set up its own financial services holding company by 2018. A Financial services holding company is one of the ‘holding master plans’ offered by the Government.

“Later, by 2018, it (the holding) will be finished,” said Gatot Trihargo, Deputy of SOE Ministry to The Insider Stories on Wednesday (20/9).

The holding company was planned to be in charge of four state-owned banks, namely, PT Bank Negara Indonesia Tbk (IDX: BBNI), PT Bank Tabungan Negara Tbk (IDX:BBTN), PT Bank Mandiri Tbk (IDX:BMRI), PT Bank Rakyat Indonesia Tbk (IDX:BBRI), and PT Pegadaian led by financial company PT Danareksa.

Consolidation through the establishment of the holding bank will basically not eliminate the entity of each bank. Government expects business must justify itself by delivering a number of strategic benefits and advantages. It is primarily an issue of optimizing existing assets and resources, better business efficiency and effectiveness.

The country’s banking regulator and the central bank have both been pushing for banks to merge, to shore up equity. The regulators want to halve the number of banks operating across the archipelago from around 120.

President Director of Bank Mandiri Kartika Wirjoatmodjo added that another benefit of the establishment of state-owned holding banks is that state banks can share infrastructure. He pointed out how it would be very good if the state-owned banks could have automated teller machines (ATMs) that can be used together.

The four banks have, under an Association of State-Owned Banks Association, already merged their ATM networks and set up a single switching company to manage the system.

While President Director of BNI Ahmad Baiquni is optimistic financial services holding overall assets can compete with the existing banks in ASEAN – nowadays only Bank Mandiri is listed as among the top five largest banks in ASEAN, as its assets reach Rp1,000 trillion or around US$750 billion.

“We want to be part of regional players and to achieve the top 10 as the biggest bank in ASEAN,” Baiquni explained.

The accumulated profits of state banks in the first half of this year managed to grow 24.1 percent on an annual basis (YoY). Through January-June 2017, four state banks reaped a net profit of Rp30.63 trillion, jumped from the previous year’s Rp24.69 trillion with total assets reaching Rp2,950 trillion, for an increase of 13.1 percent over last year.

Writing by Elisa Valenta, Email: