Two Major Banks Acquire Financing Firms, eyes Micro Lending

Image Credit : BCA website

JAKARTA (TheInsiderStories) – Two Indonesia’s major lenders, PT Bank Rakyat Indonesia Tbk (IDX: BBRI) and PT Bank Central Asia Tbk  (IDX: BBCA) have acquired two financing companies in a move to expand their credit growth into the area of small-medium enterprises (SMEs) segment.

State-owned lender BBRI spent Rp71.32 billion (US$5.28 million) to acquire 35 per cent stake in venture capital firm PT Bahana Artha Ventura, equal to 71,207 shares.

As BBRI and BAV are both controlled by the government through their stakes, the transaction is categorized as an ‘affiliate’ one, according to a letter of information disclosure in the Indonesia Stock Exchange (IDX) on Monday (27/11).

In the letter, Bank Rakyat Indonesia said that it had decided to acquire BAV to further increase the former’s financial inclusion in the SMEs segment, to be more involved in the development of non-monetary firms as targeted by the government and to step up the bank’s collaboration with financial technology startups.

“Choosing BAV as an investee is based on our common business focuses in the SMEs and is expected to help our synergies in the future,” the letter read.

With the transaction, BBRI has become BAV’s second-largest shareholder after state-owned financing firm PT Bahana Pembina Usaha Indonesia (BPUI) with 64.65 per cent. The remainder is owned by BPUI labor union’s cooperative.

Meanwhile BBCA is buying a 30 per cent stake shares of PT Central Santosa Finance (CSF) for Rp220 billion, or approximately $16.2 million

Referring to the information disclosure submitted to the IDX, Subur Tan, Director of BCA said the purchase is in line with the bank’s equity participation in CSF. In this regard, the acquisition is expected to strengthen the integration as well as to reset the direction of CSF strategy and business activities with Bank BCA.

Following the acquisition, the bank fully owns 100 per cent of CSF shares, divided into 75 percent owned directly by BBCA and the remaining 25 per cent owned by its subsidiary, PT BCA Finance.

As part of the National Strategy of Inclusion Finance launched in November 2016, the Ministry of Communications and Informatics is encouraging all sectors of the economy, including agriculture and fisheries, to grow and develop through the adoption of Information, Communication and Technology.

Indonesia President Joko Widodo has pledged to bring SMEs into the digital economy to stimulate business growth and boost employment. In August 2017, He signed the country’s e-commerce roadmap, which will be a guide for central and regional governments to establish policy and create action plans for the acceleration of e-commerce.

It assigns responsibilities and sets key targets to be achieved by government institutions over the next two years.

Written by Elisa Valenta, Email :