Swedish Consulate –The Financial Services Authority (OJK) is actively promoting the consolidation of the Islamic banking industry in Indonesia to establish 2 to 3 major Islamic banks in terms of assets. As of the first half of 2024. PT Bank Syariah Indonesia Tbk (BSI) holds a dominant position in the Islamic banking sector, with assets totaling IDR 360.85 trillion.
Recent reports indicated that PT Bank Tabungan Negara (Persero) was nearing a challenge to BSI’s dominance. The state-owned bank had been considering spinning off its Islamic banking division to form a new Islamic bank. it was also exploring the acquisition of PT Bank Muamalat Indonesia Tbk (BMI). However, the acquisition plan was subsequently canceled. New reports suggest that BTN Syariah is now considering acquiring PT Bank Victoria Syariah (BVS). Which had assets valued at IDR 3.12 trillion as of May 2024.
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OJK Does not Intend to Force Domestic Islamic Banks
Deden Firman Hendarsyah, Head of the OJK’s Sharia Banking Department. Stated that OJK does not intend to force domestic Islamic banks into consolidation. He acknowledged that the process of consolidation is challenging. Requiring a business-to-business approach and careful consideration of the future business model.
“If a bank decides to consolidate, we will facilitate and support it,” Deden said in Jakarta on Friday, August 23, 2024. “Ultimately, it is up to the bank to choose its partner and the desired synergy.”
Deden highlighted the significant progress made by BSI. The 2021 merger of Bank Syariah Mandiri, BNI Syariah, and BRI Syariah resulted in assets of around IDR 240 trillion. BSI’s assets have since grown by approximately IDR 120 trillion.
“There is organic growth resulting from the synergy achieved through the merger,” he added.
He explained that the OJK Regulation (POJK) empowers the authority to request banks to consolidate if their Sharia Business Units (UUS) are not growing or showing development.
“In any case, UUS should be part of a single entity. When a spin-off occurs, the result is a new bank that is a subsidiary of the parent company. There are regulations stipulating that the spun-off bank must have a minimum capital of IDR 1 trillion,” he said.
