IslamicFinance.de

Indonesia's planned merger of three state-owned Islamic banks will create an entity with scale comparable with the biggest local lenders. The proposed merger between Bank BRIsyariah, Bank Syariah Mandiri and Bank BNI Syariah will create an entity with between 220 trillion rupiah and 225 trillion rupiah in assets. Bank BRIsyariah will be the final entity after the merger, expected to be completed by February 2021. It will be Indonesia's seventh or eighth biggest bank by assets. Analysts expect more M&A activity within the Indonesian banking space, mainly for smaller banks to remain competitive. Currently, the nation's biggest banks are Bank Central Asia, Bank Mandiri, Bank Rakyat Indonesia and Bank Negara Indonesia.

Banks in the Arabian Gulf could be forced to scrap 2020 dividends as profits plunge in 2020 due to the coronavirus pandemic. The region's lenders are unlikely to require additional capital should loan defaults soar, despite facing headwinds related to the impact of COVID-19 and lower oil prices. According to S&P Global Ratings, the 23 banks in the Gulf Cooperation Council (GCC) have assets totaling $1.5 trillion at 2019-end and can absorb up to $36 billion in extra provisions before their capital bases start to erode. S&P sees that a significant deterioration in the finances of some banks could spur a second wave of consolidation among Gulf lenders. However, bank analysts are more skeptical, citing a lack of plausible potential takeover targets in Gulf countries except for the UAE, which is still overbanked.