IslamicFinance.de

Indonesia seems to push ahead with its plans to create a new $8bn Islamic bank that would mainly arise from the merger of three large domestic Shariah-compliant lenders. According to the chairman of Indonesia’s Financial Services Authority, Muliaman Hadad, the merger between the Islamic finance units of government-controlled Bank Mandiri, Bank Rakyat Indonesia and Bank Negara Indonesia, as well as a small unit of Bank Tabungan Negara, could happen as early as this year. The idea behind the mega-merger is to create an Islamic banking institution that would be able to face the growing foreign competition, as well as to boost the currently quite small market share of Islamic finance in the country. The new Islamic mega-bank would also be a catalyst for new products for retail customers and businesses.

Indonesian authorities are pushing ahead with a plan to create an $8 billion Islamic megabank, even after a similar proposal fell through in Malaysia. A potential merger of the shariah-compliant units of government-controlled Bank Mandiri, Bank Rakyat Indonesia and Bank Negara Indonesia could happen as soon as this year, Financial Services Authority (OJK) chairman Muliaman Hadad said. Talks are ongoing with the State-Owned Enterprises Ministry, which first proposed the merger in May 2013. The megabank could help drive a quadrupling in Islamic banks’ market share to 20 percent by 2018, compared with 10 percent without it.