Bank Association Urges Mergers of Local Banks
Wednesday, 13 December, 2006 | 16:21 WIB

TEMPO Interactive, Jakarta: The National Bank Association (Perbanas) will urge local banks to merge instead of offering their shares to foreign banks.

Nevertheless, according to Head of Perbanas Sigit Pramono, the mergers must be carried out based on purely business or commercial considerations.

“Therefore, merger processes will run more uninterruptedly,” he said yesterday (12/12) in Jakarta.

Sigit's call was made as a response to foreign banks' being more active in acquiring local banks.

For instance, Commonwealth Bank (Australia) acquired PT Bank Artha Niaga Kentjana Tbk and Bank of India bought PT Bank Swadesi on Monday (12/11).

The sales were carried out in regard to banking consolidation and the obligation for meeting minimum capitalization of Rp80 billion by the end of 2007 and Rp100 billion by 2010.

Dradjad H. Wibowo, an economist who is also member of Finance and Banking Commission at the House of Representatives, said that the high domination of foreign ownership over local banks was already worrying.

As a result, the network of customers and banking business as well as fund traffic of the intermediatory function will be more controlled by foreigners automatically.

“This may complicate the revitalization of manufacturing companies in Indonesia,” he said.

Suryani Ika Sari