Bank Ownership Will Be Limited To Less Than 50%

"Landep News"

The Indonesian Central Bank Governor Darmin Nasution said the regulation limiting majority share ownership for national banks will be issued later this year.

“The process is already running and because of this important policy we want the communication not only with the public at the preparations time are well established, we also want communication within the government. Because although this is pretty fundamental. But the process is running,” Nasution said in Jakarta, Friday.

Bank Ownership Will Be Limited To Less Than 50%

Although did not specifically mention the share ownership limit on ownership determined, Nasution said the bank’s shareholders will not be allowed to own more than 50% of the bank shares.

“I do not really want to say, but certainly below 50 percent. There must be a transition period. Do not speculate,” he said.

He said BI will in time communicate this policy to the bankers after the preparation has been completed. “Yes, sometimes this year,” he added.

The Chairman of the Indonesian National Commercial Banks Association (Perbanas) however, disagreed with the Central Bank plan to restrict the individual ownership of banks. He argued that if an individual are only allowed to hold shares no more than 50%, then they would reduce their holdings by selling shares.

“If they sell it then the most likely buyer will be foreign party,” said Perbanas Chairman Sigit Pramono at the Hotel Kempinski, Jakarta, Thursday (23 / 6).

Sigit asserted, rather than restricting individual ownership, the government should instead focusing on foreign ownership limitation as the core issues in the Indonesian banking sector is not the ownership structure.

The current banking ownership regulation that allows foreign shareholdings as high as 99% is very liberal compare to other countries. China for example allows only maximum of 25% foreign ownership in any financial institution in the country.

“If we look at developments in banking sector, it has been very good. Which means, there is no problem with ownership,” he added.

Perbanas do encourage the banking industry to be more active entering the capital market. “Because in the capital markets, the people can easily monitor the progress, so it will be more transparent,” he said.

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