01 June 2012
Indonesia's new regulation on 40% limit on foreign ownership of Indonesian Banks will only hold for new initiatives and new investments, no retroactive regulation on existing investments - Central bank deputy governor Halim Alamsyah
Indonesia’s 40pc single ownership restriction to affect only new investors
IT looks like the country's top two banks, Malayan Banking Bhd (Maybank) and CIMB Group, can heave a sigh of relief as they won't be subject to Indonesia's proposed new rules on bank ownership.
Reuters reported late yesterday that the Indonesian central bank planned to limit single ownership in its banks to 40 per cent, but only for new investments.
"This new regulation will only hold for new initiatives, new investments... there will not be a retroactive regulation," Halim Alamsyah, the central bank deputy governor responsible for banking supervision, told analysts on a conference call, the news wire said.
This means that Maybank and CIMB get to keep their controlling stakes in their respective banks in that country.
CIMB owns 97.9 per cent of CIMB Niaga, while Maybank owns 97 per cent of Bank Internasional Indonesia (BII).
Having to sell down their stakes would have hurt their prospects in the world's most populous Muslim nation, where the banking penetration rates - particularly Islamic banking - are very low and the sector offers high growth potential.
CIMB Niaga accounts for about a third of CIMB's pre-tax profit while BII accounts for under five per cent of Maybank's earnings.
Indonesia had been mulling a change in the ownership rules since last year.
Analysts have said the issue has held back the upside potential of the share prices of Maybank and CIMB.
Yesterday was the first time Bank Indonesia officially announced details of its proposed cap on bank ownership.
Alamsyah was reported to have said the proposal would allow individuals or families to own only up to 30 per cent of local banks, while financial institutions would be able to own up to a maximum of 40 per cent.
Currently, investors can own up to 99 per cent of local banks.
Bank Indonesia, the industry regulator, does not need parliamentary approval for capping foreign stakes in banks, according to Reuters.
The new move upsets Singapore bank DBS' plan to buy a 67.4 per cent stake held by Temasek Holdings in Indonesia's Bank Danamon for US$7.2 billion (RM22.84 billion).
Other Malaysian banks could also be caught by the proposed change in regulation.
RHB Capital Bhd, for instance, has been wanting to buy 80 per cent of a small Medan-based lender, PT Bank Mestika Dharma, for some RM1.16 billion since October 2009.
Affin Holdings Bhd, too, could be affected as it is keen to pursue its earlier interest of a controlling stake in PT Bank Ina Perdana.
Maybank's shares, which have added 1.9 per cent so far this year, lagging the FBM KLCI's 3.3 per cent gain, rose by five sen to RM8.75 yesterday.
CIMB's shares, which have gained 0.8 per cent so far, added one sen to RM7.50.
RHBCap's shares last traded three sen higher to RM7.43 while Affin's were unchanged at RM3.07.