ownership limit on banks in indonesia
Last Updated : GMT 11:25:12
Arab Today, arab today
Arab Today, arab today

Ownership limit on banks in Indonesia

Arab Today, arab today

Arab Today, arab today Ownership limit on banks in Indonesia

Jakarta - Arabstoday

Indonesia is the only emerging market in Asia with almost no ownership limits on banks and last month’s surprise announcement by the central bank that it is considering them has thrown a spanner in the works of many foreign banks and private equity funds who are eager to ride the nation’s economic boom.Banks, including HSBC, Standard Chartered, Barclays and Bank of Tokyo Mitsubishi have grown in Indonesia through acquisitions. Some buyers have paid more than 4 times price-to-book value (P/B), with an eye on long-term returns. The buys look to be slowly paying off, as the banks have been reporting robust financial results and share price gains, pushing up their valuations. Indonesia’s top eight banks on average trade at a price-to-earnings ratio of 11 for 2012, compared with the Asian average of 9.7 times, according to CLSA. “This is the No. 1 talking point among our clients,” said one Hong Kong-based investment banker, who advises banks on M&A, referring to the proposal. “This will nearly bring all dealmaking to a grinding halt,” the banker added. There are 122 commercial banks, and the top 10 control about 66 per cent of bank assets, CLSA estimates, making it one of Asia’s most fragmented markets.The government is yet to decide the limits, but the expectation is that no single entity will be allowed to hold more than 50 per cent. It is widely believed that the government banks will be exempt from the new restrictions. Some foreign investors may not be forced into immediate divestitures by the implementation of the new rules, since they own less than 50 per cent stakes. StanChart, for instance, owns 44.5 per cent of Bank Permata, and Australia and New Zealand Banking owns 39.2 per cent of Bank Panin. But the rules would signal the end of any ambitions the two banks had to get controlling stakes in the Indonesian lenders.  Indonesia’s planned ownership limits on lenders will stall much-needed consolidation in one of Asia’s most fragmented banking markets and may slow foreign direct investment into Southeast Asia’s biggest economy. As HSBC Plc and other foreign investors face the prospect of cutting their Indonesian bank stakes to comply with the new rules, government-run lenders, which are likely to be exempt from them, are bracing themselves for windfall buys. “If you get to a situation where Indonesia decides that all foreign investors need to dilute down to sub-50 per cent, obviously that will be a blow,” said Piyush Gupta, chief executive of DBS Group , Singapore’s biggest bank.  Eight of Indonesia’s top 11 banks by market value are either controlled by foreign banks, business families, private equity or wealth funds. Already, the planned sale of a controlling stake in unlisted PT Bank Muamalat was pulled, with bankers blaming it on the uncertainty surrounding ownership limits. “This would have impact on Indonesia’s FDI aspirations. They will be very thoughtful before they go down that path,” DBS’s Gupta said. Indonesia, with a population of 240 million, is on track to attract its highest ever FDI in 2011, thanks largely to investor-friendly policies and political stability. The country needs  more foreign capital to improve its creaky infrastructure. Foreign lenders control about 27 per cent of Indonesia’s outstanding loans and they are keen to expand their presence as the returns are juicy. On average, the Indonesian banks offer 19.9 per cent return on equity and earn net interest margin of 7.15 per cent, both highest in Asia, according to CLSA estimates. In return, foreign banks have improved the overall risk management and launched the latest technology, enhancing the overall banking experience for customers, analysts say. “Lack of control will reduce foreign banks’ incentive and capacity to get actively involved in driving strategic decisions, transferring risk management know-how or provide extraordinary support,” said S&P credit analyst Geeta Chugh.   From / Gulf today

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

ownership limit on banks in indonesia ownership limit on banks in indonesia

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

ownership limit on banks in indonesia ownership limit on banks in indonesia

 



Arab Today, arab today
Arab Today, arab today Jordanian woman reveals her project

GMT 00:46 2017 Saturday ,11 November

Jordanian woman reveals her project
Arab Today, arab today Air China suspends flights to North Korea

GMT 10:39 2017 Thursday ,23 November

Air China suspends flights to North Korea
Arab Today, arab today Sophian Yussef reveals suitable decoration

GMT 02:56 2017 Thursday ,23 November

Sophian Yussef reveals suitable decoration
Arab Today, arab today Syria opposition meets in Riyadh

GMT 06:23 2017 Thursday ,23 November

Syria opposition meets in Riyadh
Arab Today, arab today 'Advanced' cyber attack targets Saudi Arabia

GMT 10:18 2017 Wednesday ,22 November

'Advanced' cyber attack targets Saudi Arabia
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Australian academic's book pulled

GMT 15:20 2017 Monday ,13 November

Australian academic's book pulled
Arab Today, arab today Srebrenica women cry tears of joy

GMT 08:03 2017 Thursday ,23 November

Srebrenica women cry tears of joy
Arab Today, arab today Delhi half-marathon to go ahead

GMT 03:51 2017 Saturday ,18 November

Delhi half-marathon to go ahead
Arab Today, arab today The history of solar eclipses

GMT 05:16 2017 Sunday ,20 August

The history of solar eclipses
Arab Today, arab today 'Robo-taxis' hold promise, and perils

GMT 08:07 2017 Thursday ,23 November

'Robo-taxis' hold promise, and perils
Arab Today, arab today Honda recalls 800,000 minivans

GMT 11:43 2017 Wednesday ,22 November

Honda recalls 800,000 minivans
Arab Today, arab today Singer Jahda Wahba has unlimited ambitions

GMT 07:56 2017 Monday ,20 November

Singer Jahda Wahba has unlimited ambitions
Arab Today, arab today paObama climate envoy slams Trump's rejection

GMT 16:04 2017 Friday ,17 November

paObama climate envoy slams Trump's rejection

GMT 09:23 2017 Saturday ,18 November

Fedra happy for “Between Two Worlds” success

GMT 02:14 2017 Saturday ,18 November

May under Brexit pressure at EU reform summit

GMT 18:41 2017 Friday ,20 October

Designer Aql Faqih aspires to innovation

GMT 11:38 2017 Wednesday ,15 November

Unloved vultures fight for their survival

GMT 17:52 2017 Sunday ,03 September

Etiquette expert underlines importance of gifts

GMT 10:43 2017 Wednesday ,22 November

Cigar-shaped asteroid came

GMT 09:45 2017 Tuesday ,21 November

Visit Jamaica for more than just sun

GMT 17:12 2017 Monday ,07 August

Al-Shawaifi reveals secrets of total solar eclipse

GMT 16:53 2017 Tuesday ,05 September

Youssra depended on colored foam
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday