Banks are becoming hot property in Southeast Asia's most populous country. finews.asia looks at why, and who is hunting.
The pattern of north Asian institutions hunting for assets in the southeast continues apace, with news that state-owned Industrial Bank of Korea is set to buy Indonesian lender Bank Agris.
The Seoul-based acquirer is known to have trawled throughout Southeast Asia looking for an acquisition, in an bid to become a bigger financial player in the region, and especially Indonesia, according to a report in «The Korean Herald» last year.
Stagnant Home Markets
Why? With a population of more than 260 million and a burgeoning middle class, Indonesia is pulling in banks and financial services firms, especially from more mature North Asian markets. But buying into Indonesia's financial sector is not easy due to stringent requirements and red tape.
Japanese lenders facing a rapidly ageing and decreasing domestic market are among the most ambitious suitors. Mitsubishi UFJ is in the process of purchasing a 40 percent stake in Indonesia's Bank Danamon for around $1.75 billion, as finews.asia reported. Four years ago, Sumitomo Mitsui Financial Group shelled out $1.32 billion to purchase 40 percent of mid-sized Indonesian lender PT Bank Tabungan Pensiunan Nasional.
Too Close For Comfort
»A lot of international banks are intending to come to Indonesia, the reason is that we have a big market here and we have a large population, we have rich natural resources, we are happy to entertain them,» Wimboh Santoso, head of Indonesia's financial services authority’s said to «Bloomberg» in a recent interview.
Transactions are not always warmly welcomed however. In 2013, DBS looked set to buy a controlling stake in Bank Danamon from Singapore's wealth fund Temasek Holdings, a major shareholder. DBS eventually had to back off after Indonesia changed regulations and restricted single ownership in domestic banks to 40 percent.
