Thu 15 October 2020:
Indonesia, home to the world’s largest Muslim population, has sought to form a mega Islamic bank since at least 2015, taking on an earlier plan shelved by Malaysia, which has the largest Shariah-compliant capital market in the world.
The BRI Syariah, the Islamic unit of Bank Rakyat Indonesia, is set to become Indonesia’s biggest Islamic lender as it has signed a conditional merger deal with rivals BNI Syariah and Bank Syariah Mandiri.
Handi Risza, an economist from Paramadina University in the capital Jakarta, said the merger of three sharia banks is a proposal floated years ago, which would boost the growth of halal industry in the Southeast Asian country.
Risza said the growing halal industry, including tourism, fashion, and food and beverages, needs major financing from Islamic banks.
The new Islamic bank would have a lending capacity of up to Rp160 trillion ($10.8 billion), and would continue to rise with capital inflows from the government, he said.
“The merger process has entered an initial agreement,” said Hery Gunardi, head of the merger team, in a virtual conference on Tuesday.
The move could be a precursor to more bank mergers in Southeast Asia’s biggest economy where smaller lenders have been hit hard by the coronavirus pandemic, some analysts said.
It will later enter the announcement stage, and request a permit from the Financial Services Authority and others, he said, adding that all procedures will be completed by February 2021.
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