BI Prepares Regulation on Bank Ownership Restriction
Monday, 30 May, 2011 | 14:22 WIB
TEMPO Interactive, Malang:Bank Indonesia is looking at restricting bank ownership to reduce the number of banks that fold.
“We won’t be regulating foreign ownership in banks, but we will restrict the percentage of ownership,” said Bank Indonesia deputy governor Muliaman Hadad in Malang, East Java, yesterday. Based on the statistics, said Muliaman, bank failures were commonly caused by irresponsible ownership.
Bank ownership is regulated by the Government Regulation no.29/1999, which allows a person or institution, Indonesian or foreigner, to own up to 99 percent of a bank. The regulation, Muliaman said, allowed banks to be dominated by one owner.
According to Muliaman, the regulation must be altered to allow more balanced ownership structures. If banks are not allowed to be owned by several people they should be better monitored, he said.
“We also encourage them to go public in the capital market. Certainly this must be done in stages. And we want to improve governance,” said Muliaman. As such, a bank will have many supervisors, especially if it is listed on the stock exchange.
The regulation being studied by the central bank will not consider foreign or non-foreign banks. Bank Indonesia says it will be firm and anyone unsuitable will not be permitted to own a bank.
House of Representatives’ Bank Commission member, Maruarar Sirait, said that foreign ownership in Indonesian banks must be limited to a maximum of 49 percent. The reason is that the majority of the shares will be owned by local investors. “This is to maintain bank sovereignty,” he said yesterday.
The restriction intends to apply the principle of equity. According to Maruarar, if banks in Indonesia operate in the US or Singapore, they are treated firmly and with restrictions. “The requirements are complicated,” he said.
Therefore, he said, regulating foreign ownership must be revised.
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