BI Suggests Consolidation to Strengthen Country's Banking Sector

Jakarta (Antara Bali) - Bank Indonesia Governor Agus Martowardojo suggested consolidation  of the country's banking industry ahead of the implementation of the Asean Economic Community next year.

"Like Malaysia, Indonesia also needs consolidation to form a powerful and healthy bank for expansion in ASEAN," Agus said here Monday night.

Agus said the government needs to follow the step taken by Malaysia, which has announced merger of three major lenders CIMB, RHB Capital  and  Malaysia Building Society.

He said he would give his view of consolidation to be included in the banking architecture  planned and revised by the Financial Sector Authority (OJK).

He said banking consolidation is a "home work" that has to be prepared seriously  in facing the AEC  in 2015.

The Indonesian banking industry has continued the process of consolidation after it was hit by regional crisis in 1997 and it is expected  the industry could compete well in 2015  in this region, he said.

Earlier, general chairman of the National Banking Association (Perbanas)Sigit Pramono  said Malaysian banking industry has consistently strengthened itself since the crisis.

Sigit said through the merger the three Malaysian lenders wanted to give birth to the fourth largest bank in Southeast Asia.

He said  Malaysia proved that it  could carry out consolidation successfully even when the crisis hit  as well as at normal condition.

In short term the merger of the three bank would have no significant effect  on Indonesia, but in long term, it would boost contribute to inorganic growth, he said.

"Malaysia been consistent in reducing the number of its banks. This is one of the strategies of that country to face the free ASEAN market," he said.

 He expressed the hope that the new government  could carry out banking consolidation which has become a pressing requirement.

"For that purpose  Perbanas  would propose a banking blue print to serve a reference for banking development in the future," he added. (WDY)