Proposed new Bank Indonesia rules on bank ownership

Indonesia is widely recognised as having one of the most liberal regimes in the Asian region for foreign ownership of banks.  Currently, a foreigner can own up to 99% of the shares in an Indonesian bank.  This is, in part, a legacy of the Asian financial crisis of the late 1990s when ownership was opened up to help capitalise many of the banks at that time.

In recent years there has been a growing move to put in place more controls on ownership of banks.  The recently announced takeover by DBS Group Holdings (“DBS”) of PT Bank Danamon Indonesia Tbk (“Danamon”) has now brought matters to a head, and new rules regarding the ownership of Banks in Indonesia are expected to be issued by Bank Indonesia by late June 2012.  In the meantime, there have been widespread press reports and speculation regarding the basic elements of these new rules, the broad themes of which are summarised in our longer briefing.