Indonesian central bank amends Single Presence Policy for banks

Bank Indonesia ("BI"), the Indonesian central bank, has now published its long awaited amendment to the so-called Single Presence Policy which has been in place since 2006 and which in principle limits any bank controller to one banking operation in Indonesia, subject to certain exceptions. The main prupose of this amendment is to introduce more flexibility to this policy, including, amongst other things, the option of creating a Bank Holding Company whereby a controlling shareholder controls more than one bank in Indonesia, as an alternative to requiring the controlling shareholder to merge the banks under its control. It remains to be seen whether this additional flexibility will facilitate BI’s long term goal of encouraging further consolidation in the Indonesian banking sector.  For a fuller briefing click here.