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Jakarta, CNBC Indonesia – The merger of three Islamic banks owned by state-owned companies (BUMN) has not only received the attention of players in the national financial industry. This merger worth more than Rs 210 trillion has apparently received the attention of Moody’s Investors Service (Moody’s).
Moody’s issued a review on this matter, which was published today. According to Moody’s the merger This is good news for the Islamic banking industry in the country. The merger of these 3 banks will create an Islamic financial institution that will boost the efficiency and competitiveness of the Islamic banking sector.
The merger process of these 3 sharia banks has reached a stage conditional merger agreement (CMA), which will merge the three subsidiaries into one of Indonesia’s largest Islamic banks
PT Bank BRISyariah Tbk (BRIS) will become surviving entity this merger, leaving BBNI, BBRI and BMRI as shareholders (although these shareholder details have not been announced). The entities to be merged are PT Bank Syariah Mandiri and PT Bank BNI Syariah.
According to Moody’s calculations, the bank’s total melted assets will reach 2% of the total assets of all banks in Indonesia and up to 40% of the total assets of Islamic banking as of June 30, 2020. The merger , which is expected to be completed in February 2021, will create Indonesia’s seventh largest bank since in terms of assets.
In addition to the economies of scale that will undoubtedly increase, this financial institution will help increase awareness of Islamic banking in Indonesia and, of course, increase the demand for Islamic financial products and Islamic financial services.
Furthermore, with the rise of Islamic banking, the outcome of this merger will also attract workers who were previously ‘reluctant’ to work in Islamic banks due to the bank’s small scale and unfavorable career, a problem that has long been entrenched. time in Islamic banks.
The results of the syariah bank merger can also diversify financing and lending from various sources for better risk management. Due to the capital increase, this bank can also extend credit to larger companies, which is generally less risky than giving credit to smaller companies. With the large number of merged Islamic banks, they will be able to access the global sukuk market more easily.
The merger of the Islamic banks is one of the government’s plans to develop its Islamic economy. Despite having a predominantly Muslim population, Islamic banking has less market penetration than other Islamic countries such as Bangladesh, Brunei and Malaysia.
Islamic banking only had a total of 6% of the total assets of all banks as of July 31, 2020. Furthermore, the penetration of Islamic banking in Indonesia is relatively small, apart from the small number of individual Islamic banks, thus They cannot attract market attention and demand, as well as small economies of scale. compared to conventional banks that have large assets.
This is what makes Islamic banks more profitable than conventional banks profitable Although the assets of Islamic banking have recently increased, according to Moody’s the coronavirus pandemic will undermine this trend.
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