Indonesia bank ownership restrictions unclear

Author: Ashley Lee | Published: 5 Aug 2014

Indonesian politicians are contemplating further restrictions on foreign ownership of domestic financial institutions. But it is unclear whether the restrictions will be implemented.

It has been reported that Indonesian politicians are planning to introduce a new bill to limit foreign ownership of financial institutions to a 40% stake and require international banks to establish domestic subsidiaries in Indonesia.

The bill may even require foreign investors with holdings above the new maximum to sell down their stakes.

That follows a difficult period for foreign investors in the Indonesian banking market, and it’s unclear whether the market can sustain even more uncertainty. There have been few deals since DBS cancelled its acquisition of Bank Danamon following regulatory intervention.

But local lawyers were sanguine, observing that even with the rumoured change of foreign investment caps, the government’s track...