Indonesia government may set up holding company for state banks

Jakarta (ANTARA News) - The government may set up a holding company under which all state banks could be put together, in accordance with a central bank rule that disallows a bank owner to control more than one bank by end-2010, an official said Wednesday.

"We have submitted a proposal (to Bank Indonesia). The possibility is to set up a holding company," State Enterprises Minister Sofyan Djalil told reporters.

Bank Indonesia has set an end-2007 deadline for affected bank owners to decide on how they would comply with the rule.

Apart from setting up a holding company, owners can also merge the banks they control, or keep their stake in just one bank and sell their interests in other banks.

The government still controls three listed state banks -- PT Bank Mandiri, PT Bank Rakyat Indonesia and PT Bank Negara Indonesia. They are the first, third and fourth largest banks in the country.

The state also owns non-listed banks PT Bank Tabungan Negara and PT Bank Ekspor Indonesia.

Other bank owners affected by the rule include Singapore government investment arm Temasek Holdings, which controls PT Bank Internasional Indonesia and PT Bank Danamon; and Malaysia's state investment agency Khazanah Nasional Bhd, which has stakes in PT Bank Niaga and PT Bank Lippo.

Temasek has decided that it prefers to merge the two Indonesian banks that it controls.

Khazanah has yet to announce its decision.

Bank Indonesia director Halim Alamsyah told Thomson Financial he understands that Khazanah has submitted a proposal, but he declined to give more details.