The merger of three state-owned Islamic banks in Indonesia began earlier this week with the signing of a conditional merger agreement.
From February 1, BNI Syariah and Bank Syariah Mandiri will officially merge with BRI Syariah (BRIS) to form Bank Syariah Indonesia, the most important Islamic bank within the country.
The merger was approved on the extraordinary general meeting of BRIS, the entity that survived the merger, and shareholders Hery Gunardi, chief executive officer (CEO) of Bank Syariah Indonesia, said during a web based press conference on Wednesday.
Gunardi, who’s vice-chairman of Indonesian financial giant Bank Mandiri, has been appointed CEO of Bank Syariah Indonesia by the Ministry of State-Owned Enterprises.
The ministry also approved the structure of the bank’s latest management board.
It will include the CEO, two vice presidents, and the administrators of wholesale and transaction banking, retail banking, sales and distribution, information technology and operations, risk management, compliance and human capital, and finance and strategy.
“We have been working on the merger plan since March and will continue preparations so that hopefully all processes can be completed on schedule,” Gunardi said.
“We have finalized the company agreement, name, logo and organizational structure. All have been approved by shareholders.”
The next step on this process, he added, is the legal merger of the bank’s branches, products, information technology for digital banking and human resources.
He said the combined entity’s total assets are estimated to achieve 214.6 trillion Indonesian rupiah ($15.2 billion) and total equity shall be 20.4 trillion Indonesian rupiah ($1.4 billion).
It shall be amongst Indonesia’s top 10 banks by assets and the world’s top 10 Islamic banks by market capitalization.
Kartiko Wiroatmodjo, deputy minister for state-owned enterprises, said Bank Syariah Indonesia is predicted to be a catalyst for the expansion of the country’s Islamic financial economy.
“He will be an advisor to the global sukuk [financial products compliant with Islamic law] emissions for potential Indonesian companies,” he said.
According to the minister, the merger was undertaken in order that Indonesia, the country with the world’s largest Muslim population, can optimize its economic and Islamic finance potential.
