BI said to delay single presence rule

The central bank has agreed to postpone the implementation of the single presence policy for two years and may consider exempting state banks indefinitely, the government said.

State-Owned Enterprises Mi-nister Mustafa Abubakar told The Jakarta Post in an interview earlier this week that Bank Indonesia (BI) acting governor Darmin Nasution had given his approval for the postponement of the policy in a meeting that was also attended by Industry Minister Mohamad Suleman Hidayat and two BI directors.

“For the two years postponement, they have agreed. I haven’t received the letter yet, but it has been decided in the meeting,” Mustafa said.

Darmin was not available for comment, but BI spokesperson Difi Johansyah said the central bank had not made a final decision on the matter.

“The decision has to be made in the Board of Governors meeting,” Difi said.

The single presence policy, first introduced in 2006, requires majority shareholders in more than one bank to merge or divest their ownership, or create a holding company, no later than by the end of this year.

The policy resulted in Malaysia’s CIMB Group merging Bank Lippo and Bank Niaga in 2008 to form CIMB Niaga. Singapore’s Temasek Holdings, which currently owns 76 percent of Bank Danamon, also sold a majority stake in BII to comply with the policy.

Mustafa argued that private banks were different in nature and mission in comparison to state banks as the latter were governed by a set of legal provisions uniquely applied to state assets.

“State banks uphold the objectives of the state. They are bound by the Constitution, Article 33 [on national wealth], the 2003 State Enterprise Law and the Corporation Law. With a combination like this, it is legally difficult to give the same treatment to state banks [as for private ones],” he said.

The implementation of the policy on state banks not only implies serious legal complexities, but also a mammoth undertaking in merging state banks with assets among the 10 biggest in the market and thousands of workers, Mustafa said.

The government has a 76 percent share in Bank BNI, 73 percent in BTN, 66 percent in Mandiri and 56 percent in BRI. Based on December 2009 figures, the merger of the four banks would create an entity that would control 39 percent of total assets of commercial banks.

“There will be too much energy wasted at a time when we must go forward and take advantage of the positive momentum in the economy. We cannot go forward fast enough if we have to go through such a massive internal homework,” Mustafa said.

Being granted a postponement was not enough for the government, he said, thus it was proposing for BI to completely exempt state banks from the policy.

“We have sent a formal letter proposing BI to review the policy. The two-year period will allow BI to do that. What we want is full exemption,” Mustafa said, while adding that he was optimistic BI would agree to the request.