Merger Talks of Indonesia's Sharia Banks

Minister of State Owned Enterprises, Erick Thohir, had his plan to merge several state owned Islamic banks approved by the monitoring institution, OJK, along with the corresponding stakeholders. This merger value will produce a new Islamic bank entity with an estimated total assets of IDR 207 trillion, under the coordination of the state-owned bank association (Himbara). The merge will include three commercial banks: PT Bank BRISyariah Tbk (BRIS), PT Bank BNI Syariah, and PT Bank Syariah Mandiri. Furthermore, Erick’s purpose for the merge was mentioned as he said, "Then why do I want a sharia merger, because Indonesia, which has the largest Muslim population, does not have that facility. Now, if the state-owned islamic banks are merged, it can become the top bank for people's alternative choices." This claim is further strengthened upon the fact that compared to Malaysia where the penetration of Islamic banking have reached a whopping 40% -50%, Islamic banks in Indonesia have only reached 8.5%-9%. It is also quite abnormal where Indonesia have yet to own an Islamic bank powerhouse, not even one in the top 20 of the world, despite being the largest Muslim populated country.

The proposal of this merger has been well-received by the banks in question. The Director of Mandiri Sharia, Toni EB Subari, expressed his support in the virtual press conference on (8/25), stating that Mandiri Group is fully onboard with the Ministry of State-owned Enterprises (BUMN)'s merger plan. He believes that its realization will maximize the economic potential of Sharia banking in the financial indu