BCA Completes $70 million Bank Royal Acquisition

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BCA Completes $70 million Bank Royal Acquisition

Bank Central Asia, or BCA, Indonesia’s largest lender by market capitalization, completed the acquisition of small-sized lender Bank Royal Indonesia last week after securing approval from the Financial Services Authority (Otoritas Jaksa Keuangan).

The move marked continuing consolidation in Indonesia’s banking industry, which today still has 111 lenders of various sizes, down only slightly from 118 four years ago.

For BCA, the acquisition will help expand its lending business, which still lags behind state-owned rivals Bank Rakyat Indonesia and Bank Mandiri.

“The decision to acquire Bank Royal is a strategic step for BCA to complement its banking services and meet the needs of customers. In the long run, this acquisition is also expected to provide sustainable added values for all stakeholders, ” BCA Director Subur Tan said in a statement on Monday.

BCA and Bank Royal signed the Rp 988 billion ($70 million) share purchase agreement last week, Subur said. He attended the signing ceremony along with BCA Director Vera Eve Lim and the president director of Bank Royal, Louis Halilintar Sjahlim.

Under the agreement, BCA and subsidiary BCA Finance agreed to buy 2.87 million Bank Royal shares from shareholders Royalindo Investa Wijaya (73.45 percent), Leslie Soemedi (8.76 percent), Ibrahim Soemedi (4.51 percent), Nevin Soemedi (4.51 percent) and Ko Sugiarto (4.25 percent).

BCA now controls 99.99 percent of Bank Royal’s shares and BCA Finance 0.01 percent.

Bank Royla is a private bank in the BUKU I category, that is banks with less than Rp 1 trillion in capital and limited electronic bank services.

Subur said Bank Royal from now on will focus on developing its digital banking segment, further complementing BCA’s wide-ranging banking solutions.

Indonesia’s banking industry is often considered the least efficient in Southeast Asia. In response, the authorities have been encouraging small-sized lenders to consolidate themselves into a handful of big banks to improve efficiency.

Mitsubishi UFJ Financial Group (MUFG) earlier this year took over 94 percent of the shares in Bank Danamon Indonesia for Rp. 52.8 trillion. As part of the requirements for the acquisiton –  one of the largest Indonesia has seen in the past decade – MUFG also agreed to acquire small lender Bank Nusantara Parahyangan and merge it with MUFG’s existing local unit into Danamon.

Source: Jakarta Globe | 5 November 2019

BCA Completes $70 million Bank Royal Acquisition