Indonesia’s state-owned BNI enters digital banking with the acquisition of Bank Mayora

State-owned PT Bank Negara Indonesia Tbk (BNI) has announced plans to acquire a 63.92% stake in PT Bank Mayora, a small domestic lender, as part of an effort to enter the digital banking space.

BNI joins Bank Mayora’s capitalization table through the acquisition of approximately 1.03 billion new shares and more than 169 million shares owned by World Bank subsidiary International Finance Corporation (IFC). IFC had injected funds into Bank Mayora in 2015 and supported them in business development and good corporate governance.

“BNI will form a digital lender through an inorganic strategy through the acquisition of Bank Mayora, which will be transformed into a digital bank,” the bank’s management said in a prospectus released on Saturday.

The acquisition will take effect in May 2022.

The transaction will be funded from BNI’s retained earnings and not through any form of lending, the company said.

Following the transaction, 63.92% of Bank Mayora’s shares will be owned by BNI and 36.08% will be owned by PT Mayora Inti Utama.

DealStreetAsia understands Sea Ltd. involved in this transaction as technology partner of BNI.

wave of acquisitions

Both traditional lenders and tech giants are vying to enter the digital banking space in Indonesia.

In 2019, Bank Central Asia took over Bank Royal and renamed it BCA Digital.

Another state-owned lender, Bank Rakyat Indonesia, also transformed its subsidiary BRI Agro into a digital bank, primarily targeting players in the country’s multi-billion dollar gig economy. BRI Agro has since been renamed Bank Raya.

Meanwhile, tech giants and fintechs — Gojek, Bukalapak, Akulaku, Line, Kredivo, and Sea Ltd, to name a few — have also acquired small lenders to convert into digital banks.

A unit of Singapore Telecommunications announced last week that it had acquired a minority stake in PT Bank Fama International. Bank Fama is also backed by PT Elang Mahkota Teknologi Tbk (Emtek) Group and ride-hailing giant Grab.

Emtek CEO Sutanto Hartono told DealStreetAsia that Emtek and its strategic partners plan to develop digital services at Bank Fama. There is no firm start date for the services, but there will be new management.

“The competition has become more complex,” said Bhima Yudhistira, director of the think tank Center of Economic and Law Studies (Celios).

He added that BNI’s deal with Bank Mayora can be successful if both lenders combine business lending, short-term online lending and investment services. Acquiring smaller banks tends to be cheaper than creating a digital bank from scratch, he said.

“Bank Mayora has a fairly strong lending corporate base to add to BNI’s portfolio. On the product side, Bank Mayora has developed wealth management [products] with a large variety, which means that the infrastructure of the lender cannot be underestimated,” said Yudhistira.

Shares in bank BNI closed at 7,075 rupiah a share on Monday, down 1.39% against the IDX. Bank Mayora is not listed.

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