Finance debt

Indonesian state-owned BNI enters digital banking with 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 efforts to enter the space digital banking.

BNI will enter the capitalization table of Bank Mayora by acquiring approximately 1.03 billion new shares and more than 169 million shares held by the World Bank subsidiary International Finance Corporation (IFC). IFC injected funds into Bank Mayora in 2015 and helped it with business development and good corporate governance.

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

The recovery will be effective in May 2022.

The transaction will be financed by BNI’s retained earnings and not by any form of loan, the company said.

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

DealStreetAsia understands that Sea Ltd. is involved as BNI’s technology partner in this transaction.

Wave of acquisitions

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

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

Another state-owned lender, Bank Rakyat Indonesia has also transformed its subsidiary, BRI Agro, into a digital bank that primarily caters to players in the country’s 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 turn them into digital banks.

A unit of Singapore Telecommunications last week announced its acquisition of a minority stake in PT Bank Fama International. Bank Fama is also backed by the PT Elang Mahkota Teknologi Tbk (Emtek) group and car-sharing giant Grab.

Emtek Managing Director Sutanto Hartono told DealStreetAsia that Emtek and its strategic partners plan to develop digital services at Bank Fama. There is no fixed launch date for the services but new management will be put in place.

“Competition has become more complex,” said Bhima Yudhistira, director of the think tank Center for Economic and Legal Studies (Celios).

He added that BNI’s Bank Mayora deal can succeed if the two lenders combine business loans, short-term online loans and investment services. Acquiring small banks tends to be cheaper than building a digital bank from scratch, he said.

“Bank Mayora has a solid base of credit companies to add to the BNI portfolio. On the product side, Bank Mayora develops wealth management [products] with a wide variety, which means the lender’s infrastructure should not be underestimated,” said Yudhistira.

Shares of Bank BNI closed at 7,075 rupees each, down 1.39% on the IDX on Monday. Bank Mayora is not listed.