Mandiri, BNI Most Likely to Merge

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    TEMPO.CO, Jakarta – State-owned banks Bank Mandiri Tbk and Bank Negara Indonesia Tbk (BNI) are likely to merge, in a bid to compete with regional Asian banks ahead of the ASEAN Economic Community for the banking sector in 2020.

    A Tempo source said that Mandiri and BNI are two of Indonesia's SOE banks that are most likely to merge due to both banks similar business segments. A bank merge is one way of boosting the competitiveness of national banks in ASEAN. "The target is to compete with Malaysia first," the source said.

    According to their December 2013 financial statements, Bank Mandiri and BNI's assets values ranked 8th and 9th the list of ASEAN's top 10 banks. The top three spots are occupied Singaporean banks the DBS, the OCBC, and the UOB.

    Raden Pardede of the National Commercial Banks Association (Perbanas) said the government must consider merging state banks in order to secure the national banking system ahead of the ASEAN Economic Community.  

    Meanwhile, Bank Mandiri president director Budi Gunadi Sadikin said the most important thing national banks must do in acing AEC is capital strengthening. "The game is not in the asset, but in how to increase capital so they can compete," he said.

    According to Budi, to strengthen capital banks do not have to go through mergers, but find other ways such as retained earnings. Banks that can retain their profits will have the opportunity to expand. Another way is by holding a rights issue.