Bank Mandiri to Inject Rp 1.1t in Shariah Unit Ahead of IPO
Bank Mandiri will channel an additional Rp 800 billion ($83 million) in funds to its Shariah banking arm as the unit prepares to expand its services after next year’s initial public offering, a bank official said on Monday.
The bank, Indonesia’s largest lender by assets, will inject a total of Rp 1.1 trillion in capital to Bank Syariah Mandiri ahead of the Islamic finance unit’s listing on the Indonesia Stock Exchange (IDX).
Bank Syariah Mandiri plans to raise enough funds in the IPO to meet the Rp 5 trillion requirement needed to provide a domestic trust service for Indonesian customers.
The bank plans to offer corporate customers Shariah-compliant investment and lending options, Sunarso, the bank’s director for commercial and business banking, said on Monday.
The Islamic banking market is growing in Indonesia, where 11 banks offer Shariah-compliant financial services. The market reached a combined total of Rp 199.7 trillion by the end of 2012, according to central bank data.
But Indonesia’s Shariah banking market still lags behind Malaysia, where Islamic lenders hold 23.1 percent of the assets deposited in Malaysian banks. In Indonesia, Shariah banking only totals 4.7 percent of the Rp 4,000 trillion market.
Investor Daily, JG