Bank Syariah Mandiri Preparing to Be First Listed Islamic Lender

ID/Grace Dwitiya Amianti

Bank Syariah Mandiri, the Islamic unit of Bank Mandiri, is set to sell shares in an initial public offering next year, with aims to raise more than Rp 1 trillion ($103 million).

BSM’s capital debut next year would make it the first Islamic lender to list on the Indonesia Stock Exchange (IDX).

“We are still working on it. More Islamic banks will undergo IPOs next year, and BSM is too,” chief executive Yuslam Fauzi said in Jakarta on Tuesday on the sidelines of a conference.

Yuslam said that BSM’s parent is expected to inject Rp 500 billion into BSM this year. The capital injection should boost the lender’s capital structure. That will in turn help BSM compete with other Islamic-compliant lenders in Indonesia.

There are 11 Islamic lenders in Indonesia including BSM. Other Islamic compliant lenders include Bank Muamalat, Bank Syariah Mega, BCA Syariah and BRI Syariah. Yuslam did not disclose other terms of the IPO such as the size of the share sale.

Edy Setiadi, a director for Islamic finance at Bank Indonesia, said in Jakarta on Tuesday that the development of Islamic finance in Indonesia has been good in the past five years, with total combined assets of Islamic lenders in the country rising to Rp 199.7 trillion at the end of 2012.

Indonesia, with the largest Muslim population in the world, lags behind its neighbor Malaysia in the development of Islamic finance.

Edi said that total assets of Islamic compliant lenders in Indonesia accounts for around 4.7 percent of the total banking assets in Indonesia, compared with 23.1 percent in Malaysia. Indonesia is home to 120 commercial lenders with combined total assets of Rp 4,000 trillion.

Bank Syariah Mandiri is one of a few units of Bank Mandiri, the country’s largest lender by assets. Other units include Bank Sinar Harapan Bali and Mandiri Sekuritas.

Bank Sinar Harapan Bali focuses on giving loans to small farmers in Bali. Mandiri Sekuritas, one of Indonesia’s largest brokerage companies, has been aggressive in its advisory role for IPO and bond sales in Indonesia.