Indonesia's PT Bank Central Asia will merge its Islamic subsidiary, BCA Syariah, with acquisition target Rabobank after the deal is completed.
BCA’s shareholders on July 30 approved the acquisition of all of Rabobank’s 3.719 million shares for a fixed premium of $20.5 million plus a one-time adjusted book value at the time of closing. The bank expects the acquisition to be completed by the end of September.
Rabobank wound down its operations in June. It announced it was gradually closing in May 2019 when president director Jos Luhukay said the decision was taken in line with the global business strategy of the Netherlands-headquartered Rabobank Group that would focus its business on the supply chain of food and agriculture.
BCA’s decision to merge its Islamic unit with Rabobank is to support the growth of BCA Syariah, the bank said in a virtual press conference on August 28. It expects the merger to happen in 2021.
Indonesia’s government is also keen on its own Islamic banks’ merger. In August the three-way merger of state-owned Bank Syariah Mandiri, BRI Syariah and BNI Syariah was revived after being shelved for some years.
If the three-way merger happens, the new consolidated bank is expected to leverage its economies of scale and help with the recovery of Indonesia’s pandemic-hit economy. Authorities also hope the merger will accelerate Indonesia’s Islamic economy development, in terms of the halal value chain, for instance financing SMEs and large-scale projects.
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