Ownership, Controlling Shareholders, Consolidation, and Bank Holding Companies - A look into the future of Indonesia's Banking Sector

Consolidation in the banking sector is a key tenet of the Government's program in returning the sector to financial soundness and long- term health (see ILB 6/10/2006). The question has always been if the sector was not willing to consolidate on its own initiative is Government regulation mandating mergers to take place the most appropriate mechanism of achieving the objective? It seems that the simple answer to this question is, yes. Bank Indonesia (BI) has issued RegulationNo. 8/16/PBI/2006on Sole Ownership of Indonesian Banks (Regulation).