“Now is the Time for Sharia Banks to Merge …” Page all

JAKARTA, KOMPAS.com – Senior economist Fauzi Ichsan said it was time for banks to sharia bank BUKU (Commercial Bank Business Activities) I, II, and III carry out a business merger or consolidation ( merger).

Islamic banks BOOK I need to do a merger with Bank syariah BOOK II or III. Later BUKU II Bank also needs to do a merger with BUKU III sharia Bank.

He said, a business merger is needed to reduce costs (average cost) and increase the ability to compete with banks conventional bank.

Also read: Erick Thohir Wants to Merge Islamic Banks, This Is the Response of BSM’s Boss

“It needs to be done for the consolidation and development of Islamic banking. Finally, Bank Buku II and BUKU III need to merge to increase economies of scale and the ability to compete with conventional banks,” said Fauzi at the Mandiri Syariah virtual workshop, Friday (25/9/2020).

Fauzi revealed that consolidation is not a strange thing for banks to do. In the 2000s, conventional banks conducted a merger to increase business scale.

“Now is the time for Islamic banks to merge. In order to have a large business scale and reduce it average cost, “he said.

Furthermore, a merger is needed to answer the challenges in various BUKU banks. In terms of financing ratios, Non-Performing Financing (NPF) or non-performing financing ratios of BUKU I and II Islamic banks are high, in the range of 5.3 percent and 3.6 percent.

Meanwhile, BUKU III sharia banks have a lower NPL ratio of around 2.9-3 percent.

Also read: The Difference Between Conventional Bank Interest vs Sharia Bank Profit Sharing

In terms of financing, Islamic banks BUKU I and II experienced faster growth in financing, so that as of July 2020 the FDR rose to the level of 114.4 percent and 84.7 percent.

While for BUKU III Bank, the FDR of Islamic banks has dropped to 75.8 percent because they are more selective in channeling financing.

“The shift in DPK from BUKU I Islamic banks must be stopped, because the liquidity is too tight and the FDR level is too high,” he concluded.

For information only, BUKU I banks are a group of banks with core capital of Rp. 100 billion to Rp. 1 trillion, BUKU II banks with core capital of Rp. 1 trillion to Rp. 5 trillion, and Bank BUKU III of more than Rp. 5 trillion to Rp. 30 trillion.

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