Eight years ago, Indonesia stepped in to refinance its crisis-ridden banks in what was to become one of the most expensive financial sector bail-outs in history. As a result, much of the sector was brought under government control as bankers began the painful process of rebuilding their loan books and restoring public confidence in financial institutions.
Now a recent flurry of privatisations and a fresh injection of foreign capital into the banking sector has put Indonesia back on the radar screen. The latest privatisation came in January with the government’s sale of 15% of Bank Internasional Indonesia (BII), which is controlled by a consortium led by South Korea’s Kookmin Bank. Foreign institutions that are seeking exposure to Indonesia’s economic recovery snapped up the $147m offering. They are following in the footsteps of international players, including Standard Chartered and Deutsche Bank, which acquired major stakes in Indonesian banks during the past two years.
