IBK opens Indonesian unit after acquisitions

Industrial Bank of Korea (IBK) opened its Indonesia unit today - Bank IBK Indonesia - in line with Korean government efforts to bolster economic and diplomatic cooperation with Association of Southeast Asian Nations (Asean) economies.

The establishment of the institution comes after the Korean state-owned lender bought 95.79 percent of Bank Agris and 71.68 percent of Bank Mitraniaga and merged the two.

The Financial Services Authority of Indonesia approved IBK’s acquisition of Bank Agris and Bank Mitraniaga in February, and the regulator went on to give a regulatory nod to the merger of the two banks last month.

Foreign acquisition of majority interests in Indonesia banks has become more difficult following a change in the regulations in 2012.

The main clients will be small-and mid-sized enterprises, the same focus as IBK in Korea.

“We will support financing for both Korean companies operating there and Indonesian corporations,” the bank said in a statement.

Combined, the two banks have a total of 30 branches, but IBK plans to increase the number to 55 by 2023.

The takeover marks the first acquisition abroad for the IBK since its inception in 1961.

To oversee the opening of the new unit, IBK CEO Kim Do-jin will stay in Indonesia through Sept. 20.

The Korean lender cited the active presence of Korean companies in Indonesia and anticipated policy boosts as the primary reasons behind the expansion.

“Indonesia is home to 2,000 Korean companies and a key partner for the government’s New Southern Policy, which led the bank to open a new business there,” said a source at IBK.

The Moon Jae-in administration announced the initiative in 2017 in a bid to diversify Seoul’s relations and reduce its reliance on single countries for materials and markets.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]