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Indonesia’s banking sector, shaped by the echoes of the 1997-98 financial crisis, is undergoing a notable transformation marked by the expanding influence of Asia-based regional banks. Recent notable transactions, such as the sale of PT Bank Commonwealth Indonesia to PT Bank OCBC NISP Tbk and Citigroup Inc.’s sale of its Indonesian consumer banking business to PT UOB Indonesia Tbk, highlight the shifting dynamics. As Australian and U.S. banks strategically retreat from Asia, regional players are expanding their influence in Indonesia. As these global players retreat, regional and local Asian banks are making significant strides in Indonesia, intensifying competition and compelling local banks to enhance services and fortify financials.

Of the top ten largest banks in Indonesia today, only two are local privately owned banks, BCA and Panin. Foreign interest in Indonesian banks continues, with recent reports indicating that Japan’s MUFG and SMBC are competing for the potential acquisition of PT Panin Bank Tbk.

While the recent sale of PT Bank Commonwealth Indonesia to PT Bank OCBC NISP Tbk signals a growing footprint of Asia’s regional banks, the broader impact on Indonesia’s banking industry is nuanced. The evolving landscape, reflected in the altered lineup of the top ten banks, indicates ongoing consolidation and foreign interest, underscoring the need for continued innovation and regulatory oversight to achieve the government’s objectives in the banking sector.

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