Danamon by Mitsubishi UFJ Financial Group (Japan), and Bank IBK Indonesia by Industrial Bank of Korea (IBK). This phenomenon reflects the increasing openness of the Indonesian financial system to economic globalization and has created new dynamics in the ownership structure of domestic financial institutions, which were previously dominated by domestic capital. However, behind this openness to investment, legal challenges have emerged related to the protection of national economic sovereignty and the effectiveness of oversight by financial authorities such as the OJK and Bank Indonesia (BI).
The influx of foreign capital through acquisitions of national banks has had a dual impact. On the one hand, foreign investment strengthens capital, increases efficiency, expands networks, and encourages the adoption of more modern technology and governance. For example, after its acquisition by Bangkok Bank, Bank Permata demonstrated improved capital ratios and liquidity stability, while KB Bukopin began implementing digitalization and information technology-based management systems from South Korea. However, on the other hand, the dominance of foreign ownership raises concerns about economic independence and the government’s ability to control the direction of domestic financial policy. The main challenge lies in monitoring ultimate beneficial ownership (UBO), namely identifying the ultimate beneficial owners of acquired banks. This is often difficult due to the complexity of cross-border ownership structures and the use of shell companies.
In addition to POJK Number 56/POJK.03/2016, the national banking sector is also regulated by Law Number 7 of 1992 concerning Banking, as amended by Law Number 10 of 1998, and Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (UU P2SK). The regulation emphasizes the importance of prudential principles, fit and proper testing, and inter-agency supervisory coordination to prevent systemic risks arising from cross-border acquisitions. Although the legal framework is in place, post-acquisition supervision remains weak due to suboptimal mechanisms for ownership audits, UBO reporting, and evaluation of policy direction following changes in controlling shareholders. In this context, Indonesian banking law needs to strengthen the transparency, accountability, and integrity of the national financial system, so that openness to foreign investment does not erode the country’s financial sovereignty.
Our lawyers possess in-depth understanding of Banking, Finance & Projects, particularly in cross-border transactions, bank acquisitions, corporate financing, and financial restructuring. We are experienced in assisting clients through due diligence, regulatory compliance, and acquisition negotiations, and are accustomed to coordinating with the Financial Services Authority (OJK), Bank Indonesia, the Ministry of Investment, and international financial institutions. With a prudential and compliance-based approach, we are ready to provide strategic legal advice in every banking transaction, financial project, and investment, ensuring compliance with the principle of protecting national interests and maintaining the stability of the Indonesian financial system amidst economic globalization.