Rabobank Indonesia (short for PT Bank Rabobank International Indonesia) has announced that it is to phase out its operations in Indonesia starting per direct. The decision was made by the bank's shareholders. Fierce competition in Indonesia's banking industry, which particularly hurts the smaller banks, is believed to be the main reason behind the decision.
Jos Luhukay, President Director of Rabobank Indonesia, said it was a very hard decision to take, especially because the bank has been operating in Indonesia for nearly three decades. However, the decision is part of the global strategy of the Rabobank Group.
Rabobank Indonesia will gradually stop its operations starting per direct. In the first phase it will close its branches. In the second phase it will wind down the services and products it offers to clients. In the final phase it will request Indonesia's Financial Services Authority (OJK) to revoke all permits.
Specifically in the past couple of years competition in Indonesia's banking industry has risen considerably, while liquidity has fallen. It has led to a situation in which the big banks are posting very strong growth, while the smaller banks have become trapped in an increasingly tough situation. That is also why the OJK recommends the banking industry to consolidate through mergers and acquisitions. Meanwhile, the arrival of the digital economy has made it important for banks to become more innovative and creative (after all, there exists rising competition from financial technology companies, or fintech startups).
Based on Rabobank Indonesia's Q1-2019 corporate earnings, it posted a net loss of IDR 9.78 billion (approx. USD $690,000), which is actually an improvement from the net loss of IDR 27.30 billion it posted in the same quarter one year earlier. Despite the net loss, Rabobank Indonesia's credit growth grew 33.9 percent year-on-year (y/y) to IDR 11.05 trillion in the first quarter of 2019.
Through its 34 branches on Java, Sumatra, Kalimantan and Sulawesi, Rabobank Indonesia - part of the Rabobank Group with its headquarters in Utrecht (the Netherlands) - served Indonesia's corporate clients.
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