Why Foreign Banks Fail to Compete in Domestic Market?

Due to factors including local dynamics, regulations, and consumer preferences, the domestic financial market remains a challenging stage to compete in for foreign banks.

Fahmi Ahmad Burhan

20 Nov 2023 - 17.36
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Why Foreign Banks Fail to Compete in Domestic Market?

Illustration - One of the foreign banks in Indonesia.

Bisnis, JAKARTA — The Indonesian financial market has proven to be a challenging arena for foreign banks, as reflected by foreign banks' divestment of bank assets in Indonesia.

This year, the national banking industry has witnessed three prominent corporate actions involving foreign banks' divestment of bank assets in Indonesia. Firstly, the divestment of Citibank N.A. Indonesia's consumer banking business to PT Bank UOB Indonesia. 

Secondly, the divestment of business units from the Commonwealth Bank of Australia (CBA) in Indonesia, namely PT Bank Commonwealth, to PT Bank OCBC NISP Tbk. (NISP). Thirdly, the sale of the consumer banking business line of Standard Chartered Bank Indonesia (SCBI) to PT Bank Danamon Indonesia Tbk. (BDMN).

The transfer of Citi Indonesia's consumer banking business to UOB Indonesia became effective on Saturday (11/18/2023). Meanwhile, CBA and OCBC NISP have recently signed a sale and purchase agreement to acquire 99% of Bank Commonwealth's shares, valued at around IDR2.2 trillion.

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Why Foreign Banks Fail to Compete in Domestic Market?

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