Bank Tabungan Negara, a state mortgage lender, and Asuransi Jiwa Indonesia (Jasindo) plan to establish a joint venture engaged in life insurance business early next year.
“Currently, [the joint venture] is still in the process with Jasindo. We plan to become a majority shareholder,” said BTN president director Maryono in Jakarta this past weekend.
The move marked BTN’s first venture into the insurance business — a step that will add it to the bandwagon of other rivals in Southeast Asia’s largest economy.
Many Indonesian lenders like Bank Mandiri, Bank Rakyat Indonesia and Bank Central Asia have their life insurance business units.
“The ownership of this life insurance joint venture will be 51 percent BTN, and the rest will be Jasindo,” said Sahata L. Tobing, Jasindo’s retail operations director.
Maryono said that BTN and Jasindo will submit their proposal for approval with the Financial Services Authority (OJK) early next year, with hopes that the joint venture will be legally operational in the first quarter of 2014.
“God-willing, it will happen by early next year,” he said.
BTN is the state-owned mortgage lender, while Jasindo is a state-owned general insurance company.
Sahata said that Jasindo has joined hands with several institutions to boost the numbers of its clients, perform internal restructuring, and build networks locally and abroad.
Both companies have prepared approximately Rp 300 billion ($25 million) toward the joint venture’s initial capital.
Maryono and Sahata declined to disclose more details on the terms of the joint venture.
Among other lenders with insurance businesses, Bank Mandiri, the country’s largest lender by assets, has AXA Mandiri in its portfolio.
Bank Rakyat Indonesia or BRI has its BRIngin Life as its insurance unit, while Bank Central Asia or BCA has Asuransi Central Asia as its general insurance business unit.
Being part-owners to these insurance buinsess is expected to help boost the performance of the lending banks. Indonesia is home to 120 commercial lenders.