Indonesian lender Bank Permata has initiated talks with a number of fintech players, including Singapore-headquartered Honest Bank, to sell its credit card licence, said multiple persons familiar with the development.
Listed on Indonesia Stock Exchange (IDX), Bank Permata owns more than one credit card licence, “and is looking to part with one,” said one of the persons mentioned above.
If talks fructify, the proposed transaction will pave the entry of Honest Bank into Indonesia’s credit card market that is currently facing stiff competition from mobile wallets who run the “PayLater services” on their platforms.
Currently, credit card use in Indonesia stands at just 0.07 credit cards per capita, according to JP Morgan’s 2019 Global Payments Trends Report.
“For Honest Bank, which is a new player in the market, this is an opportunity to get a licence at once and start operations. But for Bank Permata which already has one licence in operation, the sale of the other will give it time to focus on its other core business areas,” said the person quoted above.
Bank Permata is engaged in wholesale banking, and also offers services in retail and Shariah-compliant banking. Considered a pioneer in mobile banking and mobile cash technology in the country, it launched PermataMobile X super application in 2018 to ramp up its digital banking segment.
Honest Bank, established by Will Ongkowidjaja, founding partner at Alfa JWC Ventures, and Peter Panas, an ex-Goldman Sachs executive, currently rides on a valuation of $27.3 million, according to DealStreetAsia DATA VANTAGE.
“As a public listed company, all disclosures will be made in line with the prevailing regulations at the appropriate time,” said the spokesperson of Bank Permata when asked about the proposed transaction. Meanwhile, an email sent to Honest Bank did not elicit any response.
Bank Permata officially became BUKUIV Bank in January 2021 due to the capital increase after the integration with the branch office of Bangkok Bank in Indonesia.
It booked operating income before provision of IDR 3.8 trillion in 2020, an increase of 23.7% year-on-year (YoY) compared to the same period the year before, according to its filing on the bourse. This growth resulted from an increase in net interest income of 14.2% and non-interest income of 16.1% YoY.
Bank Permata was originally established in 2002 out of the merger of five banks – Bank Bali, Bank Universal, Bank Prima Express, Bank Artamedia and Bank Patriot.
It currently operates a network of branches, sub-branches and cash offices across various parts of the country and is also present in the financing sector through its subsidiary, Sahabat Finansial Keluarga.
Deals in Indonesia’s banking sector
For tech upstarts, investing in a bank is a sure-shot way to enter the financial services sector, which has immense growth potential in the largely unbanked nation.
In December last year, the Indonesian super app Gojek, which recently merged with online marketplace Tokopedia, had acquired a 22.16% stake in Bank Jago. In February this year, Bank Jago secured a $222 million investment from Singapore’s sovereign wealth fund GIC through a rights issue.
Other recent deals in the banking sector include Ant Group-backed fintech Akulaku acquisition of a 25% stake in Bank Yudha Bhakti (now Bank Neo Commerce) in September 2020 and Sea Group buyout of Bank Kesejahteraan Ekonomi (BKE).
In April this year, DealStreetAsia reported that Bank Amar is planning to raise $100 million and looking at a strategic partner for the same.