Making Indonesia’s BTPN a subsidiary: from a 40% stake to a merged local bank (2013)

A cautious overseas push, begun from a halfway 40%

The core of this decision was that a Japanese bank saddled with a mature home market pushed into Asia’s growing retail and small-business markets by taking a stake in a bank itself. It began from a below-majority 40% holding so as to deepen its involvement in stages, without breaking the local management and customer base. A stake, then equity-method accounting, then additional purchases, and finally subsidiary status through the merger of two local banks — each step of a gradual, six-year advance illustrates one pattern of a cautious overseas push, tightening its grip only as fast as regulation and local conditions allowed.

It took time, though, for the results to show in the numbers. The multi-franchise strategy — which, with BTPN as its first, spread stakes into India, Vietnam and the Philippines — is swayed by each country’s economy and rules, and has yet to reach the earnings once envisaged. Even so, the fact remains that a regional bank built on lending to pensioners was remade into a commercial bank handling large-corporate business and grown into a base bearing the SMBC name. Whether the long wager of channelling capital earned at home into Asian growth pays off will be decided by how the country businesses expand over the coming decade and more.