GIC Injecting Bank Jago, Massive Singapore Corporations

The Singapore Government-owned investment fund manager, GIC Private Limited, has injected US$ 225 million or around IDR 3.15 trillion into PT Bank Jago Tbk. Previously, jumbo startups from neighboring countries such as parent Shopee, Sea Group and Grab were also interested in entering the digital banking business in Indonesia.

GIC Private Limited will buy 9.67% shares of Bank Jago through the issuance of new shares or a rights issue which will take place in March. Bank Jago plans to issue three billion new shares.

“Bank Jago will be more transparent Bank Jago with more stakeholders. This is because more parties oversee management,” said Deputy Director of Bank Jago, Arief Harris Tandjung, as quoted by the Straits Times, Friday (26/2).

The company targets fresh funds of up to Rp 7.05 trillion through this corporate action. Based on the prospectus for the issuance of new shares, the additional capital will be used for the business expansion of Bank Jago.

The main shareholders of Bank Jago today, collectively, own 51% of the shares. In the post-rights issue, Jerry and Patrick own 29.81% through Indonesian Ecosystem Metamorphosis (MEI). Then, Wealth Track Technology Limited (WTT) holds 11.69%, Gojek Group 21.40%, and the rest is owned by the public.

Before GIC, Shopee’s parent company, Sea Group, invested in the Bank for Economic Welfare. This Singapore-based company is the controlling shareholder in the bank known as BKE. Bank BKE officially changed its name to Bank Seabank Indonesia or SeaBank.

Now, the Garena parent company is said to be eyeing Bank Capital and Bank Bumi Arta (BNBA). However, Shopee’s public relations team has not yet commented on the issue. Decacorn Singapore Grab is also reportedly interested in investing in Bank Capital. “However, not only Grab (who is interested),” said Wahyu Dwi Aji, President Director of Bank Capital, Thursday (25/2).

Grab Has Obtained a Digital Bank License

The Grab-Singtel consortium and Sea Group both obtained a full digital bank (DFB) license from the Singapore monetary authority, aka the Monetary Authority of Singapore (MAS) at the end of last year.

DFB is allowed to take deposits from customers and also provide banking services for individual or retail and non-retail customer segments. Meanwhile, digital wholesale bank (DWB) can target Small and Medium Enterprises (SMEs).

Analysts think that the presence of the license holder will have little impact on the three large local banks in Singapore; the DBS Group Holdings, United Overseas Bank and Oversea-Chinese Banking Corp. But they can use the opportunity to expand their services to other markets is SEA.

In Indonesia, the Financial Services Authority (OJK) is currently drafting rules for digital banks. “In the middle of the year, we will explain how digital banks operate in this country,” said Executive Director of Banking Research and Regulation, Anung Herlianto, as quoted by the Straits Times.

The Potential of Digital Banks in Indonesia

Head of the OJK Institute, Agus Sugiarto, considered that the digital banking services or neo-bank business without physical contact (virtual banking) was very promising. The reason is that internet users in Indonesia are nearly 200 million people.

Based on the OJK survey, Indonesia’s financial inclusion index is only at 76.19%. “The potential is enormous,” said Agus in an online discussion entitled “Traditional Bank vs Neobank”, last September (17/11/2020).

During the Covid-19 pandemic, people are also getting used to using digital services. “Lastly, the potential is huge because there are no neobank officially operating in Indonesia,” said Agus.

Meanwhile, Gojek, through its subsidiary GoPay, has increased its investment in Bank Jago by around IDR 1.32 trillion. This is done through the digital bank’s rights issue scheme. Bank Jago will issue three billion new shares. The company targets to reap funds of up to IDR 7 trillion through this corporate action.