Jakarta: The three biggest foreign banks in Indonesia have shipped around 11.5 trillion rupiah (US$640mil) of their earnings out of South-East Asia’s largest economy since 2024 as they pare exposure amid President Prabowo Subianto’s increasingly state-focused economic policies.
The Indonesian units of Citigroup Inc, Standard Chartered Plc and HSBC Holdings Plc remitted a total of 11.5 trillion rupiah over the last two years, exceeding their combined profits for the period, according to an analysis of their financial statements.
That surpassed the average 84% of profits that Citigroup shipped out to its parent firm in the decade before 2024 when Prabowo took office, keeping the rest in Indonesia to support growth and strengthen its capital buffer.
That also topped the average 48% for Standard Chartered during the same period and HSBC’s 87% for 2020 to 2023.
HSBC didn’t disclose the amount of funds it remitted to its parent before 2020 in its financial statements.
Some banks decided to curb exposure to Indonesia as they became increasingly concerned over the country’s policy direction that has dented foreign investors’ confidence, according to bankers familiar with the matter who asked not to be named discussing a private matter.
A bout of market turmoil that rattled Indonesian stocks and the rupiah early last year, months into Prabowo’s administration, contributed to the decision, the people said.
Prabowo, the 74-year-old former special forces commander who became president in October 2024, has pushed for an increased role of the government including expanding the economic power of its sovereign wealth fund Danantara.
Just over a year old, Danantara now oversees hundreds of state-owned enterprises and controls assets that officials value at roughly US$900bil.
One of the earliest flashpoints for foreign banks came when Danantara sought commitments for a US$10bil loan facility.
Danantara chief investment officer Pandu Sjahrir had encouraged each lender to contribute as much as US$1bil to the package as a show of support for Indonesia and the sovereign wealth fund, according to people familiar with the discussions.
Some executives viewed this as an indication financial institutions could face growing pressure to support government priorities.
Danantara raised 50 trillion rupiah last year from the nation’s tycoons via the so-called patriot bonds, an instrument paying a coupon of 2%, far below market yields. — Bloomberg
