Will Indonesia’s big banks extend lead at the top?

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Layoffs, aggressive rate hikes, and a strained funding environment had created a gloomy outlook for startups, but Silicon Valley Bank Financial Group’s collapse on Friday marked a sudden storm.

The startup-focused lender left billions of dollars belonging to companies and investors stranded, making it the largest bank to fail since the 2008 financial crisis. The episode sent shockwaves through startup ecosystems across the world and erased over US$100 billion in market value from US banks last week.

While US regulators have since stepped in to backstop the embattled bank, a swift resolution doesn’t appear to be on the cards. Moreover, New York regulators closed Signature Bank on Sunday, marking the third-largest failure in US banking history.

With matters of a much more serious nature gripping the banking sector of the world’s largest economy, concerns over the high net interest margins (NIMs) of Indonesia’s banks have taken a backseat. However, the issue is certainly worth another look.

For starters, the average NIMs of the four biggest Indonesian banks is well over twice that of the three largest banks in Singapore. What’s more, three of the four major banks in the archipelago are state-owned.

In today’s featured piece, Tech in Asia brings to fore how the top banks of Indonesia have been stacking up the dough. Further, the premium story highlights why there’s no time for these banks to rest on their laurels as rising digitalization begins to shift the banking landscape in Southeast Asia’s largest economy.

Today we look at:

• Why Indonesia’s big four banks need to watch their backs
• The US$20 million funding round of Green Li-ion, a startup that recycles lithium-ion batteries
• Other newsy highlights such as GoTo cutting a further 600 jobs in its latest round of layoffs

Premium summary

Look over your shoulder

Image credit: Timmy Loen

From being the primary supplier of credit to playing a central role in the transmission of monetary policies, banks are the beating hearts around which governments build their economies. Naturally then, this sector runs on the back of heavy regulation.

A regulatory change in 2021 shifted the landscape of the top traditional banks in Indonesia, leaving only four banks in the highest bank categorization grouped by core capital: Bank Rakyat Indonesia (BRI), Bank Mandiri, Bank Central Asia (BCA), and Bank Negara Indonesia (BNI).

Fuelling greentech

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