Mergers and Acquisitions in Islamic Banking In Indonesia: A Study on BSI and Bank Victoria Syariah

Abstract

Mergers and acquisitions (M&A) in Islamic banking in Indonesia can be viewed from the strategic interests of each bank. This research aims to examine the patterns of M&A in Bank Syariah Indonesia (BSI) and Bank Victoria Syariah in Indonesia. It also discusses the positive and negative implications of the M&A of these two banks, as seen in the developments before and after the M&A. This research employs BOCR (Benefit, Opportunity, Cost, and Risk) analysis to assess the extent to which M&A patterns occur in the merger outcomes at BSI. It also utilizes CAMEL (Capital Asset Earnings and Liquidity) analysis to evaluate the post-acquisition banking health at Bank Victoria Syariah. The research descriptively explains the M&A conditions in these two Islamic banks in Indonesia and the impact of M&A on the banks, employees, customers, and the general public. The study results indicate that the
merger of three state-owned Islamic banking companies, namely Bank Syariah Mandiri, BRI Syariah, and BNI Syariah, into BSI was carried out not only to expand the market share of Islamic banking but also due to cost considerations. At the same time, the acquisition of Bank Victoria Syariah was made due to capital needs as required by the regulator.