JAKARTA -- Bank Mandiri will expand operations in Malaysia by using its newly awarded status as a cross-regional lender, Indonesia's largest state-owned bank said Thursday.
Mandiri said it is the first bank in the region to be designated a qualified ASEAN bank -- a concept developed by Association of Southeast Asian Nations members as part of an effort to create an open, integrated financial market providing services to companies investing and trading in the region.
To obtain QAB status, banks must meet certain conditions, such as in capital adequacy, and pass screening under bilateral agreements between monetary authorities. Indonesia and Malaysia agreed in 2016 to grant QAB status to three banks from each other's countries.
Such Malaysian banks as CIMB Group Holdings and Malayan Banking already have major operations in Indonesia, while Indonesian banks have been seeking opportunities to grow outside the home market. "We highly appreciate the Malaysian banking authorities that support the presence of banks from Indonesia," said Muliaman Hadad, chairman of Indonesia's Financial Services Authority. "Indonesia has also treated Malaysian banks as their own. This is a step forward that can strengthen relations between Indonesia and Malaysia."
Malaysia will become the first overseas market for Mandiri to operate a full-fledged banking business in, the lender said. It plans to invest 300 million ringgit ($70 million) to upgrade a remittance office in Kuala Lumpur to a full branch and roll out wholesale and retail banking services.
Mandiri is also exploring expansion into Myanmar and the Philippines, it said in a news release.