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Finance

Indonesia's state banks seek to spark sharia sector via mergers

Combining BRI, Mandiri and BNI units will make country's 8th-largest lender

Bank Mandiri together with Bank Rakyat Indonesia and Bank Negara Indonesia have signed a "conditional merger agreement" for their sharia banking units.   © Reuters

JAKARTA -- Indonesia's three state-owned banks will merge their sharia banking units to create one of the country's biggest lenders, as the government tries to kick start a sector that has stagnated despite a vast Muslim population.

Bank Rakyat Indonesia, Bank Mandiri and Bank Negara Indonesia have signed a conditional merger agreement for their Islamic banking units, according to a filing to the stock exchange on Tuesday, with BRI's sharia unit bearing the name of the entity.

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