Overseas news briefs: Bank in every China province, Indonesia looks to MOUs, Islamic mega-bank plan

The China Banking Regulatory Commission wants to run a pilot program that will establish one private bank in every province, reports Caixin. The Chinese government work report says there will be no upper limit on the number of private banks  allowed. Beijing has issued licenses to five private banks so far. In 2014, the regulator approved the establishment of 14 privately controlled financial services firms as well as 108 privately controlled country credit unions. Under China's dated Commercial Banking Law, the minimum capital requirement for setting up a bank is one billion yuan.

Indonesian banking regulator, the Financial Services Authority, is looking to sign new agreements with its counterparts in a number of countries this year, a move that will pave the way for overseas expansion for Indonesian lenders. The Jakarta Post reports the countries include South Korea, China and the United Arab Emirates, as well as Southeast Asian neighbours such as Cambodia, Myanmar and Vietnam — where domestic banks have either a small presence or none at all, but where business potential remains untapped. A similar memorandum of understanding was signed with Malaysia late last year.

A plan to create an Islamic mega bank in Indonesia by merging parts of three major state-owned lenders has gone down well with investors, in contrast to a similar deal in Malaysia that collapsed following drops in shares of the trio. In recent years, Islamic banking has grown exponentially in Indonesia, home to the world's largest Muslim population, with assets tied to products complying with the religious ban on interest rising fivefold from the end of 2008 to August 2014, according to Bank Indonesia data. Still, Shariah-based finance accounts for just 5.5 per cent of total banking assets in Indonesia, and there has been "huge" pent-up demand, Ernst & Young said in its latest annual report on global Islamic banking.