The BSI Case Study: How Indonesia's Largest Islamic Bank Was Created

The formation of Bank Syariah Indonesia (BSI) in February 2021 stands as one of Indonesia's most studied M&A transactions. The merger combined Bank Syariah Mandiri, BNI Syariah, and BRI Syariah into a single entity that became the world's 10th-largest Islamic bank by assets.

Background: A Fragmented Islamic Banking Sector

Despite having the world's largest Muslim population, Indonesia's Islamic banking sector was fragmented and subscale. Three state-owned banks each operated subsidiary Islamic banking units, but none was large enough to compete globally or offer a full range of services.

The Merger Process

  • Strategic mandate: The Ministry of State-Owned Enterprises ordered the consolidation as part of the BUMN consolidation program.
  • Independent valuation: External advisors valued each entity to determine the share exchange ratios.
  • Regulatory approvals: OJK approval was required, involving extensive documentation and compliance checks.
  • Shareholder approvals: Extraordinary general meetings were required at the listed parent banks.
  • IPO: BSI was subsequently listed on the Indonesia Stock Exchange, creating new investor relations obligations.

Outcomes and Industry Impact

  • Created a single entity with sufficient scale to invest in technology and compete with conventional banks
  • Gave Indonesia a stronger voice in global Islamic finance forums
  • Demonstrated how state-initiated mergers can be executed efficiently with regulatory and political alignment
  • Set a precedent for further consolidation among regional development banks (BPDs)

Lessons for the Indonesian M&A Market

BSI illustrates that large-scale M&A is achievable when stakeholders are aligned and advisory support is strong. The same principles — clear rationale, independent valuation, structured communication, and integration planning — apply to transactions of all sizes.


Understanding the BSI case in full requires looking at it from multiple angles. The role of investment bankers and advisors in the BSI consolidation reveals the behind-the-scenes coordination that made the largest Islamic bank merger in Indonesia possible.