Reports indicate that the ban preventing government entities in Indonesia from conducting business with U.S. lender JPMorgan Chase may soon by lifted. This is roughly a year since the ban was imposed after the lender made negative comments concerning Indonesia’s stock market.
According to the Finance Minister of Indonesia, Sri Mulyani Indrawati, there will have to be trust and respect going forward for the business relationship between the two to resume. No time frame was provided on when the restriction is likely to be lifted.
The Indonesian government led by President Joko Widodo ended its business relationship with the biggest bank in the United States following a downgrade of the Southeast Asian country’s stocks by two notches. JPMorgan Chase termed its move to downgrade the equities as a tactical response after the election of Donald Trump as the president of the United States.
Earlier in the year JPMorgan upgraded the equities though the Indonesian government did not lift the ban it had imposed preventing the U.S. investment bank from underwriting its dollar and rupiah bonds. But in an interview that was conducted on October 27, Indonesia’s Finance Minister said the government was open to allowing JPMorgan to underwrite in the event that it became necessary.
“If it’s going to be a need for all of us to have a good relationship, we will restore the relationship,” said Indrawati.
JPMorgan’s business with the Indonesian private sector in both commercial and investment banking has however remained unaffected. Last year the bank generated an income of $23 million from its Indonesian operations. The U.S. lender obtained a license to operate in Indonesia close to five decades ago.
Following the ban some of the Indonesian government business JPMorgan’s missed out in include a rupiah bond sale worth 512.6 trillion rupiah as well as sovereign bond sales worth 142 trillion. Currently there are 19 primary dealers licensed to deal in government bonds with some foreign big names such as Deutsche Bank and Citibank among them.
The statement by the Indonesian finance minister indicating that the relationship between the government and JPMorgan may be reinstated comes a few weeks after the U.S. lender released earnings which beat Wall Street’s estimates. The stellar results came in despite poor performance in JPMorgan’s investment and trading units. Revenues in the fixed-income unit for instance fell by 27% after having been boosted the previous year by Brexit.