Indonesia to Foreign banks: we be rolling, we be scammin

I believe CIMB was the first to report dismal earnings in the form of its Indonesia operations not performing so well. More will be coming.   From the latest CIMB research report on Maybank:

The operating environment in Indonesia had been challenging since the middle of last year, due to the rise in inflation and tight liquidity, which has exerted pressure on banks’ margins and asset quality. As such, the net profit of Maybank’s unit in Indonesia, Bank Internasional Indonesia (BII), plunged by 69% yoy to RM100m in 9MFY14.

Lets recall the time where buying large stakes in Indonesia banks were all the rage a couple of years ago.  Maybank purchased Bank International Indonesia for 3.8x book value.  Ridiculous price!  Now what has happened since then?  Joko has been elected president, he has cut fuel subsidies and cost of living has increased.  Indonesians *surprised* now find it hard to make payments on their loans.

Indonesia has more or less outsourced its risk in the banking industry while gearing up to settle their in house problems.  Score 1 for Indonesia, foreigners 0.  I'm sure Indonesia will be willing to buy the stuff back at a discount. 

CIMB and Maybank...ouch.