FINANCIAL FEASIBILITY ANALYSIS FOR SPIN-OFF OF SHARIA BUSINESS UNIT FROM A CONVENTIONAL BANK (CASE STUDY: PT. BANK TABUNGAN NEGARA, TBK)

• Main Author: Roedyhantoro Muhammad, Try
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/38777
• Institution: Institut Teknologi Bandung

The Law No. 21, 2008, about Islamic Banking was authorized by Indonesia Government on July 16th, 2008. By this authorization, Islamic Banks in Indonesia, which has been established for a long time, has a legal basis for its existence. Article 68 on this Law states a provision that regulate the mandatory of spin-off for sharia business unit organized by the Conventional Bank in Indonesia. According to the law, Sharia business Unit should be seperated from its parent company becoming an Islamic Bank if its Total Assets is greater than 50% of its parent company’s Total Assets or in 2023 by the latest. Bank BTN is a stated owned bank that has a Sharia business Unit. So Bank BTN is affected by the mandatory of the law to do a spin-off process if it doesn’t want to liquidate its Sharia Services. This final project uses qualitative method by conducting narrative analysis that utilize the secondary data. This report is aimed at making a conclusion based on the impact faced by the benchmark firms previously and to analyze the impact if it applied on Sharia Business Unit in Bank BTN. The benchmarking assumption in this project is conducted by using three-benchmark company which had been through the spin-off process before. They are Bank BNI Syariah, Bank Jawa Barat & Banten Syariah and Bank Bukopin Syariah. While the internal-based assumption is conducted by using the company ratio in the past period. Business situation analysis in this project conducted by generating 2 (two) projection models. The first model is 2019 Spin-off Financial Projection and the other is 2023 Spin-off Financial Projection. The recommendation is concluded by comparing the firm value of both models. Based on the financial feasibility analysis, the highest value is more favorable than the others. According to the financial feasibility study for both periods of spin-off, it seen that both of them are feasible to be conducted since both of them generate more value than its liquidation value (book value) on the beginning period (2019). Moreover, liquidating the Sharia Business Unit in 2023, instead of conducting spinn-off process, is not favorable since it shows less value than both total value of Spinned-off company. Based on the sensitivity analysis, stakeholders should be more aware of and monitor three variables to prevent the value impairment. they are Growth of Sharia Business Unit Third-Party Funds which affect directly, Islamic Bank Cost of Capital which affect inversely and Nisbah of Third-Party Funds which affect inversely to the value of the firm.