HSBC plans to inject $1 billion into Indonesia business - regulator

By Cindy Silviana and Eveline Danubrata

JAKARTA (Reuters) - British lender HSBC (HSBA.L) plans to inject $1 billion (0.82 billion pounds) of additional capital into its combined Indonesian business with PT Bank Ekonomi Raharja, an official at the Indonesian financial regulator, Ariastiadi, said on Thursday.

HSBC separately said it would integrate its Indonesian business with Bank Ekonomi, but a bank spokeswoman in Indonesia declined to comment on the planned capital injection.

The move would help to resolve a long-running issue for HSBC in Indonesia, where the government has encouraged banks in the country to operate via a single locally incorporated entity.

Since the 2008/09 global financial crisis, local regulators have encouraged banks in their jurisdictions to incorporate themselves locally in order to make them easier to police and to ring-fence them from external shocks.

Before the integration, HSBC operated its own branch on top of having a controlling stake in Bank Ekonomi.

HSBC last year offered to buy out the minority shareholders of Bank Ekonomi and delist the Indonesian lender from the Jakarta stock exchange. (http://reut.rs/2dCfisW)

Under the integration process, all the assets and liabilities of HSBC Indonesia will be transferred to the combined entity, which will be called PT Bank HSBC Indonesia, said HSBC's Indonesian legal consultant, Kemal Siregar.

HSBC shares were down 1 percent in London by 0940 GMT, while the benchmark FTSE 100 index (.FTSE) remained flat.

(Reporting by Cindy Silviana and Eveline Danubrata in JAKARTA; Additional reporting by Lawrence White in LONDON; Editing by Jacqueline Wong)