With shareholders approving the merger,

are Bank Niaga and Bank Lippo a few steps away

from being Indonesia's sixth largest bank?

Bank Niaga and Bank Lippo, two Indonesian banks indirectly controlled by Malaysia's sovereign wealth fund, have won approvals from shareholders to combine.

The shareholders of the two Jakarta-based lenders appointed Arwin Rasyid, former president director of Telekomunikasi Indonesia, as president of the lender after the merger, Niaga said in a July 18 statement on its Web site.

In June, Khazanah Nasional, Malaysia's sovereign wealth fund, said in the 24.6 trillion rupiah ($2.7 billion) merger Lippo shareholders would get 2.822 of Niaga's shares for every share they held. Khazanah will also offer to buy Niaga's shares from investors at 1,052 rupiah apiece and Lippo's shares at 2,969 rupiah a share at the end of July.

“These shareholders' approvals bring us one step closer to completing this merger for growth,” Nazir Razak, chief executive officer of Khazanah's Bumiputra-Commerce Holdings, said in the statement.

The merger is still subject to approvals from regulatory authorities in Indonesia and Malaysia, the statement said.

Merging the banks, set up almost six decades ago, will create a network of more than 600 branches with about $8.9 billion of assets, the sixth largest in Indonesia. It will also help Khazanah Nasional meet a regulation restricting control of more than one financial services company in Indonesia.

Aside from encouraging mergers among banks, how may Bank Indonesia see larger and stronger financial institutions in the country?