Bank Syariah Mandiri, the Islamic banking division of the country's largest bank by assets, is planning a 2014 IPO on the Indonesian Stock Exchange, becoming the first Islamic bank to go public on the country's exchange. However, before the IPO, the parent company Bank Mandiri will inject up to Rp 1.1 trillion ($114 million), some of which will be used to expand its services into domestic trust services.
The two articles conflict somewhat about the use of funds (or the total amount). The first says the capital injection will be Rp 500 billion, while the second article says the additional funds injected to support the domestic trust services launch will total Rp 800 billion.
The biggest question for the Islamic banking market is whether the IPO will support growth in Islamic banking in Indonesia. Currently, Bank Syariah Mandiri has total assets of Rp 48.7 billion ($5 billion) compared with total assets for Bank Mandiri of Rp 511 trillion ($57 billion). This represents 8.8% of the bank's total assets, compared with a country-wide average of 4.7% (but compared to the more than 20% share held by Islamic banks in Malaysia).
In 2008, the Indonesian central bank, Bank Indonesia, set a deadline of 2023 for conventional banks to spin off their Islamic banking subsidiaries once they reach 50% of the total assets in the combined companies. The Islamic banking window of Bank Mandiri is not close to that level, nor is it likely to reach 50% in the near future, but since the bank is government-owned (as well as being the largest bank in Indonesia), it is likely that there was additional pressure placed on the bank to list its Islamic banking business to spur other conventional banks with Islamic windows to do the same, regardless of whether they will reach the limit where they would be required to fully spin these subsidiaries off.
The question to come is whether the additional capital injection is being made in anticipation of write-offs and restructuring losses, or if the additional capital will allow Bank Syariah Mandiri to continue to grow. With the anticipated IPO at least a year off, there will be plenty of time to see which is the case, as well as to see whether other conventional banks in Indonesia with Islamic windows jump into the public markets first.
 The text of the law (PDF) reads: "In the event that a Conventional Commercial Bank having a UUS of which its assets value has reached at least 50% (fifty percent) of the total asset value of its Parent Bank or after 15 (fifteen) years of coming into force of this Act, the Conventional Commercial Bank must conduct a UUS Splitting (spin off) to turn it into a Sharia (Islamic) Commercial Bank."
 In case it is not clear in the body of the post, it appears that Bank Mandiri will be listing its subsidiary, not spinning it off entirely (i.e. it will probably retain significant and potentially majority ownership after the IPO).