FINANCIAL SERVICES AUTHORITY REGULATION NO. 12/POJK.03/2020 YEAR 2020

July 28, 2020 | Regulatory Updates


On March 16, 2020, Financial Services Authority (“OJK”) issued the Financial Services Authority Regulation No. 12/POJK.03/2020 on Commercial Banks Consolidation (“POJK 12/2020”) as one of the latest efforts to strengthen the structure, resilience and competitiveness of Indonesia economic growth and stability.

As a result, there are several regulations that are amended by this POJK 12/2002;

Such as:

(i) Minimum Core Capital requirements which was previously governed under Bank Indonesia Regulation No. 7/15/PBI/2005 Year 2005 dated 1 July 2005 and was amended by Bank Indonesia Regulation No. 9/16/PBI/2007 dated 3 December 2007 concerning Minimum Amount of Commercial Banks Core Capital; and

(ii) A single presence policy and limitation for C (Pemegang Saham Pengendali– PSP”) in acquiring Banks as per governed under OJK Regulation No. 39/POJK.03/2017 concerning Single Ownership in Indonesia Banking.

Commercial Banks Consolidation Schemes

Pursuant to POJK 12/2020, PSP Bank can own 1 (one) or more Banks thorough the following consolidation schemes:

1. Merger, amalgamation or integration- for Bank(s) which are either jointly owned by the same PSP or otherwise.

 

2. Acquisition followed by merger, an amalgamation, or an integration - for Bank Controlling Shareholders (“PSP Bank”) acquiring 1 (one) or more Banks or parties that will become PSP Bank; Or that in which the Bank Controlling Shareholders acquire 2 (two) or more Banks.

 

3. Establishment of Bank Business Group (Kelompok Usaha Bank – KUB”) over currently owned Banks - for PSP Bank which currently owns 1 (one) or more Banks or PSP (whether in the form of non-bank financial institution, non-financial institution, individual or PSP domiciled abroad) owning 2 (two) or more Banks.

4. Establishment of KUB due to segregation of Sharia Business Unit (Unit Usaha Syariah – “UUS”) - for Conventional Commercial Banks (Bank Umum Konvensional) undertaking segregation of UUS.

5. Establishment of KUB due to acquisition - for PSP Bank acquiring 1 (one) or more Banks.

Establishment of KUB

PSP Bank owning 1 (one) or more Banks, non-bank PSP, or PSP domiciled abroad owning 2 (two) or more Banks may establish a KUB in the event where its' merger, amalgamation or integration plan does not result in a significant improvement upon its' business scale.

Holding company (perusahaan induk) of KUB must be in the form of a Bank with 1 (one) or more Banks as its' subsidiary. Non-bank PSP or PSP domiciled abroad shall appoint a Bank within its group with largest total assets amount and better Bank Health Level (Tingkat Kesehatan Bank) as the holding company executor (pelaksana perusahaan induk).

Below are the documents which shall be submitted to OJK by the holding company or holding company executor:

1. KUB establishment plan along with the KUB structure; and

2. documents evidencing appointment of the Bank as holding company executor should the PSP be a non-bank institution or domiciled abroad.

Submission timeline:

Establishment of KUB

Submission by Bank

Confirmation by OJK

over currently owned Banks

at the latest within 1 (one) month as of enactment of this POJK 12/2020

at the latest within 10 (ten) business days as of KUB establishment plan and structure is received by OJK

due to USS segregation

upon submission of USS Segregation Licenses application

at the latest within 5 (five) business days as of USS Segregation effective date

due to acquisition

upon submission of Acquisition Permit application

at the latest within 5 (five) business days as of Acquisition effective date

Any changes to KUB structure following the receipt of Confirmation as mentioned above must be notified to OJK at the latest within 5 (five) business days as of the effective date of such amended structure.

Minimum Core Capital and Capital Equivalency Maintained Assets (“CEMA”)

Banks are subject to a Minimum Core Capital and CEMA requirements which shall be no less than IDR3 trillion, and must be fulfilled by 31 December 2022 at the latest under the following stages:

Minimum Core Capital

Minimum CEMA

Fulfillment Period

IDR1 trillion

-

31 December 2020

IDR2 trillion

IDR2 trillion

31 December 2021

IDR3 trillion

IDR3 trillion

31 December 2022

Regional Government Banks (Bank Pemerintah Daerah) may be granted an extension for fulfillment period until 31 December 2024 (subject to PSP/Regional Government capital and capability).

Moreover, in terms of fulfillment period requirements, Banks undertaking consolidation schemes pursuant to this POJK 12/2020 shall be given exemption under certain conditions, such as:

1. For Banks enveloped within a KUB structure;

a. The Minimum Core Capital for Banks as holding company or holding company executor shall be no less than IDR3 trillion;

b. The Minimum Core Capital for subsidiary Banks shall be no less than IDR1 trillion, and the fulfilment period may be exempted from fulfillment stages pursuant to the POJK 12/2020 (subject to OJK approval).

2. Minimum Core Capital for Banks which resulted from a merger, an amalgamation or an integration whether it was preceded with acquisition or not shall be no less than IDR3 trillion, and the fulfilment period may be exempted from the fulfillment stages under the POJK 12/2020 (subject to OJK approval).

Additional Exemptions

In order to attract Banks to forthwith the consolidation schemes hereunder, there are several exemptions granted under this POJK 12/2020 such as:

(i) Banks and/or PSP that are fulfilling the consolidation schemes pursuant to POJK 12/2020 and/or PSP Bank under the Minimum Core Capital fulfillment shall be exempted from the provisions laid under OJK Regulation No. 54/POJK.03/2016 concerning Commercial Bank Ownership; and

(ii) Banks fulfilling the consolidation schemes pursuant to POJK 12/2020 by joining a KUB may conduct the same business activities with its' holding company or holding company executor business activities (subject to OJK approval).

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