Financial Service Agency announced the regulator can force Indonesian banks to consolidate, merging or other steps to maintain financial stability amid the COVID-19, it said yesterday (04/22) - Photo by FSA Office

JAKARTA (TheInsiderStories) – Financial Service Agency (FSA) announced the regulator can force Indonesian banks to consolidate, merging or other steps to maintain financial stability amid the COVID-19, it said yesterday (04/22). Recently, Moody’s Investor Services has warned could lowering outlook of Asia Pacific banks rating caused of the pandemic.

“FSA to take the steps needed to maintain financial system stability, especially in the banking sector amid the threat of economic slowdown as a result of the spread of the pandemic,” said the authority in an official statement.

The regulation consists of the scope of regulation applies to banks and branch offices domiciled overseas. The FSA’ also has authority to give written orders to banks to merging, consolidating, taking over, or/and integrating. In addition, written orders are given to lenders that meet the criteria based on FSA assessments.

The regulation stated, “Obligations to banks given written Orders to draw up an action plan, and to carry out and maintain a smooth process of merging, consolidation, expropriation, and / or integration in accordance with the action plan. In implementing written orders by the bank to carry out or accept mergers, consolidations, expropriations, and/or integrations.”

There are some adjustments to the process of merging, consolidation, acquisition, and/or integration of the lenders, said the agency. For conventional and Islamic banks, it can be excluded from the provisions regarding sole ownership in Indonesian banks, ownership of commercial bank shares, and/or deadline for fulfilling minimum core capital.

In addition, for rural bank and Islamic people’s financing banks or branch offices can still be maintained in accordance with the office network area that has been established.

The regulator also relaxed the non-bank financial industry that have previously been submitted through a letter of the chief executive of FSA to the companies. The provisions concerning of financing restructuring for debtors affected by COVID-19 and various other provisions, such as the deadline for submitting periodic reports, conducting a fit and proper test, determination of asset quality in the form of financing and financing restructuring.

Then, solvability calculation of insurance companies, sharia insurance companies, reinsurance companies, and sharia reinsurance companies. And, calculation of the quality of pension fund funding that organizes a defined benefit pension program also implement asset management provisions according to the life cycle fund for pension funds that carry out defined contribution pension plans.

Written by Staff Editor, Email: theinsiderstories@gmail.com