JAKARTA (TheInsiderStories) – The Financial Services Authority (FSA) prepared anchor bank and a number of schemes to overcome the liquidity problems in the Indonesian financial industry amid he COVID-19 pandemic, said the chairman yesterday (05/07). The government will provides a liquidity assistances through a placement of deposit to the anchor bank.
At the hearing with commission XI of House on Wednesday, Wimboh Santoso explained, the lender will consist of systemic state and private banks. The definition of a systemic bank is have a large amount of assets and varied product complexity with a financial conglomeration.
Systemic banks also have links with other lenders, and their position is irreplaceable in the event of failure or closure. He said, the state or private banks would be able to apply for loans to the anchor banks with several mechanisms and loan guarantees.
The loans will be adjusted to market interest rates or market rates so that companies applying for liquidity assistance become last resources, not as first resources. He stressed that this facility could only be obtained by banks that were considered still healthy.
“For unhealthy banks, we ask for depositors or sell their assets to other bank or other parties. Or we can use merger schemes or use Deposit Insurance Agency schemes,” said Santoso.
Earlier, the agency has announced that the regulator can force Indonesian banks to consolidate, merging or other steps to maintain financial stability amid the COVID-19. 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’ financing banks or branch offices can still be maintained in accordance with the office network area that has been established.
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