12 big domestic banks should create recovery plan

JAKARTA. Otoritas Jasa Keuangan or Financial Services Agency (FSA) will release OJK Regulation which requires all domestic systemically important banks (D-SIBs) to create recovery plan.

Commissioner of OJK for Banking Affairs Nelson Tampubolon said, recovery plan shall include bank’s plan to cope with financial, liquidity, and capital issues. In this case, bank may take three steps in coping with those issues.

First, controlling shareholders can inject additional capitals. Second, the controlling shareholders may invite strategic investors to increase the capital.

Third, the bank may convert certain debts into capitals.

Nelson added, OJK has conducted preliminary discussions with the D-SIBs.

“There are 12 major banks under the category of D-SIB, which will be required to create recovery plan,” Nelson said.

The requirement is in accordance with the Law on Crisis Prevention and Management of Financial System (PPKSK). The law will take into effect after the issuance of POJK. “We will issue the POJK no later than the end of March 2017,” Nelson added.

As information, the recovery plan, which will be proposed to OJK, has to be approved and signed by president director, president commissioner, and the controlling shareholders. The plan has also to be approved by general meeting of shareholders.

The future POJK will include recovery options. These options would be determined by the banks to respond financial stress in maintaining or recovering financial conditions, as well as bank’s viability.

President Director of PT Bank OCBC NISP Tbk Parwati Surjaudaja said, the bank has prepared the contingency plan, which is related to capital and liquidity matters.

The contingency plan includes the establishment of a committee to quickly respond emergency situation. According to Parwati, the future recovery plan can be included under contingency plan.

Financial Director of PT Bank Rakyat Indonesia Tbk (BRI) said that the bank always prepares plan to respond the risks. To date, BRI is maintaining capital adequacy ratio at minimum of 16% to anticipate capital related issues.

BRI has prepared contingency funding plan by including the parameter of liquidity risks limit. The parameter is regularly monitored. “BRI is periodically conducting stress test related to capital and liquidity adequacy,” Haru said. (Muhammad Farid/Translator)