Indonesia plans new risk standards for banks

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Danamon bankThe Indonesian government plans to require banks to follow more extensive risk assessment standards and pay a levy, the Financial Services Authority said as it prepares to take over supervision of lenders in January, according to a Bloomberg report.

The agency is considering charging financial companies a fee of 0.03 to 0.045 per cent of assets to fund its operations, to be phased in gradually starting next year, said Muliaman Hadad, chairman of regulator OJK. From 2015, banks with investment, securities, insurance and other units will need to include the risk profile of subsidiaries in assessing capital adequacy, he said.

The authority, which became the regulator for non-bank financial services sectors in 2013, won’t introduce “significant” policy or regulatory changes, the chairman said, while signaling he’s open to altering existing rules or decisions.

Over the past decade, Indonesian lenders such as Bank Danamon and PT Bank Internasional Indonesia have been expanding by acquiring financing companies, while PT Bank Central Asia started a brokerage business to grow beyond commercial banking.

The proposal for the levy on banks and financial institutions is with the president and is expected to be signed by the end of 2013, with implementation in 2014. Indonesian lenders are the most profitable in the world’s 20 biggest economies, according to Bloomberg data.

Bank Indonesia implemented rules in 2012 that limited financial institutions to buying a 40 per cent stake in Indonesian lenders. DBS Group Holdings in August ended a bid to buy Bank Danamon for $6.5 billion in what would have been Southeast Asia’s largest bank takeover, after failing to win regulatory approval for a majority stake.

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Reading Time: 1 minute

The Indonesian government plans to require banks to follow more extensive risk assessment standards and pay a levy, the Financial Services Authority said as it prepares to take over supervision of lenders in January, according to a Bloomberg report.

Reading Time: 1 minute

Danamon bankThe Indonesian government plans to require banks to follow more extensive risk assessment standards and pay a levy, the Financial Services Authority said as it prepares to take over supervision of lenders in January, according to a Bloomberg report.

The agency is considering charging financial companies a fee of 0.03 to 0.045 per cent of assets to fund its operations, to be phased in gradually starting next year, said Muliaman Hadad, chairman of regulator OJK. From 2015, banks with investment, securities, insurance and other units will need to include the risk profile of subsidiaries in assessing capital adequacy, he said.

The authority, which became the regulator for non-bank financial services sectors in 2013, won’t introduce “significant” policy or regulatory changes, the chairman said, while signaling he’s open to altering existing rules or decisions.

Over the past decade, Indonesian lenders such as Bank Danamon and PT Bank Internasional Indonesia have been expanding by acquiring financing companies, while PT Bank Central Asia started a brokerage business to grow beyond commercial banking.

The proposal for the levy on banks and financial institutions is with the president and is expected to be signed by the end of 2013, with implementation in 2014. Indonesian lenders are the most profitable in the world’s 20 biggest economies, according to Bloomberg data.

Bank Indonesia implemented rules in 2012 that limited financial institutions to buying a 40 per cent stake in Indonesian lenders. DBS Group Holdings in August ended a bid to buy Bank Danamon for $6.5 billion in what would have been Southeast Asia’s largest bank takeover, after failing to win regulatory approval for a majority stake.

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