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Big banks may be charged with higher premiums
The Deposit Insurance Corporation (LPS), a state-owned agency that covers protection for bank deposits, is preparing a new premium rate for big banks as financial authorities prepare a new list of domestic systematically important banks (DSIB).
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Deposit Insurance Corporation (LPS) commissioner board head Halim Alamsyah poses after attending an open-house event at Financial Services Authority (OJK) chairman Muliaman Hadad's residence in South Jakarta, on Thursday. (JP/Stefani Ribka)
T
he Deposit Insurance Corporation (LPS), a state-owned agency that covers protection for bank deposits, is preparing a new premium rate for big banks as financial authorities prepare a new list of domestic systemically important banks (DSIBs).
LPS commissioner board head Halim Alamsyah said the firm was reviewing a risk-based differential premium system, as opposed to the existing rate that is charged the same for any bank that is included as its insurance member. DSIBs, also known as too-big-to-fail banks, may be charged higher premiums as they carry bigger risks.
The Financial Services Authority (OJK) and Bank Indonesia (BI) are slated to announce the DSIBs list to the LPS, which is not open to the public.
"As the OJK and BI will announce which banks fall into the DSIB category, we are reviewing the premium rates as well," he told reporters on the sidelines of an open-house event at OJK chairman Muliaman Hadad’s official residence in South Jakarta on Thursday.
Halim said the new premium rate system would follow international standards, as the global benchmark charges a higher premium rate for DSIBs that lend to other banks, had big assets and significant impact on the financial industry as a whole.
The LPS covers savings or deposits up to a maximum of Rp 2 billion (US$176,113) for each domestic depositor. Its insurance members comprise 109 commercial banks, 11 sharia banks and around 1,700 rural banks (BPRs). (est)
