TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Popular Reads
Top Results
No results found. Please check your search term and try again
Can't find what you're looking for?
View all search results
Popular Reads
Top Results
No results found. Please check your search term and try again
Can't find what you're looking for?
View all search resultsOJK pushes for consolidation in market with ‘too many banks’
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
Illustration photo of the banking industry (Shutterstock/File)
A
consolidation push in the banking industry looks set to make small lenders targets of mergers and acquisitions as the Financial Services Authority (OJK) wants to eliminate the lowest core capital category, which currently dominates the industry.
The prevailing OJK classification places banks in four categories based on their core capital. Those in the KBMI 1 category, which refers to lenders with a core capital of up to Rp 6 trillion (US$88.8 million), are expected to grow larger, either by raising capital or working with other banks.
Regional development banks (BPD) are exempt from the consolidation drive.
The OJK’s banking supervision head Dian Ediana Rae, described the consolidation plan as an “urgent” and strategic move aimed at enhancing the resiliency of the banking industry and sustaining long-term economic growth.
“This measure is deemed important considering the dynamics of information and technology development, the acceleration of digitalization in banking and global economic uncertainty, as well as the increasing risk of cyberattacks,” he said in a monthly press conference held online on Thursday.
Small banks may strengthen their capital and business scale through organic or inorganic approaches, he said, adding that the OJK encouraged them to thoroughly evaluate their business performance, capital, asset quality, governance, business model and long-term prospects.
“The inorganic approach through consolidation is also necessary to serve as a form of impetus for the performance of banks that are currently facing stagnation,” he said.
