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Print articleNew Regulation on the Consolidation of Commercial Banks
April, 2020 - Irina Anindita, Gaudencia Vania
The Financial Services Authority (Otoritas Jasa Keuangan/“OJK”) recently issued OJK Regulation Number 12/POJK.03/2020 of 2020 on the Consolidation of Commercial Banks (“OJK Reg 12/2020”). This new regulation aims for strengthening the structure, resilience, and competitiveness of the national banking industry to support national economic stability and growth through the strengthening of bank capital and the consolidation of banks in Indonesia.OJK Reg 12/2020 introduces provisions on the banking consolidation policy for conventional and sharia commercial banks. The main provisions include the following:
1. Commercial Bank (“Bank”) Consolidation Schemes
| Scheme | Relevant Parties |
| Merger, consolidation or integration | This scheme is applicable to controlling shareholders (Pemegang Saham Pengendali / “PSP”) of Banks. |
| An acquisition followed by a merger, consolidation or integration | This scheme is applicable to parties, which i) have become a Bank PSP and will acquire one or more banks or ii) will become a Bank PSP and acquire two or more Banks, to be followed by a merger, consolidation or integration. |
| The establishment of a Bank Business Group (Kelompok Usaha Bank / “KUB”) of Banks owned | This scheme is applicable to PSPs which are Banks which own one or more Banks or PSPs which are non-bank financial institutions, non-financial legal entities or individuals, or PSPs domiciled abroad which own two or more Banks. |
| The establishment of a KUB due to an acquisition | This scheme is applicable to parties which have become a Bank PSP and will acquire one or more Banks. |
| The establishment of a KUB due to the spin-off of a Sharia Business Unit (Unit Usaha Syariah / “UUS”) | This scheme is applicable to Conventional Commercial Banks (Bank Umum Konvensional / BUK) that spin-off their UUS. |
2. KUBs
A KUB can be established if the following conditions are met:
- the PSP, parent company and/or administrator of the parent company meet the required bank capital and liquidity levels for the Banks within the KUB; and
- the merger, consolidation or integration of Banks will not result in any significant increase in the business scale of the Banks following the merger, consolidation or integration.
A KUB consists of a) a parent company (a legal entity which consolidates and directly controls the KUB’s activities) which is a Bank and b) one or more Banks as subsidiaries. The parent company is either i) the PSP which is a bank or ii) if the PSP is a non-bank financial institution, a non-financial legal entity, an individual or a PSP domiciled abroad that owns two or more Banks, one of the Banks owned (which meets certain requirements) is appointed as the administrator of the parent company.
Footnotes: M&T Advisory is an email publication prepared by the Indonesian law firm, Makarim & Taira S. It is only intended to inform generally on the topics covered and should not be treated as a legal advice or relied upon when making investment or business decisions. Should you have any questions on any matter contained in M&T Advisory, or other comments generally, please contact your usual M&T contact or [email protected]. Contacts: Kurniawan Tanzil: [email protected] |
