Ada Pertanyaan? Hubungi Kami 
2026 Hak Cipta Milik Hukumonline.com
Produk Pilihan
Ada Pertanyaan? Hubungi Kami Marcell Sihombing, ANT
The Financial Services Authority. Photo by: RES
The Draft Bill on the Financial System Security Net (JPSK Bill) is currently under deliberation and is also attracting a lot of attention. David Sumual, Head of Economics at Bank Central Asia (BCA) believes that the JPSK Bill will offer additional options as regards the handling of any future financial crisis, especially if it hits the banking sector.
Mr. Sumual points to the fact that only one method is currently available to restore the health of banks which are undergoing financial problems. This method involves temporary capital investment by a guarantee institution, as happened during the infamous Bank Century bailout. There are several other ways of handling such crises however, including purchase and assumption (P&A), as well as the establishment of a bridge bank.
According to Mr. Sumual, the P&A method allows for the assets of an almost bankrupt bank to be auctioned off by investors. This approach is practiced by the FIDC (a guarantee institution owned by the government of the United States). Moreover, the bridge-bank model adopted in Japan is also another possible method.
Mr. Sumual told hukumonline that the P&A method represented an effective preventative measure and that the costs involved in employing this strategy were not as high as the amounts needed to cover losses sustained by a totally bankrupt bank. The P&A method involves the classification of banks into and good and bad, therefore minimizing possible losses in the event of a bank undergoing a financial crisis.
According to Banking Condition Index (BCI) data published by the Financial Services Authority (OJK), the condition of Indonesia’s banking sector can currently be considered normal. Irwan Lubis, the OJK’s Deputy Commissioner of Bank Oversight III, told hukumonline that Indonesia’s BCI reached a level of 0.67 in July before increasing to 0.71 in August.
“There has been an increase, however it’s still within normal BCI limits,” explained Mr. Lubis.
Mr. Lubis further revealed that a BCI index greater than 1 meant that the system was normal. Meanwhile, a BCI index of between 0.5 and 1 means a yellow alert and a situation that, while still normal, calls for caution. Finally, A BCI index of between 0 and 0.5 means a red alert, while a negative index means that a full-blown crisis is currently unfolding.
“In 1998, our BCI index tipped over into the negative and Indonesia experienced a massive financial crisis. At that time, non-performing loans [NPL] in the banking sector reached twice their current level,” explained Mr. Lubis.
The current growth in NPL in the banking-sector increased significantly from 12.2% (year on year) in April 2015 to 35.1% in August 2015. Moreover, despite remaining lower than the mandated regulatory comfort zone of 5%, the ratio of gross NPL across the banking sector has seen a steady increase of late. Gross NPL rose from 2.05% (year on year) in April 2014 to 2.76 percent (year on year) in August 2015, an increase of around 71 basis points (bps).
It should be noted that the Indonesia Deposit Insurance Corporation (IDIC) has predicted that the current increase in the country’s NPL ratio will continue until the end of 2015. The main underlying cause of this increase is the weak growth in loans from certain banks.
“Based on current trends, NPL in the banking sector will potentially increase to the 3% range. Note also that the mining, trade and commodities sectors are still weakening,” warned Mr. Sumual.
Mr. Sumual further revealed that if future trends saw an increase in loans which was accompanied by a government-level intention to boost capital spending, then the increase in the NPL ratio could be effectively slowed down.
“If there was some easing in the current monetary policy, then things would be even better,” concluded Mr. Sumual.
(sp)
Marcell Sihombing, ANT
The Financial Services Authority. Photo by: RES
The Draft Bill on the Financial System Security Net (JPSK Bill) is currently under deliberation and is also attracting a lot of attention. David Sumual, Head of Economics at Bank Central Asia (BCA) believes that the JPSK Bill will offer additional options as regards the handling of any future financial crisis, especially if it hits the banking sector.
Mr. Sumual points to the fact that only one method is currently available to restore the health of banks which are undergoing financial problems. This method involves temporary capital investment by a guarantee institution, as happened during the infamous Bank Century bailout. There are several other ways of handling such crises however, including purchase and assumption (P&A), as well as the establishment of a bridge bank.
According to Mr. Sumual, the P&A method allows for the assets of an almost bankrupt bank to be auctioned off by investors. This approach is practiced by the FIDC (a guarantee institution owned by the government of the United States). Moreover, the bridge-bank model adopted in Japan is also another possible method.
Mr. Sumual told hukumonline that the P&A method represented an effective preventative measure and that the costs involved in employing this strategy were not as high as the amounts needed to cover losses sustained by a totally bankrupt bank. The P&A method involves the classification of banks into and good and bad, therefore minimizing possible losses in the event of a bank undergoing a financial crisis.
According to Banking Condition Index (BCI) data published by the Financial Services Authority (OJK), the condition of Indonesia’s banking sector can currently be considered normal. Irwan Lubis, the OJK’s Deputy Commissioner of Bank Oversight III, told hukumonline that Indonesia’s BCI reached a level of 0.67 in July before increasing to 0.71 in August.
“There has been an increase, however it’s still within normal BCI limits,” explained Mr. Lubis.
Mr. Lubis further revealed that a BCI index greater than 1 meant that the system was normal. Meanwhile, a BCI index of between 0.5 and 1 means a yellow alert and a situation that, while still normal, calls for caution. Finally, A BCI index of between 0 and 0.5 means a red alert, while a negative index means that a full-blown crisis is currently unfolding.
“In 1998, our BCI index tipped over into the negative and Indonesia experienced a massive financial crisis. At that time, non-performing loans [NPL] in the banking sector reached twice their current level,” explained Mr. Lubis.
The current growth in NPL in the banking-sector increased significantly from 12.2% (year on year) in April 2015 to 35.1% in August 2015. Moreover, despite remaining lower than the mandated regulatory comfort zone of 5%, the ratio of gross NPL across the banking sector has seen a steady increase of late. Gross NPL rose from 2.05% (year on year) in April 2014 to 2.76 percent (year on year) in August 2015, an increase of around 71 basis points (bps).
It should be noted that the Indonesia Deposit Insurance Corporation (IDIC) has predicted that the current increase in the country’s NPL ratio will continue until the end of 2015. The main underlying cause of this increase is the weak growth in loans from certain banks.
“Based on current trends, NPL in the banking sector will potentially increase to the 3% range. Note also that the mining, trade and commodities sectors are still weakening,” warned Mr. Sumual.
Mr. Sumual further revealed that if future trends saw an increase in loans which was accompanied by a government-level intention to boost capital spending, then the increase in the NPL ratio could be effectively slowed down.
“If there was some easing in the current monetary policy, then things would be even better,” concluded Mr. Sumual.
(sp)