26 Jan 2018
New OJK Regulation on Single Presence Policy
A new OJK regulation on the Single Presence Policy in Indonesian Banking (“POJK 39/2017”), which revokes Bank Indonesia Regulation No. 14/24/PBI/2012 (“PBI 14/2012”), was issued on 12 July 2017 by the Financial Services Authority (Otoritas Jasa Keuangan or “OJK”). POJK 39/2017 was followed a week later by OJK Circular Letter No. 44/SEOJK.03/017 (“OJK Circular”), which sets out implementation regulations for POJK 39/2017.
The Single Presence Policy is aimed at ensuring that a single entity does not simultaneously hold a controlling interest in more than one bank. Accordingly, POJK 39/2017 provides that, in principle, a party may only be the controlling shareholder of one (1) bank. In line with this, a controlling shareholder of more than one bank is required to comply with the Single Presence Policy by undertaking one of the following actions:
1. merge or consolidate its controlled banks;
2. establish a bank holding company; or
3. establish a holding function.
The actions described in points 1 and 2 above must be completed within one year of the acquisition of a controlling interest in another bank, whereas the action in point 3 must be completed within six months of the acquisition of a controlling interest in another bank.
Among the provisions of the OJK Circular governing the actions described in points 1 and 2 above are the following:
Merger or consolidation
1. Extension of the Maximum Lending Limit (Batas Maksimum Pemberian Kredit) settlement deadline;
2. Easier procedures for the opening of branch offices;
3. Temporary easing of corporate governance requirements; and
4. Other incentives, as provided for by the prevailing regulations on banking-sector consolidation.
Establishment of Bank Holding Company
Upon receiving these plans, the OJK will conduct a fit-and-proper test on the proposed directors and commissioners of the Holding Company that will be established. The OJK is required to notify the results of the fit-and-proper test and its approval or rejection of the application to establish the Holding Company by not later than 30 days from the date of receipt of all of the prescribed documents and other requirements.
The technical procedures for the conducting of the above actions are set out in the OJK Circular.
As mentioned earlier, the Single Presence Policy in Indonesian Banking was previously regulated by PBI 14/2012. The shift in regulatory authority from Bank Indonesia to the OJK that is reflected in POJK 39/2017 is in line with the OJK’s role as the sole financial services regulator under Law No. 21 of 2011 on the Financial Services Authority. (By: Monic Nisa Devina & Sarah Faisal Rosa)