07 Jul 2014
REGULATION OF INDONESIA DEPOSIT INSURANCE CORPORATION ('LPS') ON PROCEDURES TO SELL SHARES OF FAILING BANKS

The LPS (Lembaga Penjamin Simpanan) has issued a new regulation, Number 1/PLPS/2014 of 2014, on Procedures to Sell Shares of Failing Banks (“Regulation 1/2014”), which replaces the older Regulation Number 2/PLPS/2011. The new regulation is set to provide clearer and more thorough information regarding procedures to sell shares of failing banks.

Regulation 1/2014 among others provides the following:

• LPS must sell the entire shares of a Saved Bank. The sale of the shares may be conducted by way of (i) strategic sale; and/or (ii) other methods which are not in contradiction with the prevailing laws and regulations. The sale of the shares through the capital market as previously regulated under Regulation Number 2/PLPS/2011 is no longer permitted.
• The sale of the shares must be conducted within the following time frame:  

1. For Failing Banks With No Systemic Impacts: 2 (two) years as of the commencement of the settlement by LPS; 
2. For Failing Banks With Systemic Impacts: 3 (three) years as of the date of the submission of their management by the Coordinating Committee to LPS.