REPUBLIKA.CO.ID, JAKARTA - Financial Services Authority (OJK) required small banks to divest to build stronger banks. Chairman of OJK's Board, Muliaman D Hadad said that the divestment would be carried out especially banks in category of BUKU I or bank with core capital under one trillion IDR.

"They must divest because we want them to be stronger and bigger," Hadad said recently.

Based on data, bank in category of BUKU I has composite rating at level of PK-3, PK-4 or PK-5 for three consecutive assessment periods. PK is an indicator of bank's health that will be cut if a bank fails to implement good corporate governance. The smaller the PK's number means the bank is healthier

OJK will issue regulation to encourage bank consolidation, including tax benefits. If a parent company has two or more bank units, then ONK encourage the bank to merge. 

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