REPUBLIKA.CO.ID, JAKARTA -- Indonesian Deposit Insurance Corporation (LPS) asked monetary authority to issue new regulation distinguishing failed banks and healthy banks. Currently Bank Indonesia (BI) and Financial Service Authority (OJK) have similar monitoring regulation on both categories.
LPS Executive Chairman Kartika Wirjoatmodjo said bank regulation should be revised. She said that financial ratio of banks under rescue must be distinguished from those of healthy banks.
"We are considering forming a bridge bank. We build a new bank to hold good assets and third party funds, while the bad assets remain in the failed bank," Wirjoatmodjo said on Wednesday, December 3.
He will suggest the proposal to be put in the draft of financial safety net (JPSK). He believes that such policy can boost LPS performance on handling failed banks. LPS can also sell the rescued bank with the best price.
The proposal is made based on experience. LPS rescued Bank Mutiara in 2008, formerly known as Bank Century. LPS spent 6.7 trillion IDR to rescue the bank from its previous owner and injected additional capital around 1.25 trillion IDR in 2013.
"Bank Century was in a bad condition when it was rescued," he said.
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