Having A Bank Status In Resolution, LPS Restores BPR Indramayu West Java

Illustration (Photo: Doc. ANTARA)

JAKARTA - The Deposit Insurance Corporation (LPS) has again restored the West Java Indramayu People's Economy Bank (BIMJ) to become a normal bank that was previously included in the category of Bank Dalam Resolution (BDR).

For information, BIMJ's health condition, which previously had a normal bank status, then worsened so that his status became a Bank in Restructuring (BDP).

Over time, BIMJ's health condition did not improve, so OJK determined the bank's status to become a Bank in Resolution (BDR) to then hand over its handling to LPS on January 12, 2024.

As stated in Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (UU P2SK), LPS has the authority to handle banks with BDR status where LPS can conduct assessments to banks interested in taking over all or part of bank assets and obligations as well as exploring other potential investors, where previously LPS did not have this authority.

As an implementation of this authority, LPS then made various efforts to restore BIMJ, among others, by cooperating with Bank BJB, which is a BIMJ creditor to become an investor.

"This is a breakthrough step for more effective bank management, allowing LPS to carry out rescue measures by potential investors or other parties, before LPS decides on resolution options, namely purchase and assessment, bank bridge, temporary capital participation, or liquidation," said LPS Board of Commissioners for Bank Guarantee and Resolution Program, Didik Madiyono, Thursday, May 30.

Didik said that BIMJ's restructuring is an important milestone in handling banks in resolution. This of course cannot be separated from the intensive coordination carried out by LPS and OJK with all BIMJ shareholders and all stakeholders. The support of the LPS leadership and the very strong OJK leadership is one of the keys to the success of BIMJ's restructuring.

"We hope that BIMJ can resume its economic function as a People's Economy Bank for the people in Indramayu Regency and its surroundings. We also hope that all elements of BIMJ shareholders, administrators, and employees can make the necessary innovations and breakthroughs so that BIMJ can be more advanced and become the pride of the Indramayu community," he concluded.

As is known, BIMJ together with 7 other BPRs have been designated by OJK as banks in resolution on January 12, 2024. This BPR-BPR has been given the opportunity for more than 1 year to improve solvency (KPMM) and/or liquidity (cash ratio).

However, until the deadline ends, the condition of solvability and/or liquidity of banks is still below the provisions regarding the level of bank health, so that OJK determines it as a bank in resolution. Based on OJK calculations, BIMJ's capital needs to improve KPMM banks are at least IDR 25 billion.

Along with BIMJ's notification as a bank in resolution by OJK, LPS immediately carries out its authority as stipulated in Article 6 paragraph (2) of the LPS Law, namely deactivating the management and assigning the Temporary Management Team to carry out bank operations.

In addition, LPS also appointed a team to secure assets and a team to prepare for reconciliation and deposit verification to anticipate that banks would ultimately not be saved.

This is so that the implementation of liquidation and payment of claims from storage customers can be carried out as soon as the bank is revoked its business license.

BIMJ's restructuring was carried out by converting loans into Additional Core Capital amounting to IDR 25 billion from all BJB Bank loans to BIMJ amounting to IDR 39 billion.

With this conversion, the calculation of the Minimum Capital Provision Obligation (KPMM) of banks according to the Temporary Management Team reached 28.83 percent and the average cash ratio for the last 3 months reached 27.03 percent.

With such a large KPMM and cash ratio, banks can meet the provisions of the health level regarding solvability and liquidity.