LPS Announces Successfully Healthy BIMJ

Illustration (Photo: Doc. ANTARA)

JAKARTA - The Deposit Insurance Corporation (LPS) has made history in handling troubled banks.

Not long ago, LPS managed to restore 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, this is the first time LPS has handled BDR by means of its banks being healthily through new powers since the issuance of Law No. 4 of 2023 concerning the Development and Strengthening of the Financial Sector (P2SK).

"This is a new innovation for the handling of more effective banks, thus allowing LPS to carry out rescue measures by involving potential investors or other parties before LPS decides on resolution options, namely purchase and assessment, bank bridge, temporary capital participation, or liquidation," said LPS Bank Executive Director of Claims and Resolution, Suwandi, Thursday, June 13.

As stated in the P2SK Law, LPS has the authority to handle banks with BDR status where LPS can conduct an assessment of 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.

He added, as an implementation of this authority, LPS then made various efforts to restore BIMJ, including collaborating with Bank BJB, which is a BIMJ creditor to become an investor.

BIMJ's restructuring was carried out by converting BIMJ's loan to Bank BJB into an additional core capital of IDR 25 billion from all BIMJ loans to Bank BJB amounting to IDR 39 billion.

In this way, LPS can save R127 billion because it does not need to pay guarantee claims if the bank is liquidated.

With this conversion, the calculation of the Minimum Capital Provision Obligation (KPMM) of banks, according to 28.83 percent and cash ratios, the average of the last 3 months reached 27.03 percent, meaning that with the KPMM and cash ratio, BIMJ was able to meet the provisions of the health level regarding the solvability and liquidity of banks.

As of April 30, 2024, BIMJ's total assets amounted to Rp160.89 billion, total liabilities of Rp158.42 billion with deposits of Rp114.20 billion and total equity of Rp2.47 billion.

Data as of May 31, 2024, the total deposits that are feasible for the People's Economy Bank Karya Remaja Indramayu (BPR KRI) that have been paid by LPS have covered a total deposit of Rp 331.15 billion (97.98 percent), and a total account of 33,400 (97.26 percent). BPR KRI is a bank whose business license has been revoked by the OJK since September 2023.

For information, based on LPS data, the average claim payment time from year to year has shown a positive trend. As an illustration, the process of paying claims for the first phase of customer guarantee in 2021 will take between 9 and 14 working days, but now in 2024 it will be faster, it only takes 5 working days since the bank was revoked its business license for the first phase of payment which includes more than 70 percent of customers. LPS Announces Successfully Healthy BIMJ