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NEWS UPDATES Asean Affairs  March 29, 2018  


Indonesia imposes extra capital requirements on important banks

Indonesia ordered the nation’s biggest lenders to set aside additional capital to bolster their ability to absorb losses and protect against any bank failures.

The Financial Services Authority, known as OJK, told the country’s systemically important banks to create a tier-1 capital surcharge of between 1 percent and 3.5 percent of risk-weighted assets, depending on the size and perceived riskiness of the lender, the regulator said in a statement on its website Tuesday. Banks have until Jan. 1 to meet the additional requirement, it said.

The move may conflict with government efforts to reverse a slowdown in lending and bolster the economy. Credit growth in Southeast Asia’s largest economy has fallen to single digits in the past two years from a more than 20 percent average in the decade before, as weak private investment weighs on demand for loans. President Joko Widodo early this month urged banks to take more risks as he seeks to accelerate economic growth before a re-election bid in 2019.

“While we can understand the intention of Indonesian regulators to safeguard the system, they should also consider the impact this stricter capital rule might have on the lenders’ ability to extend loans at a time when the country needs lots of financing for its infrastructure development,” said Taye Shim, head of research at Mirae Asset Sekuritas Indonesia.

OJK classified the country’s systemically important banks into five categories when deciding the size of the new capital surcharge. Together with Bank Indonesia, the regulator will revise the classification in March and September every year based on the lenders’ performance data, OJK said. The methodology used to identify systemically important banks will be revised at least once every three years, the authority added.



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ASEAN  ANALYSIS

This year in Thailand-what next?


AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More

 


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