Indonesia’s Financial Services Authority OJK cautious on ‘banking conglomeration’

June 23, 2014 Leave a comment

OJK cautious on ‘banking conglomeration’

The Jakarta Post, Jakarta | Business | Fri, June 20 2014, 8:49 AM

The Financial Services Authority (OJK) will closely supervise what it calls “banking conglomeration”, in which several lenders also operate other businesses either in banking or non-banking sectors.

OJK deputy commissioner Endang Kusulanjari cited Bank Mandiri as an example, saying that the state lender also ran an insurance business through Axa Mandiri and Mandiri Sekuritas, its securities company. According to her, several lenders not only run business in other sectors but some of them also own shares in other banks.

“The OJK will prepare an integrated supervision system. Potential risks will be monitored through the parent company and the subsidiary as well,” she said in Medan, North Sumatra, on Thursday. The integrated supervision system would be implemented as soon as January next year, Antara news agency reported.

Based on OJK findings, most of the irregularities in the banking industry involve fictitious credit (50 percent), funding (24 percent), a change in fund allocation (15 percent). The findings happened to either parent companies or subsidiaries.

 

Filed under Macro Trends

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