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

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.

 

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KB Kee is the Managing Editor of the Moat Report Asia (www.moatreport.com), a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia; subscribers from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing. KB has been rooted in the principles of value investing for over a decade as an analyst in Asian capital markets. He was head of research and fund manager at a Singapore-based value investment firm. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. He was previously the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, value investing, macroeconomic and industry trends, and detecting accounting frauds in Singapore, HK and China. KB was a faculty (accounting) at SMU teaching accounting courses. KB is currently the Chief Investment Officer at an ASX-listed investment holdings company since September 2015, helping to manage the listed Asian equities investments in the Hidden Champions Fund. Disclaimer: This article is for discussion purposes only and does not constitute an offer, recommendation or solicitation to buy or sell any investments, securities, futures or options. All articles in the website reflect the personal opinions of the writer.

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