Restructuring Failed Banks By Deposit Insurance Agency (Lsp) Acordanced Indonesian Banking Law

Abstract

The failed banks are the banks that face financial problem, endanger the continuity of their business, and is declared no longer able to be healthy by Banking Supervisory Agency. During the economic crisis, the government reconstructs the national banking system which included recapitalization of the national banking system, a third-party fund guarantee program and settlement of liquidity assistance from Bank Indonesia. The National Bank Restructuring Agency is purposely founded to solve the banking crisis. The programs of restructuring banking that is implemented by the National Bank Restructuring Agency run slow because of legal process barriers and slow banking restructuring are measured by the rate at which asset values decline. The government issued Law Number 9 of 2016 concerning Prevention and Management of Financial System Crisis. The duties and responsibilities of the Deposit Insurance Agency are increasingly being expanded and strengthened, including their appointment as the organizer of the banking restructuring program. From the research results, the duties, and responsibilities of the LPS were further expanded and strengthened by the enactment of the PPKSK Law. LPS implements the resolution of failed systemic and non-systemic failed banks. For non-systemic failed banks that are not saved, the LPS recommends the OJK to revoke the bank's business license, makes payment of guarantee claims and carries out liquidation. On the other hand, if certain requirements are met, the LPS can make efforts to save a failed bank without a systemic impact. For banks failing to have a systemic impact, the problem is brought to the Financial System Stability Committee (KSSK). LPS can include the old shareholders or not. The LPS Law only provides options for failed bank resolution methods in the form of payment of deposit guarantor claims and bank liquidation (reimbursement), as well as the implementation of open bank assistance carried out with temporary equity participation. In the PPKSK Law, LPS gets an additional 2 (two) choices of failed bank resolution methods, namely transferring part or all the assets and / or liabilities (bridge bank). In the purchase and assumption option, a healthy bank takes over part or all the failed bank's assets and receives part or all the failed bank's liabilities. In the bridge bank option, a new bank was established to temporarily accommodate and manage part, or all the assets and liabilities transferred from the failed bank. Subsequently, the failed bank had its license revoked and liquidated. The bank's bridge is temporarily managed until the bank can be sold to new investors. In one case bank failure, LPS can choose an option that is a combination or a combination of the existing bank resolution methods.