Financial Services Authority Regulation Number 12 of 2020 Concerning Consolidation of Universal Banks

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
COPY
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 12 /POJK.03/2020
CONCERNING
CONSOLIDATION OF UNIVERSAL BANKS
BY THE GRACE OF THE ALMIGHTY GOD,
THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY, Considering:
a. that to face the dynamics of the domestic and global economy and information technology, it is necessary to strengthen the structure, resilience, and competitiveness of the national banking industry; b. that strengthening the structure, resilience, and competitiveness of the national banking industry, aimed at supporting national economic stability and growth, can be achieved by strengthening bank capital and banking consolidation in Indonesia;
c. that to encourage the strengthening of bank capital and banking consolidation in Indonesia, provisions are needed that can support the banking industry in conducting consolidation;
d. that based on the considerations referred to in letters a, b, and c, it is necessary to establish a Financial Services Authority Regulation concerning the Consolidation of Universal Banks;

Recalling:

1. Law Number 7 of 1992 concerning Banking (State Gazette of the Republic of Indonesia Year 1992 Number 31, Supplement to the State Gazette of the Republic of Indonesia Number 3472) as amended by Law Number 10 of 1998 concerning Amendments to Law Number 7 of 1992 concerning Banking (State Gazette of the Republic of Indonesia Year 1998 Number 182, Supplement to the State Gazette of the Republic of Indonesia Number 3790);
2. Law Number 21 of 2008 concerning Sharia Banking (State Gazette of the Republic of Indonesia Year 2008 Number 94, Supplement to the State Gazette of the Republic of Indonesia Number 4867);
3. Law Number 21 of 2011 concerning the Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Supplement to the State Gazette of the Republic of Indonesia Number 5253);

DECIDING:
Establish: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING THE CONSOLIDATION OF UNIVERSAL BANKS.

CHAPTER I
GENERAL PROVISIONS
Article 1
In this Financial Services Authority Regulation, the following terms are defined:

1. Universal Bank, hereinafter referred to as Bank, is a bank that conducts conventional business activities or conducts business activities based on Sharia principles, which in its activities provides services in payment transactions.
2. Conventional Universal Bank, hereinafter abbreviated as BUK, is a Bank that conducts business activities conventionally.
3. Sharia Universal Bank, hereinafter abbreviated as BUS, is a Bank that conducts business activities based on Sharia principles.
4. Rural Credit Bank, hereinafter abbreviated as BPR, is a bank that conducts conventional business activities which in its activities do not provide services in payment transactions.
5. Sharia Rural Financing Bank, hereinafter abbreviated as BPRS, is a Sharia bank which in its activities does not provide services in payment transactions.
6. Sharia Business Unit, hereinafter abbreviated as UUS, is a work unit of the BUK headquarters functioning as the parent office of offices or units that conduct business activities based on Sharia principles.
7. Separation of UUS is Separation as referred to in provisions of legislation concerning Sharia Business Units.
8. Merger is Merger as referred to in Financial Services Authority regulations concerning merger, amalgamation, takeover, integration, and conversion of universal banks.
9. Amalgamation is Amalgamation as referred to in Financial Services Authority regulations concerning merger, amalgamation, takeover, integration, and conversion of universal banks.
10. Takeover is Takeover as referred to in Financial Services Authority regulations concerning merger, amalgamation, takeover, integration, and conversion of universal banks.
11. Integration is Integration as referred to in Financial Services Authority regulations concerning merger, amalgamation, takeover, integration, and conversion of universal banks.
12. Controlling Shareholder, hereinafter abbreviated as PSP, is a legal entity, individual, and/or business group that owns shares of a company or Bank of 25% (twenty-five percent) or more of the issued shares and has voting rights, or owns shares of a company or Bank of less than 25% (twenty-five percent) of the issued shares and has voting rights but can be proven to have controlled the company or Bank, either directly or indirectly.
13. Control is an action aimed at influencing the management and/or policy of a company, including a Bank, in any way, either directly or indirectly.
14. Bank Business Group, hereinafter abbreviated as KUB, is a Bank that is in one group due to ownership linkages and/or Control consisting of 2 (two) or more Banks.
15. Parent Company is a legal entity that consolidates and directly controls all activities of the KUB.
16. Governance is Governance as referred to in Financial Services Authority regulations concerning the implementation of governance for universal banks and provisions concerning the implementation of good corporate governance for Sharia universal banks and Sharia Business Units.
17. Bank Health Level is Bank Health Level as referred to in Financial Services Authority regulations concerning the assessment of the health level of universal banks and Financial Services Authority regulations concerning the assessment of the health level of Sharia universal banks and Sharia Business Units.
18. Core Capital is Core Capital as referred to in Financial Services Authority regulations concerning minimum capital adequacy requirements for universal banks and Financial Services Authority regulations concerning minimum capital adequacy requirements for Sharia universal banks.
19. Capital Equivalency Maintained Assets, hereinafter abbreviated as CEMA, is Capital Equivalency Maintained Assets as referred to in Financial Services Authority regulations concerning minimum capital adequacy requirements for universal banks.

Article 2
(1) A Bank PSP may own 1 (one) Bank or several Banks.
(2) A Bank PSP as referred to in paragraph (1) may consist of:
a. Bank; b. legal entity non-bank financial institutions;
c. legal entity non-financial institutions; or
d. individuals.

CHAPTER II
CONSOLIDATION OF BANKS
Article 3
(1) Bank Consolidation is conducted through schemes:
a. Merger, Amalgamation, or Integration; b. Takeover followed by Merger, Amalgamation, or Integration;
c. Formation of KUB against Banks that have been owned;
d. Formation of KUB due to Separation of UUS; or e. Formation of KUB due to Takeover.
(2) The Bank consolidation scheme as referred to in paragraph (1) letter a applies to parties who have become Bank PSP, either between Banks owned by the same PSP or with Banks owned by another PSP. (3) The Bank consolidation scheme as referred to in paragraph (1) letter b applies to parties who:
a. have become Bank PSP, and conduct Takeover of 1 (one) or more Banks; or b. will become Bank PSP, who conduct Takeover of 2 (two) or more Banks, followed by Merger, Amalgamation, or Integration. (4) The Bank consolidation scheme as referred to in paragraph (1) letter c applies to:
a. PSP in the form of Bank as referred to in Article 2 paragraph (2) letter a that owns 1 (one) or more Banks; or b. PSP in the form of legal entity non-bank financial institutions, legal entity non-financial institutions, individuals as referred to in Article 2 paragraph (2) letters b, c, and d, or PSP located abroad, that owns 2 (two) or more Banks. (5) The Bank consolidation scheme as referred to in paragraph (1) letter d applies to BUK conducting Separation of UUS. (6) The Bank consolidation scheme as referred to in paragraph (1) letter e applies to parties who have become Bank PSP and conduct Takeover of 1 (one) or more Banks.

CHAPTER III
BANK BUSINESS GROUPS
Section One
General
Article 4
(1) KUB as referred to in Article 3 paragraph (1) letters c, d, or e is formed for PSP, Parent Company, and/or Parent Company Executors who are assessed to be able to meet the capital adequacy and liquidity of Banks within the KUB. (2) KUB may be formed in the event that the plan for Merger, Amalgamation, or Integration of Banks will not significantly increase the business scale of the Bank after Merger, Amalgamation, or Integration, while still meeting the provisions as referred to in paragraph (1).

Article 5
(1) The structure of KUB as referred to in Article 3 paragraph (1) letters c, d, or e consists of:
a. Parent Company in the form of Bank; and b. subsidiary companies in the form of 1 (one) or more Banks.
(2) In the event that the PSP is a Bank as referred to in Article 2 paragraph (2) letter a, the Bank as PSP is the Parent Company as referred to in paragraph (1).
(3) In the event that the PSP is:
a. legal entity non-bank financial institutions, legal entity non-financial institutions, or individuals as referred to in Article 2 paragraph (2) letters b, c, or d; or b. PSP located abroad, that owns 2 (two) or more Banks, one of the owned Banks is designated as the Parent Company Executor. (4) The Bank designated as the Parent Company Executor as referred to in paragraph (3) is a Bank that has:
a. larger total assets; and/or b. better Bank Health Level.

Section Two
Formation of KUB
Article 6
(1) The Bank as Parent Company or the Bank as Parent Company Executor must submit to the Financial Services Authority:
a. the plan for the formation of KUB accompanied by the structure of KUB as referred to in Article 5 paragraph (1); and b. documents designating the Parent Company Executor from the PSP for the Bank designated as the Parent Company Executor by the PSP as referred to in Article 5 paragraph (3). (2) The plan for the formation of KUB accompanied by the structure of KUB and documents designating the Parent Company Executor as referred to in paragraph (1) is submitted to the Financial Services Authority:
a. at the latest 1 (one) month after this POJK takes effect for the formation of KUB against Banks that have been owned as referred to in Article 3 paragraph (1) letter c; b. at the time of submitting the application for permission for Separation of UUS for the formation of KUB due to Separation of UUS as referred to in Article 3 paragraph (1) letter d; or
c. at the time of submitting the application for permission for Takeover for the formation of KUB due to Takeover as referred to in Article 3 paragraph (1) letter e.
(3) In the event that the KUB meets the formation requirements of KUB as referred to in Article 4 and Article 5, the Financial Services Authority sends a confirmation letter regarding the plan for the formation of KUB accompanied by the structure of KUB and documents designating the Parent Company Executor as referred to in paragraph (1) to the Bank as Parent Company or the Bank as Parent Company Executor. (4) The confirmation letter as referred to in paragraph (3) is sent by the Financial Services Authority at the latest:
a. 10 (ten) working days after the plan for the formation of KUB accompanied by the structure of KUB is received by the Financial Services Authority for the formation of KUB against Banks that have been owned as referred to in paragraph (2) letter a; b. 5 (five) working days after the Separation of UUS is effective for the formation of KUB due to Separation of UUS as referred to in paragraph (2) letter b; or
c. 5 (five) working days after the Takeover is effective for the formation of KUB due to Takeover as referred to in paragraph (2) letter c.
(5) In the event that there are changes to the KUB structure after obtaining confirmation from the Financial Services Authority as referred to in paragraph (3), the Parent Company or Parent Company Executor must submit changes to the KUB structure to the Financial Services Authority at the latest 5 (five) working days after the KUB structure change is effective.

Article 7
Banks that do not meet the provisions as referred to in Article 6 paragraph (1) or Article 6 paragraph (5) are subject to administrative sanctions in the form of written reprimands.

CHAPTER IV
MINIMUM CORE CAPITAL AND CEMA
Article 8
(1) Banks are required to meet the minimum Core Capital established by the Financial Services Authority.
(2) The minimum Core Capital as referred to in paragraph (1) is at least IDR 3,000,000,000,000.00 (three trillion rupiah).
(3) The minimum Core Capital as referred to in paragraph (2) must be met at the latest by December 31, 2022.
(4) The fulfillment of the minimum Core Capital as referred to in paragraph (3) is carried out in stages:
a. IDR 1,000,000,000,000.00 (one trillion rupiah) at the latest by December 31, 2020; b. IDR 2,000,000,000,000.00 (two trillion rupiah) at the latest by December 31, 2021; and
c. IDR 3,000,000,000,000.00 (three trillion rupiah) at the latest by December 31, 2022.
(5) For Banks owned by local governments, the minimum Core Capital of at least IDR 3,000,000,000,000.00 (three trillion rupiah) as referred to in paragraph (2) must be met at the latest by December 31, 2024.

Article 9
(1) For Banks that meet the Bank consolidation scheme as referred to in Article 3 paragraph (1), the minimum Core Capital is regulated:
a. for Banks resulting from Merger, Amalgamation, or Integration as referred to in Article 3 paragraph (1) letter a, must be met at least IDR 3,000,000,000,000.00 (three trillion rupiah); b. for Banks resulting from Merger, Amalgamation, or Integration preceded by Takeover as referred to in Article 3 paragraph (1) letter b, must be met at least IDR 3,000,000,000,000.00 (three trillion rupiah);
c. for Banks as Parent Company as referred to in Article 5 paragraph (2) or Parent Company Executor as referred to in Article 5 paragraph (3) in KUB, must be met at least IDR 3,000,000,000,000.00 (three trillion rupiah) with the fulfillment period as referred to in Article 8 paragraph (3) or paragraph (5); and
d. for Banks other than Parent Company or other than Parent Company Executor in KUB, must be met at least IDR 1,000,000,000,000.00 (one trillion rupiah).
(2) The minimum Core Capital as referred to in paragraph (1) letters a, b, and d may be exempted from the fulfillment time limit as referred to in Article 8 paragraph (3) with the approval of the Financial Services Authority.

Article 10
(1) Branch offices of banks located abroad are required to meet the minimum CEMA established by the Financial Services Authority.
(2) The minimum CEMA as referred to in paragraph (1) is at least IDR 3,000,000,000,000.00 (three trillion rupiah).
(3) The minimum CEMA as referred to in paragraph (2) must be met at the latest by December 31, 2022.
(4) The fulfillment of the minimum CEMA as referred to in paragraph (3) is carried out in stages:
a. IDR 2,000,000,000,000.00 (two trillion rupiah) at the latest by December 31, 2021; and b. IDR 3,000,000,000,000.00 (three trillion rupiah) at the latest by December 31, 2022.

Article 11
(1) Banks that have a minimum Core Capital of less than IDR 1,000,000,000,000.00 (one trillion rupiah) must prepare an action plan to fulfill the minimum Core Capital for the year 2020 to meet the minimum Core Capital as referred to in Article 8 paragraph (4) letter a. (2) The action plan to fulfill the minimum Core Capital as referred to in paragraph (1) must be submitted to the Financial Services Authority at the latest 3 (three) months after this Financial Services Authority regulation takes effect.

Article 12
(1) The fulfillment of the minimum Core Capital as referred to in Article 8 paragraph (4) letters b and c and Article 8 paragraph (5) must be formulated in the form of an action plan to fulfill the minimum Core Capital. (2) The fulfillment of the minimum CEMA as referred to in Article 10 paragraph (4) must be formulated in the form of an action plan to fulfill the minimum CEMA. (3) The action plan to fulfill the minimum Core Capital as referred to in paragraph (1) or the action plan to fulfill the minimum CEMA as referred to in paragraph (2) is submitted to the Financial Services Authority as an attachment to the Bank's business plan. (4) In the event that it is necessary, the action plan to fulfill the minimum Core Capital or the action plan to fulfill the minimum CEMA as referred to in paragraph (3) may be updated with the approval of the Financial Services Authority.

Article 13
(1) Banks or branch offices of banks located abroad that do not meet the provisions as referred to in Article 8 paragraph (1), Article 8 paragraph (3), Article 8 paragraph (5), Article 9 paragraph (1), Article 10 paragraph (1), Article 10 paragraph (3), Article 11 paragraph (1), Article 11 paragraph (2), Article 12 paragraph (1), and/or Article 12 paragraph (2) are subject to administrative sanctions in the form of written reprimands. (2) In the event that Banks or branch offices of banks located abroad have been subject to administrative sanctions in the form of written reprimands as referred to in paragraph (1) and have not met the provisions as referred to in Article 8 paragraph (1), Article 8 paragraph (3), Article 8 paragraph (5), Article 9 paragraph (1), Article 10 paragraph (1), Article 10 paragraph (3), Article 11 paragraph (1), Article 11 paragraph (2), Article 12 paragraph (1), and/or Article 12 paragraph (2), Banks or branch offices of banks located abroad are subject to administrative sanctions in the form of:
a. prohibition to conduct business expansion activities and/or office networks; and/or b. suspension of certain business activities.
(3) The imposition of administrative sanctions as referred to in paragraph (1) and/or paragraph (2) does not eliminate the obligation of Banks or branch offices of banks located abroad to submit action plans to fulfill the minimum Core Capital or action plans to fulfill the minimum CEMA.

Article 14
(1) Banks that have been subject to administrative sanctions as referred to in Article 13 paragraph (2) and have not met the provisions as referred to in Article 8 paragraph (1), Article 8 paragraph (3), Article 8 paragraph (5), and/or Article 9 paragraph (1) must adjust the form and business activities of the Bank to become a BPR or BPRS, or submit an application for the revocation of business permits upon the request of the Bank in accordance with provisions of legislation concerning Universal Banks or Sharia Universal Banks. (2) Branch offices of banks located abroad that have been subject to administrative sanctions as referred to in Article 13 paragraph (2) and have not met the provisions as referred to in Article 10 paragraph (1) and/or Article 10 paragraph (3) must submit an application for the revocation of business permits for branch offices of banks located abroad upon the request of the competent authority at the headquarters in accordance with provisions of legislation governing the revocation of business permits for branch offices of banks located abroad.

Article 15
(1) PSP, Board of Directors, Board of Commissioners, and/or executive officials of Banks that do not meet the obligations as referred to in Article 14 paragraph (1) are subject to prohibitions as principal parties of Banks in accordance with Financial Services Authority regulations concerning the re-evaluation of principal parties of financial service institutions. (2) The Board of Directors, and/or executive officials of branch offices of banks located abroad that do not meet the obligations as referred to in Article 14 paragraph (2) are subject to prohibitions as principal parties in accordance with Financial Services Authority regulations concerning the re-evaluation of principal parties of financial service institutions. (3) Banks that do not meet the obligations as referred to in Article 14 paragraph (1) are designated as BPR or BPRS based on the decision of the Financial Services Authority.

CHAPTER V
OTHER PROVISIONS
Article 16
(1) Against:
a. Banks and/or parties who are PSP and meet the Bank consolidation scheme as referred to in Article 3; or b. Banks and/or Bank shareholders in fulfilling the minimum Core Capital as referred to in Article 8 and Article 9, are exempted from provisions as contained in Financial Services Authority regulations concerning share ownership of universal banks. (2) Banks, PSP, or Bank shareholders as referred to in paragraph (1) may still be subject to provisions as contained in Financial Services Authority regulations concerning share ownership of universal banks in the event that supervisory actions are ordered by the Financial Services Authority.

Article 17
Banks that have met the Bank consolidation scheme by being integrated into KUB may conduct business activities that are the same as:
a. business activities of Banks that are Parent Companies; or b. business activities of Banks that are Parent Company Executors, with the approval of the Financial Services Authority.

Article 18
The limitation on capital participation of local government-owned Banks in BUS resulting from Separation of UUS is exempted from provisions concerning capital participation limitations as contained in Financial Services Authority regulations concerning business activities and office networks based on Core Capital of banks.

Article 19
(1) For PSP and/or Bank shareholders:
a. who have been subject to obligations to adjust share ownership according to the maximum limit of share ownership on Banks as referred to in Financial Services Authority regulations concerning share ownership of universal banks; and b. who have not yet been able to meet obligations within the time limit, may be exempted from the obligation to adjust to the maximum limit of share ownership on Banks. (2) To obtain the exemption as referred to in paragraph (1), Banks must meet the requirements:
a. Bank Health Level assessments and/or Governance assessments improve and stabilize during the adjustment period; and b. conduct efforts to encourage banking consolidation with the approval of the Financial Services Authority.

CHAPTER VI
CLOSING PROVISIONS
Article 20
At the time this Financial Services Authority Regulation takes effect:
a. Financial Services Authority Regulation Number 21/POJK.03/2014 concerning Minimum Capital Adequacy Requirements for Sharia Universal Banks (State Gazette of the Republic of Indonesia Year 2014 Number 352, Supplement to the State Gazette of the Republic of Indonesia Number 5630); b. Financial Services Authority Regulation Number 6/POJK.03/2016 concerning Business Activities and Office Networks Based on Core Capital of Banks (State Gazette of the Republic of Indonesia Year 2016 Number 18, Supplement to the State Gazette of the Republic of Indonesia Number 5842) as amended by Financial Services Authority Regulation Number 17/POJK.03/2018 concerning Amendments to Financial Services Authority Regulation Number 6/POJK.03/2016 concerning Business Activities and Office Networks Based on Core Capital of Banks (State Gazette of the Republic of Indonesia Year 2018 Number 139, Supplement to the State Gazette of the Republic of Indonesia Number 6242);
c. Financial Services Authority Regulation Number 11/POJK.03/2016 concerning Minimum Capital Adequacy Requirements for Universal Banks (State Gazette of the Republic of Indonesia Year 2016 Number 25, Supplement to the State Gazette of the Republic of Indonesia Number 5848) as amended by

Financial Services Authority Regulation Number 17/POJK.03/2018 concerning Amendments to Financial Services Authority Regulation Number 11/POJK.03/2016 concerning Minimum Capital Adequacy Requirements for Universal Banks (State Gazette of the Republic of Indonesia Year 2018 Number 139, Supplement to the State Gazette of the Republic of Indonesia Number 6242); d. Financial Services Authority Regulation Number 17/POJK.03/2018 concerning Amendments to Financial Services Authority Regulation Number 6/POJK.03/2016 concerning Business Activities and Office Networks Based on Core Capital of Banks (State Gazette of the Republic of Indonesia Year 2018 Number 139, Supplement to the State Gazette of the Republic of Indonesia Number 6242); and e. Financial Services Authority Regulation Number 17/POJK.03/2018 concerning Amendments to Financial Services Authority Regulation Number 11/POJK.03/2016 concerning Minimum Capital Adequacy Requirements for Universal Banks (State Gazette of the Republic of Indonesia Year 2018 Number 139, Supplement to the State Gazette of the Republic of Indonesia Number 6242) are revoked and declared invalid.

has been amended by the Financial Services Authority Regulation Number 34/POJK.03/2016 concerning Amendment to the Financial Services Authority Regulation Number 11/POJK.03/2016 concerning Minimum Capital Requirements for General Banks (State Gazette of the Republic of Indonesia Year 2016 Number 188, Supplement to the State Gazette of the Republic of Indonesia Number 5929); d. Financial Services Authority Regulation Number 56/POJK.03/2016 concerning Ownership of General Bank Shares (State Gazette of the Republic of Indonesia Year 2016 Number 287, Supplement to the State Gazette of the Republic of Indonesia Number 5981); e. Financial Services Authority Regulation Number 39/POJK.03/2017 concerning Single Ownership in Indonesian Banking (State Gazette of the Republic of Indonesia Year 2017 Number 145, Supplement to the State Gazette of the Republic of Indonesia Number 6088); and f. Financial Services Authority Regulation Number 28/POJK.03/2019 concerning Banking Synergy in One Ownership for the Development of Sharia Banking (State Gazette of the Republic of Indonesia Year 2019 Number 221, Supplement to the State Gazette of the Republic of Indonesia Number 6419), are declared to remain valid as long as they do not conflict with the provisions in this Financial Services Authority Regulation.

Article 21
At the time this Financial Services Authority Regulation comes into force, Bank Indonesia Regulation Number 7/15/PBI/2005 concerning Minimum Core Capital Amount for General Banks (State Gazette of the Republic of Indonesia Year 2005 Number 53, Supplement to the State Gazette Number 4507) as amended by Bank Indonesia Regulation Number 9/16/PBI/2007 concerning Amendment to Bank Indonesia Regulation Number 7/15/PBI/2005 concerning Minimum Core Capital Amount for General Banks (State Gazette of the Republic of Indonesia Year

This copy is consistent with the original
Deputy Director of Legal Consultancy and
Harmonization of Banking Regulations 1
Legal Directorate 1
Legal Department signed
Wiwit Puspasari
2007 Number 145, Supplement to the State Gazette of the Republic of Indonesia Number 4786) is repealed and declared invalid.

Article 22
This Financial Services Authority Regulation comes into force on the date of its enactment.
To ensure that everyone knows it, it orders the enactment of this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.
Established in Jakarta on 16 March 2020
CHAIRMAN OF THE COMMISSIONERS
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
WIMBOH SANTOSO
Enacted in Jakarta on 17 March 2020
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY
SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2020 NUMBER 78

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 12 /POJK.03/2020
CONCERNING
CONSOLIDATION OF GENERAL BANKS

I. GENERAL
Bank Consolidation is one of the efforts to realize the strengthening of structure, resilience, and competitiveness of the national banking industry. With Bank consolidation, it is expected that there will be an increase in the economic scale of Banks as well as the ability to face challenges and demands for innovation in products and services based on technology, thereby having greater adaptive capacity. Furthermore, Bank consolidation also encourages the national banking sector to be not only resilient in the domestic scope but also competitive in the regional and global scope, including facing the integration of the Association of Southeast Asian Nations financial sector, which allows Banks with certain qualifications (Qualified Association of Southeast Asian Nations Banks-QAB) to operate freely in the Association of Southeast Asian Nations region, thereby increasing competition between national banks and banks from the Association of Southeast Asian Nations region. The resilience and competitiveness of the national banking sector are greatly influenced by and require the support of a strong banking structure as a basic framework to support the national economy. In addition, globalization in the financial system and the rapid development of information technology and financial product innovations have created a very complex and dynamic financial system among financial subsectors as well as among financial service institutions and financial groups, which can drive an increase in risk exposure, thus requiring an increase in the efficiency and effectiveness of Bank regulations and supervision in general as well as integrated. To answer various challenges of banking industry dynamics, including the efficiency and effectiveness of Bank regulations and supervision, efforts need to be made to increase the resilience, competitiveness, and contribution of Banks through regulations regarding Bank consolidation, both in terms of capital enhancement and acceleration of consolidation.

II. ARTICLE BY ARTICLE EXPLANATION
Article 1
Sufficiently clear.

Article 2
Paragraph (1)
Sufficiently clear.
Paragraph (2)
Letter a
Sufficiently clear.
Letter b
Sufficiently clear.
Letter c
Includes non-financial legal entities, namely the central government, local governments, and the Deposit Insurance Agency.
Letter d
Sufficiently clear.

Article 3
Paragraph (1)
Sufficiently clear.
Paragraph (2)
Sufficiently clear.

Paragraph (3)
Letter a
Sufficiently clear.
Letter b
What is meant by “will become a PSP Bank” is a party that at the time of Takeover has not yet become a PSP Bank in Indonesia.
Paragraph (4)
Sufficiently clear.
Paragraph (5)
Sufficiently clear.
Paragraph (6)
Sufficiently clear.

Article 4
Sufficiently clear.

Article 5
Paragraph (1)
Sufficiently clear.
Paragraph (2)
Example:
PSP: Bank
(Bank X)
Bank A Bank B Bank C
Parent Company
Note:

• PSP is a Bank (example: Bank X).
• Banks owned by PSP are Bank A, Bank B, and Bank C.
• Thus, the KUB structure of Bank X (PSP) consists of Bank X (as Parent Company), Bank A, Bank B, and Bank C.
  Bank Business Group (KUB)

Paragraph (3)
Example:

Paragraph (4)
Sufficiently clear.

Article 6
Paragraph (1)
Letter a
Sufficiently clear.
Letter b
The document appointing the Parent Company implementer is signed by the President Director or 1 (one) or more members of the Board of Directors representing the PSP, for PSPs with limited liability company status, or by an equivalent party for PSPs other than limited liability companies or foreign PSPs. Note:

• PSP is a non-bank financial legal entity, non-financial legal entity, individual, or PSP located abroad (example: PT Z).
• Banks owned by PSP are Bank P, Bank Q, and Bank R.
• One of the Banks owned by PSP is appointed as the Parent Company implementer. As an example, the Bank appointed as the Parent Company implementer is Bank P.
• Thus, the KUB structure of PT Z (PSP) consists of Bank P (as Parent Company implementer), Bank Q, and Bank R.
  PSP: non-bank financial legal entity / non-financial entity / individual / located abroad (PT Z) Bank P Bank Q Bank R Parent Company implementer Bank Business Group (KUB)

For individual PSPs, the document appointing the Parent Company implementer is signed by the individual concerned.
Paragraph (2)
Submission to the Financial Services Authority is addressed to the address:
a. The relevant Bank Supervision Department or Financial Services Authority Regional Office in Jakarta, for Banks with headquarters or domicile in the Special Capital Region of Jakarta Province and Banten Province; or b. The Financial Services Authority Regional Office or local Financial Services Authority Office, for Banks with headquarters or domicile outside the Special Capital Region of Jakarta Province and Banten Province, with a copy to:
a. The Licensing and Banking Information Department for BUK; or b. The Sharia Banking Regulation and Licensing Directorate for BUS.
Paragraph (3)
Sufficiently clear.
Paragraph (4)
Sufficiently clear.
Paragraph (5)
Examples of KUB structure changes include, among others, related to Bank Mergers, Amalgamations, or Integrations within the KUB, or the addition or release of Bank subsidiary companies within the KUB. Submission to the Financial Services Authority is addressed to the address:
a. The relevant Bank Supervision Department or Financial Services Authority Regional Office in Jakarta, for Banks with headquarters or domicile in the Special Capital Region of Jakarta Province and Banten Province; or b. The Financial Services Authority Regional Office or local Financial Services Authority Office, for Banks with headquarters or domicile outside the Special Capital Region of Jakarta Province and Banten Province, with a copy to:
a. The Licensing and Banking Information Department for BUK; or b. The Sharia Banking Regulation and Licensing Directorate for BUS.

Article 7
Sufficiently clear.

Article 8
Sufficiently clear.

Article 9
Paragraph (1)
Letter a
Sufficiently clear.
Letter b
Sufficiently clear.
Letter c
Sufficiently clear.
Letter d
Includes Banks other than the Parent Company or other than the Parent Company implementer in the KUB, namely Banks other than the Parent Company or other than the Parent Company implementer in the KUB that are Banks resulting from Mergers, Amalgamations, or Integrations. Paragraph (2) Sufficiently clear.

Article 10
Sufficiently clear.

Article 11
Paragraph (1)
Sufficiently clear.

Paragraph (2)
Submission to the Financial Services Authority is addressed to the address:
a. The relevant Bank Supervision Department or Financial Services Authority Regional Office in Jakarta, for Banks with headquarters or domicile in the Special Capital Region of Jakarta Province and Banten Province; or b. The Financial Services Authority Regional Office or local Financial Services Authority Office, for Banks with headquarters or domicile outside the Special Capital Region of Jakarta Province and Banten Province.

Article 12
Paragraph (1)
Sufficiently clear.
Paragraph (2)
Sufficiently clear.
Paragraph (3)
Sufficiently clear.
Paragraph (4)
Updating the action plan to meet minimum Core Capital or minimum CEMA action plan becomes an attachment to the Bank's business plan change.

Article 13
Paragraph (1)
Sufficiently clear.
Paragraph (2)
Letter a
Business activity expansion includes, among others, banking services, fund collection, and/or fund distribution.
Letter b
Sufficiently clear.
Paragraph (3)
Sufficiently clear.

Article 14
Sufficiently clear.

Article 15
Sufficiently clear.

Article 16
Sufficiently clear.

Article 17
Financial Services Authority approval considers, among others, Governance, Bank Health Level, quality of risk management implementation, human resource support, as well as business processes and infrastructure.

Article 18
Sufficiently clear.

Article 19
Sufficiently clear.

Article 20
Sufficiently clear.

Article 21
Sufficiently clear.

Article 22
Sufficiently clear.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6481