FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 4 /POJK.03/2016

CONCERNING

ASSESSMENT OF GENERAL BANK HEALTH LEVEL

BY THE GRACE OF GOD ALMIGHTY,

THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
a. that bank health is a tool for the supervisory authority in establishing strategies and supervision focus on banks; b. that changes in business complexity and risk profiles can originate from banks as well as from bank subsidiaries, and changes in international approaches to assessing bank conditions affect the approach to assessing bank health levels;
c. that in order to increase the effectiveness of bank health level assessment in facing changes as referred to in letter b, it is necessary to assess bank health levels using a risk-based approach;
d. that the assessment of bank health levels also needs to be adjusted to the application of consolidated supervision; e. that based on considerations as referred to in letters a, b, c, and d, it is deemed necessary to establish a Financial Services Authority Regulation concerning the Assessment of General Bank Health Level;

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 (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 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);

RESOLVING:
To Establish: A FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING THE ASSESSMENT OF GENERAL BANK HEALTH LEVEL.

CHAPTER I

GENERAL PROVISIONS

Article 1

In this Financial Services Authority Regulation, the following terms are defined as:

1. Bank means a general bank as referred to in Law Number 7 of 1992 concerning Banking as amended by Law Number 10 of 1998, including branch offices located abroad, which conduct conventional business activities.

2. Board of Directors:
   a. for Banks in the form of a Limited Liability Company, refers to the Board of Directors as referred to in Law Number 40 of 2007 concerning Limited Liability Companies; b. for Banks in the form of legal entities:

   1. Regional Public Enterprises or Regional State-Owned Enterprises refer to the Board of Directors as referred to in Law Number 23 of 2014 concerning Regional Government as last amended by Law Number 9 of 2015;
   2. Regional Enterprises refer to the directors at Banks that have not yet changed their form into Regional Public Enterprises or Regional State-Owned Enterprises according to Law Number 23 of 2014 concerning Regional Government as last amended by Law Number 9 of 2015;
      c. for Banks in the form of a Cooperative legal entity, refers to the managers as referred to in Law Number 25 of 1992 concerning Cooperatives;
      d. for Banks with the status of a branch office of a bank located abroad, refers to the branch manager and officials one level below the branch manager.

3. Board of Commissioners:
   a. for Banks in the form of a Limited Liability Company, refers to the Board of Commissioners as referred to in Law Number 40 of 2007 concerning Limited Liability Companies; b. for Banks in the form of legal entities:

   1. Regional Public Enterprises refer to the Supervisory Board as referred to in Law Number 23 of 2014 concerning Regional Government as last amended by Law Number 9 of 2015;
   2. Regional State-Owned Enterprises refer to Commissioners as referred to in Law Number 23 of 2014 concerning Regional Government as last amended by Law Number 9 of 2015;
   3. Regional Enterprises refer to supervisors at Banks that have not yet changed their form into Regional Public Enterprises or Regional State-Owned Enterprises according to Law Number 23 of 2014 concerning Regional Government as last amended by Law Number 9 of 2015;
      c. for Banks in the form of a Cooperative legal entity, refers to Supervisors as referred to in Law Number 25 of 1992 concerning Cooperatives;
      d. for Banks with the status of a branch office of a bank located abroad, refers to parties appointed to carry out supervisory functions.

4. Bank Health Level is the result of an assessment of the Bank's condition conducted against the Bank's risks and performance.

5. Composite Rating is the final rating result of the Bank Health Level assessment.

6. Subsidiary Company is a company owned and/or controlled directly or indirectly by the Bank, both domestically and abroad, that meets the criteria as referred to in provisions regulating the application of consolidated risk management for Banks that exercise control over subsidiary companies.

7. Control is control as referred to in provisions regulating the application of integrated risk management for financial conglomerates.

Article 2

(1) Banks are required to maintain and/or improve their Bank Health Level by applying prudent principles and risk management in conducting business activities.
(2) In carrying out responsibilities for the continuity of the Bank's business, the Board of Directors and Board of Commissioners are responsible for maintaining and monitoring the Bank Health Level and taking necessary steps to maintain and/or improve the Bank Health Level as referred to in paragraph (1). (3) Banks are required to assess their Bank Health Level using a risk-based approach (Risk-based Bank Rating) both individually and on a consolidated basis.

CHAPTER II

ASSESSMENT OF BANK HEALTH LEVEL

Article 3

(1) Banks are required to conduct a self-assessment of their Bank Health Level as regulated in Article 2 paragraph (3).
(2) The self-assessment of Bank Health Level as referred to in paragraph (1) must be conducted at least every semester for positions at the end of June and the end of December.
(3) Banks are required to update their self-assessment of Bank Health Level whenever necessary.
(4) The results of the self-assessment of Bank Health Level as referred to in paragraphs (2) and (3), which have received approval from the Board of Directors, must be submitted to the Board of Commissioners. (5) Banks are required to submit the results of the self-assessment of Bank Health Level as referred to in paragraph (4) to the Financial Services Authority, namely:
a. for individual Bank Health Level assessments, no later than July 31 for assessments of positions at the end of June and January 31 for assessments of positions at the end of December; and b. for consolidated Bank Health Level assessments, no later than August 15 for assessments of positions at the end of June and February 15 for assessments of positions at the end of December. (6) If the submission deadline for the results of the self-assessment of Bank Health Level as referred to in paragraph (5) falls on a Saturday, Sunday, or holiday, the results of the self-assessment of Bank Health Level must be submitted on the next working day.

Article 4

(1) The Financial Services Authority conducts Bank Health Level assessments every semester for positions at the end of June and the end of December.
(2) The Financial Services Authority updates Bank Health Level assessments whenever necessary.
(3) The Bank Health Level assessments as referred to in paragraph (1) and updates of Bank Health Level assessments as referred to in paragraph (2) are conducted based on examination results, periodic reports submitted by Banks, and/or other information.

Article 5

In the context of Bank supervision, if there is a difference between the results of the Bank Health Level assessment conducted by the Financial Services Authority as referred to in Article 4 and the results of the self-assessment of Bank Health Level conducted by the Bank as referred to in Article 3, the Bank Health Level assessment results conducted by the Financial Services Authority shall prevail.

CHAPTER III

MECHANISM FOR INDIVIDUAL BANK HEALTH LEVEL ASSESSMENT

Article 6

Banks are required to conduct individual Bank Health Level assessments using a risk-based approach (Risk-based Bank Rating) as referred to in Article 2 paragraph (3), with an assessment scope covering the following factors:
a. risk profile; b. Good Corporate Governance (GCG);
c. earnings; and
d. capital.

Article 7

(1) Assessments of the risk profile factor as referred to in Article 6 letter a constitute assessments of inherent risk and the quality of risk management implementation in Bank operations, which must be conducted against 8 (eight) risks, namely:
a. credit risk; b. market risk;
c. liquidity risk;
d. operational risk; e. legal risk; f. strategic risk; g. compliance risk; and h. reputation risk.
(2) The obligation to assess the GCG factor as referred to in Article 6 letter b constitutes an assessment of the Bank's management regarding the implementation of GCG principles.
(3) The obligation to assess the earnings factor as referred to in Article 6 letter c includes assessments of earnings performance, earnings sources, and earnings sustainability of the Bank.
(4) Assessments of the capital factor as referred to in Article 6 letter d include assessments of capital adequacy and capital management.

Article 8

(1) Each Bank Health Level assessment factor as referred to in Article 6 is assigned a rating based on a comprehensive and structured analysis framework.
(2) The assignment of ratings for the risk profile factor is carried out through the following stages:
a. determining the risk level of each risk as referred to in Article 7 paragraph (1); b. determining the composite inherent risk level and the composite quality of risk management implementation; and
c. assigning the risk profile factor rating based on comprehensive and structured analysis of the results determined in letters a and b, considering the significance of each risk to the overall risk profile.
(3) The assignment of ratings for the GCG factor is conducted based on comprehensive and structured analysis of the results of the Bank's implementation of GCG principles and other information related to the Bank's GCG. (4) The assignment of ratings for the earnings factor is conducted based on comprehensive analysis of earnings parameters or indicators, considering the significance of each parameter or indicator and taking into account other issues affecting the Bank's earnings. (5) The assignment of ratings for the Bank's capital factor is conducted based on comprehensive analysis of capital parameters or indicators, considering the significance of each parameter or indicator and taking into account other issues affecting the Bank's capital.

Article 9

(1) The Composite Rating of the Bank Health Level is established based on comprehensive and structured analysis of the ratings of each factor as referred to in Article 8 paragraphs (2), (3), (4), and (5), considering the materiality and significance of each factor. (2) The Composite Rating as referred to in paragraph (1) is categorized as follows:
a. Composite Rating 1 (CR-1); b. Composite Rating 2 (CR-2);
c. Composite Rating 3 (CR-3);
d. Composite Rating 4 (CR-4); and e. Composite Rating 5 (CR-5).
(3) Composite Rating 1 (CR-1) as referred to in paragraph (2) letter a reflects a Bank condition that is generally very healthy, thus assessed as being very capable of facing significant negative impacts from changes in business conditions and other external factors. (4) Composite Rating 2 (CR-2) as referred to in paragraph (2) letter b reflects a Bank condition that is generally healthy, thus assessed as being capable of facing significant negative impacts from changes in business conditions and other external factors. (5) Composite Rating 3 (CR-3) as referred to in paragraph (2) letter c reflects a Bank condition that is generally fairly healthy, thus assessed as being fairly capable of facing significant negative impacts from changes in business conditions and other external factors. (6) Composite Rating 4 (CR-4) as referred to in paragraph (2) letter d reflects a Bank condition that is generally less healthy, thus assessed as being less capable of facing significant negative impacts from changes in business conditions and other external factors. (7) Composite Rating 5 (CR-5) as referred to in paragraph (2) letter e reflects a Bank condition that is generally unhealthy, thus assessed as being unable to face significant negative impacts from changes in business conditions and other external factors.

Article 10

If, based on identification and assessment results by the Financial Services Authority, problems or violations are found that significantly affect or will affect the Bank's operations and/or business continuity, the Financial Services Authority has the authority to downgrade the Composite Rating of the Bank Health Level.

CHAPTER IV

MECHANISM FOR CONSOLIDATED BANK HEALTH LEVEL ASSESSMENT

Article 11

(1) Banks are required to conduct consolidated Bank Health Level assessments using a risk-based approach (Risk-based Bank Rating) as referred to in Article 2 paragraph (3), with an assessment scope covering the following factors:
a. risk profile; b. Good Corporate Governance (GCG);
c. earnings; and
d. capital.
(2) The assignment of ratings for the Bank's risk profile factor on a consolidated basis is conducted considering:
a. the significance or materiality of the Subsidiary Company's share to the Bank on a consolidated basis; and/or b. Subsidiary Company problems that significantly affect the Bank's risk profile on a consolidated basis. (3) The assignment of ratings for the GCG factor on a consolidated basis is conducted considering:
a. the significance or materiality of the Subsidiary Company's share to the Bank on a consolidated basis; and/or b. issues related to the implementation of GCG principles at the Subsidiary Company that significantly affect the implementation of GCG on a consolidated basis. (4) The assignment of ratings for the earnings factor on a consolidated basis is conducted based on comprehensive and structured analysis of specific earnings parameters or indicators resulting from the Bank's consolidated financial reports and other financial information, considering:
a. the significance or materiality of the Subsidiary Company's share to the Bank on a consolidated basis; and/or b. earnings problems at the Subsidiary Company that significantly affect earnings on a consolidated basis. (5) The assignment of ratings for the capital factor on a consolidated basis is conducted based on comprehensive and structured analysis of specific capital parameters or indicators resulting from the Bank's consolidated financial reports and other financial information, considering:
a. the significance or materiality of the Subsidiary Company's share to the Bank on a consolidated basis; and/or b. capital problems at the Subsidiary Company that significantly affect capital on a consolidated basis.

Article 12

For Banks conducting Bank Health Level assessments on a consolidated basis, the following must apply:
a. the mechanism for assigning ratings for each assessment factor and assigning the Composite Rating of the Bank Health Level on a consolidated basis; and b. the categorization of ratings for each assessment factor and the Composite Rating on a consolidated basis, must refer to the mechanism for assigning and categorizing ratings for Banks individually as regulated in Article 8, Article 9, and Article 10.

CHAPTER V

FOLLOW-UP ON BANK HEALTH LEVEL ASSESSMENT RESULTS

Article 13

(1) If, based on the results of the Bank Health Level assessment conducted by the Financial Services Authority and/or the results of self-assessment by the Bank, there are:
a. Bank Health Level factors assigned a rating of 4 or rating of 5; b. Composite Rating of the Bank Health Level assigned a rating of 4 or rating of 5; and/or
c. Composite Rating of the Bank Health Level assigned a rating of 3, but there are significant problems that need to be addressed so as not to disrupt the Bank's business continuity,
then the Board of Directors, Board of Commissioners, and/or controlling shareholders of the Bank are required to submit an action plan to the Financial Services Authority.
(2) The Financial Services Authority has the authority to request the Bank to adjust the action plan as referred to in paragraph (1).
(3) Banks are required to submit action plans:
a. within specific time limits set by the Financial Services Authority, for action plans that are follow-ups to the results of Bank Health Level assessments by the Financial Services Authority; b. no later than August 15 for Bank Health Level assessments at positions at the end of June and February 15 for Bank Health Level assessments at positions at the end of December, for action plans that are follow-ups to the results of the Bank's self-assessment. (4) If the submission deadline for the action plan for the results of the Bank's self-assessment as referred to in paragraph (3) letter b falls on a Saturday, Sunday, or holiday, the results of the self-assessment of Bank Health Level must be submitted on the next working day.

Article 14

Banks are required to submit reports on the implementation of action plans as referred to in Article 13 no later than:
a. 10 (ten) working days after the target completion time for the action plan; and/or b. 10 (ten) working days after the end of the month and conducted monthly, in the event of significant problems that will hinder the timely completion of the action plan.

Article 15

The Financial Services Authority has the authority to conduct examinations regarding the implementation of action plans by Banks.

CHAPTER VI

SANCTIONS

Article 16

Banks that violate provisions as regulated in Article 2 paragraph (1), Article 2 paragraph (3), Article 3, Article 6, Article 7, Article 8, Article 9, Article 11 paragraph (1), Article 12, Article 13 paragraph (1), Article 13 paragraph (3), or Article 14 shall be subject to administrative sanctions, consisting of:
a. written reprimand; b. reduction of Bank Health Level;
c. suspension of certain business activities; and/or
d. listing of Bank directors and/or shareholders in the list of parties who fail the fit and proper test.

CHAPTER VII

CLOSING PROVISIONS

Article 17

Further implementation details of this Financial Services Authority Regulation shall be regulated further in a Financial Services Authority Circular Letter.

Article 18

(1) Upon the commencement of this Financial Services Authority Regulation, Bank Indonesia Regulation Number 13/1/PBI/2011 dated January 5, 2011 concerning the Assessment of General Bank Health Level (State Gazette of the Republic of Indonesia Year 2011 Number 1, Supplement to the State Gazette of the Republic of Indonesia Number 5184) is revoked and declared invalid. (2) Implementation regulations of Bank Indonesia Regulation Number 13/1/PBI/2011 dated January 5, 2011 concerning the Assessment of General Bank Health Level remain valid insofar as they do not conflict with this Financial Services Authority Regulation.

Article 19

This Financial Services Authority Regulation comes into force on the date of its promulgation.

To ensure that everyone knows it, we order the promulgation of this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.

Established in Jakarta
On January 26, 2016
CHAIRMAN OF THE BOARD OF COMMISSIONERS
FINANCIAL SERVICES AUTHORITY,

[signed]
MULIAMAN D. HADAD

Promulgated in Jakarta
On January 27, 2016
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA,

[signed]
YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2016 NUMBER 16 Copy matches the original Director of Legal Affairs 1 Department of Law

[signed]
Yuliana

EXPLANATION

OF

FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 4 /POJK.03/2016

CONCERNING

ASSESSMENT OF GENERAL BANK HEALTH LEVEL

I. GENERAL

According to Law Number 7 of 1992 concerning Banking as amended by Law Number 10 of 1998, Banks are required to maintain their health. Bank health, which is a reflection of the Bank's condition and performance, serves as a tool for the supervisory authority in establishing strategies and supervision focus on Banks. Furthermore, Bank health is also of interest to all relevant parties, including owners, managers, and users of Bank services.

The development of the banking industry, particularly products and services that are increasingly complex and diverse, can increase risk exposure and the Bank's risk profile. In line with this, international assessment approaches are also moving towards a risk-based supervision approach. Increased risk exposure and risk profile, along with the application of this risk-based supervision approach, will subsequently influence the assessment of Bank Health Levels.

According to the dynamic nature of Bank business development, which affects the level of risk faced, the methodology for assessing Bank Health Levels must be able to reflect the Bank's current condition and future outlook. This is necessary so that the assessment of Bank Health Levels can be used more effectively as a tool to evaluate Bank performance, including in the application of risk management with a focus...

on significant risks, and compliance with applicable provisions and the application of prudential principles.
The Health Level Assessment of Banks using a risk-based approach is a comprehensive and structured assessment of the integration results of risk profiles and performance, including the application of good governance, profitability, and capital adequacy. This approach enables the Financial Services Authority as the supervisor to take appropriate and timely supervisory actions because the assessment is conducted comprehensively on all assessment factors and focuses on significant risks, and can be immediately communicated to the Bank in order to establish supervisory follow-up. Furthermore, in line with the implementation of risk-based supervision, supervision is not sufficient to be conducted only for Banks individually but must also be conducted for Banks on a consolidated basis, including in the assessment of the health level. Therefore, the Health Level Assessment of Banks must also include the assessment of the Health Level of Banks on a consolidated basis. In this regard, it is necessary to establish provisions regarding the Health Level of Banks in a Financial Services Authority Regulation.

II. ARTICLE BY ARTICLE

Article 1
It is clear enough.

Article 2
Paragraph (1)
The Health of Banks must be maintained and/or improved so that public trust in Banks can remain intact.
The Health Level of Banks is used as one of the means in conducting evaluations of the conditions and problems faced by Banks and determining follow-up actions to overcome Bank weaknesses or problems, either in the form of corrective actions by the Bank or supervisory actions by the Financial Services Authority. Paragraph (2) It is clear enough. Paragraph (3) The consolidated Health Level Assessment of Banks is applied to Banks that exercise Control over Subsidiary Companies.

Article 3
Paragraph (1)
It is clear enough.
Paragraph (2)
It is clear enough.
Paragraph (3)
Updating the self-assessment of the Bank's Health Level from time to time is carried out, among others, in the event of:
a. the Bank's financial conditions deteriorate; b. the Bank faces problems including liquidity and capital risks; or
c. other conditions that, in the opinion of the Financial Services Authority, require an update of the health level assessment.
Paragraph (4)
For branches of banks domiciled outside the country, the results of the self-assessment are submitted to the party corresponding to the Bank's internal organizational structure responsible for directly supervising the activities and performance of the branch of the bank domiciled outside the country in Indonesia. Paragraph (5) It is clear enough. Paragraph (6) What is meant by "holiday" is the national holiday established by the central government and/or the local holiday established by the local government.

Article 4
Paragraph (1)
It is clear enough.
Paragraph (2)
It is clear enough.
Paragraph (3)
Other information can include:
a. information from the results of assessments by other competent authorities; b. information known to the public such as assessment results from rating agencies and information from the mass media; and/or
c. data or information related to branches of banks domiciled outside the country regarding the financial conditions and ratings of their headquarters abroad generated by competent authorities or international rating agencies.

Article 5
It is clear enough.

Article 6
The Health Level Assessment of Banks using a risk-based approach (Risk-based Bank Rating) is conducted based on a comprehensive analysis of performance, risk profiles, problems faced, and the development prospects of the Bank.

Article 7
Paragraph (1)
Inherent risk assessment is an assessment of risks inherent in the Bank's business activities, both those that can be quantified and those that cannot be quantified, which have the potential to affect the Bank's financial position. The assessment of the quality of risk management implementation is an assessment of the aspects:
a. risk governance; b. risk management framework;
c. risk management processes, adequacy of human resources, and adequacy of management information systems; and
d. adequacy of risk control systems by considering the characteristics and complexity of the Bank's business.
Definitions and scope for each risk refer to provisions regulating the implementation of risk management for commercial banks.
Paragraph (2)
GCG principles and the focus of assessment on the implementation of GCG principles refer to provisions regulating good corporate governance for commercial banks by considering the characteristics and complexity of the Bank's business. Paragraph (3) Assessment of profitability (earnings) performance, earnings sources, and earnings sustainability of the Bank is conducted by considering the level, trend, structure, and stability, by considering peer group performance and the Bank's profitability management, both through quantitative and qualitative aspect analysis. Quantitative aspect analysis is conducted using main indicators as the basis for assessment. In addition, if necessary, the use of other supporting indicators can be added to sharpen the analysis, adjusted to the scale of business, characteristics, and/or complexity of the Bank's business. Qualitative aspect analysis is conducted, among others, by considering profitability management, the contribution of earnings to increasing capital, and earnings prospects. Paragraph (4) Assessment of the level of capital adequacy and capital management is conducted by the Bank by considering the level, trend, structure, and stability, by considering peer group performance and the Bank's capital management, both through quantitative and qualitative aspect analysis. Quantitative aspect analysis is conducted using main indicators. In addition, if necessary, the use of other supporting indicators can be added to sharpen the analysis, adjusted to the scale of business, characteristics, and/or complexity of the Bank's business. Qualitative aspect analysis is conducted, among others, by considering capital management and the ability to access capital.

Article 8
Paragraph (1)
The rating of each factor is categorized:
a. Rating 1; b. Rating 2;
c. Rating 3;
d. Rating 4; and e. Rating 5.
The order of smaller factor ratings reflects a better Bank condition.
Paragraph (2)
Letter a
The risk level is determined based on the inherent risk level and the quality of risk management implementation for each risk.
Letter b
The determination of the inherent risk level and the quality of risk management implementation in a composite manner is conducted based on a comprehensive and structured analysis of the inherent risk level and the quality of risk management implementation for each risk by considering the significance of each risk to the overall risk profile. Letter c It is clear enough. Paragraph (3) The results of the assessment of the implementation of the Bank's GCG principles as regulated in provisions regulating GCG for commercial banks are only one source of assessment for the Bank's GCG factor rating in the Health Level Assessment of Banks. Paragraph (4) It is clear enough. Paragraph (5) It is clear enough.

Article 9
Paragraph (1)
Comprehensive analysis is also conducted by considering the Bank's ability to face significant changes in external conditions.
Paragraph (2)
The order of smaller Composite Ratings reflects a healthier Bank condition.
Paragraph (3)
Conditions that are generally very healthy so that they are assessed as being very capable of facing significant negative influences from changes in business conditions and other external factors are reflected in the ratings of assessment factors, such as risk profiles, GCG implementation, profitability (earnings), and capital adequacy, which are generally very good. If there are weaknesses, generally these weaknesses are not significant. Paragraph (4) Conditions that are generally healthy so that they are assessed as being capable of facing significant negative influences from changes in business conditions and other external factors are reflected in the ratings of assessment factors, such as risk profiles, GCG implementation, profitability (earnings), and capital adequacy, which are generally good. If there are weaknesses, generally these weaknesses are less significant. Paragraph (5) Conditions that are generally quite healthy so that they are assessed as being quite capable of facing significant negative influences from changes in business conditions and other external factors are reflected in the ratings of assessment factors, such as risk profiles, GCG implementation, profitability (earnings), and capital adequacy, which are generally quite good. If there are weaknesses, generally these weaknesses are quite significant and if not successfully addressed well by management, they can disrupt the Bank's business continuity. Paragraph (6) Conditions that are generally less healthy so that they are assessed as being less capable of facing significant negative influences from changes in business conditions and other external factors are reflected in the ratings of assessment factors, such as risk profiles, GCG implementation, profitability (earnings), and capital adequacy, which are generally less good. There are weaknesses that are generally significant and cannot be addressed well by management and disrupt the Bank's business continuity. Paragraph (7) Conditions that are generally unhealthy so that they are assessed as being unable to face significant negative influences from changes in business conditions and other external factors are reflected in the ratings of assessment factors, such as risk profiles, GCG implementation, profitability (earnings), and capital adequacy, which are generally not good. There are weaknesses that are generally very significant so that to address them, funding support from shareholders or funding from other parties is needed to strengthen the Bank's financial conditions.

Article 10
The analysis of the significance of the influence of a problem is conducted by considering, among others:
a. the negative impact of the problem and/or violation of provisions on the continuity of business or Bank performance; b. indications of intentional violation of provisions;
c. indications of intentional failure to fulfill commitments; and/or
d. the number and/or frequency of violations.
Examples of problems or violations that have significant influence include manipulation including window dressing and internal management disputes that affect operations and/or the continuity of the Bank's business.

Article 11
Paragraph (1)
The Health Level Assessment of Banks using a risk-based approach (risk-based bank rating) is conducted based on a comprehensive analysis of performance, risk profiles, problems faced, and the development prospects of the Bank. Assessment of each factor is conducted on a consolidated basis between the Bank and Subsidiary Companies. Paragraph (2) The risks of Subsidiary Companies assessed for the measurement of the consolidated risk profile are determined by considering the characteristics of the Subsidiary Company's business and its influence on the Bank's consolidated risk profile. The measurement of the risk level on a consolidated basis is conducted using risk measurement parameters that are appropriate to the characteristics of the Subsidiary Company's business. Paragraph (3) The GCG assessment factors of the Subsidiary Company used for the assessment of the implementation of GCG principles on a consolidated basis are determined by considering the characteristics of the Subsidiary Company's business and its influence on the Bank's consolidated GCG. Paragraph (4) It is clear enough. Paragraph (5) It is clear enough.

Article 12
It is clear enough.

Article 13
Paragraph (1)
The action plan contains improvement steps to be implemented by the Bank in order to overcome significant problems faced, along with the target time for completion.
The action plan submitted by the Bank is the Bank's commitment to the Financial Services Authority.
Paragraph (2)
It is clear enough.
Paragraph (3)
Letter a
The specific deadline for submitting the action plan is established by the Financial Services Authority by considering the level of complexity and significance of the Bank's problems.
Letter b
It is clear enough.
Paragraph (4)
What is meant by "holiday" is the national holiday established by the central government and/or the local holiday established by the local government.

Article 14
Letter a
The target time for completing the action plan includes the target time for completing each stage of the action plan as well as the completion as a whole. The report on the implementation of the action plan submitted by the Bank includes, among others, an explanation regarding the realization of the implementation of the action plan, accompanied by proof of implementation and/or supporting documents related thereto. Letter b The report on the implementation of the action plan submitted by the Bank includes, among others, an explanation regarding the development and problems faced in the implementation of the action plan accompanied by proof and/or supporting documents related thereto.

Article 15
It is clear enough.

Article 16
It is clear enough.

Article 17
It is clear enough.

Article 18
It is clear enough.

Article 19
It is clear enough.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5840 ---