FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 26/POJK.03/2015

ON

INTEGRATED MINIMUM CAPITAL PROVISION REQUIREMENTS FOR FINANCIAL CONGLOMERATES

BY THE GRACE OF GOD THE ALMIGHTY,

THE COMMISSIONERS' COUNCIL OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
a. that in order to create a financial sector that grows sustainably and stably and has high competitiveness, financial conglomerates need to have adequate capital; b. that in line with the complexity of business and risks of financial conglomerates, financial conglomerates need to conduct adequate capital management;
c. that with adequate capital and capital management of financial conglomerates, it is expected to realize the stability of the financial system that grows sustainably so as to be able to increase national competitiveness;
d. that based on the considerations as referred to in letters a, b, and c, it is necessary to establish a Financial Services Authority Regulation on Integrated Minimum Capital Provision Requirements for Financial Conglomerates.

COPY
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA

Considering: 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 8 of 1995 concerning the Capital Market (State Gazette of the Republic of Indonesia Year 1995 Number 64, Supplement to the State Gazette of the Republic of Indonesia Number 3608);
3. 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);
4. 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);
5. Law Number 23 of 2014 concerning Regional Government (State Gazette of the Republic of Indonesia Year 2014 Number 244, Supplement to the State Gazette of the Republic of Indonesia Number 5587) as last amended by Law Number 9 of 2015 (State Gazette of the Republic of Indonesia Year 2015 Number 58, Supplement to the State Gazette of the Republic of Indonesia Number 5679);
6. Law Number 40 of 2014 concerning Insurance (State Gazette of the Republic of Indonesia Year 2014 Number 337, Supplement to the State Gazette of the Republic of Indonesia Number 5618);
7. Financial Services Authority Regulation Number 29/POJK.05/2014 concerning the Conduct of Financing Company Business (State Gazette of the Republic of Indonesia Year 2014 Number 364, Supplement to the State Gazette of the Republic of Indonesia Number 5638);
8. Financial Services Authority Regulation Number 31/POJK.05/2014 concerning the Conduct of Sharia Financing Business (State Gazette of the Republic of Indonesia Year 2014 Number 366, Supplement to the State Gazette of the Republic of Indonesia Number 5640);
9. Financial Services Authority Regulation Number 17/POJK.03/2014 concerning the Implementation of Integrated Risk Management for Financial Conglomerates (State Gazette of the Republic of Indonesia Year 2014 Number 348, Supplement to the State Gazette of the Republic of Indonesia Number 5626);

DECIDES:
Establish: FINANCIAL SERVICES AUTHORITY REGULATION ON INTEGRATED MINIMUM CAPITAL PROVISION REQUIREMENTS FOR FINANCIAL CONGLOMERATES.

CHAPTER I

GENERAL PROVISIONS

Article 1

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

1. Financial Service Institution, hereinafter abbreviated as FSI, is an institution that conducts activities in the Banking, Capital Market, Insurance, Pension Fund, Financing Institution, and Other Financial Service Institutions sectors as referred to in Law Number 21 of 2011 concerning the Financial Services Authority.
2. Financial Conglomerate is a Financial Conglomerate as referred to in the Financial Services Authority regulations regarding the implementation of integrated risk management for financial conglomerates.
3. Parent Entity is a Parent Entity as referred to in the Financial Services Authority regulations regarding the implementation of integrated risk management for financial conglomerates.
4. Subsidiary is a Subsidiary as referred to in the Financial Services Authority regulations regarding the implementation of integrated risk management for financial conglomerates.
5. Integrated Minimum Capital Provision Ratio, hereinafter referred to as Integrated KPMM Ratio, is the ratio between the Actual Total Capital of the Financial Conglomerate (aggregate net equity) and the Minimum Total Capital of the Financial Conglomerate (aggregate regulatory capital requirement).
6. Integrated Capital Management is a continuous process to maintain capital at an adequate level in order to support the business plan of the Financial Conglomerate or anticipate potential losses caused by the activities of the Financial Conglomerate.
7. Board of Directors is:
   a. for an FSI with the legal status of a Limited Liability Company, the Board of Directors as referred to in Law Number 40 of 2007 concerning Limited Liability Companies; b. for an FSI with the legal status of:
   1) State-Owned Enterprise or Regional-Owned Enterprise, 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-Owned Enterprise, the Board of Directors of the Regional-Owned Enterprise that has not yet adjusted its legal form as referred to in Law Number 23 of 2014 concerning Regional Government as last amended by Law Number 9 of 2015;
   c. for an FSI with the legal status of a Cooperative, the Management as referred to in Law Number 25 of 1992 concerning Cooperatives;
   d. for an FSI with the legal status of a Joint Venture, the Board of Directors as referred to in the company's articles of association; e. for an FSI in the status of a branch office of an entity located outside the country, the branch office leader and the official one level below the branch office leader.
8. Board of Commissioners is:
   a. for an FSI with the legal status of a Limited Liability Company, the Board of Commissioners as referred to in Law Number 40 of 2007 concerning Limited Liability Companies; b. for an FSI with the legal status of:
   1) State-Owned Enterprise or Regional-Owned Enterprise, the Supervisory Board or Commissioners as referred to in Law Number 23 of 2014 concerning Regional Government as last amended by Law Number 9 of 2015;
   2) Regional-Owned Enterprise, the Supervisor for the Regional-Owned Enterprise that has not yet adjusted its legal form as referred to in Law Number 23 of 2014 concerning Regional Government as last amended by Law Number 9 of 2015;
   c. for an FSI with the legal status of a Cooperative, the Supervisor as referred to in Law Number 25 of 1992 concerning Cooperatives;
   d. for an FSI with the legal status of a Joint Venture, the Board of Commissioners as referred to in the company's articles of association; e. for an FSI in the status of a branch office of an entity located outside the country, the party appointed to carry out supervisory functions.

Article 2

(1) A Financial Conglomerate is required to provide integrated minimum capital of at least 100% (one hundred percent) of the Minimum Total Capital (MTC) of the Financial Conglomerate (aggregate regulatory capital requirement). (2) The Integrated Minimum Capital Provision as referred to in paragraph (1) must be carried out by calculating the Integrated KPMM Ratio.

Article 3

(1) The Financial Services Authority is authorized to set integrated minimum capital higher than the minimum capital as referred to in Article 2 paragraph (1), in the event that the Financial Services Authority assesses that the Financial Conglomerate faces risks requiring greater capital provision. (2) The Financial Services Authority is authorized to request members of the Financial Conglomerate that have the potential to cause capital problems for the Financial Conglomerate to increase capital and do other things in accordance with regulations in each respective financial sector. (3) The request as referred to in paragraph (2) is carried out in the event that the Financial Services Authority assesses that there is a tendency for capital decline that has the potential to cause the capital of the Financial Conglomerate to be below the integrated minimum capital provision requirement as referred to in Article 2 paragraph (1) or Article 3 paragraph (1).

Article 4

FSI members of the Financial Conglomerate are prohibited from taking actions that could result in the capital condition of the Financial Conglomerate not meeting the provisions as referred to in Article 2 paragraph (1) or Article 3 paragraph (1).

CHAPTER II

ACTUAL TOTAL CAPITAL OF FINANCIAL CONGLOMERATE (AGGREGATE NET EQUITY)

Article 5

(1) In calculating the Integrated KPMM Ratio as referred to in Article 2 paragraph (2), the Parent Entity calculates the Actual Total Capital (ATC) of the Financial Conglomerate by summing the nominal value of the actual capital of each FSI individually and/or on a consolidated basis with the Subsidiary in the Financial Conglomerate in accordance with regulations in each respective financial sector. (2) The ATC of the Financial Conglomerate as referred to in paragraph (1) must be reduced by capital reduction factors consisting of:
a. equity participation of an FSI in another FSI in the Financial Conglomerate; and/or b. fund placement of an FSI in another FSI in the Financial Conglomerate recognized as a capital instrument (regulatory capital) by the other FSI referred to, to the extent that it has not been calculated in the capital calculation or has not been calculated as a capital reduction factor in each respective financial sector. (3) In the event that a financial sector has consolidated capital calculation regulations regarding the Subsidiary, the actual capital calculated in the ATC of the Financial Conglomerate is the actual capital on a consolidated basis with the Subsidiary. (4) In the event that consolidated capital calculation regulations do not calculate the capital of a Subsidiary, the actual capital of the referred Subsidiary is calculated in the ATC of the Financial Conglomerate.

Article 6

The actual capital of each FSI in the Financial Conglomerate individually and/or on a consolidated basis with the Subsidiary that is calculated in the ATC of the Financial Conglomerate is:
a. for banks, actual core capital and actual supplementary capital; b. for financing companies, adjusted actual capital;
c. for insurance/reinsurance companies, the actual value of the difference between permitted assets/wealth and liabilities;
d. for securities companies, actual Adjusted Net Working Capital (ANWC).

CHAPTER III

MINIMUM TOTAL CAPITAL OF FINANCIAL CONGLOMERATE (AGGREGATE REGULATORY CAPITAL REQUIREMENT)

Article 7

(1) In calculating the Integrated KPMM Ratio as referred to in Article 2 paragraph (2), the Parent Entity calculates the Minimum Total Capital (MTC) of the Financial Conglomerate by summing the nominal value of the minimum capital of each FSI individually and/or on a consolidated basis with the Subsidiary that must be met by each FSI in the Financial Conglomerate in accordance with regulations in each respective financial sector. (2) In the event that a financial sector has consolidated capital calculation regulations regarding the Subsidiary, the minimum capital calculated in the MTC of the Financial Conglomerate is the minimum capital on a consolidated basis with the Subsidiary that must be met in accordance with regulations in each respective financial sector. (3) In the event that consolidated capital calculation regulations do not calculate the capital of a Subsidiary, the minimum capital of the referred Subsidiary is calculated in the MTC of the Financial Conglomerate.

Article 8

The minimum capital of each FSI in the Financial Conglomerate individually and/or on a consolidated basis with the Subsidiary that is calculated in the MTC of the Financial Conglomerate is:
a. for banks, minimum capital according to risk profile; b. for financing companies, minimum adjusted capital;
c. for insurance/reinsurance companies, the minimum value of the difference between permitted assets/wealth and liabilities;
d. for securities companies, the minimum value of Adjusted Net Working Capital (ANWC).

CHAPTER IV

INTEGRATED CAPITAL MANAGEMENT

Article 9

(1) A Financial Conglomerate is required to implement Integrated Capital Management comprehensively and effectively.
(2) The implementation of Integrated Capital Management as referred to in paragraph (1) must be carried out by the Parent Entity, the Board of Directors of the Parent Entity, and the Board of Commissioners of the Parent Entity.

Article 10

(1) The Board of Directors of the Parent Entity and the Board of Commissioners of the Parent Entity are authorized and responsible for ensuring the implementation of Integrated Capital Management as referred to in Article 9 paragraph (1) in accordance with the characteristics and complexity of the business of the Financial Conglomerate. (2) The authority and responsibility of the Board of Directors of the Parent Entity as referred to in paragraph (1) includes at least:
a. formulating integrated capital policies, strategies, and procedures in accordance with the size, characteristics, business complexity, and risk level of the Financial Conglomerate; and b. implementing integrated capital management policies, strategies, and procedures. (3) The authority and responsibility of the Board of Commissioners of the Parent Entity as referred to in paragraph (1) includes at least:
a. directing, approving, and evaluating integrated capital management policies, strategies, and procedures; and b. evaluating the implementation of integrated capital management policies, strategies, and procedures by the Board of Directors of the Parent Entity.

Article 11

In the context of implementing Integrated Capital Management, the Parent Entity is required to at least:
a. have integrated capital management policies and procedures; b. conduct integrated capital adequacy assessments;
c. monitor and report capital on an integrated basis;
d. have adequate internal control systems related to integrated capital; and e. conduct periodic reviews of the implementation of Integrated Capital Management.

Article 12

(1) Integrated capital management policies as referred to in Article 11 letter a contain at least policies regarding:
a. the capital level to meet the minimum capital of the Financial Conglomerate (regulatory capital); b. capital sources, both internal and external, of the Financial Conglomerate;
c. actions taken by the Financial Conglomerate:
1. to anticipate all risks arising from the activities of the Financial Conglomerate;
2. when capital is below the established target; and
3. to ensure the compliance of the Financial Conglomerate with applicable regulations regarding the obligation to provide minimum capital.
(2) Integrated capital management procedures as referred to in Article 11 letter a contain at least procedures for planning, adequacy assessment, and monitoring of the capital of the Financial Conglomerate.

Article 13

(1) In conducting integrated capital adequacy assessments as referred to in Article 11 letter b, the Parent Entity is required to identify:
a. indications of double or multiple gearing in the Financial Conglomerate; b. indications of excessive leverage;
c. obstacles to transferring capital from one FSI to another FSI in the Financial Conglomerate; and
d. significant risks affecting the Financial Conglomerate.
(2) Integrated capital adequacy assessments are conducted by the Integrated Risk Management Unit (SKMRT).
(3) The Parent Entity is required to document the results of integrated capital adequacy assessments as referred to in paragraph (2).

Article 14

(1) In conducting monitoring and reporting of capital on an integrated basis as referred to in Article 11 letter c, the Parent Entity is required to have an information system that can generate adequate information and reports, including the impact of risks on the capital needs of the Financial Conglomerate. (2) Monitoring and reporting of capital on an integrated basis as referred to in paragraph (1) is conducted by the Integrated Risk Management Unit (SKMRT). (3) Capital reports as referred to in paragraph (2) are submitted to the Board of Directors of the Parent Entity and the Integrated Risk Management Committee on a periodic basis.

Article 15

The Parent Entity is required to have an adequate internal control system as referred to in Article 11 letter d to ensure the reliability of the implementation of Integrated Capital Management.

Article 16

The review of the implementation of Integrated Capital Management as referred to in Article 11 letter e is conducted by the Integrated Internal Audit Unit (SKAIT).

CHAPTER V

REPORTING

Article 17

(1) The Parent Entity is required to prepare the Integrated Capital Adequacy Report every semester for the end-of-month positions of June and December.
(2) The Integrated Capital Adequacy Report as referred to in paragraph (1) contains:
a. actual capital of each FSI member of the Financial Conglomerate; b. ATC of the Financial Conglomerate;
c. minimum capital that must be met by each FSI member of the Financial Conglomerate;
d. MTC of the Financial Conglomerate; e. Integrated KPMM Ratio; f. Details of equity participation between FSIs in the Financial Conglomerate; and g. Details of fund placement of an FSI in another FSI in the Financial Conglomerate recognized as a capital instrument (regulatory capital) by the other FSI referred to. (3) The Parent Entity is required to submit the Integrated Capital Adequacy Report as referred to in paragraph (1) to the Financial Services Authority at the latest:
a. on the 15th (fifteenth) day of August for the report for the end-of-month position of June; b. on the 15th (fifteenth) day of February for the report for the end-of-month position of December. (4) In the event that the 15th (fifteenth) day falls on a Saturday/Sunday/holiday, the Integrated Capital Adequacy Report is submitted on the next working day. (5) The Integrated Capital Adequacy Report is submitted to the Financial Services Authority u.p. Supervision Department or Regional Office or Financial Services Authority Office responsible for supervising the FSI Parent Entity. (6) The Integrated Capital Adequacy Report is made in accordance with the format as referred to in Attachment I of this Financial Services Authority Regulation.

Article 18

The Parent Entity is required to submit the Integrated Capital Adequacy Report at any time when requested by the Financial Services Authority.

CHAPTER VI

SANCTIONS

Article 19

Violations of the provisions in Article 2, Article 4, Article 9, Article 11, Article 13 paragraph (1), Article 13 paragraph (3), Article 14 paragraph (1), Article 15, Article 17 paragraph (1) and/or Article 18 are subject to administrative sanctions consisting of:
a. written warning; b. downgrade of health level;
c. cancellation of competence and propriety test results;
d. restriction of business activities; e. order for management replacement; f. listing of management in the list of disreputable persons; and/or g. cancellation of approval, registration, and ratification.

Article 20

The Parent Entity declared late in submitting the report as referred to in Article 17 paragraph (3) is subject to sanctions consisting of a written warning and the obligation to pay a fine of Rp1,000,000.00 (one million rupiah) per day of delay with a maximum amount of Rp100,000,000.00 (one hundred million rupiah).

Article 21

The mechanism for imposing sanctions as referred to in Article 19 and Article 20 refers to the provisions applicable to FSIs in each respective financial sector.

CHAPTER VII

TRANSITIONAL PROVISIONS

Article 22

For Financial Conglomerates consisting of FSIs of the same type, the implementation of the integrated minimum capital provision requirement provisions begins to apply at the time the integrated risk management and integrated governance provisions for the referred Financial Conglomerates begin to be applied in each respective financial sector.

Article 23

The obligation to submit the Integrated Capital Adequacy Report as referred to in Article 17 paragraph (3) is first carried out for the report for the end-of-month position of December 2015.

Article 24

The imposition of sanctions as referred to in Article 19 begins to apply on:
a. January 1, 2019, for Parent Entities that are Commercial Banks Based on Business Activities (BUKU) 4; b. July 1, 2019, for Parent Entities that are not banks and Parent Entities that are banks other than Commercial Banks Based on Business Activities (BUKU) 4.

Article 25

The imposition of sanctions as referred to in Article 20 begins to apply on:
a. January 1, 2018, for Parent Entities that are Commercial Banks Based on Business Activities (BUKU) 4; b. July 1, 2018, for Parent Entities that are not banks and Parent Entities that are banks other than Commercial Banks Based on Business Activities (BUKU) 4.

CHAPTER VIII

CLOSING PROVISIONS

Article 26

At the time this Financial Services Authority Regulation comes into force, FSIs continue to apply the provisions applicable in each respective financial sector.

Article 27

This Financial Services Authority Regulation begins to apply on the date of its promulgation.

To ensure that everyone knows it, it is ordered to promulgate this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.

Established in Jakarta
On the date of December 4, 2015

CHAIRMAN OF THE COMMISSIONERS' COUNCIL
FINANCIAL SERVICES AUTHORITY,

signed

MULIAMAN D. HADAD

Promulgated in Jakarta
On the date of December 11, 2015

MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA,

signed

YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2015 NUMBER 292

Copy in accordance with the original
Director of Law 1
Department of Law

signed

Sudarmaji

EXPLANATION

OF

FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 26 /POJK.03/2015

ON

INTEGRATED MINIMUM CAPITAL PROVISION REQUIREMENTS FOR FINANCIAL CONGLOMERATES

I. GENERAL

The condition of the financial services sector growing sustainably is a main prerequisite so that the financial system is able to support the achievement of financial system stability and contribute optimally to the national economy.

Capital is a source of financial support in the implementation of Financial Conglomerate activities as a whole, a cushion to absorb unexpected losses, and a safety net in crisis conditions. Adequate capital can increase the confidence of stakeholders so as to support the condition and stability of the Financial Conglomerate.

The amount of capital that must be provided by a Financial Conglomerate depends heavily on the risks faced. Therefore, in order to maintain public confidence and improve the overall business condition, a Financial Conglomerate is required to have an adequate system to identify, measure, monitor, and control the risks arising from the business activities of the Financial Conglomerate and to provide adequate capital to anticipate such risks.

In connection with these matters, regulations regarding the obligation to provide integrated minimum capital for financial conglomerates are needed in a Financial Services Authority Regulation.

II. ARTICLE BY ARTICLE

Article 1

Clear enough.

Article 2

Clear enough.

Article 3

Paragraph (1)
What is meant by risks requiring greater capital provision includes, among others, intra-group transaction risks.

Paragraph (2)
What is meant by other things includes, among others:
a. restriction of certain business activities; b. restriction of bonuses and other incentives; and/or
c. regulation or postponement of dividend payments.

Paragraph (3)
Clear enough.

Article 4

Examples of actions that can result in the capital condition of the Financial Conglomerate not meeting the provisions include, among others:

1. making dividend payments;
2. giving bonuses / incentives / tantiems / remuneration / other benefits to the Board of Directors, Board of Commissioners, or employees.

Article 5

Paragraph (1)
Example 1:

---

A Financial Conglomerate consists of LJK 1, LJK A, LJK B, and LJK C. The Total Actual Capital (TMA) of the Financial Conglomerate is the sum of the actual capital of LJK 1, LJK A, LJK B, and LJK C, in accordance with the regulations applicable in each respective financial sector.

Example 2:

A Financial Conglomerate consists of LJK A, LJK B, and LJK C.
The Total Actual Capital (TMA) of the Financial Conglomerate is the sum of the actual capital of LJK A, LJK B, and LJK C, in accordance with the regulations applicable in each respective financial sector.

Paragraph (2)
Is clear enough.

Paragraph (3)
Example 1

A Financial Conglomerate consists of LJK 1, LJK A, LJK B, and LJK C. In the event that LJK 1 has regulations governing the calculation of capital on a consolidated basis with Subsidiary Companies, the Total Actual Capital (TMA) of the Financial Conglomerate is the actual consolidated capital of LJK 1 with LJK A, LJK B, and LJK C.

Example 2:

A Financial Conglomerate consists of LJK 1, LJK A, LJK B, LJK C, and LJK D. In the event that LJK 1 has regulations governing the calculation of capital on a consolidated basis with Subsidiary Companies, the Total Actual Capital (TMA) of the Financial Conglomerate is the sum of the actual consolidated capital of LJK 1 with LJK A, LJK B, and LJK C plus the actual capital of LJK D individually.

Paragraph (4)
Example:

A Financial Conglomerate consists of a bank, a financing company, a securities company, and an insurance company.
Based on regulations governing banks, equity investments in Subsidiary Companies in the form of insurance companies become a capital reduction factor in the calculation of capital on a consolidated basis with Subsidiary Companies, so that the capital of the insurance company is not added to the bank's capital on a consolidated basis.

Thus, the calculation of the Total Actual Capital (TMA) of the Financial Conglomerate is the actual consolidated capital of the bank with Subsidiary Companies in the form of financing companies and securities companies plus the actual capital of the insurance company individually.

Article 6
Letter a
The term "bank" refers to commercial banks, Sharia commercial banks, rural banks, and Sharia rural financing banks.
The term "core capital and supplementary capital" refers to core capital and supplementary capital after taking into account capital reduction factors as referred to in regulations regarding minimum capital adequacy requirements.

Letter b
The term "financing company" refers to financing companies and Sharia financing companies.
The term "adjusted capital" refers to adjusted capital as referred to in regulations regarding the conduct of business of financing companies or the conduct of Sharia financing business.

Letter c
The term "insurance/reinsurance company" refers to insurance/reinsurance companies and Sharia insurance/reinsurance companies.
The term "permitted assets/wealth" refers to permitted assets/wealth as referred to in regulations regarding the financial health of insurance and reinsurance companies.
The term "liabilities" refers to liabilities as referred to in regulations regarding the financial health of insurance and reinsurance companies.

Letter d
The term "adjusted net working capital (ANWC)" refers to ANWC as referred to in regulations regarding the maintenance and reporting of ANWC.

Article 7
Paragraph (1)
Example 1:

A Financial Conglomerate consists of LJK 1, LJK A, LJK B, and LJK C. The Total Minimum Capital (TMM) of the Financial Conglomerate is the sum of the minimum capital that must be met by LJK 1, LJK A, LJK B, and LJK C, in accordance with the regulations applicable in each respective financial sector, so that the Integrated Minimum Capital Adequacy Ratio is calculated as follows:

Example 2:

A Financial Conglomerate consists of LJK A, LJK B, and LJK C.
The Total Minimum Capital (TMM) of the Financial Conglomerate is the sum of the minimum capital that must be met by LJK A, LJK B, and LJK C, in accordance with the regulations applicable in each respective financial sector, so that the Integrated Minimum Capital Adequacy Ratio is calculated as follows:

Paragraph (2)
Example 1:

A Financial Conglomerate consists of LJK 1, LJK A, LJK B, and LJK C. LJK 1 has regulations governing the calculation of capital on a consolidated basis with Subsidiary Companies. Thus, the Total Minimum Capital (TMM) of the Financial Conglomerate is the minimum capital that must be met by LJK 1 on a consolidated basis with LJK A, LJK B, and LJK C, so that the Integrated Minimum Capital Adequacy Ratio is calculated as follows:

Example 2:

A Financial Conglomerate consists of LJK 1, LJK A, LJK B, LJK C, and LJK D. LJK 1 has regulations governing the calculation of capital on a consolidated basis with Subsidiary Companies. Thus, the Total Minimum Capital (TMM) of the Financial Conglomerate is the minimum capital that must be met by LJK 1 on a consolidated basis with LJK A, LJK B, and LJK C plus the minimum capital that must be met by LJK D individually, so that the Integrated Minimum Capital Adequacy Ratio is calculated as follows:

Paragraph (3)
The term "minimum capital of Subsidiary Companies" refers to the minimum capital that must be met by Subsidiary Companies in accordance with regulations in each respective financial sector. Example:

A Financial Conglomerate consists of a bank, a financing company, a securities company, and an insurance company.
Based on regulations governing banks, equity investments in Subsidiary Companies in the form of insurance companies become a capital reduction factor in the calculation of capital on a consolidated basis with Subsidiary Companies, so that the capital of the insurance company is not added to the bank's capital on a consolidated basis.

Thus, the calculation of the Total Minimum Capital (TMM) of the Financial Conglomerate is the minimum capital that must be met by the bank on a consolidated basis with Subsidiary Companies in the form of financing companies and securities companies plus the minimum capital that must be met by the insurance company individually, so that the Integrated Minimum Capital Adequacy Ratio is calculated as follows:

Article 8
Letter a
The term "bank" refers to commercial banks, Sharia commercial banks, rural banks, and Sharia rural financing banks.
The term "minimum capital according to risk profile" refers to minimum capital according to risk profile as referred to in regulations regarding minimum capital adequacy requirements. Example: Bank A has a risk profile of 2 (two) and has a minimum capital adequacy requirement according to risk profile of 9% (nine percent) of Risk-Weighted Assets (RWA). If the bank has RWAs of Rp1,000,000,000 (one billion rupiah), then the minimum capital according to risk profile is 9% x Rp1,000,000,000 = Rp90,000,000 (ninety million rupiah).

Letter b
The term "financing company" refers to financing companies and Sharia financing companies.
The term "adjusted capital" refers to adjusted capital as referred to in regulations regarding the conduct of business of financing companies or the conduct of Sharia financing business.

Example: Financing Company A has adjusted assets of Rp2,000,000,000 (two billion rupiah). If the minimum capital ratio is set at 10% (ten percent), then the minimum adjusted capital is 10% x Rp2,000,000,000 = Rp200,000,000 (two hundred million rupiah).

Letter c
The term "insurance/reinsurance company" refers to insurance/reinsurance companies and Sharia insurance/reinsurance companies.
The term "permitted assets/wealth" refers to permitted assets/wealth as referred to in regulations regarding the financial health of insurance and reinsurance companies.
The term "liabilities" refers to liabilities as referred to in regulations regarding the financial health of insurance and reinsurance companies.

Example: Insurance Company A has a Risk-Based Minimum Capital (RBMC) of Rp1,000,000,000 (one billion rupiah). If the target solvency ratio is set at 120% (one hundred twenty percent), then the minimum value of the difference between permitted assets/wealth and liabilities is 120% x Rp1,000,000,000 = Rp1,200,000,000 (one billion two hundred million rupiah).

Letter d
The term "adjusted net working capital (ANWC)" refers to ANWC as referred to in regulations regarding the maintenance and reporting of ANWC.

Article 9
Is clear enough.

Article 10
Paragraph (1)
Is clear enough.

Paragraph (2)
Is clear enough.

Paragraph (3)
Letter a
The evaluation of capital management policies, strategies, and procedures is carried out periodically at least once (1) a year or whenever necessary.

Letter b
Is clear enough.

Article 11
Is clear enough.

Article 12
Paragraph (1)
Letter a
Is clear enough.

Letter b
Policies regarding internal capital sources need to consider obstacles in transferring capital between LJKs within the Financial Conglomerate, both due to internal or external conditions of the Financial Conglomerate, such as regulations from authorities that hinder the transfer of capital.

Letter c
Number 1
Is clear enough.

Number 2
The term "set targets" refers to targets set by the Financial Conglomerate or by the Financial Services Authority.

Number 3
Is clear enough.

Paragraph (2)
In capital planning procedures, considerations include among others capital targets, risks, strategies, and the Financial Conglomerate's business plan as well as macroeconomic conditions.

Article 13
Paragraph (1)
Letter a
The term "double or multiple gearing" refers to a condition where there are equity investments or capital placements between member LJKs of the Financial Conglomerate that cause the Capital of the Financial Conglomerate to be assessed as larger than it should be (overstated).

Letter b
The term "excessive leverage" refers to a condition where there is excessive borrowing by an LJK that is placed in the form of capital in another LJK.

Letter c
Is clear enough.

Letter d
Is clear enough.

Paragraph (2)
The term "SKMRT" refers to SKMRT as referred to in regulations regarding the implementation of integrated risk management for Financial Conglomerates.

Paragraph (3)
Is clear enough.

Article 14
Paragraph (1)
Is clear enough.

Paragraph (2)
The term "SKMRT" refers to SKMRT as referred to in regulations regarding the implementation of integrated risk management for Financial Conglomerates.

Paragraph (3)
The term "Integrated Risk Management Committee" refers to the Integrated Risk Management Committee as referred to in regulations regarding the implementation of integrated risk management for Financial Conglomerates.

Article 15
Is clear enough.

Article 16
The term "SKAIT" refers to SKAIT as referred to in regulations regarding the implementation of integrated governance for Financial Conglomerates.

Article 17
Is clear enough.

Article 18
The Integrated Capital Adequacy Report may be requested at any time, among others, when the Financial Services Authority requires information regarding the current capital condition of the Financial Conglomerate for the purpose of integrated supervision of the Financial Conglomerate.

Article 19
Is clear enough.

Article 20
Is clear enough.

Article 21
Is clear enough.

Article 22
The term "similar LJKs" refers to LJKs that are governed by the same regulations regarding the implementation of risk management and governance in each respective financial sector. Example:
a. LJK in the form of an insurance company. b. LJK in the form of a securities company.
c. LJK in the form of a rural bank.

Article 23
Is clear enough.

Article 24
Is clear enough.

Article 25
Is clear enough.

Article 26
Is clear enough.

Article 27
Is clear enough.

SUPPLEMENT TO THE STATE JOURNAL OF THE REPUBLIC OF INDONESIA NUMBER 5774

APPENDIX I
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 26 /POJK.03/2015
REGARDING
INTEGRATED MINIMUM CAPITAL ADEQUACY REQUIREMENTS FOR FINANCIAL CONGLOMERATES

Appendix I.A
Integrated Capital Adequacy Report
Name of Financial Conglomerate :
Position :
Main Entity :
No. Name of LJK Type of LJK Actual Capital
(Million Rp)
Capital Reduction Factor Total Actual Capital
(Million Rp)
Minimum Capital
(Million Rp)
Integrated Minimum Capital
Adequacy Ratio
…
Total Rp …%
Notes:

1. Name of LJK is filled with the name of the LJK member of the Financial Conglomerate.

2. Type of LJK is filled with bank, insurance/reinsurance company, financing company, or securities company.

3. Actual Capital is filled with:
   a. (Core capital + Supplementary capital) actual after being reduced by capital reduction factors for LJK types in the form of banks; b. Actual adjusted capital for LJK types in the form of financing companies;
   c. (Permitted assets or wealth – liabilities) actual for LJK types in the form of insurance/reinsurance companies;
   d. Actual Adjusted Net Working Capital (ANWC) for LJK types in the form of securities companies.

4. Total Capital Reduction Factor is the sum of:
   a. equity investments by LJKs in other LJKs within the Financial Conglomerate; and/or b. fund placements by LJKs in other LJKs within the Financial Conglomerate that are recognized as capital instruments (regulatory capital) by the respective other LJKs, provided that they have not been taken into account in the capital calculation or have not been taken into account as capital reduction factors, in each respective financial sector.

5. Minimum Capital is the minimum capital that must be met by each LJK in accordance with regulations in each respective financial sector. Minimum Capital is filled with:
   a. minimum capital according to risk profile for LJK types in the form of banks; b. minimum adjusted capital for LJK types in the form of financing companies;
   c. minimum value of the difference between permitted assets/wealth and liabilities for LJK types in the form of insurance/reinsurance companies;
   d. minimum value of Adjusted Net Working Capital (ANWC) for LJK types in the form of securities companies.

6. Integrated Minimum Capital Adequacy Ratio is calculated from (Total Actual Capital – Total Capital Reduction Factor) / Total Minimum Capital).

Appendix I.B
Report on Details of Total Capital Reduction Factor in the Form of Equity Investments by LJKs in Other LJKs within the Financial Conglomerate Name of Financial Conglomerate :
Position :
Main Entity :
No. Name of LJK Making
Equity Investment (Investor)
Name of LJK Target of
Equity Investment
(Investee)
Time of
Equity Investment 1)
Share of
Equity Investment 2)
Value of
Equity Investment 3)
(Million Rp)
Total Equity Investment
Notes:

1. Date, month, and year when the equity investment becomes effective.
2. Percentage of equity investment (ownership) in the investee company as of the reporting position.
3. Value of equity investment as of the reporting position.

Appendix I.C
Report on Details of Total Capital Reduction Factor in the Form of Fund Placements by LJKs in Other LJKs within the Financial Conglomerate Recognized as Capital Instruments (Regulatory Capital) by Other LJKs Name of Financial Conglomerate :
Position :
Main Entity :
No. Name of LJK
Making
Fund Placement
Name of LJK Target of Fund
Placement
Time of Fund
Placement 1)
Value of Fund
Placement 2)
(Million Rp)
Total Fund Placement
Notes:

1. Date, month, and year when the fund placement becomes effective.
2. Value of fund placement as of the reporting position.