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Indonesian regulator sets additional capital requirements for large banks

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Indonesian regulator sets additional capital requirements for large banks

Indonesia's Financial Services Authority, or OJK, has ordered the country's systemically important banks to create a Tier 1 capital surcharge .of between 1% and 3.5% of risk-weighted assets, depending on the size and viewed riskiness of the bank, Bloomberg News reported March 27, citing a statement from the authority

The regulator asked the lenders to meet the additional capital requirement by Jan. 1, 2019.

Heru Kristiyana, OJK's banking commissioner, said the banks are allowed to adopt any avenue — including raising fresh capital — to meet the requirements.

The country's systemically important banks were classified into five categories when the size of the new capital surcharge was decided. As part of efforts to improve loss absorption and protect banks and stakeholders against failures, the regulator is considering working with Bank Indonesia to revise the classification of lenders in March and September every year based on their performance.