Financial Services Authority Says that the Closure of SVB Will Not Impact Indonesian Banking

JAKARTADAILY.ID – The Financial Services Authority (OJK) assesses that the closure of Silicon Valley Bank (SVB) by the US Federal Deposit Insurance Corporation (FDIC) on March 10, 2023, will not have a direct impact on the Indonesian banking industry, which has a strong and stable condition.

OJK Chief Executive for Banking Supervision Dian Ediana Rae said that the closure of SVB is not expected to have a direct impact on Indonesian banks which do not have a business relationship, facility line, or investment in SVB securitization products.

In addition, unlike SVB and banking in the US in general, banks in Indonesia do not provide credit and investment to technology startups or crypto companies.

Also Read: OJK Warns Kresna Life Regarding Written Approval for Converting Obligations to Policyholders into SOL

"Therefore, OJK hopes that society and industry will not be affected by various speculations that are developing among the public," said Dian.

According to Dian, after the 1998 financial crisis, Indonesia has taken fundamental steps in the framework of strengthening institutions, and legal infrastructure and strengthening governance and customer protection which has created a strong, resilient, and stable banking system.

This is reflected in the well-maintained and solid performance of the Banking Industry and continued positive growth amid ongoing domestic and global economic pressures.

At present, the condition of Indonesian banking shows good liquidity performance, including LA/NCD and AL/DPK above the threshold of 129.64 percent and 29.13 percent, far above the regulatory threshold of 50 percent and 10 percent respectively.

Banking assets are also maintained at a proportionate composition with the composition of Third Party Funds (DPK) which are dominated by current accounts and saving accounts (CASA) or low-cost funds which are increasing so that they are not sensitive to movements in interest rates.

Likewise, other performances such as credit risk, market risk, capital, and profitability were still maintained and growing positively.

Currently, there are no commercial banks in Indonesia that fall into the category of "Banks in Resolution," namely banks that are experiencing financial difficulties, jeopardizing their business continuity, and cannot be revived.

OJK continues to carry out various collaborative and synergistic policy steps with Bank Indonesia, the Ministry of Finance, and the Deposit Insurance Corporation, both directly and through the Financial System Stability Committee (KSSK) in order to anticipate global impacts and pressures that may occur.

Also Read: OJK Issues 3 New Regulations to Strengthen Capital Market Industry

OJK ensures that it will continue to improve monitoring of various developments that are taking place globally and their implications for Indonesian Banking, ensuring the implementation of risk management and good bank governance in every activity of productive asset portfolio management and funding as well as mitigating concentration risks that have an impact on the Bank's financial performance.