New Bank Indonesia Regulation on Ratings for Commercial Banks
Bank Indonesia ("BI") has issued Regulation No. 13/1/PBI/2011 ("Regulation 13") on ratings and risk assessment for commercial banks.
Regulation 13 provides that commercial banks are obliged to maintain and/or improve their ratings by implementing certain prescribed principles relating to risk management. In this regard, commercial banks must self-evaluate their ratings on an individual and consolidated basis and must take into account factors such as corporate governance, the earnings and capital of the banks. Such self-evaluation must be conducted twice a year, at the end of June and December.
BI will also rate commercial banks at the end of June and December each year.
Sanctions for non-compliance with Regulation 13 include written warnings, rating downgrades and suspension of activities.
Regulation 13 has been in force since 5 January 2011.
New Regulations on Guarantees for Public Private Partnerships under the Infrastructure Guarantee Fund
On 21 December 2010, the Government issued Regulation No. 78 of 2011 ("Regulation 78") on guarantees for public private partnerships under the Infrastructure Guarantee Fund ("IGF"). IGF was established in December 2009 to encourage private sector participation in infrastructure development. On 31 December 2010, the Ministry of Finance issued Regulation No. 260/PMK.011/2011 ("Regulation 260") which contains guidelines and more detailed provisions on guarantees issued under the IGF.
Among other matters, Regulation 78 sets out the risks that can be covered under guarantees issued by the IGF. In addition, it sets out the criteria that must satisfied before a proposal for a guarantee can be submitted to the IGF. Such proposal must include details relating to risk allocation and the proposed scope of the guarantee. The proposal must be accompanied by supporting documents, including a draft cooperation agreement between the government and the private entity. Once the proposal has been evaluated, the IGF may issue a rejection or an approval in a prescribed form. Regulation 78 also contains information on fees for guarantees issued under the IGF as well as procedures for filing claims under such guarantees.
Regulation 260 includes provisions on the types of guarantees that can be issued under the IGF. Such guarantees can be granted by the Minister of Finance or by the IGF to the private entity. Where there are insufficient assets within the IGF to provide a guarantee, a joint guarantee may be issued by the IGF and a government entity.
According to some commentators, proposals for guarantees in respect of 9 or more infrastructure projects have been submitted to the IGF.
Further guidelines on risk coverage and categorisation for the purposes of guarantees issued under the IGF are expected to be issued in due course although there is little information on when such guidelines will be published.
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