Bank Frozen Operation (BBO)

The temporary suspension of a bank’s operations by the government is deemed unable to fulfill its obligations to third parties (suspensions).”

Financial Fervices Authority

“The temporary suspension of a bank’s operations by the government is deemed unable to fulfill its obligations to third parties (suspensions).”

Indonesia Dictionary

Definition of Frozen Bank Operations (BBO)

Bank Frozen Operation is an action taken by the government or related institutions that will freeze, terminate, or prohibit a bank from operating. The action was decided based on various long-term financial considerations of a bank. In this case, Frozen Operations Bank is a form of government distrust of related banks because it is deemed unable to fulfill its obligations to third parties. Frozen Bank Operation is the beginning of a trend called “ Merger Bank “. Banks that feel that their performance is not good and have the potential to freeze operations by the government will merge with other banks so they are not frozen.

Some banks such as Bank Bali, Bank Universal, Bank Prima Ekspres, and Bank Patriot have merged to avoid a freeze from the government. As for other government policies besides the Frozen Operations Bank, which is the Take Over Bank in which there is a takeover of ownership by the government.

Bank Frozen Operations Regulations (BBO)

The Government of Indonesia has also made a regulation regarding Bank Frozen Operations in the Regulation of the Minister of Finance of the Republic of Indonesia Number 151 / PMK.06 / 2014 concerning Determination of the Quality of Receivables and the Formation of Allowance for Uncollectible Ex-Indonesian Bank Restructuring Agency Ex-Managed PT. Asset Management Company (Persero). Rules of Frozen Bank Operations are contained in Chapter 1 General Provisions Article 1 Paragraphs 2 and 5. A copy of the Regulation of the Minister of Finance of the Republic of Indonesia can be seen here .

Background of Frozen Operations Bank (BBO)

Bank Frozen Operation is one of the government’s steps to curb banks that are no longer healthy so that they no longer operate before they improve their performance and internal system. Banks that are not healthy either in terms of capital, asset quality, management, profitability, or liquidity level will be affected by the Frozen Operations Bank policy. The government has frozen three Indonesian private banks namely BDNI, Modern Bank and BUN. The government conducts Frozen Bank Operations basically wants to create a healthy banking environment so that people do not become customers in a bank that is actually in an emergency situation. In addition to Bank Frozen Operations, the government also conducts Bank Take Over such as Bank Danamon.

Completion of Ex-Bank Frozen Operating Assets (BBO)

When a bank is frozen, there are three steps that the government will take. The first is selling on an auction basis through the Office of State Assets and Auction Services (KPKNL) for assets bound by Mortgage Rights by BI. Second, certain assets can be used by Ministries / Institutions or other managers after being purchased by the DJKN (Directorate General of State Assets) at the value of Mortgage Rights. Third, the three assets are not bound by the Underwriting Right by BI, so they are settled according to the DJKN and BI agreement.

 

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