Indonesian bank stocks fall after raises capital requirements

JAKARTA Fri Dec 20, 2013 12:17am EST

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JAKARTA Dec 20 (Reuters) - The Indonesian banking index fell 1.4 percent to 529.1 at midday, after the central bank said it plans to increase banking capital reserves.

Indonesian banks need to boost their core capital to 6 percent of risk-weighted assets from 5 percent so that they are more resilient should there be a financial crisis, Bank Indonesia said late Thursday.

State controlled lender Bank Rakyat Indonesia fell 2.11 percent to 6,950 rupiah while peers Bank Mandiri and Bank Negara Indonesia slid more than 1.2 percent each.

"We believe most banks will have no major problem in meeting the regulation given their high capital adequacy ratio (CAR) already... However, given the nature of the banking industry, which is capital intensive, further capital injection will always be needed a few years from now," Tjandra Lienandjaja, banking analyst at Jakarta-based Mandiri Sekuritas said in a note.

The Jakarta finance index has dropped 2.5 percent year to date.

At 0500 GMT, the broader Jakarta Composite Index was 1.11 percent lower, while the blue chip index was down 1.36 percent. (Reporting by Andjarsari Paramaditha; Editing by Supriya Kurane)

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