Maintaining Banking Stability: LPS Strategies for Resolving Failed Banks Revealed

Dody Zulverdi, a member of the LPS Board of Commissioners for Banking Guarantee and Resolution, has revealed that the role of the banking sector is vital in driving the economy. This is because banks serve several primary functions, one of which is acting as a ‘store of wealth’.

Furthermore, banks are considered a source of financing to stimulate the business world and act as facilitators for payment systems to support economic activities within society. “That is why banks must be protected,” said Dody during the Lampung Financial Festival at Novotel Bandar Lampung on Sunday (6/9/2026).

He continued that if a bank fails due to deteriorating conditions caused by management errors and the OJK (Financial Services Authority) is unable to restore its health, the LPS will intervene by taking over from former shareholders through capital injections.

However, before taking such action, Dody stated that the authority will first assess the bank’s business potential to determine whether it can be saved. If not, the LPS may proceed with liquidation.

“If a bank has no potential to be saved, it will ultimately be liquidated. The LPS can liquidate a bank if it becomes problematic. The LPS will first ensure whether there is potential; if the business model is good and there are no legal issues, the LPS can provide temporary capital, or we can find another bank willing to manage it while we restore the bank’s health,” he explained.