Loss Share Agreement Template for Indonesia

The Loss Share Agreement is a crucial risk management tool in Indonesia's financial sector, typically employed when financial institutions need to share or transfer risks associated with specific assets or portfolios. This agreement type gained prominence following various financial sector reforms and is commonly used in bank restructuring, asset purchases, and portfolio transfers. The document structure adheres to Indonesian legal requirements, particularly those set by OJK and Bank Indonesia, while incorporating international best practices in risk-sharing arrangements. It's essential for scenarios involving asset sales, portfolio transfers, or financial institution collaborations where risk mitigation is crucial. The agreement details loss-sharing ratios, calculation methodologies, payment mechanisms, and ongoing obligations of all parties, ensuring compliance with Indonesian financial regulations and risk management guidelines.

1. Parties: Identifies and provides full details of the participating institutions entering into the loss share arrangement

2. Background: Explains the context and purpose of the loss sharing arrangement, including any relevant regulatory context

3. Definitions: Defines all key terms used in the agreement, including financial terms, calculation methods, and technical concepts

4. Scope of Agreement: Specifies the covered assets or portfolio and the extent of loss sharing

5. Loss Share Mechanics: Details the fundamental mechanics of how losses will be shared, including percentages and thresholds

6. Calculation of Losses: Specifies how losses are to be calculated, including eligible loss types and valuation methods

7. Payment Procedures: Outlines the process for making loss share payments, including timing and documentation requirements

8. Reporting Requirements: Details the regular reporting obligations of parties, including frequency and content of reports

9. Asset Management Standards: Sets forth the required standards for managing covered assets

10. Representations and Warranties: Contains standard and specific representations and warranties from all parties

11. Term and Termination: Specifies the duration of the agreement and circumstances for early termination

12. Dispute Resolution: Outlines the process for resolving disputes between parties

13. Governing Law and Jurisdiction: Specifies Indonesian law as governing law and relevant jurisdiction

14. General Provisions: Includes standard boilerplate provisions such as notices, amendments, and assignment