PT
BANK
SUMITOMO
MITSUI
INDONESIA
GOOD CORPORATE
GOVERNANCE
IMPLEMENTATION REPORT
&
GOOD CORPORATE
GOVERNANCE
SELF-ASSESSMENT REPORT
PT
BANK
SUMITOMO
MITSUI
INDONESIA
GOOD CORPORATE
GOVERNANCE
IMPLEMENTATION REPORT
FOREWORD
In compliance with Bank Indonesia Regulation No. 8/4/PBI/2006 dated 30 January 2006, its amendment No. 8/14/PBI/2006 dated 5 October 2006 and Bank Indonesia Circular Letter No. 15/15/DPNP dated 29 April 2013, we are very pleased to present to you Good Corporate Governance (GCG) Implementation Report of PT Bank Sumitomo Misui Indonesia (“Bank”) for the position of year 2013.
TRANSPARENCY
OF
GCG
IMPLEMENTATION
A
DISCLOSURE
OF
GCG
COVERAGE
I.
Implementation
of
Tasks
and
Responsibilities
by
the
Board
of
Commissioners
and
the
Board
of
Directors.
a.
Number,
composition,
criteria
and
independency
of
Board
of
Commissioner
and
Board
of
Directors
members
Board
of
Commissioners
(BOC)
As of 31 December 2013, the number of BOC of the Bank is 4 (four), namely 2 (two) Japanese citizens and 2 (two) Indonesian citizens with the following composition:
Name Position
Masayuki Shimura President Commissioner Airo Shibuya Vice President Commissioner RAG Bramono Dwiedjanto Independent Commissioner Ninik Herlani Masli Ridhwan Independent Commissioner
All members of BOC have taken and passed the Fit and Proper Test. In addition, members of BOC:
1. Do not have another position as a member of BOC, BOD, or Executive Officers at both non‐financial institutions/companies or non‐bank subdiaries controlled by the Bank (in accordance with the regulations of Bank Indonesia No. 8/14/PBI/2006 Article 7(1)). 2. Do not have a family relationship up to the second degree with other members of BOC
and/or BOD.
3. Do not use the Bank for personal, family, and/or other parties’ interests, which may cause a loss or decline in the Bank’s profit.
Board
of
Directors
(BOD)
As of 31 December 2013, the Bank has 7 (seven) members of BOD namely 4 (four) Indonesian citizens and 3 (three) Japanese citizens whom are all domiciled in Indonesia. The composition of BOD is as follows:
Name Position
Masaya Hirayama President Director
Tsuyoshi Yamaguchi Deputy President Director
Shoichi Yamashiro Director
Bruno Octer Purba Director
Masa Paskalis Lingga Director
Trie Karjati Wibowo Compliance Director
Ajar Siswandono Director
All members of BOD come from independent parties of Controlling Shareholder. In addition, members of BOD:
1. Do not hold another position as a member of the BOC, the BOD or Executive Officer of banks, companies, and /or other institutions.
2. Do not own shares either individually or jointly of more than 25% (twenty five percent) of paid‐up capital of the Bank and/or another company.
3. Do not have family relationship up to the second degree with fellow members of the BOD and/or members of the BOC.
4. Do not extend a general power of attorney to other parties which will result in transfer of the duties and functions of the BOD.
5. Do not use the Bank for personal, family, and other parties’ interests that may cause a loss or reduce the profit of the Bank.
6. Do not take and/or receive personal gain from the Bank other than remuneration and other facilities determined based on the decision of the General Meeting of Shareholders.
b.
Tasks
and
responsibilities
of
Board
of
Commissioners
and
Board
of
Directors
Board
of
Commissioner
(BOC)
Each member of BOC has performed the following tasks and responsibilities independently and in timely manner:
1. Ensuring the implementation of GCG in any business of the Bank at all levels or hierarchy of the organization.
of the BOD, and providing advice to the BOD by:
Directing, monitoring, and evaluating the implementation of Bank strategic policies Not being involved in decision making related to Bank’s operational activities
3. Ensuring that the BOD has followed up on audit findings and recommendations of the Internal Audit Unit of the Bank, SMBC auditor, external auditor, and the result of Bank Indonesia and/or other supervisory authorities.
4. Establishing an Audit Committee and Risk Monitoring Committee on June 27, 2007, and Remuneration and Nomination Committee on June 26, 2008. The appointments of all committee members are made by BOD based on a decision by the meeting of BOC. During year 2013, BOD has appointed Ms. Ninik Herlani Masli Ridhwan as chairman of Audit Committee, Ms. Triharini Kartiko as member of Risk Monitoring Committee and Mr. Airo Shibuya as member of Remuneration and Nomination Committee.
5. Ensuring that the committees have been formed to carry out their tasks effectively.
6. To approve the Bank’s loan especially to related parties within certain limits. 7. Compiling work guideline and procedure (Code of Conduct) which are binding on each
member of the BOC that covers: Conflicts of Interest
Corporate Opportunities Confidentiality
Fair Dealing
Compliance with Laws, Rules and Regulations
Encouraging the Reporting of Any Illegal or Unethical Behavior Compliance Procedures
Working Time
Code of Meeting of BOC
Board
of
Director
(BOD)
Each member of BOD has performed its duties and responsibilities for the implementation of the management of the Bank as follows:
1. Managing the Bank in accordance with the authority and responsibilities as stipulated in the Articles of Association and applicable laws and regulations.
2. Applying the principles of GCG in any business activity of the Bank at all levels or hierarchy in the organization.
3. Following up on audit findings and recommendations of the Bank’s Internal Audit Work Unit, SMBC auditor, external auditor, the results of supervision of Bank Indonesia and /or other supervisory authorities.
4. Assigning Internal Audit Department, Risk Management Department/Risk Management Committee, and Compliance Department to continuously implement the principles of GCG. BOD regularly attended every meeting conducted and provided directions for the enhancement of GCG principles related to compliance, internal auditor and external auditor function and risk management implementation, including the internal control system.
5. Being responsible for the implementation of its tasks to Shareholders through the General Meeting of Shareholders.
satisfies the following requirements: a. A project with special characteristics;
st scope of work, responsibilities, work period c. The consultant shal
project with special characteristics as referred to in letter a. 8. Providing data and information that is accurate, relevant, and tim
9. Possessing work guideline and procedure (Code of Conduct) that are binding o member of the BOD, which covers:
Conflicts of Interest Corporate Opportunities Confidentiality
Fair Dealing
Compliance with Laws, Rules, and Regulations
Encouraging the Reporting of Any Illegal or Unethical Behavior Compliance Procedures
Working Time
Code of Meeting of BOD
accordance to the work guideline and procedure shall be
c.
Board
of
Commissioner
Recommendations
BOC to BOD that were raised at the
The followings are the summary of recommendations from
meetings of BOC held in 2013 together with the detailed agenda of the meetings:
No. Date Agenda Recommendations
1 28 ry `Review and nce on the a) Accord y report The position of compensation should be managed by referencing it to position P75 and making balance between the competitiveness and the company’s affordability to pay.
b) In terms of
No. Date Agenda Recommendations
Committee, Risk Monitoring Committee, Remuneration and Nomination Committee and Recommendation from each committee to BOC.
`Evaluation on the
Function during Semester II/2012.
Others.
nce and m
regulation. inten to improve the engagement of employees during their employ ent and the management to formulate better strategies on HRD.
te preventive action
eventive Indonesia minimum reserve requirement that recently occurred. BOC would like to draw Board of Director’s attention to instruct related departments to do the
Committee, Risk Monitoring Committee, Remuneration and Nomination Committee and Recommendation from each committee to BOC. `Others.
rate as compared to the industry, RNC recommends the management to reduce turnover rate to be lower than 10% by considering to do some actions:
▪ To give higher role and on the related case into Policy and Procedure manual.
▪ To socialize related pr action to internal department. b) Aside from having lower turn over
responsibility for the potential Staffs with higher authority. ▪ To improve the way
No. Date Agenda Recommendations
with a spirit of mutual respect and honor.
▪ Since the employees give positive feedback to "Relationship among colleagues", the Bank should maintain and improve this strength by conducting more activities to support good relationship among employees. c)In regard to the case of MRR
shortage in 11 March 2013, it was understood that the mistakes were human error and not intentionally done. Nevertheless, the concern was more to the mitigation efforts, especially the similar mistakes in the future. Thus, BOC recommends that the Management needs to revisit and review the current practices of internal system by putting emphasis on the following matters:
• Work responsibility and interactivity of checkers and approvers function in executing transactions.
• Determination of the “reasonable closing window time” for end‐of‐ day dealing with Bank Indonesia, thus we still have enough time to do final recap.
• Reprimand needs to be consistently administered as mistakes should not be associated only to the Bank’s income but more to reputation which bears unmeasurable cost to the Bank.
No. Date Agenda Recommendations
▪ Credit Policy Committee Report.
▪ Others
`Report of Activities of Audit Committee, Risk Monitoring Committee, Remuneration and Nomination Committee and Recommendation from each committee to BOC.
`Others.
a) Refer to BI regulation No. 15/15/DPNP/dated 29 April 2013 regarding “Implementation of Good Corporate Governance (GCG) for Commercial Bank”. It is advised that the Bank conducts a gap analysis between the GCG Internal Practices with BI regulations and to do necessary improvement action plan. Audit Committee also strongly recommends that the Bank needs to incorporate GCG Self assessment working papers guideline into Internal Manual Procedure.
b) Regarding with the Internal Audit collaboration project between the Bank and SMBC called Leveraging Audit Partnership in subsidiary (LAPIS), Audit Committee would like High/Moderate Inherent Risk. - To calculate and provide the
number of staff and competencies to support the Audit Plan.
c) Aside from having lower turn over ratio as compared to the industry and achieving the target to have ratio below than 10%, the management is recommended to maintain the progress by sustaining favorable working environment and other factors that influence the turnover ratio such as competitive compensation and benefit, working climate and respect & trust.
No. Date Agenda Recommendations
corporate values, it should be
conducted also for all employees in all level as it is done to newly hired staff in Shin Jin Ken program.
4 22 November 2013
`Review and acceptance on the report of BOD regarding as follows:
▪ Evaluation on Realization of Business Plan as of 30 September 2013.
▪ Discussion on Final Draft Bank’s Business Plan 2014‐ 2016.
▪ Evaluation on Risk Profile Report as of 30 September 2013.
▪ Compliance and KYC/AML Report.
▪ Follow‐Up Action on Recommendation from Commissioners.
▪ IT Steering Committee Report.
▪ Others.
`Report of Activities of Audit Committee, Risk Monitoring Committee, Remuneration and Nomination Committee and Recommendation from each committee to BOC.
`Evaluation on the Effectiveness of each Committee’s Task and Responsibilities
`Others.
a)In regard to Bank Indonesia Circular Letter number 15/35/DPAU dated 29 August 2013 regarding Credit Provision or Financing and Technical Assistance in the Framework of Micro, Small and Medium Enterprises Development (UMKM); though Bank do not have the plan to disburse UMKM; yet Audit Committee recommend the Bank to take necessary action, e.g. to prepare relevant report or analysis regarding condition of the Bank to fulfill related regulation.
II.
Completeness
and
Implementation
of
the
Tasks
of
the
Committees
and
the
Work
Unit
Performing
Bank
Internal
Audit
Function
a.
Structure,
Organization,
Skills,
and
Independency
of
Committee
Members
Audit
Committee
Committee consists of 3 (three) members with the following composition:
Name Position
Ninik Herlani Masli Ridhwan Chairman as well as Member
Jenly Hendrawan Member with expertise in Finance and Accounting Constance J. Rehatta Member with expertise in Banking
Audit Committee members have met the qualifications below:
1. Possess adequate knowledge regarding banking industry widely with good integrity, character, and morals;
2. A willingness to accept accountability; 3. Informed Judgment;
4. Mature confidence;
5. Objectivity and intellectual honesty.
Risk
Monitoring
Committee
Risk Monitoring Committee was established on 27 June 2007. The composition of Risk Monitoring Committee as of December 2013 consist of 3 (three) Independent Parties, as follows:
Name Position
RAG Bramono Dwiedjanto Chairman as well as Member
Sofyan Rambey Member with expertise in Risk Management Tri Harini Kartiko Member with expertise in Finance
Risk Monitoring Committee members have met the qualifications below:
1. Possession of adequate knowledge regarding banking industry widely with good integrity, character, and morals;
2. Sufficient time to fulfill their duty; 3. Ability to communicate effectively;
4. Good mentality and ethics, and also professionally responsible.
Remuneration
and
Nomination
Committee
Remuneration and Nomination Committee was established on 30 June 2008. As per December 2013, Remuneration and Nomination Committee consists of 2 (two) members. However, on 24 February 2014, the Bank has appointed Ms. Yvonne Febrina which is executive officer in charge of Human Resources as member. Therefore, the current composition of Remuneration and Nomination Committee is as follow:
Name Position
RAG Bramono Dwiedjanto Chairman as well as Member, Independent Commissioner Airo Shibuya Member, Commissioner
Yvonne Febrina* Member, Executive Officer in charge of Human Resources * Effective on 24 February 2014, Ms. Yvonne Febrina was appointed as member of Remuneration and Nomination
Committee to fill in the vacant position since 13 September 2013.
Remuneration and Nomination Committee members have met the qualifications below: 1. Possession of adequate knowledge regarding banking industry widely with good
integrity, character, and morals;
2. Strong commitment to task and objectivity judgment;
3. Sufficient knowledge of Human Resources Management Concept; 4. Proactive and professional ways of thinking.
b.
Tasks
and
Responsibilities
of
the
Committees
Audit
Committee
In regard to article 43 regarding duties and responsibilities of Audit Committee as stipulated in Bank Indonesia regulation number 8/4/PBI/2006 dated 30 January 2006 as amended by Bank Indonesia regulation number 8/14/PBI/2006 dated 5 October 2006 concerning implementation of Good Corporate Governance for Commercial Bank, related duties and responsibilities have been provided in Audit Committee Charter, as follows:
To possess work guideline and procedure called Audit Committee Charter that shall be binding to all Committee members.
To perform the monitoring and evaluation of audit planning and implementation as well as monitoring the audit result follow up actions in order to assess the adequacy of internal control including the adequacy of financial reporting process.
To perform the monitoring and evaluation of the followings in order to give recommendations to Board Of Commissioners:
` Implementation of the tasks of the Internal Audit Work Unit.
` Consistency between audit implementation by the Public Accountant Office with prevailing auditing standards.
` Consistency between the financial reports with prevailing accounting standards. ` Implementation of follow up actions by the BOD on findings by the Internal Audit
Work Unit, public accountant, SMBC Internal Audit as the Bank’s majority shareholders, and BI supervision result.
To give a recommendation on the appointment of Public Accountant and Public Accountant Office to the Board Of Commissioners to be submitted to the General Meeting of Shareholders.
To review in timely manner all annual and interim financial statements; including the management's discussion and analysis, auditor's comments and suggestions, and any significant accounting or reporting issues.
Risk
Monitoring
Committee
To establish a working guideline and procedure called Risk Monitoring Committee Charter that shall be binding to all Committee members.
To assist Commissioners to accomplish their roles and responsibility in the Bank’s risk management by giving recommendation to BOC.
To perform evaluation of the consistency between risk management policies and its implementation.
To perform monitoring and evaluation on the implementation of Risk Management Committee and Risk Management Department tasks.
To perform monitoring on the continuing improvement process of policies, procedures, and Bank’s risk management practices, in order to ensure that Bank’s risk management is implemented well.
To review and ensure the adequacy and the completeness of Bank’s risk management scheme including the management of credit risk, market risk, liquidity risk, operational risk, legal risk, reputation risk, strategic risk and compliance risk.
To review and ensure that Bank’s risk profile, both inherent risk and risk control system, is within the risk tolerance level decided by Management.
To give opinion broadly to Management regarding good bank risk management, including identification on high risk area, in line with the changes of Bank’s business environment.
Remuneration
and
Nomination
Committee
Related to remuneration policies:
To perform an evaluation of the remuneration policy. To give a recommendation to the BOC concerning:
`BOC and BOD remuneration policies to be submitted to the General Meeting of Shareholders.
`Executive Officers and employee remuneration policies as a whole to be submitted to the BOD.
To ensure that the remuneration policy commensurate with at least the following: `Financial performance and reserves formation as stipulated in prevailing laws and
regulations;
`Individual work performance;
`Fairness compared to peer group; and
`Consideration on long‐term goals and strategies of the Bank.
Related to nomination policies:
To prepare and give a recommendation on the system and procedure for selecting and /or replacing members of BOC and BOD to BOC to be submitted to the General Meeting of Shareholders.
To submit a recommendation on prospective members of BOC and/or BOD to the BOC to be submitted to the General Meeting of Shareholders.
To submit a recommendation on independent parties who will become committee members to BOC.
c.
Frequency
of
Committee
Meetings
Audit
Committee
Based on stipulation on Audit Committee Charter, Audit Committee conduct a meeting at least once a month. In case there are major issues, in any event, the committee will meet more frequently to fulfill its responsibilities. During the year 2013, Audit Committee has conducted a total of 17 (seventeen) meetings.
Risk
Monitoring
Committee
Risk Monitoring Committee conducted a meeting at least once a month. During the year 2013, Risk Monitoring Committee has conducted a total of 12 (twelve) meetings.
Remuneration
and
Nomination
Committee
Remuneration and Nomination Committee conducted a meeting at least once in 3 (three) months. From January to December 2013, Remuneration and Nomination Committee has conducted a total of 4 (four) meetings.
d.
Committee’s
working
schedule
and
its
realization
in
2013
Audit
Committee
In term of monitoring and evaluation of audit planning and implementation as well as monitoring of follow up of audit result for assessing adequacy of internal control including adequacy of financial reporting, thus Audit Committee has conducted activities during year 2013, as follows:
Monitored and evaluated for the following activities:
` Internal Audit Department’s activities, among others are preparation of The Annual of Internal Audit Plan for year 2014, realization of audit schedule refer to The Annual of Internal Audit Plan of year 2012 and year 2013 and submission of mandatory reporting to Bank Indonesia.
` Implementation/realization of In‐Office Inspection Plan including its result done by Business Administration Planning Department (BAPD).
` Consistency of financial report of the Bank in accordance with prevailing accounting standards.
` Consistency between audit implementation by the External Auditor (KPMG) for financial audit year 2012 and performance plan of reappointed External Auditor (KPMG) for financial audit year 2013 with prevailing audit standard.
` Follow up action done by Board of Director upon result of Internal Audit Department, Bank Indonesia’s Supervisory, SMBC Audit, External auditor.
To deliver recommendation of appointment of Public Accountant for financial audit year 2013 (KPMG) to the Board of Commissioners to be submitted to the General Meeting of Shareholders.
Other activities:
` Set up realization of Audit Committee’s activities for year 2012 and 2013.
` Conducted self‐assessment of Audit Committee’s performance for year 2012 as implementation of Good Corporate Governance.
` Handed over duties and responsibilities of Audit Committee’s Chairman from Mr. Bramono Dwiedjanto (previous Chairman) to Ms. Ninik Herlani (New Chairman). ` Delivered the written opinion to Board of Commissioners regarding matter to be
paid attention by Board of Director among others are to incorporate preventive action on one case that recently occurred and to socialize it to internal department; to conduct review on GCG internal practice with related BI guidelines and prepare improvement action plan as necessary; and to incorporate the collaboration project between IAD SMBC with IAD of the Bank (LAPIS /Leveraging Audit Partnership in Subsidiary project) into establishment of The Annual Internal Audit Plan.
` Set up agenda and having coordination meeting with related departments for discussing the current major issues, operational activity, staffing, development plan and others.
` Having discussion with External Auditor (KPMG) regarding result of Financial Audit for year 2012 and performance plan for conducting Financial Audit for year 2013.
The function and activities of Audit Committee has been performed in accordance with the planned activities as well as refer to the prevailing regulations. Bank will continuously enhance the performance of Audit Committee in accordance with the prevailing regulations.
Risk
Monitoring
Committee
In order to evaluate the consistency between risk management policies and its implementation, on year 2013 the committee conducted discussions with Risk Management Department Member and/or Risk Taking Units, as well as conducted the following activities:
Conducted meeting in a monthly basis.
Discussed on risk profile report which covering 8 (eight) types of risk, which submitted to Bank Indonesia in quarterly basis.
Discussed on Bank Indonesia audit result for position of September 2012, and May 2013.
Discussed on Loan Portfolio Stress Test conducted by the Bank.
Discussed on Compliance Risk Assessment and Money Laundry Survey with Compliance Department.
Discussed on the proposal of changing Operational Risk Parameter.
Discussed with Garuda Project members in regard to the enhancement of Bank operation through Garuda Project.
The function and activities of Risk Monitoring Committee has been performed in accordance with the prevailing regulations. Bank will continuously enhance the performance of Risk Monitoring Committee in accordance with the prevailing regulations.
Remuneration
and
Nomination
Committee
Indonesia Regulation No. 8/4/PBI/2006 dated 30 January 2006 and its amendment. For implementation of the above plans, the Committee conducted the following activities in the year 2013:
Conducted meeting periodically at least once in 3 (three) months. Related to Remuneration Policies:
Committee reviewed the Bank, including proposed the renumeration
`
to submit to General Meeting of Shareholders
m Towers Watson) to ` In coordination with HRD, The Remuneration and Nomination
remuneration policies run by
improvement in term of pension fund and enhance medical benefit program. In addition, also proposed the enhancement of non compensation reward, such as give reward to the employee in order to improve their motivation and employee engagement.
Discussed and gave recommendation to BOC concerning remuneration policies for BOC and BOD
` Discussed the progress of job evaluation and developing salary structure project that is conducted in cooperation with external experts (fro
learn the position of job and remuneration of the Bank in the labor market. ` Discussed renewal of medical benefit program for employees proposed by HRD. Related to Nomination Policies:
` Review yearly assessment conducted by each Chairman of Audit and Risk provided recommendation for re‐appointment of
`
sia regulations. Monitoring Committee and
Committee members from Independent parties.
Conducted evaluation on candidate of new members of BOC and BOD and gave recommendation in accordance with Bank Indone
` Conducted evaluation on the existing BOD and give recommendation based on Bank Indonesia Regulation.
Others
` Evaluated and monitored employee turnover. Per semester II/2013, total employee over (13%) was increased compared to semester I/2013 (9.3%).
The fu ttee has been
erformed in accordance with the planned activities as well as refer to the prevailing
III.
Performance
of
Compliance,
Internal
Auditor
and
External
Auditor
Functions
turn
nction and activities of Remuneration and Nomination Commi p
regulations. However, Bank will continuously enhance the performance of Remuneration and Nomination Committee according to the prevailing regulations.
a.
Compliance
function
Performance
of
Compliance
Function
re the Bank’s adherence to the regulations that prevail in the banking sector, and mitigated the compliance risk that might arise in the event
in the area of ompliance throughout 2013:
Bank made continuous attempts to ensu
that the Bank did not comply with or implement the applicable regulations.
Active Supervision of the Board of Directors and the Board of Commissioners
Monitoring the compliance of the Bank with the fulfillment of prudential banking principles such as Minimum Capital Requirement (CAR), Legal Lending Limit (LLL), Net
Minimum Capital Requirement (KPMM/CAR): 25,81%
ncerning Net Open Position
was 8.26%
Open Position (NOP), Minimum Reserve Requirement (MRR), Non Performing Loan, and Asset Quality Rating. During this period, the Bank has implemented the commitment to enhance the risk awareness and such commitment was supported by the fact that there was no violation toward limit that determined by the prevailing regulation.
Compliance indicators per December 2013 position as follows: `
` There was no excess or violation of Legal Lending Limit (LLL) ` There was no violation toward the regulations co
(0,23%)
` Primary Minimum Reserve Requirement (MRR) Rupiah was 8.17% and MRR foreign currency
` NPL Ratio (gross) 0,38% and NPL Ratio (net) 0.32%
Director Overseeing Compliance Function submitted periodical reports regarding the implementation of the duties and responsibilities to the President Director with a copy to the Board of Commissioners.
Conducted supervision function through periodic meeting with Executive Officers of the ank, i.e. through Monthly Compliance Meetings to discuss any problems relevant to B
the Bank’s compliance with the regulations and monitored the follow‐up actions that should be taken by the Bank in respect to the issuance of Bank Indonesia regulations.
Bank formed Compliance Department that is responsible directly to Director Overseeing ompliance Function. Compliance Department prepared Compliance Action Plan C
compiled based on the result of Compliance Risk Assessment, Risk Profile Report, the Result of Bank Indonesia Inspection, External Audit, and Internal Audit and conducted control and monitoring toward the realization of the Compliance Action Plan.
Board of Commissioners performed evaluation towards the Implementation of ompliance Function and gave recommendations on issues that needs improvement to C
Board of Directors that ensured all of the recommendation of Board of Commissioners have been implemented.
The Bank prepared Report on the Implementation of the Duties and Responsibilities of Director overseeing Compliance Function and conveyed it to Bank Indonesia every 6
dures
the
(six) months.
Policies and Proce
Internal Control
On a continual basis carried out Compliance Self‐Reviewing toward several legal ch as: Confidentiality, Conflicts of Interest, Customer Protection, Financial Products, Foreign Currency Administration, Labor, Prohibition of Insider Trading, Net categories, su
Open Position, Legal Lending Limit, Minimum Reserve Requirement, Entertainment & Gifts, and Reporting to Authorities.
Coordinating with the other related departments to perform review toward any plan of new product/ activity including any enhancement and/ or modification of the existing product/ activity.
Monitoring the submission of reports to Bank Indonesia and other authorities.
Monitored the progress of the settlement of findings as the result of Bank Indonesia inspections and ensuring that Bank Indonesia recommendations were followed up and implemented.
Management Information System
The availability of accurate and timely information, among others, by conducting update t to the Bank’s activities issued by Bank Indonesia and other government institutions, circulated it to Board of Directors and all related to the new regulations relevan
departments and discussed it in the Compliance Meeting forum.
Conducted analysis on new regulations that have significant impact to the Bank and discussed it with the related departments.
Conducted enhancement on the information and technology system of the Bank in respect to the reporting to Bank Indonesia and reporting to other authorities so that it may generate data and reports effectively.
Conducted monthly Compliance Meeting as a means to discuss and share compliance issues related with banking activities.
Human Resources and Training
function, during year 2013, the Bank conducted ograms related to compliance as follows:
In order to support the compliance internal/in‐house training pr
No. Topic Date
1. Anti Fraud Strategy and Fraud Investigation on 12 January 2013 the Bank’s Daily Operation
2. Risk Management Refreshment Program: 16 Februar Operational Risk Awareness
y 2013 3. Purchase and Restriction of Foreign Currency,
Rupiah and Derivative Transactions
28 September 2013 4. Debtor Information System (SID) and Foreign
Exchange Movement (LLD)
16 November 2013 5. Legal Lending Limit (LLL) 9 – 10 December 2013 6. Compliance Awareness (e‐learning) September ‐ December
Bank c with Bank’s e prevailing
regulations of new regulations assigned the
mployee from the related departments to attend the dissemination held by Bank onducted study meeting related
in regard to the issuance
compliance towards th as well as e
Indonesia and other authorities.
Bank organized internal training related to compliance to all new employees to give understanding in respect of the implementation of the compliance function by the Bank as well as the stipulations and prevailing rules and regulations.
Sanction
from
Bank
Indonesia
The imposition administrative sanction
13, the Bank was imposed with 4 (four) administrative The imposition of sanctions were caused by to shortage Indonesia due to human error in performing
During January – December 20 sanctions by Bank Indonesia.
minimum reserve requirement in Bank
Indonesia
authorization process toward Bank Deposit Facility, inaccuracy in the submission of data in Debtor Information System (SID), inaccuracy in the submission of data in Commercial Bank Daily Reports (LHBU), and late submission of report of the appointment and termination of BOC. The total administrative sanction imposed by Bank Indonesia during FY2013 was in the amount of IDR 75,981,471.
The Bank has taken the necessary actions follow‐up this issue, among others, by revising the internal procedure, enhancing the monitoring toward internal report and conveying
e report accurately and punctually.
th
Imp
Prin
ention
and
Restrictions
Money
Laundering
rime
(AML)
mmercial Banks as well as Law concerning Prevention and Combating Money
f
banking
lementation
of
the
Regulations
Regarding
Know
Your
Customer
(KYC)
ciples
and
Law
concerning
Prev
C
Supported by the regulations of Bank Indonesia issued in 2009, regarding the Implementation of Anti‐Money Laundering (AML) and Combating Terrorism Financing (CFT) Program for Co
Laundering Crime, the Bank strived or continual efforts to enhance the quality of risk management application that was relevant to the implementation of AML and CFT.
The above measures were taken by bearing in mind the awareness of the risks of the banking transactions being used as the means of money laundering and terrorism financing that would continue to increase along with the escalation of the complexity of
products and activities as a whole.
Taking the above considerations, throughout 2013, the Bank conducted the following activities in its attempt to enhance the quality of AML and CFT implementation:
Active Supervision of the Board of Directors and the Board of Commissioners
The Bank formed AML & CFT Unit that handling the implementation of AML and CFT tion.
The implementation of AML & CFT Program was always included into the agenda as one of the items discussed in the meetings conducted on a routine basis between the BOD and all department heads, including issues or constraints being faced by the Bank. Conducted regular monitoring toward the realization of the Implementation of AML and CFT Action Plan.
Director overseeing Compliance Function submitted the implementation of AML and CFT Program to Board of Directors and Board of Commissioners on quarter basis.
Policies and Procedures
Conducted revision toward the Standard Guidance on the Implementation of Anti‐ nd Combating Financing of Terrorism Program by referring to the suance of a number of regulations related to AML & CFT. Furthermore, the Bank also Money Laundering a
is
made revision toward Procedure Manual of AML & CFT Unit to accommodate revision of the Standard Guidance on the Implementation of AML & CFT Program.
Conducted revision toward Manual & Procedure of STB Detector, as AML support system.
Prepared an Action Plan pertinent to the implementation of AML & CFT Program, Plan to Bank Indonesia in semi annual basis.
to update customer data, and realization report on updating customer data were reported
Conducted revision toward Customer Risk Rating Methodology based on result review toward Customer Risk Rating Methodology that was conducted in yearly basis.
Internal Control
effective on of AML and CFT Program of the Bank, among others, by performing st towards the policies and procedures related to AML and CFT Program. Internal Audit Department conducted examination with respect to the implementati
obedience te
Conducted AML & CFT Independent reviews on a quarterly basis and semi‐annual basis to assess the implementation of AML & CFT especially on customer identification, customer due diligence, suspicious transaction report and the implementation of SMBC policy related with OFAC rules.
Management Information System
Bank took step to conduct several new system development which planned to go live in mentation of transaction monitoring and also AML and 2014 in order to support imple
KYC program in the Bank:
9 System Development for the reporting of fund transfer from/to overseas to INTRAC
9 e‐KYC System for more efficient and effective process during account opening processes and also during periodic review.
9 SAS System as new AML‐Support System replacing of STB Detector System
The Bank conveyed Suspicious Financial Transaction Report (LKTM) and Cash Financial Transaction Report (LTKT) to Indonesia Financial Transaction Report and Analysis (INTRAC).
Centre
Human Resources and Training
The Bank conducted candidates’ selection based on their educational background and experiences by considering the Bank’s needs as well as implemented the screening procedures to detect any connection of the prospective employee with Politically l as to detect whether the prospective employee has any criminal record, as a part of the implementation of Know Your Employee (KYE). Exposed Person (PEP) as wel
The Bank conducted study meeting related with the implementation of AML & CFT Program as well as assigned the employee from the related departments to attend the dissemination concerning the issuance of new regulations held in Bank Indonesia as well as external training provider
In order to support the implementation of AML and CFT Program, Bank conducted internal/in‐house training programs related to compliance and KYC Principles and Anti‐ Money Laundering as follows:
No. Topic Types of Training Date
1. Implementation of AML & CFT e‐learning September – December 2013
b.
Internal
Audit
(Sat
erja
Audit
)
Function
Inter Au ther oper
mai role to assess the various functions and control systems in the Bank and to advise the Management concerning their condition, as follows:
uan
K
Internal
–
SKAI
nal dit Department (SKAI), independent from o ational working units, has the n
Appraising the effectiveness and application of administrative and financial controls and liability of data that is developed within the Bank.
re
Evaluating sufficiency of an adherence to the Bank’s plans, policies and procedures and compliance with Internal and external regulations.
Ascertaining the adequacy of controls for safeguarding the Bank’s asset and, as appropriate, verifying the existence of assets.
whether results are consistent with Reviewing operations and programs to ascertain
established objectives and goals and whether the operations or programs are being carried out as planned.
Providing adequate monitoring of follow‐up actions by auditee to ensure that corrective action is taken and it is effective.
Internal Audit Department has prepared The Annual Internal Audit Plan which formed to define the expected conduct and scope of audit that related with implementation of Risk Based Audit. del as well as considering other aspects, among others are area that need to be paid attention due to problem in operational activity; Risk Profile Bank; This Annual Internal Audit Plan was composed from result of assessment of audit scope either in qualitative model or in quantitative mo
Bank’s Business Plan and others. The Annual Internal Audit Plan has been reviewed by Audit Committee and obtain approval from President Director and Board Of Commissioners.
repeated issues. Those findings or issues have been monitored until its completion in monthly and reported them to Board Of Director and Board Of Commissioners. In addition, SKAI has ported related essential of audit result to Bank Indonesia in accordance with prevailing
nology by Commercial Banks – IT Audit Function in every 3 (three) years. Last viewed has been conducted by the appointed Public Accountant (KPMG) on July 2011 which
c.
re
regulations.
Public Accountant has conducted review toward performance and compliance of SKAI toward Bank Indonesia’s regulations (The Standard For The Practice Of The Internal Audit Of Function For Commercial Banks or SPFAIB and Risk Management Implementation in The Utilization of Information Tech
re
state that performance of Internal Audit Department is proper and fulfill stipulation of related Bank Indonesia’s regulation. The review result has been submitted to Bank Indonesia.
External
Audit
and
Other
Audit
Function
Siddharta
&
Widjaja
(KPMG)
Review of the Bank’s Consolidation Reporting Package to SMBC as the Bank’s majority
shareholder for the position of 30 June 2013.
Audit of the Bank’s Financial Statements for the year ended 31 December 2013.
SMBC
Audit
From 11‐22 March 2013, SMBC as the majority shareholder of the Bank conducted audit to review Operation and Treasury of PT Bank Sumitomo Mitsui Indonesia. The primary
- Cash and Deposit Services Department ment Service Department (I & II)
result with 20 ACRs from SMBC Audit Team.The conclusion results are as follows:
The result is "Amber", which means "Identified weaknesses ‐ weaknesses in the to the reputation and or violations of laws and regulations that apply ".
¾
departments which were reviewed by SMBC are as follows:
- Settle
- Trade Finance Operation Department - Treasury Department
- Risk Management Department - Treasury Operation Department
- Other related departments
The Bank received the final
of the abovementioned SMBC audit
¾ Operation
internal control area that can affect the health of the area significantly. Identified various weaknesses can result in financial loss and or damage
Treasury
From 9 – 20 September 2013, SMBC as the majority shareholder of the Bank conducted revie
Laun were
- All Marketing Department and Marketing Middle Department
reputational damage and/or regulatory censure.
¾
result in financial loss and/or reputational damage and/or regulatory censure.
¾
- Project Finance Department
- Trade Finance Marketing Department - Loan Department
- Loan Administration Department
- Cash Management Services Department - Compliance
- Risk and governance committees - Other related depa
The Bank has received the final result with 2 team, the detail
¾ Business Promotion, Cred
environment have been identified which significantly impact the soundness of this environment. The identified weaknesses could resul
Anti Money Laundering
The result is Amber which has the definition of: “Weaknesses in the internal control environment have been identified which significantly impact the soundness of this environment. The identified weaknesses could
Regulatory Reporting
The result is Green which has the definition of: “ The internal control within the area reviewed is considered to be operating effectively. Weakness identified do not significantly impact the control environment and
asury Functional Activity nal Activity - Information Technology Functio
IV.
In erence to BI regulation No. 5/8/PBI/2003 dated 19 May 2003, and its amendment No. 1/2 /PBI/2009 dated 1 July 2009, as well as BI Circular Letter No. 5/21/DPNP/2003 dated 29 /23/DPNP dated 25 October 2011 pertaining the Implementation of Risk Management by Commercial Bank, the Bank implemented the following:
Risk
Management
Implementation
ref
1 5
September 2003 and its amendment no. 13
Revised Standard Guidance on the Implementation of Risk Management to accommodate the alteration on parameters applied in risk monitoring.
Applied management of 8 (eight) types of risk, i.e. credit risk, market risk, liquidity risk, operational risk, legal risk, reputation risk, strategic risk and compliance risk.
Established a Risk Management Committee, Asset and Liability Committee (ALCO), and Risk Management Department as part of the enhancement of bank’s risk management structure. Every month, Bank held Risk Management Coordination meeting, RMC meeting, and ALCO meeting to discuss, as follows:
a. Risk Management Coordination
Bank discussed on the management of 8 (eight) types of risk, among others as follows:
Type of Risk Content
Market Risk
`Portfolio Volume and Composition
`Potential Loss of Interest Rate Risk in Banking Book `Business Strategy and Policy
`Type and Significance of Violation
`Frequency of Violation or Track Record of Bank's Compliance `Violation towards Provisions concerning Particu
Compliance Risk
lar Financial Transaction
Liquidity Risk
`Composition of Asset, Liabilities and Administrative Account `Concentration of Asset and Liabilities
`Vulnerability of Funding Needs `Access to Funding Sources
Credit Risk
`Asset Portfolio Composition and Concentration Level `Quality of Fund Provision and Adequacy of Loan Provision `Fund Provision Strategy and Fund Resources
`External Factor
Operational Risk
`Business Characteristic and Complexity `Human Resources
`Information Technology and Supporting Infrstructures `Fraud
`External event
Legal Risk
`Litigation Factor
`Weakness of Binding Provisions Factor `Absence of Law/Regulation Factor
Reputation Risk
`Impact from Reputation of Bank Owner and Related Company `Violation of Business Ethics
`Complexity of Products and Business Cooperation
Type of Risk Content
` Proper Alignment between Strategy and Business Environment Condition
` High Risk Strategy and Low Risk Strategy
Strategic Risk
` Bank's Business Position
` Realization of Bank's Business Plan
b. Ri
In the mee e provides recommendations on the
enhancement s makes decision related to risk
management issue. c.
he Risk Management Department to ascertai
perform cation, measurement and monitoring of risk exposure on an exclusivity basis per risk in the year 2013. For the purpose of monitoring and evaluating the risk profile, active
PFD), as well as utilization of Foreign anpower which not covered in Bank’s Business Plan for year 2013 – 2015, Bank has made follow
V.
sk Management Committee (RMC)
ting, Risk Management Committe
of risk management implementation, as well a
Assets and Liabilities Management Committee (ALCO):
Bank discussed on market, funding and liquidity situation which impact to Bank’s asset and liability.
The Bank will continuously enhance the role and function of t
n adequate policy, procedure, limit measurement, and internal control system. RMD also s identifi
type
supervision by BOC and BOD will continually be conducted.
In regard to previous BI audit inspection result for position of 31 May 2013 and 31 October 2013, particularly related to industry analysis, determination of target for Non Japanese Marketing Department (NJMKD) and Project Finance Department (
M
up action by covering these factors into Bank’s Business Plan year 2014 ‐ 2016.
Provision
of
Funds
to
Related
Parties
and
Provision
of
Funds
in
Large
Amount
(Large
Exposures)
No. Description Total
Debtor Nominal (mil Rp.)
1 For related parties 9 1,520,334
2 For main debtors:
c. Individual 17 17,542,220
d.Group
8 17,805,942
VI.
Plan
Indonesia Circular Letter No. 12/27/DPNP dated 25 October 2010 regarding Business Plan of prepared its Business Plan for the year 2014–2016 and submitted Bank Indonesia on 2 December 2013. Furthermore, BOD continuously monitored their realization
realization reached Rp. 34.35 trillion at the end of year 2013 or 48.37%
% 20
ssets of the Bank also increased by 45.74%, from Rp. 32.13 trillion at the end of 2012 to Rp. 46.83
nsidering credit risk, operational risk and market risk at the end of year far above the minimum requirement set by Bank Indonesia. The Bank
VII.
gulations: Commercial Banks, the Bank has
to
and submitted the quarterly realization report of Business Plan to Bank Indonesia. BOD also reported the summary of the realization report during the coordination meeting of BOC and BOD which would then be discussed by BOC during BOC Meeting. In addition, Business Plan Supervision Report was reported by the Bank semi‐annually and was submitted to Bank Indonesia in August 2013 and February 2014.
In general, the Bank succeeded to achieve audited net income of Rp. 665.9 billion or 31.56% increase compared to last year.
rom the asset side, the loan F
higher compared to end of year 2012. The Bank has also managed to keep Non Performing Loan (NPL) ratio below 5% namely 0.38 (gross base) and 0.32% (net base) at the end of year 13. Total a
trillion at the end of 2013.
From the liability side, at the end of year 2013, the third party fund was amounting to Rp. 18.53 trillion or 47.25% higher compared to end of year 2012. From the capital side, the Bank’s Capital Adequacy Ratio (CAR) by co
013 was 25.81%, which was 2
will exert its best effort to maintain continuous business growth continuously in a steady condition.
Transparency
in
the
Bank’s
Financial
and
Non
‐
Financial
Conditions
that
Were
Not
Included
in
Other
Reports
The Bank has carried out its obligation to prepare and submit reports, information of Bank’s products and use of Bank’s customer personal data and information of prime lending rate in accordance with the following Bank Indonesia Re
Bank Indonesia Regulation No. 3/22/PBI/2001 dated 31 December 2001, its amendment No.
2012 regarding Commercial 7/50/PBI/2005 dated 29 November 2005 and Bank Indonesia Regulation No.: 14/14/PBI/2012 dated 18 October 2012 on Transparency and Publication of the Bank’s Report and Bank Indonesia Circular Letter No.: 14/35/DPNP dated 10 December
Bank Annual Report and Certain Annual Reports submitted to Bank Indonesia by properly compiling and presenting annual report, quarterly published financial report and monthly report according to the above regulations.
Bank Indonesia Regulation No. 7/6/PBI/2005 dated 20 January 2005 and Circular Letter No. 7/25/DPNP dated 18 July 2005 on Transparency in Bank’s Product Information and Use of Customer Personal Data by creating its own written policies and procedures regarding this matter.
Bank Indonesia Circular Letter No.: 13/05/DPNP dated 8 February 2011, its amended by Bank Indonesia Circular Letter No. 15/01/DPNP dated 15 January 2013 concerning Transparency of Prime Lending Rate Information.
