BCA has guidelines that support the implementation of ALCO’s duties and responsibilities, which are listed in the Board of Directors Decree No. 144/SK/DIR/2022 dated September 22, 2022 regarding the Asset Liability Committee (ALCO) Structure and the Board of Commissioner Decree No. 138/SK/KOM/2022 dated August 15, 2022 regarding Allocation of Board of Directors’ Duties and Responsibilities and The Main Framework Organization of PT Bank Central Asia Tbk.
The scopes stipulated in the Decree concerning ALCO’s Structure are as follows:
• Organization scope
- Mission, Main Function, Position and Authority.
- Position and Composition of Committee.
• Completeness of Committee - Committee Personnel.
- Main Duties.
- ALCO’s Working Group.
- Decision Making and Accountability.
1. Structure, Membership of ALCO, and Voting Rights Status
Based on the Board of Directors Decree No. 144/SK/DIR/2022 regarding the Asset Liability Committee (ALCO) Structure, the structure, membership and voting rights status of ALCO are as follows:
Position in the Committee Served by Voting Rights Status
Chairman (concurrently
as a member) President Director Reserves voting rights
Members • Deputy President Director I – IT & Digital Banking
• Deputy President Director II – Business Banking &
Operation
• Risk Management Director
• Corporate Banking & Treasury Director
• Treasury Director Commercial & SME Banking Director
• Branch & Network Director
• Credit Risk & Legal Director
• Transaction Banking Director
• Finance & Corporate Planning Director
• Consumer Banking Director
• Executive Vice President (EVP) in charge of Treasury and International Banking
• Executive Vice President (EVP) in charge of Corporate Banking & Transactions
• Executive Vice President (EVP) in charge of Finance
& Accounting, Corporate Secretary & Corporate Communication, and Industry & Economic Research
• Head of International Banking (DPI)
• Head of Treasury (DTR)
• Head of Finance & Accounting (DKP)
• Head of Corporate Strategy & Planning (DCSP)
• Head of Corporate Banking, Transaction & Finance (GBKF)
• Head of SME & Commercial Business (DKM)
• Head of Transaction Banking Product Development (DPD)
• Head of Transaction Banking Business Development (DTB)
• Head of Transaction Banking Partnership Solution
Reserves voting rights
2. Main Functions, Authorities, Duties and Responsibilities of ALCO
Main Functions of ALCO
ALCO has the following functions:
a. To establish and evaluate liquidity management policies and strategies to maintain liquidity in accordance with the applicable provisions, meet BCA’s liquidity requirement, including unexpected fund requirements, and to minimize idle funds.
b. To establish and evaluate policies and strategies related to market risks, such as interest rate risk and foreign exchange risk.
c. To establish and evaluate pricing policies and strategies for funding products, loans and inter-office accounts.
d. To establish and evaluate policies and strategies in structuring investment portfolios.
e. To establish and evaluate policies and strategies for arranging balance sheet structure by anticipating changes in interest rates to achieve an optimal net interest margin.
Authorities of ALCO
ALCO has the authority to take strategic decisions in the management of the BCA’s assets and liabilities within parameters set by the Board of Directors. The authority of ALCO are as follows:
a. To establish interest rates on time deposits, savings, and current accounts.
b. To establish lending rates.
c. To establish funding and investment strategies.
d. To establish hedging strategy where necessary.
e. To establish limits relating to liquidity risk, interest rate risk, and foreign exchange risk according to the overall risk management policy.
Duties and Responsibilities of ALCO
ALCO members who have voting rights, have the following main duties:
a. To provide input to the ALCO secretary for the preparation of meeting agenda and materials
b. To provide input in the form of information and analysis in the ALCO meeting,
regarding:
• Methodology for determining price of funds and loans products.
• Methodologies for measuring liquidity risk, interest rate risk and foreign exchange risk.
• Pricing of funds and loan products.
• Competitiveness of interest rates for funds and loan products.
• Competitor bank strategy.
• Constraints on the application of ALCO’s decision results.
• Customer behavior and its changes.
3. Meeting of ALCO
The terms of ALCO meetings are as follows:
- ALCO meetings are held as necessary and at least once every month.
- ALCO meetings are valid if attended by at least ½ (one-half) of the total members of ALCO plus 1 (one) member, including the chairman or alternate, or attended by 6 (six) Directors, including the chairman or alternate.
4. Decision Making
The decision-making provisions are as follows:
- Decision making in relation to the exercise of ALCO’s authority will only be taken through Legitimate ALCO meeting decisions.
- ALCO meeting decisions are valid and binding if approved by ½ (one-half) of the members with voting rights present plus 1 (one) vote.
5. Frequency of ALCO Meetings in 2022
As of December 31, 2022, ALCO held 21 (twenty-one) meetings with details of the attendance of ALCO members as follows:
Position Number of
Meetings Attendance Percentage
President Director (Jahja Setiaatmadja) 1) 21 21 100%
Deputy President Director (Suwignyo Budiman) 2) 8 6 75%
Deputy President Director I – IT & Digital Banking (DPD1)
(Gregory Hendra Lembong) 3) 13 12 92%
Deputy President Director II – Business Banking &
Operation (DPD2) (Armand W. Hartono) 21 19 90%
Risk Management Director (Antonius Widodo Mulyono) 4) 13 13 100%
Corporate Banking & Treasury Director (Rudy Susanto) 21 20 95%
Commercial & SME Banking Director (John Kosasih) 21 18 86%
Branch & Network Director (Frengky Chandra Kusuma) 21 21 100%
Credit Risk & Legal Director (Subur Tan) 21 20 95%
Transaction Banking Director (Santoso) 21 18 86%
Finance & Corporate Planning Director (Vera Eve Lim) 21 17 81%
Consumer Banking Director (Haryanto T. Budiman) 21 18 86%
Executive Vice President (EVP) in charge of Treasury and
International Banking 21 16 76%
Executive Vice President (EVP) in charge of Corporate
Banking & Transactions 21 13 62%
Executive Vice President (EVP) in charge of Finance
& Accounting, Corporate Secretary & Corporate Communication, and Industry & Economic Research
21 18 86%
Member
Head of Division or official representative
Head of International Banking (DPI) 21 21 100%
Head of Treasury (DTR) 21 21 100%
Head of Finance & Accounting (DKP) 21 21 100%
Head of Corporate Strategy & Planning (DCSP) 21 21 100%
Head of Corporate Banking, Transaction & Finance (GBKF) 21 21 100%
Head of SME & Commercial Business (DKM) 21 21 100%
Head of Transaction Banking Product Development (DPD) 21 18 86%
Head of Transaction Banking Business Development (DTB) 21 21 100%
Head of Transaction Banking Partnership Solution
Development (DST) 21 21 100%
Head of Consumer Finance (DBK) 21 21 100%
Head of Risk Management (MRK) 21 21 100%
Description:
1) Chairman of ALCO
2) Serves as Deputy President Director until April 30, 2022
3) Serves as Deputy President Director I – IT & Digital Banking since May 9, 2022.
4) Serves as Risk Management Director since May 9, 2022.
The details of the implementation of ALCO meetings throughout 2022 are as follows:
No. Date Agenda
1 January 17, 2022 At ALCO meetings, among other things, the following are discussed:
a. Follow-up report on the previous ALCO meeting resolutions.
b. Economic parameters which include inflation, Bank Indonesia interest rates, Term Deposit, Rupiah and USD yield curves, Rupiah and USD market liquidity, and Rupiah exchange rate.
c. Liquidity reserves comprising primary and secondary Rupiah and foreign exchange reserves, Rupiah and foreign exchange fund structure, credit projection, liquidity projection.
d. Banking Book Interest Rate Risk based on Earnings Perspective (NII method) and Economic Value Perspective (EVE method).
e. Development of Trading Book and Forex Interest Rate Risk.
f. Yield and Cost of Funds in rupiah and Foreign Currency.
g. Analysis of Assets Liabilities Management.
h. Stress Test for Liquidity Risk and Stress Test for Exchange Rate Risk and Trading Book Interest Rate.
i. Development of Bank Funds on Total Banking
j. Proposed Fund interest rate, Credit and Basic Credit Interest Rates (SBDK) k. Profit/loss projections.
2 January 28, 2022 3 February 14, 2022 4 February 24, 2022 5 March 15, 2022 6 March 29, 2022 7 April 13, 2022 8 April 27, 2022 9 May 17, 2022 10 May 30, 2022 11 June 15, 2022 12 June 27, 2022 13 July 25, 2022 14 August 15, 2022 15 August 29, 2022 16 September 19, 2022 17 September 28, 2022 18 October 21, 2022 19 November 9, 2022 20 November 28, 2022 21 November 13, 2022
6. Accountability Reporting
Accountability and realization of the committee’s work are reported through:
a. Minutes of regular meetings.
b. Minutes of special meetings held to discuss specific issues.
c. Data and information related to the areas covered.
d. Notes and ALCO’s opinion regarding the minutes of meetings and relevant data and information.
7. Realization of Work Program in 2022
Throughout 2022, ALCO has realized the following work programs:
a. Evaluating the strategy and the position of BCA’s assets and liabilities in accordance with the objective of liquidity risk management, interest rate, and exchange rate.
b. Evaluating and establish the changes in interest rates funds and loans, the interest rate on a credit basis, and the limit related to Asset Liability Management (ALM).
c. Reviewing of the results of the simulation of the profit/loss in accordance with ALM strategy of BCA.
d. Establishing policy and strategy in the arrangement of balance sheet structure and investment portfolio.
8. Work Plan of ALCO in 2023
ALCO has established work plans for 2023 as follows:
a. Establish and evaluate policies and strategies for the management of BCA’s assets and liabilities to ensure liquidity, interest rate and exchange rate risks are controlled.
b. Establish and evaluate pricing policies and strategies for fund and loan products, as well as inter-office accounts.
c. Establish and evaluate policies and strategies in structuring investment portfolios.
d. Establish and evaluate policies and strategies for arranging balance sheet structure by anticipating changes in interest rates to achieve an optimal net interest margin.
II. RISK MANAGEMENT COMMITTEE
Risk Management Committee (RMC) was formed to ensure that the risk management framework offers adequate protection against all BCA risks.