BCA has guidelines to support the implementation of ALCO’s duties and responsibilities, which are stated in the Board of Directors Decree No. 167/SK/DIR/2019 dated October 25, 2019 concerning the Structure of Asset Liability Committee (ALCO) and the Board of Commissioner Decree No. 112/SK/KOM/2021 dated July 7, 2021 concerning the Scope of Duties and Responsibilities of the Board Directors and the Main Organization Structure of PT Bank Central Asia Tbk.
The scopes regulated in the decree concerning the Structure of ALCO are as follows:
• Organizational 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.
A. Structure, ALCO Membership, and Voting Rights Status
Based on the Board of Directors Decree No. 167/SK/DIR/2019 concerning the Structure of Asset Liability Committee (ALCO), the following are the structure, membership, and voting rights status of ALCO:
Position in the Committeee Served by Voting Rights Status
Chairman (concurrently as a member)
President Director Reserve Voting Rights
Member • President Director
• Deputy President Director 1
• Deputy President Director 2
• Compliance and Risk Management Director
• Corporate Banking Director
• Commercial and SME Banking Director
• Regional and Branch Network Director
• Credit and Legal Director
• Transaction Banking Director
• Planning and Finance Director
• Executive Vice President (EVP) in charge of Treasury Division and International Banking Division
• Executive Vice President (EVP) in charge of the Corporate Banking Group
• Executive Vice President (EVP) in charge of the Corporate Finance Division and the Corporate Secretary and Communications Division
• Head of the International Banking Division
• Head of Treasury Division
• Head of Corporate Finance Division
• Head of Corporate Strategy and Planning Division
• Head of Corporate Banking, Transaction and Finance Group
Reserve Voting Rights
B. Main Functions, Authorities, 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 needs, including unexpected fund requirements, and 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 a hedging strategy where necessary.
e. To establish limits related to liquidity risk, interest rate risk, and foreign exchange risk according to the overall risk management policy.
Duties and Responsibilities of ALCO
ALCO members with 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 such as information and analysis at 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 in implementing ALCO’s decision results.
• Customer behavior and its changes.
C. Meeting of ALCO
The following are the provisions of ALCO meeting:
- ALCO meetings are held as necessary and at least once every month.
- ALCO meetings are valid if attended by at least 1/2 (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.
D. 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 1/2 (one half) of the members with voting rights present plus 1 (one) vote.
E. Frequency of ALCO Meetings in 2021
As of December 31, 2021, ALCO held 23 (twenty-three) meetings with details of the attendance of ALCO members as follows:
Position Number of
Meeting Attendance Percentage
President Director (Jahja Setiaatmadja) 1) 23 23 100%
Deputy President Director (Suwignyo Budiman) 23 20 87%
Deputy President Director (Armand W. Hartono) 23 22 96%
Credit and Legal Director (Subur Tan) 23 21 91%
Corporate Banking Director (Rudy Susanto) 23 22 96%
Commercial and SME Banking Director (Henry Koenaifi) 2) 6 5 83%
Commercial and SME Banking Director (John Kosasih) 3) 14 14 100%
Regional and Branch Network Director (Erwan Yuris Ang) 2) 6 5 83%
Regional and Branch Network Director (Frengky Chandra Kusuma) 4)
15 13 87%
Compliance and Risk Management Director (Haryanto T.
Budiman)
23 21 91%
Banking Transactions Director (Santoso) 23 22 96%
Planning and Finance Director (Vera Eve Lim) 23 20 87%
Executive Vice President (EVP) in charge of Treasury Division and International Banking Division
23 22 96%
Executive Vice President (EVP) in charge of the Corporate Banking Group
23 22 96%
Executive Vice President (EVP) in charge of the Corporate Finance Division and the Corporate Secretary and Communications Division
23 18 78%
Members
Division Head or Representative Officer:
International Banking Division 23 23 100%
Treasury Division 23 23 100%
Corporate Finance Division 23 23 100%
Corporate Strategy and Planning Division 23 23 100%
Corporate Banking, Transaction and Finance Group 23 23 100%
Commercial and SME Business Division 23 23 100%
Transaction Banking Product Development Division 23 20 87%
Transaction Banking Business Development and Marketing Division
23 23 100%
Transaction Banking Partnership Solution Development Division
23 23 100%
Consumer Credit Business Division 23 23 100%
Risk Management Work Unit 23 23 100%
Note:
1) Chairman of ALCO
2) AGMS on March 29, 2021, office term of the Director has ended
3) Served as Commercial and SME Banking Director replacing Mr. Henry Koenaifi since May 21, 2021.
4) Served as Regional and Branch Network Director replacing Mr. Erwan Yuris since May 3, 2021
Details of the implementation of ALCO meetings throughout 2021 are as follows:
No. Date Agenda
1 January 13, 2021 At ALCO meetings, among other things, the following are discussed:
a. Follow-up report of previous ALCO’s meeting resolutions.
b. Economic parameters including inflation, Bank Indonesia interest rates, Term Deposit, Rupiah and USD yield curves, Rupiah and USD market liquidity, and Rupiah exchange rate.
c. Liquidity reserves consisting of Rupiah and Foreign Currency Primary Reserves as well as Rupiah and Foreign Currency Secondary Reserves, Rupiah and Foreign Currency 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 and Trading Book Interest Rate Risk.
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 27, 2021 3 February 9, 2021 4 February 24, 2021 5 March 10, 2021 6 March 29, 2021 7 April 12, 2021 8 April 29, 2021 9 May 18, 2021 10 May 27, 2021 11 June 14, 2021 12 June 29, 2021 13 July 14, 2021 14 July 28, 2021 15 August 13, 2021 16 August 27, 2021 17 September 13, 2021 18 September 27, 2021 19 October 14, 2021 20 October 27, 2021 21 November 15, 2021 22 November 26, 2021 23 December 28, 2021
F. Accountability Reporting
Accountability and work realization of ALCO 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.
G. Realization of Work Program in 2021
Throughout 2021, ALCO has realized the following work programs:
a. Evaluating the strategy and 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 changes of funds and loans interest rates, basic loan interest rates, and limits related to Asset Liability Management (ALM).
c. Reviewing the result of profit/loss simulation in accordance with BCA’s ALM strategy.
d. Establishing policies and strategies in structuring the balance sheet and investment portfolio.
H. Work Plan of ALCO in 2022
II. RISK MANAGEMENT COMMITTEE (RMC)
RMC was established to ensure that the risk management framework provides adequate protection against all BCA risks.