PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004 and 2003, and April 30, 2003 Expressed in millions of Rupiah, unless otherwise stated
155
57. SIGNIFICANT AGREEMENTS, COMMITMENTS AND CONTINGENCIES continued
g. Commitment Liabilities under Presidential Instruction Inpres No. 52003 Regarding Economic Policy Package Prior and Post Cooperation Agreement with IMF
In relation to Inpres No. 52003 regarding Economic Policy Package Prior and Post Cooperation Agreement with the International Monetery Fund IMF, the Government has set up programs in
order to optimize domestic economic resources, to maintain and improve the sustainability of the Indonesian economy and especially to strengthen and improve corporate governance in state-
owned banks, and requested Bank Mandiri to perform the following steps: 1. Appoint an Independent Commissioner who has capital market expertise;
2. Perform a Quasi-reorganization; 3. Complete the roll-out of new information technology;
4. Set-up a master plan for divestment of subsidiaries, affiliated companies and unproductive
assets; 5. Improve internal quality control and internal audit;
6. Improve credit policy; 7. Improve risk management and market risk;
8. Improve funding mix through lower cost funding savings and demand deposits; 9. Improve recovery of credit write-offs.
Out of the 9 nine commitments listed above, items 1 one to 7 seven have been completed as scheduled while items 8 eight and 9 nine have been conducted continuously. The completion
to the above commitments have been reported to the Government.
h. Additional Prudential Supervision Requirements from Bank Indonesia Following meetings between Bank Mandiri and Bank Indonesia on May 23, 2003 and a follow up
meeting in August 25, 2003, Bank Indonesia through letter No. 58DGSDPWB2 dated November 17, 2003 required Bank Mandiri to meet the following conditions before expanding its corporate
credit portfolio: a. Secondary reserve liquid assetstotal assets ≥ 12
b. Cost of funds to total assets ratio ≤ 7.5 c. Core earning to total assets ratio ≥
1.5
Liquid assets are comprised of Current accounts with Other Banks, Placements with Bank Indonesia and Other Banks and Trading and Available-for-Sale Securities, excluding Government recapitalization bondsGovernment Recapitalization
Bonds.
Based on letter No. 587DPwB2PwB21 dated December 3, 2003, Bank Indonesia also required Bank Mandiri to achieve a maximum ratio of corporate credit to total credit of 50 by 2004.
Bank Mandiri has demonstrated its efforts to comply with the ratios as required by Bank Indonesia and accordingly had a meeting with Bank Indonesia on December 24, 2004 to discuss the
development of Corporate Banking Credit. Based on the result of the meeting the Bank is not required to comply with the ratios if the composition of corporate and non-corporate loans achieve
50:50 or lower. The Bank has sent a letter to Bank Indonesia No. DIR.CBG4832004 dated December 20, 2004 to confirm the meeting result.
PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004 and 2003, and April 30, 2003 Expressed in millions of Rupiah, unless otherwise stated
156
57. SIGNIFICANT AGREEMENTS, COMMITMENTS AND CONTINGENCIES continued
