PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2005 and 2004 Expressed in millions of Rupiah, unless otherwise stated
132
56. RISK MANAGEMENT continued
Operational Risk continued With the availability of the risk profile for Bank Indonesia regulation requirement, the profile is also function
as the tools of awareness, identification, management, mitigation and comprehensive operasional risk monitoring.
57. SIGNIFICANT AGREEMENTS, COMMITMENTS AND CONTINGENCIES
a. Integrated Banking System Agreement with PT Silverlake Informatikama and Silverlake Corporation On July 20, 2001, Bank Mandiri entered into an agreement with PT Silverlake Informatikama for the
procurement of software and installation services for a total integrated banking system which is called e- MAS, for a total contract value of US43,213,658 full amount excluding 10 VAT. Additional projects
have been contracted involving a value of US18,606,562 full amount on April 23, 2002, US420,000 full amount on August 28, 2003 and US838,301 full amount on April 12, 2004. The estimated
percentage of completion of the contract as of December 31, 2005 is 95.78 or amounting to US62,191,257.85 full amount including VAT had been recognized as premises and equipment.
b. Agreement with PT Suprima Nusantara SNP On December 16, 2004, Bank Mandiri has entered into a joint financing agreement with SNP, a multi-
finance company. Based on such agreement Bank Mandiri andor its affiliated companies have an option to become shareholders of SNP if Bank Mandiri disburses a financing facility to SNP andor its
consumers, either directly or indirectly, of up to Rp1,000,000 or effective 1 one year after the signing date of such agreement, whichever is earlier.
The agreement was notarized under Deed No. 37 by N.M. Dipo Nusantara Pua Upa, S.H., dated December 16, 2004.
c. Agreement on Implementation of e-Learning In order to support Bank Mandiri’s plan to focus on strategic excellence and operational excellence, the
training infrastructure for an e-Learning program was established by the Bank. Bank Mandiri signed a three-year contract agreement with PT Mitra Integrasi Komputindo as a representative of Intralearn Asia
Pte. Ltd. Singapore involving a total contract value of US7,213,200 full amount as stipulated in contract letter No. CHC.TRNTPD.PK.00282003 dated July 30, 2003.
d. Additional Prudential Supervision Requirements from Bank Indonesia Based on the result of the meetings between Bank Mandiri and Bank Indonesia on May 23, 2003 and a
follow up meeting on 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 comprised of Current accounts with Other Banks, Placements with Bank Indonesia
and Other Banks and Trading and Available for sale Securities, excluding Government Recapitalization Bonds.
PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2005 and 2004 Expressed in millions of Rupiah, unless otherwise stated
133
57. SIGNIFICANT AGREEMENTS, COMMITMENTS AND CONTINGENCIES continued
d. Additional Prudential Supervision Requirements from Bank Indonesia continued 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 June 29, 2005 to discuss the development of Corporate Banking Credit. Based on the result of the meeting, the minimum limitation of Secondary
Reserve ratio for Bank Mandiri became 5 due to several considerations, such as the increasing GWM ratio, fluctuating liquidity needs and unprofitable yield of assets which could also lessen the banking
intermediary function. The Bank has sent a letter to Bank Indonesia No. COO2872005 dated July 12, 2005 to confirm the meeting result.
With regards to Bank Mandiri’s corporate banking portfolio which has been guarded under 50 from total loans and referring to Bank Mandiri letter to Bank Indonesia No. COO2872005 dated July 12, 2005,
Bank Mandiri sent another letter to Bank Indonesia No. DIRUT0382006 dated March 6, 2006 which states the cancellation of ratio requirement as stated in the Bank Indonesia letter No.55DGSDPwB2
dated August 29, 2003 and No. 58DGSDPwB2 dated November 17, 2003. As of December 31, 2005, the various ratios under the additional prudential supervision requirements
were as follows:
Bank Indonesia’s
Ratios Actual
Minimum Requirement
a. Secondary reserve
11.95 12
b. Cost of funds to total assets ratio 4.75
7.5 c. Core earnings to total assets ratio
1.54 1.5
d. Corporate credit to total credit ratio 44.6 50 by 2004
e. Legal Matters Bank Mandiri received a request from a customer to liquidate its current account and deposit since
the Directorate General of Taxes has taken off the blockage and confiscation. Due to several conditions, the request cannot be executed directly since Bank Mandiri has to clarify it first to IBRA.
In the process, Bank Mandiri received admonition from the customer directly via the High Court to disburse as soon as possible the above mentioned accounts. Receiving the admonition, Bank
Mandiri took steps by proposing a request to consign the funds to the High Court.
When transferring the customer funds to the High Court account, Bank Mandiri received an order from the Minister of State Owned Enterprises as the Deputy of Clearance Team of IBRA to freeze
the fund transfer. Bank Mandiri also received a letter from the Minister of Finance as the Chief of Clearance Team of IBRA confirming that Bank Mandiri not to execute the disbursement of that
customer funds.
Minister of Finance as the Chief of Clearance Team of IBRA in his letter dated November 15, 2005 instructed the Coordinator of Execution Clearance Team of IBRA to ask Bank Mandiri to set off the
customer’s demand deposit and time deposit, and follow up the letter of the Minister of Finance, Coordinator of Execution Clearance Team of IBRA in its letter dated November 25, 2005 informed
the Bank to immediately transfer the customer’s demand deposit and time deposit to the government account in Bank Indonesia.
