PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2009, 2008 AND 2007
Expressed in millions of Rupiah, unless otherwise stated
Appendix 5144 57. SIGNIFICANT AGREEMENTS, COMMITMENTS AND CONTINGENCIES continued
f. Trade Financing with Asian Development Bank ADB
On 25 November 2009, Bank Mandiri signed a Confirmation Bank Agreement CBA, Issuing Bank Agreement IBA and Revolving Credit Agreement RCA under Trade Finance Facilitation Program
TFFP with ADB.
Based on CBA and IBA, Bank Mandiri can act either as Confirming Bank or Issuing Bank for its customer’s LC based trade transactions. As a Confirming Bank, Bank Mandiri can request a
guarantee from ADB for LC issued by Issuing Bank, and vice versa as Issuing Bank, Bank Mandiri could have confirmation guarantee from ADB for LCs that have been issued.
Trade Finance Facilitation Program TFFP scheme is a Program initiated by ADB to facilitate the LC based trade transactions within Asian developing countries to increase the trade-volume.
Becoming a participant in this program, Bank Mandiri will have access to increase its trade finance credit lines, its trade volume and to open new business opportunities especially to countries that
have low trade volume with Indonesia.
Pursuant to the RCA, Bank Mandiri received a credit revolving facility up to USD25,000,000 full amount. By using the facility, Bank Mandiri will be charged with interest of Total Margin plus LIBOR
during the interest period. As at 31 December 2009, Bank Mandiri has not withdrawn any loan from this facilities.
g. Purchase of Shares Agreement of AXA Mandiri Financial Services
On 9 December 2009, Bank Mandiri and National Mutual International Pty. Ltd. NMI signed a Conditional Sale Purchase Agreement where the Bank will acquire 2.00 of PT. AXA Mandiri
Financial Services’ shares AXA Mandiri, a limited liability life insurance company, domiciled in Jakarta, Indonesia a company which is part of AXA Group and duly incorporated under the Law of
Australia, domiciled in 750 Collins Street, Docklands, Victoria 3008, Australia, so that Bank Mandiri will increase its ownership to become 51.00. The acquisition of additional 2.00 AXA Mandiri
shares will become effective after all of conditions precedent as stated in the Conditional Sale and Purchase are fulfilled or waived by NMI and Bank Mandiri.
58. ECONOMIC CONDITIONS
Domestic economic condition continues to improve in parallel with the recovery of the global cycle. The Gross Domestic Product GDP in 3Q09 recorded growth of 4.20 Year on Year YoY, increased from
4.00 YoY in 2Q09. The improving private consumption and export performance has assisted the economy to generate higher output. In the third quarter, private consumption and export increased by
1.80 and 8.50 Quarter on Quarter QoQ, respectively.
Although domestic and global economies have undergone significant improvement, the authorities in general still intend to maintain extensive economic stimulation for a certain period in the future. It is
expected that Policy rate will start to increase in mid-next year. The government does not want the present recovery process to be interrupted. Indonesian GDP is predicted to reach 5.50 by 2010 with inflation in
the range of 6.30. To accommodate inflation increase, it is predicted that BI will implement stricter policies so that reference interest rate is expected to reach 7.25 by the end of the year.
In line with economic development, the banking condition of Indonesia is also expected to improve. At present, capital adequacy ratio CAR is at a fairly high level, 17.80 and it is predicted that such
condition will continue to exist throughout 2010. Credit will improve and is predicted to reach 15.00 YoY. Although credit expansion is higher, credit quality is predicted to be maintained at a level where Non
Performing Loans remain in the range of 4.00-5.00.
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2009, 2008 AND 2007
Expressed in millions of Rupiah, unless otherwise stated
Appendix 5145 58. ECONOMIC CONDITIONS continued
The consolidated financial statements include the effects of economic condition to the extent they can be determined and estimated. Economic recovery to a sound and stable condition depends on fiscal and
monetary policies which will be issued by the Government of the Republic of Indonesia, a condition beyond the control of Bank Mandiri and its subsidiaries. There is no events subsequent to balance sheet
date until the date of this report occur that give rise to the uncertainties of the Bank’s going concern as an impact of the uncertainties current economy of Indonesia.
59. GOVERNMENT GUARANTEE FOR THE OBLIGATIONS OF LOCALLY INCORPORATED BANKS
Based on the Decree of the Ministry of Finance of the Republic of Indonesia No. 26KMK.0171998 dated 28 January 1998, which was renewed by the Decree of the Ministry of Finance No. 179KMK.0172000
dated 26 May 2000, the Government of the Republic of Indonesia is guaranteeing certain obligations of locally incorporated banks namely demand deposits, savings deposits, time deposits and deposits on call,
bonds, marketable securities, inter-bank placements, fund borrowings, currency swaps and contingent liabilities such as bank guarantees, standby letters of credit and other liabilities, excluding subordinated
loans and amounts due to directors, commissioners and related parties.
Based on Joint Decrees of the Directors of Bank Indonesia and Head of IBRA No. 3246KEPDIR and No. 181BPPN0599 dated 14 May 1999, the guarantee period is automatically extended, unless
otherwise that within six months before the maturity of this guarantee, IBRA decided not to extend its maturity. In 2001, the Joint Decrees of the Directors of Bank Indonesia and the Head of IBRA were
canceled by BI regulation No. 37PBI2001 and the Decree of the Head of IBRA No. 1035BPPN0401.
In 2001, the Head of IBRA issued Decree No. SK-1036BPPN0401 that regulates a specific operational guidance in respect of the Government of the Republic of Indonesia’s Guarantee for the obligations of
locally incorporated banks.
The Government charges a premium in respect of its guarantee program in accordance with prevailing regulations Note 35.
Based on the Presidential Decree No. 152004 dated 27 February 2004 in relation to the termination of IBRA’s duties and its dissolution, and Decree of the Ministry of Finance No. 84KMK.062004 dated
27 February 2004, the Government of the Republic of Indonesia established Government Guarantee Implementation Unit UP3, a new institution replacing IBRA, to continue the Government Guarantee
Program for Obligations of Locally Incorporated Banks.
Based on the Ministry of Finance Decree No. 17PMK.052005 dated 3 March 2005, starting from 18 April 2005, the Government Guarantee Program covers the obligations of locally incorporated banks which
consisted of demand deposits, savings deposits, time deposits and deposits from other banks from Money Market Inter-Bank transactions.
Government Guarantee Program through Government Guarantee Implementation Unit UP3 was ended on 22 September 2005, as stated in Ministry of Finance Decree No. 68PMK.052005 dated
10 August 2005 regarding Calculation and Premium Payment for the Government Guarantee Program for the Obligations of Locally Incorporated Banks for the period from 1 July until 21 September 2005.
The Government replaced UP3 with an independent institution, Indonesia Deposit Insurance Corporation LPS based on the Republic of Indonesia Decree No. 24 year 2004 dated 22 September
2004 regarding Lembaga Penjamin Simpanan LPS, whereby LPS guaranteed third party funds including placement from other banks in the form of current accounts, time deposits, certificate of
deposits, savings deposits and other form that is equivalent to them.
