PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2008 and 2007 Expressed in millions of Rupiah, unless otherwise stated
123
53. CUSTODIAL AND TRUST OPERATIONS continued
Trust Operations Bank Mandiri had been rendering trustee services since 1983. The operating license for trustee services
was renewed and re-registered with Capital Market and Financial Institution Supervisory Board as stipulated in Decision Letter No. 17STTD-WAPM1999 dated October 27, 1999. The Trustee Services
Business TSB provides a full range of the following services:
a. Trustee for bonds MTN
b. Escrow Account Agent
c. Paying Agent
d. Initial Public OfferingIPO Receiving Bank
e. Security Agent
As of December 31, 2008, Bank Mandiri as Trustee has 25 trustee customers with the total value of bonds and MTN issued amounted to Rp14,124,400 and as of December 31, 2007 has 37 trustee customers with
the total value of bonds and MTN issued amounted to Rp13,686,607 and US100,000,000 full amount,
respectively. While the sinking fund, escrow account and third party funds managed amounted to Rp378,176 on behalf of 26 customers and Rp448,816 on behalf of 17 customers as of December 31, 2008
and 2007, respectively. Both Bank Mandiri Trust and Custodial Services have received Quality Certification ISO 9001:2000.
54. CHANNELING LOANS
Channeling loans based on sources of funds and economic sectors are as follows:
2008 2007
Government: Electricity, gas and water
9,130,302 7,602,067
Transportation and communications 4,107,413
3,915,733 Agriculture
1,173,697 1,249,057
Manufacturing 461,571
742,653 Construction
11,273 11,394
Mining -
12,612 Others
86,988 95,338
14,971,244 13,628,854
Bank Mandiri has been appointed to administer channeling loans in various foreign currencies received by the Government of Indonesia from various bilateral and multilateral financing institutions for financing
government projects through BUMN, BUMD, and Pemda, such as, Overseas Economic Cooperation Fund, Protocol France, International Bank for Reconstruction and Development, Asian Development Bank, The
Swiss Confederation 30.09.1985, Kreditanstalt Fur Wiederaufbau, Banque Paribas, Nederland Urban Sector Loan De Nederlanse Inveseringsbank voor Ontwikkelingslanden NV, Swiss Government,
Banque Français Credit National, US EXPORT IMPORT BANK, RYOSIN INT’L LTD, AUSTRIA, Swiss Banks Consortium 16.12.1994, The European Investment Bank, West Merchant Bank Ltd, Sumisho, Fuyo,
LTCB, Orix Sinco, Export Finance And Insurance Corporation EFIC Australia, Japan Bank for International Cooperation, Calyon BNP Paribas, BNP Paribas CAI, BELGIA, French Government,
USAID, BARCLAYS, IDA, RDI-KI, LYONNAIS, U.B Denmark, Bank of China, SPAIN, CDC NES, NORDISKA, Sumitomo Corporation.
PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2008 and 2007 Expressed in millions of Rupiah, unless otherwise stated
124
54. CHANNELING LOANS continued
Channeling loans are not recognized in the consolidated balance sheets as the credit risk is not borne by the Bank and its Subsidiaries. Bank Mandiri’s responsibilities under the above arrangements include,
among others, collections from borrowers and payments to the Government of principal, interest and other charges and the maintenance of loan documentation. As the compensation, Bank Mandiri receives bank
fee which varies from 0.15 - 0.40 of the interest paid by the borrowers and 0.50 from the average loan balance in one year.
55. RISK MANAGEMENT Bank Mandiri applies independent risk management conducted based on standards of Bank Indonesia’s
Regulations and best practices applied in international banking industry. Bank Mandiri adopted Enterprise Risk Management ERM concept as one of several comprehensive and integrated risk management
strategies in line to Bank’s business process and operational necessities. ERM implementation will contribute a value added to the Bank and stakeholders, especially related to the implementation of
Strategic Business Unit SBU Organization and Risk Based Performance. ERM is a risk management process embedded in the Bank’s business process, which means that the risk
management is an integrated part of daily business decision making. Using ERM, Bank will establish systematic and comprehensive risk management framework credit risk, market risk and operational risk
by connecting the capital management and business process with the complete risks faced by the Bank. In addition, ERM also applied consolidated risk management with subsidiaries, which will be implemented
gradually to maximize the effectiveness of supervision and the value of the company. The Bank’s risk management framework is based on Bank Indonesia’s Regulations regarding the
implementation of Risk Management for Commercial Banking No. 58PBI2003 dated May 19, 2003 and Circular Letter No. 521DPNP dated September 29, 2003 regarding implementation of Risk Management
for Commercial Banks. The framework is stated in the Bank Mandiri Risk Management Policy KMRBM revised to be in line with the gradually implementation plan of Basel II Accord in Indonesia. In the risk
management framework several policies are established so that the risk management will be functioned as business enabler that leads to the business grows within the prudential banking corridor with ideal risk
management performance identification - measurement - mitigation - monitoring at all organization levels. Active observation of Directors and Commissioners to Bank’s risk management activities, is implemented
through the establishment of Risk and Capital Committee RCC and Risk Monitoring Committee. RCC is responsible for the establishment of policy and strategy risk faced by the Bank that consist of market risk,
credit risk, operational risk, liquidity risk, legal risk, reputation risk, strategic risk and compliance risk. Furthermore RCC is also responsible for managing Asset Liability, Subsidiaries and capital
management. RCC consists of four sub committees, which are: Asset Liability Committee, Risk Management Committee, Capital Investment Committee and Operational Risk Committee.
Risk Monitoring Committee is responsible to analyze and to evaluate the policies and implementation of Bank’s risk management and to provide inputs and recommendations to Board of Commissioners for
decision making. The Risk Management Directorate is directed by a Director who reports to the Board of Directors and
becomes a voting member in the Risk and Capital Committee. Bank has also established Risk Management Business Unit under Risk Management Directorate.
In operational activities, Risk Management Directorate is divided into 2 two main functions: 1 Credit Approval as a part of the four-eye principle, and 2 Independent Risk Management which is divided into
two groups which are Credit Risk Policy Group related to credit risk and portfolio risk, and Market Operational Risk Group related to operational risk, market risk and liquidity risk.
PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2008 and 2007 Expressed in millions of Rupiah, unless otherwise stated
125
55. RISK MANAGEMENT continued
Risk Management Directorate together with other business unit are responsible in maintaining or coordinating all risks which are credit risk, market risk, operational risk, liquidity risk, legal risk, reputation
risk, strategic risk and compliance risk including establishing risk management policies and standards. All risks will be disclosed in quarterly risk profile report to portrait all risks embedded in Bank’s business
activities, including consolidation with subsidiaries’ risk. Credit Risk
The Bank’s credit risk management is mainly directed to improve the balance of the performing loans expansion and prudential loans monotoring in order to prevent asset impairment or to become Non
Performing Loan NPL and to optimize capital utilization allocated for optimal Risk Adjusted Return On Capital RAROC.
To support this matter, Bank has established written policies and procedures which includes the Bank Mandiri Risk Management Policy KMRBM, Bank Mandiri Credit Policy KPBM, Credit Standard
Procedures SPK for each business segment, and temporary Memorandum Credit Policy and Procedures which regulated the policies and procedures which have not been accommodated in KPBM and SPK. The
four policies and procedures purpose are to provide a comprehensive loan risk management manual related to credit risk identification, measurement and mitigation of risks in loan granting process from target
market, credit analysis, approval, documentation, loan disbursement, monitoringsupervising, also problem loan settlementloan restructuring.
In order to ensure prudential loan granting process, Bank reviews and improves credit policies and procedures periodically to fit with current business development. In alignment with the Strategic Business
Unit SBU implementation, the Bank prepared Credit Standard Procedures SPK for each business segment in order to have better focus in capturing business need by each business segment.
In principles, credit risk management is implemented on both transactional and portfolio level. On transactional level, the Bank has implemented four-eye principle whereby every loan approval will involve
Business Unit and Credit Risk Management Unit independently to obtain an objective decision. Four-eye principle process is conducted by the Credit Committee within the authority limit and loan approval process
is conducted through the Credit Committee meeting process. The holder of Loan Approval Authorization as Credit Committee member has high competence, abilities and integrity. Therefore, the loan granting
process becomes more comprehensive and prudent. As part of prudential banking practice, the authority holder in giving loan disbursement approval beside
using the financial spread sheet and the Loan Analysis Form NAK also using Rating Tools like Bank Mandiri Rating System BMRS and Scoring Tools Micro Banking Scoring System MBSS and Small
Medium Enterprise Scoring System SMESS to perform more accurate credit risk assessment and interest rate determination with risk based pricing. The Bank has Credit Rating and Credit Scoring Model, Design
and Development Guidance which is a complete guidance for the Bank to create credit rating and credit scoring model. Bank has also developed Rating System for the Financial Institution - Bank which is Bank
Mandiri Financial Institution Rating BMFIR, so that Bank can identify and measure the level risk of Counterparty Bank which can be tolerated in providing Credit Line facility. Furthermore, Bank has also
developed scoring model for SME segment focusing on potential debtor using EBITDA approach.
