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 5141 56. RISK MANAGEMENT continued
Operational Risk continued
b. Capital Charge Calculation to Cover Operational Risk
Based on Circular Letter from Bank Indonesia No. 113DPNP dated 27 January 2009, the Bank has performed the simulation for the Minimum Capital Requirement for Operational Risk. The result
of the simulation of minimum capital requirement using the Basic Indicator Approach BIA for the year 2009 is Rp2,276,350 unaudited. Starting from the first semester of 2009, the Bank has also
calculated Operational Risk capital requirement using the Standardised Approach SA, as this approach is in line with the implementation of the risk-based performance for Strategic Business
Unit.
57. SIGNIFICANT AGREEMENTS, COMMITMENTS AND CONTINGENCIES a.
Integrated Banking System Agreement with Vendor
On 21 July 2001, Bank Mandiri entered into an agreement with Vendor for software procurement and installation services for an integrated banking system, called eMAS Enterprise Mandiri Advanced
System, for a total contract value of USD47,535,022.70 full amount including 10 VAT. Additional agreements were also held on 23 April 2002, 28 August 2003, 12 April 2004, 4 July 2005, 8
September 2008 and 22 September 2008 with a contract value after VAT of USD20,467,218.20 full amount, USD462,000 full amount, USD1,014,344 full amount, USD44,000 full amount,
USD1,155,000 full amount and USD44,000 full amount, respectively. The actual payment until 31 December 2009 amounting to USD65,398,162 full amount, after VAT was recorded as construction
in progress amounting to USD668,924 full amount, after VAT and as fixed amounting to USD64,729,238 full amount, after VAT. The estimated percentage of project completion of the
contract as at 31 December 2009 was 98.98.
On 1 August 2006, the Bank entered into an agreement to enhance the eMAS feature with Vendor, for a total contract value after VAT of USD2,934,352 full amount. The actual payment until 31
December 2009 amounting to USD2,068,578 full amount, after VAT was recorded as construction in progress amounting to USD524,542 full amount and as fixed assets amounting to USD1,608,386
full amount. Specifically for LOS Consumer LOS Credit Card, the balances are temporarily recorded as liabilities during the process of document completion, amounting to USD64,350 full
amount, after VAT. The estimated percentage of completion of the contract as at 31 December 2009 was 97.22.
On 17 January 2008, the Bank entered into an agreement to enhance the eMAS feature with Vendor for a total contract value of USD871,200 full amount after VAT 10. The actual payments until 31
December 2009 amounting to USD303,494 full amount was recorded as fixed assets amounting to USD259,776 full amount and as construction in progress amounting to USD58,291 full amount.
Specifically for Enhancement Remittance System project, the balance is temporarily recorded as a liability during the process of document completion, amounting to USD14,573 full amount. The
estimated percentage of completion as at 31 December 2009 was 85.59.
On 14 September 2009, the Bank entered into an agreement to enhance the eMAS feature with Vendor for a total contract value of USD693,000 full amount after VAT 10. The payments
realisation until 31 December 2009 amounting to USD453,337 full amount was recorded as construction in progress amounting to USD453,337 full amount. The estimated percentage of
completion as at 31 December 2009 was 63.45.
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 5142 57. SIGNIFICANT AGREEMENTS, COMMITMENTS AND CONTINGENCIES continued
b. Development Agreement with the Operational Risk Management ABN AMRO Bank N.V.
On 25 February 2005, Bank Mandiri and ABN AMRO Bank N.V. signed an agreement on the development of Operational Risk Management to assist in the implementation process of operational
risk management, and has been modified by the Addendum. This cooperation is used as a means of transferring knowledge to improve the capabilities of the Bank and their employees to apply
operational risk management methodologies, as well as improving the capabilities of calculating the allocation of capital according to Basel II standards. Based on the agreement, ABN AMRO Bank N.V.
will support the development of Bank Mandiris internal capabilities in terms of operational risk management. The capability development will be done through the nine Action Track in the form of
transfer of knowledge and consultation. The agreement is worth USD1,200,000 full amount. This cooperation ended in December 2008.
c. Legal Matters
Bank Mandiri received a request from a customer to liquidate its demand and time 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 first to IBRA.
After sending the admonition, since the request to liquidate its demand and time deposit has not been fulfilled due to absence of approval from IBRA, on 7 June 2006, the customer filed a lawsuit against
the Bank as the first defendant and the Ministry of Finance of the Republic of Indonesia as the second defendant at South Jakarta High Court.
Ministry of Finance of the Republic of Indonesia in his letter dated 27 August 2008 and 28 August 2008 has asked Bank Mandiri to liquidate the customer’s demand and time deposit on behalf of the
customer because these represent loan customer’s collateral, whilst the purchase and sale agreement of the customer’s receivables with demand and time deposit as collateral have been cancelled. Based
on the cancellation agreement, the customers collateral in form of demand and time deposit was transferred to the Government to be accounted for the customer’s loan. Liquidation of the funds have
been executed and placed in the State General Treasurer’s account in Bank Indonesia.
On 23 October 2008, Bank Mandiri received notification about the cessation decision of the Supreme Court related to customer’s cassation plea submission which in principle decided that the demand and
time deposit under Bank Mandiri are owned by the customer and instructed Bank Mandiri to liquidate the demand, time deposit and its interest to the customer. Based on the cessation decision, Bank
Mandiri and Ministry of Finance applied for a judicial review on 31 March 2009. Up to the date of this consolidated financial statements the judicial review is still in process.
The Bank’s total potential exposure arising from outstanding lawsuits as at 31 December 2009, 2008 and 2007 amounting to Rp2,204,722, Rp1,277,161 and Rp2,529,424, respectively. As at
31 December 2009, 2008 and 2007, Bank Mandiri has provided a provision included in “Other Liabilities” for a number of outstanding lawsuits involving Bank Mandiri amounting to Rp514,366,
Rp176,316 and Rp205,742, respectively Note 29. Management believes that the provision is adequate to cover possible losses arising from pending litigation, or litigation cases currently in
progress.
