PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003, April 30, 2003 and December 31, 2002 Expressed in millions of Rupiah, unless otherwise stated
158
57. RELATED PARTY TRANSACTIONS continued
a. Banking Activities in the Ordinary Course of Business continued Percentages of current accounts, savings accounts, time deposits and liabilities to the Government
arising from the return of additional paid-in capital compared to the total consolidated liabilities are as follows:
December 31, April 30,
December 31, 2003
2003 2002
Demand Deposits Note 16a 0.01
0.01 0.01
Saving Deposits Note 17b -
- 0.01
Time Deposits Note 18f 0.15
1.52 0.57
Due to the Government arising from the return of additional paid-in capital Note 28
- -
0.60 Total
0.16 1.53
1.19
b. Significant transactions with the Government of the Republic of Indonesia In May 1999, the Government implemented a recapitalization program for Bank Mandiri by issuing
Government Recapitalization Bonds Notes 3 and 8. In connection with the recapitalization, Bank Mandiri entered into a management contract with the
Government in April 2000 Note 58a. The Committee on Financial Sector Policy KKSK and the Minister of Finance approved and
guaranteed the issuance of standby letters of credit and conversion of loans of PT Garuda Indonesia to Mandatory Convertible Bonds Notes 48 and 11B.f.
Government Recapitalization Bonds held by the Bank amounting to Rp103,849,017 and Rp16,783,376 were reprofiled by the Government on November 20, 2002 and February 25, 2003,
respectively Note 8. The Bank paid Rp1,124,194 to the State Treasury representing a 50 deposit in relation to an
objection regarding the Bank’s 2000 corporate income tax assessment Note 15. The Bank returned additional paid-in capital of Rp1,412,000 representing a portion of the excess
recapitalization Note 32. Based on the Minister of Finance’s Decision Letter No. No.227KMK.022003 dated May 23,
2003, and Decree of the Minister of State-Owned Enterprises, as the Bank’s shareholder, No. KEP-154M-MBU2002 dated October 29, 2002, the Government converted recapitalization fund
amounting to Rp5,000,000 with 5,000,000 shares with nominal value of Rp1,000,000 full amount per share, and the remaining recapitalization fund amounting to Rp168,801,315 was recorded as
Agio.
Based on Government Regulation PP No. 26 dated May 29, 2003, the Government of the Republic of Indonesia converted Rp1,000,000 of appropriated retained earnings to issued and
fully paid-up capital. c. Transfer of Certain Investments and Non-core Premises and Equipment
In 1999 certain investments in shares of stock and certain non-core premises and equipment of Bank Mandiri were transferred to PT PIM and PT PHTM, related companies, respectively Notes 14 and
15. In 2002, the premises and equipment of PHTM were transferred back to the Bank based on the shareholder’s resolution of PHTM dated June 14, 2002.
PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003, April 30, 2003 and December 31, 2002 Expressed in millions of Rupiah, unless otherwise stated
159
58. SIGNIFICANT AGREEMENTS, COMMITMENTS AND CONTINGENCIES
a. Management Contract On April 8, 2000, a Management Contract was signed between the Government and Bank Mandiri in
connection with the recapitalization of Bank Mandiri as described in Note 3. The Management Contract provides for, among others, the requirements and milestones to be fulfilled by Bank Mandiri
in accordance with its Business Plan for the period to the end of 2001, which include, the following:
1. Obligations to be fulfilled by Bank Mandiri, among others: • To use Government Recapitalization Bonds to settle liabilities only and not for acquiring
assets, except for Government Bonds classified as trading based on prevailing regulations. • To reduce overhead costs.
• To settle unreconciledopen items and reconcile inter-branch transactions derived from the Merged Banks.
• To conduct a special audit of high risk and material un-reconciled open items. • To implement an automated monitoring system over the use of funds and liquidity of Bank
Mandiri. • To implement a policy of reporting according to Bank Indonesia regulations.
• To take any action as required in respect of the Credit Portfolio to comply with Bank Indonesia’s requirements, especially for Legal Lending Limit LLL.
• To agree to syndicate the current outstanding corporate loans that exceed Legal Lending Limit and participate in syndication activities to support other banks in resolving Legal
Lending Limit problems. • To agree to improve its Net Open Position based on the prevailing regulations and prepare
a plan to acquire assets denominated in US Dollars. • To follow the agreement with the Minister of Finance to undertake actions needed to
accelerate the privatization process of Bank Mandiri itself by issuing shares to the public. If Bank Mandiri defaults on its commitments as stipulated in the management contract, the
consequences are: • Replacement of the Boards of Directors and Commissioners.
• Adjustment of the milestones if the reasons for non-achievement are beyond the control of Bank Mandiri.
