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
126
54. CUSTODIAL AND TRUST OPERATIONS continued
Custodial Operations continued e. Custodial for mutual fund managed by investment manager.
Bank Mandiri has 329 and 304 custodial customers as of December 31, 2005 and 2004, respectively. The customers are primarily pension funds, insurance companies, banks, securities companies, mutual funds
and other private companies with a total portfolio value as of December 31, 2005 of Rp 60,690,045 and US260,618,596.36 full amount.
Bank Mandiri carries insurance on custodial services against safekeeping and transit loss under blanket policies amounting to approximately Rp251,000. Management is of the opinion that the insurance
coverage is adequate to cover possible losses from safekeeping and transit risks.
Trust Operations Bank Mandiri had been rendering trustee services since 1983 legacy banks: Bank Exim, BDN, BBD and
Bapindo. The operating license for trustee services was renewed and re-registered with Bapepam as stipulated in Decision Letter No. 17STTD-WAPM1999 dated October 27, 1999. The Trustee Services
Business TSB, which is part of the Securities Services Department SSD of Bank Mandiri, provides a full range of the following services:
a. Preparing documentation support to bond issuers in complying with required documents for issuance. b. Signing trustee agreements and other relevant documents together with bond issuers and other
related institutions. c. Monitoring performance of issuers and compliance against required documentation as stipulated in
trustee agreements on behalf of bondholders. d. Facilitating bondholder meetings and following up and executing the results of bondholder meetings,
as required. e. Providing information on issuers’ performance as requested by Bapepam or bondholders.
f. Managing the sinking fund and other collateral as required by a bond’s issuance and terms and conditions.
g. Paying agent for bonds issue, shares, MTN and others. h. Escrow agent and security agent.
Bank Mandiri Wali Amanat has 31 and 34 trustee customers as of December 31, 2005 and 2004, respectively. The total value of bonds issued amounted to Rp9,381,567 and US100,000,000 full
amount, while the the escrow account amounted to Rp374,582 on behalf of six customers.
Both Bank Mandiri Trust and Custodial Services have received Quality Certification ISO 9001 in 2000.
55. CHANNELING LOANS
Channeling loans based on sources of funds and economic sectors are as follows:
2005 2004
Government: Electricity, gas and water
9,295,177 9,414,882
Transportation and communications 4,973,541
5,335,880 Agriculture
1,492,249 1,737,072
Manufacturing 796,800
839,980 Mining
65,995 99,738
Construction 15,558
17,015 Others
110,375 122,847
16,749,695 17,567,414
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
127
55. CHANNELING LOANS CONTINUED
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, The Export Import Bank of Japan, ASEAN Japan Development Fund, Overseas Economic Cooperation Fund, International Bank for
Reconstruction and Development, Nordiska Investeringbanken, Kreditanstalt Fur Wiederaufbau, Sumitomo, US AID, Barclays Bank, Bank of China, CN Lyonnais, Unibank, Bank of Austria, Ryobhin Hong
Kong, Export Finance and Insurance Cooperation - Australia, Mitsubishi Corporation, Chartered West LB, Banque Indosuez, Hitachi Zosen, NEC Corporation, Banque Français du Comm, US Exim Bank, and
Banque Paribas.
Channeling loans are not recognized in the consolidated balance sheets as the credit risk is not borne by the Bank or 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 compensation, Bank Mandiri receives bank fee
which varies from 0.15 - 0.40 of the interest paid from the borrowers and 0.50 from the average loan balance in one year.
56. RISK MANAGEMENT
The Bank’s risk management is not only 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 Banks, and it is intended that the Bank can implement Basel II in 2008. The Bank is implementing
Basel II and related regulations in stages, starting with the standard model and then through the internal model approach which will be developed in accordance with the best practice standard, which is primarily
based on identification, risk measurement, risk monitoring and risk mitigation. For implementation, the Bank has established a Basel II Compliance Committee, with purpose to integrate
initiatives related to risk management, such as:
• Identify PT Bank Mandiri Persero Tbk. position with the Basel II regulation gap analysis. • Prepare the strategy and implementation of integrated Risk Management.
• Integrate the above steps with the infrastructure preparation including the information technology means through the Enterprise Risk Management ERM Project 2005 - 2008.
In complying with the above Regulations and Bank Indonesia’s Circular Letter, the Bank prepares a risk profile every quarterly and reports to Bank Indonesia as scheduled. The risk profile report describes the
inherent risk in the Bank’s business activities including the risk control system for each risk. At present, the Bank has prepared risk profiles as of Quarter I2005, Quarter II2005 and Quarter III2005.
Besides reporting quarterly to BI, the Bank also internally analyzes their risk profile more frequenth, such as monthly, weekly and daily, thus the risk performance can be detected earlier and more accurate.
In accordance with Bank Indonesia regulation regarding Impelementation of Risk Management for Commercial Banks, the Bank has a established Risk Management Committee and Risk Management
Task Force which are intended to support the Bank-wide, intergrated, measurable and controlled risk management.
