PT BANK MANDIRI PERSERO AND SUBSIDIARIES
Notes to the Consolidated Financial Statements Continued December 31, 2002 and 2001
Expressed in millions of Rupiah, unless otherwise stated
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141
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59. ECONOMIC CONDITIONS Continued
The accompanying consolidated financial statements include the effects of the adverse economic conditions to the extent they can be determined and estimated. Recovery of the economy depends
on the monetary, fiscal and other measures that have been and will be undertaken by the Indonesian Government to achieve economic recovery, which actions are beyond the control of
Bank Mandiri and its Subsidiaries. It is not possible to determine the future effects a continuation of the adverse economic conditions may have on Bank Mandiri’s and its Subsidiaries’ liquidity,
earnings and realization of their earning assets, including the effects from their customers, creditors, shareholder and other stakeholders. The ultimate effect of these uncertainties on the stated
amounts of assets and liabilities at the balance sheet date cannot presently be determined. Related effects will be reported in the consolidated financial statements as they become known and can be
estimated.
60. GOVERNMENT GUARANTEE OF OBLIGATIONS OF LOCALLY INCORPORATED BANKS
Based on the Decree of the Minister of Finance No. 26KMK.0171998 dated January 28, 1998, which was replaced by Minister of Finance’s Decree No. 179KMK.0172000 dated May 26, 2000, the
Government of the Republic of Indonesia is guaranteeing certain obligations of locally incorporated banks namely demand deposits, savings, time deposits and deposits on call, bonds, marketable
securities, inter-bank placements, fund borrowings, swapshedgesfutures, derivative and contingent liabilities such as bank guarantees, standby letters of credit and other liabilities, excluding
subordinated loans and 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 May 14, 1999, the guarantee period is automatically extended, unless
otherwise decided upon by IBRA within six months from the maturity of this guarantee. In 2001, the joint decrees of the Directors of Bank Indonesia and the Head of IBRA were replaced by BI regulation
No. 37PBI2001 and Decree of the Head of IBRA No. 1035BPPN0401.
The Head of IBRA issued Decree No. SK-1036BPPN0401 in 2001 that provides for specific operational guidance in respect of the Government of the Republic of Indonesia’s Guarantee of
obligations of locally incorporated banks.
PT BANK MANDIRI PERSERO AND SUBSIDIARIES
Notes to the Consolidated Financial Statements Continued December 31, 2002 and 2001
Expressed in millions of Rupiah, unless otherwise stated
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142
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61. SUBSEQUENT EVENTS
a. Initial Public Offering IPO Plan The Bank’s plan for a local and international Initial Public Offering IPO has been postponed
due to the outstanding Government decisions to divest its ownership in the Bank through an IPO. According to the decision of the Privatization Policy Team of the Government dated May 3,
2002, Bank Mandiri will offer shares up to 30, which will consist of 15 divestment and 15 primary issues. Upon resolution of these issues, the Bank will finalize the filing and registration
of the public offering. To support the IPO Plan, the Bank has engaged ABN AMRO Rotschild as an underwriter, in addition to Credit Suisse First Boston and PT Danareksa Sekuritas.
b. Prospective Accounting Pronouncement In 2002, the Indonesian Institute of Accountants IAI issued SFAS 59 regarding “Accounting for
Syariah Based Banks” which will become effective from January 1, 2003. The Management of the Bank’s subsidiary, Bank Syariah Mandiri, is in the process of evaluating the effect of
implementation of this new accounting standard.
c. New Organizational Structure Based on Board of Directors’ Decision Letter No. KEP.DIR0022003 dated January 11, 2003,
the Directors approved a new Bank Organizational Structure effective as of January 13, 2003. Under the new organizational structure, the President Director and Chief Executive Officer are
assisted by 8 eight Senior Executive Vice Presidents.
62. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES
FOLLOWED BY THE BANK “INDONESIAN GAAP” AND INTERNATIONAL ACCOUNTING STANDARDS “IAS”
The accompanying consolidated financial statements have been prepared in accordance with Indonesian GAAP, which varies in certain significant respects from IAS. The significant differences
relate to the items in the following paragraphs:
a. Investments
Held-to-Maturity As of September 30, 2001, the Bank had reclassified certain of its Government Bonds and other
investments from its held-to-maturity portfolio to its trading or available-for-sale portfolios that are outlined in SFAS No. 50 – “Accounting for Specific Securities.” In accordance with its application
of Indonesian GAAP, the Bank did not mark-to-market the remaining held-to-maturity portfolio as a result of these transactions.
Under IAS No. 39 – “Financial Instruments: Recognition and Measurement”, the Bank made these reclassifications from its held-to-maturity portfolio as of January 1, 2001.
