GOOD CORPORATE GOVERNANCE IMPLEMENTATION SELF‐ASSESSMENT REPORT
PT BANK SUMITOMO MITSUI
INDONESIA
GOOD CORPORATE
GOVERNANCE
IMPLEMENTATION &
SELF ‐ASSESSMENT
REPORT
For the position of year 2012
PT BANK SUMITOMO MITSUI
INDONESIA
GOOD CORPORATE
GOVERNANCE
IMPLEMENTATION
REPORT
For the position of year 2012
DISCLOSURE OF GCG COVERAGE A
Foreword
In compliance with Bank Indonesia Regulation No. 8/4/PBI/2006 dated 30 January 2006, its amendment
No. 8/14/PBI/2006 dated 5 October 2006 and Bank Indonesia Circular Letter No. 9/12/DPNP dated 30 May
2007, we are very pleased to present to you Good Corporate Governance (GCG) Implementation Report of PT Bank Sumitomo Misui Indonesia (“Bank”) for the position of year 2012.
Transparency of GCG Implementation A.
Disclosure of GCG Coverage
I. Implementation of Tasks and Responsibilities by the Board of Commissioners
(BOC) and the Board of Directors (BOD).As of 31 December 2012, the number of BOC of the Bank is 3 (three), namely 2 (two)
Japanese citizens and 1 (one) Indonesian citizens with the following composition:
Name Position
Masayuki Shimura President Commissioner Hiroshi
Irie Vice
President Commissioner RAG Bramono Dwiedjanto Independent Commissioner
FOREWORD
TRANSPARENCY OF GCG IMPLEMENTATION
a. Number, composition, criteria and independency of BOC and BOD members BOC
and/or BOD. 3. Do not use the Bank for personal, family, and/or other parties’ interests, which may cause
a loss or decline in the Bank’s profit. 4. Do not take and/or receive a personal gain from the Bank other than remuneration and other
facilities decided in the General Meeting of Shareholders.
BOD
As of 31 December 2012, the Bank has 6 (six) members of BOD namely 4 (four) Indonesian citizens and 2 (two) Japanese citizens whom are all domiciled in Indonesia. The composition of BOD is as follows:
Name Position
Masaya President *) Hirayama Director Vacant Deputy President Director Shoichi Director
Yamashiro Bruno Director
Octer Purba Masa Paskalis Lingga Director Trie Compliance
Karjati Wibowo Director *) Ajar Siswandono Director
Effective on 30 October 2012, Mr. Nobuyasu Akagi resigned as Deputy President Director of the Bank, the position of The Bank’s Deputy President Director as of 31 December 2012 was vacant. On 1 April 2013, the Bank appointed Mr. Tsuyoshi Yamaguchi as new Deputy President Director of the Bank.
All
members of BOD come from independent parties of Controlling Shareholder. In addition, members of BOD:
1. Do not hold another position as a member of the BOC, the BOD or Executive Officer of banks, companies, and /or other institutions.
2. Do not own shares either individually or jointly of more than 25% (twenty five percent) of paid‐up capital of the Bank and/or another company.
b. Tasks and responsibilities of BOC and BOD BOC
Each member of BOC has performed the following tasks and responsibilities independently and in timely manner:
1. Ensuring the implementation of GCG in any business of the Bank at all levels or hierarchy of the organization.
2. Conducting supervisory function on the implementation of the tasks and responsibilities of the BOD, and providing advice to the BOD by: Directing,
monitoring, and evaluating the implementation of Bank strategic policies Not being involved in decision making related to Bank’s operational activities 3. Ensuring that the BOD has followed up on audit findings and recommendations of the
Internal Audit Unit of the Bank, external auditor, and the result of Bank Indonesia and/or other supervisory authorities.
4. Establishing an Audit Committee and Risk Monitoring Committee on June 27, 2007, and
Remuneration and Nomination Committee on June 26, 2008. The appointments of all committee members are made by BOD based on a decision by the meeting of BOC.
5. Ensuring that the committees have been formed to carry out their tasks effectively. 6.
To approve the Bank’s loan especially to related parties within certain limits.
7. Compiling work guideline and procedure (Code of Conduct) which are binding on each member of the BOC that covers: Conflicts
of Interest Corporate Opportunities Confidentiality
Fair Dealing Compliance
with Laws, Rules and Regulations Encouraging the Reporting of Any Illegal or Unethical Behavior Compliance Procedures Working
Time Code of Meeting of BOC
BOD
Each member of BOD has performed its duties and responsibilities for the implementation of the management of the Bank as follows: auditor function and risk management implementation, including the internal control system.
5. Being responsible for the implementation of its tasks to Shareholders through the General Meeting of Shareholders. 6. Disclosing the Bank’s strategic policies on employee related matters to the employees either directly to the employees or indirectly through the each Head of Department and
Human Resource Department (HRD) in weekly meetings which would then be placed in the file sharing (BSMI Library folder) which can be accessed by all employees.
7. Not employing an individual advisor and/or professional service as a consultant unless it satisfies the following requirements: a.
A project with special characteristics; b.
Based on clear contract covering at least scope of work, responsibilities, work period and costs involved; c.
The consultant shall be an independent party having a qualification to work on a project with special characteristics as referred to in letter a.
8. Providing data and information that is accurate, relevant, and timely to the BOC. 9.
Possessing work guideline and procedure (Code of Conduct) that are binding on each member of the BOD, which covers: Conflicts
of Interest Corporate Opportunities Confidentiality
Fair Dealing Compliance with Laws, Rules, and Regulations Encouraging
the Reporting of Any Illegal or Unethical Behavior Compliance Procedures Working
Time Code of Meeting of BOD
All decisions by the BOD made in accordance to the work guideline and procedure shall be binding on and become the responsibilities of all members of the BOD. Any dissenting opinions
and their reasons will be clearly disclosed in Minutes of Meeting of BOD which will then be signed and distributed to all BOD members.
c. BOC Recommendations
No. Date Agenda Recommendations
Business Plan as of 31 March 2012.
▪ Evaluation on Risk Profile
Report as of 31 March 2012.
▪ Compliance and KYC&AML Report.
▪ Follow ‐Up Action on
Recommendation from Commissioners.
▪ Others.
Report of Activities of Audit Committee, Risk Monitoring
a) BOC would like to draw Board of
Directors’ attention to KPMG’s commitment in realizing their initial presentation/proposal for Financial
Audit Year 2012 to have smooth transition process from previous
External Auditor (Ernst & Young) as well as to understand Bank’s activities without disrupting Bank’s operations and
taking much of employees’ time and efforts in soliciting information, and to expect Board of Directors to provide
clear guideline to KPMG and closely observe its work especially during
the transition period.
▪ Evaluation on Realization of
Review and acceptance on the report of BOD regarding as follows:
2011.
Report of Activities of Audit Committee,
▪
Compliance and KYC&AML
Report.
▪
Follow ‐Up Action on
Recommendation from Commissioners
▪ Others.
Risk Monitoring Committee, Remuneration and Nomination
14 May 12
Committee and Recommendation from each committee
to BOC. Evaluation on the Compliance
Function during Semester
II/2011
Others. new salary structure, the Bank should also
compare the fringe benefits with other banks since fringe benefits are also
a major component for employees’ resignation.
2
b) Due to the decrease of turnover ratio
No. Date Agenda Recommendations
fee, performance of investment, clients of the company. 4
Q ‐2012 report that the Board of Directors shall continue to provide clear
guideline to KPMG and closely observe its work especially during the transition
period.
b) In relation with the plan in improving compensation and benefit in the bank in terms of pension fund, BOC recommends
to consider several factors in selecting Pension Fund Provider
(DPLK) such as reputation of the Pension Fund Provider company; administration
24 Oct 12
from each committee to BOC. Others.
Review and acceptance on the report of BOD regarding as follows:
▪
Evaluation on Realization of Business
Plan as of 30 September 2012.
▪
Evaluation on Risk Profile
a) BOC would like to recommend for the Bank
a) BOC would like to emphasize on the recommendation or remark in the 1 st
Committee, Remuneration and Nomination Committee and Recommendation
performance target for each employee and use the performance as the basis to evaluate salary, variable pay for employee,
Report as of 30 June 2012.
and promotion. 3 7 Aug 12 Review and acceptance on the report
of BOD regarding as follows:
▪
Evaluation on Realization of Business
Plan as of 30 June 2012.
▪
Evaluation on Risk Profile
▪
Committee, Risk Monitoring
Compliance and KYC&AML
Report.
▪
Follow ‐Up Action on Recommendation
from Commissioners.
▪ Others.
Report of Activities of Audit
to implement the recognition program. In which, the program is intended to reward employees for certain achievement and to encourage employees to work better,
No. Date Agenda Recommendations
committee to BOC. the employees.
Evaluation on the effectiveness and responsibility of committees.
Others.
II. Completeness and Implementation of the Tasks of the Committees and the Work Unit Performing Bank Internal Audit Function
a. Structure, Organization, Skills, and Independency of Committee Members
Audit Committee
Audit Committee was established on 27 June 2007. As per December 2012, Audit Committee
consists of 3 (three) members with the following composition:
Name Position
RAG Chairman Bramono Dwiedjanto as well as Member
Jenly Hendrawan Member with expertise in Finance and Accounting Constance Member
J. Rehatta with expertise in Banking
Audit Committee members have met the qualifications below: 1.
Possess adequate knowledge regarding banking industry widely with good integrity, character, and morals;
2. A willingness to accept accountability;
3. Informed Judgment; 4.
Mature confidence; 5. Objectivity and intellectual honesty.
Name Position Vacant *) Chairman as well as Member
Sofyan Member Rambey with expertise in Risk Management
Maharani Reza Member with expertise in Banking
Effective on 1 July 2012 Mr. Subianto Rustandi resigned from his position as as
- *)
Independent Commissioner of the Bank, the position of Risk Monitoring Committee Chairman of the Bank as of 31 December 2012 was vacant.
On 15 March 2013, the Bank appointed Mr. RAG Bramono Dwiedjanto as Chairman as well as Member of Risk Monitoring Committee and Ms. Triharini as member of Risk Monitoring Committee
with expertise in Banking. Thus, the composition of Risk Monitoring Committee as of 15 March 2013 are as follows:
Name Position
RAG Bramono Dwiedjanto Chairman as well as Member Sofyan Member
Rambey with expertise in Risk Management Triharini Member with expertise in Banking
Risk
Monitoring Committee members have met the qualifications below: 1. Possession of adequate knowledge regarding banking industry widely with good integrity,
character, and morals;
2. Sufficient time to fulfill his duty; 3.
Ability to communicate effectively;
4. Good mentality and ethics, and also professionally responsible
Remuneration and Nomination Committee
Remuneration and Nomination Committee was established on 30 June 2008. As per December 2012, Remuneration and Nomination Committee consists of 3 (three) members
3. Sufficient knowledge of Human Resources Management Concept; 4.
Proactive and professional ways of thinking.
b. Tasks and Responsibilities of the Committees Audit Committee
In regard to article 43 regarding duties and responsibilities of Audit Committee as stipulated in Bank Indonesia regulation number 8/4/PBI/2006 dated 30 January 2006 as amended by
Bank Indonesia regulation number 8/14/PBI/2006 dated 5 October 2006 concerning implementation of Good Corporate Governance for Commercial Bank, related duties and responsibilities
have been provided in Audit Committee Charter, as follows: To possess work guideline and procedure called Audit Committee Charter that shall be binding to all Committee members. To perform the monitoring and evaluation of audit planning and implementation as well as monitoring the audit result follow up actions in order to assess the adequacy of internal
control including the adequacy of financial reporting process. To perform the monitoring and evaluation of the followings in order to give recommendations
to Board Of Commissioners: ` Implementation of the tasks of the Internal Audit Work Unit. ` Consistency between audit implementation by the Public Accountant Office with prevailing
auditing standards. ` Consistency between the financial reports with prevailing accounting standards. ` Implementation of follow up actions by the BOD on findings by the Internal Audit
Work Unit, public accountant, SMBC Internal Audit as the Bank’s majority shareholders, and BI supervision result.
To give a recommendation on the appointment of Public Accountant and Public Accountant Office to the Board Of Commissioners to be submitted to the General Meeting
of Shareholders. To review in timely manner all annual and interim financial statements; including the management's
discussion and analysis, auditor's comments and suggestions, and any significant accounting or reporting issues.
Risk Monitoring Committee scheme including the management of credit risk, market risk, liquidity risk, operational risk, legal risk, reputation risk, strategic risk and compliance risk.
To review and ensure that Bank’s risk profile, both inherent risk and risk control system,
is within the risk tolerance level decided by Management.
To give opinion broadly to Management regarding good bank risk management,
including identification on high risk area, in line with the changes of Bank’s business environment.
Remuneration and Nomination Committee
Related to remuneration policies: To perform an evaluation of the remuneration policy. To give a recommendation to the BOC concerning:
` BOC and BOD remuneration policies to be submitted to the General Meeting of Shareholders.
` Executive Officers and employee remuneration policies as a whole to be submitted to the BOD. To ensure that the remuneration policy commensurate with at least the following:
` Financial performance and reserves formation as stipulated in prevailing laws and regulations; ` Individual work performance; ` Fairness compared to peer group; and ` Consideration on long‐term goals and strategies of the Bank.
Related to nomination policies: To prepare and give a recommendation on the system and procedure for selecting and
/or replacing members of BOC and BOD to BOC to be submitted to the General Meeting of Shareholders.
To submit a recommendation on prospective members of BOC and/or BOD to the BOC to be submitted to the General Meeting of Shareholders.
To submit a recommendation on independent parties who will become committee members to BOC.
c. Frequency of Committee Meetings
months. From January to December 2012, Remuneration and Nomination Committee has conducted a total of 8 (eight) meetings.
d. Committee’s working schedule and its realization in 2012 Audit Committee
In term of monitoring and evaluation of audit planning and implementation as well as monitoring of follow up of audit result for assessing adequacy of internal control including adequacy of financial reporting, thus Audit Committee has conducted activities during year 2012, as follows:
Monitored and evaluated for the following activities:
` Internal
Audit Department’s activities, among others are preparation of The Annual of Internal Audit Plan for year 2012 and 2013; realization of audit schedule
refer to The Annual of Internal Audit Plan of year 2011 and year 2012; implementation of follow up action toward result of triennial years review by appointed
Public Accountant (KPMG) upon IAD’s performance and compliance toward Bank Indonesia’s regulation (SPFAIB/The Standards for The Practice of The Internal Audit Function for Commercial Bank and Risk Management Implementation
in The Utilization of Information Technology by Commercial Banks – IT Audit Function); and submission of mandatory reporting to Bank Indonesia.
`
Implementation/realization of In‐Office Inspection Plan including its result done by Business Administration Planning Department (BAPD).
` Consistency
of financial report of the Bank in accordance with prevailing accounting standards.
` Consistency
between audit implementation by the External Auditor (Ernst and Young) for financial audit year 2011 and performance plan of new External Auditor
for financial audit year 2012 with prevailing audit standard.
`
Follow up action done by Board of Director upon result of Internal Audit Department; Bank Indonesia’s supervisory team; SMBC Parent Company Audit; External auditor (Ernst and Young).
To deliver recommendation of appointment of Public Accountant for financial audit year 2012 (KPMG) to the Board of Commissioners to be submitted to the General
`
Certification of BI‐RTGS system and National Clearing System as audit report of BI‐RTGS and National Clearing System to Bank Indonesia.
Discussed on the result of compliance risk assessment prepared by Compliance Department based on SMBC rules, and its deifference from compliance risk asseesment prepared
on minutes of Risk Management Coordination meeting and Risk Management Committee meeting as a way to monitor the implementation of risk management in the Bank.
on risk profile report which covering 8 (eight) types of risk, which submitted to Bank Indonesia in quarterly basis. Discussed
Department Member and/or Risk Taking Units, as well as conducted the following activities: Conducted meeting in a monthly basis. Discussed
In order to evaluate the consistency between risk management policies and its implementation, on year 2012 the committee conducted discussions with Risk Management
Risk Monitoring Committee
the performance of Audit Committee in accordance with the prevailing regulations.
The function and activities of Audit Committee has been performed in accordance with the planned activities as well as refer to the prevailing regulations. Bank will continuously enhance
discussion with new stipulations which issued by Bank Indonesia with Internal Audit Department, such as submission of filling Questionnaire of Member
Set up agenda and having coordination meeting with related departments in BSMI for discussing oeprational activity staffing, development plan and others.
` Having
Having discussion with new External Auditor (KPMG) for conducting Financial Audit for year 2012.
`
for year 2011.
Having discussion with External Auditor (Ernst and Young) regarding Financial Audit
`
of IFRS (International Financial Reporting Standard.
discussion with related departments regarding the current issues and activities, among others are monitoring Bank’s preparation toward the implementation
` Having
by Risk Management Department. Discussed on Asset Purchase, Trade Finance, and Information Technology activity in the
Remuneration and Nomination Committee
In the year 2012 the Remuneration and Nomination Committee have made some activity plans related to the Remuneration and Nomination Committee’s tasks based on Bank
Indonesia Regulation No. 8/4/PBI/2006 dated 30 January 2006 and its amendment. For implementation of the above plans, the Committee conducted the following activities in the year 2012:
Conducted meeting periodically at least once in 3 (three) months. Related to Remuneration Policies:
` In coordination with HRD, The Remuneration and Nomination Committee reviewed
remuneration policies run by the Bank, including proposed the renumeration improvement in term of pension fund and enhance medical benefit program. In addition,
also proposed the enhancement of non compensation reward, such as give reward to the employee in order to improve their motivation and employee engagement.
`
Discussed and gave recommendation to BOC concerning remuneration policies for BOC and BOD to submit to General Meeting of Shareholders
`
Discussed the progress of job evaluation and developing salary structure project that is conducted in cooperation with external experts (from Towers Watson) to learn
the position of job and remuneration of the Bank in the labor market.
`
Discussed renewal of medical benefit program for employees proposed by HRD. Related to Nomination Policies:
`
Review yearly assessment conducted by each Chairman of Audit and Risk Monitoring Committee and provided recommendation for re‐appointment of Committee
members from Independent parties.
`
Conducted evaluation on candidate of new members of BOC and BOD and gave recommendation in accordance with Bank Indonesia regulations.
`
Conducted evaluation on the existing BOD and give recommendation based on Bank Indonesia
Regulation. Others
` Evaluated and monitored employee turnover. Per semester II/2012, total employee
turnover (11.52%) was decreased compared to semester I/2012 (13.37%).
The
function and activities of Remuneration and Nomination Committee has been
III. Performance of Compliance, Internal Auditor, and External Auditor Functions
a. Compliance function Performance of Compliance Function
Bank made continuous attempts to ensure the Bank’s adherence to the regulations that prevail
in the banking sector, and mitigated the compliance risk that might arise in the event that the Bank did not comply with or implement the applicable regulations. In
the context of ensuring this, the following were the activities made in the area of compliance throughout 2012:
Active Supervision of the Board of Directors and the Board of Commissioners
Board of Commissioner and Board of Directors monitored and maintained that the Bank’s
business activities did not deviate from the prevailing regulations, mainly toward the fulfillment of the regulations related to the principles of prudence, such as Minimum Capital Requirement, Legal Lending Limit (LLL), Net Open Position (NOP), Minimum Reserve
Requirement (MRR), and Asset Quality Rating. Compliance indicators per December 2012 position as follows:
` Minimum
Capital Requirement (KPMM/CAR) : 26.14%
`
There was no excess or violation of Legal Lending Limit (LLL)
` There
was no violation toward the regulations concerning Net Open Position (0.14%)
` Minimum Reserve Requirement (MRR) in Rupiah was 8.21% and in foreign currency
was 8.19%
`
NPL Ratio (gross) 0.70% and NPL Ratio (net) 0.55% Director
Overseeing Compliance Function submitted periodical reports regarding the implementation of the duties and responsibilities to the President Director with a copy to