Good Corporate Governance Report of SMBCI 2013
PT BANK SUMITOMO MITSUI
INDONESIA
GOOD CORPORATE GOVERNANCE
IMPLEMENTATION REPORT
& GOOD CORPORATE GOVERNANCE
PT BANK SUMITOMO MITSUI
INDONESIA
GOOD CORPORATE GOVERNANCE
IMPLEMENTATION REPORT
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. 15/15/DPNP dated 29 April
2013, 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 2013.
TRANSPARENCY OF GCG IMPLEMENTATION A DISCLOSURE OF GCG COVERAGE
I. Implementation of Tasks and Responsibilities by the Board of Commissioners and the Board of Directors. a. Number, composition, criteria and independency of Board of Commissioner and Board of Directors members Board of Commissioners (BOC)
As
citizens and 2 (two) Indonesian citizens with the following composition:
Name Position
Masayuki Shimura
President Commissioner
Airo Shibuya
Vice President Commissioner
RAG Bramono Dwiedjanto
Independent Commissioner
of 31 December 2013, the number of BOC of the Bank is 4 (four), namely 2 (two) Japanese
Board of Directors (BOD)
As
of 31 December 2013, the Bank has 7 (seven) members of BOD namely 4 (four) Indonesian
citizens and 3 (three) Japanese citizens whom are all domiciled in Indonesia. The composition of BOD is as follows:
Name Position
Masaya President Hirayama Director
Tsuyoshi Deputy Yamaguchi President Director
Shoichi Director Yamashiro
Bruno Director Octer Purba
Masa Director Paskalis Lingga
Trie Compliance Karjati Wibowo Director
Ajar Director Siswandono
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.
3. Do not have family relationship up to the second degree with fellow members of the
BOD and/or members of the BOC.
4. Do not extend a general power of attorney to other parties which will result in transfer of
the duties and functions of the BOD.
5. Do not use the Bank for personal, family, and other parties’ interests that may cause a loss
or reduce the profit of the Bank.
6. Do not take and/or receive personal gain from the Bank other than remuneration and 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, SMBC auditor, 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. During
year 2013, BOD has appointed Ms. Ninik Herlani Masli Ridhwan as chairman of Audit
Committee, Ms. Triharini Kartiko as member of Risk Monitoring Committee and Mr. Airo Shibuya as member of Remuneration and Nomination Committee.
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
Board of Director (BOD)
Each
member of BOD has performed its duties and responsibilities for the implementation of the management of the Bank as follows:
1. Managing the Bank in accordance with the authority and responsibilities as stipulated in the
Articles of Association and applicable laws and regulations.
2. Applying the principles of GCG in any business activity of the Bank at all levels or hierarchy
in the organization. satisfies the following requirements:
a. A project with special characteristics; st
and their reasons will be clearly disclosed in Minutes of Meeting of BOD which will then be signed and distributed to all BOD members.
The followings are the summary of recommendations from meetings
of BOC held in 2013 together with the detailed agenda of the meetings: No.
Date Agenda Recommendations
1
28 ry
` Review
All
and nce on the a) Accord y
report Februa
2013
accepta report of BOD regarding as follows:
ing to salary surve
2012, BOC recommends that the
Bank should
maintain the
decisions by the BOD made in binding on and become the responsibilities of all members of the BOD. Any dissenting opinions
BOC to BOD that were raised at the
scope of work, responsibilities, work period l be an independent party having a qualification to work on a ely
of Interest Corporate
to the BOC. n each
b. Based on clear contract covering at lea and
costs involved;
c. The consultant shal project
with special characteristics as referred to in letter a.
8. Providing data and information that is accurate, relevant, and tim
9. Possessing work guideline and procedure (Code of Conduct) that are binding o member
of the BOD, which covers: Conflicts
Opportunities Confidentiality
Board of Commissioner Recommendations
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 accordance to the work guideline and procedure shall be
c.
- Others
requirement that recently occurred.
minimum reserve
related to shortage on Bank Indonesia
quarter I/2013 which is the case that
Evalua 3.
▪
Business Plan as of 31 March 2013.
Director’s attention to instruct related
Evaluat
▪
of BOD regarding as follows:
a) In relation with the act report
preventive action eventive
BOC would like to draw Board of
departments to do the following in order to avoid reoccurrence:
Action on m ittee
Follow ‐U
▪
the related case into Policy and Procedure manual.
IT Steering Comm on
▪
Recommendation fro Commissioners.
▪
Compliance and AML & CFT Report.
▪
Report as of 31 March 201
To incorpora
▪
ivities in te
on Realization of tion on Risk Profile p
No. Date Agenda Recommendations
c) g much lower turn
from each committee to BOC.
Committee and Recommendation
Remuneration and Nomination
Risk Monitoring Committee,
of Committee,
` Report
k l te
on the Function
t m
It is ded m
insura anpower
of Audit Compliance
Activities
` Evaluation
during Semester II/2012. Others. nce
Review and acceptance on the ion
for further study on turn over pattern in an effort to have
`
6 May 2013
2
strategies on HRD.
better understanding on it in the longer term, so as to enable the management to formulate better
rate as compared to the industry, BOC recommends to the management
and m regulation.
Aside from havin over
implemen d it.
has a ready
2012, 77.77% of Joint Venture Ban
their employ ent and support heir fa ily when they pass away. According to salary survey report
inten to improve the engagement of employees during
To socialize related pr
be
to the mitigation efforts, especially the similar mistakes in the future. Thus, BOC recommends that the
needs to
final recap.
dealing with Bank Indonesia, thus we still have enough time to do
of the “reasonable closing window time” for end‐of‐ day
function in executing transactions.
interactivity of checkers and approvers
responsibility and
system by putting emphasis on the following matters:
Management needs to revisit and review the current practices of internal
error and not intentionally done. Nevertheless, the concern was more
No. Date Agenda Recommendations
in 11 March 2013, it was understood that the mistakes were human
c) In regard to the case of MRR shortage
to support good relationship among employees.
and improve this strength by conducting more activities
colleagues", the Bank should maintain
"Relationship among
to
the employees give positive feedback
▪ Since
honor.
with a spirit of mutual respect and
- Work
- Determination
- Reprimand
No. Date Agenda Recommendations ` Review
a) Refer and acceptance on the to BI regulation No.
3
6 September report 15/15/DPNP/dated
of BOD regarding as 29 April 2013 2013
follows: regarding “Implementation of
Evaluation Good
▪
on Realization of Corporate Governance (GCG) Business for
Plan as of 30 June Commercial Bank”. It is advised 2013. that
the Bank conducts a gap
▪ Evaluation analysis
on Risk Profile between the GCG Internal Report Practices
as of 30 June 2013. with BI regulations and to Compliance do
▪
and KYC/AML necessary improvement action Report. plan. Audit Committee also
Follow strongly
▪
‐Up Action on recommends that the Bank Recommendation needs
from to incorporate GCG Self Commissioners. assessment working papers
▪
IT guideline Steering Committee into Internal Manual Report. Procedure.
Credit
▪
Policy Committee
b) Regarding with the Internal Audit Report.
collaboration project between the
Others
▪
Bank
and SMBC called Leveraging
`
Report of Activities of Audit
Audit Partnership in subsidiary
Committee, Risk Monitoring
(LAPIS), Audit Committee would like
Committee, Remuneration and to
recommend to the Internal Audit Nomination
Committee and Department
to do the following for Recommendation
from each the 2014 Audit plan: committee
to BOC.
- To incorporate LAPIS into the ` Others.
2014
Audit Plan.
- To give emphasize to the audit activities
to the area with High/Moderate
Inherent Risk.
- To calculate and provide the number of staff and
competencies to support the
Audit Plan.
No. Date Agenda Recommendations
Letter number 15/35/DPAU dated 29
Steering
Committee Report.
▪ Others.
` Report
of Activities of Audit Committee,
Risk Monitoring Committee,
Remuneration and Nomination
Committee and Recommendation
from each committee to BOC.
` Evaluation
on the Effectiveness of each Committee’s Task and
a) In regard to Bank Indonesia Circular
August 2013 regarding Credit
▪
Provision or Financing and Technical
Assistance in the Framework of
Micro,
Small and
Medium
Enterprises
Development (UMKM); though Bank do not have the plan to disburse
UMKM;
yet
Audit
Committee recommend the Bank to take
necessary action, e.g. to prepare relevant report or analysis regarding
IT
Commissioners.
Business Plan as of 30
corporate values, it should be conducted
also for all employees in all level as it is done to newly hired staff
in Shin Jin Ken program.
4
22 November
2013
`
Review and acceptance on the report
of BOD regarding as follows:
▪
Evaluation on Realization of
September 2013.
Recommendation from
▪
Discussion on Final Draft
Bank’s Business Plan 2014‐ 2016.
▪ Evaluation
on Risk Profile Report
as of 30 September 2013.
▪ Compliance
and KYC/AML Report.
▪ Follow
‐Up Action
on
condition of the Bank to fulfill related regulation. Committee consists of 3 (three) members with the following composition:
Name Position
Ninik Chairman Herlani Masli Ridhwan as well as Member
Jenly Member Hendrawan 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.
Risk Monitoring Committee
Risk
Monitoring Committee was established on 27 June 2007. The composition of Risk Monitoring
Committee as of December 2013 consist of 3 (three) Independent Parties, as follows:
Name Position
RAG Chairman Bramono Dwiedjanto as well as Member
Sofyan Member Rambey with expertise in Risk Management
Tri Member Harini Kartiko with expertise in Finance
Risk
Monitoring Committee members have met the qualifications below:
1. Possession of adequate knowledge regarding banking industry widely with good integrity,
character, and morals;
Name Position
4. Proactive and professional ways of thinking.
` Implementation of the tasks of the Internal Audit Work Unit.
To perform the monitoring and evaluation of the followings in order to give recommendations to Board Of Commissioners:
monitoring the audit result follow up actions in order to assess the adequacy of internal control including the adequacy of financial reporting process.
to all Committee members. To perform the monitoring and evaluation of audit planning and implementation as well as
have been provided in Audit Committee Charter, as follows: To possess work guideline and procedure called Audit Committee Charter that shall be binding
Indonesia regulation number 8/14/PBI/2006 dated 5 October 2006 concerning implementation of Good Corporate Governance for Commercial Bank, related duties and responsibilities
Bank Indonesia regulation number 8/4/PBI/2006 dated 30 January 2006 as amended by Bank
In regard to article 43 regarding duties and responsibilities of Audit Committee as stipulated in
Tasks and Responsibilities of the Committees Audit Committee
b.
3. Sufficient knowledge of Human Resources Management Concept;
RAG Bramono Dwiedjanto
2. Strong commitment to task and objectivity judgment;
character, and morals;
1. Possession of adequate knowledge regarding banking industry widely with good integrity,
and Nomination Committee members have met the qualifications below:
Remuneration
Effective on 24 February 2014, Ms. Yvonne Febrina was appointed as member of Remuneration and Nomination Committee to fill in the vacant position since 13 September 2013.
Member, Executive Officer in charge of Human Resources *
Yvonne Febrina*
Member, Commissioner
Airo Shibuya
Chairman as well as Member, Independent Commissioner
` Consistency between audit implementation by the Public Accountant Office with
Risk Monitoring Committee
To review and ensure that Bank’s risk profile, both inherent risk and risk control system,
To ensure that the remuneration policy commensurate with at least the following: ` Financial
Officers and employee remuneration policies as a whole to be submitted to the BOD.
` Executive
` BOC and BOD remuneration policies to be submitted to the General Meeting of Shareholders.
To perform an evaluation of the remuneration policy. To give a recommendation to the BOC concerning:
Related to remuneration policies:
Remuneration and Nomination Committee
including identification on high risk area, in line with the changes of Bank’s business environment.
To give opinion broadly to Management regarding good bank risk management,
is within the risk tolerance level decided by Management.
legal risk, reputation risk, strategic risk and compliance risk.
To establish a working guideline and procedure called Risk Monitoring Committee
scheme including the management of credit risk, market risk, liquidity risk, operational risk,
To review and ensure the adequacy and the completeness of Bank’s risk management
implemented well.
and Bank’s risk management practices, in order to ensure that Bank’s risk management is
To perform monitoring on the continuing improvement process of policies, procedures,
Committee and Risk Management Department tasks.
To perform monitoring and evaluation on the implementation of Risk Management
To perform evaluation of the consistency between risk management policies and its implementation.
management by giving recommendation to BOC.
To assist Commissioners to accomplish their roles and responsibility in the Bank’s risk
Charter that shall be binding to all Committee members.
performance and reserves formation as stipulated in prevailing laws and regulations;
c. Frequency of Committee Meetings Audit Committee
Based on stipulation on Audit Committee Charter, Audit Committee conduct a meeting at least
once a month. In case there are major issues, in any event, the committee will meet more frequently to fulfill its responsibilities. During the year 2013, Audit Committee has conducted
a total of 17 (seventeen) meetings.
Risk Monitoring Committee
Risk Monitoring Committee conducted a meeting at least once a month. During the year
2013, Risk Monitoring Committee has conducted a total of 12 (twelve) meetings.
Remuneration and Nomination Committee
Remuneration and Nomination Committee conducted a meeting at least once in 3 (three) months.
From January to December 2013, Remuneration and Nomination Committee has conducted a total of 4 (four) meetings.
d.
Committee’s
working schedule and its realization in 2013
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
2013, 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 2014, realization of audit schedule refer to The Annual
of Internal Audit Plan of year 2012 and year 2013 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
`
` Having
Discussed
Discussed on Bank Indonesia audit result for position of September 2012, and May 2013.
on risk profile report which covering 8 (eight) types of risk, which submitted to Bank Indonesia in quarterly basis.
meeting in a monthly basis. Discussed
Member and/or Risk Taking Units, as well as conducted the following activities: Conducted
on year 2013 the committee conducted discussions with Risk Management Department
In order to evaluate the consistency between risk management policies and its implementation,
Risk Monitoring Committee
the performance of Audit Committee in accordance with the prevailing regulations.
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
The
discussion with External Auditor (KPMG) regarding result of Financial Audit for year 2012 and performance plan for conducting Financial Audit for year 2013.
the current major issues, operational activity, staffing, development plan and others.
Set up realization of Audit Committee’s activities for year 2012 and 2013.
Set up agenda and having coordination meeting with related departments for discussing
`
project) into establishment of The Annual Internal Audit Plan.
IAD SMBC with IAD of the Bank (LAPIS /Leveraging Audit Partnership in Subsidiary
conduct review on GCG internal practice with related BI guidelines and prepare improvement action plan as necessary; and to incorporate the collaboration project between
attention by Board of Director among others are to incorporate preventive action on one case that recently occurred and to socialize it to internal department; to
Delivered the written opinion to Board of Commissioners regarding matter to be paid
`
Bramono Dwiedjanto (previous Chairman) to Ms. Ninik Herlani (New Chairman).
Handed over duties and responsibilities of Audit Committee’s Chairman from Mr.
`
self‐assessment of Audit Committee’s performance for year 2012 as implementation of Good Corporate Governance.
` Conducted
on Loan Portfolio Stress Test conducted by the 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 2013:
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 to
and BOD submit to General Meeting of Shareholders
` Discussed
the progress of job evaluation and developing salary structure project that m
is conducted in cooperation with external experts (fro 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