GOOD CORPORATE GOVERNANCE - bankbjb.co.id Report of bank bjb... · good corporate governance report...

GOOD CORPORATE GOVERNANCE

REPORT 2015

PT. BANK PEMBANGNAN DAERAH JAWA BARAT DAN BANTEN, Tbk.

i Table of Contents

TABLE OF CONTENTS

A. Background ....................................................................................................................................... 1

A.1 Main Principles ........................................................................................................................ 1

A.2 Good Corporate Governance Assessment .............................................................................. 2

A.3 Bank’s Vision, Missions and Corporate Values ....................................................................... 2

A.4 Organizational Structure .......................................................................................................... 3

B. Bank’s Good Corporate Governance Implementation ....................................................................... 4

B.1 The Implementation of Tasks and Responsibilities of the Board of Commissioners and the

Board of Directors ................................................................................................................... 4

B.1.1 The Board of Commissioners ..................................................................................... 4

B.1.1.1 The Members and Composition of the Board of Commissioners ............... 4

B.1.1.2 The Tasks and Responsibilities of the Board of Commissioners ............... 4

B.1.2 The Board of Directors ............................................................................................... 6

B.1.2.1 The Members and Composition of the Board of Directors ......................... 6

B.1.2.2 The Tasks and Responsibilities of the Board of Directors .......................... 7

B.1.3 Relationship between the Board of Directors and the Board of Commissioners ........ 9

B.2 Establishment of Committees and Implementation of Their Tasks ........................................ 11

B.2.1 Audit Committee ....................................................................................................... 11

B.2.1.1 Audit Committee’s Tasks and Responsibilities ......................................... 12

B.2.1.2 Audit Committee’s Meeting and Attendance Level ................................... 19

B.2.1.3 Independency of Audit Committee’s Members ......................................... 20

B.2.2 Risk Monitoring Committee ...................................................................................... 20

B.2.2.1 Risk Monitoring Committee’s Tasks and Responsibilities ........................ 20

B.2.2.2 Risk Monitoring Committee’s Activities in 2015 ........................................ 22

B.2.2.3 Risk Monitoring Committee’s Meeting and Attendance Level .................. 23

ii Table of Contents

B.2.2.4 The Independency of the Risk Monitoring Committee’s Chairman and

Members .................................................................................................. 23

B.2.2.5 Working Mechanism ................................................................................ 23

B.2.3 Remuneration and Nomination Committee .............................................................. 23

B.2.3.1 Remuneration and Nomination Committee’s Tasks and Responsibilities 24

B.2.3.2 Remuneration and Nomination Committee’s Performance Report .......... 25

B.2.3.3 Remuneration and Nomination Committee’s Meeting and Attendance

Level ........................................................................................................ 26

B.2.3.4 Remuneration and Nomination Committee’s Independency .................... 26

B.2.4 Integrated Governance Committee .......................................................................... 26

B.2.4.1 Integrated Governance Committee’s Tasks and Responsibilities ............ 27

B.2.4.2 Integrated Governance Committee’s Performance Report ...................... 28

B.2.4.3 Integrated Governance Committee’s Meeting and Attendance Level ...... 28

B.2.4.4 Integrated Governance Committee’s Independency ................................ 28

B.2.5 Business and Credit Monitoring Committee ............................................................. 29

B.2.5.1 Business and Credit Monitoring Committee’s Tasks and Responsibilities29

B.2.5.2 Business and Credit Monitoring Committee’s Performance Report ......... 30

B.2.5.3 Business and Credit Monitoring Committee’s Meeting and Attendance

Level ........................................................................................................ 30

B.2.5.4 Business and Credit Monitoring Committee’s Independency ................... 31

B.3 Implementation of Compliance, Internal Audit and External Audit Function .......................... 31

B.3.1 Compliance Function Implementation ...................................................................... 31

B.3.1.1 Compliance Function ............................................................................... 31

B.3.1.2 The Tasks and Responsibilities of Compliance Unit ................................ 32

B.3.1.3 Anti-Money Laundering and Counter Terrorism Financing Programme ... 35

B.3.2 Internal Audit Function ............................................................................................. 36

B.3.3 Implementation of External Audit Function ............................................................... 37

iii Table of Contents

B.4 Implementation of Risk Management and Internal Control System ....................................... 39

B.4.1 Credit Risk ................................................................................................................ 39

B.4.1.1 Identification Process Adequacy, Assessment, Monitoring, and Risk

Management, and Risk Management Information System ....................... 39

B.4.1.2 Internal Control System Across Organization ......................................... 41

B.4.2 Market Risk .............................................................................................................. 42

B.4.2.1 Internal Control System Across Organization .......................................... 42

B.4.2.2 Requirements on Limit Policies, Procedures and Determination ............. 43

B.4.2.3 Requirements on the Process of Identification, Assessment, Monitoring,

and Risk Control, and Risk Management Information System ................. 44

B.4.2.3 Internal Control System Across Organization ......................................... 47

B.4.3 Liquidity Risk ............................................................................................................ 47

B.4.3.1 Active Monitoring by the Board of Commissioners and the Board of

Directors .................................................................................................. 48

B.4.3.2 Requirements on Limit Policies, Procedures and Determination ............. 48

B.4.3.3 Requirements on the Process of Identification, Assessment, Monitoring



B.4.4 Operating Risk ......................................................................................................... 50


Directors .................................................................................................. 51

B.4.4.2 Policy, Procedure and Limit Adequacy .................................................... 51




B.4.5 Legal Risk ................................................................................................................ 53


Directors .................................................................................................. 53

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B.4.6 Compliance Risk ...................................................................................................... 54


Directors .................................................................................................. 54





B.4.7 Strategic Risk ........................................................................................................... 56


Directors .................................................................................................. 56





B.4.8 Reputation Risk ........................................................................................................ 57


Directors .................................................................................................. 57





B.4.9 Risk Management Organization at the Board of Directors Level .............................. 58

B.5 Related Party Financing and Large Exposure ....................................................................... 59

B.6 Bank Strategic Plan (Corporate Plan) .................................................................................... 59

v Table of Contents

B.6.1 Long-Term Plan (Corporate Plan) ............................................................................ 59

B.6.2 Medium-Term Plan (Business Plan) ......................................................................... 64

B.7 2015 Bank Education and Training Data ............................................................................... 69

B.7.1 The Board of Directors, the Board of Commissioners and Committee Members ..... 69

B.7.2 Employees Training Data ......................................................................................... 71

B.8 Corporate Secretary .............................................................................................................. 72

B.9 Bond Rating ........................................................................................................................... 73

B.10 Good Corporate Governance Activities and Socialization in 2015 ......................................... 73

C. The Board of Commissioners and the Board of Directors Members whose Ownership in Company’s

Paid-Up Capital is or Greater than 5% ............................................................................................ 74

D. The Board of Commissioners and the Board of Directors Financial Relationship and Their Each

Other Personal Relationship and/or with Major Shareholders ......................................................... 74

E. Remuneration Package/Policy and Other Facilities Reserved for the Board of Commissioners and

the Board of Directors ..................................................................................................................... 75

F. Share Option ................................................................................................................................... 75

G. Highest and Lowest Salary Ratio .................................................................................................... 76

H. Employment .................................................................................................................................... 76

H.1 Recruitment Management and Career Development ............................................................. 76

H.1.1 Recruitment Management ........................................................................................ 76

H.1.2 Career Development ................................................................................................ 76

H.2 Administration and Compensation Management ................................................................... 77

H.3 Performance Management and Employees Competency ...................................................... 77

H.3.1 Performance Management ....................................................................................... 77

H.3.2 Competency Development ....................................................................................... 77

H.4.1 Employees Relationship Management includes the following actions: ..................... 78

H.4.2 HRM Policies Management ...................................................................................... 78

I. The Frequency of the Board of Commissioners and Board of Commissioners Meeting ................. 79

vi Table of Contents

I.1 The Frequency of the Board of Commissioners Meeting ....................................................... 79

I.2 The Frequency of the Board of Directors Meeting ................................................................. 79

J. Internal Fraud .................................................................................................................................. 80

K. Legal Matters .................................................................................................................................. 80

L. Transaction with Conflict of Interest ................................................................................................ 80

M. Shares Buy Back and/or Bonds Buy Back ...................................................................................... 80

N. Funding for Social Activities in 2015 ............................................................................................... 81

O. Executive Summary of Good Corporate Governance Self-Assessment by the Bank in 2015 ......... 83

1 bank bjb’s Good Corporate Governance (GCG) Implementation Report 2015

bank bjb’s Good Corporate Governance Implementation

Year 2015

A. Background

Good corporate governance is a basic concept which add value to the company.

Nowadays, the concept of good corporate governance has been embraced as fundamental

principle in running a company, including those companies in banking sector. As a

company in banking sector, PT. Bank Pembangunan Daerah Jawa Barat dan Banten,

Tbk., hereinafter referred to as Bank, embraced the principles of good corporate

governance as the bases of its business. The Bank realized the importance of good

corporate governance principles in its actions to maintain the trust given by its

stakeholders such as customers, investors, shareholders, public in general and public in

banking industry.

A.1 Main Principles

From currently available literature, the implementation of Good Corporate

Governance is founded on 5 basic principles, which are:

1. Transparency, means openness in providing material and relevant information

and transparency in decision-making process;

2. Accountability, means clarity of function and Bank organization accountability

which results in effective management;

3. Responsibility, means Bank management compliance with the applicable laws

and regulations and Bank good corporate governance principles;

4. Independency, means Bank professional management without any

distortion/pressure from any other parties;

5. Fairness, means reasonable and equal treatment in fulfilling the stakeholder’s

right arising from agreements and mandated by the applicable laws and

regulations.

As one effort of Good Corporate Governance implementation, Bank stated the

basic principles of GCG in Annual Board of Directors Policies (KUDT). KUDT is

the guidance for Bank Business Plan which prepared annually and the basis for all

Bank organizational unit in performing their tasks. The purposes of GCG as the

basic principles in KUDT are to ensure united performance, language, perception

and action by all staffs who shall complies with the GCG principles in their works.

Therefore, to improve the GCG practice across the bank operations at all levels,

the Bank has strong determination to implement GCG as the basic principles in its

operations. Such implementation required by the authority concerning good

corporate governance under the Bank Indonesia Regulation number 8/4/PBI/2006

on Good Corporate Governance Implementation in Commercial Bank as amended

by the Bank Indonesia Regulation number 8/14/2006 on Good Corporate

Governance Implementation in Commercial Bank and Bank Indonesia Circular

number 15/15/DPNP on Good Corporate Governance Implementation in

Commercial Bank.


A.2 Good Corporate Governance Assessment

To ensure the implementation of 5 basic principles of GCG. The bank conduct

assessment on GCG implementation. Such assessment conducted periodically by

self-assessment method. The following are 11 factors of GCG assessment:

1. The Board of Commissioners tasks and responsibilities performance;

2. The Board of Directors tasks and responsibilities performance;

3. Committee requirements and performance;

4. Conflict of interests;

5. Compliance function;

6. Internal audit function;

7. External audit function;

8. Risk management implementation including internal control system;

9. Financing to related parties and large exposures;

10. Transparency of Bank financial and non-financial condition, Good Corporate

Governance report and internal report;

11. Bank Strategic planning.

The assessment of the 11 factors of GCG implementation is made in a governance

system that is grouped into 3 sub-assessments namely governance structure,

governance process and governance outcome.

A.3 Bank’s Vision, Missions and Corporate Values

Vision:

To become one of the top 10 biggest Banks with high performance in Indonesia.

Mission:

a. Regional economic driver and motivator;

b. Regional depository;

c. A source of regional revenue.

Bank’s Corporate Values:

GO SPIRIT

Corporate Values Main Behaviour

Service Excellence 1. Friendly, honest, empathy

2. Prime service first

Professionalism

3. Quick, correct, accurate

4. Competence and accountable

5. Understand and observer the company’s

rules

Integrity

6. Consistent, disciplined, and lively

7. Maintain corporate image by services with

pride and ethic


Respect 8. Customer oriented

9. Environmentally friendly

Intelligence

10. Best solutions

11. Self-development

12. Embrace positive changes

Trust

13. Embrace transparency, participation and

mutual relationship

14. Comply with Non-Disclosure Agreement

A.4 Organizational Structure

The Bank GCG implementation based on the principles of unanimous commitment

of all of the people concerned, both management and employees, to be a subject

and observe the applicable laws and regulations. This is reflected by the Bank

organizational structure which purpose to achieve the company’s objectives. Bank

Organizational Structure is effected by the Board of Directors Decision number

621/SK/DIR-PS/2015 dated 1 July 2015 on the Organizational Structure of PT.

Bank Pembangunan Daerah Jawa Barat dan Banten, Tbk., as follows:


B. Bank’s Good Corporate Governance Implementation

B.1 The Implementation of Tasks and Responsibilities of the Board of

Commissioners and the Board of Directors

B.1.1 The Board of Commissioners

B.1.1.1 The Members and Composition of the Board of

Commissioners

Based on the Company’s Shareholders Extraordinary General

Meeting of PT. Bank Pembangunan Daerah Jawa Barat dan

Banten, Tbk., under the Minutes of Company’s Shareholders

Extraordinary General Meeting number 221 dated 19

December 2014, the Bank’s Board of Commissioners

composition is as follows:

a. President Commissioner : Taufiqurahman Ruki

b. Commissioner : Muhadi

c. Commissioner : Wawan Ridwan

d. Independent Commissioner : Achmad Baraba

e. Independent Commissioner : Klemi Subiyantoro

f. Independent Commissioner : Rudhyanto Mooduto

g. Independent Commissioner : Yayat Sutaryat

Based on the decision of Shareholders Annual General



Annual General Meeting number 119 dated 31 March 2015,

the Bank’s Board of Commissioners composition is as follows:

a. Commissioner : Muhadi

b. Independent Commissioner : Klemi Subiyantoro

c. Independent Commissioner : Rudhyanto Mooduto

d. Independent Commissioner : Yayat Sutaryat

B.1.1.2 The Tasks and Responsibilities of the Board of Commissioners

The tasks and responsibilities of the Board of Commissioners

under the Deed of Company’s Shareholders Annual General

Meeting on Company’s Articles of Association and the Board of

Commissioners Decision number 10/SK/DK/2015 dated 2

September 2015 on Rules and Guidance for Commissioners, is as

follows:

a. Supervise, advise, control, monitor and evaluate the Bank

management and the implementation of Bank strategic policies

by the Board of Directors;

b. Perform the tasks, responsibilities and authorities pursuant to

the Company’s Articles of Association, Minutes of

Shareholders General Meeting and the applicable laws and

regulations, such as:


1. Prepare and evaluate periodically the rules and guidance

for Commissioners which effective to all Commissioners;

2. Evaluate and agreed Bank Business Plan (RBB);

3. Based on the Minutes of Shareholders General Meeting

(GM), the Board of Commissioners appoint a certified

public accountant as recommended by the Audit

Committee to audit the Company’s financial statements.

c. Perform the tasks and responsibilities which is independence

and accountable to the GM;

d. Ensure the implementation of GCG by the Bank at all levels or

organizational hierarchy of its business;

e. Establish committees and ensure their effective performance

pursuant to the applicable laws and regulations;

f. Shall not interfere with any decision making concerning Bank

operations, unless it is stated otherwise by Articles of

Association or the applicable laws and regulations;

g. Approval given by the Board of Commissioners is a part of its

supervision function therefore shall not release the Board of

Directors responsibilities in running the Bank. Such

supervision by the Board of Commissioners is mandatory

initial monitoring;

h. Review and approve any policies which is a subject to the

Board of Commissioners approval;

i. Review the Board of Directors report on policies

implementation;

j. Prepare report on monitoring for the previous year to be

presented before the GM;

k. Evaluate annual report prepared by the Board of Directors and

sign the report. Annual report review shall be done prior to

GM;

l. Ensure that the Board of Directors follow-up any audit

qualified findings and the recommendation proposed by the

Bank Internal Audit Unit (SKAI), external auditor, Financial

Services Authority and/or any other relevant financial

authorities;

m. Notify the Financial Services Authority not later than 7

business days as of any findings about:

1. Unlawful actions against the applicable laws and

regulations on financial and banking; and

2. Circumstances or foreknowledge which threatened the

Bank’s business, following the findings or

recommendations from the committees established by the

Board of Commissioners which implement the monitoring

over the Bank operations.

Such mandatory reporting tasks which had not yet been

reported or did not reported by the Bank and/or Compliance

Director to the Financial Services Authority;


n. Determine and implement systems on transparent nomination,

evaluation, remuneration for the Bank Management in

consideration of analysis results by the Remuneration and

Nomination Committee which is a subject to the GM approval;

B.1.2 The Board of Directors

B.1.2.1 The Members and Composition of the Board of Directors

Based on the Company’s Shareholders Extraordinary

General Meeting of PT. Bank Pembangunan Daerah Jawa

Barat dan Banten, Tbk., under the Minutes of Company’s

Shareholders Extraordinary General Meeting number 221

dated 19 December 2014, the Bank’s Board of Directors

composition is as follows:

a. Managing Director : Ahmad Irfan

b. Director : Zaenal Aripin

c. Director : Agus Gunawan

d. Director : Benny Santoso

e. Director : Fermiyanti

f. Director : Nia Kania

g. Director : Suartini




Annual General Meeting number 119 dated 31 March 2015,

the Bank’s Board of Commissioners composition is as

follows:


b. Commercial Director : Suartini

c. Consumer Director : Fermiyanti

d. Micro Director : Agus Gunawan

e. Finance Director : Nia Kania

f. Operation Director : Benny Santoso




Annual General Meeting number 111 dated 29 May 2015, the

Bank’s Board of Commissioners composition is as follows:


b. Director : Suartini

c. Director : Fermiyanti

d. Director : Agus Gunawan

e. Director : Nia Kania

f. Director : Benny Santoso

g. Director : Agus Mulyana


B.1.2.2 The Tasks and Responsibilities of the Board of Directors

Pursuant to the Board of Directors Decision number 519/SK/DIR-

CS/2011 dated 20 September 2011, the tasks and responsibilities

of the Board of Directors are as follows:

a. Tasks of the Board of Directors

1. The Board fully responsible over the Bank management;

2. The Board shall manage the Bank in accordance with their

authorities and responsibilities under the company’s

Articles of Association and the applicable laws and

regulations;

3. The Board manage the Bank treasury pursuant to the

applicable laws and regulations;

4. The Board shall prepare and implement Annual Action

Plan which shall be submitted to the Board of

Commissioners within a period not later than 60 calendar

days prior to the following financial year;

5. If the Board did not submit such Annual Action Plan, the

previous plan shall be used. The use of previous plan shall

also be effective over any other plan which still a subject

to obtain approval as referred to in the company’s Articles

of Association or the applicable laws and regulations;

6. The Board shall submit annual report to the certified public

accountant appointed by the Shareholders General Meeting

(GM) for auditing. Audit report shall be submitted in

writing to AGM. Annual report shall at least have the

following contents:

- Financial statements comprised of at least ending

balance of the year compared to the previous year,

income statement of the year, cash flow statement and

changes to equity statement, and the notes to financial

statements;

- Bank activities report;

- Corporate social and environmental responsibilities

report;

- Significant issues which affect the Bank operations for

the year;

- Supervision report by the Board of Commissioners for

the year;

- Individual name of the Board of Directors and the

Board of Commissioners;

- The Board of Directors salary and benefits and the

Board of Commissioners salary or honorarium and

benefits for the year.

7. The Board shall implement risk management and GCG

principles at all levels or organizational hierarchy of the

Bank. For the purpose of such GCG implementation, the

Board shall establish at least:


- Internal audit unit to assist the Board in Bank

operations supervision over the entire Bank

organization. This internal audit unit shall be

independent towards any other operation units;

- Risk Management Unit and Risk Management

Committee to assist the Board in risk management

implementation pursuant to Bank Indonesia

Regulations;

- Compliance Unit, to assist the Board in making all

Bank operations complied with the laws and

regulations including Bank Indonesia Regulations.

8. The Board shall follow-up any audit qualified findings and

the recommendation proposed by the Bank Internal Audit

Unit (SKAI), external auditor, Financial Services

Authority and/or any other relevant financial authorities;

9. Perform special tasks from the Board of Commissioners

and/or GM;

10. The Board hold Annual Shareholders General Meeting and

EGM (Shareholders Extraordinary General Meeting)

which shall be decided on General Meeting;

11. When holding a GM, if all Commissioners is absence or

having conflict of interest, the GM shall be chaired by a

Director appointed by the Board;

12. The Board in the care of their staff who responsible for

Human Resources management using available and

accessible facilities, shall disclose the Bank strategic

policies to its employees concerning employment such as

remuneration, benefits, facilities, recruitment system,

promotion system, including the Bank plan on efficiency

by reducing the number of its employee and concerning the

Bank strategic policies concerning any other employment

conditions;

13. Three months before the Board term ends, the Board shall

not decide/determine any strategic policies;

14. The Board shall provide accurate and relevant data and

information in timely manner to the Board of

Commissioners;

15. The Board shall reply and explain anything questioned by

the Board of Commissioners;

16. The Board shall ensure communication well established

between the Bank and its stakeholders through

empowerment of corporate secretary;

17. The Board shall keep and maintain shareholders registry

and particular lists in good orders;

18. The Board in performing their tasks and responsibilities

shall observe the Bank ethics standard and ethics standard

set in the guidance for the Board of Directors.


b. Responsibilities of the Board of Directors

1. The Board shall be responsible over financial statements;

2. The Board shall be responsible collegially over any

strategic tasks for the Bank’s benefit. Each Director shall

be responsible in performing day to day activities as stated

in strategic decision and any other decisions in accordance

with the tasks and responsibilities;

3. The Board shall present report on their tasks before GM

(Shareholders General Meeting);

4. Within the framework of Bank businesses, the Board shall

have focused and clear Corporate Social Responsibility

plan;

5. The Board shall be responsible for the Bank code of

conduct implementation across the organization.

B.1.3 Relationship between the Board of Directors and the Board of

Commissioners

One key success factor in a good Bank management is inter-organ

relationship that honour and respect each other’s functions and roles, solely

for the interest of the Bank and for compliance with the applicable laws and

regulations and the Bank’s Articles of Association.

To create harmonic relationship between the Board of Commissioners and

the Board of Directors which supports the Bank performance, united

perception and good communication between the Board of Commissioners

and the Board of Directors is necessary. Therefore, the Board of

Commissioners and the Board of Directors determined and agreed on the

basic principles of coordination between the Board of Commissioners and

the Board of Directors. In general, the coordination between the Board of

Directors and the Board of Commissioners is governed by the company’s

Articles of Association and the applicable laws and regulations and Bank

Indonesia Regulations, as follows:

a. The Board of Directors and the Board of Commissioners shall sign

Corporate documents, such as corporate plans, business plan and

financial statements;

b. For any individual or multiple related transactions, the Board of

Directors shall be responsible to ensure that information required by the

Bank is fully available in timely manner to be accessed by the Board of

Commissioners;

c. The Board shall give the Board of Commissioners full access to Bank

information in timely manner;

d. The Board shall give all commissioners, either severally or jointly at

any time in the Bank business hour, the rights to enter the building and

yards or any other premise used by or controlled by the Bank and the

rights to examine all books, letters and any other instruments, inventory,

examine and confirmed cash position (for verification) and any other

securities, and the rights to question any action taken by the Board;

e. Each Director shall reply any question asked by the Board;


f. Upon written request by the Board of Commissioners, the Board shall

present the report on examination or internal audit results;

g. Deliver monthly financial statements upon request by the Board of

Commissioners;

h. Submit request for approval to the Board of Commissioners on addition

to the paid-up capital;

i. Made available risk management report and compliance report to the

Board of Commissioners;

j. Prepare the materials for AGM (Annual Shareholders General Meeting)

and EGM (Shareholders Extraordinary General Meeting) for mutual

agreement and approval by the Board of Commissioners and the Board

of Directors;

k. Whenever necessary, the Board of Commissioners may directly request

information from the relevant management function of Bank operations

for supervision purpose which is a subject to the Board of Directors

acknowledgement;

l. Director and/or any other Bank officials shall attend the meeting

convened by the Board of Commissioners which is a subject to the

Board of Directors acknowledgement;

m. The Board of Directors shall give the committee established by the

Board of Commissioners the rights to access to Bank information by

prior notice delivered by the Board of Commissioners to the the Board

of Directors;

n. The Board of Directors whenever necessary may invite the Board of

Commissioners to convene at the meeting held by the Board of

Directors;

o. The Minutes of the Board of Directors Meeting shall be made available

to the Board of Commissioners upon request;

p. The Board of Directors have the rights and authority to determine Bank

policies which is a subject to the Board of Commissioners approval for

the benefit of Bank, unless the applicable laws and regulations stated

otherwise;

q. The Board of Directors prepare the Bank organizational structure and

corporate governance which is a subject to the Board of Commissioners

approval;

r. The Board of Directors with the Board of Commissioners written

approval in accordance with the applicable laws and regulations may

take the following actions:

1. Built, Operate and Transfer (BOT) agreement, Built, Operate and

Own/BOO agreement and alike;

2. Take part or participate in any other Company/entities or establish

new company excluding for bailing out purpose, pursuant to the


3. Transfer some parts or all Bank ownership in any other company or

entities;

s. Use the bank reserves for credit write-off to any related parties pursuant

to the Conventional Maximum Credit Limit or the applicable laws and

regulations;


t. Write-off any receivables of the principal amount in the credit given to

related parties pursuant to the applicable laws and regulations.

u. Any individual or multiple related transactions, which recorded in a

financial year or in longer term under the company’s Articles of

Association may be made by the Board of Directors which is a subject

to the Board of Commissioners approval in accordance with the

applicable laws and regulations, especially on stock exchange;

v. If the Bank has any conflict of interest with a Director’s personal

interest, the Company shall be represented by any other Directors and

if the Company has any conflict of interest against all Directors, the

Company shall be represented by the Board of Commissioners;

w. The overall Bank management performed by the Board (both on

Corporate issues or Corporate business and advise required by the

Board of Directors) shall be carried out under the Board of

Commissioners supervision.

B.2 Establishment of Committees and Implementation of Their Tasks

The Board of Commissioners has established Audit Committee, Risk Monitoring

Committee, and Remuneration and Nomination Committee, to assist the Board of

Commissioners in performing their tasks and responsibilities effectively.

B.2.1 Audit Committee

Pursuant to Bank Indonesia Regulation number 8/4/PBI/2006 on Good

Corporate Governance for Conventional Bank as amended by Bank

Indonesia Regulation number 8/14/PBI/2006 on the Amendment to the

Bank Indonesia Regulation number 8/4/PBI/2006 on Good Corporate

Governance for Conventional Bank, the Board of Commissioners has

established Audit Committee. Such Audit Committee is an operating

committee of the Board of Commissioners charged with overseeing the

effectiveness of internal control system, audit internal process and financial

statements, therefore the Bank can be managed in accordance with the

principles of transparency, accountability, responsibility, independency and

fairness.

Audit Committee establishment shall also comply with the following laws

and regulations:

a. Decree of the Minister of State-Owned Enterprise Empowerment

number KEP-117/M-PBUMN/2002 dated 1 August 2002 on the

Implementation of Good Corporate Governance Practice by State-

Owned Enterprises;

b. Decree of the Bapepam Chairman number Kep-41/PM/2003 dated 22

December 2003 on the Establishment and Work Guidelines of Audit

Committee;

c. Bank Indonesia Regulation number 8/4/PBI/2006 on the

Implementation of Good Corporate Governance for Conventional

Banks;

d. Bank Indonesia Regulation number 8/14/PBI/2006 dated 5 October

2006 on the Amendment to the Bank Indonesia Regulation number

8/4/PBI/2006 on Good Corporate Governance;


e. The Board of Commissioners Decision number 04A/SK/DK/2007 dated

28 June 2007 on the Establishment and Work Guidelines of PT. Bank

Jabar Committee;

f. The Board of Commissioners Decision number 07/SK/DK/2015 dated

22 April 2015 on Assignment and Schedule of the Board of

Commissioners and Committees Activities.

The composition of Bank Audit Committee for the year 2015 is as follows:

a. Chairman : Klemi Subiyantoro

b. Member : Rudhyanto Mooduto

c. Member : Ramson Sinaga

d. Member : Memed Sueb

e. Member : Suwarta

Audit Committee collectively have competency and experience in

accounting, finance and banking. All committee member acting

independently from the Board of Directors and external auditor, and report

their works to the Board of Commissioners.

B.2.1.1 Audit Committee’s Tasks and Responsibilities

Audit Committee tasks is to support the Board of Commissioners

accordingly to their tasks and responsibilities.

Tasks

a. Overseeing Financial Reporting Process

Audit Committee shall perform supervision on the process of

the Bank financial reporting. In any case, Audit Committee

perform:

1. Monitor financial reporting to ensure the compliance with

the applicable accounting standard and policies;

2. Evaluates financial information to be issued by the Bank

such as financial statements, projections and any other

financial information;

3. Re-check financial statements to the applicable accounting

standard and its consistency with any other information

collected by Audit Committee in monthly, quarterly, and

annual basis;

4. Monitor assets and liabilities valuation method in use, any

necessary commitment, contingency and reserves;

5. Monitor financial statements items with complex and

extraordinary transactions;

6. Assess transaction disclosure adequacy with related

parties;

7. Assess and prepare recommendation to the Board of

Commissioners concerning advise proposed by external

auditor, the Board of Directors and internal auditor for any


changes made to the scope of audit and its accounting

principles and standards.

8. Audit Committee communicates to external auditor, the

Board of Directors and internal auditor for any different

interpretation or inconsistencies.

b. Selection and Appointment of Certified Public Accountant

(CPA) and Performance Supervision Audit Committee prepare recommendation to the Board of

Commissioners concerning Certified Public Accountant

(CPA) that will be assigned to perform annual audit as external

audit on the following matters:

1. Select and recommend a CPA

- Audit Committee shall select and recommend to the

Board of Commissioners concerning potential CPA to

be assigned for the Bank financial statements audit;

- The selection and appointment process of CPA

provided herein as appendix Guidance for Audit

Committee – independent auditor appointment process,

pursuant to the applicable laws and regulations;

- Audit Committee may recommend termination of an

external auditor to the Board of Commissioners if there

is strong indication that the independency of such

external auditor is biased or such external auditor

unable to perform audit in accordance with the

Certified Public Accountant Professional Standards.

2. Oversee external auditor performance

- Evaluate audit plan and audit programme requirements

and supervise external auditor performance following

audit results on internal control adequacy including

financial reporting process;

- Participate in and/or receive report on audit findings

discussion by external auditor and management and

prepare a written report on any differences opinion

stated by external auditor and the management which

is a subject to the Board of Commissioners concern;

- In performing such tasks, Audit Committee shall at

least monitor and evaluate the following matters:

CPA audit compliance with the applicable

standards;

Financial statements compliance with the

applicable accounting standards;

Prepare recommendation to the Board of

Commissioners concerning the Board of Directors

follow-up action on external auditor findings.

- Provide feedback to external auditor to identify high

risks areas;


- Consult with external auditor in the absence of

management concerning internal control on

identification of possible weakness, its requirements

and accuracy of the Bank financial statements.

- Advise external auditor, in relation to general audit, to

communicate the following matters:

The extent of auditor responsibilities on its internal

control when carry out audit of the Bank’s financial

statements;

Significant changes to accounting policies;

Significant weakness found in the design and

implementation of internal control;

Method used in accounting, reporting and the

impacts of extraordinary significant transaction on

financial statements;

Any fraud or its indication and any incompliance

with the applicable laws and regulations, made by

the management or employees which created

material errors in the Bank’s financial statements;

Significant audit correction;

Procedures followed by the auditor to examine an

annual report with unaudited financial statements;

Disagreement with the management on accounting

standards, scope of audit, financial statements

disclosure and the wordings used by the auditor in

its audit report;

Different opinion between the management and

external auditor concerning consultation with any

other external auditor;

Difficulties found while carrying out an audit.

- Together with the Board of Commissioners, the Board

of Directors and external auditor in the review of the

following matters:

Bank financial statements and the notes to financial

statements prior to its publication;

Audit report prepared by external auditor on the

Bank’s annual financial statement and opinion and

recommendation proposed by external auditor;

Important findings and recommendation proposed

by external auditor and monitor the follow-up on

such recommendation by the Board of Directors;

- Audit Committee evaluate the qualification,

performance and independency of external auditor

concerning the partner assigned on audit jobs by the

CPA, receive recommendation from the management

and Internal Audit Unit concerning the performance of

such external auditor;


- Having discussion with the Board of Commissioners

and the Board of Directors and external auditor to gain

understanding on the considerations concerning the

accounting standard designation and its application;

- Ensure adequate disclosure of the accounting

standards;

c. Evaluate Non-Audit Services To maintain the external audit independency, Audit

Committee shall evaluate it prior to pre-approval of non-audit

services to be assigned to external auditor who perform

auditing. Such non-audit services which may weakened

external auditor independency are:

1. Bookkeeping or any other services in relation with the

Bank accounting or financial statements;

2. Design and implementation of financial information

system;

3. Valuation or opinion services on fairness;

4. Actuarial;

5. Internal audit outsourcing;

6. Management or human resources function;

7. Arranger;

8. Legal services and any other non-audit services;

9. Tax consultation services;

10. Any other services pursuant to the applicable laws and

regulations and Bank Indonesia regulations.

The steps must be taken by the Bank management to obtain

pre-approval is as follows:

1. The Board of Directors submit in writing to the Board of

Commissioners concerning details on the services and the

assignment to be performed by CPA;

2. Audit Committee evaluate and analyse any non-audit

services assignment to be performed by CPA therefore any

harmful assignment or conflict of interest can be avoided.

3. Audit Committee may approve such non-audit services

only if the evaluation results did not contain any harmful

assignment to the CPA independency or conflict of

interests,

Pre-approval for such non-audit services may be excluded, if

the valuation of all non-audit services is below 5% (five

percent) of the total audit fee payable by the Bank to the CPA

in the fiscal year when such non-audit services were

performed.


d. Overseeing Internal Control Audit Committee and Internal Audit Unit shall perform

supervision on Bank operations in accordance with their

functions to avoid any breach against Bank Indonesia

regulations, and the applicable laws and regulations. Such

supervisions shall cover at least the following matters:

1. Audit Committee obtain periodical internal audit report

from Internal Audit Unit as input to identify internal

control weaknesses;

2. To improve the effectiveness of internal control, Audit

Committee may provide feedback to the Bank

management, in the care of the Board of Commissioners,

concerning the improvement of Internal Audit

Performance Unit performance.

3. Review and provide feedback to the Board of

Commissioners on Internal Audit Annual Action Plan,

including the scope of audit, and to ensure that such

Internal Audit Annual Action Plan cover all risk which is

harmful to the Bank operations;

4. In every each of year beginning, Audit Committee evaluate

Annual Audit Programme prepared by Internal Audit

Action Plan and the scope of audit and recommend the

evaluation results to the Board of Commissioners;

5. Review and prepare recommendation to the Board of

Commissioners on any difficulties or problems faced by

Internal Audit Unit, including problems concerning the

scope of audit and/or access to obtain necessary

information;

6. Audit Committee shall be in coordination with Internal

Audit Unit to perform the following tasks:

- Hold a regular meeting to discuss any findings and/or

any other subject matters which indicated a weakness

of internal control, and any error on accounting

standard implementation including monitoring of

follow-up by the Bank management on such findings;

- Discuss the Bank management response on any

significant findings concerning the Bank operations

and the recommendation from Internal Audit Unit on

such findings;

- Annual monitoring on the professional code of ethics,

activities, organizational structure and the qualification

of internal audit member;

- Extend the evaluation to assess the nature, the scope,

the extent and the impact of any significant weakness

of internal control and its impact on financial

statements;

7. Assess the effectiveness and the independency of Internal

Audit Unit and evaluate its routine activities, internal


auditor assignment and the organizational structure of

Internal Auditor Unit;

8. Makes recommendation to the Board of Commissioners on

the following matters:

- Significant changes on the scope of audit from its

originally intended, including human resources and

Internal Audit Unit;

- Update on Guidance for Audit Committee;

- Compliance with the Guidance for Audit Committee;

9. Audit Committee upon request of the Board of

Commissioners may recommend the election and

termination of the Head of Internal Audit Unit;

e. Compliance with the Applicable Laws and Regulations Audit Committee and Compliance and Legal Unit in

accordance with their functions shall monitor the Bank

compliance with the applicable laws and regulations and Bank

Indonesia Regulations, at least on the following matters:

1. Monitoring through evaluation on findings, report or

examination results from Bank Indonesia, external auditor,

Compliance Unit, Internal Audit Unit, Risk Management

Unit/Risk Management Committee;

2. If there is a strong indication of a breach against the

applicable laws and regulations and Bank Indonesia

Regulations, Audit Committee shall report it to the Board

of Commissioners and recommend investigation.

f. Risk Reporting and Risk Management Implementation Audit Committee and Risk Monitoring Committee in

accordance with their function shall monitor the Bank

operations and to minimize the risk at least on the following

matters:

1. Evaluate the risk identification process and the risk

management implementation by the management;

2. Assess the risk management process and the Bank financial

control including identification and evaluation of all the

risks and its control to minimize the risk potentials;

3. Monitor and evaluate external auditor and Internal Audit

Unit performance to ensure that main control and risk

management has been included in audit plan;

4. Verify that the Bank management had follow-up all

recommendation concerning the risk and control proposed

by external auditor, Internal Audit Unit, Risk Management

Unit and Risk Management Committee.


g. Handling Third Party’s Complaint Audit Committee shall not only concern with any information

pertaining to its tasks, it shall also handle third party’s

complaint concerning accounting method, internal control and

fraud which is harmful to the Bank operations;

1. Requirements for complaint to be processed in further

consideration:

- Shall be submitted in writing

- Clearly stated the alibi and the problems concerning the

complaint.

2. Complaint handling

In handing any third party’s complaint, Audit Committee

may request Internal Audit Unit to response it accordingly.

3. Complaint handing result

If from the complaint handling results, the complaint is

proved:

- Audit Committee shall deliver the results to the Board

of Commissioners;

- Audit Committee shall monitor the response in

accordance with the complaint handling, upon request

by the Board of Commissioners.

h. Special Assignments Special assignments are non-routine assignments delegated by

the Board of Commissioners, made in writing to the Audit

Committee.

1. The Board of Commissioners delegate special

assignments, in the event of:

- There is a strong indication of noncompliance with the

applicable laws and regulations therefore the Audit

Committee, with the Board of Commissioners consent,

extend the evaluation with investigative audit to

determine the impact and the damage created from

such noncompliance. When performing such

investigative audit, Audit Committee may request

assistance from Internal Audit Unit or external auditor;

- There is third party’s report/complaint which indicated

noncompliance and/or fraud.

2. When performing special assignments Audit Committee

may:

- Evaluate all records including the Minutes of the Board

of Directors Meeting and the Minutes of the Board of

Commissioners Meeting, and any other necessary

documentation.

- Ask some question to the Board of Directors and their

staffs, the results shall be prepared in Cross-

Examination Report signed by both parties.


- If necessary, perform joint investigative audit with

Internal Audit Unit or external auditor.

i. Audit Committee Performance Self-assessment Self-assessment shall be done pursuant to Bank Indonesia

regulations to assess its effectiveness when performing tasks

in accordance with the Guidance for Audit Committee in

addition to the evaluation by the Board of Commissioners on

the Audit Committee performance.

Responsibilities a. Ensure that the Bank’s financial statement is clear, transparent

and reliable.

b. Assess audit activities and its results which performed by

Internal Audit Unit or external auditor to prevent the

implementation and reporting that fall below standard.

c. Evaluate the Bank’s policies in relation to its compliance with

the applicable laws and regulations, ethics, conflict of interests

and investigation on any error or fraud, in the case of the Board

of Commissioners provide recommendation on the

improvement of the Bank internal control and its

implementation.

d. Evaluate the Internal Audit Unit Plan, reports and significant

findings.

e. Maintain communication with the Board of Directors and any

other relevant unit concerning the status, progress and latest

development on problems found in the Bank operations and

any other findings by Internal Audit Unit.

f. Ensure the Internal Audit Unit has direct access to Audit

Committee and encourage communication at any times than

the scheduled meeting;

g. Create direct communication lines with external auditor/Bank

inspector to discuss audit plan, findings or reports

B.2.1.2 Audit Committee’s Meeting and Attendance Level

In 2015, Audit Committee able to follow the schedule to convene

in meeting which accounted 17 times. The following is

information on Attendance level of Audit Committee Meeting in

2015:

Name Position Attendance

Klemi Subiyantoro Chairman 17

Rudhyanto Mooduto Member 13

Suwarta Member 10

Mermed Sueb Member 13

Ramson Sinaga Member 16


B.2.1.3 Independency of Audit Committee’s Members

Every nomination on potential member of Audit Committee had

been reviewed by Remuneration and Nomination Committee. The

Remuneration and Nomination Committee has determined that all

member of committee shall be independent. The qualification of

assignments and the function of Audit Committee is a subject to

the provisions stated by the Bapepam-LK, Indonesian Stock

Exchange and Bank Indonesia. All member of bjb Bank Audit

Committee is independent from the Bank Management.

B.2.2 Risk Monitoring Committee

Bank Risk Monitoring Committee is a committee established by the Board

of Commissioners to support the effectiveness of its tasks and

responsibilities performance, as referred to in Bank Indonesia Regulations

number 8/4/PBI/2006 on Good Corporate Governance for Conventional

Bank as amended by Bank Indonesia Regulation number 8/14/PBI/2006 on

the Amendment to the Bank Indonesia Regulation number 8/4/PBI/2006 on

Good Corporate Governance for Conventional Bank.

The establishment of Bank Risks Monitoring Committee for the year 2015

pursuant to the following laws and regulations:

a. Bank Indonesia Regulation number 8/4/PBI/2006 on Good Corporate

Governance implementation for Conventional Bank;

b. Bank Indonesia Regulation number 8/14/PBI/2006 dated 5 October



c. Bank Indonesia Circular number 15/15/DPNP dated 29 April 2013 on

Good Corporate Governance Implementation for Conventional Bank;

d. The Board of Commissioners Decision number 07/SK/DK/2015 dated



The composition of Bank Risk Monitoring Committee for the year 2015 is

as follows:

a. Chairman : Rudhyanto Mooduto

b. Member : Yayat Sutaryat

c. Member : Muhadi

d. Member : Nury Effendi

e. Member : Tettet Fitrijanti

The Risk Monitoring Committee had held weekly meeting as an internal

meeting of Risk Monitoring Committee, coordination meeting with Risk

Management Unit, Audit Committee or joint meeting with any other bank

operating units in accordance with the programme and requirements.

B.2.2.1 Risk Monitoring Committee’s Tasks and Responsibilities

Pursuant to Bank Indonesia Regulation number 8/4/PBI/2006 on

Good Corporate Governance Implementation for Conventional

Bank, in which one of the Board of Commissioners tasks is to


ensure the implementation of Good Corporate Governance in

Bank operations at all levels or organizational hierarchy. To

support such activities, the Board of Commissioners shall establish

Risk Monitoring Committee. Such Committee is an operating

committee of the Board of Commissioners charged with risk

monitoring and Bank risk management policy implementation

assessment, evaluate policies improvement, Bank risk procedure

and management practice to ensure proper risk management,

especially credit risks, market risks, liquidity risks, operating risks

and any other risks against the Bank.

Pursuant to the provisions under Article 2 of Bank Indonesia

Regulation number 5/8/PBI/2003 as amended by Bank Indonesia

Regulation number 11/25/PBI/2009 on Risk Management

Implementation for Conventional Bank, the Bank shall implement

an effective risk management for the Bank in an individual manner

and the Bank in a consolidated manner with its subsidiaries, which

includes at least the 4 pillars as described below:

a. Active supervision by the Board of Commissioners and the

Board of Directors;

b. Policy, procedure and limit adequacy;

c. Identification process adequacy, assessment, monitoring and

Risks control and Risk Management information system and;

d. Internal control system across the Bank organization;

The Board of Commissioners tasks and responsibilities shall at

least include:

a. Approve risk management policies including the strategy and

the framework of risk management in accordance with the

Bank risk appetite and risk tolerance;

b. Evaluate the risk management policies and the risk

management strategy at least once a year or more frequent in

the event of changes to factors which significantly affect the

Bank business;

c. Evaluate the Board of Directors report and provide direction

on the periodical improvement and the implementation of risk

management policies. Evaluation shall be carried out to ensure

that the Board of Directors is managing the Bank activities and

risk effectively.

Risk Monitoring-Related Tasks and Responsibilities

The Risk Monitoring Committee’s Tasks and Responsibilities

include:

a. Evaluates the consistency of risk management policies and its

implementation:

1. Periodically evaluate and analyse the compliance of risk

management policies with the laws and regulations, and its

adequacy;


2. Provide recommendation to the Board of Commissioners

on necessary improvement for better risk management.

b. Monitor and evaluates the Risk Management Committee

performance and the Risk Management Unit:

1. Evaluates and analyse Bank risk profile quarterly and any

other report or any other relevant reviews and provide

recommendation on necessary improvement and

refinement;

2. Evaluate & analyse the Bank health in risk profile and

GCG section;

3. Monitor Bank identification process adequacy,

measurement, monitoring, controlling and risk

management information system.

4. Prepare and implement Risk Monitoring Committee

annual action plan in accordance with the Board of

Commissioners direction and the rules applied by the

Bank.

B.2.2.2 Risk Monitoring Committee’s Activities in 2015

Pursuant to the Guidance for Risk Monitoring Committee, below

is the 2015 action plan:

No Risk Monitoring Committee’s Activities in 2015

1 Evaluate Risk Monitoring Committee’s Activities in

2014 and determine the Risk Monitoring

Committee’s Activities for 2015.

2 Review Guidance and Rules of Risk Monitoring

Committee.

3 Evaluate adequacy of risk management

implementation, from each aspect of organization,

policies, staffs, and implementation and provide

recommendation for the Board of Commissioners.

4 Monitoring upon recommendation by the Board of

Commissioners based on the evaluation results in the

point 3.

5 Evaluate risk profile, and report and make

recommendation based on the evaluation results to

the Board of Commissioners.

6 Analyse the Root Cause Credit Risk (RCCR).

7 Analyse liquidity & credit stress test.

8 Monitor self-assessment of Bank Health Level.

9 Review the draft changes to Conventional Bank

Credit.

10 Discuss resources development and information

technology concerning Operating Risk to better the

risk level and Bank Health Level.


11 Capacity Building of the Chairman andMember of

Risk Monitoring Committee through workshop,

seminar and benchmarking.

12 Perform any other tasks given by the Board of

Commissioners pursuant to the applicable laws and

regulation.

B.2.2.3 Risk Monitoring Committee’s Meeting and Attendance Level

In 2015, Risk Monitoring Committee had convened a meeting 19

times. The following is information on Attendance level of Risk

Monitoring Committee Meeting in 2015:


Rudhyanto Mooduto Chairman 19

Muhadi Member 11

Yayat Sutaryat Member 9

Nury Effendi Member 14

Tettet Fitrijanti Member 18

B.2.2.4 The Independency of the Risk Monitoring Committee’s

Chairman and Members

The Chairman and member of the Risk Monitoring Committee

comprised of 2 (two) Independent Commissioners, 1 (one)

Commissioner and 2 (two) independent members.

B.2.2.5 Working Mechanism

The Risk Monitoring Committee under annual working

programme which had been prepared and approved by the Board

of Commissioners, such as monthly, quarterly and annual routine

risk monitoring, and any other activities without definite schedule

such as Chairman and member capacities building of the Risk

Monitoring Committee.

The Risk Monitoring Committee hold routine meeting which is an

internal meeting of the Risk Monitoring Committee, coordination

meeting with the Risk Management Unit, Compliance Unit or joint

meeting with Business and Credit Monitoring Committee.

B.2.3 Remuneration and Nomination Committee

The establishment of Bank Remuneration and Nomination Committee

pursuant to the following laws and regulations:

a. Bank Indonesia Regulation number 8/4/PBI/2006 dated 30 January

2006 on Good Corporate Governance;










e. The Board of Commissioners Decision number 11/SK/DK/2015 dated

14 September 2015 on Guidance and Rules of Remuneration and

Nomination Committee.

The composition of Bank Remuneration and Nomination Committee for the

year 2015 is as follows:

a. Chairman : Yayat Sutaryat

b. Member : Muhadi

c. Member : Klemi Subiyantoro

d. Member : Head of Human Resources Division

B.2.3.1 Remuneration and Nomination Committee’s Tasks and

Responsibilities

Remuneration and Nomination Committee’s Tasks and

Responsibilities includes preparation and implementation annual

action plan of the Remuneration and Nomination Committee under

direction of the Board of Commissioners and the rules applied by

the Bank.

a. Remuneration policies

1. Evaluate the remuneration policies applied by the Bank.

2. Learning the applicable laws and regulations on

remuneration policies, facilities and other benefits.


concerning:

- Remuneration policies such as salary, facilities and other

benefits for the Board of Commissioners and the Board

of Directors to be presented before GM.

- Remuneration policies for executives and employees to

be presented to the Board of Directors in the care of the

Board of Commissioners.

4. Such recommendations as referred to in the point 3 are

presented with respect to:

- Financial performance and reserves adequacy pursuant

to the applicable laws and regulations;

- Individual achievement;

- Fairness among peer group;

- Bank long-term objectives and strategic consideration.


on the Bank human resources policies to be presented to

the Board of Commissioners.

b. Nomination policies

1. Prepare and provide recommendation on the system and

procedure of selection and/or replacement of Management


member to the Board of Commissioners to be presented to

Shareholders General Meeting (GM);

2. Provide recommendation on Management member

candidates to the Board of Commissioners to be presented

to Shareholders General Meeting (GM) after assessment

process;

3. Provide recommendation on independent parties

candidates for committee member to the Board of

Commissioners.

c. Self-Assessment of Remuneration and Nomination

Committee’s Performance

Carry out Remuneration and Nomination Committee annual

self-assessment in addition to evaluation performed by the

Board of Commissioners concerning the Remuneration and

Nomination Committee performance.

d. Special Tasks

1. Perform any other tasks delegated by the Board of

Commissioners within the scope of Remuneration and

Nomination tasks and responsibilities pursuant to the

applicable laws and regulations and Bank Indonesia

regulations/Financial Services Authority regulations;

2. In performing such tasks, the Remuneration and

Nomination Committee may hire any independent third

party with appropriate competencies;

3. Submit special tasks report to the Board of

Commissioners.

B.2.3.2 Remuneration and Nomination Committee’s Performance

Report

In 2015, Remuneration and Nomination Committee Report has

discussed the following matters:

a. Remuneration Policies 1. Evaluates remuneration policies;

- Documentation on the applicable laws and regulations,

company’s policies on remuneration, facilities and

other benefits;

- Monitor current remuneration system in the market of

Central/Regional State-Owned Banks, national or

foreign private bank.

2. Discuss current remuneration policies applied by the

Company.

- Management Remuneration

Discuss current remuneration policies for the

management applied by the Bank and makes

recommendation to the Board of Commissioners;

- Employees Remuneration;


Remuneration policies evaluation for executives and

employees.

b. Nomination Policies 1. Discussion on the guidance/system and procedure of

management member selection and replacement;

2. Discussion on screening and recommendation on

management member;

3. Discussion on recommendation of committee member

proposed by independent party:

- Discussion on recommendation of committee member

proposed by independent party;

- Discussion on nomination of committee member.

c. Guidance and Reporting 1. Working guidance;

2. Working programme;

3. Activities report.

Any other activities within the scope of Remuneration and

Nomination Committee’s Tasks and Responsibilities.

B.2.3.3 Remuneration and Nomination Committee’s Meeting and

Attendance Level

In 2015, Remuneration and Nomination Committee had

convened/meeting 15 times. The following is information on

Attendance level of Remuneration and Nomination Committee

Meeting in 2015:


Yayat Sutaryat Chairman 15

Muhadi Member 14

Klemi Subiyantoro Member 11

Head of HR Division Member 15

B.2.3.4 Remuneration and Nomination Committee’s Independency

Remuneration and Nomination Committee has 4 (four) members


Commissioner and 1 (one) ex officio bank officer which is the

Head of Human Resources Division.

B.2.4 Integrated Governance Committee

The establishment of Bank Integrated Governance Committee pursuant to

the Financial Services Authority number 17/POJK.03/2014 and Financial

Services Authority Circular number 14/SEOJK.03/2015 on Risk Integrated

Management Implementation for Financial Conglomeration. The above

Financial Services Authority regulations stated that financial


conglomeration is Financial Services Institution under a group or collective

by ownership and/or control.

The establishment of Bank Integrated Governance Committee for the year

2015 pursuant to the following laws and regulations:








d. Financial Services Authority Regulation number 17/POJK.03/2014 and

Financial Services Authority Circular number 14/SEOJK.03/2015 on

Risk Integrated Management for Financial Conglomeration;

e. The Board of Commissioners Decision number 04/SK/DK/2007, dated

28 June 2007, on Committee Establishment and Guidance for the

Committees under the Board of Commissioners

f. The Board of Commissioners Decision number 07/SK/DK/2015 dated



The composition of Bank Integrated Governance Committee for the year

2015 is as follows:

a. Chairman : Yayat Sutaryat

b. Member : Muhadi

c. Member : Rudhyanto Mooduto

d. Member : Aldrin Herwany

B.2.4.1 Integrated Governance Committee’s Tasks and

Responsibilities

a. The tasks and responsibilities of the Integrated Governance

Committee

1. Supervise the implementation of corporate governance by

every Financial Services Institutions in compliance with

the Integrated Governance Policies;

2. Provide Recommendation to the Parent Entity Board of

Commissioners on the performance of Parent Entity

Board of Directors in compliance with the Integrated

Governance Committee Policies and follow-up of audit

results by internal and external parties;

3. Evaluate the Integrated Governance Committee Policies

implementation;

4. Evaluate and analyse integrated governance report

submitted by the Board of Directors and any other

reports;

5. Prepare and implement annual action plan of the

Integrated Governance Committee pursuant to the Board


of Commissioners direction and the rules applied by the

Bank.

6. Prepare annual working programme;

7. Prepare evaluation results report and makes

recommendation to the Board of Commissioners at least

1 times in every quarter.

b. Special tasks

1. Perform any other tasks delegated by the Board of

Commissioners within the scope of Integrated

Governance Committee’s Tasks and Responsibilities

pursuant to the applicable laws and regulations and Bank

Indonesia regulations/Financial Services Authority

regulations;

2. In performing such tasks, the Integrated Governance

Committee may hire any independent third party with

appropriate competencies;

3. Submit special tasks report to the Board of

Commissioners.

B.2.4.2 Integrated Governance Committee’s Performance Report

In 2015, Integrated Governance Committee Report has

performed the following activities:

1. Coordination with Compliance and Risk Management

Directorate;

2. Provide feedback to the Board of Commissioners;

3. Monitor progress report on the implementation of integrated

governance and integrated risk management by the Bank.

B.2.4.3 Integrated Governance Committee’s Meeting and Attendance

Level

In 2015, Integrated Governance Committee had

convened/meeting 5 times. The following is information on

Attendance level of Integrated Governance Committee Meeting

in 2015:


Yayat Sutaryat Chairman 5

Muhadi Member 4

Rudhyanto Mooduto Member 5

Aldrin Herwany Member 5

B.2.4.4 Integrated Governance Committee’s Independency

Integrated Governance Committee has 4 (four) members


Commissioner and 1 (one) independent party.


B.2.5 Business and Credit Monitoring Committee

Bank Business and Credit Monitoring Committee is a committee

established by the Board of Commissioners to support the effectiveness of

its tasks and responsibilities performance, concerning Business and Credit

in particular. The establishment of Bank Business and Credit Monitoring

Committee for the year 2015 pursuant to the following laws and

regulations:











e. The Board of Commissioners Decision number 05/SK/DK/2015, dated

03 March 2015, on Guidance and Rules of the Business and Credit

Monitoring Committee.

The composition of Bank Business and Credit Monitoring Committee for

the year 2015 is as follows:

a. Chairman : Rudhyanto Mooduto

b. Member : Muhadi

c. Member : Agus Hery Subagyo

d. Member : Usman

B.2.5.1 Business and Credit Monitoring Committee’s Tasks and

Responsibilities

Tasks

Business and Credit Monitoring Committee tasks are:

a. Monitor Bank policies, business and credit

b. Any other tasks delegated by the Board of Commissioners

Responsibilities

In performing their tasks, Business and Credit Monitoring

Committee report to the Board of Commissioners. The member

of Business and Credit Monitoring Committee shall not disclose

any confidential information pursuant to the applicable laws and

regulations.

The member of Business and Credit Monitoring Committee in

performing their tasks shall follow Bank ethics standard and shall

not abuse their power for personal gain either directly or

indirectly from any Bank activities other than honorarium and/or

other benefits in accordance with the applicable laws and

regulations.


B.2.5.2 Business and Credit Monitoring Committee’s Performance

Report

Pursuant to the Guidance for Business and Credit Monitoring

Committee, in 2015 the following action plan had been realized:

No Business and Credit Monitoring Committee’s

Activities Programme in 2015

1 Evaluate Business and credit policies, and provide

recommendation to refine and develop policies on

business and credit.

2 Supervise and monitor business and credit process.

3 Review and monitor credit performance of Branch Office.

4 Site visit any Branch Office which suffered losses.

5 Prepare analysis report on the causes of losses in such

Branch Office and the recommendation to mitigate the

losses.

6 Review and monitor the performance of relevant credit

Division.

7 Review and monitor NPL & CKPN of relevant Branch

Office and Division and provide recommendation on its

solutions.

8 Review and monitor funding performance by relevant

Branch Office and Division.

9 Review and monitor CASA of relevant Branch Office and

Division and provide recommendation to lower the cost of

funding.

10 Evaluate fee based income performance of relevant

Branch Office and Division and provide recommendation

on its improvement.

11 Review and monitor OPEX of relevant Branch Office and

Division and provide recommendation on operating cost

efficiency improvement.

12 Prepare periodical report of all the above activities to the

Board of Commissioners.

B.2.5.3 Business and Credit Monitoring Committee’s Meeting and

Attendance Level

In 2015, Business and Credit Monitoring Committee had convened

a meeting 23 times. The following is information on Attendance

level of Business and Credit Monitoring Committee Meeting in

2015:


Rudhyanto Mooduto Chairman 23

Muhadi Member 14

Agus Hery Subagyo Member 23

Usman Member 23


B.2.5.4 Business and Credit Monitoring Committee’s Independency

The Business and Credit Monitoring Committee has 4 (four)

members comprised of 2 (two) Independent Commissioners, 1

(one) Commissioner and 2 (two) independent parties with

expertise in finance from their working experience in banking

sector.

B.3 Implementation of Compliance, Internal Audit and External Audit Function

B.3.1 Compliance Function Implementation

B.3.1.1 Compliance Function

Compliance Function Implementation by the Bank is pursuant to

Bank Indonesia Regulation number 13/2/PBI/2011 on Compliance

Function Implementation by Conventional Bank. In accordance

with the provisions under such Bank Indonesia Regulation, the

Board of Directors shall ensure the implementation of Bank

Compliance Function. In addition, the Bank shall have the Board

of Directors who implement Compliance Function as follows:

a. The Function of Director who implement Compliance

Function

Create Compliance Culture at all Bank organizational

levels and business;

Manage the Bank exposure to Compliance Risk;

Ensure that the policies, provisions, systems and

procedures and business of the Bank had complied with the

applicable laws and regulations, including Sharia

Principles for Sharia Conventional Bank and Sharia

Business Units; and

Ensure the Bank compliance with the commitment made

by the Bank to Bank Indonesia and/or any other authorities.

b. The tasks and responsibilities of the Director who implement

Compliance Function, shall at least including:

Strategy formulation to support the creation of Bank

Compliance Culture;

Propose compliance policies or compliance principles to

be determined by the Board of Directors;

Determination of compliance system and procedure to be

used in the preparation of Bank internal provisions and

guidance;

Ensure that all policies, provisions, systems and

procedures, and business activities of the Bank had

complied with Bank Indonesia regulations and the

applicable laws and regulations, including Sharia

Principles for Sharia Conventional Bank and Sharia

Business Units;

Minimize the Bank Compliance Risk;

Perform preventive action in order to maintain the policies

and/or decisions making by the Bank Director or foreign


Branch Office Head in compliance with Bank Indonesia

regulation and the applicable laws and regulations;

Perform any other related tasks of Compliance Function.

The tasks and responsibilities as stated above does not release

the rights and obligations of the Director who implement

Compliance Function in the capacities as member of the Board

of Directors pursuant to the provision under Act on Limited

Liabilities Company, in any case which is a subject to approval

by all member of the Board of Directors.

B.3.1.2 The Tasks and Responsibilities of Compliance Unit

The tasks and responsibilities of Compliance Unit to ensure the

implementation of Compliance Function shall at least including:

a. Taking actions to create Compliance Culture in all Bank’s

Business at all levels of organization;

b. Identification, measurement, monitoring and control

Compliance Risk and pursuant to Regulator provisions on the

Implementation of Risk Management by Conventional Bank;

c. Assess and evaluate the effectiveness, adequacy and

appropriateness of policies, provisions, systems or procedures

applied by the Bank in accordance with the applicable laws and

regulations;

d. Review and/or recommend update and refinement of policies,

provisions, systems or procedures applied by the Bank in

accordance with the Regulator provisions and/or the applicable

laws and regulations;

e. Ensure the Bank’s compliance with the commitment made by

the Bank to and/or any other authorities;

f. Monitor policies, systems, procedures, and Bank business in

accordance with the Regulator provisions and the applicable


g. Perform monitoring on internal compliance and compliance

with any changes to the applicable laws and regulations and

regulator provisions and inform the Bank management and all

relevant Division/Unit on such statutory changes;

h. Review the policies and procedures draft proposal by

Division/Unit on Bank business;

i. Review procedures and policies system monitoring in each

relevant Division/Unit pursuant to the implementation of

Corporate Governance;

j. Manage Anti-Money Laundering and Counter Terrorism

Financing programme, Gratification Control Programme,

Whistle Blower System and Government Officials Assets

Disclosure;

k. Monitor compliance with Anti-Money Laundering and

Counter Terrorism Financing programme, Gratification


Control Programme, Whistle Blower System and Government

Officials Assets Disclosure;

l. Propose Anti-Money Laundering and Counter Terrorism

Financing programme in writing to the Board of Directors;

m. Evaluate compliance aspect analysis results pursuant to the

Bank internal regulations such as Decision, Circular and any

other instruments in accordance with the Bank official

documents management which constitute decision and

regulations in effect or in drafting stage;

n. Ensure and monitor the Bank compliance with the

commitment made by the Bank to and/or any other authorities;

o. Develop and monitor Quality Assurance (QA) function in all

Bank business at all levels of organization;

p. Monitor integrated procurement;

q. Develop tools/means to improve compliance culture;

r. Coordinating the preparation, development and application of

policies and/or guidance to support the success of Compliance

Unit management process;

s. Prepare, coordinating and propose Compliance Unit working

programme to the Director in charge with the oversight and

control of budget utilization for the Compliance Unit

accordingly to the programme;

t. Supervise and improve the quality of Compliance Unit staff

concerning their performance effectiveness;

u. Develop and facilitate communication with other

Division/Unit, Regional Office, Branch Office in performance

and activities management of the Compliance Unit;

v. Implement risk management in Compliance Unit;

w. Implement due diligence principles and compliance with

regulator provisions and the applicable laws and regulations,

and any other internal rules;

x. Monitor Compliance Unit overall performance pursuant to the


y. Socialize Bank internal regulations and any other provisions

within the scope of its tasks and responsibilities;

z. Coordinating in gathering relevant data/documentation

concerning internal and external assessment pursuant to the

applicable laws and regulations and the limit of authority

granted by the Board of Directors.

aa. Coordinating in the follow-up actions concerning external

assessment findings pursuant to the limit of authority granted

by the Board of Directors.

In the implementation of Compliance Function, the Compliance

Director helped by the Compliance Function in charge with

responsibilities to take any necessary actions which support the

creation of compliance culture in all Bank business and at all levels

of organization, which may be carried out through:


a. Monitoring of Bank commitment fulfilment on findings by the

Financial Services Authorities and/or any other authorities;

b. Review current relevant policies and procedures of Bank

business based on new provisions effected by the relevant

institutions, based on the proposal submitted by the relevant

unit or based on the initiative proposed by the Compliance

Unit;

c. Review the draft on policies and procedures concerning Bank

business proposed by the relevant unit;

d. Recapitulate and monitor the Reporting to be submitted to the

Bank Management and/or Financial Services Authority;

e. Compile both internal and external rules from database

inputted by Development and Evaluation Group and socialize

the rules to every Divisions/Unit of Regional Offices and

Branch Offices;

f. Implement socialization Compliance Culture both through

employees education and training programme or by site visit

to every Regional Offices;

g. Coordinating with KPK (Corruption Eradication Commission)

in the implementation of Gratification Control and

Government Officials Assets Disclosure within the Bank

organization;

h. The implementation of reporting/complain on any breach

against the rules (whistle blower system);

i. Review operating/non-operating sections which require new

compliance/evaluation sheet to replace the existing sheet.

In its business, the Bank had complied with the regulator

provisions on capital adequacy ratio, credit requirements,

liquidity, and Anti-Money Laundering and Counter Terrorism

Financial Programme.

Compliance Aspects Bank

Achievement

Standard

(statutory)

Capital Adequacy Ratio

(CAR) requirements 14.37% ≥8%

Over/Breach Credit Limit None Prohibited

Non-Performing Loan

(NPL) 2.91% ≤5%

Minimum Mandatory

Primary Reserves Ratio 10.49% ≥7.5%

Minimum Mandatory

Secondary Reserves Ratio 10.49% ≥4%

Mandatory Reserves Ratio

in Foreign Currency 8.38% ≥8%

Net Foreign Exchange

Position 0.45% ≤20%


B.3.1.3 Anti-Money Laundering and Counter Terrorism Financing

Programme

The implementation of Anti-Money Laundering and Counter

Terrorism Financing Programme (AML-CFT) is a continuous

program to fulfil the obligation under Act 8 of 2010 on Prevention

and Eradication of Money Laundering, Bank Indonesia

Regulation number 14/27/PBI/2012 dated 28 December 2012 on

the implementation of Anti-Money Laundering and Counter

Terrorism Financing by Conventional Bank and Bank Indonesia

Circular number 15/21/DPNP/2013 dated 14 June 2013 on the

Implementation of Anti-Money Laundering and Counter

Terrorism Financing Programme by Conventional Bank.

In 2015, as commitment to the AML-CFT, the Bank had

completed the following activities:

a. Monitor potential high-risk transactions and deep analysis to

every suspicious transaction;

b. Monitor cash transaction at certain limit to be reported to the

Financial Transaction Report and Analysis centre (PPATK);

c. Monitor fund transfer to and from offshores which shall be

reported to the PPATK;

d. Coordinating reporting with other unit on Suspicious

Transaction Report and Cash Transaction Report and Fund

Transfer to and from Offshore which are mandatory reporting

to the PPATK;

e. Maintain and monitor customer report on list of high-risk

people or entities issued by both national and international

authorities;

f. Monitor any customer who is suspected or convicted in a

criminal case by authorities by means of monitoring mass

media or any other official information sources;

g. Monitor customer data update by all Units and Branch

Offices;

h. Comply with the AML-CFT regimes prior to Bank

correspondence with any other bank;

i. Review any feedback or opinion on Bank activities or new

products with respect to the AML-CFT programme prior to

the launching of such activities or product;

j. Implement socialization through Bank employees education

and training on AML-CFT for better understanding of AML-

CFT implementation in the relevant unit, and for better

understanding on money laundering risks and terrorism

financing;

k. Coordination in the procurement and development of AML-

CFT application installed by the Bank in accordance with the

growing number in customers, activities, and transactions.

l. Coordinating and monitor the AML-CFT programme

implementation with the relevant customer contact points

unit.


AML-CFT programme implementation in 2015 in number is as

follows:

Activities Number

Cash transaction report 15,222 Reports

Suspicious Transaction report 90 Reports

Cash Transaction to and from Offshores 32,267 Reports

Correspondence with relevant authorities

concerning AML-CFT 81 Correspondences

Review on AML-CFT 5 Reviews

Questionnaires with correspondence bank 24 Banks

Monitoring on employees participating in

AML-CFT training 1,687 Employees

B.3.2 Internal Audit Function

Based on current organizational structure which has been effected by

the Board of Directors under the Board of Directors Decree number

621/SK/DIR-PS/2015 dated 1 July 2015 on Organizational Structure of

PT. Bank Pembangunan Daerah Jawa Barat dan Banten, Tbk., Internal

Audit Division under the command line of Managing Director and

within coordination line of Audit Committee.

In accordance with the Board of Directors Decision number

728/SK/DIR-DAI/2014 dated 10 November 2014 on Audit Charter

which explain the vision, missions, functions, tasks and responsibilities

of Internal Audit Division in performing Internal Audit activities.

The number of Internal Audit Division of 2015 with the following

details:


No Position Number

1 Division Head 1

2 Section Head 8

3 Manager 5

4 Senior Officer 1

5 Officer 12

6 Junior Staff 17

TOTAL 44

Internal Division Head owned Qualified Internal Auditor (QIA),

Certified Internal Compliance & Financial Crime of Manchester

Business School & Risk Management Level 5 and some Internal Audit

Division employees had participated in certification such as follows:

No Certification Number

1 Certified Information System Auditor (CISA) 3

2 Certified Fraud Examiner (CFE) 2

Based on the monitoring by SDQA Group, the following table

summarize the examination by Internal Audit Division:

No Certification Realization

1 24 Branch Offices 23 Branch Offices

2 3 Division 3 Division

3 4 Information Technology Application 5 Information Technology Application

4 0 Unscheduled Audit 14 Special Examination

SKAI had updated SPFAIB which had been effected by the Board of

Directors and approved by the Board of Commissioners under the Board

of Directors number 729/SK/DIR-AI/2014 dated 10 November 2014 on

Internal Audit Function Standard Operating Procedure of PT. Bank

Pembangunan Daerah Jawa Barat dan Banten, Tbk.

Auditor team examined branch offices & provide recommendation for

future process improvement and disseminate the information to the

relevant Division.

B.3.3 Implementation of External Audit Function

External audit function is an independent party in the preparation of Bank

financial statement (transparent condition) to better its quality and accuracy.

Each year the Bank financial statement is audited by an Independent

Certified Public Accountant (CPA). The CPA is appointed according to the

recommendation by Audit Committee pursuant to the applicable laws and

regulations, that one CPA may be appointed to audit a Bank annual

financial statement only for 5 (five) audits in a row. Other requirements are

the CPA must be registered with Bank Indonesia and meet the criteria under

Bank Indonesia Regulation, as of 29 February 2012 the number of CPA

hired by the Bank to perform audit are registered with Bank Indonesia their

number D-3732, D-6646, D-9733, D-41263.


Auditor Independent perform audit in accordance with public accounting

professional standard to ensure that the Bank financial statement were

prepared pursuant to the applicable Financial Statement Standard. The

scope of audit is comprehensive and includes all aspects concerning

policies, operations, information technology, verification and other.

CPA appointment has obtained prior agreement in GM (General Meeting)

and granted power of attorney to the Board of Commissioners in CPA

appointment pursuant to the recommendation by Audit Committee (Bank

Indonesia Regulation number 8/4/PBI/2006 on Good Corporate

Governance for Conventional Bank as amended by Bank Indonesia

Regulation number 8/14/PBI/2006 on Good Corporate Governance for

conventional bank).

In accordance with the applicable laws and regulations the Bank opted Ernst

& Young Independent Auditor (Purwantono, Sungkoro & Surja) (Indonesia

Stock Exchange Building Tower, 2.7th floor Jalan Jenderal Sudirman Kav

52-53 Jakarta 12190, Indonesia) to audit the 2015 Bank financial statement.

Such appointment was entered into an agreement number

0298/PSS/10/2015.

The agreement stated that the management responsibilities in Consolidated

Financial Statement shall be reflected in audit result which included in

Management Letter in which stated all issues and disadvantages of Bank

internal control, Accounting Standard and any other significant subject, also

recommendation and advise on improvement.

The scope of findings pursuant to the Financial Services Authority

Regulation number 6/POJK.03/2015 on Bank Financial Statement

Transparency and Publication.

The following table listed the CPA hired by the Bank:

No

Certified Public Accountant PIC

(Partner in Charge) International Indonesian Affiliate

2015 Ernst & Young Purwantono, Sungkoro & Surja Sinatra

2014 Ernst & Young Purwantono, Sungkoro & Surja Sinatra

2013 Ernst & Young Purwantono, Sungkoro & Surja Benyanto Suherman

2012 Ernst & Young Purwantono, Sungkoro & Surja Benyanto Suherman

2011 Ernst & Young Purwantono, Sungkoro & Surja Drs. Hari Purwantono



2008 Pricewaterhousecoopers Haryanto Sahari & Partners Lucy Luciana Suhenda


B.4 Implementation of Risk Management and Internal Control System

B.4.1 Credit Risk

To ensure the compliance of Bank policies and procedures on credit, the

Bank has established Bank Credit Policies as guidance and Standard

Operating Procedure in credit activities.

The Bank implements a strict process in every drafting or amendment of

internal Bank provision. Such drafting or amendment to the Bank Credit

Policies, guidance and SOP of credit activities is hierarchical range from

technical level to the Board of Directors approval. The Bank also has

standard procedure of SOP drafting to maintain its quality. Each drafting or

amendment to the Bank Credit Policies shall passed from joint discussion

of the relevant units to ensure its compliance on risk identification and

mitigation and the applicable laws and regulations.

The Bank currently intensively refining its model concerning risk appetite

and risk tolerance in view of its capital availability and credit target. The

risk appetite is the levels and the types of the risk bearable by the Bank to

get its target. Risk tolerance is the levels and the types of the risk bearable

by the Bank to the maximum. Such risk tolerance provides the Bank

reliability in risk taking.

Concerning the limit of authority on credit, currently the Bank implement

credit mechanism in a hierarchy in accordance with the risk level as

reflected from the ceiling of each credit facility application.

B.4.1.1 Identification Process Adequacy, Assessment, Monitoring, and

Risk Management, and Risk Management Information

System

In performing credit analysis, the Bank has implement

identification process concerning any inherent potential risks.

Such identification process is optimized by the establishment of

special unit to further review and analyse the inherent risk

potentials of each credit facilities application.

To identify the Credit Risk, an independent review has been

developed by the Bank to analyse credit portfolio, Non-Performing

Loan (NPL), Credit Cost and the prediction of credit quality in

consideration of the available supporting infrastructure.

In risk assessment, the Bank has developed the Credit Risk model

in the form of Internal Credit Risk Rating (ICRR) and Internal

Credit Risk Scoring (ICRS) which applied to all credit activities.

The rating and scoring implemented by the Bank is as follows:

a. Non-Retail Credit Rating:

- Construction Company Rating

- Corporate Rating

- Construction SME Rating

- SME Rating

b. Retail Credit Rating

- Primary Micro Credit Scoring

c. Consumptive Credit Rating


- Guna Bakti Credit Product Rating

- Home Loan Credit Scoring

ICRR is the tool used to assess credit risks by providing prediction

of default possibilities for every debtor in accordance with their

credit facilities. ICRR systematically classified the

entity/corporate risk into several classes (grading or rating). ICRR

used to determine the rating of each debtor which reflected their

Probability of Default (PD). Debtor with the best rating has zero

Probability of Default. The lower the credit rating, the higher its

Probability of Default level, known as exponential default rate

curve.

The debtor rating are stated with a unique code for 20 different

rating as follows:

Rating Description

AAA Outstanding

AA+ Strong

AA Strong

AA- Strong

A+ Good

A Good

A- Good

BBB+ Average

BBB Average

BBB- Acceptable

BBB Average

BBB- Average

BB+ Acceptable

BB Acceptable

BB- High Risk

B+ High Risk

B Watch List

B- Watch List

CCC+ Special Mention

CCC Special Mention

CCC- Substandard

D Doubtful

Using ICRS the Bank process the credit much better, objective

and according to standard in timely manner.

Bank had prepared the plan to improve the rating system which

constitute a component in the methodology of Credit Risk

identification and assessment and had developed scoring system

in the credit process, for a massive one in particular.

As another form of Credit Risk assessment, the Bank had

estimated the expected loss and unexpected loss. Expected Loss


(EL) is estimated statistical loss average from prevalence cases.

EL obtained by calculation of Exposure at Default (EAD), Loss

Gross Default (LGD) and probability of default (PD), it is

estimated from the historical probability default data. Whereas

Unexpected Loss (UL) is a deviation of loss average. UL obtained

from historical volatility of default data.

The Bank also had developed periodical risk monitoring process

in the form of Root Cause of Credit Risk (RCRR) and it is

distributed to all the Board of Directors and all relevant Units. The

contents of such Root Cause of Credit Risk (RCCR) concerning

portfolio development analysis and its credit quality, and the level

of credit concentration by economic sectors, geographical regions,

or major debtors. Through this report the Bank develop periodical

identification mechanism to identify any poor quality potential of

a credit portfolio as input in the preparation of strategy on risk

management. Thereby any credit portfolio which posed some

potentials to perform poorly can be managed from the outset to

provide Early Warning Signal (EWS) for the Bank.

The Bank periodically perform stress test analysis which include

several significant scenarios such as:

a. Portfolio Centration Stress Test (Specific Market Crisis)

Stress test calculation by portfolio concentration approach

used to calculate Probability of Default (PD) as a result of

credit poor collectability in foreign currency (USD).

b. Macro-Economy Stress Test (General Market Crisis)

Stress test calculation using macro-economic analysis used to

identified Probability of Default (PD) as a result of foreign

currency exchange rate fluctuation USD/IDR, reference

interest rate changes, and inflation rate fluctuation.

Whereas the stress test output are NPL, profit and loss and CAR

at the time of such stress condition in effect.

B.4.1.2 Internal Control System Across Organization

The Bank implements internal control system in relation to credit

risk management in compliance with Bank Indonesia Circular

Number 13/23/DPNP dated 24 October of 2011 on the

Amendment to the Bank Indonesia Circular Number 5/21/DPNP

on Risk Management Implementation by Conventional Bank. In

practice, internal control system implemented by the Bank in

relation to Credit Risk includes the following implements:

a. Compliance with the requirements provided under credit

policies, guidance and procedures;

b. Review by an independent unit on credit policies, guidance and

procedures;

c. Review on the risk assessment method used by the Risk

Management Unit which includes assessment on method and

assumption appropriateness used in risk assessment;


d. Review on Bank compliance with internal and external

provisions on credit.

Concerning internal control optimization, the Bank had defined

clearly the function of business units and the unit which perform

internal control therefore the Bank implements segregation of duty

and dual control in making credit decision. Internal control in

Credit Risk management also includes periodical monitoring by

the Board of Commissioners and the Board of Directors by Risk

Management Unit reporting or the establishment of Risk

Management Committee (RMC) which member composition

comprise of the Board of Directors and the relevant executives.

Risk Monitoring Committee (RMC) meeting held periodically to

monitor the development of Credit Risk exposure development in

accordance with the latest development.

B.4.2 Market Risk

Market Risk is the risk which arise from the portfolio in the balance position

and administrative account including derivative transaction, as a result of

condition changes across the market, including the risk pose by option price

change. Market risk components includes:

a. Interest rate risk is the risk of financial instruments price change from

its trading book position as a result of risk sensitivity action (risk factor)

of each instrument or as a result of economic value of equity of the Bank

from banking book activities as a result of interest rate change;

b. Interest rate risk classification includes repricing risk, yield curve risk,

basis risk and optionality risk;

c. Foreign Exchange Risk is the risk as a result of foreign currency open

position value change under trading book classification or as a result of

the Bank net reserves in foreign currencies (banking book) which

exposed to the risk of foreign exchange.

Market Risk is related with action/change on the interest rate and/or foreign

exchange rate which have some negative impacts on the Bank financial

position such as its capital ratio. In general, market risk management has 2

parts, they are trading book and banking book. The source of trading book

risk is dealing room activities of Treasury Division as a result of Bank

exposure to interest rate or foreign exchange rate.

The source of banking book risk is any change to the Bank portfolio

structure and administrative account balance as they are sensitive to any

action on interest rate which affect the net income from interest and as a

result of any change to the Bank portfolio structure and administrative

account balance as there are sensitive to any action on foreign exchange rate

as reflected from the Bank Net Foreign Currency Reserves Position.


The Board of Commissioners and the Board of Directors are

responsible for the effectiveness of the Market Risk Management


Implementation by the Bank. In relation to the tasks and

responsibilities of the Board of Commissioners and the Board of

Directors on active monitoring, they shall at all times obtain

information on risk management implementation and evaluation

concerning the Bank exposure to the Market Risk, daily limit

monitoring and any actions taken by risk taking unit with

emphasize on over limit.

In such monitoring tasks, the Board of Commissioners helped by

the Bank Risk Monitoring Committee (RMC) which periodically

perform monitoring in coordination with the Risk Management

Unit. Such coordination use media as risk monitoring report

prepared by the Risk Management Unit submitted to the Risk

Monitoring Committee or in meeting. Such meeting discusses the

implementation of risk management by the Bank including the

implementation of risk tolerance assessment, material risk profile,

and methodology requirements and evaluation and/or Market Risk

assessment tools used by the Risk Management Unit.

Monitoring by the Board of Directors treasury is periodical

treasury limit monitoring to identify whether there is a breach limit

and to approve new limit or limit change. Discussion on market

risk management is on the Bank pricing and assets and liabilities

structure is a subject in ALCO (Asset & Liability Committee)

Meeting whereas discussion on Market Risk exposure discuss in

the Risk Management Committee meeting. In compliance with the

market risk management policies on breach limit escalation stage,

each breach limit will be informed and approved in the event an

abnormal condition found by the Risk Management Committee

(RMC). Such Market Risk Management were prepared in the form

of policies, procedure, risk limit and any other decisions in relation

to the Market Risk. The Bank Market Risk and risk appetite is

evaluated periodically or at any time necessary in accordance with

the Bank business strategic environment.

B.4.2.2 Requirements on Limit Policies, Procedures and

Determination

Concerning dynamic Market Risk Management, Risk

Management unit periodically update and evaluate the policy and

guidance of the Bank risk management. The Market Risk

Management Unit periodically evaluate the guidance on market

risk limit assessment and discussion with risk taking unit (Treasury

Division) and the result submitted to the Board of Directors for

approval.

Concerning limit determination evaluation by the Dealing Room

Treasury and ALM submitted by the Treasury Division, Risk

Management Unit evaluate the limit with the Methodology under

the Bank risk management guidance. The limit of the treasury

portfolio level is evaluated at least once a year or more often in the

event of market price volatility movement or business plan risk


taking unit change. Such analysis evaluation is at least containing

information on the background of any limit change, present

condition, the basis used in limit change calculation, compliance

with the applicable regulation and its implication on capital.

B.4.2.3 Requirements on the Process of Identification, Assessment,

Monitoring, and Risk Control, and Risk Management

Information System

Concerning the implementation of Risk Management by

identification, assessment, monitoring and Risk control process,

and Risk Management information system for any Market Risk as

referred to in the Bank Indonesia Circular Number 13/23/DPNP

dated 25 October of 2011, the Bank implement the following risk

management:

a. Market Risk Identification

Market risk identification process including identification of

new product characteristics, identification of market risk

sources and its implication on the transaction by the Dealing

Room Treasury. The adjusted risk identification process to the

Market Risk is inherent on the Bank business activities which

includes the risk related to the interest rate such as repricing

risk, yield curve risk, basis risk and optionality risk, and

concerning foreign exchange risk it is reflected from the

severity of transactional exposure. Risk Management Unit also

review or evaluated the product or activities which exposed to

the market variables movement.

b. Market Risk Assessment

When Treasury Division portfolio management skip the risk

consideration and assessment it will expose the Bank to losses

beyond amount the Bank can tolerate. One way to manage such

intolerable risk is the implementation of risk tolerance or

transaction limit policy. Any limit that will be determined by

the Treasury Division as the risk taking unit shall be submitted

to the Risk Management Unit for review and assessment. Such

policy is implemented to provide the Bank with better

understanding on any risk exposure and how to manage it.

Limit determination shall comply with the following criteria:

Treasury Division as risk taking unit periodically implement

“trading” and “hedging” as a part of treasury business

management process such as treasury trading in particular. In

the context of this limit-based risk, the limit in concern is any

limit related to Treasury activities. The components of Limit

determination process is as follows:

1. Business plan

- Business plan stated the purpose of the limit in concern,

target market, expected income and capital


requirement. The plan qualified the limit, such as

“trading” or “hedging” limit;

- Limit application identify the currency and specific

market risk exposure against the target of the business

unit.

2. Capital requirements and projected income

- Treasury Division request advise from the Risk

Management Unit in the assessment of capital

allocation requirements to mitigate any possible risk;

- Treasury Division prepare projected income in relation

to the limit in concern. Such projection will provide the

Board of Directors better understanding in the decision

making on limit approval.

3. Historical utilization

Treasury Division provide trend market outlook in

relation to the historical utilization on risk exposure or

applicable limit.

The procedure of treasury business unit limit assessment

includes consideration on several aspects on risk potentials.

The components of limit assessment is as follows:

1. Market risk sensitivity factor

Each treasury activities has inherent risk in which the

process in risk assessment shall be based on the risk

sensitivity which is inherent on the treasury transaction

activities. The market risk sensitivity factors include PV01,

duration and transaction volatility.

2. Data reliability

Data reliability in statistical analysis and risk assessment

ensure valid and reliable output which provide the Bank

with foreseeable risk exposure inherent in its activities.

Such historical data is any data which is relevant to support

the risk limit assessment.

3. Value at risk assessment

Value at risk model (VaR) used to measure and analyse any

risk inherent in the treasury transaction comprehensively

and empirically. For example, value at risk to assess budget

loos of the trading treasury transaction. In addition, this

model assess the worst case scenario the Bank can be

exposed to within a specific period under normal market

condition and level of confidence.

Market risk management strategy implemented by the Bank

include the system and procedure which methods are Mark to

Market, Value at Risk (VaR), Stress Testing, Repricing Gap &

Duration Gap Model or any other methods to obtained

periodical fair exposure value, and to provide the right

platform to assess the risk position.


At present, the Bank implement the method which enable it to

assess the risk of foreign exchange rate using Exponential

Weighted Moving Average (EWMA) which supported by

fundamental analysis and historical simulation to assess the

risk level of foreign exchange rate as reflected from the Net

Reserves in Foreign Currencies. The Bank also had developed

risk assessment model of interest rate using the methodology

which can assess the risk of interest rate against any portfolio

assets and liabilities which is case sensitive to any interest rate

change and to determine the risk against the Bank using

Repricing Profile, Duration GAP and Economic Value of

Equity (EVE). Any loss potentials assessment either related to

interest rate and foreign exchange rate against treasury

transaction can be assessed by VaR historical simulation under

a system (OPICS Risk) or manually. Internal VaR historical

simulation assessment can be performed by periodical back

testing Var vs profit/loss treasury.

c. Market Risk Monitoring

Risk management activities in the process of business

activities monitoring performed is as follows:

1. Person In Charge (PIC) whose function is to implement the

trading book market risk management process by

monitoring daily treasury limit, such as GWM, open

position, budget loss, risk sensitivity limit, etc. Concerning

achievement of effective and accurate monitoring process,

the Bank has OPICS risk system which function is to assess

the trading book risk exposure against the dealing room

treasury;

2. Risk monitoring of banking book related to foreign

exchange rate by monitoring the Net Reserves Position in

Foreign Currencies every 30 minutes and daily to maintain

the limit is tolerable by the Bank and in compliance with

the applicable regulations by the Bank Indonesia;

3. Monitoring on banking book risk related to interest rate by

Repricing GAP, Duration GAP and Economic Value of

Equity (EVE) to oversee the sensitivity of portfolio assets

and liabilities of the bank against any negative changes on

interest rate in the future;

4. Evaluate the Bank against any possible risk exposure;

5. In the event of breach limit, Risk Management Unit make

report on the breach to the Board of Directors.

d. Market Risk Control

The Bank strategy to control market risk were performed by

hedging, squaring position, back-to-back and any other way

which purpose to offset a non-profitable transaction/position

and stress testing to assess the strength of Bank financial


position just in case it is exposed to crises. In addition, the

strategy also useful to transfer the inherent risk in the Bank

dealing room treasury to the extent such risk transfer is in the

Bank risk limit. The Bank also limit or restricted any kind of

transaction or instrument by its business units and lower the

risk by implementation of maximum transaction limit or

portfolio in accordance with the Bank risk appetite.


Concerning the implementation of dynamic risk management, the

Risk Management Unit periodically evaluate the policy, procedure

and the limit on market risk. To control the market risk in the form

of policy requirements and the procedure of the Risk Management

Unit, an internal or external independent unit review the policy and

procedure implemented by the Bank.

Review and evaluation of risk assessment by the Risk

Management Unit includes:

a. Compliance with the policy, risk management process design,

information system and the risk management reporting

according to the Bank business needs, and to the applicable

regulation and best practices on risk management;

b. The method, assumption and the variables used in the risk

assessment and limit determination of the market risk;

c. Comparison between assumption used in the risk assessment

method and the observed/actual condition;

d. Comparison between the determined limit with the

observed/actual exposure;

The review by the Risk Management Unit which had been

reviewed by the Internal Audit Unit is submitted to the Risk

Management Committee (RMC) to obtain approval by the Board

of Directors. The Board of Commissioners also take part in such

discussion with the help of the Risk Monitoring Committee. The

review by the Internal Audit Unit includes:

a. The reliability of risk management framework, including the

policy, organizational structure, resources allocation, risk

management process design, information system and the risk

reporting implemented by the Bank;

b. The monitoring proses performed by the Risk Management

Unit;

c. The evaluation of assessment methodology used by the Risk

Management Unit.

B.4.3 Liquidity Risk

Liquidity Risk is the risk from the Bank incapability to perform its

contractual obligation or any due liabilities. The risk is inherent with failure

on fund management and fund mismatch or fund shortage that will make

the Bank in default. Liquidity risk can be categorized as follows:


Market Liquidity Risk, defined as the risk from the Bank failure to

offset its position to the market price because the market liquidity

condition is poor or there is a market disruption;

Fund Liquidity Risk, defined as the risk from the Bank failure to

liquidate its assets or to obtain funding from any other source.

B.4.3.1 Active Monitoring by the Board of Commissioners and the

Board of Directors

The Board of Commissioners and the Board of Directors is

responsible for the effectiveness of Liquidity Risk Management by

the Bank. In relation to the tasks and responsibilities of active

monitoring by the Board of Commissioners and the Board of

Directors, at all times they obtained information on risk exposure

management implementation and evaluation concerning Liquidity

Risk, daily limit monitoring and any actions taken by the risk

taking unit with emphasize on breach limit.

In such monitoring tasks, the Board of Commissioners helped by

the Bank Risk Monitoring Committee (RMC) which periodically

perform monitoring in coordination with the Risk Management

Unit. Such coordination use media as risk monitoring report

prepared by the Risk Management Unit submitted to the Risk

Monitoring Committee or in meeting. Such meeting discusses the

implementation of risk management by the Bank including the

implementation of risk tolerance assessment, material risk profile,

and methodology requirements and evaluation and/or Market Risk

assessment tools used by the Risk Management Unit.

Monitoring by the Board of Directors treasury is periodical

treasury limit monitoring to identify whether there is a breach limit

and to approve new limit or limit change. Discussion on market

risk management is on the Bank pricing and assets and liabilities

structure is a subject in ALCO (Asset & Liability Committee)

Meeting whereas discussion on Market Risk exposure discuss in

the Risk Management Committee meeting. In compliance with the

market risk management policies on breach limit escalation stage,

each breach limit will be informed and approved in the event an

abnormal condition found by the Risk Management Committee

(RMC). Such Market Risk Management were prepared in the form

of policies, procedure, risk limit and any other decisions in relation

to the Market Risk. The Bank Market Risk and risk appetite is

evaluated periodically or at any time necessary in accordance with

the Bank business strategic environment.

B.4.3.2 Requirements on Limit Policies, Procedures and

Determination

Concerning basic liquidity risk, the Bank implements the policy

and guidance on Liquidity Risk management. The contents of such

policy and guidance concerning Liquidity Risk, stress testing

liquidity which include the scenarios on general market crisis and


bank specific crisis. In relation to the liquidity gap limit

implementation, breach limit escalation procedure, contingency

plan of liquidity funding, at present the Bank is preparing the

procedure and its actions together with the risk taking unit for

future uses. The liquidity limit implementation by the Bank

includes primary reserve, secondary reserve, and excess reserve of

GWM whereas the amount of cash reserve for each Operational

Branch is a subject to the Operating Division decision.

The Risk Management Unit at all times evaluate the policy,

procedure and the performance analysis of the Bank on the

implemented limit. Whereas any changes to the limit is a subject

to the risk taking unit decision in accordance with the applicable

standard by the Risk Management Unit.


Monitoring and Risk Control, and Risk Management

Information System

Liquidity Risk Policy include any risk which might create losses

against the Bank as a result of higher cost of fund or any

restriction/limitation in the fulfilment of any due obligation. Most

of financial transaction or commitment has some impacts on the

Bank liquidity. Therefore, the Bank is prone to liability risk, both

to the Bank itself or to the banking industry as a whole. The Bank

shall fulfill its financial obligation at all times which force it to

shall always maintain an adequate level of liquidity ratio.

In maintaining the limit of Liquidity Ratio, the Bank shall consider

the liquidity condition of its assets-liabilities. Adequate liquidity

shall be properly maintained and used as an indicator of liquidity

risk limit to support Bank profitability, because too liquid means

idle fund and it will posed some loses in relation to investment

financed by corporation. Liquidity gap historically can be used as

a standard in the determination of Bank liquidity risk limit. The

liquidity limit implementation by the Bank includes primary

reserve, secondary reserve, and excess reserve of GWM whereas

the amount of cash reserve for each Operational Branch is a subject

to the Operating Division decision.

At present the Bank is developing information system on Liquidity

Risk assessment such as integrated maturity profile. Risk

Management Unit together with risk taking unit in the integration

stage of such maturity profile information system held various

meetings which purpose to analyse the progress of system

utilization. Maturity profile reporting system in relation to foreign

exchange rate risk had been integrated and validated properly

therefore manual reporting is not necessary.

Concerning coordination of the Bank management against any

possible liquidity risk, the Bank had established Liquidity Crisis

Management Team to anticipate liquidity crises by


implementation of Contingency Funding Plan Scenario which is a

subject to the ALCO (Asset Liability Committee) approval.

In the process of limit monitoring by the risk taking unit, the Risk

Management Unit monitor daily limit and periodically report the

result to the Board of Directors. In the event of breach limit it will

be promptly reported to the Board of Directors including any

contingency plan by the risk taking unit. Concerning the

implementation of Basel III which focused on liquidity risk. The

Risk Management unit together with the business unit and

supporting unit perform the assessment of Basel III impact on the

Bank by simulation of Liquidity Coverage Ratio (LCR) and Net

Stable Funding Ratio (NSFR) of the Bank in order to avoid any

Liquidity Risk and to comply with the applicable internal and

external regulations.


Concerning dynamic risk management implementation, the Risk

Management Unit at all times perform periodical evaluation on the

policy, procedure and liquidity risk limit. Concerning market risk

control in the form of policy and procedure implemented by the

Risk Management Unit, it is reviewed by an internal or external

independent unit. The Risk Management Unit also had stress

testing the Bank liquidity and provide information on liquid assets

adequacy in the event the Bank were rushed by the customers.

Such report is submitted to the Board of Directors and the risk

taking unit to obtain feedback and create risk awareness.

B.4.4 Operating Risk

Operating Risk is the risk of internal process function adequacy, human

error, system failure and/or any other external which affect the Bank

operational. Operational Risk is inherent in every Bank activities, thereby

Operational Risk though controllable by proper risk mitigation it cannot be

completely eliminated. The impact of Operational Risk can be in the form

of financial or non-financial loss. The Bank had managed its Operational

Risk by the three lines of defense which is risk taking unit as the first line

of defense, operational risk management unit as the second line of defense,

and internal audit as the third line of defense.

The first line of defense is responsible to ensure that all operational process

had been conducted in accordance with the applicable policy and procedure,

had identified Operational Risk and mitigate it. The second line of defense

which function is to support and ensure the unit in the first line of defense

had managed the risk effectively. The third line of defense function is to

ensure the process of Operational Risk management by the first line and the

second line of defense which had been effective in actual or potential risk

mitigation to avoid any potential loss against the Bank.



Board of Directors

The Board of Commissioners and the Board of Directors had

active monitoring on Operational Risk management, such as it had

been conducted by the Risk Committee both at the Board of

Commissioners level or at Board of Directors level. Such active

monitoring by the by Board of Commissioners, is carried out by

the Risk Monitoring Committee. Whereas at Board of Directors

level it is conducted by the Risk Management Committee which

function among other is to discuss the risk management policy

implemented by the Bank. To minimize fraud, the Board of

Directors had programmed socialization to all employees on fraud

prevention to increase the employees’ awareness on fraud.

The Bank has an independent unit to perform bankwide

operational risk management such as Operational Risk Group

under Risk Management Unit. This unit function is to establish

standards and policies on operational risk management and in

connection and in coordination with all business units and

supporting units to ensure mitigation effectiveness to prevent

Operational Risk potentials.

The Bank had managed its Operational Risk in every its activities,

in which all employees shall take part in managing the operational

risk at each unit and observe effective control to anticipate any

possible risk against the Bank.

B.4.4.2 Policy, Procedure and Limit Adequacy

The Bank has policies and guidance on Operational Risk

management which periodically update and evaluate such policies

and guidance. In addition, the Bank had implement any other

policies on operational risk management, such as Anti-Fraud,

Business Continuity Plan which provide contingency procedure to

protect the Bank data and assets and Disaster Recovery Plan which

provide system continuity and information technology

infrastructure, policies on information technology management. In

addition, new product and activities development is a subject to

analysis which assess any inherent risk.

The Bank has operational procedure to process the Bank

operational activities on each unit with respects to internal control

system therefore it minimized any possible Operational Risk

against the Bank. In addition, the Bank implements policies on the

extent of authority for each operational activity, defines the tasks

and responsibilities of each position, and every escalation is a

subject to the Bank approval.




Information System

Concerning the implementation of Operational Risk management

to process the identification, assessment, monitoring and control,

the Bank had developed risk management tools such as:

a. Risk Control Self-Assessment (RCSA) is self-assessment on

risk exposure in the risk register to analyse any potential risk

against the Bank. RCSA includes assessment on risk control

system implemented by the Bank;

b. Key Risk Indicator is the tools which assess the key risk

indicator to provide the Bank with early warning to detect any

potential risks against the Bank;

c. Loss Event Database is a database of every potential risks that

had become a case. The purpose of this database is to comply

with requirements on internal loss database to record any loss

suffered by the Bank and to be mined in the development

process of more advanced capital adequacy assessment.

In addition, the Bank is a member of External Loss Data

Consortium (ELDC) which provide risk event database suffered

by its members without compromising its confidentiality. The

Bank membership in ELDC is one way to identify the risk and to

increase awareness of risk event suffered by other banks.

The process of identification, monitoring and control of such

operational risk require adequate infrastructure and human

resources in accordance with the scope and complexity of the Bank

business.

Concerning assessment of inherent operational risk in capital

allocation and ATMR operational risk, the Bank calculated it with

basic indicator approach method in accordance with the applicable

provisions by the regulator.

Concerning information statement on Operational Risk, the Bank

has prepared reports on its Operational Risk such as bankwide

periodical Operational Risk profile. In addition, the Bank also has

prepared routine reports on Operational Risk based on the data

obtained from risk management tools, also report on incidental risk

in accordance with the needs of the relevant risk event.


Internal control system in the risk management implementation

includes:

a. Operational procedure in accordance with the Bank

operational activities to minimize any potential risks against

the Bank;

b. Policies on the extent of authority for each operational activity,

the tasks and responsibilities definition of each position, and

every escalation is a subject to the Bank approval.


c. Clear definition on the function of business units and the unit

which perform internal control.

B.4.5 Legal Risk

Legal Risk is the risk arising from legal charges and/or juridical aspect

disadvantage. Juridical aspects disadvantage could be legal charges, or it

means that the applicable laws and regulations is not in favour to the Bank,

whether in the form of insufficient provisions applied by the law on

agreement validity and collateralization. Other legal risk can arise from the

Bank operational, agreement with third party, legal uncertainty and weak

law enforcement, any hindrance in litigation process of claim settlement,

and international jurisdiction related matter.


Board of Directors

The parties in concern to the Legal Risk are the Board of

Commissioners, the Board of Directors and all Bank employees,

that the parties is responsible for the Legal Risk management. The

Board of Commissioners and the Board of Directors monitor the

Legal Risk by means of legal risk report and any other reports

concerning legal matters. Concerning the implementation of Legal

Risk management, the Bank has special unit to take care any Legal

Matters which comprise of litigation section and non-litigation

section. The unit who perform such Legal Risk management is the

Legal Division under the Directorate of Finance and had been

made independent from the compliance management function.


The Bank implements policies and guidance on Legal Risk

Management which is updated and evaluated periodically. In

addition, the Bank also have policies and procedure in legal

matters to ensure that all of its activities had complied with the

laws and regulations and any other applicable statutory

requirements, therefore any potential risk against the Bank can be

avoided.

In addition, the Bank has legal documents standardization

concerning its products and services which reviewed periodically

in accordance with the Bank business strategic environment. The

Bank also review any potential Legal Risk against its products and

new activities to mitigate any Legal Risk.



Information System

Concerning the process of risk management implementation, the

Bank had identified, assessed, monitored and controlled any Legal

Risk which conducted by the Legal Division. The Legal Division

acting in its capacities as the “legal watch” which provide legal


analysis/advise to all employees across organization. In addition,

its function is to provide legal opinion concerning every agreement

entered by the Bank. Concerning Legal Risk management, the

Bank helped by legal counsel to take care any case in the Legal

Risk mitigation.

Concerning the Legal Risk control, the Bank had taken actions in

the following matters:

a. Process of the legal review and opinion on its products and

services including new activities and products;

b. Standardization of legal documents on its products and

services;

c. Review of its legal documents in accordance with its business

strategic environment;

d. Policies and procedures on legal matters;

e. Taken care any legal matters, helped by legal counsel if

necessary;

f. Taken care any relevant unit in legal matters;

g. Provided legal information and knowledge to the relevant unit;

h. Documentation of every Legal Risk and the loss potentials of

any Legal Risk.


Internal control system across organization in the process of Legal

Risk Management taken care by the Legal Division in a timely

manner and in coordination with the Risk Management Unit and

Internal Audit Unit.

B.4.6 Compliance Risk

Compliance risk is the risk arising from the Bank failure and/or non-

compliance with the applicable laws and regulations. Compliance Risk

Management is taken care by the implementation of consistent internal

control system.


Board of Directors

The parties in concern to the Compliance Risk are the Board of

Commissioners, the Board of Directors and all Bank employees,

that the parties is responsible for the Compliance Risk

management. The implementation of compliance principles and

culture begin with the commitment of the Board of Commissioners

and the Board of Directors who shall complies with the applicable

laws and regulations. Compliance to the applicable laws and

regulations is the responsibility of all organization members

including the Board of Commissioners, the Board of Directors, and

all employees.

In its organization structure, for the purpose concerning

Compliance Risk, the Bank had established Compliance Unit such

as Compliance Division who is responsible to ensure that all units


of the Bank had complied with the applicable laws and regulations.

In this matter, each risk taking unit is responsible for the

compliance of their unit.


The Bank implements policies and guidance on Compliance Risk

Management which is updated and evaluated periodically. In

addition, the Bank also have policies on Anti-Money Laundering

and Counter Terrorism Financing Programme (AML-CFT) which

discuss suspicious transactions and customers data update, policies

on gratification control in cooperation with the Corruption

Eradication Commission (KPK) and Compliance Procedure for its

units.

The Bank implements policy on compliance reporting in the form

of compliance sheet to the relevant unit. In addition, new products

and activities is a subject to prior compliance analysis with the

applicable laws and regulations.



Information System


Bank had identified, assessed, monitored and controlled any

Compliance Risk which conducted by risk taking unit. Such

identification and assessment on compliance risk is conducted by

the Compliance Unit which monitor the compliance

implementation in all units.

Concerning control on Compliance Risk, the Bank had taken

actions in the following matters:

a. Review of the policies and internal procedures of the Bank,

and any new products and activities;

b. Socialization programme on the applicable laws and

regulations to promote Compliance Culture;

c. Monitoring of the implementation of due diligence principles;

d. Monitoring of Compliance Risk;

e. Implementation of Anti-Money Laundering and Counter

Terrorism Financing Programme (AML-CFT);

f. Implementation of gratification control by the Gratification

Control Unit in cooperation with the Corruption Eradication

Commission (KPK) including socialization programme to

increase the relevant employees on gratification control;

g. Socialization programme on the latest external regulation to

the bank units.

Concerning information statement on Compliance Risk, the Bank

has prepared reports on its Compliance Risk such as bankwide

periodical Compliance Risk profile. In addition, the Bank also has

prepared routine reports on Compliance Risk based on the data


obtained from risk management tools, also reporting on

compliance to the management.


Internal control system across organization in the process of

Compliance Risk Management perform to the standard by the

Compliance Unit and in coordination Risk Management Unit and

Internal Audit Unit.

B.4.7 Strategic Risk

Strategic Risk is the risk arising inappropriate actions and/or

implementation of a strategic decision and failure to adapt with business

strategic environment. The Bank is a subject to this risk whenever it failed

to employ strategy in accordance with its vision and missions, when its

analysis is incomprehensive/or counter-productive. In addition, Strategic

Risk also arising from failure to anticipate business strategic environment,

including any failure to anticipate technology advancement,

macroeconomic condition, market competition and regulation.


Board of Directors

Active Monitoring by the Board of Commissioners and the Board

of Directors direct the strategy employed by the Bank in

accordance with the provisions on its tasks and responsibilities.

The Bank had adjusted their strategy to its Bank risk appetite and

risk tolerance. In addition, the Bank also had adjusted its short-

term, medium-term, and long-term strategies, its medium-term or

long-term strategy in accordance with the business growth,

internal and external condition.

Such business strategies are prepared by the Board of Directors in

the form of Bank Business Plan (BBP) which is a subject to the

Board of Commissioners approval. The Board of Directors direct

each unit to implement the Bank business plan accordingly.

Concerning the Bank strategies, the Board of Directors helped by

the Strategic Planning Division to monitor its implementation

including the BBP. In addition, business plan implementation were

analysed, and the report is submitted to the Board of Directors.

All business units/supporting units is responsible to help the Board

of Directors in the preparation of strategic planning and implement

the strategy effectively. Such units also responsible to ensure the

implementation of Strategic Risk management in accordance with

the Bank policies.


The Bank implements policies and guidance on Strategic Risk

management which is updated and evaluated periodically. The

Bank Business Plan (BBP) is the Bank Strategic Plan to achieve


the Bank vision and missions. Therefore, all Bank policies in

accordance with the Bank strategic objectives as stated in its BBP.



Information System


Bank identify, assess, monitor and control its Strategic Risk. The

Bank identify, assess and monitor its Strategic Risk by monitoring

its performance in accordance with the BBP (Bank Business Plan).

In addition, the Bank monitor its business strategic environment

with respect to its strategy. The Bank develop businesses in

accordance with its risk appetite and risk tolerance, and monitor

its business position.

Concerning control on its Strategic Risk, the Bank analyse its

performance and take any necessary strategic actions in response

to business strategic environment, and periodical performance

business review.


Concerning internal control on Strategic Risk, the Bank

implements control across its business line under supervision of

Risk Management Unit and Internal Audit Unit.

B.4.8 Reputation Risk

Reputation Risk is the risk of lower confidence from the Bank stakeholder

as a result of negative perception against the Bank. Such negative perception

might result from negative news and/or rumor against the Bank, nonetheless

ineffective communication.


Board of Directors

The Board of Commissioners and the Board of Directors monitor

the effectiveness of Reputation Risk Management implemented by

the Bank. In relation to its tasks and responsibilities on active

monitoring, the Board of Commissioners and the Board of

Directors at all times obtained clear information on the Reputation

Risk Management implementation and evaluation.

In its organizational structure, for the purpose of Reputation Risk

management, the Bank had established a special unit Corporate

Secretary and Network, Services and Operational Division. Such

units function is to manage the Bank reputation and to standardize

the Bank services in every of its Branch Offices to mitigate any

potential risks against the Bank.


The Bank implements policies and guidance on Reputation Risk

Management which is updated and evaluated periodically. The


Bank also has policies on standard of services for operational units

to minimize any Reputation Risk against the Bank. The Bank also

implements customers complaint handling management. In

addition, the Bank implements call centre to provide information

on banking services and to provide complaint channel for the

public. Concerning investor relationship management, the Bank

has established investor relationship management

to maintain communication with investors.

The Bank also implements Reputation Risk Management by

public relations, corporate social responsibility and quick response

activities to handle any complaints filed against the Bank.



Information System


Bank identify, assess, monitor and control its Reputation Risk. The

Bank identify, assess and monitor its Reputation Risk by

monitoring the number of complaints handling by the call centre

or Bank officer and monitor its progress. The Bank also monitor

mass media on any relevant news.

Concerning control on reputation risk, the Bank implements call

centre and coaching clinic for its employees by training or

workshop on standard of services for better service delivery to the

customers, both external and internal, to mitigate any potential risk

against the bank. In addition, the Bank had clearly stated its

direction to all of its employees about the Bank reputation utmost

important, the Bank also provides the customers with information

on its products/activities to mitigate any risks against the Bank. In

addition, to better the frontliner services as the Bank point of

contacts with its customers, the Bank implements a programme

well known as bjb Service Excellent Award (BBSEA).


The Bank has special unit, namely Risk Management Unit, to take

care its Reputation Risk Management which include periodical

monitoring of any relevant news and complaints against the Bank

reputation.

B.4.9 Risk Management Organization at the Board of Directors Level

One active monitoring by the Board of Directors is performed by the

establishment of Risk Management Committee as the Main and the highest

committee and the forum to provide recommendation for the Board of

Directors concerning the implementation of its policies, strategies and the

management of any risk against the Bank.

The tasks and responsibilities of the Risk Management Committee is as

follows:


a. Determine the policy on risk management and its amendment, including

risk management strategy and contingency plan in the event of worst

case scenario;

b. Determine the improvement and refinement of risk management

implementation both periodical and incidental in accordance with any

changes to the Bank external and internal condition which affect its

capital adequacy and risk profile and with reference to the evaluation

result on the effectiveness of such implementation;

c. Liable to any irregular business decision that had been justified by the

Board of Directors, such as overriding the business expansion limit as

stated in its BBP (Bank Business Plan) or overriding the risk

position/exposure limit;

d. Determine any material changes to the policies and the procedures of

risk management implementation;

e. Ensure risk monitoring by setting the Bank risk appetite and risk

tolerance or the risk limit may be taken by the risk taking unit and the

amount of capital reserves allocated to back-up any inherent risk across

the Bank operational;

f. Acting in its capacities, coordinating and monitoring the Bank risk

management strategies;

g. Evaluate risk assessment model implementation;

h. Disposition any risk management strategy proposed by the head of

operational unit;

i. Setting the Bank risk appetite & risk tolerance on new products and

activities in accordance with the Bank position;

j. Monitor Bank capital adequacy to the risk exposure in accordance with

the Bank Indonesia regulation;

k. Evaluate the Bank Risk Profile Report;

l. Evaluate the effectiveness of risk management implementation.

B.5 Related Party Financing and Large Exposure

Concerning related party financing and large exposure, the position in 2015 is as

follows:

No. Financing Amount

Debtor Nominal (Rp)

1. To Related Party 19 166,739,721,447

2. To Major Debtor:

a. Individual

b. Group

25

0

5,894,659,470,519

0

B.6 Bank Strategic Plan (Corporate Plan)

B.6.1 Long-Term Plan (Corporate Plan)

Corporate plan is future strategic plan, which purpose is to provide strategic

direction for an organization. The Bank has determined its strategic

direction for 2015-2020.


Estafet road map of the Bank in 2016 has entered the next stage which titled Build

Stronger for Quality Growth, therefore the Bank has prepared various agenda of

Bank business to create business growth and higher profitability to achieve the

Bank vision as The Top 10 Indonesia Biggest and Best Performance Bank. In

addition, the preparation of transformation process in this stage is not only depend

on the right and focus business strategy, but also depend on the consistency and the

discipline in building the GCG (Good Corporate Governance) to adapt with higher

growth and more complicated business strategic environment.

In view of the Bank financial performance in the mid 2015 is satisfactory, the first

phase of the Bank road map is expected to deliver results according to the previous

year planning which titled build strong foundation to achieve better performance

in the future by quality growth. The achievement recorded in 2015 is the

momentum to reflect the transformation in the past and in the future by 2019.

In accordance with the Bank road map, in 2016 the Bank will build stronger

foundation for quality growth.

The policy on strategic management will guide the Bank in running its business

activities to better its performance, as follows:

a. Increase the Third Party Fund composition by following actions:

1. Optimum Growth of Third Party Fund

Higher CASA composition through above the line and below the line

program, product features, better ATM service features,

national/international debit card, transfer & payments features;

Higher Third Party Fund by better technological infrastructure and

partnership of business to government, business to business and

business to human;

Development of CASA infrastructure which focus on IT based saving

(virtual account, mobile banking, etc.);

Strengthening promotion program such as redeem point, activities event

and community marketing;


Higher growth of Third Party Fund by better services and strategic

partnership (strategic alliance) both with BUMN (Central Government

State Owned Enterprises), BUMD (Local Government State Owned

Enterprises), and any other institutions;

Develop and enter business partnership with the customers and with the

institutional customers prospects;

Relocate the Third Party Fund in accordance with its domicile;

2. Better service quality

Service culture sustainability program development to improve the

Bank business performance;

Branchless banking development for more convenient banking

transaction services;

Develop and add e-banking to its service;

Develop the market share and increase the usage of e-banking

transaction;

Extend office networks which location in accordance with the market

share to optimize services;

Better service quality at all levels, both in people aspect and premises

aspect at all Bank outlet;

b. Quality growth:

1. Optimum credit growth to increase credit market share:

Strengthened risk management in credit sector and credit administration

and legal business to support credit expansion target;

Maintain and expand the market share of fixed income credit and larger

market share of pension credit as champion product;

Better portfolio credit management with focus on financing companies

sector, strategic BUMN/BUMN and go public and widely known

companies by bilateral financing, club deal or syndication;

Portfolio diversification by credit facilities on business sector other than

Working Capital Loan (WCL) for construction business using collateral

base lending approach and credit distribution to affiliated debtor with

corporation segment debtor;

Higher productive credit sector distribution for SMEs, including credit

distribution to BPR (thrifts institutions) and LKM (Micro Loan

Institution) under due diligence principles;

Re-branding of waroeng bjb with the philosophy valuable and sociable;

Asset security lending approach in providing credit for SMEs;

Increase of Home Loan portfolio growth by assets buy;

Launching auto credit for Bank internal;

Expand and increase credit program both directly or through linkage

institution by executing pattern and optimize the Bank function as

channelling pattern credit management program;

Relocate productive assets, with respect to the domicile of the relevant

credit for more convenient in service and monitoring.

2. Credit bailout and settlement:

Restructure, reschedule, recondition;


Credit settlement by better collection and focus on NPL elimination

using early warning system and accelerated actions of collateral

execution by KPKNL (State Run Auction House)/private auction

house/voluntary sales, write-off, insurance claim, lawyer and any other

relevant authorities;

Credit quality:

- Non-performing loan handling by collectability monitoring on each

credit business unit;

- Improve review quality on Credit Risk to control Credit Risk.

c. Fee based income improvement to support the Bank in the achievement of

target income

1. Increase transaction fee of the treasury and international banking,

including:

Increase the volume of transaction through customers sales transaction;

Enhancement yield instrument treasury in accordance with the Market

Risk;

Increase the transaction remittance, trade finance and service;

Increase new international remittance agent and enter partnerships with

leveraging institutions and organization in trade and remittance

transaction;

Increase correspondence relationship in term of quantity and quality by

improvement on existing or new agreements.

2. Banking transaction service development

Increase fee based by higher payment on transaction, transfer, teller

services, etc.;

Increase of wealth management and bancassurance;

Increase the sales of credit card issued by the Bank.

d. Bank Capital Increase:

1. Bank capital increase by Preemptive rights and Non-Preemptive rights;

2. Smaller Dividend Payout Ratio

e. Development of Supporting Sectors to Achieve Sustainable Growth Bank

Businesses

1. Planning and Change Management

Actively take part in monitoring, research and provide information on

banking business environment, by business intelligence research with

the relevant business units;

Organizational structure refinement for better business process and

optimize the function of each unit and uniform of nomenclature;

Project monitoring for project/program implementation effectiveness

and efficiency to keep them on schedule;

Implementation of corporate culture towards efficient and effective

changes;


2. Human Resources quality development

Capacity planning in timely and accurate manner in Bank business

development by identification of any weakness in the Bank

organizational structure, business expansion and office network needs;

Higher performance management system;

Quality recruitment process;

Better education and training management to produce qualified human

resources;

Sustainable and structured education and training program

development;

Better Human Resources capabilities, training infrastructure and

facilities;

3. Information technology and general affairs

Strengthening information technology deployed in the Bank supply

chain for better convenience, security and speed of transaction for the

customers with competitive fee across channels;

Higher performance, core banking application capacities increase and

network infrastructure;

Support the units and any other support in the form of infrastructure and

facilities;

4. Risk management implementation, credit risk, compliance and legal

matters

Risk culture development;

Identify the relevant policies and procedures on integrated risk

management;

Strengthening GCG (Good Corporate Governance) and optimize legal

counsel and support across organization;

Support the growth of Bank businesses, in particular of Legal Risk

mitigation;

Increase the quality of Credit Risk Review and Credit Risk control;

5. Better subsidiaries performance

Comply with the requirements on capital shares in subsidiaries or

otherwise;

Analyse the prospect of investment in new companies which engage in

financial services such as banks or non-banks;

Initiate the development and synergy of information technology system

between the Bank and subsidiaries or non-subsidiaries, to prepare the

Bank infrastructure as a financial conglomeration within the framework

of integrated risk management implementation;

Host-to-host partnership with bjb Sharia.

6. Better internal control system

Enhance the position of internal audit as strategic business partner and

ensure the optimization of Bank Internal Audit Standards Function;


Assurance the subsidiaries compliance with internal regulations and the

Bank compliance with external regulations.

7. Financial and operational control

Better financial reporting transparency and sustainable operational

efficiency program;

Optimize accounting information system;

Cost centre refinement and financial performance analysis

development;

Non-cash payment system development such as SKNBI e-Channel, BI

RTGS e-Channel and MPN e-Channel;

Fund Transfer Pricing development and implementation (FTP) across

organization in accordance with the performance of each business units.

8. Investor relationship and promotion

Appoint spoke person as the Bank ambassador to empower the

company’s reputation;

Centralize and coordinating gathering and promotion;

Build communication infrastructure with the investors and media;

Strengthen the Bank’s brand image.

B.6.2 Medium-Term Plan (Business Plan)

a. Management Policy and Strategy

Bank management policy implementation on its business to increase the

performance in 2016, is as follows:

1. Third Party Fund composition increase;

2. Quality growth;

3. Fee based income;

4. Bank capital;

5. Supporting services development.

b. Business Development Strategy

1. Operational/Business

Corporation and Commercial:

- Corporation and commercial portfolio increase;

- Model business refinement and business process

strengthening by internal policies;

- Sustainable and optimum yields credit distribution to

segmented customers/industrial economics sectors;

- Credit supervision strengthening to avoid any credit quality

degradation;

SMEs Credit

- Increase of productive sector credit distribution, in particular

for SMEs under due diligence principles;

- Education and supervision on SMEs debtors and potential

debtors to support SMEs business;


- Prepare local business, increase portfolio and maintain

credit quality.

BPR (thrifts institutions) and LKM (micro loan institution)

- Implement the strategy to maintain partnership with thrifts

institutions and micro loan institutions;

- Business opportunities identification, preparation and

implementation of marketing, development and supervision;

- Monitoring, evaluation, and increase the growth of credit

distributed by thrifts institutions and micro loan institutions.

Consumer Credit

- Consumer credit growth;

- Review pricing of consumer credit;

- Develop credit card product services by co-branding and

debit visa card.

Home Loan and Auto Credit

- Portfolio home loan increase by refinement/review of

internal policy development;

- Develop, maintain and improve home loan credit quality;

- Launch auto credit of Bank internal;

Treasury

- Financial market actions momentum optimization;

- Assets and liabilities management optimization;

International services

- Increase the marketing of trade finance and services

products to optimize the achievement of fee based income;

- Create, develop and maintain the correspondence with FI

bank and non-bank both in Indonesia and at international

level;

- Better service and remittance transaction quality;

Institutional Banking

- Increase Third Party Fundraising from institutional

customers;

- Increase the marketing of services and services for

institutions;

- Develop and increase the quality of services for customers

classified as corporate priority.

Consumer Fund Services

- Increase the number of account and the volume of CASA

retail by marketing activities formulation and competitive

interest rate;


- Diversification, development and product evaluation to

increase the value and product competitive edge to increase

the portfolio of third party fund;

- System integration of Pension Fund with Bank system (auto

debit, customer balance access by ATM).

2. Supports

Information Technology

- Core banking and non-core application development;

- System development and implementation for better

integration and implement the policies and procedure with

more focus to end users;

Compliance

- Create Compliance Culture across organization;

- Assess and evaluate the effectiveness, adequacy and

compliance of the Bank policies, regulations, systems or

procedures implemented by the Bank in compliance with the

applicable laws and regulations.

Legal

- Increase/optimize legal counsel services (consultation and

supervision) on legal matters either in criminal and civil

case;

- Increase the legal observance, knowledge and awareness in

banking practice, in particular of legal matters either in

criminal and civil case;

Risk Management

- Risk awareness culture development and risk management

implementation;

- Integrated risk management system development;

- Comprehensive risk management.

General

- Non-current assets and inventory required for Bank

operational activities;

- Bank operational assets management.

Financial Control

- Accounting information system development;

- Data accuracy and quantitative analysis of Bank

performance;

- Organizational structure refinement for better business

process and optimize the function of each unit and uniform

of nomenclature;

- Determine the Bank direction and strategy, both short-term,

medium-term and long-term for higher growth of Bank

businesses;


- Increase the quantity and quality of research in business

development (including internal and external analyst).

Networks, Services & Operational

- Effective and efficient liquidity;

- Better settlement transaction;

- Increase service quality at all level for better business

performance;

- Office networks development in accordance with business

direction and strategic management;

Human Resources

- Evaluation on employees welfare to maintain and increase

their motivation;

- Increase reward and punishment system for better

employees performance;

- Competence-based Human Resources.

Education and Training

- Education and training program development to create more

structured and sustainable Bank business activities;

- Education and training development to produce qualified

Human Resources;

- bjb Bank Corporate University development.

Corporate Secretary

- Investor relationship management;

- Win people’s trust;

- Raise brand awareness;

Internal Audit

- Raise adherence to internal and external regulations;

- Prepare audit plan with risk-based approach;

- Implement fraud control system implementation.

Change Management Office

- Internalization and externalization of corporate culture in the

process of Bank business/operational;

- Individual KPI Balanced scorecard implementation.

Electronic Banking

- e-banking transaction service quality;

- Better operational quality and card supplies;

- NSICCS CHIP based ATM card implementation.

Subsidiary Management

- Increase Bank’s income from dividend;

- Business synergy with subsidiary;


- Identify potential investment to financial institutions

(insurance and multi-finance).

Credit Bailout and Credit Settlement

- Non-performance loan settlement by collateral liquidation;

- Non-performance loan collection assistance;

- Write-off submission and assistance for any execution on

collateral;

Credit Risk

- Better risk assessment;

- Credit risk operating standard in accordance with the

company’s regulations and Financial Services Authority;

- Bankwide credit collectability monitoring to maintain

productive assets quality.

Credit Administration and Legal Business

- Proper credit documentation management;

- Optimization of monitoring function in relation to

professional services.

c. Business Plan Projections

In consideration of having integrated and comprehensive program, the

Bank expected the following objectives.

1. Assets

In view of macro-economic and economic stabilization under 2016

prediction, and Indonesia economics growth projection as much as

5.3%, it is expected that assets growth according to 2016 target is

directed to increase the market share as much as 1.28% in 2016 by

assets growth as much as 12%.

2. Third Party Fund Raising

The target of Third Party Fund Raising in 2016 is targeted to

increase the Third Party Fund raising as much as 13.5% with

projected market share as much as 1.37%. Whereas the composition

of third party fund in 2016 is as follows:

Checking account 13%

Saving account 13%

Deposit account 15%

3. Credit Distribution

In accordance with the 2016 strategy on quality growth, to maintain

the Bank profitability, the Bank projected credit growth as much as

14% with market share as much as 1.38%. Whereas credit

composition in 2016 is as follows:

Commercial 15%

SMEs 15%

Thrifts Institutions and Micro Loan Institutions 32%


Consumer Retail 13%

Home Loan & Auto Credit 15%

B.7 2015 Bank Education and Training Data

B.7.1 The Board of Directors, the Board of Commissioners and Committee

Members

Concerning knowledge, skills and capabilities building of the Board of

Directors, the Board of Commissioners and Committee Members, the Bank

has a programme for them to participate in education and training such as:

a. Refreshment Risk Management Certification “Risk Management

Implementation and Integrated Governance for Financial

Conglomeration in Indonesia”, held by BSMR for 1 day on the 26th of

January 2015 in Jakarta. There are 9 participants in this certification,

four of them are sent by the Bank, they are Managing Director Ahmad

Irfan, Financial Director Nia Kania, Commissioner Klemi Subiyantoro

and Yayat Sutaryat. The purpose is to comply with the Bank Indonesia

regulations in relation to the Risk Management Certification and to

better the understanding on Risk Management Implementation and

Integrated Governance for Financial Conglomeration in Indonesia.

b. GARP 16th Annual Risk Management Convention, held by the Global

Association of Risk Professionals (GARP) for 2 days on 24 – 25

February 2015 in America. The Bank sent 2 people to participate in this

convention, they are Managing Director Ahmad Irfan and

Commissioner Klemi Subiyantoro. The purpose is to better the

understanding on risk management implementation at global level and

to increase the competency in strategic decision making;

c. BPDSI Seminar “BPD Transformation Program to Become Regional

Champion of BPD Competitive Edge with regards to EU”, held by

ASBANDA for 3 days on 13 to 15 March 2015 in Bukit Tinggi. The

Bank sent 2 people to participate in this seminar, they are Consumer

Director Fermiyanti. The purpose is to better the understanding on BPD

road map and transformation with regards to opportunities of EU by

2016 to increase the Bank competitive edge.

d. The South Pacific and Asia Conference 2015 held by Bank Internal

Auditor Association (IAIB) for 5 days on 15 – 19 March 2015 in

Australia. The Bank sent 3 people to participate in this conference, they

are Compliance and Risk Management Director Zaenal Aripin. The

purpose is to better the understanding on global best practice of internal

audit;

e. Financial Literacy to Support Financial Inclusion Seminar, held by

the Financial Services Authority (OJK) for 2 days on 09 – 10 June 2015

in Bali. The Bank sent 2 people to participate in this seminar, they are

Managing Director Ahmad Irfan and Consumer Director Fermiyanti.

The purpose is to better the understanding of Bank Implementation on

National Strategy in Financial Literacy;

f. Introduction to Factoring & Structuring Factoring Transaction

Workshop, held by PT. Intan Batupranan Finance for 1 day on the 10th


of June 2015 in Jakarta. The Bank sent 1 people to participate in this

workshop, she is Suartini the Bank Commercial Director. The purpose

is to better the understanding the factoring;

g. Workshop on Bank Business Plan as a Means to Control Strategic Risk,

held by BSMR for 1 day on the 06th of July 2015 in Jakarta. The Bank

sent 1 people to participate in this workshop, he is Agus Mulyana the

Bank Compliance and Risk Management Director. The purpose is to

better the understanding on appropriate BBP preparation with respect to

business strategies and risk governance and the Bank organizational

capacities to achieve prime and sustainable performance and health;

h. Short Courses: Valuation, held by the New York University (NYU)

Stern for 3 days on 20 – 22 July 2015 in America. The Bank sent 1

people to participate in this courses, she is Fermiyanti the Bank

Consumer Director. The purpose is to better the understanding on

valuation using valuation model and estimation of company’s

restructuring impacts;

i. Risk Management Certification, held by BSMR for 1 day on the 08th of

August 2015 in Jakarta. The Bank sent 2 people in this certification,

they are Risk Monitoring Committee Members Nury Effendi and Tettet

Fitrijanti. The purpose is to comply with the requirements and to

establish the competency and skills in risk management;

j. International Risk Management Refreshment Program for Executives

held by the Magister Management Program of Faculty of Economics

and Business of the Universitas Gadjah Mada (MMUGM) in

cooperation with LSPP and IBI for 1 day on the 05th of November 2015

in Jakarta. The Bank sent 1 people to participate in this program, he is

Benny Santoso the Bank Operational Director. The purpose is to

comply with the Bank Indonesia requirements on Risk Management

Certification and to better the understanding on risk management and

information update on the applicable regulations on banking industry;

k. ALM-Liquidity Risk Management Course & Banking Comparative

Study, held by BSMR for 5 days on 7 – 11 December 2015 in Australia

and New Zealand. The Bank sent 6 people to participate in this course,

they are Managing Director Ahmad Irfan, Compliance and Risk

Management Agus Mulyana, Commissioner Klemi Subiyantoro,

Muhadi, Yayat Sutaryat and Rudhyanto Mooduto. The purpose is to

better the understanding on identification and assessment of liquidity

risk using global standards and liquidity maintenance by the Bank in

normal or crisis time. In addition, the participants equipped with

knowledge on comparative study on appropriate strategies employed by

the banks included in case study.

l. Master Class Risk Governance Training & Certification and

International Seminar on Enterprise Risk Management, held by

Enterprise Risk Management Academy (ERMA) & Centre for Risk

Management Studies (CRMS) for 3 days on 09 – 11 December 2015 in

Bali. The Bank sent 2 people to participate in this seminar, they are

Operational Director Benny Santoso and Micro Director Agus


Gunawan. The purpose is to better the understanding on business

development strategy with regards to EU;

m. National Good Governance Dialogue, held by Indonesia Accountant

Association and Faculty of Economics and Business of Universitas

Padjadjajaran for 2 days on 14 - 15 December 2015 in Bandung. The

Bank sent 1 people to participate in this dialogue, he is Ramson Sinaga

Audit Committee Member. The purpose is to better the understanding

on the basic concept of Good Corporate Governance and its assessment

for better competency.

B.7.2 Employees Training Data

In accordance with the Board of Directors Decision number 332/SK/DIR-

ET/2014 dated 12 May 2014 on the Guidance of Bank Employees Training

Requirements by Grading System, the training requirements for the Bank

employees shall be prepared by the following grades:

a. Primary Training

All types of education and training requirements which shall be met by

the Bank employees in accordance with their grade.

b. Technical Training

Any kind of training directed for better technical competency of the

employees;

c. Soft skill Training

Any kind of training on employees self-development.

d. Certification

Any kind of certification program requirements by the applicable

regulations by authority and in accordance with the competency

requirement of a position and as Bank deemed it as necessary.

e. Banking knowledge and other skills

The detail of such training in 2015 can be summarized in the following

table:


THE NUMBER OF EMPLOYEES PARTICIPATED IN TRAINING IN

2015

GRADE

NUMBER

OF

TRAINING

NUMBER

OF

EMPLOYEES

G1

On Boarding Programme

10,120 4,180

G2 2,022 689

G3 1,258 159

G4

Career Development Programme

69 23

G5 286 109

G6 2,415 858

G7 113 42

G8 966 282

G9 247 72

G10 888 225

G11 905 279

G12

Executive Program

470 123

G13 246 65

G14 298 64

G15 166 37

G16 87 21

G17 41 12

G18 15 4

G19 42 10

G20 49 13

TOTAL 7,267

B.8 Corporate Secretary

Pursuant to the transparency principle and provisions requirements by the Bank

Indonesia on Bank information disclosure, Corporate Secretary is responsible for

all communication and information disclosure to the banking, monetary and capital

market authority, shareholders and public in general. In 2015 Corporate Secretary

had implements the following activities:

a. Prepare the Board of Commissioners and the Board of Directors meeting,

record meeting results and distribute it to whom it may concern;

Managing Director

Managing Director

Public Relations Group

Group Head

The Board of Directors Secretariat

Group

Group Head

Investor Relationship

Group

Group Head

The Board of Commissioners

Executive Secretariat Group

Group Head

Marketing Communication

Group

Group Head

Corporate Social Responsibility (CSR)

Group

Group Head


b. Deliver notification and prepare anything necessary with respect to

Shareholders General Meeting and publish any resolution decided by the

Shareholders General Meeting;

c. Maintain good relationship with capital market authority and prepare reports

on Bank information transparency in compliance with the applicable laws and

regulations;

d. Coordinating and administration of share ownership record and corporate

actions;

e. Coordinating public relations and marketing communications for the Bank;

f. Bank products and services promotion management, including annual report

preparation;

g. Counterparty management;

h. Coordinating and monitoring customer’s complaint handling;

i. Supervision the Branch Office in public relations, customer’s complaint and

secretariat;

j. Corporate Social Responsibility (CSR) program to show that the Bank also care

the better welfare of the people;

k. Due diligence principles and compliance with the Bank Indonesia regulations,

the applicable laws and regulations, and any other applicable Bank internal

regulations;

l. Implement banking education program for public in general.

B.9 Bond Rating

PT. Pemeringkat Efek Indonesia (PEFINDO) rated the bonds issued by the Bank

as AA- (Double A Minus) Outlook Stable for the rating period 6 November 2015 -

1 November 2016.

B.10 Good Corporate Governance Activities and Socialization in 2015

Good Corporate Governance begin with the implementation of corporate culture

which comprise of the core procedures or core values which constitute the Bank

corporate value. Concerning the commitment in the practice of GCG, the

Bank corporate value described in the code of conduct which guide the Board of

Commissioners, the Board of Directors, and all employees in taking any actions for

the benefits of the Bank in the achievement of its vision, missions, and objectives.

One ethic in the code of conduct is ethical standards to avoid any conflict of

interests and abuse of power and the ethics to report any gratification, and its

management. Concerning the implementation of code of conduct and conflict of

interest management under GCG principles implementation, the Bank implement

Gratification Control Program under memorandum of understanding with the

Corruption Eradication Commission.

Gratification Control Program comprise of several instruments and activities and

mechanism in gratification control which consistently maintain the integrity of

employees from unlawful gratification practice. Gratification control program

comprise of provisions, organization, socialization/dissemination of gratification

control and reporting on gratification in coordination with the Corruption

Eradication Commission (KPK).

Concerning the implementation of gratification reporting in 2015 there are 203

gratification reports which value equivalent to Rp.129.5 million, 71 of which as


much as equivalent to Rp.48.8 million is under KPK investigation to decide their

status. In this matter, in 2015 the KPK awarded the Bank as the 2015 Third Best

BUMN/D Category in Gratification Control Unit.

C. The Board of Commissioners and the Board of Directors Members whose

Ownership in Company’s Paid-Up Capital is or Greater than 5%

There is none in the Board of Commissioners and the Board of Directors whose

ownership in the Company’s Paid-Up Capital is or greater than 5%, both in the Bank, in

other banks, in non-bank institution and in any other companies in Indonesia or in any

other countries, as stated by the following table:

Name bjb Other

Banks

Non-Bank

Institutions Description

Muhadi x x x

Klemi Subiyantoro x x x

Yayat Sutaryat x x x

Rudhyanto Mooduto x x x

Taifequrachman Ruki* x x x

Wawan Ridwah* x x x

Achmad Baraba* x x x

Ahmad Irfan x x x

Zaenal Aripin** x x x

Agus Gunawan x x x

Benny Santoso x x x

Suartini x x x

Nia Kania x x x

Fermiyanti x x x

Agus Mulyana*** x x x

*Serves as Company’s Commissioner whose term ends on the 31st of March 2015

**Serves as Company’s Director whose term ends on the 31st of March 2015

***Serves as Company’s Director since the 29th of May 2015

Whereas the commissioner’s shares ownership in the Company as of December 2015 is

as follows:

No Name Position Amount

(shares) Percentage

1 Muhadi Commissioner 2,341,500 0.024

2 Suartini Commercial Director 5,000 0.000

D. The Board of Commissioners and the Board of Directors Financial Relationship

and Their Each Other Personal Relationship and/or with Major Shareholders

All members of the Board of Commissioners and the Board of Directors does not have

any financial relationship to each other, as expressed in their independency statement. In

addition, there is no personal relationship either horizontal or vertical, including based


on marriage, including third degree lineage, to each other, between the Board of

Commissioners, between the Board of Directors, between the Board of Commissioners

and Major Shareholders and between the Board of Directors and Major Shareholders.

E. Remuneration Package/Policy and Other Facilities Reserved for the Board of

Commissioners and the Board of Directors

Types of Remuneration and Other

Facilities

Amount Received in 1 Year

The Board of

Commissioners

The Board of

Directors

People Million

(Rp) People

Million

(Rp)

1 Remuneration (salary, bonus, routine

benefits, tantiem and non-properties

other facilities)

7 32,339 11 65,340

2 Other facilities (housing, transportation,

insurance, health, etc.) *):

a. Given

b. Official

-

-

-

-

-

-

Total 32,339 65,340

Description:

1. Equivalent value in Rupiah;

2. The Board of Commissioners members are 7 (seven) people including Taufiequrahman Ruki, Wawan Ridwan

and Achmad Baraba (Serves as Company’s Commissioner whose term ends on the 31st of March 2015);

3. The Board of Directors are 11 (eleven) people including Bien Subiantoro, Djamal Muslim, Arie Yulianto (Former

Director) and Zaenal Aripin (Serves as Company’s Director whose term ends on the 31st of March 2015) and the

election of Agus Mulyana (Serves as Company’s Compliance and Risk Management Director since the 29th of

March 2015).

4. The Board of Directors members who lives in office house in 2015 are 4 (four) people whereas 4 (four) directors

lives in their own house.

Remuneration package/policy and other facilities for the Board of Commissioners and

the Board of Directors, is decided in the GM (Shareholders General Meeting). The

amount of remuneration for the Board of Commissioners and the Board of Directors

members is as follows:

Remuneration per Commissioner

in 1 year*)

Number of the

Board of Directors

Number of the

Board of Commissioners

above Rp 2 billion 10 5

above Rp 1 billion to 2 billion 1 -

Above Rp 500 million to Rp 1 billion - 2

below Rp 500 million

Description:

The Board of Commissioners and the Board of Directors receive remuneration package

in 1 (one) year categorized by level of income (per member).

F. Share Option

Concerning compensation for the Board of Commissioners, the Board of Directors and

executive officers, PT. Bank Pembangunan Daerah Jawa Barat dan Banten, Tbk., does

not granted share option.


G. Highest and Lowest Salary Ratio

The highest and lowest salary ratio, in comparison scale can be summarized as follows:

No Description Highest Lowest Ratio

Highest Lowest

1 Employees highest and lowest salary

ratio

45,000 3,286 13,69 1,00

2 The Board of Directors highest and

lowest salary ratio

130,000 104,000 1,25 1,00

3 The Board of Commissioners highest and

lowest salary ratio

65,000 52,000 1,25 1,00

4 The Board of Directors highest salary

ratio and the Employees highest salary

130,000 45,000 2,89 1,00

H. Employment

H.1 Recruitment Management and Career Development

H.1.1 Recruitment Management

In accordance with the Bank vision to become the top 10 biggest and best

performance Bank in Indonesia, the Bank expand its business networks

with respect to employment concern by definite recruitment process in

accordance with the capacity planning. The media used in recruitment

process is as follows:

a. Online Recruitment

b. Filling System

c. Campus Hiring

d. Job Fair/Career Day

e. Advertising

Consistent recruitment management use the following methodology:

a. Fresh Graduate Recruitment

The Bank recruit fresh graduates from respectable universities.

b. Experience Hire Recruitment

The Bank recruit experienced workers with required skills and

technical knowledge to fill vacant position.

c. Officer Development Program

The Bank recruit new employees to be included in leadership

succession program.

H.1.2 Career Development

The Bank career development comprise of rotation and promotion to

maintain organization stability and human resources availability to fill the

needs and objectives of the Bank, better productivity, risk management

related to working process of each unit. By rotation and promotion, the

Bank implements Human Resources management function such as

development function and employees maintenance with respect to


position qualification concerning competency, experience and

ethics/employees behaviour.

H.2 Administration and Compensation Management

Remuneration for employees is a subject to the provisions under the Board of

Directors Decision number 1075/SK/DIR-SDM/2015 dated 01 December 2015 on

the Guidance of Employees Remuneration and Facilities and the Board of Directors

number 231/SK/DIR-SDM/2015 dated 01 April 2015 on the Guidance of Grading

and Single Salary within the total reward scheme as follows:

H.3 Performance Management and Employees Competency

H.3.1 Performance Management

To better the employees performance and motivation with respect to the

Bank target performance, individual employees performance is assessed

periodically.

H.3.2 Competency Development

Employees capabilities development is the key to the availability of

reliable human resources to answer the challenges of business

development in the more dynamic banking sector. The Bank assess

competency to identify employees capabilities and knowledge in

performing their tasks and responsibilities. The result of such

identification can be used as recommendation, both development or

employees career development.

(direct transaction)

(indirect transaction)

Salary

Position Facilities

Employee Facilities

Social Security & Pension

Paid Leave

Overtime

Secretary Benefit

Performance Index Production Services

Overtime Benefit Overtime Incentive

Directors Secretary B. Commissioners Secretary B.

Dental

Glasses

In-patient

Out-patient

Delivery

COP, Car Allowance

Office House, Housing Benefit

Mobile phone, credit top up

Suit facilities

Newspaper/Magazine Facilities

Uniform

Relocation Facilities (Moving, Holiday)

Recreation Facilities

Pension

Pension Fund

BPJS TK (JHT, JKK, JKM, Pension Security)

Sporting Facilities

Meeting allowance

Official Travel (pocket money & Accommodation, transportation)

BPJS Kesehatan

Pension Preparation (MPP)


H.4 Employees Relationship Management and Policies on Human Resources

H.4.1 Employees Relationship Management includes the following actions:

a. Establishment of Industrial Relationship Management Unit

The Bank establish industrial relationship management unit to ensure

its effective and efficient management by optimizing coordination and

leadership.

b. Restructuring Provisions on Employees Discipline

The Bank complies with the requirements, provisions and the

mechanism of employees discipline by establishment of the Guidance

on Employees Discipline.

c. Employees Circular Issue

1. The Board of Directors number 047/SE/DIR-SDM/2015 dated 30

July 2015 on Employer Internal Control Responsibilities.

The Bank stately express that the position which is 2 level higher

shall carry out supervision and internal control, therefore such

superordinate is responsible to ensure all employees under their

coordination to work according to their tasks and responsibilities

and the applicable regulations.

2. The Board of Directors Circular number 071/SE/DIR-SDM/2015

dated 23 October 2015 on Non-Disclosure Agreement on

Confidential Information of Employees Compensation and

Benefits.

The Bank shall made its employees to enter into non-disclosure

agreement on confidential information of employees

compensation and benefit, either to fellow employees or to any

other parties.

d. Internal Communication Facilities

The Bank establish internal communication facilities in the form “HC

Cares” as the forum of discussion and sharing, feedback or input,

creative ideas and innovation, and the right place to ask for

consultation.

H.4.2 HRM Policies Management

The Bank has policies on HRM management by coordinating employment

aspects with the employment unit, both in recruitment and career

development, administration and compensation, or performance

management and Employees competency.


I. The Frequency of the Board of Commissioners and Board of Commissioners

Meeting

I.1 The Frequency of the Board of Commissioners Meeting

In 2015, the Board of Commissioners held 51 (fifty one) meetings with attendance

rate as follows:

No Name Position Attendance

1 Taufiqurachman Ruki* President Commissioner 3

2 Muhadi Commissioner 47

3 Wawan Ridwan* Commissioner 8

4 Achmad Baraba* Independent Commissioner 9

5 Klemi Subiyantoro** Independent Commissioner

Acting for the President

Commissioner

45

6 Yayat Sutaryat Independent Commissioner 47

7 Rudhayanto Mooduto Independent Commissioner 47

* Serves as Company’s Commissioner whose term ends on the 31st of March

2015

** Serves as Independent Commissioner Acting for the President Commissioner

whose term ends on the 31st of March 2015

In 2015, none of the Board of Commissioners meeting held by means of

teleconference technology.

I.2 The Frequency of the Board of Directors Meeting

In 2015, the Board of Directors held 23 meetings, with attendance rate as follows:

No Name Position Attendance

1 Ahmad Irfan Managing Director 19

2 Zaenal Aripin* Compliance and Risk

Management Director 4

3 Nia Kania Financial Director 19

4 Fermiyanti Consumer Director 17

5 Suartini Commercial Director 18

6 Benny Santoso Operational Director 17

7 Agus Gunawan Micro Director 19

8 Agus Mulyana** Compliance and Risk

Management Director 10

* Serves as Company’s Director whose term ends on the 31st of March 2015

* Serves as Company’s Director whose term ends on the 29th of May 2015


J. Internal Fraud

The number of internal fraud found by the Bank in 2015:

Internal Fraud

in 1 Year

The Number of Cases

Members of

The Board of

Commissioners and

the Board of

Directors

Full Time

Employees

Part Time

Employees

Previous

Year

Current

Year

Previous

Year

Current

Year

Previous

Year

Current

Year

Total Fraud - - 10 5 - 2

Solved - - 9 5 - 2

Under

Investigation by

Bank Internal

- - - - - -

Waiting for

Decision - - - - - -

Filed to Court

of Justice - - 1 - - -

The list of fraud in the table above is harmful to the Bank with potential losses more than

Rp.100.000.000. As of August 2015, bank bjb increase the reward and punishment

function in its business process which affected by fraud to increase SKAI function,

employees discipline and the quality of business process.

K. Legal Matters

Legal Matters Amount

Civil Criminal

Solved (Ruled by the court) 23 None

Under process 32 None

Total 55 None

L. Transaction with Conflict of Interest

Concerning conflict of interest, it is a subject to the provisions under the following

instruments:

a. The Board of Commissioners Decision number 10/SK/DK/2015 dated 2 September

2015 on the Guidance and Procedures of The Board of Commissioners;

b. The Board of Directors Decision number 931/SK/DIR/2007 on Good Corporate

Governance;

c. The Board of Directors number 1217/SK/DIR-KP/2015 on Conflict of Interest of PT.

Bank Pembangunan Daerah Jawa Barat dan Banten, Tbk.

M. Shares Buy Back and/or Bonds Buy Back

In 2015, the Bank did not make any buy back transaction of its shares, also it did not buy

back its bonds.


N. Funding for Social Activities in 2015

Concerning corporate social responsibilities, in 2015 the Bank had granted CSR fund as

much as Rp.53.861.652.684 (fifty three billion eight hundred sixty one million and six

hundred fifty two thousand and six hundred eighty four Rupiah). 58% of which was

granted to the local government and another 42% was granted to public. Such CSR fund

absorbed by various sectors such as environmental concerns as much as Rp.30,7 billion

(56%), education sector as much as Rp.16,98 billion (32%) and health sector as much as

Rp.6,17 billion (12%).

The following table summarized the CSR fund granted by the Bank: SECTOR SUBSECTOR ACTIVITIES NOMINAL

(Rp)

ENVIRONMENTAL

(Rp.30,708,376,380)

Development/general

infrastructure

rehabilitation

Development/mosque

infrastructure

renovation/majlis

ta’lim/mushala

Sanitation, Cemetery

City landmark

Theatre house

Neighborhood road

Suspension bridge

8,257,335,868

Environment quality

enhancement/improvem

ent

City park management

Tree/fruit seedling

Bio-pore construction

Environmental

conservation

Housing

construction/renovation

for poor people

Waste water treatment

plant

11,652,994,062

Public welfare

Charity program

Donation for orphan and

dhuafa

Break fasting with orphan

and dhuafa

Basic primary goods

distribution

Honoring civil servants

Veteran appreciation

4,450,475,000

Increase public

participation in

environmental care

Garbage cars, trash bins,

trash carts and potted

flowers

Garbage bank

Environmental

discussion and campaign

Recycling/Greenschool

City Clean by Youth

Movement

Natural concert

Public economic

empowerment

Capital support

Technical

training/entrepreneur

Beautician equipment

1,557,211,750


Technology

implementation

Paddy hullers

Cattle farming

Public condition

revitalization

Flood disaster relief

Donation for housing and

school

Social problems

solutions and shelter for

people with HIV

408,662,500

Religion

Mosque


Mosque

equipment/facilities

1,323,130,200

Sports

Pole rally

Sporting fields

improvement

45,000,000

EDUCATION

(Rp. 16,981,216,054)

Education Infrastructure

construction/rehabilitati

on

Classroom, dorm

construction/improveme

nt

TPA, PAUD, Madrasa,

Pesantren Construction

School facilities

infrastructure


(sports, canteen, toilet,

school yard, school

access roads, windows,

doors, etc.)

11,332,280,780

Education facilities

Library

Internet corner

PCs

Projectors

Sound system for Al-

Qur’an recital

Books, education, APE

Training equipment

School furniture

Artist

2,153,117,470

Culture, art and history

Art informal school

renovation

Art and music equipment

Gamelan

salendro/salancar

Keraton Galuh Pakuan

existence seminar

Art and culture

performance

923,600,394

Nation building

Scholarship

Anti-corruption festival

Public access

empowerment to

education services

Seminar, workshop

Training/skills

development

923,600,304


HEALTH

(Rp. 6,172,060,250)

Public health services

empowerment

Cataract charity

operation

Free medical check-up

Mass circumcision

Blood donor

3,922,357,250

Health facilities

Ambulance

Red Cross operational

car

Lansia care

Transferring patient

stretcher

1,382,986,000

Health infrastructure

rehabilitation/developm

ent

Posyandu renovation

Clean fresh water

services

Sanitation facilities care

830,717,000

Increase the roles of

people in health Psychotic care 36,000,000

53,861,652,684

O. Executive Summary of Good Corporate Governance Self-Assessment by the Bank

in 2015

Bank Name : PT. Bank Pembangunan Daerah Jawa Barat dan Banten, Tbk.

Position : December 2015

GCG Self-Assessment

Individual

Ranking Ranking Definition

2

Reflected that Bank management has implement Good

Corporate Governance (GCG) properly. This is

reflected from the realization of GCG principles. Any

weakness found in GCG implementation, such

weakness is less significant and can be solved by

normal management actions.

Analysis

Conclusion:

From the analysis of all the above characters/indicators:

A. Governance Structure

1. Positive factor of the Bank governance structure aspects is as follows:

- The Bank management composition in December 2015 comprise of 4 (four)

members of the Board of Commissioners and 7 (seven) members of the Board of

Directors, all of them are the people with integrity, competency and good

financial reputation. This is supported with fit and proper test result carried out

by the Financial Authority Services (OJK) which qualified them as had passed

the fit and proper test;

- The Board of Commissioners and the Board of Directors members doesn’t have

multi-position except for anything stated in the Bank Indonesia Regulation on

GCG Implementation by Conventional Bank and any other regulations;


- The Board of Commissioners and the Board of Directors doesn’t have any

personal relationship including the second decree with the fellow members;

- The Bank had refined its organizational structure in accordance with its business

complexities and has positioned its Directors according to their tasks and

responsibilities;

- The Bank has established committees under the Board of Commissioners (Audit

Committee, Risk Management Committee, Remuneration and Nomination

Committee, Business and Credit Monitoring Committee and Integrated

Management Committee) which members has the competency according to their

own function;

- The Bank has established Internal Audit Unit, Compliance Unit and Risk

Management Unit which had been made independent from business unit and

operational;

- The Bank has adequate policies and procedure for all Bank business activities

such as Credit Policy, Risk Management, etc.;

- The Bank implements adequate written policies, system and procedures to

provide financing to related parties and large exposure, including monitoring and

management in the case of non-performing loan;

- The Bank has guidance on GCG which implements policies on bank operational.

- The Bank has guidance on Conflict of Interest to handle conflict of interest in its

business;

- The Bank has Standard Implementation of Bank Internal Audit Standards

Function as the basis of its Internal Audit function;

- The Bank had prepared GCG Implementation Report at the ends of financial

year in accordance with the applicable laws and regulations;

- The Bank had prepared Bank Business Plan in realistic, comprehensive,

achievable, with respects to due diligence and responsiveness to any internal or

external changes;

- The Bank has Compliance Function, especially Compliance Culture by

implementation of quality assurance in the form of compliance sheet and

compliance checklist in the Bank operational activities which consistently

observed the principles of good governance principles and healthy banking.

B. Governance Process

1. Positive factor of the Bank governance process is as follows:

- The Board of Commissioners held meeting to provide recommendation to the

Board of Directors in the implementation of its tasks and responsibilities. The

meeting was held to ensure the implementation of GCG principles in every

Bank businesses at all levels and across organization. In performing

supervision, the Board of Commissioners had directed, monitored and

evaluated the implementation of its strategic policies;

- The Committees under the Bank had performed its function independently

and had analysed properly any recommendation to the Board of

Commissioners;


- The Board of Directors managed the Bank in accordance with its tasks and

responsibilities and fully liable for the Bank management;

- The Board of Directors had prepared the Bank Business Plan in realistic,

comprehensive, achievable comprehensively in consideration of opportunities

and strength of the Bank and identify the weakness and threats against it

(SWOT Analysis);

- The Board of Directors had taken any necessary action for any findings and

recommendations by Internal Audit Unit, external audit, Financial Authority

Services and/or Financial Audit Agency in accordance with the direction

concerning such findings and recommendations;

- Compliance Unit had prepared and taken any necessary actions to create

Compliance Culture across organization;

- Compliance Unit review and/or recommend update and refinement of the

policies, provisions, system or procedure implemented by the Bank;

- Compliance Unit ensure that its policies, provisions, system and procedures,

and the Bank businesses had complied with the Bank Indonesia regulations

and the applicable laws and regulations;

- The implementation of monitoring and reporting of the commitment made

based on the findings by the Financial Authority Services and any other

authority had been carried out by the Compliance Unit in accordance with the

provisions on Bank organizational structure;

- Internal Audit Unit had reported all findings in accordance with the applicable


- The appointed Certified Public Accountant office, had carried out independent

audit, according to the professional standards of public accountant and the

scope of audit;

- Internal Audit Unit, Compliance Unit and Risk Management Unit had carried

out their tasks and responsibilities in accordance with the applicable laws and

regulations;

- The decision making on financing decided on the Committee Meeting which

carried out independently without intervention of all relevant parties and/or

any other parties with respect to due diligence principles;

- The Bank had submitted financial and non-financial information in a

transparent manner.

2. Negative factors of the Bank governance process is as follows:

- There is a commitment on the findings by the Financial Services Authority in

progress;

C. Governance Outcome

1. Positive factors of the Bank governance outcome aspects is as follows:

- The Board of Commissioners and the committees under the Board of

Directors had implemented its tasks and responsibilities such as supervision

function, properly. This can be seen from supervision carried out on the Bank

Business Plan target/realization;


- The committees under the Board of Directors had provide analysis and

recommendation to the Board of Directors. Such Analysis and

Recommendation had been taken into consideration by the Board of

Commissioners in carried out supervision on the Board of Directors;

- The Board of Directors had presented its accountability in the Shareholders

General Meeting (GM) and its 2014 performance report had been accepted by

the GM;

- The Bank had periodically submitted report to the Financial Services

Authority on the Board of Directors performance in relation to its Compliance

Function in accordance with the applicable laws and regulations;

- Internal Audit Unit is objective in its audit;

- Internal Audit Unit had carried out audit in accordance with the RKAT in

2015 and consistent monitoring on audit result and 100% commitment

fulfilment per December 2015.

- External Audit is objective in audit and the result and the management letter

which reflected anything that shall be considered by the Bank had been

submitted in a timely manner to the Financial Authority Services by the

appointed Certified Public Accountant;

- The Board of Commissioners and the Board of Directors is capable to perform

active supervision on the implementation of its Risk Management policies and

strategies.

- There are reports such as Bank Health Level, audit results and other reports

that had been submitted to internal or external parties in accordance with the


- The Bank had implemented provisions on compliance sheet on credit to

anticipate that any financing shall not exceed the limit, Collateral, Insurance,

Agreement, PDN, etc. For the period of July – December 2015, the Bank did

not find any breach in its financing;

- Report on monitoring results had been submitted by the Compliance Unit

based on the inspection by the Financial Services Authority, with nearly 100%

fulfilment of commitment in December 2015;

- The Bank had periodically submitted financial and non-financial information

in a transparent manner both on its homepage or in printed publishing;

- With respect to any fines imposed by the Financial Authority Services to the

Bank, the nominal value of breach against the applicable provisions has not

yet decreased.

2. Negative factors of the Bank governance outcome aspect are as follows:

- With respect to any fines imposed by the Financial Authority Services to the

Bank, the nominal value of breach against the applicable provisions has not

yet decreased.


Bandung, 04 May 2016PT. BANK PEMBANGUNAN DAERAH JAWA BARAT DAN BANTEN, Tbk.

signedsigned

Klemi Subiyantoro Ahmad IrfanIndependent Commissioner Managing Director

I hereby certify that, to the best of my knowledge and belief,this is the true and accurate translation of the original document.

This 29th day of October 2017

INDRA SOFYARJl. Neptunus Barat VIII A7/9,

Bandung 40286, West Java, IndonesiaPhone +628121425691

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