1 GOOD CORPORATE GOVERNANCE IMPLEMENTATION REPORT PT BANK CENTRAL ASIA Tbk YEAR OF 2014 BCA’s Good Corporate Governance Implementation Report in 2014 was prepared in accordance with Bank Indonesia Regulation No. 8/4/PBI/2006 dated 30 January 2006, as amended by Bank Indonesia Regulation No. 8/14/PBI/2006 dated 5 October 2006, and Circular Letter of Bank Indonesia No. 15/15/DPNP dated 29 April 2013 concerning the Implementation of Good Corporate Governance for Commercial Banks. The GCG Implementation Report of BCA for 2014 consists of: I. GCG Implementation Transparency as referred to in point IX of the Circular Letter of Bank Indonesia Number: 15/15/DPNP dated April 29, 2013; and II. Self Assessment Report on GCG Implementation in 2014. I. GCG Implementation Transparency A. Disclosures of GCG Implementation includes: 1. Implementation of the duties and responsibilities of the Board of Commissioners and the Board of Directors, consisting of: a. Number, composition, criteria and independency of the members of the Board of Commissioners As of December 31, 2014, the total number of members of the BCA’s Board of Commissioners is 5 (five) persons, consisting of 1 (one) President Commissioner, 1 (one) Commissioner, and 3 (three) Independent Commissioners. The total number of members of the BCA’s Board of Commissioners does not exceed the total number of members of the BCA’s Board of Directors. Total number of the BCA’s Independent Commis- sioners is 60% of the total number of BCA’s Board of Commissioners. Composition of the members of the BCA’s Board of Commissioners as of December 31, 2014 under the deed of Minutes of Annual General Meeting of Shareholders of BCA Number: 80 dated August 14, 2014 is as follows:
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GOOD CORPORATE GOVERNANCE IMPLEMENTATION REPORT
PT BANK CENTRAL ASIA Tbk
YEAR OF 2014
BCA’s Good Corporate Governance Implementation Report in2014 was prepared in accordance with Bank IndonesiaRegulation No. 8/4/PBI/2006 dated 30 January 2006, asamended by Bank Indonesia Regulation No. 8/14/PBI/2006dated 5 October 2006, and Circular Letter of BankIndonesia No. 15/15/DPNP dated 29 April 2013 concerningthe Implementation of Good Corporate Governance forCommercial Banks.
The GCG Implementation Report of BCA for 2014 consists of:I. GCG Implementation Transparency as referred to in point
IX of the Circular Letter of Bank Indonesia Number:15/15/DPNP dated April 29, 2013; and
II. Self Assessment Report on GCG Implementation in 2014.
I. GCG Implementation TransparencyA. Disclosures of GCG Implementation includes:
1. Implementation of the duties and responsibilitiesof the Board of Commissioners and the Board ofDirectors, consisting of:
a. Number, composition, criteria and independencyof the members of the Board of Commissioners
As of December 31, 2014, the total number ofmembers of the BCA’s Board of Commissionersis 5 (five) persons, consisting of 1 (one)President Commissioner, 1 (one) Commissioner,and 3 (three) Independent Commissioners. Thetotal number of members of the BCA’s Board ofCommissioners does not exceed the total numberof members of the BCA’s Board of Directors.Total number of the BCA’s Independent Commis-sioners is 60% of the total number of BCA’sBoard of Commissioners.
Composition of the members of the BCA’s Boardof Commissioners as of December 31, 2014 underthe deed of Minutes of Annual General Meetingof Shareholders of BCA Number: 80 datedAugust 14, 2014 is as follows:
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Title Name
President Commissioner Djohan Emir Setijoso
Commissioner Tonny Kusnadi
Independent Commissioner Cyrillus Harinowo
Independent Commissioner Raden Pardede
Independent Commissioner Sigit Pramono
Number, composition, criteria and independencyof the members of the Board of Directors
As of December 31, 2014, the total number ofmembers of the BCA’s Board of Directors is 10(ten) persons, consisting of 1 (one) PresidentDirector, 1 (one) Vice President Director, and8 (eight) Directors. One member of the Boardof Directors also serves as the ComplianceDirector.
Composition of the members of the BCA’s Boardof Directors as of December 31, 2014 under thedeed of Minutes of Annual General Meeting ofShareholders of BCA No. 80 dated August 14,2014 is as follows:
Title Name
President Director Jahja Setiaatmadja
Vice PresidentDirector
Eugene Keith Galbraith
Director Dhalia Mansor Ariotedjo
Director Anthony Brent Elam
Director Suwignyo Budiman
Director Henry Koenaifi
Director (also servesas ComplianceDirector)
Tan Ho Hien/Subur or SuburTan
Director Armand Wahyudi Hartono
Director Erwan Yuris Ang
Independent Director Rudy Susanto
General criteria in the selection of membersof the Board of Commissioners and the Boardof Directors, among others are:a. Having expertise and experience in the
field of his/her responsibility;
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b. Having good leadership;c. Having a good reputation during the relevant
member performing his/her previous assign-ments;
d. Having good character and moral;e. Being able to take legal conduct;f. Having never been declared bankrupt or
became a member of the Board of Commis-sioners/Board of Directors who was foundguilty of causing a company to be declaredbankrupt within a period of 5 (five) yearsprior to his/her appointment;
g. Having never been sentenced for committingany crime in the financial sector withina period of 5 (five) years prior to his/her appointment;
h. Meeting the requirements of integrity,competence, and financial reputation asreferred to in the Regulation of BankIndonesia and Circular Letter of BankIndonesian concerning Fit and Proper Test.
Independency of the Board of Commissioners
All members of the Board of Commissioners haveno financial relationship, management relation-ship, shareholding relationship and/or familyrelationship with fellow members of the Board ofCommissioners, members of the Board of Directorsand/or Controlling Shareholders or relation-ship with BCA, which may affect their abilityto act independently.
Independency of the Board of Directors
All members of the Board of Directors have nofinancial relationship, management relation-ship, shareholding relationship and/or familyrelationship with the members of the Board ofCommissioners and fellow members of the Boardof Directors, which may affect their abilityto act independently.
The majority of the members of the Board ofDirectors have no financial relationship, mana-gement relationship, shareholding relation-ship and family relationship with ControllingShareholders or relationship with BCA, whichmay affect their ability to act independently.The President Director is an independent party
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to the controlling shareholders.
b. Duties and Responsibilities of the Board ofCommissioners, among others are:
1. Supervising the management policies of BCA,and the running of the management in general,and providing advices to the Board ofDirectors. The supervision performed bythe Board of Commissioners shall be inthe interest of BCA in accordance withthe purposes and objectives as well asthe BCA’s Articles of Associations.
2. Ensuring the implementation of GCG prin-ciples in any business activities of BCAat all levels of BCA’s organization.
3. Directing, monitoring and evaluating theimplementation of BCA’s strategicpolicies.
4. Ensuring that the Board of Directors hastaken follow-up actions on auditfindings and recommendations from theInternal Audit Division, ExternalAuditors, monitoring reports of theauthorities, including but not limited tothe Financial Services Authority, BankIndonesia, and/or the Indonesia StockExchange.
5. Informing Bank Indonesia/FinancialServices Authority no later than 7(seven) business days as of discoveringviolations of the laws and regulations inthe field of finance and banking, andcircumstances or an approximation ofcircumstances which may jeopardize thebusiness continuity of BCA.
6. Establishing:a. Audit Committee;b. Risk Oversight Committee; andc. Remuneration and Nomination Committee.
7. Ensuring that the Committees establishedby the Board of Commissioners performtheir duties effectively.
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8. Providing adequate time to perform theirduties and responsibilities in anoptimal manner.
9. Organizing the Board of Commissionersmeetings regularly, no less than four(4) times a year. The Board ofCommissioners meeting shall be attendedphysically by all members of the Boardof Commissioners at least twice (2) ayear.
10. Preparing minutes of the Board ofCommissioners meetings, and it shall besigned by all members of the Board ofCommissioners attending the Board ofCommissioners meeting.
11. Distributing a copy of the minutes ofthe Board of Commissioners meeting toall members of the Board ofCommissioners and related parties.
12. Submitting the report on the supervisoryduties which were carried out during theprevious financial year to the AnnualGMS.
In carrying out its duties andresponsibilities, the Board of Commissionersshall observe the provisions of the BCA’sArticles of Association, Guidelines and Codeof Conduct of the Board of Commissioners, aswell as the prevailing laws and regulations.The Board of Commissioners carries out itsduties and responsibilities independently.
Duties and Responsibilities of the Board ofDirectors, among others are:1. Directing and managing BCA in accordance
with the BCA’s purposes and objectives;
2. Controlling, maintaining and managingBCA’s assets in the interest of BCA;
3. Creating an internal control structure,ensuring the implementation of theinternal audit function at each managementlevel and following up Internal Auditfindings in accordance with the policies
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or directives given by the Board ofCommissioners.
4. Submitting the Annual Work Plan, whichalso includes Annual Budget to the Boardof Commissioners for approval of theBoard of Commissioners prior to thecommencement of the forthcoming financialyear, with due observance of theapplicable provisions.
5. Implementing the GCG principles in eachbusiness activity of BCA at all organi-zational levels of BCA.
6. Preparing and maintaining the Registerof Shareholders, Special Register,Minutes of General Meetings ofShareholders and Minutes of the Board ofDirectors Meetings.
7. Preparing the Annual Report and otherfinancial documents of the company asreferred to in the prevailing laws andregulations.
8. Following up the audit findings andrecommendations of the External Auditors,and the results of monitoring activitiesby the Financial Services Authority,Bank Indonesia and/or other authorities,including but not limited to theIndonesia Stock Exchange.
9. Being accountable for the performance ofits duties and responsibilities to theshareholders through a General Meetingof Shareholders.
In carrying out its duties andresponsibilities, the Board of Directorsshall observe the provisions of the BCA’sArticles of Association, Guidelines andCode of Conduct of the Board of Directors,as well as the prevailing laws andregulations. The Board of Directorscarries out its duties andresponsibilities independently.
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c. Implementation of Duties of the Board ofCommissioners/Recommendations of Board ofCommissioners
One of the duties and responsibilities ofthe Board of Commissioners is to provideadvice to the Board of Directors for thebenefit of the Company in accordance withthe purposes and objectives of the Company.
In 2014, the advice and recommendationsprovided by the Board of Commissioners tothe Board of Directors included:
1.Relating to Business Management ingeneral:a. In consideration of the rapid
development of BCA’s business and theincrease in the number of BCA’ssubsidiaries, it is necessary todevelop a consolidated integrated riskcontrol that is both effective andefficient while being in line with theprevailing rules and regulations.
b. Given the economic development at homeand abroad that is not veryconducive, the implementation of theprogram/business objectives carried inthe Bank’s Business Plan and AnnualBudget Plan shall consider theprudential banking and complianceaspects, and socialize this to allbranches and business units.
c. Capitalization will increasinglybecome a challenge in the coming yearsso good capital planning is required.
2. Relating to Risk Management:a. Credit Risk
- A risk of high concentration of onegroup/specific industry in lendingshould be avoided.
- In relation with the fluctuatingRupiah exchange rate, foreigncurrency loans must be monitoredand reviewed if necessary.
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b. Market RiskIn relation with the exchange ratefluctuations associated with theweakening of the Rupiah against theUSD, Treasury shall manage the risk ofthe exchange rate and maintain the NetOpen Position (NOP) of BCA at a solidposition.
c. Liquidity RiskTaking into account the tighteningliquidity conditions, competition ingetting the third party funds, as wellas the high demand for credit, BCA’ssecondary reserves has to be adequateand LDR must be maintained at apredetermined range.
d. Operational RiskIn terms of operational risk, thesecurity of information technologyrequires special attention in order tomaintain BCA’s excellence intransactional banking.
e. Reputation RiskIn the increasing light of interactivecommunication by the public throughsocial media and BCA’s role as atransaction bank, the monitoring andprovision of a timely response is amust.
f. Strategic Risk
- It is necessary to develop a leanorganization concept and planning forthe availability of competent humanresources in accordance with therequirements of BCA.
- Anticipating the decline in the netinterest margin of banks in thefuture, a fee-based income strategyshould be prepared.
3. Relating to Audit and Compliance:a. A risk based approach becomes
important to Internal Audit whenconducting an assessment/auditfunction so that the Internal Audit
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is able to be more focused on high-risk problems or business units.
b. Regulatory compliance needs to getspecial attention from all functionsand levels, not only in terms ofinternal control and internal audit,but in order to mitigate startingfrom the front line.
2. Completeness and performance of duties of theCommitteesa. Structure, membership, expertise and indepen-
dency of the members of Audit Committee
The Audit Committee comprises of 3 (three)members, which consists of:- a Chairman who is also an Independent
Commissioner; and- 2 (two) members, all of whom are Indepen-
dent Parties.
The Audit Committee is chaired by an Inde-pendent Commissioner.
Composition of the Members of Audit Committeeas of December 31, 2014 is as follows:
Name Title
Sigit Pramono Chairman (concurrentlyas IndependentCommissioner)
Inawaty Handoyo Member (IndependentParty)
Ilham Ikhsan Member (IndependentParty)
One of the Independent Parties is an expertin finance/accounting and the other one isan expert in the field of banking.
All members of the Audit Committee have nofinancial relationship, management rela-tionship, shareholding relationship and/or family relationship with the members ofthe Board of Commissioners, members of theBoard of Directors and/or Controlling Share-holders or business relationship with BCA,which may affect their ability to actindependently.
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Structure, membership, expertise and indepen-dency of the members of Risk Oversight Committee
The Risk Oversight Committee comprises of3 (three) members, which consists of:- a Chairman who is also an IndependentCommissioner; and
- 2 (two) members, all of whom are Inde-pendent Parties.
The Risk Oversight Committee is chaired byan Independent Commissioner.
One of the Independent Parties is an expertin financial risk management and the otherone is an expert in financial andinformation technology risk.
Composition of the members of the RiskOversight Committee as of Desember 312014, as follows:
Name Title
Cyrillus Harinowo Chairman (concurrentlyas IndependentCommissioner)
Endang SwasthikaWibowo
Member (IndependentParty)
Andreas E. Susetyo Member (IndependentParty)
- Mr.Andreas E. Susetyo resigned as member of Risk OversightCommittee effectively starting 1 January 2015.
- Mr. Wimpie Rianto effectively has become a member of RiskOversight Committee starting 1 February 2015
All members of the Risk Oversight Committeehave no financial relationship, managementrelationship, shareholding relationshipand/or family relationship with the membersof the Board of Commissioners, members ofthe Board of Directors and/or ControllingShareholders or business relationship withBCA, which may affect their ability to actindependently.
Structure, membership, expertise and inde-pendency of the members of Remuneration andNomination Committee
The Remuneration and Nomination Committeecomprises of 3 (three) members, whichconsists of:- a Chairman who is also an IndependentCommissioner; and
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- 2 (two) members, i.e. the PresidentCommissioner and an Executive Officer incharge of the Division of Human CapitalManagement (Human Resources).
The Remuneration and Nomination Committeeis chaired by an Independent Commissioner.
Composition of the members of theRemuneration and Nomination Committee asof 31 December 2014, is as follows:
Name Title
Raden Pardede Chairman (concurrentlyas IndependentCommissioner)
Djohan EmirSetijoso
Member (concurrently asthe PresidentCommissioner)
Lianawaty Suwono Member (concurrently asthe Head of theDivision of HumanCapital Management)
The Executive Officer serving as a memberof the Remuneration and Nomination Committeeshall have the knowledge of remunerationsystems and/or nominations as well as ofsuccession plan.
All members of the Remuneration andNomination Committee have no financialrelationship, management relationship,shareholding relationship and/or familyrelationship with the members of the Boardof Commissioners, members of the Board ofDirectors and/or Controlling Shareholdersor business relationship with BCA, whichmay affect their ability to actindependently.
b. Duties and responsibilities of the AuditCommittee:
1.Monitoring and evaluating the planning andimplementation of audits as well asmonitoring the follow-up actions of auditfindings in order to assess the adequacy ofinternal controls, including the adequacy ofthe financial reporting process.
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2.In order to carry out the above-statedduties and to provide recommendations tothe Board of Commissioners, the AuditCommittee conducts monitoring andevaluation on:a. The implementation of duties by the
Internal Audit Division (DAI).b. The compliance of audit implementation
by the Public Accountant Firm to theapplicable auditing standards.
c. The compliance of Financial Statementswith the prevailing accountingstandards.
d. Provide independent opinion in theevent of disagreements between themanagement and the Public AccountingFirm for the services rendered.
e. The follow-up implementation by theBoard of Directors on the findings ofDAI, Public Accountants and FinancialService Authority supervision results.
3. Reviewing other financial informationthat will be issued by BCA to the publicand/ or to the Regulator documents suchas projections, and other reportsrelating to the financial information ofBCA.
4. Reviewing the compliance of BCA with thelaws and regulations in the field of banking,Capital Markets and other laws and regula-tions as well as provisions relating tothe business activities of BCA.
5. Providing recommendations to the Board ofCommissioners on the appointment of thePublic Accountant Firm based on theindependency, the scope of assignment,and the fee to be submitted to a GeneralMeeting of Share-holders.
6. Reviewing and reporting to the Board ofCommissioners regarding any complaintsrelating to accounting and financial report-ing processes of BCA.
7. Reviewing and providing advices to theBoard of Commissioners related with anypotential conflict of interest in BCA.
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8. Reviewing and monitoring the implementa-tion of effective and sustainable goodcorporate governance (GCG).
9. Performing other duties relevant to thefunctions of the Audit Committee at therequest of the Board of Commissioners.
Duties and responsibilities of the RiskOversight Committee:
1. Assisting and making recommendations tothe Board of Commissioners in order toimprove oversight in implementation oftasks and responsibilities in riskmanagement and to ensure that riskmanagement policies are properlyimplemented.
2. In regard with the process to providerecommendation, the Risk OversightCommittee should:a. Evaluate the consistency between risk
management policies and implementation.b. Monitor and evaluate the Risk Management
Committee and the Risk Management Unit.
Duties and Responsibilities of theRemuneration and Nomination Committee:1. To evaluate the remuneration and
nomination policies of BCA..
2. To give recommendations to the Board ofCommissioners on:a. Remuneration policy for the Board of
Commissioners and Board of Directors tobe submitted to the General Meeting ofShareholders of BCA.
b. Remuneration policy for all ExecutiveOfficers and employees to be deliveredby the Board of Commissioners to theBoard of Directors
3. To develop and recommend election systemsand procedures and/or replacement ofmembers of the Board of Commissioners andthe Board of Directors to the Board of
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Commissioners, to be further submitted tothe AGM.
4.To ensure that the remuneration policiesof BCA are in compliance with theprevailing legislation.
5.To advise the Board of Commissionersregarding prospective members of the Boardof Commissioners and /or prospectivemembers of the Board of Directors to besubmitted to the AGM.
6.To recommend independent parties asprospective members of the Audit Committeeand the Risk Oversight Committee to theBoard of Commissioners
7.To assess the feasibility of thefacilities policy provided to the Board ofCommissioners and Board of Directors.
8.To carry out other duties assigned by theBoard of Commissioners regardingremuneration and nomination in accordancewith the applicable regulations.
9.To report the results of assessments andrecommendations with respect to the dutiesof the Remuneration and NominationCommittee to the Board of Commissionerswhen required.
c. Frequency of the Audit Committee meetingThe Audit Committee holds at least 4 (four)meetings in one year as stipulated in theAudit Committee Charter and Code of Conduct.During 2014, the Audit Committee held 26(twenty six) meetings.
Minutes of meetings are prepared for eachAudit Committee Meeting, describing the dateof meeting, attendance of the AuditCommittee members, meeting agenda, andmeeting materials. Results of the AuditCommittee meeting are always documentedorderly and properly.
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Attendance of the members of the AuditCommittee at the Audit Committee meetingsduring the year 2014 is as follows:
NameNumber ofmeetings
Attendance Percentage
SigitPramono
26 26 100%
InawatyHandoyo
26 26 100%
IlhamIkhsan
26 26 100%
Frequency of the Risk Oversight CommitteemeetingThe Risk Oversight Committee holds at least4 (four) meetings in one year as stipulatedin the Risk Oversight Committee Charter andCode of Conduct of the Risk OversightCommittee. Throughout 2014, the RiskOversight Committee held 9 (nine) meetings.
In each Risk Oversight Committee meeting,minutes of the meeting were prepared, whichstate the date of meeting, the attendance ofmembers of the Risk Oversight Committee, theitem(s) on the agenda of meeting, and thematerials of meeting.Results of the Risk Oversight Committee meetingare always documented orderly and properly.
Attendance of the members of the RiskOversight Committee at the Risk OversightCommittee meetings during the year 2014 wasas follows:
NameNumber ofmeetings
Attendance Percentage
CyrillusHarinowo
9 9 100%
EndangSwasthikaWibowo
9 9 100%
Andreas E.Susetyo
9 7 78%
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Frequency of the Remuneration and NominationCommittee meeting
The Remuneration and Nomination Committeeholds meetings in accordance with BCArequirements, at least 1 (one) time a year asstipulated in the Guidelines and Code ofConduct of the Remuneration and NominationCommittee. During 2014, the Remuneration andNomination Committee held 7 (seven) meetings.
In each Remuneration and Nomination Committeemeeting, minutes of the meeting were prepared,which state the date of meeting, the attendanceof members of the Remuneration and NominationCommittee, the item(s) on the agenda of meeting,and the materials of meeting.
Results of the Remuneration and NominationCommittee meeting are always documented orderlyand properly.
Attendance of the members of the Remunerationand Nomination Committee at the Remunerationand Nomination Committee meetings during theyear 2014 was as follows:
NameNumber ofmeetings
Attendance Percentage
Raden Pardede 7 7 100%
Djohan EmirSetijoso
7 7 100%
LianawatySuwono
7 7 100%
d. Reports on the Implementation of AuditCommittee Work Program in 20141. Conducted meetings with the KAP Siddharta
& Widjaja (now Siddharta Widjaja & Rekan),a member firm of KPMG International, todiscuss the final audit results of BCA’sFinancial Statement for the 2013 fiscalyear and its Management Letter.
2. Evaluated and approved the proposal forextending the contract with KAP Siddharta& Widjaja (now Siddharta Widjaja & Rekan),a member firm of KPMG International, whichis affiliated with KPMG International in aBusiness Review Business Support Brief
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Letter to Shareholders and recommended itto the Board of Commissioners to performthe audit the BCA Financial Statements forfinancial year 2014.
3. Conducted meetings with KAP Siddharta &Widjaja (now Siddharta Widjaja & Rekan), amember firm of KPMG International, todiscuss the plan and scope of the audit ofBCA’s Financial Statements for the 2014fiscal year.
4. Conducted meetings with the Division ofFinance and Planning to review theFinancial Statements of BCA which will bepublished every quarter.
5. Assessed the analysis of financialrealization against budget.
6. Conducted 8 (eight) meetings with theInternal Audit Division to:a) Evaluate the annual planning.b) Evaluate the implementation of internal
audit each semester.\c) Conduct discussions on audit results
deemed significant.7. Conducted 6 (six) visits to the Branch
Office and Subsidiaries to attend internalaudit exit meetings.
8. Reviewed reports of internal audit results(over 187 reports) and monitored follow-ups.
9. Assessed BCA compliance with prevailinglegislation provisions in the field ofbanking through a review of the reports ofcompliance to the prudent bankingprinciples as reported every quarter.
10.Assessed credit portfolio reports issuedevery semester.
11. Monitored the risk managementimplementation through quarterly reportsof BCA’s Risk Profile and monthly reportsof the Operation Risk ManagementInformation System (ORMIS).
12. Conducted discussions with related unitsto evaluate operational risk and internalcontrol activities in strategic workunits: Funding and Service Development,Wealth Management, Finance and CorporatePlanning, and Credit Services in order toprovide an opinion to the Board ofCommissioners regarding the adequacy of
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mitigation efforts for the variousexisting risks.
13. Conducted studies on:a. Results of the inspection conducted by
the Financial Services Authority andfollow-up actions.
b. The Management Letter from KAPSiddharta & Widjaja (now SiddhartaWidjaja & Rekan), a member firm ofKPMG International, and its follow-ups.
14. Reported the results of reviews androutine evaluations to the Board ofCommissioners on aspects such asgovernance, risk management, complianceand internal control on a quarterlybasis.
15. Attended the GMS, Analyst Meetings, andBCA National Work Meetings in order tomonitor the implementation of GCG.
Work Program of the Risk Oversight Committeeand the realization thereofIn 2014, the Risk Oversight Committee’s workprogram was as follows:1. Conducted:
a. Monitoring of risk by reviewing andevaluating risk reports prepared bythe risk control units. The RiskOversight Committee gives opinions andrecommendation in writing and canrequest further clarification orexplanations through special meetingsto discuss the topic.
b. Reviewing the Quarterly Stress Testresults.
c. Monitoring of risks profile by a riskdashboard report to comply with theregulation.
d. Reporting the progress of monitoringduties to the Board of Commissionersquarterly.
2. Conducted special monitoring on:a. Operational risks, particularly the
risk of Information Technology (IT) toensure that operational risks areunder control implementation ofBusiness Continuity Plan (BCP) andCrisis Management Protocol.
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b. Analysis the stress test specificallyon the aspects of:
Liquidity risk based on various macroindicators scenarios and testing theresistance of liquidity reserves;
Credit risk including consumercredit, SME and Corporate credit;
Capital allocation and reserves tosupport economic conditions.
3. Evaluated the implementation of goodcorporate governance by reviewing therisk management documents of SKMR andthe Risk Management Committee.
4. Provided recommendation to the Board ofCommissioners on the implementation anddevelopment of the risk managementprocess regarding:a. Business Continuity Planning and
Crisis Management Protocol.b. Consumer Credit Risk on a national
level.c. The targets of the SME credit
program, by regulator correspondingwith economic conditions andpotential.
d. The Implementation of integrated riskmanagement and assessment mechanisms.
5. Ensured that BCA has an excellentinfrastructure for controlling risk,therefore the evaluation are conductedby:
a. Reviewing the rules and guidelinesfor risk management.
b. Evaluating the risk methods,indicators and measurement.
6. Ensuring implementation of GCG byattending the General Meeting ofShareholders, Analyst Meetings and theAnnual National Work Meeting.
Work Program of the Remuneration and NominationCommittee and the realization thereof
1. In order to prepare the executives of BCAto gain a complete knowledge andexperience as officials at the HeadOffice or Branch Office(s), plans forseveral knowledge-enriching and cross-function placements have been run. Therotation of officials from the Head to
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Branch Offices and vice versa has beenimplemented at several levels. TheCommittee emphasizes the importance ofsupervising the execution of enrichmentprograms for more specialized workfunctions in Head Office with the aim ofequipping Head Office officials withknowledge of actual conditions at BranchOffices so that when they return to theiroriginal posts they will have a betterunderstanding of the needs of BranchOffices. Officials are then expected tomake decisions, design systems andproducts, and carry out other duties thatfulfill the needs of Branch Offices andcustomers more effectively.
2. Recommended to the Board of Commissionersthe distribution of the tantiem offinancial year 2013 to all members of theBoard of Commissioners and management whoheld office during the 2013 financialyear so that it may be delivered by theBoard of Commissioners during the AnnualGeneral Meeting of Shareholders on 07April 2014 for approval.
3. Recommended to the Board of Commissionersthe nomination of a new member to theBoard of Directors, Mr. Rudy Susanto, tobe delivered during the Annual GeneralMeeting of Shareholders on 07 April 2014for approval.
4. Recommended to the Board of Commissionersa remuneration package for the Boards ofCommissioners and Directors for the termof office of 2 (two) years, from 2014 to2016, in accordance with decisionsreached during the Annual General Meetingof Shareholders PT Bank Central Asia on12 May 2011 regarding the appointment ofBoards of Commissioners and Directorsmembers for the 2011-2014 period and theGMS and Extraordinary GMS decisions on 16May 2012 regarding the change in term ofoffice for members of the Boards ofCommissioners and Directors from 3 (three)years to 5 (five) years, from 2011 to2016.
5. Recommended to the Board of Commissionersthe granting of a remuneration package to
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Mr. Renaldo Hector Barros for the term ofoffice from January 2014 to May 2014 inaccordance to GMS Decision on 07 April2014 which approved the resignation ofMr. Renaldo Hector Barros, effective on 1June 2014.
6. The Talent Mapping process as a part ofthe Talent Management process must alwaysbe consistent with the Company’s businessstrategy. This must be reflected in themanpower planning process, which is thebasis for recruitment and employeedevelopment strategies that areappropriate for business needs. TheTalent Mapping process observes andrecords the work and potential ofindividuals in order to provide employeeswith placements and developments thatsuit their skills while stillprioritizing the business needs of theCompany. The aim of talent mapping is toplace “the right talent in the rightplace at the right time” in order toproduce optimal results for the Company’sprogress. The Committee recommended thatthe Board of Commissioners carries outthe Direction Panel consistently eachyear, keeping in mind that one of thesources of nominations for members of theBoards of Directors and Commissioners arefrom the internal officials of theCompany.
7. In relation to Mr. Andreas Eddy Susetyo’sresignation as a member of the RiskOversight Committee as of 1 January 2015,the Remuneration and Nomination Committeerecommended Mr. Wimpie Rianto as a RiskOversight Committee member, replacing Mr.Andreas Eddy Susetyo.
8. Reviewed budget policies on salary raisesin 2015 and budget allocated for bonusesin 2014 for BCA employees.
3. Implementation of compliance, internal auditand external audit functions
Implementation of compliance functionGiven that the Bank is in an industry regulatean closely monitored, as well as the increasingcomplexity of the banking business, major
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impacts from risk exposure are faced by banksone of which is compliance risk. To manage anmitigate compliance risk, BCA has appointed oneof the members of the Board of Director as theDirector in charge of the compliance function.The Compliance Unit has been formed to assistthe Director in charge of the compliancefunction.
The position of the Compliance Unit isequivalent to Divisions within the Head Officeand is directly responsible to the Director incharge of the compliance function. TheCompliance Unit is independent and free fromthe influence of other working units, as wellas having direct access to the Director incharge of the compliance function. TheCompliance Unit is responsible for theimplementation of the compliance function aswell as function as well for the implementationof provisions related to Anti-Money Launderingand Combating the Financing of Terrorism.
In order to ensure the implementation of thecompliance function of BCA, the Board ofCommissioners and Board of Directors conductactive monitoring of compliance. The activemonitoring is conducted in the form of, amongothers, approval of policies and procedures,periodic reporting, demand of explanations, andmeetings.
Compliance Activities during 2014
Undertook measures to encourage the creationof Compliance Culture, among others:
- Conducted socialization of regulations;
- Implemented consultative functionsrelated to the implementation of thenapplicable regulations;
- Provided information on OJK and BankIndonesia regulations, as well as otherlaws in the BCA portal site that can beaccessed by employees;
- Ensured the adjustment of internalregulations with the applicableregulations.
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Performed gap analysis and the impact of newprovisions to the operations of BCA and theadjustment of manual as well as necessaryinternal policies and procedures.
Performed compliance risk assessment andprepared quarterly compliance risk profilereports in order to minimize compliance risk.
Conducted review and provide opinion on newproducts and activities plan to ensure thatthe new products and activities that will beproduced in accordance with the applicableregulations.
Approved the draft of internal regulations tobe published.
Assessed the compliance of corporate creditrelease.
Tested the compliance of the implementationof the provisions in the branch offices, incooperation with the Branch InternalSupervisor.
Followed-up BCA’s commitment to the OJK, BankIndonesia and other regulators.
Performed coordination in order to assess theRisk-based Bank Health Level.
Activities Related to the Application of Anti-Money Laundering and Prevention of TerrorismFinancing ( APU and PPT )
Updated the Manual of Credit Card provisionsrelated AML and PTF.
Conducted review on the new products andactivities plan to ensure compliance to theAML and PTF regulations.
Monitored suspicious financial transactionsusing the Suspicious TransactionIdentification Model (STIM) application.
Reported suspicious financial transactions,cash transactions and financial transactionsabroad to the Center of Financial TransactionReports and Analysis Center (PPATK).
Coordinated the implementation of customerdata updating through the formulation oftarget and monitoring of the realization ofthe target.
Completed the system to filter money transfertransactions which is part of the upgradingof the STIM application.
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Renewed OFAC List and UN List as terroristdatabase to filter customers andtransactions.
Conducted training and socialization of AMLand PTF on an ongoing basis.
Developed e-learning materials on theapplication of AML and PTF.
Published a comic book on AML and PTFdistributed to all branch offices as part ofan effort to socialize.
Tested the compliance on the application ofAML and PTF in the branch offices incooperation with the Branch InternalSupervisors.
Indicators of ComplianceCompliance indicators in 2014 are reported as:• Capital Adequacy Ratio (CAR) including
credit risk, market risk and operationalrisk was 16.88%, above the prevailing BankIndonesia regulation of a minimum CAR ofbetween 9% and less than 10% (CAR based onBCA’s risk profile which is ranked as 2).
• NPL ratio (net) of 0.22%, well below themaximum allowed by Bank Indonesia regulationof 5%.
• The Bank did not exceed nor violate theLegal Lending Limit (LLL), either to relatedparties or to business groups.
• Accounted for Rupiah Account MandatoryMinimum (GWM) primary reserve of 8.36% andSecondary reserves of 20.74%, in conformitywith the provisions of the Bank regardingprimary Rupiah reserves.
• Foreign Currency Account Mandatory Minimumreserve of (GWM) 8.60%, in conformity withthe provisions for a Foreign Exchange Bankfor required reserve levels.
• Net Open Position (NOP) at 0.55%, within theBank Indonesia regulation of 20% of capital.
• All commitments to the Financial ServicesAuthority, Bank Indonesia and othersupervising authorities were well fulfilled.
Implementation of internal audit functionThe Internal Audit Division was established togenerate value and improve the operations ofBCA through independent and objective
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evaluation of various aspect, of the operationof the Bank and consulting activities.
In performing its function, the Internal AuditDivision evaluates the adequacy andeffectiveness of risk management, internalcontrol, and governance processes, and providesconsulting services to BCA internal parties inneed.
Duties and Responsibilities of the InternalAudit Division1. Develop and implement a risk-based annual
audit plan and report the realization of theplan.
2. Test and evaluate the risk management,internal control, and governance to assessits adequacy and effectiveness.
3. Carry out credit quality assessment.4. Provide recommendations for improvements and
objective information on the activitiesexamined.
5. Carry out special investigations/examinations upon request of the Board ofCommissioners, Audit Committee, Board ofDirectors, work units or based on specificindications.
6. Monitor, analyze and report theimplementation of follow-up by auditors basedon the audit result recommendations.
7. Act as a consultant for BCA internal parties,especially concerning the internal auditscope of duties.
8. Compile a program to evaluate the quality ofinternal audit activities.
Implementation StandardsActivities of the Internal Audit Division areguided by the Internal Audit Division WorkManual and the Internal Audit Charter as setforth in Directors Decision No.074A/SK/DIR/2012 dated April 30, 2012 which wasprepared in accordance with the StandardImplementation of Internal Audit for Banksissued by Bank Indonesia and regulations on thePreparation and Formulation Guidelines of theInternal Audit Charter by Bapepam-LK. As areference towards global best practices, theInternal Audit Division also uses the standardsand the code of ethics issued by the Institute
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of Internal Auditors (IIA) as well as theInformation System Audit & Control Association(ISACA).
The effectiveness of the Internal AuditDivision and its compliance with Internal AuditFunction Implementation Standards in Banking(SPFAIB) is reviewed by an independent externalparty at least once every 3 (three) years. Themost recent review was undertaken at the end of2013.
Activities of the Internal Audit Division in2014Internal Audit Division activities in 2014focused on the following:1. Renewed the Strategic Audit Plan 2015-2017
based on the Bank’s Business Plan 2015- 2017and the expectations of the Board ofCommissioners, Audit Committee and the Boardof Directors.
2. Performed audits of the Branch Offices,Regional Offices, Divisions/Working Units atthe head office and the subsidiaries based onthe results of risk assessments.
3. Performed thematic audits on theimplementation of Anti-Money Laundering –Prevention of Terrorism Financing andCorporate Social Responsibility.
4. Performed audits on the implementation ofInternal Capital Adequacy Assessment Process(ICAAP), and the application of Card-BasedPayment Instrument (APMK), in accordance toBank Indonesia regulations.
5. Performed audits on outsourced activities,especially activities that support bankingtransactions, such as the management of ATMand EDC machines.
6. Performed audits on the core application,namely Deposit and Loan System.
7. Improved the effectiveness of methodologythrough the development and implementation ofcontinuous auditing to support the role ofaudit as an early warning system.
Audit Plan Focus in 20151. The 2015 Audit will focus on:
IT Governance, in line with the increasingcomplexity of information technologyapplied.
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Electronic channels, along with theincreasing volume of transactions throughe-channels.
Management of outsourcing, in connectionwith the increasing number of outsourcedactivities.
The process of SME, commercial, andcorporate loans, to maintain good creditquality.
2. Carry out audits in Branch Offices, RegionalOffices, Head Office Division/Working Unitsand Subsidiaries determined based on theresults of risk assessments.
3. Develop Audit Management System to improvethe efficiency and effectiveness of theinternal audit management.
4. Develop and implement continuous auditing tosupport the audit’s role as an early warningsystem.
Implementation of External Audit FunctionIn order to fulfill the implementation of ExternalAudit functions in accordance with Bank IndonesiaRegulation Number: 14/14/PBI/2012 on Transparencyand Publications of Bank Reports and BankIndonesia Circular Letter Number: 3/32/DPNPconcerning the relationship between the Bank, thePublic Accounting Firms and the Bank Indonesia,BCA has implemented the following:
1. BCA Financial Statements have been audited byan independent, competent, professional, andobjective Certified Public Accountant, whouses professional skills carefully andthoroughly (due professional care).
2. The Public Accountant appointed by BCA hasconducted audits in accordance withprofessional standards, employmentagreements, and the scope of the audit.
3. Based on the decision of the Annual GeneralMeeting, the appointment of Public Accountantand the determination of fee have beenconducted by the Board of Commissioners withconsideration on the recommendation from theAudit Committee.
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4. The appointment of the Public Accountant Firmhas been conducted according to theapplicable provisions, among others:• Is a Public Accountant Firm and Public
Accountant(partner-in-charge) registeredin the Financial Service Authority/BankIndonesia. BCA only considers the 4 (four)largest Public Accountant Firms registeredin the Financial Service Authority/ BankIndonesia.
• The Public Accountant Firm will notprovide other services to BCA during theyear in order to avoid the possibility ofconflict of interest.
• The Public Accountant Firm provides auditservices for no more than 5 (five) yearsin a row.
The Public Accountant Firm Siddharta &Widjaja, affiliated with KPMGInternational, was appointed as theauditor of BCA to audit its financialstatements for the fiscal year endingDecember 31, 2014, with an estimated feeof USD 510,000 (excluding VAT).
5. BCA grants power to the Public AccountantFirm to submit audited financial statements(audit report) accompanied by a ManagementLetter to Bank Indonesia no later than 4(four) months after the fiscal year.
The Registered Public Accounting Firm and thePublic Accountants who have audited the FinancialStatements of BCA with the past 3 (three) years:
2014 2013 2012Public
AccountantFirm
Siddharta &Widjaja (nowSiddhartaWidjaja &Rekan)
Siddharta& Widjaja
Siddharta& Widjaja
PublicAccountant
ElisabethImelda
ElisabethImelda
ElisabethImelda
4. Implementation of risk management includinginternal control systemThe BOC & BOD are responsible for theimplementation of risk management and internalcontrol system in BCA. Application of risk
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management and internal control systems BCAinclude:• Active supervision by the Board of
Commissioners and the Board of Directors.• Adequacy of policies, procedures and limits.• Adequacy of the process of identification,
measurement, monitoring and control of riskand the risk management information system.
• The system of internal controls.
BCA implements risk management and internalcontrol systems which are effectively tailored tothe goals and policies of the business, the sizeand complexity of the business activities ofthe Bank in accordance to the regulations ofBank Indonesia, the Financial ServicesAuthority and with reference to best practicesthrough the following actions:
1. Identifying and controlling all risksincluding those arising from new products oractivities.
2. Establishing a Risk Oversight Committeetasked to ensure that the risk managementframework provides adequate protectionagainst all risks faced by BCA. The RiskOversight Committee’s main duty is to provideadvice and professional opinion independentlyregarding the appropriateness of the policyand the implementation of the risk managementpolicies to the Board of Commissioners, aswell as monitor and evaluate theimplementation by the Risk ManagementCommittee (KMR) and the Risk Management Unit(SKMR).
3. Establishing the Risk Management Committee(KMR) with the main duty to develop policies,strategies and guidelines for riskmanagement, to enhance the implementation ofrisk management based on the results of theevaluation of the implementation of effectiverisk management process and system whileimplementing on matters related to businessdecisions that deviate from normal procedures(irregularities).
4. Establishing the Risk Management Unit(SKMR)designed to ensure that the risks faced by
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BCA can be identified, measured, monitored,controlled, and properly reported through theappropriate application of the riskmanagement framework.
5. Managing risks and ensuring the provision ofpolicies and the establishment of risk limitsthat are supported by procedures, reports,and information systems to provide accurateand timely information and analysis tomanagement, including the development ofmeasures to deal with changes in marketconditions.
6. Ensuring that work systems and procedureshave been developed with consideration tooperations and business as well as the levelof risk that may exist in a respective workunit.
7. Ensuring that an internal control system hasbeen applied properly according to theapplicable provisions.
8. Monitoring BCA’s conformity with soundbanking principles according to theapplicable regulations through the ComplianceUnit.
9. Preparing quarterly Risk Profile and theConsolidated Risk Profile Reports andsubmitting these to the Financial ServicesAuthority in a timely manner.
Based on the results of the assessment of BCA’srisk profile, the composite risk of BCA is Lowto Moderate, the result of the inherent riskassessment is Low to Moderate and quality ofrisk management is Satisfactory.
Risk Management SystemIn order to control risk, the Bank hasimplemented an integrated Risk ManagementFramework set forth in the Basic Policy on RiskManagement(KDMR). The framework is used as aninstrument for the determination of strategy,organization, policies and guidelines, as wellas BCA’s infrastructure to ensure that all
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risks faced by the Bank can be identified,measured, controlled and reported.
In order for the application of risk managementto be carried out effectively and optimally,BCA has a Risk Management Committee that worksto address issues of risk faced by the Bank asa whole and recommend risk management policiesto the Board of Directors.
In addition to the above Committee, BCA hasformed several other committees assigned todeal with specific risks, namely the CreditPolicy Committee, the Credit Committee and theAsset and Liability Committee (ALCO).
BCA continues to do a thorough risk assessmenton the proposed issuance of new products andactivities according to the type of risk and asdetailed in PBI No. 5/8/PBI/2003 dated May 19,2003 and its amendments, among others, PBI No.11/25/PBI/2009 dated July 1, 2009 and the SEBINo. 11/35/DPNP dated December 31, 2009.
8 (eight) Types of Risk Managed by BCA:1. Credit Risk
Organization of credit continues to berefined based on the application of the“four eyes principle” whereby creditdecisions are taken based on theconsideration of both the businessdevelopment and the credit risk analysis.
BCA has developed a Basic Bank CreditPolicy (KDPB) that is continually refinedin line with BCA’s growth, Bank IndonesiaRegulations, OJK Regulations and accordingto “International Best Practice”.
Refinement of credit risk managementprocedures and the system is conductedthrough the development of the “LoanOrigination System” on loan processing(from start to finish) to allow anefficient and effective credit process.The development of a debtor risk profilemeasurement system continues to beimproved in order to be applied as awhole, while the development of a creditdatabase continues to be conducted andrefined.
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To properly maintain credit quality,credit quality monitoring continues to beconducted on a regular basis, either bycredit category (Corporate, Commercial,Small & Medium Enterprise (SME), Consumerand Credit Card) or on an overall loanportfolio basis.
BCA has developed a credit risk managementsystem by conducting a stress-testinganalysis on the credit portfolio andmonitoring the result. As a response tochanging market conditions and economicvolatility, it conducts the testing on aregular basis. Stress testing isbeneficial to the Bank as a tool forestimating the impact of risk in“stressful conditions” so that the Bankcan make appropriate strategies mitigatingthese risks as part of the implementationof the “contingency plan”.
In order to monitor and control creditrisk that may occur in subsidiaries, BCAconducts monitoring of subsidiary creditrisk on a regular basis, while ensuringthat subsidiaries have sound and effectiveCredit Risk Management policies.
2. Market Risk
In managing foreign exchange risk, BCAcentralizes the management of its net openposition through the Treasury Division,which combines daily reports of net openpositions from all branches. Each branchis required to cover their total foreignexchange risk at the end of each workingday, although there is a maximum net openposition limit for each branch dependingon the volume of foreign exchange activityin the transacting branch. BCA creates adaily net open position report thatcombines the net open positions in theconsolidated financial position statementand the administrative account (off-balance sheet accounts).
To measure foreign exchange risk, BCA usesthe Value at Risk (VaR) methodology withHistorical Simulation approach forinternal reporting purposes, while toreport BCA’s compliance to the Minimum
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Capital Requirements the Bank uses BankIndonesia’s standard methodology.
The main components of the Bank’sliabilities that are sensitive to themovements of interest rates is customerdeposits, while BCA’s sensitive assets aregovernment bonds, securities, and loans.ALCO regularly monitors marketdevelopments and adjusts interest rates ondeposits and loans.
BCA determines the interest rates ondeposits based on market conditions andcompetition by monitoring the movement ofthe benchmark interest rate and theinterest rates offered by other banks.
3. Liquidity Risk
BCA attaches great importance on themaintenance of adequate liquidity to meetits commitments to its customers and otherparties within the framework of theprovision of credit, repayment of customerdeposits, and in meeting operationalliquidity needs. The function of managingthe overall bank liquidity is conducted byALCO and implemented operationally by theTreasury Division.
Measurement and control of liquidity riskis conducted by monitoring the liquidityreserves and the Loan to Deposit Ratio(LDR), reviewing maturity profileanalysis, preparing cash flow projections,and undertaking periodic stress tests tomeasure possible impact on the Bank’sliquidity in extreme conditions. BCA alsohas a contingency funding plan to dealwith extreme conditions.
• BCA has followed the provisions related toliquidity as stipulated in Bank IndonesiaRegulation which requires the Bank tomaintain Rupiah liquidity(StatutoryReserves) on a daily basis, which consistsof Primary GWM, and LDR GWM in Rupiahdeposits at Bank Indonesia as well assecondary reserves consisting of SBI,SDBI, SUN, and excess reserves, andforeign currency reserve in the form offoreign currency current accounts in BankIndonesia.
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4. Operational Risk• The Basel II Accord requires a Bank toinclude operational risk as a component inthe calculation of capital adequacy of abank. In connection with this, BCAimplemented Risk Control Self- Assessment(RCSA) in all branch/ regional officesfollowed by divisions or work units withhigh risks in the Head Office. One goal ofthe implementation of RCSA is to embedrisk culture (the culture to manage risk)and increase risk awareness, which is amain requirement in risk management.
• BCA maintains a database of cases/ lossesrelated to operational risk occurring inall of the working units known as the LossEvent Database (LED). The LED is one ofthe means to record operational losseswhich will be used by the Bank tocalculate capital charge and tocontinuously monitor cases that may leadto operational losses.
The LED is also used by BCA to analyzecases or problems, so that corrective/prevention actions can be taken tominimize/ mitigate operational risk lossesthat may occur in the Bank. BCA hasimplemented a Key Risk Indicator(KRI)identification system as an applicationused to provide indicators(early warningsigns) on the possibility of an increasedoperational risk within a working unit.
• BCA has calculated the Bank’s minimumcapital requirement for operational risknbased on the Basic Indicator Approach, inaccordance with the regulations of BankIndonesia in relation to the inclusion ofoperational risk in the calculation ofrisk capital adequacy ratio (CAR) inaddition to credit risk and market risk.
5. Legal Risk•Inherent legal risk is assessed based onthe potential losses on court casesinvolving BCA and its subsidiaries,compared to BCA’s capital and consolidatedcapital. The parameters used to calculatethe potential losses of the cases in courtproceedings are the basis of lawsuit
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(position case), the value of the case,and legal documentation.
•In order to identify, measure, monitor andcontrol legal risks, the Bank hasestablished a Legal Group at Headquartersand legal units in most of the RegionalOffices.
•In order to mitigate legal risks, theLegal Group has taken the followingmeasures to:
- Establish Legal Risk Management Policy,having internal regulations which governthe organizational structure and the jobdescription of the Legal Group as wellas establishing legal documentstandardization.
- Organize legal communication forum toimprove the competence of the legalstaff.
- Conduct socialization on the impacts ofprevailing regulations on the bankingactivities of BCA and various modusoperandi of banking felony as well asthe legal handling guidelines forrelated branch or working unit officers.
- Conduct legal defense on civil andcriminal cases that involve the Bankwhich are currently in courtproceedings, as well as monitoring theprogress of the cases.
- Develop a loan security strategy (incollaboration with other work units,among others the Credit SettlementBureau) in relation to issues of non-performing loans.
- Register with the authorizedinstitutions the assets belonging toBCA, among others, intellectual propertyHAKI) on banking products and servicesas well as the rights on BCA’s land andbuildings.
- Monitor and conduct legal actions forviolations of BCA’s assets includingviolations on BCA’s intellectualproperty (HAKI).
- Monitor and analyze cases in courtproceedings faced by BCA and itsSubsidiaries.
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- Conduct an inventory, monitoring,analysis, and calculate loss potentialswhich may arise related to the occurringlegal cases.
6. Reputation Risk• Assessment of reputation risk is performed
using parameters such as frequency ofcomplaints and negative publicity as wellas the achievement of complaintresolution. The assessment is compiled ina quarterly report of reputation riskprofile.
• To manage and control reputation risk, theBank I supported by Halo BCA (24-hourtelephone hotline service for information,suggestions, and complaints).
• Reputation Risk management is carried outbased on:
- Bank Indonesia Regulation No. 7/7/PBI/2005 dated January 20, 2005 on theSettlement of Customer Complaints asamended by Bank Indonesia Regulation No.10/10/ PBI/2008 dated February 28, 2008.
- Bank Indonesia Circular LetterNo.7/24/DPNP dated July 18, 2005concerning Settlement of CustomerComplaints as amended by Bank IndonesiaCircular Letter No. 10/13/ DPNP datedMarch 6, 2008.
- Bank Indonesia Regulation No. 8/5/ PBI/2006 dated January 30, 2006 on BankingMediation.
- Bank Indonesia Regulation No.16/1/PBI/2014 dated January 16, 2014 onPayment System Service ConsumerProtection.
- Regulation of the Financial ServicesAuthority No. 1/POJK.07/ 2013 dated July26, 2013 on Financial Services SectorConsumer Protection.
7. Strategic Risk• Assessment of inherent strategic risk isperformed using parameters such as thesuitability between the strategy and thebusiness environment, low risk strategyversus high-risk strategy, the position of
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the Bank’s business and the achievement ofthe Bank’s Business Plan.
• Assessment of the quality of strategicrisk management is conducted by usingparameters such as risk governance, therisk management framework, risk managementprocesses, MIS and human resources, aswell as the adequacy of the risk controlsystem.
8. Compliance Risk• In accordance with the applicable BankIndonesia provisions, BCA has appointed amember of the Board of Directors as theDirector in charge of compliance. In theperformance of duties, the ComplianceDirector is supported by the ComplianceUnit which is responsible for managingBCA’s compliance risk.
• BCA has developed compliance policies andprocedures. These policies address theprocess of adjusting applicable internalsystem of rules and regulations andcommunicating relevant provisions toemployees in line with new Bank Indonesiaor OJK guidelines. The Bank also hasimplemented compliance guidelines for thereviews of new products/activities,periodic compliance testing and trainingof employees and the issuance of monthlycompliance reports to the Board ofDirectors and Board of Commissioners
• BCA has applied Bank Indonesia andinternational policies and regulations forAnti-Money Laundering and for Preventingthe Financing of Terrorism. BCA has alsodeveloped applications to identifysuspicious financial transactions inaccordance with applicable regulations.
BCA’s composite risk in the fourth quarter of2014 was “Low to moderate”, which was theresult of an assessment of “Low to Moderate”inherent risk and the assessment of“Satisfactory” quality of risk management.
The composite risks of the 8 (eight) types ofrisk assessed are as follows:
- Risks with low composite risk are MarketRisk, Liquidity Risk and Legal Risk.
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- Risks with low to moderate composite riskare Credit Risk, Operational Risk,Reputation Risk, Strategic Risk andCompliance Risk.
BCA implemented effective and efficient riskmanagement of its activities allowing the“low to moderate” composite risk level to beachieved.
The trend of inherent risks in the nextquarter is to remain stable, since based onprojection results, the Bank predicts thatthere will be no significant changes ininherent risks. The trend of the quality ofrisk management remains stable. These trendsare attributable to the Bank’s continuousimprovement on the implementation of riskmanagement in all of its activities so thatthe Bank is able to identify, measure,monitor, and control any existing risks.
Implementation Of Internal Control SystemBCA’s internal control system includes 5 (five)components:
Supervision by management and a riskcontrol culture.
Identification and assessment of risk.
Control activities and segregation of duties
Accounting, information, and communicationsystems.
Monitoring and corrective action againstdeviations from policy.
In addition, BCA has developed a businesscontinuity plan and disaster recovery plan tospeed up the recovery process in the event of adisaster and in order to have a backup systemto prevent the failure of a high-risk venture.
All management and employees of BCA have a role andresponsibility in improving the quality andimplementation of BCA’s internal control system.
The parties involved and responsible for theimplementation of BCA’s internal control systeminclude the Board of Commissioners, the AuditCommittee, the Board of Directors, the InternalAudit Division, officers and employees of BCA,
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the Internal Control of BCA, Branch InternalControl, Regional Internal Control and InternalControl of Specified Work Unit at theHeadquarters
1. Internal control is implemented through:a. Financial Control, where:
•BCA has established a Business Plan thatdetails BCA’s overall strategy,including business developmentdirection.
•The development of a strategy has takeninto account the impacts on the Bank’scapital, including projected capital andthe Bank’s CAR (Capital Adequacy Ratio).
•Directors actively engage indiscussions, providing input andmonitoring internal conditions andexternal factors that directly orindirectly could affect the Bank‘sbusiness strategy.
•BCA has implemented financial controlthrough the monitoring of efforts on therealization compared with the financialbudget in a report that is generatedperiodically and delivered in time ofneed for follow up from the Board ofDirectors.
b. Operational Control, where:• BCA has completed the standard
operating procedures/ work manualsdetailing the work procedures of eachbanking operation transactionconducted in BCA related to newproducts and new activities, includingthe mitigation of the relatedoperational risk. The creation of workprocedures was performed by Divisionof Operations and Service Development(DPOL) and has been reviewed by avariety of related work units toensure that the operational risks thatmay exist in such activities have beenmitigated.
• BCA imposed restrictions on theauthority of officers through theestablishment of limits in conductingtransactions; and restrictions to theofficers’ access to IT and computer
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networks through use of user IDs andpasswords as well as the installationfinger scanners.
• BCA has established a goodorganizational structure, equippedwith monitoring units/control tosupport the operational control as in:
- Separation of functions that can giverise to conflict of interest.
- Supervisor function to oversee thedaily implementation of internalcontrol at the Branches.
- PIC functions to periodically overseethe implementation of internalcontrol at the Branches.
- PKIW functions to oversee theimplementation of internal control atthe regional offices.
- Internal control which functions tooversee the implementation ofinternal control in specific workingunits at the Head Office.
- Risk Management Unit (SKMR), LegalGroup, Compliance Unit (SKK).
• DAI:
- Independent from the risk takingunit.
- Examines and assesses theadequacy/effectiveness of the systemof internal control, risk managementand corporate governance byperforming an annual audit plan.
c. Compliance to other laws and regulations,where:• BCA has a strong commitment to comply
with the prevailing rules andregulations and takes steps to rectifyshortcomings, if any.
• BCA has a Compliance Unit (SKK) thatis independent from the operationalunits in carrying out compliancefunctions.
• Monthly compliance monitoring of BCA’sPrecautionary Provisions submitted tothe Board of Commissioners and Boardof Directors.
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• BCA’s risk management strategy has thepolicy to always comply with theapplicable regulations and takeproactive preventive action to prevent(ex-ante) in order to minimize theoccurrence of violations and curativeaction ex-post) in order to repairshortcomings.
2. BCA has implemented an effective internalcontrol system which is adjusted with thegoals, business polices, size andcomplexity of the Bank’s businessactivities and based on the requirementsand procedures as set out by Bank IndonesiaRegulation as well as with reference tobest practice through the followingactions:• Determination of clear reporting linesand separation of functions between theoperating units and work units carryingout control functions. Control functionsare performed by the Risk ManagementUnit (SKMR), Law Group (GHK), ComplianceUnit (SKK) and the Internal AuditDivision (DAI).
• The Internal Audit Divisionindependently and objectively reviewsBCA’s procedures and operationalactivities periodically. The result ofthe review is presented in Audit Reportsand Audit Follow-up Reports to the Boardof Directors.
• Branch Internal Oversight (PIC),Regional Office Internal Oversight(PIKW) and the Audit Division (DAI) haveconducted evaluations on theimplementation of the systems andprocedures in BCA. The results of theevaluation from PIC, PIKW and DAI becomethe benchmark of compliance level of theworking units to the system andprocedures that have been established.
5. Provision Of Funds To Related Parties And LargeExposuresBCA has a policy regarding the provision offunds to related parties and large exposures,as stipulated in the Credit Manual. Evaluationand update of the policies in the Credit Manualare performed regularly. Lending to related
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parties and large exposures to debtors arealways conducted with respect to theprecautionary principle, and in compliance withBank Indonesia Regulations and other prevailinglaws and regulations, among others concerningthe aspect of Legal Lending Limit (LLL). Inaddition, lending to related parties should bedecided by the Board of Commissionersindependently.Routine reporting of LLL to Bank Indonesia isconducted in a timely manner. Throughout 2014,there was no violation of or exceeding limitsof LLL.
Provision of Funds to Related Parties and toMain Individual and Group Debtors (LargeExposures) in BCA during 2014
No. Lending
Total
DebtorNominal(MillionRupiah)
1. To Related Parties 199 4,816,082
2. To main Debtorsa. Individual 50 71,506,758b. Group 30 94,735,965
6. Strategic planIn anticipation of the dynamic changes in theexternal business environment, BCA continues toreview its short, medium and long-termstrategies in its strategic plan, as covered inthe Bank Business Plan and the Annual Budgetand Work Plan. The formulation of the BankBusiness Plan is undertaken with reference toBank Indonesia Regulation No. 12/21/PBI/2010dated 19 October 2010 on Business Plan forCommercial Banks and the provisions on BankIndonesia Circular Letter No. 12/27/DPNP dated25 October 2010 on Business Plan for CommercialBanks.
As part of its policy direction and strategicinitiatives towards its vision and missionstatements, BCA has developed a number ofbusiness initiatives that are specificallydesigned to accommodate the growing andchanging customer needs.
BCA Strategic Plan in 2015
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Although faced with various challenges, BCA isoptimistic that Indonesia will see a smoothtransition period. The presidential electionsand the transition to the new administrationwent smoothly with the election of Joko Widodogiving high confidence for businesses andconsumers. The Bank believes that the solidbase developed by Susilo Bambang Yudhoyono’sadministration and the new approaches offeredby Joko Widodo’s administration will open upnew opportunities for businesses.
Overall, BCA sees the Indonesian economy andthe banking sector on a solid footing to face aperiod of economic transition and consolidationin 2015. BCA supports the efforts of theIndonesia Financial Services Authority and BankIndonesia to maintain national credit growth atsustainable levels and maintain a healthycapital and liquidity of the banking sector.
In the long run, BCA is optimistic about theprospects of the economy and banking inIndonesia. The growth of the middle class inIndonesia and infrastructure development willsupport domestic economic growth in the future.
Supported by sound capital and solid liquidityposition, BCA is committed to continuinginvestments in 2015 in order to strengthen theBank’s franchise value. Strategic priorities in2015 will remain directed at deepening customerrelationships through enhanced paymentsettlement services, prudent lending, and newbusinesses development. Opportunities forlending and development of new businesses willoptimize the Bank’s preeminence as atransaction bank. Below is a furtherelaboration of the three major businessobjectives:
Enhancing Payment Settlement ServicesBCA believes that excellence in paymentsettlement services will strengthen the longterm competitive advantage and will supportthe growth of the Bank’s third party fundsparticularly in the stable CASA accounts.As such, BCA continues to improve thecapability of payment settlement services,including through innovation and improvement
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of product features and services. BCA willfollow, explore and apply the latesttechnological developments in line with thelevel of customer acceptance. On networkexpansion, the Bank will increase the numberof branches and electronic deliverychannels, supported by enhanced capabilityand capacity of information technologyinfrastructure. In addition, cash managementcapabilities will continue to be improved.
BCA will continue to assess the developmentof the banking sector, in particularliquidity and CASA trends, withconsideration to economic growth andbusiness activities. If necessary, BCA canactively raise funds through time depositsproducts by adjusting interest rates. Thisis essential to maintaining third partyfunds and a strong and healthy liquidityposition.
LendingIn developing the credit portfolio in thecoming years, BCA will continue to implementongoing policies while taking into accountliquidity and capital capacity, as well asmonitoring macroeconomic developmentsaccompanied by the implementation of aprudent and effective risk managementregime.
In the short term, the Bank will prioritizelending to qualified customers and segmentsthat can contribute to CASA and overallthird-party funds growth. For businesslending, the Bank will actively explorelending to sectors with broad value chains.For individual customer lending, the Bankbelieves that mortgages, vehicle loans, andcredit card loans have great potential forgrowth in the long term. Thus, althoughindividual loans are expected to grow slowerthan loans in the business sector. In shortmedium term, BCA is committed to being aleader and maintaining a strategic presencein the market.
BCA sees that the lending activities play animportant role in maintaining long-term
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relationships with customers. To that end,the Bank will continue to enhance lendinginfrastructure in the various segments bothin branches and at headquarters in supportof sustainable credit growth.
Business Development Through SubsidiariesTo meet the increasingly diverse needs ofcustomers, BCA is developing a wide range ofcomprehensive financial products and servicesthrough new lines of businesses together withits subsidiaries in the field of vehiclefinancing, Sharia banking, securities,remittance, general insurance and lifeinsurance.
In general, the subsidiaries continued togrow and have begun showing positive resultsin recent years. In late 2014, BCA Life,providing life insurance products, beganoperations and will complete the Bank’sfinancial products and solutions forcustomers. BCA Finance, an establishedsubsidiary entity active in the 4-wheelerfinancing industry, consistently provides asignificant contribution to BCA’sprofitability.
In the coming years, the Bank will continueto support the growth of its subsidiaries andstrengthen synergies with the Bank’s mainbusiness lines in the field of paymentsettlement services and lending. BCA willprovide capital support progressively in linewith business growth of respectivesubsidiaries.
The Bank believes that the strategy and thepolicy will support BCA in strengthening theBank’s long-term competitive advantages.Consistent strategic moves are believed to beable to build a quality customer base amidrising competition of Indonesian bankingindustry.
46
7. Transparency Of Bank Financial And NonFinancial Conditions Not Disclosed In OtherReportsInformation on the financial conditions of BCAhas been disclosed in a transparent manner inseveral reports, among others:
Transparency of Financial Conditions1. Annual Report, which among others covers:
a. Financial highlights including stockperformance, reports of the Board ofCommissioners and Board of Directors,Company profile, management analysis anddiscussion on business and financialperformance, corporate governance, andcorporate social responsibility.
b. The Annual Financial Statements that havebeen audited by a Public Accountant andPublic Accountant Firm that is registeredat Bank Indonesia. The annual FinancialStatements cover a period of 1 (one)fiscal year with comparison to theprevious fiscal year.
c. Statement of responsibilities of theBoard of Commissioners and Board ofDirectors regarding the accuracy of thecontents of the Annual Report. Thestatements are set forth in the statementletter, which is signed by all members ofthe Board of Commissioners and Board ofDirectors.
2. Quarterly Published Financial ReportsBCA releases Quarterly Published FinancialReports in accordance with the prevailingregulations. The Published Financial Reportsare signed by 2 (two) members of the Boardof Directors. The Published FinancialReports are published in 3 (three) majordaily newspapers, 2 (two) in Indonesianlanguage and 1 (one) in English, which havea wide circulation in the location of BCA’sHead Office.
3. Monthly Published Financial ReportsBCA prepares and submits a monthly financialreport in the Commercial Bank Monthly Reportformat in accordance with Bank Indonesiaregulations. This report in turn forms thebasis for Bank Indonesia to prepare the
47
monthly financial reports for bankspublished on its website.
Transparency of Non-Financial ConditionsBCA provides clear, accurate and up-to-dateinformation on its banking products. Theinformation can be easily obtained by customersin the form of leaflets, brochures and otherwritten materials in every BCA branch office ineasily accessible locations, and/or in the formof electronic information provided through thehotline service/call center or website.
In addition, BCA also provides information oncustomer complaints and the settlement ofdisputes with customers in accordance with BankIndonesia regulations concerning customercomplaints and banking mediation.
In relation to the above, BCA has conducted thefollowing:1. Transparently published the financial and
non-financial conditions to stakeholders,among others in the form of PeriodicFinancial Reports, and the submission ofRoutine Legal Lending Limit Reports to BankIndonesia, Quarterly Published FinancialReports, as well as publishing on BCA’swebsite in accordance with the prevailingregulations.
2. Prepared and presented reports in a manner,type and scope as stipulated in BankIndonesia regulation on Transparency of BankFinancial Conditions.
3. Disclosed information regarding BCA’sproducts in accordance with Bank Indonesiaregulation on Transparency of Information ofBanking Products and on Utilization ofCustomer’s Personal Data.
4. Transparently disclosed information on thehandling of customer complaints and thesettlement of disputes with customers, inaccordance with Bank Indonesia regulation onCustomer Complaints and Banking Mediation.
5. Submitted Annual Reports to Bank Indonesia,other regulatory bodies, and other
48
institutions as required by the relevantregulations or as deemed necessary.
6. Published the Ownership Structure in theAnnual Report and the BCA website.
8. Other Information relating to Corporate GovernanceNo intervention from the owner in:
the composition of the members of the Boardof Commissioners and the Board of Directors;
implementation of the duties of the Board ofCommissioners and the Board of Directors;
which causes the BCA operations is disrupted thatresult in the BCA;s profits being reduced and/orcausing harm to BCA.
the composition of the Committees under theBoard of Commissioners;
the implementation of duties of the Committeesunder the Board of Commissioners;
B. Share ownership of the members of the Board of Commis-sioners and the Board of Directors with an equityamount of 5% (five percent) or more than the amount ofpaid-up capital, including the type and number ofshares in:a. BCA;b. Other banks;c. Non-Bank Financial Institutions; andd. Other companies;domiciled in Indonesia or overseas.
Share ownership of members of the Board of Commis-sioners that ammounts to 5% or more of the paid-upcapital
Name
Share ownership of the members of theBoard of Commissioners that ammount 5%
or more of the paid-up capital in
BCAOtherBanks
Non-BankFinancial
Institutions
Othercompanies
Djohan EmirSetijono
- - -
Tonny Kusnadi - - - CyrillusHarinowo
- - - -
Raden Pardede - - - Sigit Pramono - - - -Description:√ = owns shares that amount to 5% (five percent) or more of the Paid-up Capital
49
Share ownership of members of the Board of Directorsthat ammounts 5% or more of the paid-up capital
Name
Share Ownership of Members of the Boardof Directors that amounts to 5% or moreof the Paid-up Capital at:
BCAOtherBanks
Non-BankFinancial
Institutions
Othercompanies
JahjaSetiaatmadja
- - -
Eugene KeithGalbraith
- - - -
Dhalia M.Ariotedjo
- - - -
Anthony BrentElam
- - - -
SuwignyoBudiman
- - - -
HenryKoenaifi
- - - -
Tan HoHien/SuburTan
- - - -
Armand W.Hartono
- - -
Erwan YurisAng
- - - -
Rudy Susanto - - - -
Description :√ = owns shares amounting to 5% (five percent) or more of the paid up
capital
C. Financial relationship and family relationships ofmembers of the Board of Commissioners and the Board ofDirectors with other members of the Board of Commis-sioners, other members of the Board of Directors and/or Controlling ShareholdersAll members of the Board of Commissioners of BCA haveno family connection to the second degree orfinancial relationships with fellow members of theBoard of Commissioners, members of the Board ofDirectors and/or Controlling Shareholders, or arelationship with BCA that may affect their abilityto act independently.
50
Name Position
Family Relations to the Second Degreewith:
Financial Relations with:
Board ofCommissioners
Board ofDirectors
ControllingShareholder
Board ofCommissioners
Board ofDirectors
ControllingShareholder
Yes No Yes No Yes No Yes No Yes No Yes NoDjohanEmirSetijono
PresidentCommissioner
- - - - - -
TonnyKusnadi
Commissioner - - - - - -
CyrillusHarinowo
IndependentCommissioner
- - - - - -
RadenPardede
IndependentCommissioner
- - - - - -
SigitPramono
IndependentCommissioner
- - - - - -
The majority of members of the Board of Directors of BCAhave no financial, management, stock ownership and familyrelationships with members of the Board of Commissioners,fellow members of the Board of Directors and/orControlling Shareholders or business relationship withBCA that may affect their ability to act independently
Name Position
Family Relations to the Second Degreewith:
Financial Relations with:
Board ofCommissioners
Board ofDirectors
ControllingShareholder
Board ofCommissioners
Board ofDirectors
ControllingShareholder
Yes No Yes No Yes No Yes No Yes No Yes NoJahjaSetiaatmadja
PresidentDirector
- - - - - -
Eugene KeithGalbraith
VicePresidentDirector
- - - - - -
Dhalia M.Ariotedjo
Director - - - - - -
AnthonyBrent Elam
Director - - - - - -
SuwignyoBudiman
Director - - - - - -
RenaldoHectorBarros
Director - - - - - -
HenryKoenaifi
Director - - - - - -
Tan HoHien/SuburTan
Director - - - - - -
ArmandWahyudiHartono
Director - - - - - -
Erwan YurisAng
Director(concurrentlyas ComplianceDirector)
- - - - - -
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D. Remuneration package/policy and other facilities forthe Board of Commissioners and the Board of Directors.
The Remuneration structure that shows the componentsof remuneration and the nominal amount per componentsfor all members of the Board of Commissioners for2014
The amount of remuneration for each member of the Board ofDirectors in 1 (one) year is above Rp 2 billion, receivedin cash throughout 2014.
The Remuneration Structure showing the remunerationcomponents and nominal value for each component forall members of the Board of Directors in 2014 is asfollows:
Type of Remuneration and otherfacilities
Type of Remuneration and OtherFacilities
THE BOARD OF DIRECTORSPerson In million Rupiah
1. Remuneration (salary, bonus,routine allowances, tantiem,and other non-naturafacilities)
10 254,915
2. Other natura facilities:a. Business Travel Allowanceb. Health Benefitsc. Health Club Membershipd. Option to buy service
vehicle at the end ofleasing period
1010710
5601,374257
15,809
3. Benefit retirement (owned atthe end of the duty)
10 USD 2,190,000
Total 272,915 + USD 2,190,000
Type of Remuneration and other facilitiesAmount Received in 1 Year
THE BOARD OF COMMISSIONERSPerson In million Rupiah
1. Remuneration (salary, bonus,routine allowances, tantiem,and other non-naturafacilities)
5 71, 694
2. Other natura facilities:a. Business Travel Allowanceb. Health Benefitsc. Health & Golf Club
Membershipd. Option of purchasing
service vehicles at theend of Leasingn period
352
5
7854489
5,596
3. Benefit retirement (owned atthe end of the duty)
5 USD 825,000
Total 78,001 + USD 825,000
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The amount of remuneration for each member of theBoard of Directors in 1 (one) year is above Rp 2billion, received in cash throughout 2014.
E. SHARES BUY BACKIn 2014, there were no corporate actions of sharerepurchase (Shares Buy Back).
F. HIGHEST AND LOWEST SALARY RATIO
What is meant by salary is the employee’s rightreceived and expressed in the form of money as areward from BCA as the employer to the employee whichis determined and paid according to the employmentcontracts, agreements or laws, including benefits foremployees and their families, for the tasks and/orservices which has been conducted.
The following is the highest and lowest salary ratioin comparison scale
Salaries comparable in the salary ratio mentionedabove, is the reward received by members of the Boardof Commissioners, members of the Board of Directorsand employees per month. What is meant by employee ispermanent employee of BCA to executive.
G. Frequency of the Board of Commissioners Meetings, theBoard of Directors Meetings and Joint Meetings betweenthe Board of Commissioners and the Board of Directors.Board of Commissioners MeetingsThe Board of Commissioners meeting schedule is set atthe beginning of the year. Throughout 2014, the Boardof Commissioners held 50 (fifty) meetings. BCA is incompliance with Bank Indonesia regulations regardingminimum mandatory Board meetings of 4 (four) times ayear, with physical attendance of at least 2 (two)times a year.Decision-making is conducted through consensusagreement. In the event consensus agreement does notoccur, decision-making is carried out based onmajority vote.
Ratio Comparison ScaleHighest and lowest employee salary ratio 42.60Highest and lowest Director salary ratio 2.88Highest and lowest Commissioner salary ratio 1.63The ratio of the highest Director salary andthe highest employee salary
6.14
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All decisions taken in the meeting of the Board ofCommissioners shall be binding. Differences ofopinion (dissenting opinions) that occur in the Boardof Commissioners meetings shall be clearly stated inthe minutes of the meeting along with the reasons fordissent.
Frequency and Attendance of the Board ofCommissioners for 2014 are detailed in the following:
Name TotalMeetings
Attendance Percentage
Djohan EmirSetijono
50 46 92%
Tonny Kusnadi 50 46 92%CyrillusHarinowo
50 39 78%
Raden Pardede 50 42 84%Sigit Pramono 50 48 96%
Board of Directors MeetingsThe Board of Directors meeting schedule is set at thebeginning of the year. Throughout 2014, the Board ofDirectors held 45 (forty five) meetings.The decision making is conducted through consensusagreement. In the event consensus agreement is notreached, the decision making shall be made based onmajority vote.All decisions made in the Board of Directors Meetingsshall be binding. Dissenting opinions that occur in theBoard of Directors meetings shall be clearly stated inthe minutes of meeting along with the reasons thereof.
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Frequency of the Board of Directors Meetings andAttendance of the Members of the Board of Directors for2014
Name TotalMeetings
Attendance Percentage
Jahja Setiaatmadja 45 42 93%Eugene KeithGalbraith
45 36 80%
Dhalia M. Ariotedjo 45 35 78%Anthony Brent Elam 45 36 80%Suwignyo Budiman 45 38 84%Tan Ho Hien/SuburTan
45 39 87%
Renaldo HectorBarros *
24 9 37.5%
Henry Koenaifi 45 37 82%Armand W. Hartono 45 35 78%Erwan Yuris Ang 45 35 78%Rudy Susanto ** 17 14 82%
* Mr. Renaldo Hector Barros resigned as Director of BCA effectively starting 1June 2014
** Mr. Rudy Susanto effectively has become a Director of BCA starting 21 July 2014
The frequency of Joint Meetings between the Board ofCommissioners and the Board of Directors andAttendance of Members of the Board of Commissionersduring these joint meetings in 2014 is detailed in thefollowing:
Name TotalMeetings
Attendance Percentage
Djohan EmirSetijono
15 14 93%
Tonny Kusnadi 15 15 100%Cyrillus Harinowo 15 12 80%Raden Pardede 15 13 87%Sigit Pramono 15 13 87%
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The Board of Commissioners and Board of Directors JointMeeting frequency and level of attendance of members ofthe Board of Directors at the Joint Meetings throughout2014 are as follows:
Name TotalMeetings
Attendance Percentage
Jahja Setiaatmadja 15 11 73%Eugene KeithGalbraith
15 12 80%
Dhalia M.Ariotedjo
15 10 67%
Anthony Brent Elam 15 12 80%Suwignyo Budiman 15 11 73%Tan Ho Hien/SuburTan
15 13 87%
Renaldo HectorBarros *
8 2 25%
Henry Koenaifi 15 14 93%Armand W. Hartono 15 10 67%Erwan Yuris Ang 15 11 73%Rudy Susanto ** 7 5 71%
* Mr. Renaldo Hector Barros resigned as Director of BCA effectively starting 1June 2014
** Mr. Rudy Susanto effectively has become a Director of BCA starting 21 July 2014
H. Internal FraudInternal fraud is the deviation/fraud committed bymanagement, permanent and temporary employees relatedto the work processes and operational activities ofBCA. Throughout 2014, there were some internal fraudswith nominal above Rp100 million (one hundred millionrupiah). 2 (two) internal frauds were committed bypermanent employees and 1 (one) by a temporaryemployee. The three cases have been solved internallyin BCA.
Internalfraud in 1
Year
Number of Cases conducted by:
ManagementPermanentEmployees
TemporaryEmployees
Prior YearCurrentYear
PriorYear
CurrentYear
PriorYear
CurrentYear
Total Found - - 2 2 1 1Resolved - - 2 2 - 1In theprocess ofinternalsettlementwithin BCA
- - - - - -
Settlementhas notbeen sought
- - - - - -
Followed upthroughthe legalprocess
- - - - 1 -
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I. Important Cases And Administrative Sanctions (LegalIssues )
The numbers of civil and criminal cases with thevalue above Rp 100,000,000 (one hundred millionRupiah) which have been resolved (having bindinglegal force) and which are still in the process ofsettlement as of December 31, 2014 are as follows:
Legal Cases Civil Cases Criminal CasesHave been resolved (having bindinglegal force):• Rp 101 million – Rp 500 million 4 1• Above Rp 500 million 1 1
Total 5 2In the process of settlement:
Rp 101 million – Rp 500 million 47 1
Above Rp 500 million 4 -
Total 51 1Total Cases 56 3
During 2014, there were no important cases faced byBCA, BCA subsidiary entities, members of the Board ofCommissioners and members of the Board of Directorsduring the period of this annual report, thusproviding no effect on the BCA’s financial condition.
During 2014 there were no material administrativesanctions, imposed by the authorities (the FinancialServices Authority, Bank Indonesia, the StockExchange, and other authorities) to BCA, members ofthe Board of Commissioners, and the members of theBoard of Directors.
J. Transactions with Conflict of Interest and AffiliatedTransactionBCA is committed to handling all transactions withconflict of interest by complying with applicablelaws and regulations, among others, the regulationsfrom Bank Indonesia and Bapepam-LK. To support this,BCA has internal policies regarding conflict ofinterest, among others, published in:
BOD Decision No. 219/SK/DIR/2003 dated November 10,2003 on the provisions related to conflict ofinterest.
BOD Decision No. 137/SK/DIR/2008 dated September 26,2008 on the provisions related to transactions withparties affiliated to BCA.
BOD Decision on the provisions related to theprocurement of goods/services for logistics, andbuilding including those related to Information
57
Technology (IT) applicable at the Head Office, inall Regional Offices and Branch Offices of BCA.
BCA’s Articles of Association.
BCA’s Code of Ethics.
The Code of Ethics of the Logistic and BuildingDivision.
Policy/internal memos related to AffiliationTransactions.
BCA’s Manual, among others, GCG Manual, the Manualof the Logistic and Building Division.
In order to prevent conflict of interest in theprocurement of goods and/or services, procurementsystem conducted consists among others:1. Centralized Procurement
Procurement of logistics goods/services as well asbuilding through the Logistics and BuildingDivision – BCA Head Office
2. Decentralized ProcurementProcurement of logistics goods/services as well asbuilding without going through the Logistics andBuilding Division – BCA Head Office, but isconducted by:
- Head Office Work Unit located at the Branch, or
- BCA Regional Office (for all main branches andsub-branches bellow).
BCA has an internal policy that requires all membersof the Board of Commissioners, members of the Boardof Directors and officials with the rank Echelon 1(S1) to echelon 5 (S5) to make an annual statement(annual disclosure) that contains all thecircumstances or situations that may lead to aconflict of interest, which is updated on a yearlybasis.
.In 2014, BCA did not have transactions containingconflict of interest
K. Shares Buy Back and/or Bond Buy BackIn 2014, there were no corporate actions of sharerepurchase (Shares Buy Back).
L. Donation for Social Activities and/or Political Acti-vities during the Reporting Period (Provision OfFunds For Social Activities)BCA actively contributes to the improvement of publicwelfare and environmental causes through variouscorporate social responsibility activities. Underthe ‘Bakti BCA’ program.
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Overall, BCA’s social activities programs during 2014were focused on 3 (three pillars), among others:A. Smart Solution Pillar (Pilar Solusi Cerdas), whichconsists of:
1. Non-degree Accounting Education Program (PPA)2. Non-degree Information Technology Education
(PPTI)3. Bakti BCA Internship4. Integrated partner schools5. Bakti BCA Scholarship6. Banking education and partnership with other
institutions in education, and charity/donationfor other education institutions
B. Sinergy Solution Pillar (Pilar Solusi Energi),which consists of:1. Culture2. Health Area:
a. Bakti BCA Cataract operations serviceb. Bakti BCA Blood Donorc. Bakti BCA Public Health Service Partnership
3. Environmental Conservation area4. Bakti BCA Empathy Program in form of donation
for natural disaster victims, and sportsprogram
C. Excellent Business Solution Pillar (Pilar SolusiBisnis Unggul), which consists of:
1. Partnership with communities2. Business Development Institution
In addition to the programs mentioned above, BCA alsoparticipates in giving charity or donation to othersocial institutions.
The total funds distributed for BCA’s socialactivities in 2014 is as explained in the chapter onCorporate Social Responsibility in this BCA AnnualReport.
A full description of the Company’s socialresponsibility activities throughout 2014 is reportedin the chapter on Corporate Social Responsibility inthis BCA Annual Report.
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