TABLE OF CONTENT - Bank BJB · 3 Implementation of Good Corporate Governance (GCG) of bank bjb year 2016 Integrity 6. Consistent, disciplined, and passionate 7. Keeping good image

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TABLE OF CONTENT

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

A.1 Key Principles ..................................................................................................... 1

A.2 Good Corporate Governance Assessment ........................................................ 1

A.3 Vision, Mission, and Corporate Values of the Bank ........................................ 2

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

B. Implementation of Good Corporate Governance of the Bank ................................ 3

B.1 Execution of Duties and Responsibilities of the Board of Commissionersand Board of Director ....................................................................................... 3

B.1.1 The Board of Commissioners ................................................................... 3

B.1.1.1 Amount and Composition of the Board of Commissioners ...... 3

B.1.1.2 Criteria of the Member of the Board of Commissioners .......... 4

B.1.1.3 The Duties and Responsibilities of the Board ofCommissioners ............................................................................

5

B.1.1.4 The Board of Commissioners’ Independence ............................ 7

B.1.1.5 Recommendation from the Board of Commissioners .............. 7

B.1.2 Board of Directors .................................................................................... 9

B.1.2.1 Number and Composition of the Board of Directors ............... 9

B.1.2.2 Criteria of the Members of the Board of Directors .................. 9

B.1.2.3 Duties and Responsibilities of the Board of Directors ............. 10

B.2 Instrument and the Performance of Committees ............................................ 13

B.2.1 Audit Committee ..................................................................................... 14

B.2.1.1 Independence of the Audit Committee Members .................... 15

B.2.1.2 The Roles and Responsibilities of the Audit Committee ......... 15

B.2.1.3 Meetings and Attendance of the Audit Committee ................. 24

B.2.1.4 The Implementation of the Task of the Audit Committee ...... 24

B.2.2 Risk Monitoring Committee ................................................................... 26

B.2.2.1 Independence of Risk Monitoring Committee Members ........ 27

B.2.2.2 The Roles and Responsibilities of the Risk MonitoringCommittee .................................................................................... 27

B.2.2.3 Meeting and Attendance of the Risk Monitoring Committee . 28

B.2.2.4 Implementation of Risk Monitoring Committee Duties ......... 28

B.2.3 Nomination and Remuneration Committee ......................................... 29

B.2.3.1 Nomination and Remuneration Committee Independence .... 30

B.2.3.2 The Roles and Responsibilities of the Nomination andRemuneration Committee .......................................................... 30

B.2.3.3 Meetings and Attendance of the Nomination andRemuneration Committee .......................................................... 32

B.2.3.4 Implementation of the Task of the Remuneration andNomination Committee .............................................................. 32

B.2.4 Integrated Good Governance Committee ............................................. 33

B.2.4.1 The Independence of the Integrated Good GovernanceCommittee .................................................................................... 34

B.2.4.2 The Roles and Responsibilities of of the Integrated GoodGovernance Committee .............................................................. 34

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B.2.4.3 Meeting and Attendance of the Integrated Good GovernanceCommittee .................................................................................... 35

B.2.4.4 Implementation of the Task of the Integrated GoodGovernance Committee .............................................................. 35

B.2.5 Business & Credit Monitoring Committee ............................................ 36

B.2.5.1 Business & Credit Monitoring Committee ................................ 36

B.2.5.2 The Roles and Responsibilities of the Business and CreditMonitoring Committee ............................................................... 37

B.2.5.3 Meeting and Attendance of Business Monitoring and CreditCommittee .................................................................................... 37

B.2.5.4 Implementation of the Task of the Business Monitoring andCredit Committee ........................................................................ 37

B.3 Implementation of Compliance Function, Internal and External Audit ....... 38

B.3.1 Implementation of Compliance Function .............................................. 38

B.3.1.1 Compliance Function .................................................................. 38

B.3.1.2 The Roles and Responsibilities of the Compliance Work Unit 39

B.3.1.3 Monitoring implementation of Anti Money Laundering andCounter Terrorist Financing (APL-CFT) .................................... 42

B.3.2 Implementation of Internal Audit Function ......................................... 44

B.3.3 Implementation of External Audit Function ......................................... 46

B.4 Implementation of Risk Management and Internal Control System ............. 47

B.4.1 Risk Management Implementation ........................................................ 47

B.4.2 Internal Control System ......................................................................... 59

B.5 Credit Grant to Related Parties and Large Exposures ..................................... 61

B.6 The Bank’s Strategic Plan .................................................................................. 62

B.7 Bank’s Learning and Training 2016 ................................................................... 67

B.7.1 Competence Development of the Board of Commissioners ................ 67

B.7.2 Development of the Board of Directors Competency .......................... 68

B.7.3 Employee Training Information ............................................................. 68

B.8 Company Secretary ............................................................................................ 70

B.9 Bond Rating ........................................................................................................ 71

B.10 Good Corporate Governance Activity of 2016 .................................................. 71

C. Share Ownership of the Members of the Board of Commissioners and Board ofDirectors that Reach 5% (five percent) or More from the Paid-in Capital ............ 72

D. Financial Relationships and Family Relationships of the Members of the Boardof Commissioners and the Board of Directors with Other Members of TheBoard of Commissioners, the Board of Directors and/or The Bank’s ControllingShareholder ................................................................................................................. 73

E. Human Resources Management ............................................................................... 73

E.1 Human Resoures Planning ................................................................................. 73

E.2 Recruitment of Human Resources .................................................................... 74

E.3 Career Development Policy ............................................................................... 74

E.4 Employee Competency Development .............................................................. 75

E.5 Competency Development Policy ..................................................................... 75

E.6 Performance Management System ................................................................... 75

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E.7 Corporate Recognition to All Employee ........................................................... 76

E.8 Employee Remuneration Strategy .................................................................... 77

F. The Frequency of the Board of Commissioners and the Board of DirectorsMeeting ....................................................................................................................... 78

G. Number of Internal Fraud ......................................................................................... 79

H. Litigation Cases .......................................................................................................... 79

I. Conflict of Interest Transaction ................................................................................ 80

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

K. Social Activities Funding for 2016 ............................................................................. 80

L. General Conclusion of Self Assessment Results Implementation of GoodCorporate Governance Bank Implementation for Year 2016 ..................................

82

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1 Implementation of Good Corporate Governance (GCG) of bank bjb year 2016

Implementation of Good Corporate Governance of bank bjbYear 2016

A. Background

To build on its success PT. Bank Pembangunan Daerah Jawa Barat dan Banten, Tbk.,

hereinafter referred to as the Bank, needs to adapt with any changes. The changes faced

by the Bank in performing its business activities require professional and consistent

management of the company. Such changes can be the motivator to perform a good

corporate governance across the company’s process. Based on the above considerations,

the Bank strives to make the good governance principles as one of the main pillars in

undertaking all of its business activities. The commitment is made so the Bank can

always give extra value to all the stakeholders, i.e. the customers, investors, shareholders.

public in general, and bjb employees for all the trust they have put to the Bank.

A.1 Key Principles

Good Corporate Governance is always founded on these 5 basic principles, i.e.:

a. Transparency, the openness in providing material and relevant information as

well as in its decision-making process;

b. Accountability, the clarity of the functions and accountability from the Bank’s

elements to ensure effective management;

c. Responsibility, compliance of the Bank management to the prevailing

legislations and sound bank management principles;

d. Independency, the professional management of the Bank without any

influence/pressure from any parties;

e. Fairness, the absence of favoritism and equality to fulfill the rights of the

stakeholders due the contractual agreement and prevailing legislations

requirements.

To implement Good Corporate Governance (GCG) practice, the Bank has committed

to make the GCG principles in conformity with its policies as the foundation in

performing its business activities. This is consistent with the Financial Services

Authority’s objective to improve the good governance practice of the banking sector

as stated in the Financial Services Authority Regulation number 55/POJK.03/2016

and Concerning the Implementation of Good Governance for Commercial Bank and

Circular Letter of the Financial Services Authority number 13/SEOJK.03/2017

Concerning the Implementation of Good Corporate Governance for Commercial

Bank.

A.2 Good Corporate Governance Assessment

Assessments have been preformed to ensure the implementation of 5 basic

principles of GCG by the Bank. Using the self-assessment method, the Bank has

performed the assessments on a regular basis. The assessments were made by

evaluating 11 (eleven) GCG implementation factors:

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a. Execution of duties and responsibilities of the Board of Commissioners;

b. Execution of duties and responsibilities of the Board of Directors;

c. Establishment of the Committee and performance of its duties;

d. Conflict of interest management;

e. Implementation of compliance function;

f. Implementation of internal audit function;

g. Implementation of external audit functions;

h. Implementation of risk management including its internal control system;

i. Credit grant to related parties and large exposures;

j. Transparency of the Bank's financial and non-financial conditions, Good

Corporate Governance implementation, and internal reporting;

k. The Bank’s Strategic Plan

The assessments of 11 (eleven) GCG implementation factors were carried out in a

governance system comprising of 3 (three) assessment components, i.e. governance

structure, governance process, and governance outcome.

A.3 Vision, Mission, and Corporate Values of the Bank

As an organization, the Bank expresses its objectives in the following vision and

mission:

Vision:

To be the Indonesian Top 10 Most Performing Bank.

Mission:

- To be the motor and driver of the regional economy;

- To be the region's money management;

- One of the region’s original sources of income.

To achieve the vision and mission, the Bank nurtures corporate values so that all

the Bank’s employees have the shared perceptions on the actions that the Bank

need to take to run aligned business activities. The corporate values set by the Bank

are also founded on the principles of transparency, accountability, responsibility,

independence, and fairness which also the foundation of GCG implementation.

These established corporate values are embodied in the tagline of Go SPIRIT in

order to facilitate the implementation.

Go SPIRIT

Corporate Values Main Behavior

Service Excellence1. Friendly, sincere, family relationship

2. Continuous excellent service

Professionalism

3. Fast, precise, accurate

4. Competent and responsible

5. Understands and in compliance with the company policies.

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Integrity

6. Consistent, disciplined, and passionate

7. Keeping good image of the Bank through exemplary

behavior and ethics

Respect8. Customer-focused

9. Care for the environment

Intelligence

10. Always provides the best solution

11. Strong determination to develop themselves

12. Open to positive change

Trust13. Nurture transparency, unity, and positive collaboration

14. Maintain the bank’s and company’s confidentiality

A.4 Organizational Structure

Implementation of GCG in the Bank is based on the joint commitment of all Bank

personnel to follow and comply with all applicable regulations. This is implemented

through Bank’s organizational structure that reflects the GCG principles. The

Bank’s organizational structure consists of main organs (General Meeting of

Shareholders, Board of Commissioners, and Board of Directors) and supporting

organs (Committees, Internal Audit Work Unit, Risk Management Work Unit, and

Company Secretary)

B. Implementation of Good Corporate Governance of the Bank

B.1 Execution of Duties and Responsibilities of the Board of Commissioners and

Board of Directors

B.1.1 The Board of Commissioners

B.1.1.1 Amount and Composition of the Board of Commissioners

(a) Pursuant to the Decision of the Annual General Meeting of

Shareholders PT. Bank Pembangunan Daerah Jawa Barat dan

Banten, Tbk., as written in the Deed of Statement of The

Business andSupporting Work

Unit

Internal Audit ComplianceRisk

Management

Board of

Directors

General Meeting ofShareholders

The Board of

Commissioners

CompanySecretary

Audit Committee

Nomination andRemuneration Committee

Risk Monitoring Committee

Integrated GoodGovernance Committee

Business & Credit MonitoringCommittee

Risk ManagementCommittee

IT Steering Committee

Asset & Liability Committee

Integrated Risk ManagementCommittee

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Annual General Meeting of Shareholders number 119 dated 31

March 2015, the structure of the Bank’s Board of

Commissioners is:

i. Commissioner : Muhadi

ii. Independent Commissioners : Klemi Subiyantoro

iii. Independent Commissioners : Rudhyanto Mooduto

iv. Independent Commissioners : Yayat Sutaryat

(b) Pursuant to the Decision of the Annual General Meeting of

Shareholders PT. Bank Pembangunan Daerah Jawa Barat dan

Banten, Tbk., as written in the Deed of Statement of the

Resolution of The Annual General Meeting of Shareholders

number 61 dated 23 March 2016, the structure of the Bank’s

Board of Commissioners is:

i. Commissioner : Muhadi

ii. Independent Commissioners : Klemi Subiyantoro

iii. Independent Commissioners : Rudhyanto Mooduto

iv. Independent Commissioners : Yayat Sutaryat

v. Independent Commissioners : Suwarta

B.1.1.2 Criteria of the Member of the Board of Commissioners

The criteria for members of the Board of Commissioners refer to

the Financial Services Authority Regulation number

33/POJK.04/2014 dated 08 December 2014 Concerning the Board of

Directors and the Board of Commissioners of Issuers or Public

Companies. The Board of Commissioners of the Bank has passed

the fit and proper test which means that they have met the

prerequisites criteria. The Board of Commissioners of the Bank is

an individual who meets the requirements when appointed and

during the service:

(a) Having good character, morals. and integrity;

(b) Competent in taking legal actions;

(c) Five (5) years before and during the service year:

i. has never been declared bankrupt;

ii. has never been the member of the Board of Directors

and/or member of the Board of Commissioners who is

declared to cause a company’s bankruptcy;

iii. has never been sentenced due to criminal actions that

causes losses to the state’s finance and/or related to the

financial sector; and

iv. has never been the member of the Board of Directors

and/or the Board of Commissioners, who is during his

service:

has never convened to perform annual GMS;

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his accountability as the member of the Board of

Directors and/or the member of Board of

Commissioners was previously unacceptable or failed

to provide an accountability as a member of the Board

of Directors and/or the member of the Board of

Commissioners to the GMS; and

has caused the Company with the permit, approval, or

registration from the Financial Service Authority to

fail in meeting the obligation in providing the annual

report and/or financial report to the Financial Services

Authority.

(d) Committed to comply with the laws and legislations; and

(e) Has the knowledge and/or skills required by the Company.

B.1.1.3 The Duties and Responsibilities of the Board of

Commissioners

The duties and responsibilities of the Board of Commissioners are

expressed in the Guidelines and Code of Conduct of the Board of

Commissioners stipulated in the Decree of the Board of

Commissioners number 07/SK/DK/2016 dated 14 October 2016

Concerning the Guidelines and Code of Conduct of the Board of

Commissioners. The following are the duties and responsibilities of

the Board of Commissioners based on the Guidelines and Code of

Conduct of the Board of Commissioners:

(a) Monitor, advise, direct, supervise and evaluate the

management of the Bank and the implementation of the

Bank’s strategic policy by the Board of Directors;

(b) Perform the duty, responsibilities, and authorities according to

the Company’s Articles of Association, decision GMS and

prevailing rules and regulations;

i. Prepare and evaluate the Guidelines and Code of Conduct

of the Board of Commissioners that bind each member of

the Board of Commissioners;

ii. Evaluate and approve the Bank’s Business Plan (RBB);

iii. Based on the resolutions of the GMS, Board of

Commissioners appoints a Public Accountant upon the

recommendation of the Audit Committee to audit the

Company's financial statements.

(c) Carry out the duties and responsibilities independently and

responsibly to the GMS;

(d) Requirement to ensure the implementation of GCG in every

business activity of the Bank at all levels or organization level;

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(e) Requirement to establish committees and ensure that their

performance is effective according to prevailing rules and

regulation.

(f) Prohibition to involve in the decision making of Bank

operational activities, unless otherwise stated in in the Articles

of Association or prevailing laws and legislations;

(g) The approval granted by the Board of Commissioners is part of

the supervisory duties of the Board of Commissioners therefore

not eliminating the Board of Director's responsibility in the

management of the Bank. Such supervisory duties of the Board

of Commissioners are the form of initial monitoring that must

be performed;

(h) Review and approve the policy that according to the prevailing

rules and legislations require the Board of Commissioners’

approval;

(i) Review the the Board of Directors' accountability on the

execution of previously approved policies;

(j) Create a report on the supervisory duty that has been

performed during past financial year for the GMS;

(k) Evaluate and sign the annual report prepared by the Board of

Directors. Annual report reviews to be conducted prior to the

GMS;

(l) Ensure that the Board of Directors has followed up the audit

findings and audit recommendations from the Bank’s Internal

Audit Work Unit (SKAI), external auditors, the results of the

Financial Services Authority and/or other authority's

supervision result;

(m) Notify the Financial Services Authority at no later than 7

(seven) working days upon the discovery of:

i. Violations of financial and banking laws and regulation;

ii. Circumstances or predictions of circumstances that could

jeopardize the Bank's business based on the findings and

recommendations from the committees assisting the

Board of Commissioners in supervising the Bank’s

operation: and

iii. Other compulsory requirements above that yet or were

not reported by the Bank and/or bu the Director of the

Compliance to the Financial Services Authority.

(n) Define and perform a transparent nomination system,

evaluation, remuneration for all the Management after

considering the results of all Nomination and Remuneration

Committee study that will subsequently submitted for GMS

approval.

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B.1.1.4 The Board of Commissioners’ Independence

The Board of Commissioners always strives to ensure that the

Company has been managed professionally, according to the

shareholders’ and other stakeholders’ interest. The Board of

Commissioners always maintains objectivity and independence in

performing its role. For that reasons, the Board is not involved in

the Company’s operational decision making, unless for aspects that

have been governed and stipulated in the Articles of Association

and the laws and regulations.

Additionally, considering the composition of the Company’s Board

of Commissioners as of 31 December 2016 which in total was 5 (five)

persons, 4 (four) of them were the Independent Commissioners or

80% of the member of the Board of Commissioners were from

Independent Commissioners. The Independence of Independent

Commissioners is evident in the Certificate of Independent issued

and signed by all of Independent Commissioners.

B.1.1.5 Recommendation from the Board of Commissioners

As part of its duties and responsibilities, the Board of

Commissioners proactively monitored and provided feedback to

the the Board of Directors. The Board of Commissioners monitors

the Board of Directors by referring to its recommendation to the

Board of Directors or to the established committees. During the

period of January to December 2016 period, the Board of

Commissioners have performed the following:

(a) Supervised the management’s policy, the management of the

Company by the Board of Directors including the supervision

of:

i. The Bank’s Business Plan 2016-2018;

ii. The Company’s Annual Work Plan and Budget (RKAP).

iii. Monthly Performance Evaluation;

iv. The provisions of Articles of Association and Resolutions

of the GMS;

v. The rules and legislations for the the Company’ and

business’ so it aligns with the purpose and objectives of

the Company.

(b) "Performing the duties that have been specifically assigned to

the Board of Directors according to the Articles of Association,

laws and regulations, Central Bank (BI) and/or Financial

Service Service provisions. and GMS.

i. Monitoring and reporting the implementation of the GCG

action plan;

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ii. Supervising and advising the Board of Directors in

conducting the Company's business activities (Board of

Directors’ management policy);

iii. Supervising the effectiveness of GCG implementation at

all levels of the Bank’s organization;

iv. Supervising the implementation of risk management;

v. Monitoring and evaluating the performance of the Board

of Directors;

vi. Monitoring the Bank's compliance and commitment to

Bank Indonesia/Central Bank regulations, prevailing laws

and legislations and to the Financial Services Authority/

Bank Indonesia and other parties;

vii. Directing, monitoring, and evaluating the implementation

of RJP, RBB, Company Work Plan and Budget (RKAP);

viii. Studying the development and utilization of information

technology.

(c) Dividing the duties among the member of the Board of

Commissioners according to the skill and experience of

members;

(d) Creating an annual work program and performance target of

the Board of Commissioners and review mechanism for the

performance of the Board of Commissioners.

(e) Creating the mechanism of providing information from the

Board of Commissioners to all stakeholders;

(f) Providing the accountability of the duties as the Board of

Commissioners to the GMS;

(g) Giving written opinions and suggestions to the GMS on the

Company's Long-Term Plan (RJP), the Bank’s Business Plan

(RBB), and Company’s Work Plan and Budget (RKAP)

proposed by the Board of Directors;

(h) Giving the opinion to the General Meeting of Shareholders on

the strategic issues or important matters, including the

opinions on the feasibility of the Bank's vision and mission;

(i) Examining and study the regular and annual reports prepared

by the Board of Directors, including the result of the

Company’s internal audit reports.

(j) Ensuring that the Board of Directors has followed up the audit

findings and audit recommendations from the Bank’s Internal

Audit Work Unit, external auditors, the results of the Financial

Services Authority and/or other authority's supervision result;

(k) Ensuring that the committees that have been established to

perform effectively;

(l) Reviewing of the structure of the organization;

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(m) Reviewing the Key Performance Index of the Board of

Directors;

(n) Reviewing the company's work culture;

(o) Recommending ISO implementation for the Compliance Work

Unit and Risk Management Division

B.1.2 Board of Directors

B.1.2.1 Number and Composition of the Board of Directors

Pursuant to the Decision of the Extraordinary General Meeting of

Shareholders of PT. Bank Pembangunan Daerah Jawa Barat dan

Banten, Tbk., as written in the Deed of Statement of the Resolution

of The Extraordinary General Meeting of Shareholders number 111

dated 29 May 2015, the structure of the Bank’s Board Board of

Directors is:

(a) President Director : Ahmad Irfan

(b) Director : Suartini

(c) Director : Fermiyanti

(d) Director : Agus Gunawan

(e) Director : Nia Kania

(f) Director : Benny Santoso

(g) Director : Agus Mulyana

B.1.2.2 Criteria of the Members of the Board of Directors

The criteria for members of the Board of Directors refer to the

Financial Services Authority Regulation number 33/POJK.04/2014

dated 08 December 2014 Concerning the Board of Directors and the

Board of Commissioners of Issuers or Public Companies. The Board

of Directors of the Bank has passed the fit and proper test which

means that they have met the prerequisites criteria. The Criteria for

the Members of the Board of Directors according to Financial

Services Authority regulations are:

(a) The Board of Directors are required to comply with the

prevailing rules and legislation and with applicable regulation

of Bank Indonesia/Financial Services Authority (OJK), passed

the fit and proper test according to the provisions of Bank

Indonesia/ Financial Services Authority (OJK) on Fit and

Proper Test, and residing in Indonesia;

(b) The Board of Directors to follow the provisions of the Law on

Limited Liability Company, the laws and regulations on the

Capital Market and laws and regulations relevant to the Bank's

business activities;

(c) The Board of Directors is an Indonesian citizen who:

i. Faithful to the God the Almighty;

ii. Having good character and moral;

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iii. Faithful and loyal to the State and the Government of the

Republic of Indonesia;

iv. Not directly or indirectly involved in the act of treason

against the State of Republic of Indonesia;

v. Physically and mentally in good condition;

vi. Not involved in drugs or alcohol abuse;

vii. Maintain impartiality against all political parties;

viii. Has never been sentenced due to activities or actions

that may harm the state or the banking sector;

ix. No court decision currently in place that revokes his

voting rights;

x. Having the capability to perform legal acts;

xi. Has never been declared as bankrupt; or become the

member of the Board of Directors and/or member of the

Board of Commissioners who is declared to cause a

Bank’s bankruptcy;

xii. Has never been sentenced for committing the crime that

harms the State's finances within 5 (five) years prior to

the appointment;

xiii. Has passed the fit and proper test pursuant to the

applicable regulation;

xiv. The maximum age of candidates for the Board of

Directors on first appointment is 54 (fifty-four) years;

xv. Not formerly the member of the Board of Directors or

Executive Officer of the Company that has retired,

resigned, or terminated;

xvi. Particularly for the President Director’s position, it

requires commercial banking experience with minimum

experience in Directorship position at a Commercial

Bank with total assets of minimum equal to Company’s

asset value and having excellent track record;

xvii. Requirement to be the member of the Board of Directors

of a Bank for candidates coming from Corporate

background;

xviii. Requirement to posses commercial banking background

with the experience as an executive officer or one level

below the position of Board of Directors, for the

Director’s candidate coming from a Bank or non-Bank.

B.1.2.3 Duties and Responsibilities of the Board of Directors

Pursuant to the Decree of the Board of Directors number

519/SK/DIR-CS/2011 dated 20 September 2011 Concerning the Board

of Directors’ Work Guideline, the duties and responsibilities of the

Board of Directors are:

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(a) The Duties of the Board of Directors

i. The Board of Directors is fully responsible for the

execution of the Bank's management;

ii. The Board of Directors are required to manage the Bank

in accordance to its authorities and responsibilities, as

stated in the Articles of Association and prevailing laws

and legislations;

iii. The Board of Directors to manage its assets according to

the rules and legislations then in place;

iv. The Board of Directors are required to create and execute

the Annual Work Plan that should be delivered to the

Board of Commissioners at no later than 60 (sixty)

calendar days prior to the commencement of the

forthcoming financial year;

v. The previous year’s work plan to be used if the Board of

Directors do not provide such plan. The previous year

work plan provision also applies for Bank whose plan has

not been approved as specified in the Articles of

Association or laws and legislations;

vi. The Board of Directors are required to submit the Bank’s

annual report to the General Meeting of Shareholders

(GMS) for review. The result of audit by public

accountant to be delivered in writing to the Annual

General Meeting of Shareholders. The annual report

should include at least:

The balance of recent financial year in comparison

with the previous fiscal year, the relevant fiscal year’s

statements of income, the profit and loss statement of

the relevant year, cash flow statement, and the

statement of changes in stakeholder equity, and the

notes to the financial statements;

The report on the Bank’s activities;

The report on the implementation of corporate social

and environmental responsibility;

The details of all problems encountered in financial

year that affect the Bank's business activities;

The supervisory duties of the Board of Commissioners

in the previous fiscal year;

The names of the members of the Board of Directors

and the Board of Commissioners;

The wages and allowances for the members of the

Board of Directors and previous year’s salaries or

wages and allowance for the members of the Board of

Commissioners.

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vii. The Board of Directors is required to implement the risk

management and GCG principals in the Banks business

activity at all levels or organization level. In order to

implement GCG, the Board of Directors at least establish

the following:

Working Units performing Internal Audits function in

order to assist the Board of Directors in supervising

the Bank's across the Bank’s organization. The

Internal Audit Work Unit must be independent from

the operational work unit;

The work unit performing the Risk Management

Function and Risk Management Committee to help

the Board of Directors in implementing the risk

management as required by Bank Indonesia

Regulations/Financial Services Authority Regulation;

The Work Unit performing the Compliance function

that will help the Board of Directors in complying

with the legal, laws, and legislation requirements as

well as with the operational requirements from the

Bank Indonesia/Central Bank Regulations and

Financial Service Authority regulations.

viii. It is compulsory that the Board of Directors to follow the

audit findings and audit recommendations from the

Bank’s Internal Audit Work Unit, external auditors, the

results of the Financial Services Authority and/or other

authority's supervision result;

ix. Performing the tasks specifically assigned by the Board of

Commissioners and/or the GMS;

x. The Board of Directors to organize the Annual General

Meeting of Shareholders (AGM) and Extraordinary

General Meeting of Shareholders (EGMS) prior to the

General Meeting of Shareholders;

xi. In RUPS, if all members of the Board of Commissioners

are not available or having conflict of interest, the RUPS

must be chaired by one of the Directors appointed by the

Board of Directors;

xii. The Board of Directors through the Human Resources

staff to inform the employees on the Bank’s strategic

policy in relation to personnel matters, salary, benefits,

facility, employee recruitment system, including the

bank ‘s plan to improve the efficiency through employee

reduction or the Bank’s other personnel related aspects.

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xiii. The Board of Directors is prohibited from

deciding/taking strategic decisions within three months

prior to the termination of the Board of Directors service.

xiv. The Board of Directors is required to provide the Board

of Commissioners with accurate, relevant, and timely

data and information;

xv. The Board of Directors to provide answer and

explanation asked by the Board of Commissioners;

xvi. The Board of Directors to ensure a smooth

communication between the Bank and its stakeholders

by empowering the corporate secretary;

xvii. The Board of Directors must keep and maintain list of

shareholders and special lists in good condition;

xviii. The Board of Directors need to follow the Bank's ethical

standards and ethical standards found in the Board of

Directors Work Guideline.

(b) The Board of Directors responsibilities

i. Responsible for the financial statements;

ii. The Board of Directors is collectively responsible for the

Bank’s strategic duties. All members of the Board of

Directors is responsible to implement the operational

activities of the strategic decisions and other decisions

according to its task and authorities;

iii. The Board of Directors is required to report the execution

of its duties to the General Meeting of Shareholders;

iv. The Board of Directors must be able to ensure continuous

compliance of the Bank’s Corporate Social Responsibility

(CSR) by making available of transparent plan and focus

of execution.

v. The Board of Directors’ decision are in compliance of the

Company’s guideline and code of conduct that binds all

members of the Board of Directors;

vi. The Board of Directors is responsible to implement the

code of conduct and code of business conduct within the

company premise.

B.2 Instrument and the Performance of Committees

The establishment of Audit Committee, Risk Monitoring Committee, Remuneration

and Nomination Committee, Integrated Good Governance Committee as well as

Business and Credit Monitoring Committee by the Board of Commissioners to

support the effectiveness of duties and responsibilities of the Board of

Commissioners.

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B.2.1 Audit Committee

The Audit Committee is the Board of Commissioners’ instrument

responsible to supervise the effectiveness of internal control system,

internal audit, financial reporting process that will enable the management

of the Bank according to the principles of transparency, accountability,

responsibility, independence and fairness.

The Audit Committee was established based on the Financial Services

Authority Regulation number 55/POJK.04/2015 dated 23 December 2015

Concerning the Establishment and Implementation Guidelines for the Audit

Committee. Additionally, the following provisions also served as the

guidelines for the Audit Committee:

(1) Financial Authority Regulation number 55/POJK.03/2016 dated 07

December 2016 concerning The Implementation of Good Governance

for Commercial Bank;

(2) Decision of the State Minister of State Owned Enterprises number

KEP-117/M-PBUMN/2002 dated 1 August 2002 Concerning the

Implementation of Good Corporate Governance Practice within the

State Owned Enterprises.

(3) The Decision of the Chairman of Bapepam number Kep-41/PM/2003

dated 22 December 2003 Concerning the Establishment and

Implementation Guidelines for the Audit Committee;

(4) The Decision of the Board of Commissioners of PT Bank Pembangunan

Daerah Jawa Barat dan Banten, Tbk. number 07/SK/DK/2015 dated 22

April 2015 concerning Allocation of Tasks and the Implementation of

the Board of Commissioners’ and Committee’s Activity Schedule.



March 2016 concerning Allocation of Tasks and the Implementation of


Below is the information on the membership, structure, and skills of the

Audit Committee of 2016:

No Name Remarks Title Expertise

1 Suwarta* Independent

Commissioners

Chairman Accounting and

Legal

2 Klemi Subiyantoro** Independent

Commissioner,

Acting President

Commissioner

Member Accounting and

Legal

3 Muhadi Commissioner Member Technical

4 Rudhyanto

Mooduto***

Commissioner Member Accounting and

International

Business

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Management

5 Erie Febrian**** Independent

Party

Member Economy

6 Mokhamad

Anwar*****

Independent

Party

Member Economy and

Financial

Management

7 Memed Sueb****** Independent

Party


Legal

8 Ramson

Sinaga*******

Independent

Party


Legal

*Appointed as the committee Chairman on 30 March 2016

**Assumed the Head of Committee position until 30 March 2016 and became the

members of the committee afterwards

***Became the member of the committee until 30 March 2016

****Appointed as the committee member on 19 September 2016

*****Appointed as the committee member on 19 September 2016

******Resigned as the member of the committee on 30 June 2016

*******Honorably discharged as the member of the committee on 14 October 2016

B.2.1.1 Independence of the Audit Committee Members

The Audit Committee Independence are stipulated in the following

Audit Committee Code of Conduct:

(a) The members of the Audit Committee are not affiliated with

the Bank, the Board of Commissioners, the Board of Directors

or the General Meeting of Shareholders (GMS);

(b) Committee have no direct or indirect business relationship

with the Bank's business activities;

(c) Committee are not authorized or responsible to plan, lead, or

control the Bank’s activities within the last 6 (six) months prior

to the stipulation, except the individuals with authority and

responsibility to perform the supervisory role;

(d) Committee are not the Board of Commissioners or the

majority shareholders or the primary partners of the Bank;

(e) The Independent Party who is the member of the Audit

Committee is the Bank’s external party that has no financial

relationship. Management, shares ownership and/or family

relations with the Board of Commissioners, Board of Directors

and/or Controlling Shareholder, or any relationship with the

Bank that may affect its ability to act independently.

B.2.1.2 The Roles and Responsibilities of the Audit Committee

The duties of the Audit Committee are to support the Board of

Commissioners according to the following its responsibilities:

(a) Supervising the Financial Report Process

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The audit committee is responsibility to supervise the issuance

of Bank’s Financial Statement. In this regard, the Audit

Committee:

i. Monitor the financial reporting process to ensure that the

accounting standard and policy are met.

ii. Evaluate the financial information to be issued by the

Bank, i.e. financial statements, projections, and other

financial information.

iii. Review the financial statements’ compliance with the

prevailing accounting standards and its consistency with

the other information available to the members of the

Audit Committee on a monthly, quarterly and annual

basis.

iv. Monitor the rating determination of valuation method of

assets and liabilities, commitment and contingency and

the reserves that meeds to be established.

v. Monitor the entries in the financial statements that

contain complex and unusual transactions.

vi. Evaluate the adequacy of transactions disclosure with

relevant parties.

vii. Evaluate and provide recommendations to the Board of

Commissioners regarding the suggestions given by the

external auditors, the Board of Directors and internal

auditors for the changes in the scope of the audit and in

the accounting principles and standards.

viii. The Audit Committee will communicate with the External

Auditor, the Board of Directors, and the Internal Auditor

upon discovery of different interpretations and

inconsistencies.

(b) Selection and Appointment of Public Accounting Firm (PAF)

and the Supervision of the Work

The Audit Committee provides the Board of Commissioners

with the recommendation on the appointment of PAF that will

perform the external annual audit will do the following:

i. Select and recommend the appointment of PAF

The Audit Committee selects and recommends PAF

candidates that will audit the Bank's annual financial

report for the Board of Commissioners.

The PAF selection and appointment process is

available in the appendix of the Audit Committee

Work Guideline - Independent Auditor's Appointment

Process, according to the applicable regulations.

The Audit Committee may recommend the Board of

Commissioners to terminate the relationship with the

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external auditor if there is a strong indication that the

auditor's independence may be impaired or the

auditor failed to perform the audit according to the

Standards of Professional Public Accountant.

ii. Evaluate the External Auditor’s work

Evaluate the audit plan and the adequacy of the audit

program as well as monitor the external auditor work

and follow up the audit results evaluate the adequacy

of internal controls including the adequacy of the

financial reporting process.

Involved in and/or receive the reports on audit

findings made by the external auditor with

management and issuing a written report of any

difference of opinion between the auditor and

management that requires the Board of

Commissioners’ attention.

To perform the above duties, the Audit Committee at

least to monitor and evaluate:

- The compliance of PAF’s Audit according to

applicable standards;

- The compliance of financial statements according

to applicable accounting standards;

- The Board of Directors’ follow up actions based on

the external auditor’s findings as the

recommendation for the Board of Commissioners.

Giving the inputs to the External Auditor to identify

high risk areas.

Consulting with the External Auditor without the

presence of management regarding the internal

control to identify the possible weaknesses, and the

issuance and the accuracy of the Bank's financial

statements.

On general audit, ensure the external auditor to

communicate the following;

- The auditor’s level of responsibility on the internal

control in the presentation of financial statements;

- Significant accounting policy revision;

- Significant design and application weaknesses of

internal controls;

- Recording and reporting methods, and the impact

of significant extraordinary transactions on the

financial statements;

- The existence or indications of fraud and the

irregularities in violation of prevailing rules and

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regulations performed by the management or

employees causing the material misrepresentation

of the financial statements;

- Significant audit correction;

- The procedures performed by the auditors on the

annual reports containing audited financial

statements;

- Disagreements with management on the

application of accounting standards, audit scope,

disclosures in financial statements and words used

by auditors in their audit reports;

- Any difference of opinions between the

management and the external auditors to consult

with the other external auditors;

- Any obstacles during the performance of the audit.

Perform a joint review with the Board of

Commissioners, the Board of Directors, and external

auditors on:

- The Bank’s annual financial statements along with

its notes prior to publication;

- External auditors report on the Bank's annual

financial statements including the external

auditor’s opinions and suggestions;

- Follow up of External Auditor’s crucial findings and

recommendations to be monitored by the Board of

Directors and management;

- Reviewing the representation letter signed by the

Board of Directors, and ensuring easy access to

obtain the letter and other specific matters

discovered in the assignment;

- Evaluate the external auditor’s opinion on the

quality and accuracy of the applied Financial

Accounting Standards for the banks.

The Audit Committee evaluates the external auditor’s

qualifications, performance, and independence of the

PAF audit partner and the appointed auditor perform

the financial audit, receives input from the

management and the Internal Audit Division of the

work of the external auditor;

Discussion with the Board of Commissioners and the

Board of Directors and external auditor to understand

the considerations of the accounting standards used

and its applications;

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Ensure sufficient disclosure against the accounting

standards.

(c) Evaluation of Non-Audit Services

In order to keep the external auditor independence, the Audit

Committee is required to provide initial approval (pre-

approval) to the non-audit services assigned to an external

auditor performing the audit service. The non-audit services

that may impair the independence are:

i. Bookkeeping services or other services related to the

accounting records or the Bank’s financial report;

ii. Design and implementation services of financial

information systems;

iii. Assessment service or service to provide opinions of

reasonableness;

iv. Actuarial service;

v. Outsourcing of internal audit service;

vi. Management or human resources management service;

vii. Intermediary service;

viii. Non-audit legal and expertise services;

ix. Taxation advisory service;

x. Other services according to the prevailing rules and

regulations and Central Bank/Bank Indonesia regulations

The procedure to be followed by the Bank’s management in

order to obtain pre-approval are:

i. The Board of Directors to submit a detailed description to

the to the Board of Commissioners regarding the type of

services and work to be assigned to the PAF;

ii. The Audit Committee to evaluate and analyze the non-

audit services to be assigned to the PAF to avoid things

that may undermine the independence or cause a conflict

of interest;

iii. The Audit Committee may only approve the provision of

non-audit services if no indication that may undermine

the independence or cause conflict of interest in the in the

evaluation results.

Pre-approval of non-audit services may not be required if the

value of all non-audit services is not more than 5% of the total

audit cost spent by the Bank to PAF in the fiscal year which

non-audit services are rendered.

(d) Internal Control Monitoring

The Audit Committee and the Internal Audit Work Unit

supervise the Bank’s operation according to its functional

responsibility to comply with the Central Bank/Bank

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Indonesia/Financial Services Authority regulations, and

prevailing legislations. The monitoring at minimum to include:

i. Regular internal audit reports from the Internal Audit

Division to the Audit Committee as the form of feedback

and input that can be used to identify the possibility of

weak internal controls;

ii. Feedback and input to improve internal controls

effectiveness containing suggestions to improve the

performance of the Internal Audit Division are provided

by the Audit Committee to the management of the Bank

via the Board of Commissioners;

iii. Review and give feedback to the Board of Commissioners

on the Annual Internal Audit Work Plan, including the

scope of the Audit, and to ensure that the Annual Internal

Audit Work Plan already covers all the operational risks of

the Bank;

iv. Evaluation on an annual basis by the Audit Committee on

the Annual Audit Work Program created by the Internal

Audit Division and recommend the result to the Board of

Commissioners;

v. Review and inform the Board of Commissioners on the

difficulties and constraints faced by the internal audits in

performing their duties, including the to the scope of the

audit work and/or issues to access required information;

vi. The Audit Committee in coordination with the Internal

Audit Division to:

Conduct regular meetings to discuss findings and/or

other issues regarding the indications of weaknesses

or loopholes in the internal control weaknesses, as

well as inappropriate application of accounting

standards as well as monitoring of the follow-up with

the Bank's management regarding the findings;

Discuss the response from the Bank's management for

significant findings in the operation of the Bank and

the recommendations provided by the Internal Audit

Division for such findings;

Annually monitor the ethical code of the profession,

evaluate the activities, organizational structure and

qualifications of internal audit members;

Extend the evaluation in order to assess the nature,

scope, magnitude and impact of significant internal

control weaknesses and how it affects the financial

statements.

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vii. Assess the effectiveness and independence of the Internal

Audit Division and evaluate the regular activities,

placement of internal auditors and the Internal Audit

Division’s organizational structure.

viii. Recommend the Board of Commissioners on:

Any significant changes to the scope of the audit work

against the original plan, including human resources

and internal audit budget;

Updates on the Audit Committee Work Guideline;

Compliance against the Audit Committee Work

Guideline.

ix. At the request of the Board of Commissioners, the Audit

Committee may recommend the appointment and

dismissal of the Chief of the Internal Audit Division.

(e) Supervision on the Compliance to the Rules and Legislation

Based on its functions, the Audit Committee and the

Compliance Work Unit are required to monitor the

operational compliance of the bank with applicable Laws and

Regulations, the Financial Services Authority

Regulation/Central Bank or Bank Indonesia Regulation,

including:

i. Evaluation of findings, reporting or inspection results

performed by the Financial Services Authority/Central

Bank or Bank Indonesia, external auditors, Compliance

Work Unit, Internal Audit Work Unit, Risk Management

Work Unit/Risk Management Committee.

ii. The report to the Board of Commissioners by the Audit

Committee if there is a strong indication of the

occurrence of violation to the prevailing laws and

regulations, Central Bank or Bank Indonesia/Financial

Services Authority regulations, and to propose an

investigation.

(f) Risk and Risk Management Implementation Report

The Audit Committee and the Risk Monitoring Committee

according to its functions, to individually monitor the Bank’s

operation and mitigate the risks, at a minimum to include:

i. Evaluation of the risk identified and implementation of

the risk management performed by the management;

ii. Assessment of risk management process and financial

control of the Bank including the identification and

evaluation of all risks and its control to minimize the

occurrence of the risks;

iii. Monitoring and evaluation of the adequacy of duties

performed by External Auditor and Internal Audit

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Division to ensure that all the major risks have been

covered in the audit planning.

iv. Assurance that the Bank's management has performed all

recommended actions regarding the risk and control

provided by the external auditors, Internal Audit Division,

Risk Management Work Unit and Risk Monitoring

Committee.

(g) Third Party Complaint Review

The Audit Committee to receive not only information on the

execution of its regular performance, but also third-party

complaints related to the accounting, internal controls, and

fraud that may disrupt the the Bank’s operations.

i. The requirements to follow up the complaints:

Complaint to be submitted in writing;

Clear reasoning of the issues being complained.

ii. Complaint Review

The Audit Committee may request the Internal Audit

Division to follow up the complaints.

iii. Review Result

If the complaints are proven to be accurate based on the

review:

The Audit Committee to forward the result of the

review to the Board of Commissioners.

The Audit Committee to monitor the follow-up of the

review, if the Board of Commissioners request to do

so.

(h) Special Tasks Implementation

Special task refers to any tasks performed on irregular, case to

case basis, as instructed by the Board of Commissioners, and

assigns the Audit Committee.

i. The Board of Commissioners assigns special task, if;

there is an indication of non-compliance with the

prevailing laws and regulations. For that reasons the

Audit Committee by the approval of the Board of

Commissioners to extend the evaluation and conduct

Investigation Audit to measure the impact and

magnitude of the losses due to the violation. The

Audit Committee may request the assistance of the

Internal Audit Division or the external auditor to

perform the investigation audit.

there is a report/complaint from the third party that

indicates the non-compliance

ii. For special task, the Audit Committee has the authority

to:

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Evaluate all records including the minutes of the

meetings of the Board of the Board of Commissioners,

documentations and other required information.

Inquire the Board of Directors and its staff and report

the result of th inquiry in the Summary of Q&A signed

by both parties.

If necessary, the audit investigation may be performed

in cooperation with the Internal Audit Division or the

External Auditor.

(i) Independently assess the Audit Committee Implementation

through a self-assessment

The self-assessment to be carried out according to the

provisions of Bank Indonesia on the effectiveness of its

performance in accordance with the Audit Committee Work

Guideline and Board of Commissioners evaluation on Audit

Committee performance.

Additionally, the Audit Committee is also responsible to:

(a) Ensure that the Bank's financial statements are

understandable, transparent, and reliable;

(b) Assess the implementation of the activities and audit results

performed by the Internal Audit Division and external auditors

to avoid non-standard implementation and reporting;

(c) Evaluate the Bank’s policies on the legal compliance with

prevailing laws and regulations, ethics, conflict of interest and

investigate the possibility of omissions and fraud, and through

Board of Commissioners to provide improvements

recommendation on the Bank's internal control system and its

executions;

(d) Evaluate the Internal Audit Division Work Plan, significant

report and findings;

(e) Communicate with the Board of Directors and relevant work

units on the new status, progress and development of

operational issues and findings encountered by the Internal

Audit Division;

(f) Ensure that the Internal Audit Division have direct access to

the Audit Committee and encourage communication outside

the scheduled committee meetings;

(g) Provide direct access of communication with the External

Auditor/Bank’s Oversight to discuss the audit plan, findings

and reports.

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B.2.1.3 Meetings and Attendance of the Audit Committee

In 2016, the Audit Committee held 14 (ten) meetings. Below is the

information on meetings conducted by the Audit Committee in

2016:

NameTotal

Meetings

Total

AttendancePercentage

Suwarta 14 13 93%

Klemi Subiyantoro 14 6 43%

Muhadi* 10 10 100%

Rudhyanto Mooduto** 4 4 100%

Erie Febrian*** 7 5 71%

Mokhamad Anwar**** 4 4 100%

Memed Sueb***** 8 5 63%

Ramson Sinaga****** 10 8 80%

*Appointed as the committee Chairman on 30 March 2016

**Became the member of the committee until 30 March 2016

***Appointed as the committee member on 19 September 2016

****Appointed as the committee member on 19 September 2016

*****Resigned as the member of the committee on 30 June 2016

******Honorably discharged as the member of the committee on 14

October 2016

B.2.1.4 The Implementation of the Task of the Audit Committee

The audit committee has performed both regular and non-regular

duties. It includes the monitoring and evaluation of audit plan and

execution and follow-up of audit results to assess the adequacy of

internal controls and financial reporting, with the following details:

(a) In 2016 the Audit Committee held internal meetings and

meetings with the Internal Audit Division and the Compliance

to discuss the implementation of work program, the result of

general and special audits findings by the Internal Audit

Division, the follow up by the Board of Directors on the PAF

and Financial Services findings, appointment of public

accountant company and review of published quarterly

financial report.

(b) Review and monitoring

i. The Audit Committee reviews and monitors the

performance of the Internal Audit Division's duties. Based

on the results of the evaluation, a conclusion can be

drawn that the Internal Audit Division has performed the

audit according to the provided work program risk-based

audit planning, audit implementation and reporting are

consistent with the Bank’s Internal Audit Implementation

Standard (SPFAIB).

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ii. The Audit Committee reviews and provides feedback to

improve the draft of quarterly publication reports and

actively in discussions with the PAF on the audit result

performed by PAF.

iii. The Audit Committee reviews and involves in the PAF

selection team consisting of the Audit Committee and the

management, to audit the Financial Statements of 2016.

The committee also reviews the PAF’s audit for the

Pension Fund Investment Portfolio and PAF’s audit for

CSR Funds. The committee also provide the

recommendations to the Board of Commissioners

regarding the result of the PAF appointment.

iv. The Audit Committee evaluates the effectiveness of the

external audit, including independence and objectivity

review of the external auditor and adequacy of the

performed audit to ensure that consideration of all crucial

risks have been considered, as well as the conformity of

the audit by public accounting firm against prevailing

standard. Based on the monitoring and evaluation by the

Audit Committee, PAF have performed the audit

according to the Auditing Standards of Indonesian

Institute of Certified Public Accountants. During the

process, the Audit Committee through its members also

attended the exit meeting of 2015 financial statements

audit the by the public accounting company.

v. Monitor the follow-up

Monitoring the follow up of Internal Audit Results

The Audit Committee monitors the follow up of audit

findings performed by the Internal Audit Division in

meetings to discuss the findings and follow-up of the

Internal Audit Division audit results inside or outside

the regular meetings.

Monitoring the Follow Up of External Audit Results

The Audit Committee monitor the fulfillment of the

commitment made to the result of Financial Service

Authority audit through meetings with the

Compliance Division. This is consistent with Central

Bank/Bank Indonesia regulation number 13/2/PBI/2011

concerning the The Implementation of Bank’s

Compliance Function as contained in Chapter II on

Bank’s Compliance Function where Compliance

Division is in charge to monitor the fulfillment of such

commitment.

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The Audit Committee also provide recommendation

to the Board of Commissioners to remind the

Management to fulfill its commitment given to the

Financial Services Authority.

B.2.2 Risk Monitoring Committee

Consistent with the Financial Services Authority Regulation number

55/POJK.03/2016 Concerning the Implementation of Good Governance for

Commercial Bank, the Risk Monitoring Committee is the Commissioner's

organ to monitor the risk and to assess the risk tolerance that the Bank may

take, to evaluate the improvements made to policies, procedures and

practice of the Bank’s risk management, in order to ensure good risk

management particularly on credit risk management, market risk, liquidity

risk, operational risk and other risks.

The Bank’s Risk Monitoring Committee for 2016 was established under:

a. Financial Authority Regulation number 18/POJK.03/2016 Concerning

The Implementation of Good Governance for Commercial Bank

b. Circular Letter of Bank Indonesia number 15/15/DPNP dated 29 April

2013 concerning The Implementation of Good Corporate Governance for

Commercial Bank;

c. The Decision of the Board of Commissioners of PT Bank Pembangunan


April 2015 concerning Allocation of Tasks and the Implementation of the

Board of Commissioners’ and Committee’s Activity Schedule.

d. The Decision of the Board of Commissioners of PT Bank Pembangunan


March 2016 concerning the Working Guideline and Regulations of the of

Integrated Good Governance Committees.

e. The Decision of the Board of Commissioners of PT Bank Pembangunan


January 2015 concerning the Guideline and Code of Conduct of the Risk

Monitoring Committee.


Bank’s Risk Monitoring Committee of 2016.


1 Rudhyanto Mooduto Independent

Commissioners


International

Business

Management


3 Yayat Sutaryat Independent

Commissioners

Member Legal

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4 Suwarta Independent

Commissioners


Legal

5 Tettet Fitrijanti Independent

Party

Member Accounting

6 Nury Effendi Independent

Party

Member Economy

B.2.2.1 Independence of Risk Monitoring Committee Members

To maintain its independence, the members of the Risk Monitoring

Committee coming from independent parties are prohibited from:

(a) Receiving any compensations from the Bank, its subsidiaries or

affiliates except the wages, salaries and other facilities provided

to perform their tasks as the members of the Risk Monitoring

Committee;

(b) Having family or business relations with the Board of the

Directors or the Board of Commissioners;

(c) Assuming other position with the Bank and other affiliated

companies;

(d) Having the duties, responsibilities and authorities that may

create a conflict of interest;

B.2.2.2 The Roles and Responsibilities of the Risk Monitoring

Committee

The Roles and Responsibilities of the Risk Monitoring Committee

includes:

(a) Evaluation of consistency between the risk management policy

and its implementation:

i. Regular evaluation and analysis of consistency between

the risk management policy with the regulations, and

adequacy of the risk management policy.

ii. Provides opinion in the form of suggestion or

recommendation to the Board of Commissioners to

improve the required risk management

(b) Monitoring and evaluation of the implementation of the Risk

Management Committee and Risk Management Work Unit:

(c) Review and analyze quarterly risk profile of the Bank and other

reports, or other relevant result of relevant and give opinions

in the form or suggestion and/or recommendation for

necessary improvement and perfection of risk management;

(d) Evaluation and analysis of the Bank’s health level for the risk

profile part and GCG.

(e) Monitoring the adequacy of the process of identification,

measurement, monitory, controlling and risk management

information system;

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(f) Formulate and implement the Risk Monitoring Committee

annual work plan and the Bank’s prevailing conditions.

B.2.2.3 Meeting and Attendance of the Risk Monitoring Committee

In 2016, the Risk Monitoring Committee held 13 (thirteen)

meetings. Below is the information on meetings conducted by the

Remuneration and Nomination Committee in 2016:

NameTotal

Meetings

Total


Rudhyanto Mooduto 13 13 100%

Muhadi 13 12 92.31%

Yayat Sutaryat 13 9 69.23%

Suwarta* 9 5 55.55%

Tettet Fitrijanti 13 13 100%

Nurry Efendi 13 6 46.15%

*Appointed as the committee member on 30 March 2016

B.2.2.4 Implementation of Risk Monitoring Committee Duties

According to Risk Monitoring Committee work plan, the following

work plan has been executed in 2016.

(a) Evaluation of adequacy of risk management implementation

by reviewing the adequacy of guideline, risk management

facilities, and risk level variable parameter;

(b) Evaluation of risk level based on the Self-Assessment Risk

Profile Report and provide recommendation based on the

result of the evaluation to the Board of Commissioners;

(c) Monitoring of Self-Assessment Bank’s Health Level;

(d) Review of Liquidity & Credit Stress Test

(e) Review of Root Cause Credit Risk (RCCR) Analysis Report;

(f) Review of the Market Risk Measurement & Liquidity

Guideline;

(g) Discussion of credit risk management for UMKM (Micro

Credit);

(h) Discussion of the bank’s subsidiary performance (bank bjb

Syariah) and recommendation to the Board of Commissioners

through Integrated Good Governance Committee;

(i) Specific discussion on the legal risk and reputation risk;

(j) Creation of quarterly home mortgage (KPR) report and work

plan;

(k) Capacity improvement of the Head and Members of KPR

through workshop, seminar, and benchmarking;

(l) Execution of other tasks assigned by the Board of

Commissioners based on the provision of prevailing rules and

legislations;

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B.2.3 Nomination and Remuneration Committee

Nomination and Remuneration Committee is one of the organs of the Board

of Commissioners that help the Board to perform its functions and tasks in

the fields related with the nomination and remuneration of the members of

The Board of Directors and the Board of Commissioners. The Central

Bank/Bank Indonesia/Financial Service Authority Regulation requires the

public company to establish Nomination and Remuneration Committee as

one form of GCG implementation. The management of the Bank, therefore,

to be performed by founding the principles of transparency, accountability,

responsibility, Independency, and reasonableness.

The Nomination and Remuneration Committee was established pursuant

to:

(1) Financial Services Authority Regulation number 34/POJK.04/2014

dated 08 December 2014 concerning the Nomination and

Remuneration of Issuer or Public Company;

(2) Financial Services Authority Regulation number 55/POJK.03/2016 dated

07 December 2016 concerning The Implementation of Good

Governance for Commercial Bank.

(3) Circular Letter of Bank Indonesia number 9/12/DPNP dated 30 May

2007 concerning The Implementation of Good Corporate Governance

for Commercial Bank.






Daerah Jawa Barat dan Banten, Tbk. Number 04/SK/DK/2016 dated 30





December 2016 concerning the Working Guideline and Regulations of

the of Integrated Good Governance Committee.


Bank’s Nomination and Remuneration Committee of 2016.


1 Klemi Subiyantoro Independent

Commissioner,

Acting President

Commissioner


Legal



Commissioners

Member Legal

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4 Dadan Yonanda Ex. Officio of the

Human Resources

Division Head

Member Legal and Human

Resources

5 Ernie Tisnawati Sule Independent

Party

Member Human Resources

Management

B.2.3.1 Nomination and Remuneration Committee Independence

All members of the Nomination and Remuneration Committee

have no financial relationship. management, shares ownership

and/or family relations with the Board of Commissioners, Board of

Directors and/or Controlling Shareholder, or any relationship with

the Bank that may affect its ability to act independently.

B.2.3.2 The Roles and Responsibilities of the Nomination and

Remuneration Committee

The Nomination and Remuneration Committee has the roles and

responsibility to formulate and implement the annual work plan of

the Nomination and Remuneration Committee according to the

direction of the Board of Commissioners and the Bank’s prevailing

regulations.

(a) Nomination Related Duties

i. Recommendation on the composition of the member of

the Board of Directors and/or the member of the Board of

Commissioners position;

ii. Formulation and recommendation of the system and

procedure of appointment and/or replacement of the

member of the Board of Directors and/or the member of

the Board of Commissioners to be submitted to the GMS;

iii. The system and procedure of appointment and/or

replacement of the member of the Board of Directors

and/or the member of the Board of Commissioners is

stipulated in the Nomination Guideline;

iv. Recommendation of the name of the candidates for the

Board of Commissioners and the Board of Directors to the

Board of Commissioners to be submitted to the GMS

through Fit and Proper Test from the Financial Services

Authority;

v. Recommendation on the independent party to be the

members of the committees under the Board of

Commissioners to the Board of Commissioners;

vi. Formulation of performance evaluation criteria for the

member of the Board of Directors and/or the member of

the Board of Commissioners position;

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vii. Assistance to the Board of Commissioners in the

performance evaluation of the member of the Board of

Directors and/or the Board of Commissioners;

viii. Recommendation on the skill development program for

the member of the Board of Directors and/or the member

of the Board of Commissioners.

(b) Remuneration Related Duties

i. Evaluation of the prevailing remuneration policy in the

Bank, including the structure and amount of the

remuneration;

ii. Understanding the prevailing provisions and rules and

legislations on the remuneration and stipulation of

facilities and other benefits;

iii. Recommendation to the Board of Commissioners on the

following:

Remuneration policy in the form of salary, facility, and

other benefits for the member of the Board of

Directors and/or the member of the Board of

Commissioners to be submitted to the GMS;

Overall remuneration policies for the executive

officers and employees to be submitted to the Board of

Directors through the Board of Commissioners;

iv. Recommendation is submitted in view of:

The financial performance and fulfillment of reserves

as set up in the prevailing rules and legislations;

Individual work performance/merit;

Reasonableness with the peer group;

Consideration of target and long term strategy of the

Bank;

The duties, responsibilities and authority of the Board

of the Directors and/or the member of the Board of

Commissioners to be connected with the achievement

of the objective and performance of the Bank;

Performance target or individual performance of each

member of the Board of Directors and/or the member

of the Board of Commissioners;

The balance of fixed benefits and variable benefits;

v. Assistance to the Board of Commissioners to evaluate the

performance against the remuneration received by the

member of the Board of Directors and/or the Board of

Commissioners ;

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vi. Recommendation to the Board of Commissioners on the

overall remuneration policy of the employees of the Bank

to be submitted to the Board of the Directors.

B.2.3.3 Meetings and Attendance of the Nomination and

Remuneration Committee

The Nomination and Remuneration Committee held 11 (ten)

meetings in 2016. Below is the information on meetings conducted

by the Remuneration and Nomination Committee:

NameTotal

Meetings

Total


Klemi Subiyantoro 11 7 63.64%

Muhadi 11 10 90.91%

Yayat Sutaryat 11 11 100%

Dadan Yonanda 11 11 100%

Ernie Tisnawati Sule* 7 3 42.86%


B.2.2.5 Implementation of the Task of the Remuneration and

Nomination Committee

Throughout the meetings in 2016, the Nomination and

Remuneration Committee have discussed the following matters:

(a) Remuneration-related policy

i. Evaluation of remuneration policy:

Documentation of prevailing provisions and rules and

legislations on the remuneration and stipulation of

facilities and other benefits.

Monitoring of the remuneration system currently used

in the market, State-Owned Enterprise/Regional

Government Owned Enterprise Bank, Private National

or Foreign Bank.

ii. Discussion on the remuneration policy currently used

with the following details:

Remuneration of the management discussing the the

remuneration policy of the Bank’s management currently

used in the Bank and recommendation to the Board of

Commissioners.

Remuneration of the Employees discussing the

remuneration policy evaluation for the executive officers

and overall employee of the Bank.

(b) Nomination-related policy:

i. Discussion on the guideline/system and procedure of

nomination and or replacement of the Management;

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ii. Discussion on the selection and recommendation of the

candidates of the member of the Management;

iii. Discussion on the committee member’s recommendation

from the independent party;

Discussion on the committee member’s

recommendation from the independent party.

Discussion on the nomination of committee member.

(c) Guidelines and Code of Conduct Related Work and Report

i. Working guideline.

ii. Work Program,

iii. Activity report.

(d) Other activities under the scope of Remuneration &

Nomination Committee.

B.2.4 Integrated Good Governance Committee

Financial Services Authority number 18/POJK.03/2014 concerning the

Application of Governance for Financial Conglomeration is stipulated to

guide the execution of integrated good governance for the Financial Services

Institutions with ownership and/or controlling relationship. Therefore,

every Financial Services Institution in a financial conglomeration is required

to put integrated good governance in place. To do this, the Bank has

established an Integrated Good Governance Committee as part of the

supervision to provide recommendation or advice for the execution of the

policy.

The Integrated Good Governance Committee was established pursuant to:



for General Bank;

(2) Circular Letter of Bank Indonesia number 15/15/DPNP dated 29 April



(3) Financial Service Authority Regulation number 17/POJK.03/2014 dated

18 November 2014 concerning the Implementation of Risk Management

for Financial Conglomeration;

(4) Circular Letter of Financial Service Authority number 14/SEOJK.03/2015

dated 25 May 2015 concerning The Implementation of Risk

Management for Financial Conglomeration;

(5) Circular Letter of Financial Authority Regulation number

15/SEOJK.03/2015 dated 25 May 2016 concerning The Implementation

of Good Governance for Financial Conglomeration;



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Daerah Jawa Barat dan Banten, Tbk. Number 04/SK/DK/2016 dated 30





March 2016 concerning the Guidelines and Code of Conduct of the of

Integrated Good Governance Committees.


Bank’s Integrated Good Governance Committee of 2016.



Commissioners

Chairman Legal

2 Klemi Subiyantoro Independent

Commissioner,

Acting President

Commissioner


Legal


Commissioners


International

Business

Management

4 Suwarta Independent

Commissioners


Legal

5 Aldrin Herwany Independent

Party

Member Economy

B.2.4.1 The Independence of the Integrated Good Governance

Committee

All members of the Integrated Good Governance Committee have

no financial relationship. Management, shares ownership and/or

family relations with the Board of Commissioners, Board of



B.2.4.2 The Roles and Responsibilities of of the Integrated Good

Governance Committee

The Integrated Good Governance Committee has the roles and

responsibility to formulate and implement the annual work plan

according to the direction of the Board of Commissioners and the

Bank’s prevailing regulations. The roles and responsibilities of the

Integrated Good Governance Committee are:

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(a) Supervise the implementation of good governance in

individual Financial Service Institutions to meet the Integrated

Good Governance Policy;

(b) Provide the recommendations to the Principal Entity’s Board

of Commissioners regarding the implementation of the roles

and responsibilities of the Principal Entity’ Board of Directors

in the implementation of Integrated Good Governance Policy

and the follow up of the internal and external audit results;

(c) Evaluate the stipulated Integrated Good Governance Policy;

(d) Evaluate and analyze the report of integrated good governance

provided by the Board of Directors and other reports;

(e) Formulate and implement the Integrated Good Governance

Committee‘s annual work plan according to the direction of

the Board of Commissioners and the Bank’s prevailing

conditions.

(f) Create annual work program;

(g) Create the evaluation report and provide the recommendation

to the Board of Commissioners at least 1 (one) time on a

quarterly basis.

B.2.4.3 Meeting and Attendance of the Integrated Good Governance

Committee

The Integrated Good Governance Committee has held 10 (ten)

meetings. Below is the information on meetings conducted by the

Remuneration and Nomination Committee in 2016:

NameTotal

Meetings

Total


Yayat Sutaryat 10 10 100%

Klemi Subiyantoro 10 - -


Suwarta* 7 5 71.43%

Aldrin Herwany** 6 8 75%


**Appointed as the committee member on 3 June 2016

B.2.4.4 Implementation of the Task of the Integrated Good

Governance Committee

The following lists all of the activities of the Integrated Good

Governance Committee in 2016:

(a) Coordination with the Director of Compliance and Risk

Management;

(b) Providing inputs to the Board of the Directors;

(c) Monitor the progress report of the Bank’s Integrated Good

Governance and Integrated Risk Management implementation.

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B.2.5 Business & Credit Monitoring Committee

Business & Credit Monitoring Committee (KPBP) of the Bank is one of the

committees established by the Bank’s Board of Commissioners to support

the effectiveness of task implementation and responsibilities. KPBP of the

Bank was established based on:




(2) Circular Letter of Bank Indonesia number 15/15/DPNP dated 29 April





March 2016 concerning the Working Guideline and Regulations of the

of Integrated Good Governance Committee.





(5) The Decision letter of the Board of Commissioners number

05/SK/DK/2015 dated 03 March 2015 concerning Guidelines and Code

of Conduct of Business and Credit Monitoring Committee.


Bank’s Business and Credit Monitoring Committee of 2016.



Commissioners


International

Business

Management


Commissioners

Member Legal


4 Agus Hery Subagyo Independent

Party

Member Economy

5 Usman Independent

Party

Member of the Board

B.2.5.1 Business & Credit Monitoring Committee

All members of the Business and Credit Monitoring Committee

have no financial relationship. Management, shares ownership

and/or family relations with the Board of Commissioners, Board of

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B.2.5.2 The Roles and Responsibilities of the Business and Credit

Monitoring Committee

The task of Business and Credit Monitoring Committee are:

(a) Monitor the policy and the day to day business and credit of

the Bank;

(b) Other tasks instructed by the Board of Commissioners.

The following are task of the Business and Credit Monitoring

Committee:

(a) In performing its tasks, KPBP is reporting to the Board of

Commissioners;

(b) The member of KPBP is required to keep the information

obtained confidential according to the prevailing provisions;

(c) In performing its tasks, the member of KPBP is required to

follow the ethics standard of the Bank and prohibited from

taking direct or indirect personal advantage from the Bank

activities other than the honorarium and/other benefits

according to the prevailing provisions.

B.2.5.3 Meeting and Attendance of Business Monitoring and Credit

Committee

In 2016, Business and Credit Monitoring Committee held 17

(seventeen) meetings. Below is the information on meetings

conducted by the Business and Credit Monitoring Committee in

2016:

NameTotal

Meetings

Total



Yayat Sutaryat 17 8 47.56%

Muhadi 17 14 82.35%

Agus Hery Subagyo 17 17 100%

Usman 17 17 100%

B.2.5.4 Implementation of the Task of the Business Monitoring and

Credit Committee

According to Business and Credit Monitoring Committee work

plan, the following work plan has been executed in 2016.

(a) Evaluation of business policy and credit and provide

recommendation to improve the business and credit policies

and development.

(b) Monitoring and supervising the business and credit processes;

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(c) Performing a review and monitoring of the Bank’s

performance;

(d) Performing a review and monitoring of the performance of

credit of the relevant Division;

(e) Performing review and monitoring to the NPL & CKPN of the

Branch Offices and relevant Divisions as well as provide

recommendations for its resolutions;

(f) Performing review and monitoring to the performance of

Third Party Funds (DPK) collection;

(g) Performing a review and monitoring to the Bank’s CASA

condition;

(h) Evaluation of fee based income achievement and

recommendation for improvement;

(i) Performing a review and monitoring to the Bank’s OPEX

condition;

(j) Reporting the business and credit monitoring activities to the

Board of Commissioners on a regular basis.

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

B.3.1 Implementation of Compliance Function

B.3.1.1 Compliance Function

Implementation of Compliance Function is referred to the Central

Bank/Bank Indonesia regulation number 13/2/PBI/2011 dated 12

January 2011 concerning the Implementation of Compliance

Function in Commercial Bank. Consistent with the mandate of the

Central Bank/Bank Indonesia Regulation, the Board of Directors are

required to ensure the execution of the Bank Compliance Function.

Additionally, the Bank is required to assign a Director that

supervises the Compliance Function with the following roles:

(a) Director Function supervising the Compliance Function

i. To put in place a Compliance Culture to across the

organization level and the Bank’s business activities;

ii. Management of the Compliance Risk faced by the Bank;

iii. Ensuring the Bank’s policies, provisions, systems, and

procedures and business activities have met the provisions

of the relevant authorities and prevailing rules and

legislations; and

iv. Ensuring the Bank’s compliance with the commitments

made by the Bank to the Financial Services Authority

and/or other authorized supervision authority.

(b) The Roses and responsibilities of the Board of the Directors

supervising the Compliance Function, at least to cover the

following

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i. Formulation of strategy to encourage the the Bank’s

Compliance Culture.

ii. Proposing the compliance policy or compliance principles

to be stipulated by the Board of Directors;

iii. Setting up the systems and procedures to be used in the in

the developing the Bank’s internal provisions and

guideline.

iv. Ensuring that all Bank’s policies, provisions, systems, and

procedures and business activities have met the provisions

of the relevant authorities and prevailing rules and

legislations;

v. Minimizing he Bank’s Compliance Risk;

vi. Taking measures to prevent the policy and/or the

decisions taken by the Bank’s Board of Directors from

violating the provisions of the authorities and prevailing

rules and legislations;

vii. Performing other tasks related to the Compliance

Function.

The task and responsibilities as mentioned to above does not lessen

the rights and obligations of the Director responsible for the

Compliance Function as the Bank’s Board of Directors. As stated in

the Law on Limited Liability Companies, certain actions required

the decision from all members of the Board of Directors.

B.3.1.2 The Roles and Responsibilities of the Compliance Work Unit

The tasks and responsibilities of the Compliance Work Unit to

ensure the performance of Compliance Function should at least

include:

(a) Taking the steps to support the development of Compliance

Culture across the Bank’s business activities at every level of

the organization;

(b) Identifying, measuring, monitoring, and controlling the

Compliance Risk by referring to the Regulators’ regulation

concerning the Implementation of Risk Management for

Commercial Bank;

(c) Assessment and evaluation of the effectiveness, adequacy, and

consistency of the Bank’s policy, condition, system or

procedure with the prevailing rules and legislations;

(d) Reviewing and/or giving recommendation to update and

improve the Bank’s policies, provisions, systems and

procedures according to the provisions of the Regulator and

prevailing laws and legislations;

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(e) Ensuring the Bank’s compliance with the commitments made

by the Bank to the Financial Services Authority and/or other

authorized supervision authorities;

(f) Making efforts to monitor the policies, provisions, systems and

procedures and Bank's business activities so that it meets the

regulator’s provisions and prevailing laws and legislations;

(g) Monitoring the internal compliance and compliance with any

amendments to the laws and legislations and provisions from

the regulator and inform such changes to all the Bank’s

management and across relevant Divisions/Work Units.

(h) Reviewing the draft of policies and procedures relevant to the

Bank’s business activities proposed by the Division/Work Unit.

(i) Reviewing the monitoring procedure of the system and policies

in every Divisions/Work Unit relevant with the Company’s

Good Governance implementation;

(j) Managing the execution of Anti-Money Laundering and

Counter Terrorist Financing (AML-CFT), Gratification

Controlling Program (GCP), reporting/grievances or Whistle

Blower System (WBS) and Wealth Report of the State Officials

(WRSO);

(k) Monitoring the compliance in the implementation of AML-

CFT, GCP, WRSO, and WBS

(l) Proposing the written policy of the AML-CFT to the Board of

Directors.

(m) Evaluating the compliance with the Bank’s internal aspect in

the form of Decision, Circular Letter, and other other forms of

letters according to the Bank’s form management consist of

official stipulation and prevailing regulation letter that have

been executed or still being proposed;

(n) Ensuring and monitoring the Bank’s compliance with the

commitments made by the Bank to and/or other authorized

supervision authorities;

(o) Developing and monitoring the Quality Assurance (QA)

function across the Bank’s business activities at every level of

the organization;

(p) Monitoring the fulfillment of the integrated needs;

(q) Developing the tools in order to improve the compliance

culture;

(r) Coordinating the formulation, development, and application of

the policies and/or guidelines to support the efficient process

of management Compliance Work Unit;

(s) Preparing, coordinating, and proposing the program for the

Compliance Work Unit to the Director who is responsible and

control the utilization of Compliance Work Unit’s budget;

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(t) Developing and improving the quality and performance

effectiveness of the Compliance Work Unit’s staff;

(u) Developing and facilitating the communication with the other

Divisions/Work Units, Regional Offices, Branch Offices in

executing the performance management and activities of the

Compliance Work Unit;

(v) Organizing the risk management implementation in the

Compliance Work Unit;

(w) Applying the prudential principle and compliance with the

regulator’s regulation and legislations, and other prevailing

internal regulations;

(x) Monitoring all work areas of the Compliance Work Unit

according to the prevailing provisions;

(y) Informing all the Bank’s internal regulations and other

provisions relevant to the scope of the tasks within its work

unit;

(z) Coordinating the provision of relevant data/document with

the internal and external audit according to the prevailing

regulations and within the limit of authority provided by the

Board of Directors.

(aa) Coordinating the follow-up of the external audit findings

according to the limit of authority provided by the Board of

Directors.

In the implementation of the Compliance Function, the

Compliance Work Unit assists the Compliance Director. The unit is

responsible to formulate the steps to develop a compliance culture

across the bank’s business activities at each level of the

organization, which among others executed by:

(a) Monitoring the fulfillment of the Bank's commitment to the

result of the audit reports from the Financial Services

Authority and/or other supervisory authorities;

(b) Reviewing the relevant policies and procedures on the Bank’s

business activities that have been executed based on the

information on the new provisions from the relevant

institutions or the initiatives of the Compliance Work Unit;

(c) Reviewing the draft of policies and procedures relevant to the

Bank’s business activities proposed by the related work unit;

(d) Recapitulating and monitoring the Report to be submitted to

the Bank’s Management and/or the Financial Services

Authority;

(e) Compiling the Bank’s internal or external regulations inputted

to the Development and Evaluation Group database and

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informed to the Division/Unit, Regional Office and Branch

Office;

(f) Delivering the dissemination of Compliance Culture in

employee learning and training program or delivery in the the

Branch Offices;

(g) Coordinating with the KPK in the application of Gratification

Control Guideline and Wealth Report of the State Officials

(WRSO) within the Bank;

(h) Implementation of WBS reporting/complaints management;

(i) Reviewing the operational/non-operational area considered to

require new compliance sheet/evaluation of existing

compliance sheet.

In performing its business activities, the Bank has fulfilled the

regulator’s provisions related with the capital adequacy aspects,

credit, maintenance of liquidity, and the implementation of AML-

Counter Terrorist Financing Program.

Compliance AspectBank’s

Compliance

Reference

(Provisions)

Minimum Capital Adequacy

Ratio (CAR)18.43% ≥ 8%

Exceeding/Violation to Legal

Lending Limit (BMPK)None Not allowed

Non- Performing Loan Ratio

(NPL)1.69% ≤ 5%

Primary Minimum Reserve

Requirement Ratio (GWM)7.92% ≥ 7.5%

Secondary Minimum Reserve

Requirement (GWM)7.15% ≥ 4%

Minimum Reserve

Requirement in Foreign

Currency

11.33% ≥ 8%

Net Open Position Ration

(PDN)0.58% ≤ 20%

B.3.1.3 Monitoring implementation of Anti Money Laundering and

Counter Terrorist Financing (APL-CFT);

The implementation of the AML-CFT program is a continuous

program to meet the obligations under the following provisions:

(a) Law number 8 of 2010 dated 22 October 2010 concerning the

Prevention and Eradication of Money Laundering Crime;

(b) Law number 9 of 2013 dated 13 March 2013 on the Prevention

and Eradication of Terrorism Financing Crimes;

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(c) Central Bank/Bank Indonesia Regulation number

14/27/PBI/2012 dated December 28, 2012 concerning the

Implementation of Anti Money Laundering and Counter-

Terrorism Financing Program for Commercial Banks; and

(d) Circular Letter of Bank Indonesia Number 15/21/DPNP/2013

dated 14 June 2013 concerning the Implementation of Anti

Money Laundering and Counter-Terrorism Financing Program

for Commercial Banks.

In 2016, as the form of the Bank's serious effort to improve the

quality of risk management implementation, the Bank has

performed the following activities and development of AML-CFT

program:

(a) Monitoring the financial transactions for more complete

analysis on potential Suspicious Transactions;

(b) Submitting Suspicious Financial Transaction Report (STR) to

the Financial Transaction Reporting and Analysis Center

(PPATK);

(c) Submitting Cash Transaction Report (CTR) to PPATK;

(d) Submitting international transfer fund instruction (IFTI)

report to PPATK;

(e) Submitting Integrated Service User Information System

(SIPESAT) to PPATK;

(f) Maintaining and monitoring the customer profiles with the

lists of individuals and institutions to be monitored based on

national and international authorities’ database information;

(g) Monitoring the customers who are the suspect or defendant in

a crime and also monitoring the Suspects List and Suspected

Terrorists from the authorities or mass media or based on

other information from official sources;

(h) Coordinating with PPATK, KPK, Indonesian National Police

and other authorities concerning the information request,

account suspension and confiscation of money laundering

funds and terrorism financing cases;

(i) Monitoring the customer data updates activities performed by

all work units and branches;

(j) Effective monitoring of customer profiles and transactions by

supervising the implementation of customer groupings into

the risk level (Risk Based Approach) of money laundering

activities;

(k) Fulfillment of the requirement to open the Bank’s business

relationship with correspondent overseas bank from the APL-

CFT;

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(l) Reviewing the new banking products and activities related to

the AML-CFT program implementation requirements prior

commissioning the activities or products;

(m) Monitoring and giving recommendations on AML-CFT

learning and training programs to employees of the Bank to

improve understanding, awareness, and risks of Money

Laundering and Terrorism Financing crimes;

(n) Ensuring that information technology in support of AML-CFT

program implementation is consistent and includes the

development of the Bank’s business, products and services;

(o) Coordinating and monitoring the implementation of AML-CFT

program policy with relevant customer-faced work units.

As for the statistics of the implementation of AML-CFT performed

by the Banks in 2016, the following information is available:

Activities Total

Suspicious Transactions Report (STR) 297 Reports

Cash Financial Transaction Report (CTR) 19,313 Reports

International Fund Transfer Instruction Report

(IFTI)15,222 Reports

SIPESAT Report406.066 CIF

entries

Correspondence with the authorities 101 times

Assessment of AML-CFT implementation related to

New Bank Activities and Products12 Review

Implementation of AML-CFT in related

correspondent banks16 times

Number of employees attending the AML-CFT

Training1,020 employees

B.3.2 Implementation of Internal Audit Function

(1) Based on current organizational structure approved by the Board of

Directors through Letter of Decision number 621/SK/DIR-PS/ 2015

dated 1 July 2015 on Organizational Structure of PT Bank Pembangunan

Daerah Jawa Barat dan Banten, Tbk., Internal Audit Division is under

administrative line of the President Director and coordination line of

the Audit Committee.

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(2) Pursuant to the Letter of Decision of the Board of Directors number

729/SK/DIR-DAI/2014 dated 20 November 2014 on the Internal Audit

Charter concerning the vision, mission, functions, roles and

responsibilities of the Internal Audit Division in performing the Bank’s

effective Internal Audit.

(3) The detailed number of Internal Audit Division staffs in 2016 are as

follows:

No Designation Total

1 Division Head 1

2 Group Head 8

3 Senior Manager 1

4 Manager 5

5 Senior Officer 4

6 Officer 8

7 Staff 9

8 Junior Staff 10

TOTAL 46

(4) The Head of Internal Audit Division is a certified Qualified Internal

Auditor (QIA), Certified International Compliance & Financial Crime

from Manchester Business School and Level 5 Risk Management.

Additionally, the staff of Internal Audit Division have been included in

the following certification training:

No Name of Certification Training

Total

Certification

Training

1 BSMR1 12

2 BSMR2 7

3 BSMR3 7

4 BSMR4 1

5 BSMR5 1

The Board of

Commissioners

General Audit Group

President Director

Division Head

Information TechnologyAudit Group

Anti Fraud AuditGroup

Group Head

Group’s Service Development& Quality Assurance

Audit

Committee

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6 Qualified Internal Auditor (QIA) Certification 1

7 Enterprise Risk Management Professional (ERMCP) 1

8Certified Information Systems Security Professional

(CISSP)1

9 CA/Ak 6

10 Certified Fraud Examiners (CFE) 1

11 Certified Forensic Audit (CfrA) 1

12 BREVET A&B 3

TOTAL 42

(5) Based on monitoring performed by the Service Development & Quality

Assurance (SDQA) group, the Internal Audit Division has performed an

audit with the following information:

No Plan Actual

1 30 Branch Offices 33 Branch Offices

2 5 Divisions 5 Divisions

35 Information Technology

Applications

5 Information Technology

Applications

4 0 Special Audit/Fraud 3 Special Audit/Fraud

5 0 Surprise Audit 12 Surprise Audit

(6) Internal Audit Work Unit (SKAI) has updated the Bank’s

Implementation of Internal Audit Standard Function (SPFAIB) that has

been authorized by the Board of Commissioners and approved by the

Board of Directors in the Board of Directors Decision Letter number

729/SK/DIR-AI/2014 dated 10 November 2014 Concerning the

Implementation of Internal Audit Functions of PT. Bank Pembangunan

Daerah Jawa Barat dan Banten, Tbk.

(7) The auditor team inspected the work unit and recommended for future

process improvement and informed the relevant Working Units.

B.3.3 Implementation of External Audit Function

The independent oversight function of the Bank's financial aspects is

performed by conducting audits by external auditors from Public

Accounting Firm (PAF). The external auditors reviewing the financial

statements of the Bank for financial year 2016 was determined through the

GMS based on recommendations from the Board of Commissioners and the

Audit Committee. The Bank obtains the service according to applicable

goods and service procurement mechanism. To guarantee independence

and good quality of the audit results, the external auditor appointed should

not have any conflict of interest with the Bank.

The appointment of external auditor of the Bank refers to the provisions in

the Minister of Finance Regulation number 17/PMK.01/2008 dated 5

February 2008 article 3 paragraph 1 stating that the provision of general

audit service for a financial statement of an entity to be performed by a CAP

maximum for 6 (six) consecutive financial years and by a Pubic Accountant

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for maximum 3 (three) consecutive years. The Bank has consistently try to

improve the communication between the Public Accounting Firm, the

Audit and Management Committee to minimize the problems faced during

the audit process. To comply with the audit process according to

Professional Accounting Standard, work agreement, and audit scope that

have been agreed and to be completed according to the agreed time,

discussed in a regular meeting discussing some important issues.

The appointment of the Public Accounting Firm and the cost of the audit

shall be conducted in accordance with the resolution of the GMS and the

stipulated KAP and shall be a Partner In-Charge registered in Bank

Indonesia/Financial Services Authority. The Audit of Bank Financial

Statements ended 31 December 2016 was implemented pursuant to the SPK

number 0277/PSS/10/2016 dated 21 October 2016 to PAF Purwantono,

Sungkoro & Surja with audit fee of Rp. 2.145.000.000,- (two billion one

hundred forty0five million Rupiah) (including Value Added Tax (10%) and

Out-of-Pocket (OPE)).

The list of PAF that has audited the Bank's financial statements are as

follow:

Year

Financ

ial Year

Public Accountant Company PIC

In-Charge

PartnerInternational Indonesian Affiliate

2016 Ernst & Young Purwantono, Sungkoro & Surja Sinarta

2015 Ernst & Young Purwantono, Sungkoro & Surja Sinarta

2014 Ernst & Young Purwantono, Suherman & Surja Sinarta

2013 Ernst & Young Purwantono, Suherman & SurjaBenyanto

Suherman

2012 Ernst & Young Purwantono, Suherman & SurjaBenyanto

Suherman

B.4 Implementation of Risk Management and Internal Control System

B.4.1. Risk Management Implementation

The Bank implements the Risk Management System based on the following

four pillars:

(1) Active supervision of the Board of Commissioners and the Board of

Directors as part of the management oversight role.

The Board of Directors and Board of Commissioners are responsible for

the effectiveness of the Bank’s Risk Management implementation.

Therefore, the Board of Directors and the Board of Commissioners

needs to understand the risk of the Bank’s and provide clear guidance,

actively monitor and mitigate and develop a Risk Management culture

within the Bank’s organization. To support the effective

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implementation of Risk Management, the Board of Directors and the

Board of Commissioners have set a clear task and responsibilities to

each unit, ensuring the sufficient organizational structure, and ensure

the adequacy of the quantity and quality of Human Resources (HR).

(2) Adequacy of policy, procedures, and stipulation of limit as the

guideline of risk management implementation.

Effective Risk Management Implementation has been supported by a

framework that includes the policies and procedures of the Risk

Management and identified risk limits that consistent with the vision,

mission, and business strategy of the Bank. The formulation of policies

and procedures of the Risk Management was performed by considering

the type, complexity of business activities, risk profile, risk level taken,

risk connections, and the regulations as stipulated by the authority

and/or healthy banking practice. Additionally, the policy and

procedure implementation of the Risk Management of the Bank must

be supported by adequacy of capital and human resources quality. For

efficient risk control, the policies and procedures of the Bank’s shall are

to be based on the the Risk Management strategy that includes the Risk

tolerance and limit. The Risk tolerance and Limit is identified

considering the level of Risk to be taken and the Bank's overall strategy.

The Risk Management framework, including its policies, procedures

and limits are established by considering the following:

(a) Risk Management Strategy

Risk management strategy is used as a reference to approach the

achievement the Risk Management’s objectives. The Bank

formulates a Risk Management strategy according to overall

business strategy by considering the risk appetite, risk tolerance,

and risk limit. The Risk Management Strategy is formulated to

ensure that the Bank's risk exposure is at or below the level that

has been established according to the Bank's internal policies,

internal procedures, laws and other prevailing legislations. The

Risk Management Strategy is formulated based on the general

principles as follow:

i. The Risk Management Strategy must be have long-term

orientation in order to ensure the Bank’s viability and the

condition or economic cycle considerations;

ii. Comprehensive Risk Management Strategy can control and

manage the Bank’s risk and its subsidiaries; and

iii. Having capital adequacy with adequate allocation of

sufficient resources.

The Risk Management Strategy is formulated by in consideration

of the following factors:

i. Economic conditions and its impact to the Bank's risk.

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ii. The Bank’s organization, including the sufficiency of human

resources and supporting infrastructure.

iii. The Bank’s financial condition, organization, and its ability

to generate profits and the ability to identify, monitor, and

control risks due to changes within the internal as well as

external factors;

iv. The Bank’s portfolio mix and diversification.

The Risk Management Strategy is periodically reviewed and and

effectively communicated to all levels of the organization so that

they understand the approach taken and the compliance with all

related aspects. The Board of Directors communicates the Risk

Management Strategy effectively across levels within the

organization and reviews it periodically.

(b) The level of Risk Taken (Risk Appetite) and Risk Tolerance

It is the level of risk that the Bank’s accepted to achieve the target

and expected level of profits. Risk Appetite is reflected in the

Bank’s business strategy and target and reflects the expectation of

the stakeholders. The level of risk to be taken (risk appetite ) is

reflected in the Bank's business strategy and objectives.

The risk tolerance refers to the maximum level and type of risk

that the Bank has set. Risk tolerance describes the risk appetite.

The Board of Directors provides clear guideline on the Bank’s risk

appetite, risk tolerance, and risk limit. Risk appetite and risk

tolerance must be reflected in the Risk Management policy,

including in the setting of the limits. In setting up the risk

tolerance, the Bank must consider its business strategy and

objectives and its risk bearing capacity.

(3) The sufficiency of identification process, measurement, monitoring and

risk control process as well as the management of the information

system.

Risk identification, measurement, monitoring and control take up most

of the Risk Management implementation process. The Risk

identification is proactive in nature and it covers all products and

business activities of the Bank and performed to analyze the source of

the risk, its possibility and impact to the viability of the bank's

business.

The measurement of identified risk is further required according to the

nature and complexity of the Bank's business activities. Based on the

result of the measurement, Risk Taking Unit (RTU) along with the Risk

Management Work Unit (SKMR) as the independent party in the

monitoring process will then perform the monitoring. Additionally, to

ensure the effectiveness of the implementation in Risk Management, it

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needs the support in the form of adequate risk control and risk

management information system.

(4) Comprehensive internal control system.

The process of effective Risk Management application must be

complemented by a reliable internal control system. The effective

implementation of the internal control system will help the

management of the Bank in keeping the Bank's assets safe, ensure

reliable financial and managerial reporting, compliance improvement

with laws and legislation, as well as minimizing the the risk of losses,

deviations and violations to the prudence principle. A reliable and

effective implementation of the Bank's internal control system is the

responsibility of all work and support units as well as Internal Audit

Work Unit.

Aspects where attentions should be given in the implementation of the

control system are:

(a) Effective control systems to be implemented in the application of

the Bank’s Risk Management will refer to the policies and

procedures that have been established. The implementation of

functional separation principle (four eyes principle) should

sufficient and to be executed in a consistent manner.

(b) The internal control systems in the Risk Management

implementation should least include:

i. the conformity between the internal control system and the

type and level of Risk embedded to the Bank's business

activities;

ii. the establishment of authority and responsibility to monitor

the compliance with the Risk Management policies and

procedures and establishment of Risk limit;

iii. the establishment of clear reporting lines and separation of

function from the operational working unit risk-taking unit)

to the work unit performing the control function;

iv. a clear description of an organizational structure on the tasks

and responsibilities of respective units and individuals;

v. accurate and timely financial reporting and operational

activities;

vi. sufficient procedures that ensure the compliance with the

laws and legislations;

vii. effective, independent, and objective review of the Bank's

operational policies, frameworks, and procedures;

viii. adequate testing and review to the management of

information systems;

ix. complete and adequate documentation on the scope,

operational procedures, audit findings, and responses from

the Bank’s management based on the audit results; and

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x. regular and continuous verification and review on the

management of the Bank's material weaknesses and the

Bank’s correction actions for any irregularities that occurred.

(c) the minimum Risk Management review to be made should at

least include:

i. Risk Management Work Unit and Internal Audit Work Unit

to be reviewed and evaluated regularly at least once a year;

ii. the frequency or intensity of the scope of review and

evaluation may be increased based on the development of

Bank’s risk exposure, market changes, measurement method,

and Risk management;

iii. particularly for the review and evaluation of Risk

measurement by SKMR, it should at least include:

the consistency of Risk Management framework that

includes the policy, organizational structure, resource

allocation, process design of the Risk Management,

information system, and the Bank’s Risk reporting with

the development of regulation and best practice of the

Risk Management;

methods, assumptions, and variables currently in place

to measure Risk and establish the limit of Risk exposure;

comparison of Risk measurement method results using

simulation or future projection with actual results;

comparison of assumptions used in the method with

actual conditions;

comparison between the limits that have been set with

the actual exposure; and

determination of appropriateness of measurement and

risk exposure limits with the Bank’s past performance

and the Bank's capital position at the moment.

iv. Independent review or Internal Audit Work Unit to include:

the reliability of the Risk Management framework, which

includes policies, organizational structure, resource

allocation, Risk Management process design, information

systems and the Bank’s Risk reporting; and

the application of Risk Management by business units or

the supporting activities, including the SKMR’s

monitoring.

(d) Delivery of Risk Management Work Unit review assessment

results to the Board of Commissioners, Internal Audit Work Unit,

the Director responsible for the compliance function, the Audit

Committee (if any) and other relevant Board of Directors to give

input in order to to improve the Risk Management framework

and process;

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(e) Internal Audit Work Unit to monitor the improvements made to

the internal or external audit findings; Internal Audit Work Unit

to inform the Board of Directors for any findings that have not

been followed up so that the required steps can be made;

(f) The Bank’s responsiveness to weaknesses and/or irregularities

occurred to the internal and external provisions currently in

place.

There are 8 (eight) types of risks that the Bank needs to properly manage.

They are Credit Risk, Liquidity Risk, Market Risk, Operational Risk,

Strategic Risk, Compliance Risk, Legal Risk, and Reputational Risk.

(1) Credit Risk

In relation to the process of identification, measurement, monitoring

and control of credit risk, the Bank has performed the following:

(a) Comprehensive analysis of its internal and external aspects on a

regular basis through Root Cause of Credit Risk analysis (RCCR)

containing the analysis of the decrease in debtors’ collection that

have caused the Non- Performing Loans (NPLs).

(b) Calculation of stress test to the Credit Risk delivered to the

Director of Compliance and Risk Management. Additionally, the

Bank has performed Bottom Up Stress Test (BUST) analysis, the

report is submitted to the Financial Services Authority (OJK) as

part of the Financial Sector Assessment Program (FSAP) and

stress tests has been set up which focuses on the establishment of

BPD Banten. The stress test was performed using the level

portfolio approach and the objective was to calculate the shock

impact of macroeconomic conditions to the NPL increase across

the bank. The calculations were made using the satellite model

and it includes productive and non-productive credit in all

economic sectors. it is a multiple regression calculation

connecting the macroeconomic conditions as independent

variable and NPL as dependent variable.

(c) In relation to the process of identification, measurement,

monitoring, and control of credit risk in the credit business

division, a report is made on the regular basis regarding the

development of credit risk exposure made for risk mitigation

purpose and as an effort for immediate improvement according to

the risk level. The quality of credit portfolio monitoring is also

reported regularly to the Board of Directors by reporting as

follow:

i. Regular review and evaluation through business review

including the discussion on the position and quality of loan

portfolios;

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ii. Risk potential in credit activities reported independently by

the Risk Management Work Unit.

Additionally, the Bank also performs credit monitoring and it

contains the information on:

i. Financial condition of the debtor;

ii. Collateral adequacy;

iii. Monitoring of the compliance with the credit agreement

requirements;

(2) Market Risk

The Market Risk Management efforts performed by the Banks are as

follow:

(a) The Bank has the procedures on the identification of banking

book interest rate risk that is supported by an sufficient

information system and availability of daily reporting on the

fluctuation of exchange rate, interest rate and other market

information to the Board of Directors including over limit;

(b) Daily mark to market process exists to the bank’s trading

transaction to find out the loss/profit made by the bank and the

method of mark to market is also exists, including the

contingency plan procedures in its mark to market process when

extraordinary conditions occur;

(c) The Bank performs regular review or validation to the market risk

measurement model using the back testing and the measurement

model is still valid s per results of the back testing. As for the

validation and back testing was arranged in the form of VaR

(Value at Risk ) report and model validation;

(d) The Bank has daily limit monitoring procedures as the standard

of monitoring for the Risk Management Division to dealing room

treasury activities including the follow-up to be performed by the

risk-taking unit in the event of limit is exceeded and it is reported

to the Board of Directors;

(e) The Bank exercises market risk control by monitoring transaction

contracts and counterparty credibility review on a daily basis and

it is monitored by a dedicated experienced person. In setting the

limit of counterparty, other independent work units from the

business unit was assigned so that the limit setting process

involves four eyes principle;

(f) To improve the information on market risk exposure of the bank,

relevant units have reported the market risk exposure on daily

baisis (treasury utilization), weekly basis (treasury utilization

report), monthly basis (analysis of market risk and liquidity

measurements), semiannual (market risk stress test) to the Board

of Directors and executive officers and therefore it is expected

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that follow-up actions for improvement and mitigations will be in

place to reduce the fitur risks;

(g) In the measurement process, the monitoring performed by the

Risk Management Unit in its report for the Treasury Work Unit

activity is still performed manually and no system is in place.

However, due to non-complex exposure of the bank transactions,

the mitigation of Bank’s potential risks is still under control.

(3) Liquidity Ratio

As for the the Liquidity Risk efforts performed by the Banks are as

follow.

(a) The Bank analyzes all sources of liquidity risk both from internal

and external, i.e. in the banking products and activities affecting

the source of comprehensive utilization of the funds, adequacy of

fund through the markets, and risk analysis that is supported by

sufficient information and data system;

(b) The Bank has tool of measurement ready capable of measuring

and identifying complete liquidity risks on time and based on

internal and external indicators in the early warning indicator that

measures the inherent risks concerning the composition of

funding, liquidity ratio, cash flow projection, liquidity gap,

scenario analysis and stress testing;

(c) The Bank has developed an early warning indicator of liquidity

risk. It is an indicator used to predict the potential future

liquidity crisis by identifying, measuring, and monitoring the

liquidity risk on a day-to-day basis to mitigate early should a

potential future liquidity crisis occur;

(d) The Bank monitors the limit on a daily bis, i.e. primary and

secondary GWM limit, and excess reserve (AL+NAB)/NCD

against the threshold set by the regulator including the future

actions to be preformed by the risk-taking unit if the limit is

exceeded and reports to the Board of Directors is made.

(4) Operational Risk

As for the Operational Risk efforts performed by the Banks are as

follow.

(a) The Bank tries to improve the business process especially for

credit activities. This is evident in the implementation of business

model by involving several functions such as Relationship

Manager, Relationship Officer and Account Officer accommodated

in the organizational structure and reviews of working procedures

in place to support a reliable risk management process;

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(b) The Bank tries to minimize the concentration of staff at the basic

level by performing employee development programs i.e. through

Staff Development Program;

(c) The Bank always improve its human resources, particularly in the

Bank's main business activities, i.e. credit/loan by providing

learning and training programs to employees;

(d) Risk taking unit performs risk assessment continuously on new

product development and activities as part of risk management

implementation;

(e) The Bank performs Operational Risk measurement process on a

regular basis by utilizing Operational Risk measurement tools

such as Risk Control Self Assessment, Key Risk Indicator,

operational risk data loss report on individual work unit and

Operational Risk profile measurement across the bank. As for the

result of the analysis of the Operational Risk assessment was

submitted to the management regularly in the monthly report;

(f) In order to maintain the interests of the Bank and discipline

enforcement, the Bank has implemented effective disciplinary

guidelines including the application of personnel sanction.

(5) Legal Risk

Through legal work unit, the Banks always involves in any legal cases

either directly or through legal consultant service upon the request of

the risk taking unit. The Bank manages the Legal Risk through:

(a) Regular legal guidelines by providing assistance in the legal cases,

legal sessions to the risk-taking unit through discussions of legal

issues encountered bu the Branch Office, and review the

agreements to be performed to protect the interest of the Bank.

However, improvements still required in the review process that

currently based on the request from the risk taking unit;

(b) Identification and control over the Legal Risk of the new products

and activities are performed by the Bank by reviewing of the

relevant legal aspects and the mitigation of Legal Risk is reported

to the Board of Directors responsible for the legal work unit;

(c) On the management of information system for Legal Risk, it has

been performed by regularly reporting the monitoring and

recording of any legal case assistance, updates of legal case being

handled by the Legal Division. A quarterly report is also provided

in the form of Legal Risk profile.

(6) Strategic Risk

The following lists down the Strategic Risk management performed by

the Bank.

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(a) The Bank performs Strategic Risk measurement on a regular basis

by monitoring of the achievement of the Bank's business plan

summarized in the progress report and business review on the

Bank's business development;

(b) Discussion on the achievement of the Bank's business objectives

is reported to the management regularly, including to committees

reporting to the Board of Commissioners;

(c) The Bank continuously monitor the performance of the Branch

Offices;

(d) The Bank’s has taken some actions and work out the strategy in

optimizing the settlement of non-performing loans through

collection, insurance claims and disbursement of collateral, and

increasing the CASA funds;

(e) The Bank has made the evaluation and dissemination of

information to all work units concerning the Bank's business

targets;

(f) The Bank made some improvements in its cooperation of service

with the operator/institution/agency to increase fee based income

or additional income for the Bank.

(7) Compliance Risk

The following lists down the Compliance Risk management performed

by the Bank:

(a) The identification, measurement, control, and monitoring

process are performed by implementing compliance sheet,

compliance checklist, and regular reporting on a quarterly basis

in the form of Compliance Risk profile and monitoring and

reporting activities regarding the completion of audit object by

the regulator. The bank also followed the provision of Regular

Meeting Report submission at least 1 (once) a month delivering

the following materials:

i. Discussion on the regulation applied in each work area;

ii. Monitoring the completion of the compliance with the

checklist quality assurance and execution of the work

description relevant to their area of work;

iii. Discussions of the issues faced by each work unit;

(b) The monitoring or recording of Compliance Risk by Compliance

Division have are yet to include the violation to the internal

regulation. It is still limited to the monitoring of the prudence

principal and review of the compliance aspect and reported to the

Person in Charge and under the responsibility of the Director of

Compliance and Risk Management;

(c) For business activity, new product and activities and its

development, the Bank reviews the provisions for the new

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products and activities. Additionally, the Compliance Division

reviews the Bank’s policies/provisions/business activities;

(d) In order to support the implementation of effective Compliance

Risk management, particularly on the tools of Compliance Risk

i.e. compliance sheet form and compliance check list, regular

monitoring of the quality assurance is still required to ensure the

tools is working efficiently.

(8) Reputational Risk

(a) Identification and measurement of Reputational Risk are

performed regularly by monitoring the complaints made by the

customers to call center and/or frontliner;

(b) The Bank manages the administration of any negative news in the

media monitoring report. The report contains the headline, the

name of the media, including the news value to measure the

impact of the news;

(c) The Bank also manages the administration of any customer

complaints in the Customer Complaint Report submitted to the

Board of Directors on a regular basis;

(d) Monitoring of customer complaints and resolutions of customer

grievances according to the provisions/SLA are in place.

(e) Monitoring of the negative news to the Bank in different media

including search engine optimization are in place to improve the

positive image of the Bank, and assessment of reputational risk

profile through the implementation of quarterly risk profile

reporting.

(f) The Bank counters any negative reporting against itself by

disseminating positive news including advertorial that highlights

the bank’s performance and corporate action taken by the bank;

(g) The Bank immediately handles any negative reporting that

potentially give significant material and immaterial impact to the

Bank in coordination with the relevant work unit and the Bank

follows up any negative news with less significant impact

according to the prevailing regulations;

(h) The Bank keeps the customer service informed on the need for

continuous customer education to minimize the potential

Reputational Risk that may surface due to misunderstandings

related to the Bank’s product/service. Additionally, the bank visits

its network regarding the adjustments needed to the banking

industry services standard, perform coaching, and mentoring to

Branch Offices. The Bank also informs the network on the service

program and culture required to improve the Bank’s service.

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(i) As an effort to improve the quality of service, the Bank also

performs internal and external service surveys to improve

customer satisfaction and loyalty to Bank, they are:

i. Internal Survey:

The score of service performance meets the Market

Research Indonesia standard;

Internal monitoring by the Head Office or Regional

Office to the Branch Office:

Self-Assessment on service has been performed across

the Banks network office. Mysterious shopper by vendors

in cooperation with the Bank is also in place to provide

independent evaluation on the Bank’s service.

Service quality assurance is in place to evaluate, provide

coaching, and monitor the services at the Branch Office

to pursue service excellence and good bank image.

ii. External Survey:

With the help of the vendor, the Banks perform customer

satisfaction survey in a program called Customer Loyalty

Index and Customer Loyalty Index to find out the

customer expectation on the Bank’s service. The findings

are used to improve the satisfaction and loyalty of the

customers.

The Bank also distributes the results of customer

satisfaction/feedback to all Branch Offices as the source

for evaluation on the Bank’s services;

Quality of human resources are improved by provision of

learning and training on service excellent & service

standards as well as training on communication skills;

Additionally, to minimize the Reputational Risk arising

from customer complaints to the Bank's

products/services, the Bank, in coordination with

relevant work units continuously follows up the

disrupted machine/transaction system repairs being

performed to the ATM machines and electronic banking;

Other form of mitigation that are regular; y performed

are:

- Media visit to several printed or electronic national

media;

- Establish communication link with the investors;

- Establish good relations with local and national

media partners and conduct media gathering,

invitation to the media to cover the Bank’s activities

and organizing seminars for the media partners to

maintain the balance of coverage;

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B.4.2. Internal Control System

The Internal Control System is an on-going oversight mechanism

established by the Bank. The design quality and its implementation is

influenced by the Board of Commissioners, the Board of Directors, all the

Bank’s officials, and employees, and designed to provide reasonable

assurance to safeguard and secure the Bank’s assets, ensure accurate

reports, improves compliance with the prevailing regulations, minimize the

impact of financial losses, irregularities including fraud and violations to the

prudential aspects, and improve the effectiveness of the organization and

improve the cost efficiency.

The scope of the general audit in evaluating internal control system

includes:

(1) Financial Aspect and Adherence include:

(a) The accuracy, completion, and timeliness of information

presented in the management reports and financial statements;

(b) Adherence to the policies and regulations that have been

established (compliance objectives/compliance audit), test the

financial activities and operations (financial process) of the object

being audited to ensure that all the rights and obligations arising

from the authorized transaction have been correctly recorded.

Additionally, it ensures that that the activities carried out were

not in conflict with the prevailing system, procedures and

regulations.

(2) Operational Aspects, it includes:

(a) Assessment and Efficiency

Identifying, analyzing, and assessing applicable regulations across

the organization, programs and activities through an audit to find

out whether the the current practice can be more efficient or

useful.

(b) Efficiency and Benefits Assessment

In depth identification, analysis, and assessment of the strategies,

policies, objectives and goals of the unit being audited, to provide

insights on the results that is actually expected from the unit’s

activities. Additionally, sufficient review of the activities was

conducted to determine whether the activities were performed

according to the regulations and achieve the results as expected.

The reasons for the operational aspect audit is the test performed by

the internal auditor on the efficiency and effectiveness of activities

implemented (performance objectives), the achievement of the goals

and objectives that have been set.

In addition to the Central Bank/Bank Indonesia/Financial Services

Authority (OJK) regulations, the Bank's internal control system also refers

to the COSO (Committee of Sponsoring Organizations of Tradeway

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Commission). Internal control is a series of processes performed by the

Board of Directors, Management, and the Bank’s personnel on an ongoing

basis to provide reasonable assurance to the achievement of the objectives.

The objectives of the internal control are:

(1) Effectiveness and Efficiency of Operation, that is the effectiveness and

efficiency of corporate resources utilization, i.e. fixed assets, personnel,

capital, reputation, production capability and security of resources;

(2) Reliability of Financial Report, that is accurate and timely submission of

reports for internal and external;

(3) Compliance with prevailing law and regulations, that the company is

complied with the laws and regulations, Central Bank/Bank Indonesia’s

Regulation and the Financial Services Authority Regulation.

The compliance of the Bank's internal control with COSO's internal control

framework are:

(1) Control Environment

The Board of Directors and the Board of Commissioners have

stipulated the policies that embodied the overall management control.

(a) Stipulation of bankers’ code of conduct;

(b) Setting the corporate values reflected in the 14 behaviors;

(c) Establishing the Organizational Structure that reflects the

company's business model.

(2) Risk Assessment

An effective internal control system capable of identifying and

reviewing the risks that will materially and significantly affect the

achievement of the Bank's objectives and goals. The review to cover all

the Bank’s risks on a consolidated basis (including: Credit Risk, Market

Risk, Liquidity Risk, Operational Risk, Legal Risk, Reputational Risk,

Compliance Risk and Strategic Risk). The top management has

identified, analyzed, and assessed 8 (eight) risks on a consolidated

basis. The Risk Management Division, Internal Audit Division, and

Compliance Work Unit work together in identifying and evaluating the

risks.

(3) Control Activities

The Board of Directors has established a policy that governs all

activities of bjb employees to have adequate internal control. The

actions include among others:

(a) Formulating, establishing, and approving the policies and

standard operational procedures;

(b) Assigning and separation of duties and responsibilities of all

employees according to the position;

(c) Setting the authority limits policy;

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(d) Establishment and implementation of Business Continuity

Management such as DRC (Disaster Recovery Center) and BRC

(Business Recovery Center).

(4) Information and Communication

Information is an important aspect in every company activity including

in the decision making. The Board of Directors has developed an

effective and quality information and communication system. As for

the the policies and actions that have been performed by the top

management are as follows.

(a) Utilization of Internet-based applications by considering the

security level and access levels according to the duties and

responsibilities;

(b) The financial transactions and accounting process adhere to the

the latest Standard of PAPI (Indonesian Banking Accounting

Regulations);

(c) The company's financial information has been audited by a public

accountant.

(5) Monitoring

The Board of Directors evaluated the implementation of internal control

across the Bank’s activities based on the Audit Result Report submitted

to the President Director and the Board of Commissioners, and copied

to the Director of Compliance and Risk Management. Additionally, the

Internal Audit Result Report is submitted to the Financial Services

Authority on every 6 (six) months.

Based on the audit performed by the Internal Audit Division to the internal

control system. The Bank has policies and control design in place in running

the company's activities, despites some minor disadvantages. Internal Audit

Division gives recommendation to the Board of Directors on the required

improvement to the internal control system and it has been followed up by

improving the internal control system.

B.5 Credit Grant to Related Parties and Large Exposures

The credit granted to the related party and large exposers. The position as of end

2016, are:

No Credit GrantedTotal

Debtor Amount (Rp)

1. To Related Party 22 168,170,771,447.

2. To Core Debtors:

a. Individual

b. Group

25

10

3,389,907,369,962.

3,379,561,323,454.

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B.6 The Bank’s Strategic Plan

a. The short term strategy for 2017 to be performed by the Bank are:

(1) Maintaining the growth momentum of quality credit, by taking the

following actions:

(a) Maintaining and increasing the market share for fixed income credit

(KGB) and retired credit (pension credit) as the champion product;

(b) Increasing the the consumer loan portfolio through price reviews and

product features to be tailored with market needs at the Regional

Offices and Branch Offices;

(c) Increasing the loan portfolio under the management by focusing on

the disbursement to state-owned enterprises/strategic regional

government enterprises and Foreign Investment institutions that

already went public and popular;

(d) Optimization of corporate and commercial lending through:

i. Commercial loans with pricing review for either cash loan and

non-cash loan;

ii. Corporation segment loans by diversifying the financing industry

sector;

iii. Unlocking potential product holding of debtors under

management;

iv. Developing cross selling business alliance to develop value chain

potential from the customers;

(e) Improve collaboration with BPRs and MFIs through community-

based marketing activities, product and service development by

utilizing Information Technology (IT);

(f) Launching new products to penetrate small & medium enterprise

(SME) segment;

(g) Improving the function of community development (debtor and

prospective debtor) with PESAT program (Integrated Community

Economic Empowerment) to create engagement with the Bank;

(h) Increase the acceleration of credit growth KPR (home loan) and KKB

(car loan) through accelerated SLA credit process, by focusing on the

product that are targeting KPR and KKB;

(i) Ensuring sufficient qualified lending support infrastructure that

facilitates easier management and control of the risk.

(2) Liquidity management that prioritize the CASA improvement by human

to human business approach, among others:

(a) Third Party Funds

i. Promoting the growth of Third Party Funds prioritized to

improve CASA by improving the services and strategic

cooperation (strategic alliances) with State-Owned Enterprise,

Regional-Owned Enterprise and other institutions (business to

government);

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ii. Improving and developing business cooperation with customer

and potential institutional customer prospects (business to

business);

iii. Development of transaction-based services to encourage funds

generation.

(b) Placement of productive assets to obtain margin from excess fund or

borrowing to meet the liquidity requirement;

(c) Additional agents for Laku Pandai bjb BiSA to achieve inclusive

finance;

(d) Development of Digital-Based Services (IT), i.e.:

i. Development of web/Internet based distribution channel service

and applications that support the institutional agreement;

ii. IT-based infrastructure addition to increase CASA and fee-based

income, particularly for retail products.

(3) Encouraging the growth of fee-based income to increase the non-interest

income contribution

As for the fee based income strategy improvement that has been

performed among others:

(a) Encouraging increase in the revenue and custodial services and

trustees;

(b) Enhancement yield of treasury instruments by considering the

liquidity risk;

(c) To be chosen by the correspondent banks in Indonesia and Asia as

the partner in an inter-bank cooperation that will support the Bank's

business;

(d) Providing internationally certified service standards (ISO 9001) for

bjb trade finance and service transactions;

(e) Opening overseas service network that have remittance potential to

increase fee based income;

(4) Controlling of the productive asset quality and acceleration of best credit

recovery write-off settlement

(a) Performing intensive reconciliation and collection with insurance

brokers and or insurers to accelerate the claims settlement;

(b) Optimization of intensive collection function of debtors with non-

performing credit quality;

(c) Improvement in the quality of all prospective debtors in a joint

discussion between the business unit and unit risk that enables the

risk appetite according to the level expected;

(d) Improving the collection process for non-performing loans through

better coordination with relevant business units;

(e) Credit rescue (restructuring) and improvement in the internal

regulations and its authority;

(f) Credit conclusion by accelerating the execution of collateral in

auction KPKNL/private auction house/voluntary sale, write off,

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insurance claims, lawyer, authorized agencies including cooperation

with the Attorney and coordination with relevant units and Branch

Offices to improve the collateral contract.

(5) Spur the growth of assets through initiation of bjb holding

(a) Improve the performance of the subsidiaries and non-subsidiaries

through business synergy with the Bank, among others:

i. Through linkage credit program to affiliated BPR;

ii. Cooperation in the good governance and integrated risk

management.

(b) Injecting the capital to subsidiaries and non-subsidiaries based on the

the conditions of the subsidiaries and/or to comply with the Regional

Regulations and other regulations, to develop the business of the

subsidiary, and acquire new companies including multifinance

companies, insurance, securities and private BPR (People’s Credit

Bank).

(6) Strengthening the capital of the Banks in order to improve the resilience

of the institution and improve the competitiveness by expanding the

business, through:

(a) Reducing the Dividend Payout Ratio;

(b) Issuance of subordinate bond;

(c) Adding the capital through Rights Issues or Non-Preemptive Rights

Issues.

(7) Strengthening of the organizational structure through the support of

professional human resources

(a) Encourage more efficient and effective decision-making process by

gradual delegation of authority to the region while maintaining the

supervisory function;

(b) Organizational structure improvement by focusing to the

strengthening of business support functions by maintaining the

principles of prudence;

(c) The optimization of the Head Office, Regional Office, and Branch

Office functions through allocation of more effective and efficient

roles and responsibilities;

(d) Encouraging the Change Management Office to give innovative and

responsive inputs to ensure the execution of business plan by

monitoring the work program;

(e) Implementation of the bjb culture the initiation of Bank

transformation;

(f) Encouraging the the strengthening of "Go SPIRIT" as the corporate

culture and corporate value of bjb employees;

(g) Developing the balanced scorecard as the strategy of management

system to accelerate the achievement of the Bank’s vision;

(h) The implementation of individual score card that will enable an

employee to give their best performance, improve the loyalty and

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direct performance competition toward an open, positive, and

progressive climate;

(i) Developing the bjb employees into a knowledgeable, reliable banker

through business alignment and strengthening of learning center

functions through bjb University as the strategic business partner;

(j) Continuous updating and upgrading of the employee competence to

align with to the business development;

(k) Supporting the growth of the Bank’s business through competence-

based learning & training programs and by being the strategic partner

to obtain qualified human resources;

(l) Improving the training and learning management through equal

distribution of learning and training programs for all the Banks

employees.

(8) IT improvement towards adigital banking and integrated payment system

(a) Development of IT application and infrastructure that will support

increased banking transactions in a comprehensive and continuous

way;

(b) Completing the policies and procedures that will support the

improvement of the Bank’s GCG quality particularly in IT;

(c) Support the development that of payment systems, reporting and

administration of services that will improve the security and smooth

flow of services by:

i. Developing monitoring interface application of SKNBI;

ii. Creation of inward clearing database;

iii. Development of MPN reporting application;

iv. Development of ID Billing interface application;

v. Expansion of e-banking transaction network.

(d) Features and/or e-banking transaction services additions through:

i. Expanding the collaboration with switching/regulator and biller

to improe the e-banking transaction;

ii. Development of e-banking transaction services (USSD Menu

Browser, bjb Mobile Banking);

iii. Development of e-banking features multiple accounts for bjb

NET and bjb SMS services, deposit account opening in bjb NET,

opening of term savings accounts in bjb NET, development of

purchase menu for ATM/Debit cards of other banks).

(e) Improving the IT capability and reliability that will encourage the

establishment of digital banking services, in anticipation of customer-

based electronic services need.

(9) Improving the non-business work units to support the acceleration of

quality growth of the business;

(a) Active involvement in the monitoring, research, and provision of

information on the latest banking business developments including

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the strategies across the Bank and the strategy of the Branch Office

through business intelligence research with relevant business units;

(b) Ensuring the fulfillment of juridical aspects and the submission of

quality credit documents;

(c) Improving the management of third-party service cooperation to

support the Bank's quality business operations;

(d) Implementing the Legal Risk Management to support the Bank's

business progress consistent with the prevailing regulation;

(e) Encouraging effective and efficient legal services that will support a

successful Bank's business;

(f) Implementing the SQA team in each Regional Office and the service

ambassador at the Branch Office;

(g) Application of the four eyes principles in the lending process;

(h) Managing and developing the standard of credit risk measurement;

(i) Evaluation and development of risk assessment quality;

(j) Inc reading the role of internal audit as a strategic business partner

for the management and all the Bank’s employees to achieve the

Bank's objectives;

(k) Fostering anti fraud awareness within the Bank’s operations;

(l) Improving the implementation of compliance culture to internal and

external provisions and raising awareness of risk compliance as

commitment to fulfill the Bank's compliance function;

(m) Performing review to ensure the Bank's products and activities are in

compliance with prevailing regulations;

(n) Increasing the brand image of the products and services through

above the line and below the line promotion programs;

(o) Improvement of the cost center functions to control the operational

costs, to foster the awareness to meet the budget;

(p) Optimization of accounting information system to support a fast,

precise. and accurate financial information in real time to improve

the transparency quality of the financial statements.

b. As for the Bank's long-term strategy (corporate plan) is as follows:

(1) Primary Strategy

(a) The strength and opportunity strategy by replicating the pattern of

relationship between the Bank with the Provincial Government of

West Java and Banten to other provinces.

(b) Strengthening and developing the business in other regions in

Indonesia

(2) Additional Strategies

(a) Management and utilization of data for to develop the Bank’s

business;

(b) Cross selling across the departments to increase the volume of

business and efficient in terms of the cost;

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(c) Inorganic Growth Strategy:

i. Diversification strategy was concentrated to: mergers and/or

acquisitions of financial institutions

ii. For inorganic growth the Banks needs to increase the capital by:

Issuing new shares (Rights Issues /Non-Preemptive Rights

Issues);

Issuing subordinated bonds to strengthen the funding

structure and meeting the liquidity requirements of the

capital market;

Increase profitability;

Dividend Payout Ratio.

B.7 Bank’s Learning and Training 2016

B.7.1 Competence Development of the Board of Commissioners

Name Designation Activities Time

Klemi

Subiyantoro

Independent

Commissioners

Acting

President

Commissioner

Asean Global Leadership

Program

8–13 May 2016

BPDSI Seminar 3 September 2016

Muhadi Commissioner BPDSI Seminar 2 April 2016


Program

8–13 May 2016


Rudhyanto

Mooduto

Independent

Commissioners


Program

8–13 May 2016

International Risk

Management Refreshment

program for executives

15-22 October 2016

Developing Key

Performance Indicator

(KPI) of the Board of

Directors/Commissioners

and Implementation of

POJK Number

45/POJK.03/2015

24–25 February 2016

Yayat

Sutaryat

Independent

Commissioners

BPDSI Seminar 2 April 2016

International Risk


Program for Executives

15-22 October 2016

Seminar on the National

Economy Outlook 2017

Opportunities and

Challenges of the Banking

Industry

3 November 2016

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Suwarta Independent

Commissioners

Bank Credit Risk

Measurement, Capital and

Accounting Requirements

Under Basel III and IFRS 9

15 August 2016

B.7.2 Development of the Board of Directors Competency

Name Designation What Happens Time

Ahmad Irfan President

Director

Global Financial Services

Industry Summit 2016

1-3 June 2016


International CWM

Executive Euro Program

16-23 October 2016

Agus

Gunawan

Director of

Micro Credit

ERMA Bali International

Conference on Enterprise

Risk Management

8-9 December 2016

Suartini Commercial

Director

Risk Management

Certification Refreshment

11 April 2016

International Risk


Program for Executive

15-22 October 2016

Fermiyanti Consumer

Director

Executive in English

Program

18 January – 4

August 2016

BPDSI Seminar 2 April 2016

International Banker

Management School

16-20 May 2016


International CWM

Executive Europe Program

2016

16-23 October 2016

Agus

Mulyana

Director of

Compliance

and Risk

Management

International Risk


Program for Executive

15-22 October 2016

Nia Kania Finance

Director

Global Financial Services

Industry Summit 2016

1-3 June 2016

Benny

Santoso

Operations

Director

Asian Global Leadership

Program

8-13 May 2016

B.7.3 Employee Training Information

Based on the Decision Letter of the Board of Directors number 332/SK/ DIR-

ET/2014 dated 12 May 2014 regarding the Training Requirements Guideline

for Bank Employees According to the Grading System, training

requirements for the Bank’s employees for each grade:

a. Main Training

The types of compulsory learning and training for the Bank’s employees

according to the grade.

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b. Technical Training

The type of training aiming at the improving the employees’ technical

competence.

c. Softskill Training

The types of training for employee development.

d. Certification

Compulsory certification program as mandated by the regulation of the

authority and consistent with the competence of the position and Bank’s

requirement.

e. Banking knowledge and other skills.

The details of training participants in 2016:

NUMBER OF EMPLOYEES ATTENDING THE TRAINING IN 2016

GRADETOTAL

TRAINING

TOTAL

EMPLOYEE

G1

On Boarding Program

564 12,159

G2 581 5,144

G3 205 486

G4

Career Development Program

276 1,817

G5 104 192

G6 377 2,564

G7 162 306

G8 261 633

G9 118 151

G10 262 1,078

G11 215 1,087

G12

Executive Program

229 749

G13 102 268

G14 102 317

G15 83 188

G16 41 82

G17 18 34

G18 19 24

G19 21 32

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B.8 Company Secretary

Consistent with Bank Indonesia/ Financial Services Authority principles of

disclosure and provisions of the Bank's disclosure obligations, the Corporate

Secretary is responsible for the communication and delivery of important

information concerning the Bank to the banking, monetary and capital market

authorities, shareholders and the public. In 2016, the Corporate Secretary has

carried out the following activities:

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

record the results of the meeting and its distribution to the concerned parties;

b. Giving notice and preparing all related to organization of the General Meeting

of Shareholders and publishing the meeting results;

c. Maintaining good relations with the Capital Market Authority and prepare

reports on disclosure of the Company's information according to the with

prevailing regulations;

d. Coordinating and administering the registration of share ownership and

corporate actions;

e. Coordinating public relations and marketing communications activities for the

Company;

f. Managing and executing promotional activities of the Bank’s products and

services, including the preparation of the Annual Financial Report;

g. Managing relations with other institutions (counterparty);

h. Coordinating and monitoring the follow-up on customer grievance;

i. Branch Office development through learning and trainings in public relations,

customer complaints, and secretariats;

j. Implementing CSR (Corporate Social Responsibility) program as the form of

Company’s contribution and attention in improving the quality of life of the

surrounding communities;

k. Applying the prudential principle and compliance with the Central Bank/Bank

Indonesia regulation and legislations, and other prevailing Bank regulations;

l. Implementation of banking education campaign for the public.

PublicRelations•

Group

President Director

Division Head

Secretary to theBoard of

Directors Group

InvestorRelations

Group

Executive SecretaryGroup for the

Board ofCommissioner

MarketingCommunications Group

Corporate Social

Responsibility

(CSR) of the

Group

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B.9 Bond Rating

PT. Rating Pemeringkat Indonesia (PEFINDO) on bonds issued by Banks, the bonds

of Banks were rated as AA (Double A Minus) for the rating period of 7 November

2016 - 1 November 2017.

B.10 Good Corporate Governance Activity of 2016

One of the Bank’s GCG activities implemented in 2016 was the third-party

assessment. Third party assessment was conducted through Corporate Governance

Perception Index (CGPI) organized by The Indonesian Institute for Corporate

Governance (IICG) in collaboration with SWA magazine. CGPI is a research and

ratomg actovoty for the implementation of GCG for Indonesian companies through

research design. It encourages companies to improve the quality of the

implementation of Corporate Governance concept. The goal is to ensure continuous

improvement and evaluation and benchmarking. CGPI's research and ranking

program was started in 2001 and form the the contribution from IICG in

encouraging the GCG practice in Indonesia. IICG is an independent institution

focusing on the study, development, education, training and dissemination of good

corporate governance (GCG) concept, practice and benefit for the creation of a

sustainable and trustworthy business. As for the benefits of research programs and

CGPI ranking include:

a. Motivating the companies to implement GCG;

b. Improving the insufficient internal factors of the Company to improve the

quality of GCG implementation;

c. Mapping the company's strategic issues to improve the quality of GCG

implementation;

d. Increase stakeholder’s awareness regarding the urgency and benefits of the

GCG;

e. Increasing investor and public trust and confidence to the company;

f. Establishing indicators or standards of GCG sustainability quality to be achieved

by the company;

g. Increasing common awareness and commitment with internal companies.\

For the CGPI activities that have been attendend, the Bank received the rating of

"Trusted Company” with the total value of 82.80. The details are:

Assessment Stage Score WeightCompliance

Percentage

Self Assessment 26.58 30 88.6%

Document Review 20.43 26 78.6%

Paper 12.12 15 80.8%

Observation/Interview 23 29 79.3%

Total 82.13

Other activities that were implemented as the form of GCG implementation were

the implementation of ethical standards on code of conduct and management of

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conflict of interest in the Gratification Control Program in the cooperation with the

Corruption Eradication Commission (Komisi Pemberantasan Korupsi). The

Gratification Control Program is a set of tools and activities as well as mechanisms

to continously control the gratification practive to maintain the integrity of the

employees from prohibited gratification practices. The gratification control

program comprise of stipulation of gratification control regulations, the

establishment of an organization that manages the gratification control,

socialization/dissemination of activities on gratification control regulation,

promotion of individual and organizational awareness activities on gratuities and

implementation of gratification acceptance report in coordination with the KPK.

In the implementation of gratification management report for the year of 2016,

there was 134 reports of gratification acceptance was made and the estimated value

was equal to Rp. 83.4 million and 49 reports with estimated value of Rp. 19.8 million

that was also managed by the Bank and used to determine the status of gratuities

received.

Based on the meeting with KPK, the Bank was informed by the KPK that for the

implementation of Gratuity Control Program, the Bank was a pioneer in the

Gratuity Control Program implementation for the banking sector, as well as in the

management of gratification control, WRSO expansion and excellent

Whistleblowing System. This is evidenced by comparative studies made by several

institutions to the Bank to find out the implementation of the Bank’s Gratification

Control Program, including the study from the Ministry of Finance, the Ministry of

Justice and Human Rights, the Financial Services Authority, Bank Mandiri, BNI etc,

as well as the awards from Corruption Eradication Commission to the Gratification

Control Unit of the Bank during the International Anti-Corruption Day activities in

2016 and other activities that were also received awards are:

a. BUMN/D with the Best Gratification Control System of 2016;

b. Appreciation for the High Level of Compliance and Level of Activity of WRSO

Management for the Year 2016;

c. The Best WRSO Management of Local Government/Regional

Parliament/Regional-Government Owned Entersie in West Java Province for

the Year 2016.

C. Share Ownership of the Members of the Board of Commissioners and Board of

Directors that Reach 5% (five percent) or More from the Paid-in Capital

All the Boards of Commissioners and the Board of Directors do not own the shares of 5%

(five percent) or more from the company’s paid up capital, whether in Banks, other

banks, non-bank financial institutions and other companies domiciled in the country or

abroad. They are:

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Designati

onName bank bjb

Other

banks

Non-Bank

Financial

Institutions

Remarks

The Board

of

Commissio

ners

Muhadi x x x

Klemi Subiyantoro x x x

Yayat Sutaryat x x x

Rudhyanto

Mooduto

x x x

Suwarta x x x

Board of

Directors

Ahmad Irfan x x x

Agus Gunawan x x x

Benny Santoso x x x

Suartini x x x

Nia Kania x x x

Fermiyanti x x x

Agus Mulyana x x x

As for the the Company's share ownership as per December 2016:

No Name DesignationAmount

(shares)Percentage

1 Muhadi Commissioner 2,341,500 0.024

2 Suartini Commercial Director 5,000 0.000

D. Financial Relationships and Family Relationships of the Members of the Board of

Commissioners and the Board of Directors with Other Members of The Board of

Commissioners, the Board of Directors and/or The Bank’s Controlling

Shareholder

All members of the Board of Commissioners and the Board of Directors have no financial

relationship among members of the Board of Commissioners, among members of the

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

between the Board of Commissioners and the Controlling Shareholders of the Bank and

among members of the Board of Directors and Controlling Shareholders of the Bank as

stated in an independent statement. Additionally, there are no horizontal or vertical

family relationships, including marital relationships up to the third lineage, among

members of the Board of Commissioners, among members of the Board of Directors,

between the Board of Commissioners and the Board of Directors, among the Board of

Commissioners and Controlling Shareholders of the Bank and among members of the

Board of Directors and the Controlling Shareholder of the Bank.

E. Human Resources Management

E.1 Human Resoures Planning

The increasing size of the Bank’s organization becomes a challenge in the

management of human resources amids increasing banking services competition.

The Bank’s growth through business development needs to be supported by

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excellent, reliable and strong human resources through mature and measurable

human resource planning.

Through human resource planning, a strategy was established to acquire, utilize,

develop. and maintain human resources according to the company needs today and

its future development. Therefore, the recruitment, career management as well as

the management of employee compensation and benefits became the top priority in

2016.

E.2 Recruitment of Human Resources

The Company strives to continuously improve the quality and capability of its

human resource professionals. This was achieved among others through a more

selective and competitive employee selection process aiming to obtain a more

competent, superior, reliable and strong employees. In 2016, the Bank recruited

around 484 new employees. The number is consistent with Bank's business growth

in 2016.

The recruitment of the new employees in 2016 comes from the following categories:

a. Fresh graduate recruits.

This recruitment process selects college new graduates. In 2016, the Bank

recruited total 431 (four hundred and thirty one) fresh graduates that have been

successfully recruited.

b. Experienced Hire Recruitment.

This recruitment is a process of recruitment of the new employees who come

from experienced workers to find employees who are ready to work and

possessing the skills and technical knowledge for the positions required by the

Bank. As for 2016, the Bank has successfully recruited 53 (fifty-three) new

employees with different backgrounds of work experience.

c. Officer Development Program Recruitment.

In 2016, the Banks through Officer Development Prorgam (ODP) received 24

(twenty-four) employees prepared as the future Bank management.

E.3 Career Development Policy

The career development of the Bank’s employees is fostered thoroughly and

touches every aspect and position’s level. To improve the competence and add

experience and individual self-development, the Bank provides the employees with

all opportunities to develop their career. The acceleration program executed in 2016

through Staff Development Program, Acceleration Program and other career

development programs remains the priority program to improve the Bank’s

performance by increasing the motivation of the employees to better develop their

career. Through the involvement of Learning and Training Division and the roles of

the Unit Leaders, the Banks encouraged the employees to improve themselves to be

the best, reliable, and strong employees.

The employee career development can be identified through the assessment

method used as one of the parameters for employee placement and transfers

process. Each career transfer for employee development is made by considering the

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readiness, skills and qualifications and what is required for the position to achieve

the Bank's strategic objectives.

E.4 Employee Competency Development

Employee capacity building is the key obtain reliable human resources to meet the

challenges faced by various positions and to nurture a dynamic performance culture

in the Bank. The Human Resources Division has performed regular assessment

programs. The purpose of this program, among others, is to map employee

competence, increase employee ability and awareness and to measure the

suitability of required competencies for certain level of position with the capability

of the employee.

The assessment result can be used as a recommendation for the employees to

develp a self-development programs and should the analysis finds gap in the

employee’s competence in certain positions, a recommendation can be submitted

to the Learning and Training Division to prepare syllabus required by the

employees. Additionally, the assesment results can also be used as one of the

decision tools to establish career development of the employee. An employee who

is considered to have the required competence to fill any managerial positions is

proposed to assume a position according to his/her capabilities.

E.5 Competency Development Policy

All employees have the equal opportunity in the career development process based

on his/her performance, competence, experience and other criteria that have been

determined and opportunities to get the learning and training needed. This is

consistent with the policies related to the development of employee competencies

as stated in the Letter of Decree of the Board of Directors number 704/SK-DIR/ET/

2014 dated 22 September 2014 Leraning and Training Management Guideline.

E.6 Performance Management System

To support the Bank's in achieving its performance objective better, the Bank has

implemented a performance management system based on personal scorecard

through bjb prestasiku. The employee’s performance objective (personal goal

setting) is determined based on the task/works and responsibilities that must be

performed by the employees in the year he/she is being appraised and has direct

connection to the achievement of the balanced scorecard of the work unit.

The setting of individual target as the Key Performance Indicator (KPI) of the

employees and disciplined monitoring and controlling process according to the

agreed KPI are crucial in th eemployee performance appraisal. In order to achieve

the best performance through quality work processes and to encourage the

optimum achievement of the target, the bjb prestasiku appraisal - personal

scorecard to is performed regularly on a quarterly basis.

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Balanced Scorecard and Key Performance Indicator

In selecting the strategy required to achieve the objectives, the Bank must have a

good strategy management system, as it will be used benchmark of the

performance, and the company performance. To determine the strategy, the

company must pay attention to the objectives that have been determined and it

must be measurable. The Bank used the strategic management callled Balanced

Scorecard (BSC). The Bank uses four BSC standard perspectives: financial

perspective, customer perspective, internal business process perspective, and learning

and growth perspective.

a. Financial Perspective

BSC is built from a performance measurement study in the business sector, and

financial perspective here shall refers to the financial sustainability. This

perspective is used by the shareholders to asses the organization performance.

b. Customer Perspective

The customer perspective is a customer-oriented perspective as they are users of

the product service that the company produces. This means that the company

must really pay attention to what the customer wants.

c. Internal Perspective/Business Process

The internal/business process perspective referes to a series of activities within

an organization to create products/services to meet the expectations of the

consumers. This perspective explains the management of business processes to

deliver services and values to all stakeholders and customers.

d. Learning and Growth Perspective

A learning and growth perspective means a perspective of the organization’s

ability to improve and change using internal organizational resources. Company

sustainablility in the long term depends on this perspective. Strategy is

implemented by executing initiative strategy or work program by each work

unit and it is limited by time.

By implementing BSC in the Bank, the management can communicate its strategy,

vision and mission to its employees so that both management and the employees

are united to achieve the Bank’s target.

E.7 Corporate Recognition to All Employee

To motivate the employees to maintain their high productivity, the Bank introduces

the policy of recognizing all employees in a reward and punishment mechanism.

Below is the explanation on the Bank’s reward and punishment.

a. Reward

The Bank has various award programs such as the best employee, the best

frontliner and service and the best business unit all under bjb better award with

the following explanation:

(1) The Best Employee

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An appreciation program for the employee with the best performance and

successfully become role model and change agent in the implementation

of Go SPIRIT culture.

(2) The Best Frontliner and Service

An appreciation program for the frontliner, operational officer and work

unit who made the best performance in providing service excellence

according to the service standard.

(3) The Best Business Unit

An appreciation frogram for the Regional Office/Branch Office/Sub

Branch Offices with the best financial performance.

b. Punishment

The Bank also adopt the policy on punishment on Employee Discipline

Guideline providing obligations and prohibitions, types of personnel sanction,

procedure to impose employment sanctions and other matters relevant to the

enforcement of employee discipline, including the provision of penalties for the

personnel. The types of personnel sanctions imposed are in accordance with the

types of offenses committed by paying attention to the elements violation,

including negligence or deliberate actions, including the consideration on

whether fraud exist.

In 2016, the Bank imposed 68 (sixty-eight) personnel sanctions with the

following data:

(1) Reprimand for 11 people;

(2) First Warning for 8 people and Third Warning for 12 people;

(3) Statement of non-satisfaction for 14 people;

(4) Suspension of regular salary increase for 3 people;

(5) Reduction of regular salary for 3 people;

(6) Demotion for 5 people;

(7) Termination for 12 people

E.8 Employee Remuneration Strategy

The Bank's strategu on remuneration is currently governed by the Decision Letter

of the Board of Directors No. 783/SK/DIR-SDM/ 2016 dated 19 September 2016 on

The Management of Income and Employee Benefits Guideline and The Decision

Letter No. 0804/SK/DIR-SDM/2016 dated 3 October 2016 on Grading and Single

Salary Guideline.

a. Compensation and Benefit

(1) Annual salary adjustment;

(2) Employee transfer benefits;

(3) Health facility.

b. Employee Engagement

(1) Emotional Attachment

Employee remuneration strategy will always create an emotional

relationship between the company and employees. This will enable a a

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comfortable working atmosphere and a high sense of belonging with the

creation of employee emotional attachment to the company.

(2) Dedication

The Motivation (employees’ remuneration) will create good working

atmosphere dedication to the company.

(3) Concentration

With employee remuneration, a good atmosphere among the employees

will be created and in turn will create focus in the performance of the job.

c. Attractive and Competittive

(1) Job Motivation

The Banks regularly adjust the salary of the employees according to the

prevailing regulations to improve the employees’ job motivation and

company loyalty.

(2) Maintaining the Purchasing Power

The employee remuneration strategy imposed by the company is expected

to provide financial support for the employees against the

changes/inflation.

(3) Decent Living Standards

The employee remuneration strategy is made to support the financial

needs of the employees due to changes in the standard of living condition

and adjustment is made according to the regional minimum wage.

(4) According to the Provisions of the Legislations.

The Bank’s remuneration strategy always complies with applicable laws

and regulations by giving attention the principles of GCG implementation

practice.

(5) Company Capability

The Employee remuneration strategy performed by the Bank does not

exceed the limit of the company's capability.

F. The Frequency of the Board of Commissioners and the Board of Directors Meeting

F.1 Frequency of the Board of Commissioners Meetings

In 2016, the Board of Commissioners conducted 35 (thirty-five) meetings. With the

following details:

No Name DesignationTotal

Attendance

1 Muhadi Commissioner 94.29%

2 Klemi Subiyantoro Independent Commissioners

Acting President Commissioner

77.14%

3 Yayat Sutaryat Independent Commissioners 94.29

4 Rudhiyanto Mooduto Independent Commissioners 100%

5 Suwarta* Independent Commissioners 74.07

* Assumed the Company’s Board of Commissioners since 31 March 2016

During the Board of Commissioners' meeting in 2016, no meetings was held using

teleconferencing technology.

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F.2 Frequency of the Board of Directors Meetings

In 2016, the Board of Directors conducted 22 (twenty-two) meetings. With the

following details:

No Name DesignationTotal

Attendance

1 Ahmad Irfan President Director 100%

2 Nia Kania Finance Director 95.45%

3 Fermiyanti Consumer Director 95.45%

4 Suartini Commercial Director 95.45%

5 Benny Santoso Operations Director 100%

6 Agus Gunawan Director of Micro Credit 90.91%

7 Agus Mulyana Director of Compliance and Risk Management 100%

G. Number of Internal Fraud

Number of internal irregularities occured in the Bank in 2016 was:

Internal Fraud

(Within 1 year)

Number of Cases commited by

The Members of the

Board of

Commissioners and

Members of the

Board of Directors

Permanent

employee

Temporary

employees

Previous

Year

Year-to-

Date

Previous

Year

Year-to-

Date

Previous

Year

Year-to-

Date

Total Frauds - - 5 10 2 -

Resolved - - 5 10 2 -

By the Bank’s Internal

Resolution Process- - - - - -

No resolutions- - - - - -

Followed up with legal

process- - - 2 - -

The number fraud cases that have been resolved through internal process was 10 (ten)

cases with 2 (two) of them was followed up by legal process. The above list is a fraud case

that potentially cost the Bank of more than Rp100 millions The Bank has increased its

reward and punishment function particularly in fraud to improve the Internal Audit

Work Unit, employee discipline and business process quality.

H. Litigation Cases

Litigation CasesTotal

Civil Criminal*)

Completed (having a fixed legal force) 14 None

In the process of completion 47 None

Total 61 None

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I. Conflict of Interest Transaction

The provisions on conflict of interest term have been set in:

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

September 2015 concerning Guidelines and Code of Conduct of the Board of

Commissioners.

b. The Decision Letter o the Board of Directors number 931/SK/DIR/2007 dated 28

September 2007 concerning Good Corporate Governance Guideline;

c. The Decision Letter of the Board of Directors number 1217/SK/DIR-KP/2015 dated 28

December 2015 concerning the Conflict of Interest Guidelines of PT. Bank

Pembangunan Daerah Jawa Barat dan Banten, Tbk.

In 2016, there were no conflict of interest transactions in the bank's business activities.

J. Buy Back Shares and/or Buy Back Bonds

In 2016, the Bank did not make buy back transactions on the shares, and the Bank also

did not make any buy back on the issued bonds.

K. Social Activities Funding for 2016

As the form of its corporate social responsibility, in 2016 the Bank disbursed CSR

(Corporate Social Responsibility) funds of Rp. 79.324.457.534 (seventy nine billion three

hundred twenty four million four hundred fifty seven thousand five hundred thirty-four

rupiah) distributed in various sectors i.e. environmental sector by 60% or Rp 47.87

billion, distributed in the education sector by 28% or Rp 22.37 billion and distributed in

the health sector by 11% or Rp 9.06 billion Rp The distribution of CSR funds that have

been performed, among others include:

SECTORS SUB SECTOR ACTIVITIESAMOUNT

(Rp)

ENVIRONMENTALCONSERVATION

Rp. 47,876,877,490

Development/Rehabilitation

public infrastructure

Bridge construction

Construction of citymonument

Environmental roadconstruction / improvement

5,004,677,765

Improvement/Quality Improvement

environement

Tree planting

Redesign/development ofpark/green open space

Development of Biopori

Environmental conservation

The construction/renovationof poor houses

Development of wastewaterdischarge line

8,493,484,009

Procurement ofinfrastructue/General

facility

Redesign of Gasibu square(fountain, running track, andlibrary)

Free bus service provisions

Infrastructure for OrphanageFacilities

10,724,988,723

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Improvement of thecommunity role inthe environmental

preservation

Integrated TPS Development

Integrated waste management

Discussion and environmentalcampaigns

bJb Green school

Construction of landfill

Development/procurement ofwaste processing equipment

1,220,001,000

Religious

Construction/renovation ofthe mosque

Procurement of mosquefacilities

Religious activity

12,241,783,143

Sports

Sports tournaments

Sports Coaching

Sports activities for thedisabled

895,000,000

Community

Assistance and aids for floodvictims, landslides,earthquakes

Home

Development of psychiatricboarding home

Construction of treatmentfacilities for the drug users

Allowance

5,820,411,100

Communityeconomic empowerment

bank bjb entrepreneurialprogram

UMKM Champion program

Training/seminar/entrepreneurship development

Business credit assistance

Development of food barns

Market restructuring

Development of nurseries

Street hawkers management

3,476,531,750

EDUCATIONRp. 22,379,079,730

Development/rehabilitation of educational

infrastructure

Construction/repair ofclassrooms

Construction/Repair of OtherSchool Infrastructure(Dormitory, Laboratory,Praying Room, Toilet,Cafeteria, Sports Field, Hall,Health Room (UKS), TeacherRoom)

10,938,715,230

Procurement ofeducational facilities

School’s furnitures

Provisions of EducationalGame

Development of libraries

Electrical installation of theMuslim boarding school

Provision of laboratoryequipment

3,517,200,000

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Procurement of personalcomputer

Digital school assistance (Edubox)

Culture,art, and history

Cultural parade

Procurement of art tools

Art and Culture buildingsupplies

Cultural artsperformance/show

4,514,184,500

National characterbuilding

Dissemination of PoliticalEducation for PKN Teachers

50,000,000

Improvement of publicaccess to educational

services

Scholarship

Story telling Activity 3,358,980,000

HEALTHRp. 9,068,500,314

Improvement to thepublic access to health

services

Free medicalexamination/treatment

Group circumcision

Blood donor activities

bjb healthy village

BPJS (Medical insurance)Membership Assistance

6,242,545,000

Procurement of healthfacilities

Ambulance assistance

Health equipment assistance

Procurement of car for BloodDonor Mobile Unit

Health equipment assistance

560,992,000

Development/rehabilitation of health

infrastructure

Repair/construction of publictoilet

Development/Procurementof clean water facilities

Development of Clean WaterSource/Artesis Well

Repair of hospitalinfrastructure (polyclinics,pharmacies, etc.)

2,264,963,314

TOTAL 79,324,457,534

L. General Conclusion of Self Assessment Results Implementation of Good

Corporate Governance Bank Implementation for Year 2016

Bank Name: PT. Bank Pembangunan Daerah Jawa Barat dan Banten, Tbk.

Position: December 2016

Self Assessment Results of GCG Implementation

Ranking Ranking Definition

Individual: 2

Reflecting the Bank's management performance of a

generally good implementation of Good Corporate

Governance (GCG). This is reflected in the sufficient

compliance of Good Corporate Governance principles.

Any insufficient implementation of the Good Corporate

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Governance is insignificant and it could be resolved by

normal actions of the Bank’s management.

Analysis

Conclusion:

Based on the analysis of all criteria/indicators of the above assessment, it is

concluded that:

A. Governance Structure1. Positive factors of the governance structure of bank bjb are:

Up to December 2016, bank bjb management consists of 5 (five)

members of the Board of Commissioners and 7 (seven) Board of Directors

who have good integrity, competence, and financial reputation. This is

evidence in the implementation of fit and proper test by the Financial

Service Authority where all members of the Board of Commissioners and

Board of Directors of bank bjb have been declared passed;

No members of the Board of Commissioners and Board of Directors of

the bank bjb assuming double positions except for matters specified in

the Financial Services Authority Regulation concerning the

Implementation of Good Corporate Governance for Commercial Banks

and other provisions;

No members of the Board of Commissioners and Board of Directors of

bank bjb have a family relationship up to the second level the other

members of the Board of Commissioners and/or Board of Directors;

Bank bjb has improved the organizational structure based on the

complexity of the business it undertakes and appoints the Board of

Directors according to its respective assignments;

Bank bjb has established committees to support the implementation of

the Board of Commissioner's task (Audit Committee, Risk Management

Committee, Nomination and Remuneration Committee, Business &

Credit Monitoring Committee, and Integrated Good Governance

Committee) and all the members have the skills and competence in their

fields to meet bjb requirements.

Bank bjb has established Internal Audit Work Unit, Compliance Work

Unit and Risk Management Work Unit, with competent Human

Resources capable of working independently from business and

operational work units;

Bank bjb has established adequate policies and procedures to support all

of its business activities for example Credit Policy, Risk Management

Policy, etc.;

Bank bjb has established sufficient written policies, systems and

procedures to grant the credit to related parties and provision of

substantial funds (large exposure), along with the necessary monitoring

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and management upon the occurrence of non-performing loans;

Bank bjb has established corporate governance guidelines that governs

the policies to support the bank bjb's operational activities, so that every

activity performed reflects a good corporate governance;

Bank bjb has set conflict of interest guidelines to address potential

conflict situation of interest faced by all of bjb employees;

bjb has audit charter that stipulates among other the purpose, authority

and responsibility and the position of Internal Audit Unit within the

Bank’s organizational structure. The implementation of internal audit

function standard was stipulated in the Implementation of Internal Audit

Function Standard (SPFAIB).

Bank bjb has established sufficient risk management policy that support

the implementation of good risk management and internal control;

Bank bjb has prepared GCG Implementation Report at the end of each

financial year which content is in accordance with prevailing regulation;

Bank bjb has developed realistic, comprehensive, measurable

(achievable) Bank Business Plan that observes the principle of prudence

and responsive to any internal or external changes;

bjb bank has performed the strengthening of Compliance Function

particularly the Compliance Culture through the implementation of

quality assurance function by providing compliance sheet and

compliance checklist for bank bjb operational activities. This ensures a

consistent implementation while remains the adherence to the principles

of good governance and the principles of health bank.

B. Governance Process1. Positive factors of bank bjb’s governance process are:

The Board of Commissioners performs the meetings to provide

recommendations to the Board of Directors in carrying out its functions

and responsibilities. The meeting held among others to ensure the

implementation of the good corporate governance principles across bank

bjb business activities at all levels of the organization. In performing its

supervisory duties, the Board of Commissioners has directed, monitored,

and evaluated the implementation of the bank bjb’s strategic policy;

All committees established to support the execution of the Board of

Commissioners responsibility have performed their duties independently

and provided sufficient analysis and recommendations to the Board of

Commissioners;

The Board of Directors has managed the bank bjb according to its

authority and responsibility and fully accountable for the

implementation of the bank bjbmanagement;

The Board of Directors prepared realistic, comprehensive, measurable

(achievable) Business Plan for the Bank based on a comprehensive study

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on banks bjb’s business opportunities and strengths and identify the

existing weaknesses and threats;

The Board of Directors has followed up the audit findings and

recommendations from Internal Audit Work Unit, the external auditor,

the results of supervision by competent authorities by giving the

direction related to the findings and recommendations for all relevant

work units;

The Compliance Work Unit has established and provided the steps to

instill a Compliance Culture across the levels of the organization;

The Compliance Unit has reviewed and/or recommend updating and

revisions of banks bjb’s policies, conditions, systems and procedures;

The Compliance Work Unit ensures that bank bjb policies, regulations,

systems and procedures, and business activities comply with the

provisions of Central Bank/Bank Indonesia and/or Financial Services

Authority and the prevailing laws and legislations;

Implementation and monitoring as well as submission of reports on

commitments made based on the audit results of Financial Services

Authority and other authorized auditors have been performed by the

Compliance Work Unit according to the provisions of the bank bjb’s

organizational structure;

The Internal Work Audit Unit has performed independent monitoring

function with sufficient scope of work according to the work plan,

implementation. and monitoring of the audit results;

The Internal Audit Work Unit has reported all audit findings according

to the applicable regulations;

The appointed Public Accountant Company, capable of working

independently, meets the professional standards of the public accountant

as well as the scope of the audit established;

The Internal Audit Work Unit, the Compliance Work Unit and the Risk

Management Work Unit have performed their duties according to the


Decision-making in the provision of credit is decided in a Committee

Meeting performed independently without any intervention from related

parties and/or other parties using prudential principles;

Bank bjb has submitted the financial and non-financial information

transparently.

2. The negative factors of bank bjb’s governance process are:

Fulfillments of some commitments made based on the Financial Services

Authority findings which completion takes more time therefore needs to

be rescheduled.

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C. Governance Outcome1. The positive factors of bank bjb’s governance process are:

The Board of Commissioners and the committees under the Board of

Commissioners have performed their supervisory duties and

responsibilities well. This is evidence with the supervision of the

achievement of targets/actual achievement of the Bank’s Business Plan;

The committees under the Board of Commissioners have provided the

analysis and recommendation to the Board of Commissioners. The

analysis and recommendations shall be considered by the Board of

Commissioners to implement the supervisory function of the Board of

Directors;

The Board of Directors has reported their performance of its duties to

shareholders through the General Meeting of Shareholders (AGMS) and

all implementation of the duties and responsibilities of the Board of

Directors for the fiscal year 2015 has been accepted by the shareholders;

Bank bjb has submitted the report on the performance of the duties of

the Director in charge of the Compliance Function to the Financial

Services Authority periodically according to prevailing regulations;

The Internal Audit Charter has been implemented to the Bank's

organizational structure, so that the Internal Audit Work Unit is

independent and the audit task can be objectively implemented.

The Internal Audit Unit has performed its audits according to the RKAT

2016 and the monitoring of the audit results has been performed

continuously and completion of the follow-up commitments as of

December 2016 was 100%;

External Audit has acted objectively in conducting audit and audit result

and management letter have described the bank bjb’s problems and the

report have been submitted to the Financial Services Authority by the

designated KAP on time;

The Board of Commissioners and the Board of Directors have performed

their active supervision in the implementation of Risk Management’s

policy and strategy;

The reports on the Bank’s Health Level, audit reports and others have

been reported to bank bjb’s internal or external parties according to the


Bank bjb has determined the provisions on compliance sheet on credit to

anticipate the provision of funds to LLL, Collateral, Insurance,

Agreement, PDN etc, are according to the limitations that have been set.

During the period of July - December 2016 there were no credit that

exceed the LLL;

Bank bjb has delivered the financial and non-financial information

transparently and regularly through the website and print media.

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Bandung, 21 April 2017

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

Signed Signed

Klemi Subiyantoro President Commissioner

Independent

Ahmad Irfan President Director

2. Negative factors of the governance outcome of bank bjb are:

On the commitment to Financial Services Authority audit findings in 2015,

of 14.37% (fourteen-point thirty seven percent) of the commitment was

rescheduled.


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TABLE OF CONTENT - Bank BJB · 3 Implementation of Good Corporate Governance (GCG) of bank bjb year 2016 Integrity 6. Consistent, disciplined, and passionate 7. Keeping good image

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