GOOD CORPORATE GOVERNANCE 1 | Page

GOOD CORPORATE GOVERNANCE

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REPORT FOR GOOD CORPORATE GOVERNANCE IMPLEMENTATION 2012

A. Overview

In adherence to the Bank Indonesia Regulation No.8/4/PBI/2006 on Good Corporate Governance

Implementation for Commercial Banks, Bank Indonesia Regulation No.8/14/PBI/2006 on Revision on

Bank Indonesia Regulation No.8/4/PBI/2006 on Good Corporate Governance Implementation for

Commercial Banks, and Bank Indonesia Circular Letter No. 9/12/DPNP on Good Corporate Governance

Implementation by Commercial Banks, the Board of Commissioners, Board of Directors and all PTBC

employees are fully committed to managing the business by following the principles of Transparency,

Accountability, Responsibility, Independency and Fairness.

In its effort to maintain, rectify, and improve the quality of the implementation of Good Corporate

Governance, PTBC regularly conducts comprehensive Self Assessment on the implementation of Good

Corporate Governance relating to 11 (eleven) evaluation aspects to monitor and evaluate the results

of implementation and to establish action plans and to take any necessary corrective actions.

B. General Meeting of Shareholders (GMS)

General Meeting of Shareholders was held for several times during 2012, which then mentioned in the

following Deeds:

No. Deed Number

Deed Date Deed Summary

1 62 26 April 2012 Appointment of Ms. Dhien Tjahajani as Compliance Director effective 9 April 2012 for two years period

2 33 24 May 2012

• Reappointment of Mr. Antonio Da Silva Costa as President Director for another two years period

• Reappointment of Mr. Andriaan Laoh as Vice President Director for another two years period since 17 June 2012

3 34 24 May 2012

• Approval Remuneration Policy for Local Commissioners

• Approval for New Travel Policy for Board of Commissioners members, President Director and Board of Director members

4 35 24 May 2012 General Meeting of Shareholder year 2011-2012

5 26 8 November 2012 Resignation of Mr. Andriaan Laoh as Vice President Director

6 19 4 December 2012

• Appointment of Ms. Suwartini as Independent Commissioners effective 7 November 2013 for three years period

• Release of Mr. Jeffrey Turangan as Independent


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No. Deed Number

Deed Date Deed Summary

Commissioners

7 20 4 December 2012

• Approval on the amendment of Article no 14 of Bank’s Article of Association with additional of point 1.c regarding Director duties and authorities

• Approval amendment Article no 17 of Bank’s Article of Association with addition of new article no 5 regarding Commissioners duties and authorities

• Approval amendment Article 18 point 10 of Bank’s Article of Association concerning Board of Commissioners Report

C. Board of Commissioners and Committees

1. Composition, Independency and Share Ownership of Commissioners as of December 2012

The Board of Commissioners of PT Bank Commonwealth members are in accordance with the

provisions of the Regulation of Bank Indonesia on Good Corporate Governance. The number of the

Board of Commissioners PTBC members is 4 (four people). Two members of the Board are

Independent Commissioners and all independent commissioners domicile in Indonesia.

Independent Commissioners in terms of tasks and responsibilities means that no one can affect

their ability to act independently in accordance with Bank Indonesia Regulation concerning

Implementation of Good Corporate Governance for Banks.

Ownership of shares by Commissioners by 5% (five percent) or more of the paid up capital of PT

Bank Commonwealth, other Banks, Non-Bank Financial Institutions, and other companies, which

are located inside or outside the country is not found in the Board of Commissioners PTBC .

Composition of Board of Commissioners as of December 2012 is as follows:

No. Commissioners

Appointment

1 Geoffrey David Coates President Commissioner

2 Craig Anthony Carland Deputy President Commissioner

3 Suwartini Independent Commissioner

4 Franciskus Antonius Alijoyo Independent Commissioner


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Note: 1. Mr. Jeffrey Turangan effectively resigned as PTBC Independent Commissioners since 27

November 2012. 2. Ms. Suwartini appointed as Independent Commissioner effective 7 November 2012.

3. Duties and Responsibilities of PTBC's Board of Commissioners

a. The Board of Commissioners monitors and ensures the application of Good Corporate

Governance principles in all aspects of the Bank’s business and across all levels of the

Bank’s hierarchy.

b. The Board of Commissioners actively monitors the performance of duties and

responsibilities by the Board of Directors, provides recommendations, directs, monitors

and evaluates the enforcement of Bank's strategic policies.

c. The Board of Commissioners assures that the Board of Directors addresses the audit

findings and recommendations provided by the Bank's Internal Auditor, External Auditor,

and Reviews by Bank Indonesia and/or other supervisory authorities.

d. The Board of Commissioners does not engage in the process of formulating operational

decisions, with the exception of approving credit to related parties as mandated in Bank

Indonesia regulations on Legal Lending Limit for Commercial Banks or other prevailing

rules and regulations.

e. In accordance to Bank Indonesia Regulation, the Board of Commissioners is obligated to

establish an Audit Committee, Risk Monitoring Committee and Remuneration and

Nomination Committee. The appointment of these Committees members are based on the

decisions made in the meeting of the Board of Commissioners. Currently, there are 3

(three) Committees established, they are Audit Committee, Risk Oversight Committee and

Remuneration and Nomination Committee.

To improve the effectiveness of daily duties and responsibilities of Board of Commissioners

function, the Board of Commissioners Manual has been issued in March 2012 and amended in June

2012. The manual provides guidelines for Commissioner’s activities in a structured, systematic and

consistent manner.

4. Meeting of the Board of Commissioners

The meetings of the Board of Commissioners were conducted on regular basis throughout 2012 and

the results of the meetings were well-documented in the minutes of the meetings. During 2012

period, the Board of Commissioners meeting had been conducted 7 (seven) times and members

are attended either physically or through teleconference with detail as follows:


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No Member Appointment Period March April June July Sept Oct Dec

1 Geoffrey David Coates

President Commissioner *

2 Craig Anthony Carland

Vice President Commissioner - *

3 Jeffrey Turangan Independent Commissioner - - * -

4 Franciskus Antonius (Alijoyo)

Independent Commissioner

5 Suwartini Independent Commissioner N/A N/A N/A N/A ** -

Note: * via teleconference ** Ms. Suwartini attend as observer

During the meeting, Independent Party of Committee, Board of Directors members, Executive

Officer and Internal Audit were invited in order to obtain clarity regarding PTBC business and in

2012, the Board of Commissioner supervised several important aspects including:

1. To advice and together with Board of Directors approving PTBC Business Plan 2012 and revised

Business Plan in April 2012

2. Evaluated PTBC financial performance during year 2012 including 4 pillars of growth-related to

Bank’s priority strategies for each of the pillars, namely Wealth Management, Small and

Medium Enterprises, Emerging Affluent and Consumer Loan

3. Discussion on External Audit and Internal Audit Annual Plan and also monitor the improvement

of related finding by both Internal Audit and Regulatory Audit.

4. Discussion on Bank Soundness Report, Quarterly Risk Profile Report and new regulation’s

impacts to PTBC. Additionally with regards to Soundness Rating, Board of Commissioners

supports PTBC efforts to improve Bank’s Soundness Rating by formed Prudential Project Team

and monitors the updates of the project

5. Discussion on Information Technology (IT) Strategy Roadmap taking into account also Asian

Banking Platform project to replace existing PTBC core banking system.

Additionally, the Board of Commissioners provided important recommendations and approval as

follows:

1. Approval of the planned liquidation of Yayasan Bank Commonwealth and Commonwealth

Securities

2. Recommended the appointment of Public Accounting Firm (KAP) Tanudiredja, Wibisana &

Rekan for fiscal year 2012 through Audit Committee

3. Through Remuneration and Nomination Committee, proposed new independent commissioner,

proposed extension of the term of office for President Director and Vice President Director


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and also endorse adoption of Board of Commissioners and Board of Directors remuneration

policy together with 2012 bonus package proposal.

4. Through Risk Oversight Committee, approval of any policies related to risk management not

limited to Risk Appetite Statement, Credit Committee Charter, Market Risk Policy, Liquidity

and Funding Policy, etc.

5. Financial relationship and / or family ties to the second degree with a member of the Board of Commissioners and / or the members of the Board of Directors or other relationship In accordance to Bank Indonesia Regulation concerning Implementation of Good Corporate

Governance for Banks, the two Independent Commissioners have no financial and / or family ties

to the second degree with a member of the Board of Commissioners and / or members Directors

or other relationships. Thus Independent Commissioners have the ability that cannot be affected

by anyone to act independently in delivering their tasks and responsibilities.. Meanwhile, two

other commissioners had financial relationship with the Controlling Shareholders.

6. Committees

The following committees have been performing their duties and responsibilities:

a) Audit Committee

The Audit Committee is established in order to support effective implementation of the duties

and responsibilities of the Board of Commissioners. In performing its duties, the Audit

Committee is supported with an Audit Committee Charter that defines its authorities and

responsibilities.

Composition and Membership

Composition, membership and expertise of the Audit Committee have met the prevailing

regulatory requirements, and is composed of an Independent Commissioner who serves as the

Chairman of Audit Committee and 3 members consisting of one Commissioner and two members

representing Independent Parties with expertise in finance / accounting and legal / banking.

The membership of the Audit Committee as of December 2012 is as follows:

No Position Name

1. Chairman (Independent Commissioner) Franciskus Antonius Alijoyo

2. Member (Commissioner) Craig Anthony Carland


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No Position Name

3. Member (Independent Party) Lungguk Gultom

Note: Mr. Paul Hamilton has tendered his resignation as Independent Party of Committee effective December 2012.

Roles and Responsibilities

Independently, the Audit Committee reviews the Bank’s financial statements and financial

disclosures, based on information provided by the Board of Directors and External Auditors, as

well as reviewing the accounting policy to ensure compliance with the prevailing laws,

regulations, and accounting standard. The Audit Committee considers and discusses with the

Board of Directors and External Auditors on significant financial reporting issues and judgments

made in connection with the preparation of the financial statements. Moreover, Audit

Committee also has the duty to review the assurance over effectiveness of internal control

system, to oversee and evaluate independence, effectiveness, scope of work, annual audit plan

of the internal and external auditors, to oversee and evaluate the action plans made by the

Board of Directors on outstanding audit issues raised by internal audit, external audit, and local

regulators. The Audit Committee regularly reports its activities including advice on matters of

concern to the Board of Commissioners, and provides recommendations on the nomination of

the External Auditor to the Board of Commissioners for further approval at the General Meeting

of Shareholders.

Meetings

During 2012, the Audit Committee held formal meetings of the Audit Committee as follows:

Name Position Number of

Attendance

1. Franciskus Antonius Alijoyo Chairman (Independent Commissioner 4

2. Craig Anthony Carland Member (Commissioner) 4

3. Lungguk Gultom Member (Independent Party) 4

4. Paul Hamilton Member (Independent Party) 3

In these meetings, discussions were held with the Internal Audit, External Auditor, and Board of Directors:


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Meeting with Internal Audit

Meetings with Internal Audit discussed the audit plan and its realization, risk-based audit

approach, scope of audit, audit reports issued during the reporting period, significant Internal

Audit findings including repeated findings that occurred at the branch offices, follow-up of

corrective action plans from the internal audit findings, and the results of independent party

review over Internal Audit Division. In addition, discussions were also held on the adequacy of

the Internal Audit team members in terms of number, competence and expertise, as well as

development program of Internal Audit team members.

Meeting with External Auditor

Meetings with the External Auditor discussed financial statement for December 2011 that

received an unqualified opinion, Bank’s adherence to applicable accounting standards, the

External Auditor’s findings related to internal controls, the audit plan, audit scope, and the

application of PSAK 50/55 by the Bank. Based on these discussions, the Audit Committee

recommended to the Board of Commissioners to approve the 2011 financial statements and

recommended the appointment of KAP Tanudiredja, Wibisana & Partners as the External Auditor

of the Bank and its subsidiaries for the subsequent year.

Meeting with the Board of Directors

Meetings with the Board of Directors discussed the draft Financial Statements per December

2011, 31 March 2012, 30 June 2012, and 30 September 2012, as well as follow-up of Internal

Audit’s and Bank Indonesia’s findings related to KYC and AML, Credit, Operational Risk, Good

Corporate Governance, Information Technology, Human Resources, and Treasury.

b) Risk Oversight Committee

The Risk Oversight Committee is established in order to support effective implementation of the

duties and responsibilities of the Board of Commissioners. In performing its duties, the Risk

Oversight Committee is supported with Charter of Risk Oversight Committee which is update on

September 2012 that defines its responsibilities.

Composition and Membership

The compositions of the Risk Oversight Committee are in compliance with prevailing regulations.

The composition of the audit committee comprised of independent commissioner as chairman

and four members consisting of one commissioner, one independent and two independent

parties who have expertise in banking and risk management The members of the Audit

Committee as of December 2012 are as follows:


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No. Name

Appointment

1 Suwartini Chairman and member (Independent Commissioner)

2 Craig Anthony Carland Member

3 Franciskus Antonius Alijoyo Member (Independent Commissioner)

4 Lungguk Gultom Member (Independent Party)

Note: Mr. Paul Hamilton has tendered his resignation as Independent Party of Committee effective December 2012.

Roles and Responsibilities

Risk Oversight Committee has responsibility to monitor the eight risks that PTBC should manage

namely Credit, Market, Liquidity, Operational, Legal, Reputation and Strategic Risk and ensure

that the implementation of risk management are in accordance with risk management policies.

The committee also monitors and assesses the performance of duties by the Executive Risk

Committees and Risk Management work units, also monitors the development of litigation cases

involving the Bank and assesses the risks involved, like the regulatory risk, reputation risk and

compliance risk. The Risk Oversight Committee regularly reports its activities including advice on

matters of concern to the Board of Commissioners

During 2012, the Risk Oversight Committee held formal meetings of the Risk Oversight Committee

as follows:


Attendance

1. Suwartini Chairman (Independent Commissioner) 1

2. Craig Anthony Carland Member (Commissioner) 4

3. Lungguk Gultom Member (Independent Party) 4

4. Franciskus Antonius Alijoyo Member (Independent Commissioner) 4

5. Paul Hamilton Member (Independent Party) 3

Through these meetings, the Committee had a discussion among others as follows:

1. Discussion on PTBC Quarterly Risk Profile Report period December 2011 until September 2012

and Soundness Report period December 2011 and June 2012

2. Discussion on Credit Risk, Market Risk, Operational Risk, Compliance Risk and Security

Business Continuity and Financial Crime Report


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3. Discussed and recommended several policies such as Risk Appetite Statement, Risk

Management Policy, Credit Committee Charter, Credit Policy Manual, SME Credit Policy,

Consumer Credit Policy, Investment Policy, Market Risk Policy, Anti Fraud Strategy, etc

4. Approved Risk Oversight Committee Calendar 2012

5. Discussion on Lending Transformation Program CHOSEN update in order to develop business

lending architecture which was simple, fast and standardized

6. Discussion on Internal Capital Adequacy Assessment Process (ICAAP) with regards to Bank’s

assumption and methodology to support the ICAAP and stress testing scenario used for credit,

market and operational risk

c) Remuneration and Nomination Committee

The compositions of the Remuneration and Nomination Committee are in compliance with

prevailing regulations. The composition of Remuneration and Nomination Committee comprised

of independent commissioner as chairman and two members consisting of one commissioner and

one executive officer representative from Human Resource Dept. The members of the

Remuneration and Nomination Committee as of December 2012 are as follows:

No. Remuneration and Nomination Committee Appointment

1 Suwartini Chairman and member (Independent Commissioner)

2 Craig Anthony Carland Member (Vice President Commissioner)

3 Bagus Harimawan Member (HR Executive Officer)

Duties and responsibilities of the Remuneration and Nomination Committee are as follows:

Committee had conducted an evaluation of the Bank’s remuneration policy including annual salary

review and performance bonus management and provides recommendations to the Board of

Commissioners concerning the Bank’s remuneration program and policy, taking into account

several factors, as follows:

1) Financial performance and reserve fulfillment following the prevailing regulations

2) Employee’s work achievement and contribution

3) Fairness to the peer group

4) Consideration of Banks long-term target and strategies.


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During year 2012, the Committee has meeting as follows:


Attendance

1. Suwartini Chairman (Independent Commissioner) 1

2. Craig Anthony Carland Member ( Vice President Commissioner) 4

3. Bagus Harimawan Member (HR Executive Officer) 4

4. Jeffrey Turangan Chairman (Independent Commissioner) 3

Through these meetings, the Remuneration and Nomination Committee has held discussion and

review as well as provide recommendation as follows:

1. Developed Committee’s Work plan 2012-2013 and used as working guideline of the

Committee

2. Reviewed and agreed on Remuneration policy and Travel policy for local Board of

Commissioner and local Board of Director

3. Recommended arrangement on Expatriate’s visit & secondment program in PTBC

4. Recommended 2 (two) years extension for President Director & Vice President Director upon

review on the individual’s satisfactory performance

5. Has recommended appointment of Mrs. Suwartini as new Independent Commissioner.

Subsequently, the Board of Commissioner has appointed Mrs. Suwartini as Chairman of Risk

Oversight Committee and Chairman of Remuneration & Nomination Committee

6. Provided a recommendation to the Board of Commissioners on appointment of Mr. Paul as

Operations & Information Technology Director and to progress with subsequent steps

including application to Bank Indonesia for Fit & Proper Test and for RUPS approval

7. Has recommended PTBC Board of Directors to establish a Corporate Secretary function within

the organization. The Corporate Secretary will responsible to lead and manage GCG

implementation for both Board of Commissioners and Board of Directors, include monitor and

ensure its compliance to the applicable laws and regulations

8. Reviewed and endorsed 2012 Performance Bonus distribution and 2013 Annual Salary Review

proposed by Human Resource Director, including result of Job Grading & Salary Structure

exercise.

9. Reviewed and agreed on HR proposal to provide Appreciation Rewards for Mr. Andriaan Laoh

and Mr. Jeffrey Turangan at respective completion date of assignment


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d) Expertise Independent Member of Committee

Mr. Paul Hamilton has the expertise and experience in banking and risk management after which

he retired from the Commonwealth Bank of Australia in 1999 is involved in several projects

related to risk management, credit risk, impaired asset management strategy in several Banks

including Bank of Bangkok, Jinan City Commercial Bank in China, and others.

Mr. Lungguk Gultom has expertise and experience in audit and risk management where he held

the position as head of Audit, Risk Management and Compliance at Bank Danamon.

D. Board of Directors

1. Composition, Independency and Share Ownership of the the Board of Directors as of December 2012

The membership of PTBC Board of Directors was in accordance to Bank Indonesia Regulation

regarding Good Corporate Governance including prohibition of multiple appointments, non-

existence of letter of authority to other party that may cause the transfer of duties and functions

of the Board of Directors. All members of the Board of Directors are residing in Indonesia.

The Directors who served PTBC have no financial or family relationship with a member of the

Board of Commissioners, Board of Directors and / or Controlling Shareholders of the Bank, and

thus does not affect the decision-making of each member of the Board of Directors.

Ownership of shares by Directors by 5% (five percent) or more of the paid up capital of PT Bank

Commonwealth, other Banks, Non-Bank Financial Institutions, and other companies, which are

located inside or outside the country is not found in the Board of Director PTBC

The number of the Board of Directors as of December 2012 is 4 (four) members with details as

follows:

No. Name Appointment

1 Antonio Da Silva Costa President Director

2 Ian Phillip Whitehead Director Retail & Business Banking

3 Mia Patria Director Human Resource

4 Dhien Tjahajani Compliance Director


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Mr. Andriaan Laoh effectively resigned as Vice President Director per 31 December 2012. Bank

understands that with the resignation of Mr. Andriaan Laoh, the Board of Directors composition

with foreign nationalities is equal with Indonesian nationality. Currently PTBC is requesting Bank

Indonesia approval for local directors who will be in charge of Information Technology and

Operation through Bank’s Letter on February 2013 subject to Fit and Proper Test result.

2. Duties and Responsibilities of Board of Directors

a. Board of Directors is fully responsible for the operation of the Bank's management and manage

the business in accordance to the authorities and responsibilities according to the Articles of

Association and prevailing rules and regulations.

b. Board of Directors are responsible to ensure that the application of Good Corporate

Governance principles in all aspects of the Bank’s business and across all levels of the Bank’s

hierarchy.

c. Board of Directors consistently addresses the findings and recommendations reported by the

Audit Intern Unit, external auditor, and the reviews of Bank Indonesia and/ or other

authorities.

d. Board of Directors builds and ensures the implementation of Risk Management across all levels

of the Bank’s hierarchy and ensures that the Risk Management functions have operated

independently.

e. Board of Directors reports its performance in fulfilling its duties and responsibilities to the

General Meeting of Shareholders.

To improve the effectiveness of daily duties and responsibilities of Board of Commissioners

function, starting in March 2012 the Board of Directors Manual has been established. The manual

provides guidelines for Directors activities in a structured, systematic and consistent manner.

3. Meeting of the Board of Directors

As of 31 December 2012, Board of Directors held a total of 32 (thirty two) meetings, with detail of attendance as follows:

No. Name Attendance of BOD Meeting

1 Antonio da Silva Costa 31

2 Ian Phillip Whitehead 26


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No. Name Attendance of BOD Meeting

3 Mia Patria 29

4 Dhien Tjahajani 26

5 Andriaan Laoh 29

During 2012, BOD meeting agenda, among others covered discussion as follows:

1. New Regulations and the impacts of the regulation to PTBC

2. Human Resource related topics such as Training Plan for year 2012, Job Grading process,

policy and procedure related to Human Resource, Renewal of Company Regulation (2012-

2014)

3. Bank’s Financial Performance year 2012

4. Capital Injection Process

5. Information Technology including but not limited to Asia Banking Project, Thaler

performance and projects related to Information Technology

6. Service Quality Result and PTBC Internal Customer Service Measurement Result

7. Know Your Customer/Anti Money Laundering and update on including Sanction project

8. Internal Audit and Regulatory Audit issue and progress

9. Prudential Project update in order to improve Bank’s Good Corporate Governance and

Soundness

10. Treasury Enhancement Project in order to improve treasury process

4. Committees

In the execution of its duties, Board of Directors is supported by several committees as follows:

a. Executive Risk Management Committee

b. Asset and Liability Committee

c. Credit Committee

d. IT Steering Committee

e. Integrity Committee

f. Product Committee

Executive Risk Committee (ERC) Purpose of ERC is to assist the Board of Directors and Management in monitoring and managing

Credit Risk, Market Risk, Legal Risk, Liquidity Risk, Reputation Risk, Strategic Risk, Operational


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and Compliance Risk, to ensure consistency with internal policies and Bank Indonesia

requirement

Composition

Chairman: Chief Risk Officer

Member:

Board of Directors or equivalent holder of these senior positions within PTBC who are responsible

for:

President Director

Chief Financial Officer

Audit

Compliance

Human Resource

Operations

Retail and Business Banking

Security

Technology

Duties and Responsibilities

Develop and maintain PTBC Risk culture

Review and maintain strategy and policy related to eight risks as required by regulations

Monitor compliance with polices

Assist Board of Directors in formulate Bank’s Risk Appetite at least annually

Review Bank’s credit portfolio in accordance with established parameters including

concentration (both on portfolio and individual transaction basis), duration (term) and

expected return and loss and recommended for credit portfolio adjustment

Review legal, reputation, operational and compliance risk incidents and overview issue

resolution

Provide recommendation to Board of Directors and Risk Oversight Committee for any

exception and deviation against risk policy and procedure

Review any audit finding either internally or externally on Bank’s operations and overview

issue resolution

Asset and Liability Committee (ALCO) The purpose of ALCO is to oversee the market risk, banking book management, funding and

lending strategy, and capital management policies and methodologies used within PTBC


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Composition

Chairman: Chief of Global Market

Member:

President Directors


Deputy President Director

Director of Retail and Business Banking

Chief Risk Officer

ALCO has standing attendee for Head of Treasury and Head of Market Risk and other attendee

from business as necessary


• Review proposed policies and methodologies for ERC approval including change in capital mix

or target, liquidity management, funding, placement or investment, transfer pricing, traded

and non-traded market risk

• Approve target and strategy changes for capital management and non-traded market risk

subject to President Director’s delegated authority

• Approve investment of capital and dividend requirement by/for shareholders

• Oversight and assurance on asset quality that remain in good conditions at all times

• Oversight policy compliance, capital position and risk exposure

• Oversight business performance addressing the direction and explanation of banking Net

Interest Margin and total Banking Margin

• Oversight compliance with relevant regulatory and statutory requirement

Credit Committee (CC) Purpose of Credit Committee to assist Board of Directors in evaluating and or decision making of

Credit Application for the sums and type of credit approved by Board of Directors

Composition

Chairman: President Director

Member:

Business Director or Delegate

Vice President Director

Chief Risk Officer

Head of Credit Risk or Delegate

Attendance


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Compliance Director (Observer)

Credit Risk Team


• Approve or disapprove credit applications in accordance to limits pre-determined by Board of

Directors

• Define subcommittees to delegate its authorities in credit decision making

• Coordinate with ALCO in credit funding

• Comply with the adequate provision for write off and claim write off regulation, credit to

related party with acknowledgement from Board of Commissioners

• Develop detail Standard Operating Procedure with regards to duties and responsibilities

• Obliged at minimum to perform its function in credit approval or disapproval based on

professionalism, honesty, objectivity and accuracy also refuse any request or influence from

related parties to credit applicant during credit disbursement process.

Information Technology Steering Committee (ITSC) Composition

Chairman: Chief Technology Officer

Member:

Board of Director

Division of Retail Banking

Director of Risk Management

Project Management Office (PMO)

Major End-user Departments (which required to present during the meeting)


Provide recommendation on Information Technology (IT) Plan to be in line with Bank’s

business strategic plan.

Provide recommendation on the suitability of the approved IT projects and IT strategic plan

and determine the critical priority status of the IT project

Provide recommendation on suitability between the implementation of IT projects and the

project charter plan agreed upon in the service level agreement

Provide recommendation on suitability of the IT with the need of Management Information

System and Bank’s business activities

Recommended on the monitoring of IT performance and efforts to improve

Provide recommendation on the effort of various issues settlement related to IT that cannot

settle by user and IT unit effectively, efficiently and timely basis


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Provide recommendation on the road map to achieve IT requirements to support Bank’s

business strategy

Provide recommendation on the formulation of IT policy and procedure and risk management

related to IT

Provide recommendation on the adequacy and allocation of Bank’s resource

Integrity Committee Purpose of Integrity Committee is to manage Bank’s Anti Fraud Strategy including corruption and

misconduct through the Integrity Programmed

Composition

Chairman: President Director

Member:

Director, Operations and Information Technology

Chief Risk Officer

Compliance Director

Director, Human Resource

Director, Retail and Business Banking

Head of Operational Risk

Financial Crime Manager

Chief Audit Executive (Observer)


• Manage and oversight of the implementation of Bank’s Anti Fraud Strategy and all of the

associated policies, procedures and practices

• Review report of fraud, corruption or misconduct within the Bank and direct the appropriate

course of actions

• Consider the result of any investigation into fraud, corruption or misconduct and determine

what disciplinary or other action should be taken and by whom

• Ensure that each department that has policy or procedure related directly or indirectly to

the prevention and mitigation of fraud, corruption or misconduct are actively engaged in the

execution of those policy and procedure

• Deliberate upon and made decision or recommendation in relation to, any other matters that

impact upon the Bank’s ability to prevent and mitigate fraud, corruption and misconduct


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Product Committee Purpose of product committee is to review and approve Bank’s new products or activities prior

the launching, review and re-approve Bank’s existing products and activities, and review and

approve termination or temporary cease of Bank’s existing product or activities.

Composition

Chairman: Director of Retail and Business Banking

Member:

Voting Members

President Director


Chief Risk Officer

Chief of Operations and IT

Non Voting Members

Compliance Director

Head of Product, Service and Marketing

Head of Business Division subject to related product or activities or business that being

discussed


• Ensure all products and activities are within Bank’s Risk Appetite

• Ensure all product and activities meet internal and external regulations and policies

• Ensure adequate risk identification and mitigation of product features and process

• Ensure that Bank is able to properly support operational of the products or activities

including but not limited to IT, Operation, System, Accounting, Tax, Legal and Compliance

• Decide and/or approve product features and commission

• Decide and approve new products and activities

• Provide recommendation to improve product policy and procedure

5. Financial relationship and / or family ties to the second degree with a member of the Board of Commissioners and / or the members of the Board of Directors or other relationship

In accordance with Bank Indonesia Regulation concerning Implementation of Good Corporate

Governance, for PTBC the members of the Board of Directors, who are serving, have no financial

or family relationship with a member of the Board of Commissioners, Board of Directors and / or

Bank’s Controlling Shareholders


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E. Implementation of the Compliance Functions, Internal Audit, and External Audit

Compliance Function

During year 2012, in order to improve compliance function’s effectiveness, a number of key initiatives

have been taken, including organizational restructuring, compliance related process re design and

new internal policies and procedures enactment.

The compliance organization function has been restructured into three units as follows:

1. Anti Money Laundering /Counter Terrorism Financing (AML/CFT) and Sanctions Units. This unit

responsible to implement AML/CFT and Sanctions across the Bank and ensures that any

international and trade finance transactions do not violate against prevailing International

Sanctions

2. Regulatory Affairs Unit. This unit has responsibility to communicates with regulators, provides

compliance advisory and review for any Bank’s internal policy and procedure

3. Monitoring and Training Unit. This unit responsible for monitoring Bank’s compliance to prevailing

regulations; conducts monitoring testing and provides necessary training to improve compliance

culture and knowledge across the Bank.

To properly manage the compliance risk, during year 2012 Compliance unit conduct several activities,

which include:

1. Conducted socialization and discussion for any new regulation with related department

2. Conducted regular training related to AML/CFT and Sanctions to all new staff and training

refresher for existing staff

3. Conducted Training on Compliance Code of Conduct for all staffs across the Bank

4. Participate on any project that involved regulatory issued

5. To perform Compliance testing through

COMPLIANCE DIRECTOR

REGULATORY AFFAIRS AML & SANCTION COMPLIANCE

MONITORING & TRAINING


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a. Compliance testing for any new products and activities

b. Testing for any new and amendment policy

c. Conduct specific testing for area Human Resource and AML/CTF

6. To monitor any commitment to regulator audit by ensuring the deadline and quality of Bank’s

commitment delivery by providing weekly reminder to respective party including the Director in

charge

7. Performed reporting and follow-up activities related to AML/CTF as follows:

a. CTR Report : 49 reports

b. STR Report : 924 transactions

c. Follow up action on request for account/financial data and information

KPK : 62 reports

PPATK : 11 reports Compliance Code of Conduct The Compliance Code of Conduct (COC) contains the code of conducts for staffs on day to day

operations. This COC governs the relationship between Company, Employees, Customers and other

Stakeholders. Some of points related to COC among others are as follows:

a. Confidentiality

Staffs have responsibility to maintain confidentiality of their personal information and customers.

Disclosing of customer information to third party outside Bank is a serious violation against law

and regulation

b. Gift and Entertainment

It’s about governance of gift and entertainment received by Bank’s staff and obligation to report.

c. Conflict of Interest

Staffs must avoid any situation that leads to a conflict of interest. In the situation where a

conflict of interest cannot be avoided then the staff must report it to HRD or Compliance Dept.

d. Relationship with Customer

All staff that had dealing with customer must establish and maintain clarity of relationship with

customer in a professional manner

e. Anti Money Laundering and Know Your Customer

All staff should be vigilant against the abuse of Bank by Money Launderer, Terrorist, Other

Criminal and Corrupted Persons.

Internal Audit Function

The Internal Audit function provides an independent and objective assurance to the Board of Directors

and Board of Commissioners over the Bank’s design and operational effectiveness of governance, risk

management, and internal control. In performing its activities Internal Audit is equipped with an


21 | P a g e

Internal Audit Charter which defines Internal Audit’s vision, mission, authority, and responsibilities.

The Internal Audit Charter is periodically reviewed and approved by the President Director and Board

of Commissioners.

Internal Audit’s Vision and Mission

Internal Audit’s Vision is: “To be a provider of constructive, professional, high quality assurance and

be recognized as a great place to work” and its Mission is: “To provide independent and objective

assurance to Board of Directors and the Board of Commissioners through the Audit Committee on the

design and operational effectiveness of the Bank’s governance, risk management and internal control

systems”.

In order to accomplish its vision and mission, Internal Audit is granted full, free, and unrestricted

access to any and all of PTBC records, physical properties, and personnel relevant to any function

under review. Moreover, to maintain its independence, Internal Audit will have no operational

responsibility or authority over any of the activities they review. Internal Audit will also not develop

nor install systems or procedures, prepare records, or engage in any other activity which would

normally be audited. It is the Business Unit’s responsibility to manage the effectiveness and efficiency

of its own internal controls.

Internal Audit’s Organization Structure and Composition

Internal Audit function is independently structured under President Director and is composed with

team members coming from different backgrounds such as from accounting firms or other banks with

mostly audit experiences, as well as from other Business Units within the Bank with special expertise

on certain areas. Selection of Internal Audit team members is done in a prudent manner to select

skilled and qualified personnel. Internal Audit has also had a development program by having the

team members attend specific trainings, acquiring relevant certifications, as well as having a “sharing

session” by inviting guest speakers from Business Units to share their knowledge and updates to

improve Internal Audit team members’ skills and knowledge.

As of 31 December 2012, PTBC’s Internal Audit organization structure is as below:


22 | P a g e

The current Chief Audit Executive is Reza HM Soemadipradja. Internal Audit also regularly meet with

the Board of Directors and the Audit Committee to discuss audit activities that have been carried out,

the audit findings of which should be a concern of the Audit Committee, and the status of corrective

action plan implementation over Internal Audit findings.

Audit Approach

Internal Audit adopts a risk-based approach in performing both annual audit planning and the

individual audit activity. With the risk-based approach, the Bank will gain value by prioritizing those

areas with greater risks to the Bank. The annual audit planning’s risk-based approach is performed by

assessing each potential audit entities against several parameters such as strategic risk, credit risk,

market risk, liquidity risk, operational risk (including operational risk incidents and fraud cases if any),

legal risk, compliance risk, reputational risk, Assets Under Management, regulatory findings, and last

internal audit rating. The Audit Plan is also developed considering the number of resources available

in the Internal Audit. Detailed audit steps are elaborated in the Internal Audit Manual. Internal Audit’s

methodology and approach are periodically reviewed to adjust with the latest development and best

practices.

2012 Audit Realization

Internal Audit planned to audit 50 areas consisting of 37 branches and 13 head office function / non-

branches. As at 31 December 2012, Internal Audit has completed 53 audits consisting of 50 planned

audits and 3 special audits performed in respond to emerging risks.

External Audit Function

For Fiscal year 2012, PTBC appointed KAP Tanudiredja, WIbisana and Rekan (KAP) which is registered

with Bank Indonesia. The appointment of KAP do not exceeding five years time limit due to change in

President Director

Chief Audit Executive

Core & Support Audit

Branch Network Audit

IT Audit & Analytic

Assurance, Reporting & Monitoring

Board of Commissioners (through Audit

Committee)


23 | P a g e

local partners and the appointment has been approved though General Meeting of Shareholder on May

2012.

To be in line with the Bank’s general practice to ensure the independence of audit process, KAP has

rotated the partner engagement and KAP do not provide other services to PTBC thus does not have

any potential conflict of interest

F. Risk Management Implementation

Risk Management has become an integral part of business, decision making and cultural processes that

emphasizes on risk awareness of its employees. Risk management framework focuses on active

monitoring from the Board of Commissioners and Directors, development of policies and procedures,

adequate process of risk identification, measurement and supervision. During implementation, overall

risk management as a whole comprehensive process becomes the responsibility of all employees at

every level of the organization.

Board of Commissioners and Directors understand the Bank’s risks and have conducted reviews,

oversight of the risks inherent in sustainable business. Risk Management Unit submits monitoring

reports on regular basis over the risk exposure to the management, directors and commissioners to be

studied in order to support the risk control implementation.

The Bank has risk management policies and procedures that set up the implementation of

identification, assessment, monitoring and control on Bank’s environmental risks. Bank's risk

management policy is prepared in accordance with its mission, business strategy, capital adequacy,

human resource capability, and risk appetite.

The Bank constantly manages risks by improving the capability and capacity of risk infrastructures, in

terms of organization and human resources, policies and procedures, the development of data system

and management, and methodologies and risk analytics. Risk management framework and Risk

Appetite Statement of the Bank will always be perfected continually along with business expansion

and complexity of the Bank for present and future conditions.

G. Provision of Funds to Related Party and Large Exposures

The details of provision of funds to related party and large exposures as of December 31, 2012 is as follows:

Provision of Fund Number of Debtor Nominal (in million Rupiah)

To Related Party 19 9,041


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Provision of Fund Number of Debtor Nominal (in million Rupiah)

Provision of Large Exposure a. Individual Debtor b. Group Debtor

50 39

11

2,951,588 2,072,664

878,924

In its conduct, the Bank consistently upholds the prudential principles in provision of funds by

referring to Bank Indonesia Regulation concerning the Legal Lending Limit and other prevailing rules

and regulations.

For the large exposures, the above are top 50 core debtors and group debtors other than affiliated

parties.

Throughout 2012, PT Bank Commonwealth has performed in accordance to the regulations and

reported the transactions to Bank Indonesia in timely manner.

H. Bank's Strategic Plan

To achieve the Bank’s target, 4 (four) pillars strategies have been defined to guide Bank’s

development to achieve short and long term target, which is:

a. Strengthen Wealth Management penetration

b. Entering Emerging Affluent Market

c. Focus on Small Medium Enterprise (SME) Lending

d. Wholesale Lending Strategy

As of December 2012, achievement for SME, Commercial and Consumer lending has increased

compared to 2011 by 48%, 46% and 59% respectively. Increase in SME lending was mainly due to more

effective and efficient approval processes and credit policy. While increase in Commercial and

Consumer lending mainly driven by optimized utilization of existing facility and new partnerships from

new customers in Commercial segment and increased productivity in Consumer segment. Lower Multi-

finance balance compared to last year by 44% mainly due to the minimum down payment regulation.

To anticipate dynamic changes in Multi-finance segment, especially after the minimum down payment

regulation implementation, the Bank has conducted a regular review process and strategies to achieve

profitability target based on the submitted Business Plan 2012.

For funding, the Bank will continue to focus on lower cost and sticky funding, managing deposits level

in line with lending growth. This will be in line with targeted growth in Commercial and Emerging

Affluent segments.

While for expenditure management, the Bank will set up following initiatives:


25 | P a g e

o Continue to tighten its cost control for its investments and expenses in line with lending and

third party fund growth.

o Managing mix of foreign resources/provider in supply mix and focusing on increasing internal

resource mix

o Slowed down pace of physical expansion to support leveraging earlier investments for purposes

of profit growth.

o Manage FTE level to be lower than plan.

To achieve the Bank’s growth, PTBC will focus on these following strategies:

a. Risk Management Framework

The Bank will continue to enhance the Risk Management Framework to maintain

competitiveness aligning with the Bank strategy and business model.

b. 4 (four) Strategic Pillars

The Bank will continue with the organic growth strategy in the 4 (four) strategic pillars:

1. Wealth Management - building on our strength, leverage Commonwealth Life, First State

Investments & other partners, cross sell and product diversification.

2. Emerging Affluent & Mortgage - mortgages, savings accounts, tailored investment and

insurance products, investments in e-channels (enhanced capability) and new channels,

customer acquisition savings-lending-wealth.

3. SME - market competitive credit policy and processes, technology, increased sales staff,

sales productivity, packaged offering to segment.

4. Wholesale Banking - building on the balance sheet optimisation, utilise opportunities with

clients – targeting blue chip clients from commercial / business banking. Working capital

requirements and basic trade capabilities.

c. Improvement of Customer Service Satisfaction

To support the Bank to be the finest financial services organisation in Indonesia through

excelling in Customer Service, PTBC will provide all employees with relevant and qualified

training to maintain its commitment of excellent customer service

I. Transparency of Bank’s Financial and Non-Financial Conditions

Information in financial reports has been prepared and presented in such procedures, type and scope

as regulated by Bank Indonesia Regulation and Circular Letter concerning Transparency of Bank's

Financial Condition and submitted to Bank Indonesia and other related institutions in a timely manner.

The above information also available online at PTBC homepage (www.commbank.co.id) so that it can

be easily access by all PTBC’s stakeholders

http://www.commbank.co.id/


26 | P a g e

J. Remuneration and Other Facilities Policy for Board of Commissioners and Board of Directors

a. Types of remuneration and other facilities received by PTBC's Board of Commissioners and Board of Directors in 2012

Pursuant to Unanimous Written Resolution of the Shareholder of PT Bank Commonwealth in Lieu of

the Extraordinary General Meeting of Shareholder dated 15 May 2012, it resolved to approve the

determination of remuneration, salaries, allowances, and emoluments for Local Commissioners of

Bank which refers to Remuneration Policy for Local Commissioners. The local commissioners

received compensation in the form of Honorarium, Religious (THRK) Allowance and 14th

Honorarium and benefit in the form of Inpatient/Outpatient Medical Benefit and Company Car.

Referring to the Deed No. 63 dated October 18, 2011, it stated that the shareholders unanimously

approved the delegation of authority General Meeting of Shareholders to the Board in determining

the salaries and allowances of members of the Board of Directors derived into Bank policy. Based

on the policy the Board of Directors receive compensation in the form of salaries, THRK, Year-End

Allowance, performance-based bonuses, sign-on bonuses and retention bonuses. Additionally

Directors receive benefits in the form of Pension Fund, social security program, Life Insurance,

Medical Benefit, annual leave, company car and car running cost.

Type of Remuneration and Other Facilities

Amount Received in 2012

Board of Commissioners

Board of Directors

Number of people

In Million Rupiah

Number of people

In Million Rupiah

1. Remuneration (salaries, bonus, routine benefits, tantiem and other intangible facilities)

3 1,586 5 18,081

2. Other tangible facilities Can be owned Cannot be owned

- -

- -

5 -

3,909 -

Total 3 1,586 5 21,990

b. The detail on the remuneration per person (received in cash before income tax) received by

PTBC's Board of Commissioners and Board of Directors in 2012 is as follows:

Remuneration per person in 1 (one) year in 2012 Number of Directors

Number of Commissioners

Above Rp 3 billion 2 -

Above Rp 2 billion and up to Rp 3 billion 3 -


27 | P a g e

Remuneration per person in 1 (one) year in 2012 Number of Directors

Number of Commissioners

Above Rp 1 billion and up to Rp 2 billion - -

Above Rp 500 million and up to Rp 1billion - 1

Below Rp 500 million - 2

K. Ratios of Highest and Lowest Salaries

Ratios of highest and lowest salaries received by the member of the Board of Commissioners, Board of Directors and employee per month were as follows:

Description Ratio

Highest and lowest salary of employees 70,6:1

Highest and lowest salary of Directors 2,4:1

Highest and lowest salary of Commissioners 2:1

Highest salary of Directors and employees 1,6:1

L. Shares Option

During the year of 2012, PTBC does not provide any shares option for members of the Board of Commissioners, Board of Directors, Executive Officers, and other Head of Business Units.

M. Internal Fraud

The following is detail of frauds committed by the management, permanent employee and temporary employee including workers under probation and/or outsourced workers:

Internal Fraud 2012

Number of Cases Committed by

Management Permanent Employee Temporary Employee

Previous Year

Current Year

Previous Year

Current Year

Previous Year

Current Year

Total Internal Fraud 0 0 2 1 0 0

Resolved 0 0 1 1 0 0 Under process of settlement internally

0 0 0 0 0 0

Under process of settlement internally and with customer

0 0 0 0 0 0

Currently no settlement efforts 0 0 0 0 0 0


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Internal Fraud 2012

Number of Cases Committed by

Management Permanent Employee Temporary Employee

Previous Year

Current Year

Previous Year

Current Year

Previous Year

Current Year

Followed up through legal process

0 0 1 0 0 0

N. Legal Proceeding

Numbers of civil and criminal cases faced by PTBC, both resolved with final legal binding power and in the process of settlement, as of December 31, 2012, were as follows:

a. PTBC as Plaintiff:

Legal Proceedings Number of Legal Proceedings

Criminal Civil

Resolved (with final legal binding power) • Rp 101 million to Rp 500 million - 2 • Above Rp 500 million - - In the process of settlement • Rp 101 million to Rp 500 million 3 3 • Above Rp 500 million 4 2

Total 7 7

b. PTBC as Defendant

Legal Proceedings Number of Legal Proceedings

Criminal Civil

Resolved (with final legal binding power) • Rp 101 million to Rp 500 million - - • Above Rp 500 million - - In the process of settlement • Rp 101 million to Rp 500 million - 1 • Above Rp 500 million 1 2

Total 1 3

Below information’s concerning Legal proceeding that still in the process of settlements: 1. Related to Client’s Non Performing Loans

Bank is in process with District Court and for one case up to Supreme Court for collateral

execution.

2. Related to Misuse of Customer Account


29 | P a g e

The case related to misuse of customer account by Bank’s staffs. Bank already paid to

customer and currently in process to get the settlement from the former staffs

3. Related to Customer Falsifying Identity

The case related to burglary committed by fake customer and Bank already reported the

suspected person to Police Office

4. Related to Business Transaction

The case related to Bank rejected on customer Letter of Credit (LC) due to no connection

between the customer and the LC issuers and the LC issuers was not included as Prime Banks.

The consequence is customer has to paid deficiency for insurance premium and customer paid

double for premium due to not-confirmed with the Bank. The Bank already won on Surabaya

District Court and currently customer filled new legal suit with similar case.

O. Transactions Containing Conflict of Interest

Conflict of Interest policy has been issued in March 2012 and applies to all staffs across the Bank.

Additionally the Conflict of Interest section has been accommodated in Credit Application Form,

Enhance Due Diligence Review Form and Employee Statement of Professional. As part of The Risk

Awareness and Code of Conduct Training the Conflict of Interest section is also presented. Bank has

also closed issue concerning potential Conflict of Interest from regulator through their audit by May

2012 and will close additional one by first quarter 2013.

During year 2012, there is no conflict of interest transactions that have impact to Bank’s profit.

P. Buy back Shares and Buy Back Bonds

In 2012, there were no bonds buy back or shares buy back transaction.

Q. Funds for Social and Political Activities

a. Social Activities

In performing the Bank's corporate social responsibility, PTBC actively participated in improving

public welfare, focusing on education and sport. PTBC performed the following social activities in

2011:

No Type of Program and Its Purpose Beneficiary Total

1

Building Homes for Community Location: Gunung Sari –Tangerang Village, Babakan Madang Village - Sentul, Bogor)

Habitat For Humanity www.habitatindonesia.org/

IDR 90,000,000

2 Martin Luther King Charity Golf – Golf

Overseas Security Advisory Council (OSAC) – US

IDR 50,000,000


30 | P a g e

No Type of Program and Its Purpose Beneficiary Total

event for fundraising program to be donated to several organization

Department of State Bureau of Diplomatic Security

3

Go Green Campaign – campaign for environment

Pemerintah Kota Surabaya

IDR 10,000,000

4

Shave for Hope – fundraising event for child with cancer

Yayasan Pita Kuning Anak Indonesia, Rumah Sakit Kanker Dharmais Jakarta

IDR 120,000,000

5

Canada Cup Golf Tournament - a charity event to help surrounding kids

Embassy of Canada, WTC, 6th Floor Jl.Jend. Sudirman Kav.29

IDR 50,000,000

6 Merapi Donation – fundraising program for Merapi affected people

Palang Merah Indonesia (PMI), Jalan Gatot Subroto Kav.96 Mampang Prapatan

IDR 100,000,000

7

Geber Ramadhan – fasting break and activities with orphan kids

Komunitas Berkah & Majalah Market Plus

IDR 20,000,000

8

Sunatan Massal – free circumcision to help kids in Pondok Pesantren

Pondok Pesantren Yatimku Laa Tahzan, Bintaro

IDR 20,000,000

9

Sentuhan Kasih Yohanes – fundraising program to help disabled baby named Yohanes

Yayasan Bhakti Luhur IDR 38,190,000

10

Financial Literacy program – educational program with topic about Financial management

Public (program participants)

IDR 112,000,000

b. Political Activities

In 2012, the Bank did not fund any political activity.


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R. Self Assessment Review on the Implementation of Good Corporate Governance

The composite score in the Self Assessment of Good Corporate Governance was calculated based on

Bank Indonesia Regulation by reviewing the implementation of its 11 (eleven) aspects. The results,

calculated as of December 31, 2012, are provided in the following table:

No Aspects for Assessment

Weight Rating Score Notes

1 Performance of Duties and Responsibilities by the Board of Commissioners

10% 2 0.20 The number of people and composition of Board members and composition were in adherence to PBI provisions. The Board was capable of making independent decisions and performed their duties in accordance to GCG principles. Meetings were conducted effectively and efficiently.

2 Performance of Duties and Responsibilities by the Board of Directors

20% 2 0.40 The competence, integrity and composition of the members of the Board of Directors were in line with the capacity and complexity of the business today although Bank noted on the composition between local and foreign nationality. Members of the Board of Directors were able to take action and make decisions internally. In performing their duties, efforts must be made to meet the principle of compliance and GCG. Meetings were conducted effectively and efficiently while decision making process still needed improvements on minutes of meeting.

3 Adequacy and Performance of Duties by the Committees

10% 2 0.20 The composition and competence of the members of the Committees were in adherence to PBI provisions. Committee meetings have been run and attended by members.

4 Managing Conflict of Interest

10% 2 0.20 Any potential conflict of interest was mitigated by enforcing strict company policies, binding all PTBC employees and other parties that cooperate with the Bank.

5 Implementation of Bank Compliance Function

5% 2 0.10 The Board of Commissioners and Directors committed to improve and uphold company's compliance to the prevailing rules and regulations. PTBC appointed the Compliance Director who passed the Fit and Proper Test held by Bank Indonesia. Compliance functions has been improved during the year


32 | P a g e

No Aspects for Assessment

Weight Rating Score Notes

6 Implementation of Internal Audit Function

5% 2 0.10 The implementation of Internal Audit Function was well-conducted in accordance to Standard Minimum established by SPFAIB.

7 Implementation of External Audit Function

5% 1 0.05 The implementation of External Audit Function was well-conducted by qualified independent Public Accountant.

8 Implementation of Risk Management and Internal Control Functions

7.5% 2 0.150 Risk Management will still and identify continuously and control Bank’s risk. The management actively monitors and controls Bank's risks and management actively supervises policy, procedure to keep Bank's internal condition sound.

9 Provision of Funds to Related Party and Large Exposures

7.5% 2 0.150 The implementation of provision of funds to related party and large exposures, including the decision making process, were conducted in adherence to Bank Indonesia Regulation on Legal Limit Lending

10 Transparency of Bank’s Financial and Non-Financial Conditions, Good Corporate Governance Implementation Report and Internal Report

15% 3 0.45 The Bank's financial and non-financial reports were informed to the public with transparency and easily accessed by stakeholders through various media outlets and the Bank's homepage. The Good Corporate Governance implementation report was reported in a timely and in accordance to PBI provisions. The Information Management System regarding Internal Report was in process to provide timely, accurate and complete information.

11 Bank Strategic Plan 5% 2 0.10 Bank's strategic plan has been prepared and approved by BOC and submitted to Bank Indonesia. The plan is as a guidance in carrying out banking business

Composite Score 100% 2.10 GOOD

The results of self-assessment in 2012 GCG produce a composite score of 2.10 which shows that Good Corporate Governance Implementation at PT Bank Commonwealth is deemed Good


33 | P a g e

Weakness and Causes

Referring to the composite rating which is shown good on the GCG Implementation, Bank noted

there are rooms for improvement. There’s some of Bank Indonesia audit finding that need Bank’s

attention related to:

1. The organization structure has not represented Bank’s governance structure since it has not

described function clarity, implementations and organ responsibility to support bank

effective business activity

2. Compliance function implementation is not optimal considering two commitments related to

reporting that are still outstanding since year 2011.

The above issues were committed to be closed in first semester 2013.

Additional Information

With regards to Prudential Meeting with Bank Indonesia on May 2013 regarding PTBC Risk Based

Bank Rating position December 2012, Bank Indonesia asses PTBC GCG Composite rating as 3

considering the persistence of Bank Indonesia audit finding related to GCG Implementation as per

September 2012 position such as BOC and BOD duties and responsibilities, Credit Risk Management

and transparency aspect with commitment deadline latest June 2013

GCG Implementation Strength

The implementation of GCG principles is strongly supported by the commitment of all employees,

Directors and Commissioners as well as the commitment of the controlling shareholders to

consistently support the implementation of good corporate governance in order to achieve the

mission and vision of the Bank as has been determined.


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S. Closing

Thus ends our Report of Good Corporate Governance Implementation. Furthermore, we expect Bank

Indonesia’s continuous guidance and instruction for the betterment and development of our bank in

particular and the banking world in general.

PT Bank Commonwealth

Geoffrey David Coates Antonio Da Silva Costa

Presiden Komisaris Presiden Direktur

Documents

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