1.

0 Introduction
According to the explanation that contributed by Justin Hawkins, David Blaine, Daniel
Nielson, and Tommy Tiernan (2006), the Guidelines on the Specimens Reports and
Financial statements for Licensed Banks (GP8) is set out the minimum requirements for
the presentation and disclosure of reports and financial statements of commercial bank in
Malaysia. First at all, Guidelines on the Specimens Reports and Financial statements for
Licensed Banks (GP8) was first introduced in year 1988 primarily to ensure the financial
institutions comply with the provisions of the Companies Act 1965 and the required
accounting standards. Jaffe, A.B. and R. N Stavins (1994) also explained that Guidelines
on the Specimens Reports and Financial statements for Licensed Banks (GP8) places the
primary responsibility for the preparation of financial statement on the Board that is
expected to develop a sound financial reporting structure to ensure the integrity and
reliability of its accounts.
Although Guidelines on the Specimens Reports and Financial statements for Licensed
Banks (GP8) recognize a self regulatory stance, Green, J. R. and N. L. Stokey. (1983)
believed that it is also less prescriptive, thus enabling the banking institution to have
some flexibility in disclosing their policies and reporting their financial performance as
well as business operations according to the specific circumstance pertaining to the
institution. It is agreed by Granovetter, Mark (1985) and he also explained that
Guidelines on the Specimens Reports and Financial statements for Licensed Banks (GP8)
is a very important set of regulatory guidelines pertaining to disclosure requirements. The
guidelines that proposed under Guidelines on the Specimens Reports and Financial
statements for Licensed Banks (GP8) requires financial institutions to disclose material
and exceptional facts to facilitate users in their assessment of the financial position and
performance of the financial institution.

Due to that, a systematic and intensive research will be planned and carried out to
investigate how far two of the local financial institutions, namely Ambank Berhad and
Maybank Berhads financial reports follow the disclosure requirements that been
proposed under Guidelines on the Specimens Reports and Financial statements for
Licensed Banks (GP8). All the discussion will be supported by various kinds of
examples.

2.0 Background Introduction of Ambank Berhad

According to the information that been written in annual report of Ambank Berhad year
2014, Ambank Berhad commenced operations on 1 April 1976, and in December 1983
became known as Arab-Malaysian Merchant Bank Berhad, a name by which they were
known for over three decades until our rebranding in June 2002. Today, they have grown
into a Group with staff strength of more than 12,000. With the extensive nationwide
branch network, ATMs, and Internet banking services, Ambank Berhad proud to
acknowledge that AmBank Group, as one of the largest financial services group in the
country, is only a brick and click away.
Apart of that, AmBank Group is one of Malaysias premier financial solutions Groups
with nearly 40 years of legacy in understanding Malaysian customers and provides a
wide range of both conventional and Islamic financial products and services, including
retail banking, wholesale banking, as well as the underwriting of general insurance, life
assurance and family takaful.
The Groups mission of Connecting, Growing and Outperforming accentuates our
commitment in connecting with customers, people as well as stakeholders and the
Groups continuous initiatives in growing to further cement our position in the industry as
we aspire to exceed expectations by consistently outperforming. This mission underpins
the Groups vision as Malaysias preferred diversified, internationally connected financial
solutions group. The recent repositioning of our brand Your Brand. Malaysias Bank.
AmBank. portrays us as a modern Malaysian diversified financial solutions partner that
understands and meets the diverse needs of modern Malaysians.

3.0 Background Introduction of CIMB Bank Berhad

As mentioned and explained in the annual report, CIMB Group is a leading ASEAN
universal bank, with arguably the largest Asia Pacific investment banking network. It is
also a world leader in Islamic finance. The Group is headquartered in Kuala Lumpur,
Malaysia, and offers consumer banking, wholesale banking, Islamic banking and asset
management products and services. It is the fifth largest banking group by assets in
ASEAN and, as at the end of 2014, has over 40,000 staff and approximately 13 million
customers. Products and services are complemented by partnerships and alliances with
various leading companies including AirAsia Indonesia, AIS, Howden and Sun Life
Malaysia. CIMB Group Holdings Berhad has been listed on the main market of Bursa
Malaysia since 1987 and was one of the largest companies at the end of 2014 with a
market capitalisation of RM46.3 billion. Total assets at the end of 2014 were RM414.2
billion, with total shareholders funds of RM37.4 billion and total Islamic assets of
RM61.3 billion. Major shareholders at the end of 2014 were Khazanah Nasional with
29.31%, Employees Provident Fund (EPF) with 14.65%, Kumpulan Wang Persaraan
(KWAP) with 3.58% and Mitsubishi UFJ Financial Group with 4.61%.
Apart of that, CIMB Group and its employees adhere to Bank Negara Malaysias Code of
Ethics BNM/GP8, which promotes proper standards of conduct and sound and prudent
business practices among financial institutions. As a custodian of public funds, a financial
institution has the responsibility to safeguard its integrity and credibility. In the business
of banking, the vital ingredient is confidence: confidence of the public in the safety of
their deposits, and confidence in the integrity and professional conduct of their bankers.

4.0 BNM / GP 8 Disclosure Requirements

According to the explanation that contributed by ustin Hawkins, David Blaine, Daniel
Nielson, and Tommy Tiernan (2006), Guidelines on the Specimens Reports and Financial
statements for Licensed Banks (GP8) disclosure requirements that been established and
fixed by Bank Negara includes few components. These components include:

Market risk policy

o This document aims to present the market risk management structure and
operation in order to ensure its proper functioning in the PINE
Conglomerate.

Credit risk policy

o This sample outlines a set of policies and procedures formalizing the
credit risk management process

Net Inter bank market transactions

o It is a market in which banks extend loans to one another for a specified
term. Most interbank loans are for maturities of one week or less, the
majority being overnight.

Dealing Securities
o It is a category of securities that includes both debt and equity securities,
and which an entity intends to sell in the short term for a profit that it
expects to generate from increases in the price of the securities.

Contingent liabilities
o It refers to liabilities that may be incurred by an entity depending on the
outcome of an uncertain future event such as a court case.

Off balance sheet items

o An asset or debt that does not appear on a company's balance
sheet. Items that are considered off balance sheet are generally ones in
which the company does not have legal claim or responsibility for.

Related party transactions

o A business deal or arrangement between two parties who are joined by a
special relationship prior to the deal.

Material disclosures

Loan loss reserves

o It

refers

to

accounting

entries

banks

make

to

cover

estimated losses on loans due to defaults and nonpayment.

Segmental analysis
o A component of a business that is or will generate revenues and costs
related to operations.

Net interest margins

o It is a measure of the difference between the interest income generated by
banks or other financial institutions and the amount of interest paid out to
their lenders (for example, deposits), relative to the amount of their
(interest-earning) assets.

Share of non interest incomes

o Bank and creditor income derived primarily from fees. Examples of noninterest income include deposit and transaction fees, insufficient funds
(NSF) fees, annual fees, monthly account service charges; inactivity fees,
check and deposit slip fees, etc.

Subordinated bonds
o It refers to debt which ranks after other debts if a company falls into
liquidation or bankruptcy.

Unsecured subordinated bonds

o It refers to debt which ranks after other debts if a company falls into
liquidation or bankruptcy.

At the mean time, the binary entries of the disclosure requirements under Guidelines on
the Specimens Reports and Financial statements for Licensed Banks (GP8) are as shown
in table below:
No Component
Binary Entries
1
Market risk policy
Disclosed = 1
2
Credit risk policy
Disclosed = 1
3
Net Inter bank market transactions
Positive = 1
4
Dealing Securities
Disclosed = 1
5
Contingent liabilities
Disclosed = 1
6
Off balance sheet items
Disclosed = 1
7
Related party transactions
Disclosed = 1
8
Material disclosures
Bad news = 0
9
Loan loss reserves
Disclosed = 1
10
Segmental analysis
Disclosed = 1
11
Net interest margins
Rising = 1
12
Share of non interest incomes
Rising = 1
13
Subordinated bonds
Positive = 0
14
Unsecured subordinated bonds
Positive = 0
Table 1.0 Disclosure Requirements under Guidelines on the Specimens Reports and
Financial statements for Licensed Banks (GP8)

5.0 Analysis of Conformity of BNM / GP8 for Ambank Berhad

According to the analysis results, most of the disclosure requirements under Guidelines
on the Specimens Reports and Financial statements for Licensed Banks (GP8) were
complied in the annual report. The detail of the analysis of conformity of BNM / GP8
Disclosure requirements for Ambank Berhad as discussed below:
No
1

Component
Market risk policy

AMBANK BERHAD
Undisclosed market

Binary Entries
0

risk policy. However,

the annual report did
disclose market risk
management for
2

Credit risk policy

Net Inter bank market transactions

Dealing Securities

Contingent liabilities

Off balance sheet items

Related party transactions

Ambank Berhad.
Disclosed. Amban
Berhad did disclose
the credit risk policy
in the annual report
respectively.
Did not disclose in the
annual report.
Disclosed = 1. The
annual report did
mention how to deal
and manage the
securities in the bank.
Disclosed. Ambank
Berhad did disclose
the contingent
liabilities and
contingent assets in
the annual report.
Disclosed. Ambank
Berhad did disclose
the off balance sheet
items in the annual
report.
Disclosed. Ambank
Berhad did disclose
related party

0
1

10

11

12

13

14

transaction under 43 in
the annual report.
Material disclosures
In the annual reports,
Ambank Berhad did
not disclose any
material disclosures.
Loan loss reserves
Disclosed. Ambank
1
Berhad did disclose
the loan loss reserve in
the annual report.
Segmental analysis
Disclosed. Ambank
1
Berhad segmental
reporting is based on
retail banking,
business banking,
investment banking,
corporate and
institutional banking,
insurance, markets
with minor segment
aggregated under
group functions and
others.
Net interest margins
The net interest
1
margins of Ambank
Berhad was increased
from RM2, 218, 448,
000 to RM2, 271, 927,
000
Share of non interest incomes
The share of non
1
interest incomes of
Ambank Berhad was
increased.
Subordinated bonds
The subordinated
0
bonds of Ambank
Berhad in year 2014
are RM21, 754, 000.
Thus, it is positive.
Unsecured subordinated bonds
The unsecured
0
subordinated bonds of
Ambank Berhad in
year 2014 are RM548,
526, 000. Thus, it is
positive.
Table 2.0 The Analysis of Conformity of BNM / GP8 for Ambank Berhad

According to the table 1.0, the total scored point for Ambank Berhad for the disclosure
requirements under Guidelines on the Specimens Reports and Financial statements for
Licensed Banks (GP8) was 9. Most of the items that been required under Guidelines on
the Specimens Reports and Financial statements for Licensed Banks (GP8) was complied
under the annual report of Ambank Berhad

6.0 Analysis of Conformity of BNM / GP8 for CIMB Bank Berhad

According to the analysis results, most of the disclosure requirements under Guidelines
on the Specimens Reports and Financial statements for Licensed Banks (GP8) were
complied in the annual report. The detail of the analysis of conformity of BNM / GP8
Disclosure requirements for CIMB Bank Berhad as discussed below:
No
1

Component
Market risk policy

CIMB BERHAD
Binary Entries
The market policy of
1
CIMB

BANK

disclosed.
to

the

was

According
report,

policy

The

prescribes

consistent Group-wide
framework to manage
market risk across all
CIMB entities.
It serves as a primary
reference
for

the

document
Group

in

establishing a sound
operating environment
for

market

risk

activities

that

is

consistent

with

the

governance

and

control standards of
the

Group

Risk

Appetite
2

Credit risk policy

Statement.
Disclosed. CIMB

Net Inter bank market transactions

Dealing Securities

Contingent liabilities

Off balance sheet items

Related party transactions

Material disclosures

Loan loss reserves

10

Segmental analysis

11

Net interest margins

Bank Berhad did

disclose the credit risk
policy in the annual
report under section
10.1
Did not disclose in the
annual report.
The annual report did
mention how to deal
and manage the
securities in the bank.
Disclosed. CIMB
Bank Berhad did
disclose the contingent
liabilities and
contingent assets in
the annual report.
Disclosed. CIMB
Bank Berhad did
disclose the off
balance sheet items in
the annual report.
Disclosed. CIMB
Berhad did disclose
related party
transaction under
section 42 in the
annual report.
In the annual reports,
CIMB Bank Berhad
did not disclose any
material disclosures.
Disclosed. CIMB
Bank Berhad did
disclose the loan loss
reserve in the annual
report.
Did not disclose in this
annual report.
CIMBANK Bank
Berhad put all account
in one lump sum and
did not separate into
different segment.
The net interest

0
1

margins of CIMB
Bank Berhad was
decreased from
RM2,850 to RM2,850
12
Share of non interest incomes
The share of non
0
interest incomes of
Ambank Berhad was
decreased from RM5,
124, 826, 000 to RM4,
029, 098, 000
13
Subordinated bonds
The subordinated
0
bonds of Ambank
Berhad in year 2014
are RM800, 000, 000.
Thus, it is positive.
14
Unsecured subordinated bonds
The unsecured
0
subordinated bonds of
Ambank Berhad in
year 2014 are RM4
million. Thus, it is
positive.
Table 2.0 The Analysis of Conformity of BNM / GP8 for CIMB Bank Berhad

According to the table 2.0, the total scored point for CIMBK Bank Berhad for the
disclosure requirements under Guidelines on the Specimens Reports and Financial
statements for Licensed Banks (GP8) was 7. Most of the items that been required under
Guidelines on the Specimens Reports and Financial statements for Licensed Banks (GP8)
was complied under the annual report of CIMB Band Berhad

7.0 Conclusion

As a conclusion, the Guidelines on the Specimens Reports and Financial statements for
Licensed Banks (GP8) are set out the minimum requirements for the presentation and
disclosure of reports and financial statements of commercial bank in Malaysia. The
guidelines that proposed under Guidelines on the Specimens Reports and Financial
statements for Licensed Banks (GP8) requires financial institutions to disclose material
and exceptional facts to facilitate users in their assessment of the financial position and
performance of the financial institution. According to the research outcomes, both of the
company namely Ambank Berhad and CIMB Bank Berhad achieve majority of the
requirements under Guidelines on the Specimens Reports and Financial statements for
Licensed Banks (GP8) that been set up by Bank Negara Malaysia. Thus, the annual report
that produced by both banks namely Ambank Berhad and CIMB Bank Berhad was
reliable and comply with Guidelines on the Specimens Reports and Financial statements
for Licensed Banks (GP8)

8.0 Reference

Fukuyama, Francis. (1995).Trust: The Social Virtues and the Creation of Prosperity,
Hamish Hamilton: London
Granovetter, Mark (1985). Economic Action and Social Structure: The Problem of
Embeddedness, American Journal of Sociology 91:3, p481-510
Green, J. R. and N. L. Stokey. (1983). "A Comparison of Tournaments and Contracts",
Journal of Political Economy, 91, 349-364.
IEA (2007) Mind the Gap- Quantifying Principal-Agent Problems in Energy Efficiency
Justin Hawkins, David Blaine, Daniel Nielson, and Tommy Tiernan (2006). Delegation
and Agency in Internaitonal Organizations. Cambridge University Press.
Jaffe, A.B. and R. N Stavins (1994). The energy-efficiency gap - What does it mean?, in
Energy Policy 22 (10) 804-810