Governance

Governance

5

 

Governance and Compliance

 Al Baraka Bank Egypt applies and complies with the sound Governance Rules which constitute the optimal method for the determination of the distribution of the “Rights and Responsibilities” among the various parties within the Bank (the Board of Directors; the Executive Management; the Shareholders; the Depositors; and other Interested Parties). Governance is concerned with the necessary Rules and Procedures for taking Decisions as concerning the Bank’s Affairs as well as the determination of the Mechanism to be applied by the Board of Directors together with its Committees branching therefrom, and by the Senior Management, for laying down the Targets and the Means for the achievement thereof; in addition to the Performance Control, the direction and handling of the Bank’s affairs together with its daily activities, taking into account the assumption of responsibility towards Shareholders, besides taking into consideration the protection of the interests of Depositors and of the other interested parties, while ensuring that the Bank’s activities are run in a safe and sound method, and within the  framework of Compliance with the Laws and Parameters in force, and the application of principles of disclosure and transparency.   

The Bank’s Board of Directors

The Bank’s Board of Directors consists of top competent personalities having extensive expertise and skills coupled with the necessary and appropriate qualifications. It is constituted as a whole from a blend of such basic competencies that would ensure effective and highly efficient performance, and who should not be - less in number – than (11) members nor more than (15) Members. The Board is to be presided over by a non-executive Chairman, while the Vice-Chairman of the Board shall assume the functions of the Bank’s Chief Executive Officer.

The Duties and responsibilities of the Board of Directors as a whole, as well as those of the Board Chairman and of the Chief Executive Officer, are defined and ratified in the Governance Manual. The Proper Balancing and Independence Principle should be applied in the selection of the Board Members. The Board shall create appropriate Channels for the effective inter-communication between the Board Members, as well as between the Board and the Bank’s Senior Management and the responsible Audit and Control Officers.

All Board Members can get accurate and clear information at the proper time on all relevant matters, and can also avail themselves of, and obtain the advice from the services of the Bank’s legal Officer and the Bank’s Secretary who shall, together with the Head of the Compliance Department, shall be responsible for ensuring the application of the Board Procedures and its abidance by all rules and regulations in force.

An official qualifying course shall be arranged for each new Board Member upon joining the Board of Directors, including a briefing on the Governance Policy of the Bank’s Companies coupled with providing him with a copy thereof for reference, and including also the arrangement of meetings to be held with the other Board Members and with the Secretary of the Board, besides the presentation of the necessary programs for the continual culturing and evolution of Board Members, so as to ensure their being aware of the most up-to-date innovations and developments within the Banking Industry and Sector, both domestically and Internationally, so as to enable them to undertake their tasks as Board Members.

The Board of Directors with apply the Governance Policy, starting by the establishment of the Governance Culture, the approval of the Ethical Standards and the Professional Conduct Pact for both the Staff and the Senior Management of the Bank, up to the taking of the necessary decisions for spreading the objectives and the conduct that should be followed within the Bank. In parallel with all the foregoing, the Board has to maintain and protect the interests of the Shareholders and the Depositors, besides the  approval of the standards and values that reflect the Bank Policies which should be observed by all of the Bank’s personnel together with its Senior Management as well as by the Board Members, in addition to the Strategically Orientation of the Bank, the determination of the general targets of the Executive Management, and the follow-up of their implementation, and asserting the efficacy of both the Internal Audit and the Risk Management Systems, in such a manner that would maintain the Bank’s Image.

The Bank’s Strategic Shareholder – Al Baraka Banking Group

Al Baraka Banking Group is a Bahrain Joint Stock Company Licensed as an Islamic Wholesale Bank by the Central Bank of Bahrain, and listed on Bahrain Bourse and Nasdaq Dubai stock exchanges. It is a leading international Islamic bank providing its unique services to around one billion people and with Standard and Poor's investment grade long term counterparty credit rating of BBB- / A-3 (Short Term). Al Baraka Banks offers their banking and financial products and services strictly in accordance with the principles of the tolerant Islamic Shari'a within the retail, trading Banks and the investment field, in addition to the treasury services. The authorized capital of the Group is US$1.5 billion, while total equity amounts to about US$1.8 billion.

The Group has a wide geographical presence in the form of subsidiary banking Units and representative offices in fifteen countries, which in turn provide their services through more than 400 branches. Al Baraka is currently having a strong presence in Jordan, Tunisia, Sudan, Turkey, Bahrain, Egypt, Algeria, Pakistan, South Africa, Lebanon, Syria, Indonesia, Libya, Iraq and Saudi Arabia

Performance Evaluation
  • Coping with the Governance Policy approved for our Bank, the Bank has taken certain official procedures with the purpose of enabling the Board of Directors to undertake – in accordance with the approved formats – an official evaluation of its performance as a whole body as well as of the performance of its members as individuals, and of its Committees branching therefrom.
  • The Board of Directors has held four Meetings attended by all of the Board Members (100% by each, with the exception of one member whose attendance reached only 75%)
  • The Board of Directors has held one Meeting for the non-executive Board Members, with the attendance of the Chairman of the Board, but, without being participated in by the Executive Members.
Disclosure & Transparency
The Bank applies the “Disclosure and Transparency Principle” in all of its business, within the framework of the Rules issued by the Control Bodies and within the Requirements of the Banking Standards. This can be achieved by availing data and information through all visual and audible Media Means, as well as on our Website and in the Annual Financial Report of the Bank, in order that all information and conditions; would be available for all of its clients and for the Public, as regulated and defined by the Disclosure and Publicity Policy approved for the Bank.
Conflict of Interests

The Board of Directors shall approve the Policies relating to the Management of any conflict of interests, and shall apply such policies to the Board of Directors as well as to the Executive Management and the Staff, and to such other Bodies having direct and/or indirect relevance. Any of the Bank’s operations that may involve any conflict of interests should be presented to the Board of Directors for approval. The Annual Financial Report of the Bank should contain a detailed clarification of any operations or transactions that may constitute any conflict of interests.

 The Social Responsibility:


The Social and environmental responsibility constitutes one of the strategic determinants adopted by our bank for attaining the best practices on both the domestic and the Regional levels.

  • The Bank seeks the provision of high quality financial and banking services for all categories of the Community, governed by our abidance by the principles of the tolerant Islamic Shariá, which give due attention to the environment and to the Community, and urge the achievement of sustainable results, based on the confidence springing out of the satisfaction of both clients and Shareholders, besides deepening the sense of loyalty and belonging among all of the Bank personnel; and the diligent observation of the environmental and Community requirements.
  • Our Bank undertakes to be committed to the protection of the Human Rights and the acknowledgment of the principles of the Staff rights and the participation in combating financial crimes.
  • The bank has - since years ago and through the Fund of Zakah and Charity Donations established and equipped Medical Units at the University Hospitals, including neurosurgery and spinal unit, intensive care unit and dialysis unit. These Units provide their free services to thousands of poor and needy patients, while the Bank undertakes a periodical follow-up of such Units for ensuring the continual proper performance thereat.
  • The Bank has appointed since its inception a Medical Responsible charged with safeguarding the health and safety of all of the Bank personnel. This has been supplemented by contracting with many specialized medical centers.
  • The Bank undertakes the distribution of symbolic in-kind gifts for all of its personnel at various occasions, besides sponsoring their sport activities.
  • The Bank insures its clients and those frequenting the Bank’s Units against Civil Risks.
  • The Bank observes, when granting its financing, that such financing should be for such project that would contribute to covering actual and necessary needs of the Community, without contributing to the financing of activities contradicting with religious rulings or that involve threatening the community or the environment.
  • The Bank gives particular attention for supporting the Community by the provision of contributions and sponsorship of activities, through the Fund of Zakah and Charity Donations of Al Baraka Bank Egypt, for students and individuals, besides the granting of annual rewards and incentives to those who recite of Glorious Quran, by heart.    



Board Committees:


Governance and Nomination Committee


The Committee consists of three non-executive Board Members, and is basically concerned, in addition to other tasks, with periodical evaluation of the Bank’s Governance System, the proposal of suggestions for any appropriate changes in the approved Governance Policies, the submittal of suggestions and periodical Supervision on the policies and practices relating to Governance, and ensuring the Bank’s compliance with the optimal practicing standards as well as with the applicable Laws and Legislations, and with the relevant control instructions and directives of Al Baraka Banking Group, in addition to what may be connected with the  Nomination of the independent Members for the Board, and the Appointment, the Renewal of Membership or the alienation of a Board Member.

The Executive Committee:


In accordance with the provisions of article 82 of Law No 88 for 2003, this Committee consists of seven Members chaired by the Vice-Chairman of the Board of Directors and Chief Executive Officer. Its functions are as provided for by Article 29 of the Executive Regulations of the same Law, in addition to other functions as may be assigned to it by the Board of Directors particularly to study and take decisions as concerning the financing transactions and the facilities to be granted by the bank, within the powers conferred by the Board of Directors, besides giving opinion as regarding the reports on the internal credit classifications of clients; in addition to giving opinion on the Organizational and Functional Structure of the Bank.


The Audit Committee:


Under the provisions of Article 82 of Law No 88 for 2003, this committee consists of three non-executive Members of the Board of Directors. Its functions, as provided for by Article 27 of the Executive Regulations of the Same Law, include mainly the assistance of the Board of Directors for the handling of its Supervisory responsibilities, and ensuring the independence of the Bank’s Internal Auditing as well as of the external Auditors of the Bank; besides the integrity and honesty of the Bank’s Financial Data, and also ensuring the Bank’s commitment to afford an effective internal auditing; in addition to any other additional functions that may be assigned to the Committee by the Board of Directors. The Committee meetings may be attended by the Head of the Bank’s Internal Audit and the Follow-up Sectors.

The Risks Committee:


This Committee consists of three non-executive Board-Members, and is attended in its meetings by the Head of the Bank’s Risk-Sector.
The Committee is concerned with the Follow-up of the Bank’s abidance by the Strategies and Policies approved for the Bank, and the Submittal of Suggestions in respect thereof, especially in connection with the strategies related to the Bank’s Capital and to the Management of Credit-Risks, Liquidity Risks, Market Risks, Operational Risks, and the Compliance and Goodwill Risks; besides the development and implementation of a framework for the operations of the Risks and Control Departments of the Bank, and the follow up of their functioning and the assessment of the impact of such risks on the achievement of the Bank’s Objectives, together with ensuring the application of effective Policies, Strategies, and Manuals for the management of all types of Risks encountered by the Bank, as well as assuring the effectiveness and efficiency of the Risk Management at the Bank, through the identification, measurement, monitoring, control, and the minimization of the Bank’s exposure to risks.

The Salaries and Remunerations Committee:


This Committee consists of three non-executive Board Members, in addition to the Bank’s Chief Executive Officer, and is to be chaired by an independent non-executive Board Member. The Committee is concerned with ensuring an independent supervision on all elements of the salaries as well as on the structure of the agreed-upon other incentives, including the determination of the Allowances of the Senior Executives of the Bank; the submittal of suggestion as concerning the Board Members’ allowances; besides giving due attention to the Control Jobs at the Bank (the Risk Dept., the Compliance Dept., and the Internal Audit Dept.), so that their variable wages would reflect the level of the Bank’s performance together with the Risks to which the Bank has been exposed. Generally, the Committee has as its function the revision, the development and the updating of the Policies relating to the nominations and the remunerations within the Bank for the purpose of the evaluation thereof and the assessment of their comparability with those of other institutions; and of ensuring the Bank’s ability to attract and retain the best elements.
A “Succession Plan” has been approved for the Bank, with the purpose of covering the risks of staff Rotation, and affording the availability of a Second Line and a Third Line of leaders having the ability and Efficiency to handle business effectively in case a key post becomes vacant.

The Fund of Zakat Committee:

Fund of zakat and Charity Donations of Al Baraka Bank Egypt was established pursuant to the decision of the Board of Directors held on 29 April 1994 with its head office located at the head office of the Bank. the Funds of the fund and its accounts are independent of the Funds of the Bank and its accounts.

Members of the Bank’s Senior Executive Management
Mrs. Zeinab Mohamed El-Bahey Al-Safty,
Afull-time consultant to C.E.O
Mr. Sami Fathi Mohamed Abd-el-Jawwad,
Deputy C.E.O
Mr. Salah Hassan Swefi Ali,

C.E.O Internal Audit and the Follow-up Sectors

Mr. Hazem Mohamed Mustafa Mohamed,
C.E.O Marketing, Financing, and Investment Sectors

Mr. Mahmoud Mohamed Saad Maher,
In Charge of Legal Sector

Mr. Mohamed Reda Ahmed Mostafa,
Consultant of  Foreign Operation Sector

Mrs. Mushira Fathi Dakrouri,
In charge of the Risk Sector

Mr. Ali Ismail Ali Ismail,
Consultant of International Relations &Accounts Investments Sector

Mr.Tarek Salah ELDIN EL Defrawi
In charge of the Branches and central units sector


Dr.Adel Mohamed Ahmad EL alim
In charge of information &technology sector

 Mr. Emad Mohamed Shalabi Mohamed,
In charge of the General Department for Compliance.
 
 Compliance Department


The Organizational Structure of the Bank includes an independent Central Control Department, directly subordinate to the Audit Committee, Branching from the Board of Directors. There has been appointed in charge of the said Department, a Compliance Officer, having distinguished efficiency, appropriate expertise, and high ability for contact and communication with all of the Bank’s Officers and Staff. The Department undertakes its functions in a professional and effective manner for the identification, the evaluation and the control of Compliance Risks which may be reflected in Control legal penalties, financial loss, or the loss of the Bank’s Image as a result of its failure to abide by the Laws and Regulations, or by the Ethical Conduct Rules of the Profession. The Department exercises a crucial role, particularly the application of the Rules, Instructions and Systems concerning the Anti-Money-Laundering and Terrorism Financing. No Banking Business may be exercised by this Unit.
The Compliance Department receives full support from the Board of Directors and the Senior Executive Management, for the free and independent performance of its functions. Appropriate Policies and work system have been prepared and approved for its performance of its independent activity as one of the Internal Control Units. It has to prepare Quarterly and Annual Reports and raise them directly to the Audit Committee branching from the Board of Directors and to the Board of Directors, besides referring a copy thereof to the Senior Management for information. There may also be submitted with such Reports, any suggestions for any amendments to be introduced to the Policies and Work Systems, so as to keep commensurate with the developments witnessed by the Bank.
The Compliance Department cooperates with the Human Resources Sector for the development and outspread of the Compliance culture among all of the Bank’s personnel and their training in this respect; besides the participation in the development of Training Programs associated therewith.

Risk management:


Risks constitute a key component of the Financial and Business Activities of the Market Economy. Risk Tolerance and/or Risk Conveyance represent two basic characteristics of the Banking Activity. The handling Risk Management is essential, taking into account that the Banking Business evolves and gets more and more complicated, notwithstanding the existence of strict Control Instructions. The matter necessitates the development and application of such Policy systems that would enable the identification, the measurement, the monitoring, and the proper Management of Risks, with the objective of controlling and the alleviation or the minimization of such Risks to restrict them within tolerable limits in accordance with the bank’s “Risk Appetite”, in view of the acceptable Risk Limits as approved by the Board of Directors.
Owing to the diverse and sophisticated activities pursued by our Bank, the Bank would be normally exposed to diversified risks, and to the fact that Risk Tolerance has thus become basical for the financial activity, it is essential then to analyze and evaluate some, or a group taken together of the Risks. It is through such analysis and evaluation that the Bank can decide the acceptance and toleration of certain risks or the transmittal of their impact to other parties. In all cases, the Bank seeks to achieve an acceptable balance between Risk Tolerance and the anticipated return of such toleration.
Certain Risk Management Policies have been developed for the Bank (Credit Risk; Market Risk; Liquidity Risk; Return-Rates Risk; and Operational risks), including the identification, measurement, evaluation, analysis and control of Risks; besides the determination of limits thereto and controls thereon, through diverse methods and continually updated information systems, in accordance with the approved relevant Risk Acceptance Policy, in close collaboration with the Bank’s Operational Units. The Policies and Risks Management system are periodically revised and amended so as to cope with the changes taking place in the markets, products and services, together with the best modern applications.
The Risk Management Sector of the Bank undertakes a periodical follow-up of the extent of the Bank’s Compliance with the maximal acceptable Risk limits, and with the actual extent outstanding within the Bank. This can be achieved through Periodical Reports to be presented to the Risk Committee emanating from the Board of Directors, for approval, so as to be raised thereafter to the Board for information as well as for taking what it may deem appropriate in respect thereof. The Sector applies automated system for the determination of the creditworthiness of all of the Bank’s clients whether being banks and correspondents, or being corporations and companies, or small-scale economic activities clients, or retail-banking clients.
The bank adopts extremely cautions policies as regards the Liquidity Control, and applies higher ratios than those normally required for control purposes. Such policies include an approved plan and a Permanent Committee for Liquidity Risk Management under exceptional circumstances, while pursuing specialized methods for the Market Risks Management. The Bank has also to conduct a periodical appraisal of its investments, besides laying control on the Cash-Flows, through the Management of its Assets and Liabilities in order to achieve at all times the Balance required, with the purpose of the maximization of the Capital’s profitability, and the provision of adequate liquidity for the all-time meeting of requirements, and the consolidation of the Bank’s approved Strategy, besides the avoidance of entering into High-Risk Investments. It is to be noticed that the Bank does not maintain presently an Investment Portfolio for trading purposes.     


Shari’a Operational Risks


Our Bank, Al Baraka Bank Egypt, exercises all Banking services and operations together with the Commercial and Investment Business, as authorized for commercial Banks, on non-usury basis, in conformity with the provision and principles of  the Islamic tolerant Shariá and under the relevant applicable Law.
Our Bank belongs to Al Baraka Banking Group, (the Bank’s Principal Investor), as being a Unit of the Group which stands as one of the leading Banking Entities in the World, abiding by the application of  the provisions and principles of the Islamic Shariá in all of its transactions.
This is further evidenced by the Organizational Structure of the Bank, which embodies a Shariá Supervisory Board, directly linked to the Bank’s Board of Directors, and consists of three eminent Scholars specialized in Islamic Shariá and the Islamic financial transactions, and recognized and acknowledged for their sound Religious opinions (Fatwa) and deeply versed in the Jurisprudence of transactions. The Shariá Supervisory Board undertake the study and scrutiny of the Contracts and the Practical Agreements Forms, the Procedural and Technical Manuals together with the [Standard] Forms used in the Bank [daily] activities, in addition to any innovated products, as concerning the Shariá point of view. This Board issues Decisions, Recommendations, Religions opinions (fatwa) in their final form; its Decisions are binding.
The Board undertakes the examination and revision of the Bank operations, besides checking the Bank’s revenues and their sources through the Quarterly Financial Positions before having been approved, and submits its Reports therein at its Periodical Meetings, in addition to its independent Annual Report as concerning the Bank abidance by all Shariá requirements, for publication, accompanying the Bank’s Annual Financial Report.
For the further enhancement of this Role, the Bank has appointed a Shariá Internal Auditor, for the follow-up, and the implementation of all Fatwas, Rulings and Recommendations, emanating from the Shariá Supervisory Board, as well as for conducting periodical field visits to all Branches of the Bank to ensure abidance of all daily business carried out at the Bank, thereby; in addition to the clarification and rapprochement of  variant points of view between Shariá rules and the actual problems of their application. The aforesaid Auditor presents his Reports to the Shariá supervisory Board as well as to the Senior Management of the Bank. He is empowered to draw the attention of the concerned bodies for rectifying the discovered Shari’a mistakes, which can be rectifies forthwith

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