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Corporate Governance

Framework

Corporate Governance at banks is of paramount importance to ensure sound practices, promoting transparency and efficiency, in consistency with the law. The Board and the management of NBK Egypt are committed to the long-term success of the Bank and generating stable and sustainable returns for the shareholders. Standards of Corporate Governance, in particular those defined by Central Bank of Egypt and other regulatory bodies, are fundamental in supporting NBK Egypt to facilitate better execution of activities and creating sustainable shareholder value, without overlooking the interests of other stakeholders in the Bank and the business community at large.

 

NBK Egypt is continuously developing its Corporate Governance framework to meet the highest standards by leading professional bodies and regulatory authorities. The Bank’s governance framework outlines a consistent approach across the Bank infused into its culture and will be reviewed on a periodic basis by the Board of Directors. NBK Egypt as a whole, along with the Board, Senior Management and employees are collectively responsible for integrating the Corporate Governance framework into their day to day activities. The Board sets the “tone at the top”, the management ensures that the Corporate Governance framework is implemented through a robust set of policies and procedures, and employees follow the Corporate Governance requirements in their day-to-day business.

Structure

The Corporate Governance structure of NBK Egypt is developed and approved by the Board of Directors. The structure will be reviewed on an annual basis and updated to reflect emerging trends relevant to the Bank’s business and development. To download the high-level structure supporting the Governance framework - click here

Board of Directors

The board of directors is responsible for setting the strategic objectives of the bank and its risk appetite, corporate governance framework, active contribution in the bank organization, bearing responsibility related to the bank's financial soundness, safeguarding the interest of shareholders, depositors and other stakeholders, focusing on risk management and governance, enhancing internal control systems and internal and external audits.

The board is currently composed of 8 members; 5 of which are non-executive members (including one independent member) and 3 executive members, with diverse backgrounds and experience.

 

The Board of Directors Duties and Responsibilities:

1- Approve the bank's strategic objectives and goals, supervise their implementation and ensure they are properly communicated to the bank's staff.

2- Approve the bank's organizational structure, and define both the limits of authority for line managers and the delegation of authorities matrix.

3- Selection and appointment of the bank's senior executives and supervising their performance. Moreover having the power to replace them if required after taking the opinion of the CEO.

4- Supervising senior management and following up on their performance in light of the accountability of the management and availability of all tangible and important information (financial and administrative reports) in a timely manner, to properly assess management's performance.

5- Carry out periodical meetings with the bank's senior management and the bank's internal audit department to review and discuss the applied policies and procedures and follow up on the progress in terms of executing the bank's strategic goals. The board's non-executive members are required to meet at least once a year in the presence of the chairman and without the board's executive members.

6- Control and supervise the overall bank's activities without it being involved in the executive practices as it is the responsibility of the senior management. This is via periodical progress reports and regular meetings.

7- Control and manage any possible conflict of interest related to the bank's management, board members and shareholders including the misuse of the bank's assets and abuse of related parties' transactions. Also setting the gift policy for the chairman, board members and bank staff. The board is obliged to undergo proper disclosure (including to the CBE) in matters related to the bank's conflict of interest policy and transactions with related parties'.

8- Approve and periodically review the bank's disclosure policies in terms of the legal and legislative framework and international standards.

9- Periodical assessment regarding the effectiveness of the bank's corporate governance policy and practices and the bank's other internal control functions (internal audit, risk management and compliance).

10- Spreading good corporate governance culture in the bank and encouraging all the staff and senior management in its effective application. In addition to encouraging the bank's clients to apply corporate governance rules in their institutions.

11- Maintaining the proper perception and understanding of the control and legal environment surrounding the bank in compliance with the laws and control disciplines and necessity of continuous dialogue between the board members and the control entity for the mutual understanding and sound financial performance of the bank.

12- Allocation of appropriate time and effort to soundly accomplish the board's responsibilities.

13- Approve the bank's overall strategies and policies related to the overall risk profile of the bank (credit, market, operational and compliance) with their periodical review and reassessment. In addition to the risk appetite of the bank and the necessary actions to identify, measure, follow up and control these risks in light of the set strategies and policies.

14- Approve and review the bank's IT policies particularly in terms of confidentiality and maintaining the security of the information of the bank and its clients.

15- Approve and review periodically the bank's remuneration policy to reinforce the bank's effective and prudent risk management.

16- Act continuously to achieve the interests of the shareholders, staff, depositors and any other stakeholders and any member avoiding conflict of interest by refraining from or being involved in any decision that may result in a conflict of interest with respect to the member's duties and obligations.

17- The board should meet at least once every two months, based upon the invitation of the chairman of the board or whenever the chairman deems it necessary. The CEO may request the chairman for a board meeting accompanied by the agenda desired to be submitted.

18- The members of the board are not to be absent more than one third of the number of board meetings held during the year; otherwise the chairman is to notify the general assembly to take suitable action.

 

For NBK Egypt's current BOD composition and members' biographies - Click here

Board Committees

The board is supported by five committees. The mandate and responsibility of each committee are defined and delegated by the board. These are documented in comprehensive charters which list the detailed terms of reference for each committee. The committees are mostly formed with the non-executive members of the board holding relevant experience to the scope of the committee. These include: 

  • Board Audit Committee
  • Board Risk Committee
  • Board Remuneration Committee 
  • Board Corporate Governance  and Nomination Committee
  • Board Credit Committee  

 
1-Board Audit Committee

Role:

The Board Audit Committee (BAC) is responsible for overseeing the bank’s internal control framework. The BAC shall perform an assessment of the effectiveness of the internal control framework on a periodic basis through the evaluations carried out by the bank’s internal audit. Also, the BAC shall report to the board the results of the assessment on the adequacy of existing controls and processes.

The committee is also responsible for the recruitment, dismissal and performance evaluation and remuneration recommendation of the head of internal audit. In conducting its role the committee coordinates closely with the Board Risk Committee, the Board Corporate Governance Committee and Remuneration Committee.

Furthermore, the BAC is responsible for the monitoring of the performance of External Auditors and coordinating with them on subjects related to audit and financial statements.

The BAC is responsible for the submission of  the committee’s meeting report to Central Bank of Egypt on a quarterly basis, including the committee’s most important observations and actions taken in addition to any other relevant issues.

Members:

It is composed of 3 non-executive board members.

Quorom:
A quorum shall be a minimum of 2 members with the head of compliance and head of internal audit to be invited as attendees.

2-Board Risk Committee:

Role:

The Board Risk Committee (BRC) is responsible for the review and monitoring of the bank’s risk profile, risk strategy, risk appetite and risk controls. It also administers and manages the bank’s capital requirements by ensuring that the bank maintains an appropriate level and quality of capital and liquidity in line with its activities. The committee also reviews the ICAAP and stress test scenarios and result of the bank.

In addition the committee reviews the compliance risk processes, anticipates the impact of regulatory change, ensures accountability of risk management, and flags any high-risk actions/transactions as required internally and by the regulators.

The committee is also responsible for the recruitment, dismissal and performance evaluation and remuneration recommendation of the Chief Risk Officer.

The BRC is to periodically review and provide suggestions with respect to the risk management strategies and policies related to capital, liquidity, credit risk, market risk, operational risk, compliance risk and reputation. Thus, developing the policies and procedures to manage all types of risks. The board approves these strategies after adding the agreed upon amendments.

Moreover, the BRC is responsible for reviewing the risk management structure role and responsibilities recommended by the bank’s senior management and submitting their recommendations to the board for their review and approval.

Members:
It is to be composed of mostly non-executive board members with a minimum number of members to be three. The chairman of the committee is to be a non-executive board member.

Quorom:
A quorum shall be a minimum of two members non-executive and Chief Risk Officer will be invited as an attendee.


3-Board Remuneration Committee: 

Role:

The Board Remuneration Committee (BREC) is responsible for the drafting of clear remuneration policies for the bank, reviewing and developing them on periodical basis to be in line with the level of risk that the Bank is exposed to and its specific criteria. The board is obliged to approve and disclose these policies including the total aggregate amount of the bank‘s top 20 highest salaries and incentives which includes their salaries, allowances, incentives and any other financial benefits.
In setting the bank’s remuneration scheme and policies it is vital that they are in line with the bank’s long term goals and in particular taking into consideration that the rewards of the committee members  and senior management are not be linked to short term goals.

The BREC is also responsible for determining the size the bank’s variable wages and the capability of setting a cap for it and the method of distribution among the bank’s departments based on the size of risk especially liquidity risk and the capital required to cover this risk.

The BREC is responsible for deciding on the bank‘s senior executives packages and providing the suggestions for the board members packages (including all financial remunerations as salaries, incentives and intangible benefits) bearing in mind the goals expected to be achieved.

Special attention should be given to the internal control functions of the bank being risk department, internal audit department and compliance in terms of rewarding their performance objectively and determining their remunerations while bearing in mind the independency of such functions.

The BREC is responsible for drafting clear remuneration policies for the bank, reviewing and updating them on periodical basis to be in line with the level of risk that the bank is exposed to. The board is obliged to approve and disclose these policies including the total aggregate amount of the bank‘s top 20 highest earners which includes their salaries, allowances, incentives and any other financial benefits.

Members:
It is composed of 3 non-executive board members.

Quorum:
Shall be a minimum of 2 members 

4- Board Corporate Governance and Nomination Committee: 

Role:

The Board’s Corporate Governance & Nomination Committee (BCGNC) supports the board in the review of the bank’s corporate governance principles and practices at regular intervals. It is responsible for monitoring the robustness of the policies and procedures developed, and the effective implementation of the disclosure framework. Furthermore the committee supervises the process of monitoring and reporting of conflict of interest & related party transactions.

Moreover it is required to oversee the bank's succession plan formulation process. It is responsible for the nomination of potential board members, training of new members and raising the awareness of the existing board of directors. The committee also initiates and oversees the evaluation process of the board and committees. The committee is supported by the corporate governance office.

The committee is responsible to prepare overall governance report for the bank on a regular basis. Moreover reviewing the bank‘s annual report particularly with regards to the terms of disclosures and other information relevant to corporate governance.

BCGNC is required to study the comments of the Central Bank of Egypt’s inspection that are related to corporate governance and take them into consideration.

Members:
It is composed of 3 non-executive board members.

Quorum:
Shall be a minimum of two members.

5- Board Credit Committee:

Role:

The Board’s Credit Committee (BCC) is responsible for the review and approval of the bank’s credit committee’s decisions. Moreover submitting to the board of directors all credit cases that require approvals for restructuring, writing-off and prosecutions.  

Members:
It is composed of mostly non - executive Board members with a minimum number of members to be three. The Chairman of the Committee is to be a non-executive Board member.

Quorum:
Shall be at least 2 members.

Corporate Governance Office (CGO)

The implementation and maintenance of the Corporate Governance framework across the Bank is of paramount importance to the Board, and the management. The Bank therefore has created a centralized CGO which is responsible for supporting the Board and the Management in maintaining the Corporate Governance practices across the Bank. Moreover, provides assistance to the Chairman and other committees in fulfilling their administrative duties ensuring implementation effectively throughout the organization. CGO reports to the Board Corporate Governance and Nomination Committee.

Corporate Values

NBK Egypt is committed to achieving high standards of corporate values. These are followed and embedded through a number of well-established pillars. These pillars are formalized through a robust set of policies and procedures covering:   

  • Code of Conduct
  • Related Parties Transactions
  • Confidentiality
  • Conflict of interest
  • Whistle Blowing 
  • Disclosure and Transparency

Code of Conduct
The Board takes the lead in setting professional standards and corporate values which promote integrity for the entire body, Executive Management and other employees and puts in to place mechanisms to ensure such practices are adhered to and reviewed continuously. The Bank’s Code of Conduct outlines the ethical standards expected of various stakeholders in the conduct of its business. This specifically covers the Board, Bank employees and other stakeholders. 

Related Parties Transactions
The Bank’s Related Parties Transactions Policy outlines the guiding principles on dealing with and managing transactions with relevant parties, whether between the Bank and its Board members, their companies or their related parties, Executive Management, and employees including syndicated financing and trading activities .The policy is in compliance with regulatory and IFRS standards. 

Confidentiality
The Board, Executive Management and employees are committed to preserve the confidentiality of information and data related to the Bank’s customers, as per the rules of the laws and instructions issued by the regulatory bodies in this respect. This has been well governed by confidentiality and information-security rules adopted and implemented throughout the Bank.

Conflict of Interest
The Board monitors and manages the potential conflict of interest of the Bank including the abuse of the Bank‘s resources and any misuse of powers between the Bank and the Board members. The Corporate Governance Office assists in identification and monitoring of potential and actual conflict of interest. The Conflict of Interest Policy provides guidelines for the identification, reporting, disclosure, prevention, and strict limitation of potential conflict of interest, including rules concerning connected party transactions and potential conflicts of interest.

Whistle Blowing
The Bank promotes a transparent and collaborative working environment for all employees. The Whistle Blowing practices determine the guiding principles and procedures which enable the Bank’s employees to escalate to the Chairman any significant disputes, their concerns regarding any potential violations, malpractice, and “reportable” conduct, and to allow independent investigation and monitoring of these concerns. This is to encourage the employees to raise serious concerns whilst providing protection of these employees, giving them assurance that they will not be subject to any penalties in case these concerns are not proved correct.

Disclosure and Transparency
The Bank is committed to disclosure and transparency as per the regulations issued by regulatory bodies and as per best practice standards. This involves disclosing information in accordance with International Reporting Standards (IFRS) and CBE guidelines. The most important means of disclosure the bank uses are Bank’s official web site and Annual reports.

Risk Management and Internal Control

NBK Egypt’s Risk Management and Compliance are centralized and independent functions. The Bank’s Chief Risk Officer (CRO) is the head of the Risk Management function and reports to the Board Risk Committee. His appointment, dismissal, remuneration and evaluation are also determined by the Board Risk Committee.  The function is primarily responsible for identifying, measuring, monitoring, controlling and reporting the risk profile of the Bank. It assists and acts as the internal advice to the Executive Management to actively assess and control the Bank’s overall risk.
 

The Risk Management function ensures:   

  • The overall Bank’s business strategy and business activities conducted are consistent with the risk appetite approved by the Board. 
  • Risk policies, procedures and methodologies are tailored in a manner that is consistent with the Bank’s risk appetite.
  • Appropriate risk management architecture and systems are developed and implemented for the region.
  • Adequate monitoring of portfolios’ risks and limitations across the Bank and at a regional level. 

 
 The Compliance function ensures:  

  • The continuous follow up on the Bank’s compliance with all policies, procedures, relevant laws, systems, instructions including Corporate Governance policy and procedures and reporting any remarks to the concerned management level and audit committee.
  • Ensure that any violations or malpractice can be reported with an independent investigation in line with the Whistle Blowing Policy.
  • Ensure that the Bank’s laws and internal control systems are compatible with any new products or development in the bank’s procedures.

 
The Head of Compliance submits his reports to the Chief Risk and Compliance Officer who in turn submits these reports directly to the Board Audit Committee. The Bank’s structure insures the independence of the compliance function through direct communication with the Board Audit Committee and Board of Directors.


Internal Audit 

The Bank’s Internal Audit Function is an independent function, mainly responsible for evaluating the adequacy and effectiveness of the Bank’s internal controls, ensuring compliance with policies, procedures and regulatory requirements. The Bank’s Internal Auditors are not assigned any executive responsibilities in order to maintain their autonomy and impartiality in fulfilling their duties and responsibilities. The Internal Audit function reports directly to the Board Audit Committee which is accountable for monitoring the overall performance of the function. 


Control Environment

The Bank maintains a sound control environment supported by a set of policies and procedures which are adhered to by all members across the Bank and are designed to specifically cater and accommodate the needs and requirements of the Bank. The effectiveness of internal controls is monitored through a well-structured control self-assessment program designed as per COSO framework. This is routinely monitored by the Board and is subject to independent assessment and review, to identify enhancement opportunities and the effectiveness of the control framework.

Remuneration Governance

The Bank’s remuneration process is governed by the Board Remuneration Committee (BREC) with the Board holding the overall responsibility. 

The Remuneration Policy of the Bank is drafted and periodically reviewed and developed by the Bank‘s Board Remuneration Committee (BREC). It sets out key aspects and components of the Remuneration of the Executive Management and other employees. 

As per CBE ‘s Corporate Governance guidelines, the Bank’s Board  approves and discloses the applied Remuneration Policy including the total aggregate amount of the Bank’s 20 highest earners.

The Remuneration Policy stipulates the linkage of the Bank’s long-term strategic objectives and its risk takers .The Bank differentiates between remuneration of Senior Management, Material-Risk takers and Control Functions. These are linked to key performance indicators subject to risk-adjusted approach.

Stakeholders Rights

The corporate governance framework of NBK-Egypt aims to protect and facilitate the exercise of shareholders’ rights. The shareholders have delegated the authority and responsibility for supervision and management of the Bank to the Board, which in turn has delegated the authority and responsibility of the Bank’s day-to-day operations to the Executive Management. Shareholders’ rights include, but are not limited, to the following:   

  • Receive shares of dividends allocated for distribution 
  • Attend the Bank’s Annual General Meeting (AGM)
  • Participate in deliberations, vote on General Assembly resolutions
  • Disposal of shares
  • Examine the Bank’s records and documents with the permission of the Board of Directors or the General Assembly pursuant to the Bank's Memorandum and Articles of Association.
  • Exercise their rights duly and indiscriminately.
  • Be aware of the rules which govern the voting procedures and Annual General Meeting
  • Be aware of any information with regard to the Bank's plans before voting in meetings or any other information
  • Major shareholders and the Board’s non-executive members are to meet on a regular basis to discuss the Bank’s strategy.
  • Annual report is to disclose the steps taken by the Board’s non-executive members with respect to reaching a mutual understanding and agreement with major shareholders regarding the Bank’s strategy.

Customers

The Bank protects and abides by the rights provided to customers which include, but are not limited to the following: 

  • Fair and equal treatment
  • Communication on available products on offer
  • Participation in Customer Satisfaction Survey and independent customer complaints 

Employees

The Bank protects and abides by the rights provided to employees which include, but are not limited to the following:  

  • Working in an environment with transparency
  • Contributing to employee talent-management schemes
  • Transparent remuneration and compensation structure
  • Access to the whistle blowing policy

Community (Corporate Social Responsibility)

The Bank recognizes the importance of corporate social responsibility and seeks to devote itself to creating CSR initiatives within Egypt’s community. In line with this responsibility, the Bank strives to consistently integrate social growth and development as a fundamental part of the Bank’s missions and objectives.