CIB’s undeniable leading position in the private banking sector has always been a drive to adopt the international best practices of corporate governance. The governance framework seeks to drive long-term value for shareholders, employees, and other stakeholders through robust implementation of sound governance practices. It is anchored with a distinguished group of independent non-executive directors (NED), as well as its competent board committees and experienced management team. A set of internal policies and processes are designed to provide effective internal control within the Bank and assist the Board and senior management in making the proper decisions.
The Bank’s corporate governance practices aim at promoting overall transparency while explaining the rationale behind the decision-making processes and insights into the formation of the Board of Directors (BOD), their related committees, their responsibilities, Executive Management, and financial performance.
CIB strongly believes in the importance of effective governance and stakeholder engagement, particularly in such challenging times of the pandemic, which is key to CIB achieving its purpose and to the successful delivery of its strategy.
CIB’s governance structure consists of a strong independent Board of Directors with a wide range of expertise, competent board committees, a professional and highly-skilled management, transparent processes and reporting through its internal control departments (Risk, Compliance, Internal Audit, Corporate Governance, and Legal), in addition to objective and unbiased assurance performed by its external auditors. The BOD and executive management believe that corporate governance is an essential element to enhancing shareholder confidence, specifically that of minority shareholders and stakeholders. Indisputably, investors’ outlook about the Bank is enhanced by increasing the level of transparency of ownership and control.
The Bank’s governance framework focuses on the clear segregation of duties and responsibilities of the BOD and those of the senior management, the reporting mechanism of the internal control departments, the independence of external and internal auditing, cooperation with supervisory and regulatory authorities, and the assurance of the disclosure and transparency of information. The framework also ensures that timely, transparent, and accurate disclosures are made available with respect to material information regarding the Bank, its ownership, operations, and financial performance. It ensures the implementation of sound environmental management systems and elevates the Bank’s corporate social and environmental responsibility. It also advocates the equal treatment of all shareholders with sound protection of their voting rights.
Governance policies are designed to promote a corporate culture that emphasizes building trust with key stakeholders and to provide effective internal control within the Bank.
Using best practices as its foundation, CIB’s Code of Corporate Governance outlines the role and composition of the Board of Directors, relationships with shareholders and executive management, the role of the internal control departments, reporting transparency, and information disclosure with an aim of protecting shareholder investments and fostering a culture of integrity, accountability, and confidence. The code sets forth the governance policies and procedures.
The Code of Conduct articulates the values that the Bank wishes to foster in leaders and employees, in line with CIB’s core values and, in doing so, defines the desired behavior expected from all employees, providing a comprehensive frame of reference regarding their rights and duties toward the Bank. The code reinforces the importance of conducting business within the framework of professional standards, laws, and regulations, together with our own policies and procedures. It also further enshrines the principles of equal employment opportunity and gender equality, encourages collaboration and innovation, and fosters a sense of care, integrity, and responsibility.
The Conflict of Interest policy demonstrates the Bank’s commitment to maintaining the highest level of probity and integrity amongst its workforce. It helps ensure the Bank has a process in place when actual or potential conflicts of interest arise between the Bank and its employees’ personal, professional, or business interests. The policy outlines procedures and provides guidance on how to identify, disclose, manage, and mitigate conflicts of interest within the Bank’s operations, organizational structure, reporting lines, and transactions. It aims to protect the Bank’s interest and decision-making process by preserving the integrity and reputation of the Bank, its employees, and the BOD.
The Staff Issues Committee handles staff complaints related to the Code of Conduct and the Performance Management. It is a communication channel for employees to express their queries, complaints, and any work-related issues to an unbiased body.
The Disclosure policy ensures that the Bank’s information is disclosed to the public, investors, employees, customers, and other stakeholders in a timely, accurate, complete, understandable, and convenient manner. It helps establish and maintain effective engagement with existing shareholders and potential investors by increasing their confidence and satisfaction in the credibility and accessibility of the Bank’s information. The policy promotes desirable transparency practices and aims to minimize the risks of violating relevant laws and regulations in relation to communicating information to the investing public and regulators of the capital and financial markets.
Together with the Bank’s bylaws, as well as the charters of the Board and Board committees, this comprehensive set of policies guarantees CIB’s fostering of a sound governance culture and the effective implementation of a strong governance framework exemplified by each of the Bank’s board members’ firm leadership, excellence, and great vision. CIB’s competent executive management team plays an outstanding role in executing the governance strategy of the Bank through the effective implementation of the Bank’s policies and procedures, executing the Bank’s strategy set by the Board, and ensuring the clarity of goals and objectives of the respective LOB functions, while directing their activities in alignment with the Bank’s policies and regulations.
Board of Directors
The Board aims to promote CIB’s long-term success, deliver sustainable value to shareholders, and promote a culture of integrity, transparency, trust, and respect among its stakeholders, while performing its duties with entrepreneurial leadership, excellence, and in good faith.
CIB’s Board is comprised of a majority of independent non-executive directors. Led by its non-executive Chairman, the Board is primarily responsible for providing a sound base for good corporate governance in the operations of the Bank, setting the Bank’s strategic objectives, and providing oversight of senior management, ensuring the effectiveness of the Bank’s internal control systems, managing risk, and securing CIB’s institutional reputation and longterm sustainability.
The Board ensures the Bank’s accounts and financial statements are fair, balanced, and understandable and provide information necessary to shareholders to assess CIB’s position, performance, business model, and strategy.
The Board liaises with and supports the internal control functions of the Bank and constructively uses outcomes and reports received by these functions to take the necessary corrective actions. It ensures the clear segregation of the roles and responsibilities of the internal control functions so that each function is able to communicate directly and independently with the Board and senior management.
The Board ensures the Bank has the proper focus on risk, reviews the Bank’s risk appetite as proposed by executive management, and constantly monitors the risk profile in relation to such appetite to ensure the proper mitigation of all possible risks.
It forms the respective Board committees that assist the Board in taking over and fulfilling its responsibilities, approves their respective charters, and evaluates the effectiveness and contribution of these committees on an annual basis in light of their respective charters.
The Bank’s board structure complies with the local prevailing regulations and international best practices and allows for the position of a lead director. The strength of our Board is a product of the variety of our directors’ experience, diversity, differing perspectives, and institutional knowledge. We are committed to maintaining independence and fostering diversity in terms of gender and nationality on our Board. As a result of this commitment, 25% of our directors are women and 88% are independent NEDs, according to the latest Board structure.
Changes to the Board of Directors During 2021
On 8 March 2021, Mr. Tarek Rouchdy joined CIB’s Board of Directors as an independent NED as approved by the Central Bank of Egypt (CBE). Mr. Rouchdy brings a wealth of knowledge and experience in internal audit, controls, and risk management. He currently manages his consulting firm and is a Commissioner of the UK’s Independent Commission for Aid Impact.
On 24 June 2021, and pursuant to a decision approval by CBE, Mr. Hussein Abaza was granted the responsibility to serve as the Bank’s CEO and Managing Director.
CIB’s Board of Directors currently consists of eight members who possess an appropriate balance of experience, competencies, and individual qualifications. These collective qualities give the Bank a distinct competitive edge. Over the course of 2021, CIB’s Board of Directors met 14 times, 12 of which were conducted via video conferencing, and two meetings attended in person by the directors who were present in Cairo, with directors residing abroad joining via video conference in view of the prevailing preventive measures due to the COVID-19 pandemic.
Backed by an experienced executive management team, CIB’s highly qualified Board of Directors is also supported by specialized board committees. Committees are chaired by the NEDs, who brief the Board on major points raised by their respective committee. Such briefings enable the members of the BOD to carry out their duties in an effective manner. CIB’s BOD has six standing committees that assist in fulfilling its responsibilities. Each committee operates under a written charter that sets out its responsibilities and composition requirements and reports to the Board on a regular basis. Separate committees may be set up by the BOD to consider specific issues when the need arises.
Board Audit Committee
Responsibilities: The Audit committee was established to provide oversight over the integrity of the Bank’s financial reporting process, the effectiveness of the Bank’s internal control systems, and its compliance with all statutory requirements. The committee is also responsible for overseeing and reviewing the performance of the Bank’s Internal Audit and Compliance functions, as well as the work of the Bank’s external auditors, to ensure the independence and objectivity of each, in addition to the quality of the applied outputs.
2021 Audit Committee Highlights:
Oversight of the Financial Reporting:
During 2021, as mandated in its charter by the Board, the Audit committee reviewed the financial statements and its notes and discussed them with the relevant Bank officers and external auditors, receiving assurances that the financial statements fairly presented CIB’s financial position and complied with regulatory (CBE and FRA) directives and reporting standards. This is in addition to the 2020 IFRS statements.
Meetings were held inviting the Bank’s CEO and Managing Director, Acting-Chief Risk Officer, CFO, Chief Audit Executive, Chief Compliance Officer, external auditors, and all required stakeholders.
Effectiveness of the Bank’s Internal Control System:
The Audit committee monitored the effectiveness of the Internal Audit Department, approving its annual work plan, discussing utilization of its resources, while also taking into account the impact of the COVID-19 pandemic on its day-to-day operations. The committee also discussed audit engagement reports regularly, addressing measures taken to remediate identified deficiencies.
The committee also discussed the proposal for the fee agreement with external auditors for the 2021 financial year.
The committee discussed policies, controls, and procedures related to compliance, combatting money laundering, and preventing financial crime. The committee took note of whistleblowing issues, discussing material whistleblowing cases, enhancements to whistleblowing arrangements, and plans for periodic updates to the committee. It also regularly discussed customer protection unit updates.
The committee met eight times in 2021. In light of the COVID-19 pandemic, meetings were held virtually as per the Central Bank of Egypt’s regulations.
Mr. Tarek Roushdy
Mrs. Magda Habib, Mr. Paresh Sukthankar
Board Risk Committee
Responsibilities: The Risk committee assists the BOD in carrying out its duties related to Risk Management oversight, concurs on all Risk Policies, and makes the necessary recommendations to the BOD for resolution. The committee’s role includes assisting the BOD in the organization’s governance and exercising due care and diligence in relation to the risk management framework and processes for all financial and non-financial risks.
2021 Risk Committee Highlights
The committee reviews forward-looking risk reports for both financial and non-financial risks, advising them with the main challenges. The information provided is comprehensive and covers items such as risk appetite, portfolio quality, balance sheet highlights, stress testing, capital adequacy ratio coverage, value-at-risk analysis, as well as other risk reporting analytics. The committee reviewed and concurred the annual ICAAP report through which it ensures adequate, current, and future capital requirements.
During and following the pandemic, the committee ensured that the Bank’s liquidity, along with other financial and non-financial risks, remained stable. The committee also reviewed and challenged the Expected Credit Loss (ECL) calculation, and was confident of the Bank’s relatively better and more stable portfolio quality and healthy coverage ratios. The committee also reviewed the new corporate lending rating model methodology, as well as all other risk related action points.
The committee met 13 times in 2021.
Mr. Jay-Michael Baslow
Dr. Amani Abou-Zeid, Mr. Paresh Sukthankar
Board Governance and Nomination Committee
Responsibilities: The Governance and Nomination committee (GNC) advises the Board on the general oversight of governance matters and ensures the promotion of a sound governance culture within the Board and the Bank. The GNC also reviews additions and amendments to the Board and Committee Charters, along with the governance group of policies. This entails a periodic review of the Bank’s corporate governance structure, while recommending changes, when and if necessary, to the BOD. The committee also acts as the Nomination committee, which contributes to the Board’s effectiveness and governance, sets the criteria for selecting new directors, and assists the Board in identifying suitable individuals for nominations as non-shareholder representative board members. The committee’s duties extend to Board succession planning, including the Bank’s CEO.
2021 Governance and Nomination Committee Highlights
Throughout 2021, the committee regularly advised the Board on governance matters based on its periodic review of the Bank’s governance framework. The committee assisted the Board in operating as effectively as possible and governing the Bank’s operations to be executed in accordance with international governance best practices. The committee reviewed the Bank’s 2021 Annual Corporate Governance report and BOD report. During the year, the committee received updates on newly issued or amended laws, executive regulations, rules, or decrees affecting the governance of the Bank, and it recommended the necessary actions. In 2021, the committee oversaw the annual Board assessment that resulted in an affirmation that the Board discussions are conducted openly and transparently, creating an environment for sustainable and robust debate. During 2021, one NED was appointed, and potential candidates were identified and assessed by the committee throughout the year. The GNC ensured that the newly appointed candidate received proper induction, and the non-executive Board committees were formed to accommodate the new director and leverage his knowledge and experience.
The committee met five times in 2021.
Dr. Amany Abou Zeid
Mr. Rajeev Kakar, Mr. Paresh Sukthankar
Board Operations and Technology Committee
Responsibilities: The Operations and Technology committee assists the Board of Directors in fulfilling its responsibilities of Operations and Technology, with respect to the direction of and alignment with the Bank’s strategy and efficiency and in support of the business’ robustness and resilience. This is in addition to ensuring they are at the forefront of developments, adopting cost justified best practices, with the objective of increasing the Bank’s competitiveness while reducing risks.
2021 Operations and Technology Committee Highlights
During 2021, the Operations and Technology committee maintained its efforts and oversight over the 2021 key strategic projects, direction, and associated budget. The committee reviewed and challenged the operations and technology projects and strategies in light of COVID-19 challenges. Activities involved providing further guidance on enhancing the customers’ experience, key service indicators and operational key performance indicators, and the importance of leveraging data to transform the business and manage risks. Focus was also given on rolling out CIB’s Flex program and enabling Flexible Working Arrangements, as well as the branches’ transformation and digital and agile transformation projects, including the Business Banking and Financial Inclusion for the untapped segments. The committee continued their focus on critical, nonfinancial risks across different domains, including IT continuity and resilience, cyber security, information security, and technology control assurance, and it recommended a revamp of the operational risk scaling definition to match global standards and further reflect on their significance from a business perspective. The committee also focused on the outstanding internal and external audit issues and stressed on the importance of having full alignment and consistency across the different layers of defense in identifying and assessing the associated risk criticality and the business impact. In preparation for the 2022 budget, the committee stressed on the importance of focusing on the customers’ journey and the projects that support the business strategy, properly segregating between critical projects needed to run the Bank and those required to change the Bank.
The committee met five times in 2021.
Mr. Rajeev Kakar
Mrs. Magda Habib, Mr. Tarek Rouchdy
Board Compensation Committee
Responsibilities: The Compensation committee was established to provide guidance regarding the appropriate compensation for the Board and the Bank’s executive officers and to ensure that compensation is consistent with the Bank’s objectives, strategy, and control environment. The committee ensures that clear policies for the Bank’s salaries and compensation schemes are in place, and that they are effective at attracting and retaining the best caliber professionals.
2021 Compensation Committee Highlights
During 2021, the committee assessed executive officers’ and expatriates’ performance for the year 2020, and it recommended the appropriate compensation accordingly. The committee also reviewed and approved the Bank’s overall variable compensation guidelines for 2020.
The committee met twice in 2021.
Mr. Rajeev Kakar
Mr. Jay-Michael Baslow, Mrs. Magda Habib
Board Sustainability Committee
Responsibilities: The CIB BOD established the Board Sustainability committee to ensure that sustainable finance is well attended on the Bank’s agenda. The committee provides the Bank with strategic guidance on Environmental, Social, and Governance matters and oversees the effective integration of ESG practices within the Bank’s business and operations, while ensuring alignment with global and regional frameworks. In acknowledging and identifying that all businesses have the potential to affect people and the planet in both positive and negative ways, CIB’s focus is to ensure that its products and services are intended to minimize the Bank’s long-term negative impacts and to create and maximize sustainable value to all its stakeholders.
2021 Highlights of the Board Sustainability Committee
The committee has reviewed the Sustainable Finance Governance Structure, Framework Architecture, System Building, and Strategy to give directions for ESG integration within policies and procedures. It has widened the scope of sustainable finance within the group to incorporate Mayfair CIB, covering the Bank’s activities in Kenya, and encouraged additional business side engagement by including further members from the business to the Sustainable Finance Steering committee. It has followed up on the Bank’s disclosure strategy covering:
- CIB annual GRI Sustainability Report for 2020
- The Bank’s carbon footprint reporting expanded to an Ecological Footprint Report for the first time
- The Carbon Disclosure Project
- The Principles of Responsible Banking Report, including impact assessment utilizing the UNEP FI tool on the business banking lending portfolio
The committee was established on 30 March 2021 in its new form and met three times in 2021.
Mr. Jay-Michael Baslow
Dr. Amani Abou-Zeid, Mr. Tarek Rouchdy
The Board Audit committee recommends the appointment and/or termination of the external auditor, which is approved at the General Assembly Meeting of Shareholders. Moreover, the Board Audit committee evaluates the performance of the external auditor and endorses the prepared financial statements to ensure they reflect the Bank’s performance and faithfully reveal its genuine financial position. In adherence to CBE regulations, external auditors are reappointed every five years to ensure objectivity and exposure to new practices.
CIB’s Annual General Meeting of Shareholders is held in March of each year, no later than three months after the end of the Bank’s financial year. Additional extraordinary general shareholder meetings may be convened at any time by the BOD. The General Assembly provides a platform for shareholders to engage with the BOD, ask questions, and exercise their voting rights. Shareholder consent is required for key decisions, such as:
- The adoption of financial statements
- Voting on proposed dividends by the BOD
- Significant changes to the Bank’s corporate governance practices
- The remuneration policy
- The remuneration of NEDs
- The appointment of the external auditor
- The appointment, suspension, or dismissal of the members of the BOD
- The issuance of shares or rights to shares, restriction or exclusion of preemptive rights of shareholders, and repurchase or cancellation of shares
- Amendments to the Articles of Association