Governance and Compliance
Al Baraka Bank 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).
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Al Baraka Bank Egypt B.S.C. (C) All rights reserved
Governance and Compliance
Al Baraka Bank 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 from a blend of such basic competencies that would ensure effective and highly efficient performance, and who should not be - less in number – than (9) 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.
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.
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 five 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 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 Shariah, 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 Zakat 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 it’s 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 Zakat 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.
Salaries, Governance and Nomination Committee:
The committee is composed of three non-executive and independent Board members, and it is preferable that the chairman of the committee be an independent non-executive member, and the committee has the right to invite other Board members or members from the bank’s executive management or a member of the Sharia Supervisory Board - to provide guidance and advice on matters related to Sharia - as well as the use of the expertise of external consultants to attend its meetings or perform or implement specific tasks if required, and the governance official is invited to attend the meetings of the committee in relation to the work of governance.
Regarding Salaries and Remunerations; 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. Regarding Governance and Nomination; a 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.
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 Audit Committee:
The committee shall be formed from an odd number of members, not less than three non-executive and independent members of the Bank’s Board of Directors, to be selected by the Board of Directors. The Board may include to its formation an experienced external member after obtaining the approval of the Governor of the Central Bank to join him in accordance with the Central Bank and Banking System Law promulgated by law. No. 194 of 2020, and the majority of the committee members must be independent, provided that the committee chairman is among them, and the committee holds a meeting every three months at most, attended by the bank’s auditors, and the committee may seek help in carrying out its work from whoever it deems appropriate, and the committee presents its recommendations to the board of directors, and for any the auditors may request a meeting of the committee, if deemed necessary.
The terms of reference of the audit committee are determined according to the governance instructions issued by the Central Bank of Egypt and the committee’s work system approved by the Board of Directors. Integrity of the Bank's financial statements and ensuring the Bank's commitment to effective internal auditing procedures, in addition to other functions assigned to it by the Board of Directors.
The committee shall be composed of a minimum of (three) members from the Board members, provided that the majority is for the non-executive and independent members, and the chairman of the committee shall be a non-executive member. The Committee shall have the right to invite other members of the Board of Directors or from the Bank’s executive management, as well as to seek the expertise of external consultants to attend its meetings, or performing or executing specific tasks if required, and the bank's chief risk officer is invited to attend the committee's meetings.
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 committee is composed of three members of the Board of Directors, provided that the majority is for the non-executive members of the Board of Directors. The Committee has the right to invite other members of the Board of Directors or from the bank’s executive management, as well as to seek the assistance of external consultants to attend its meetings or perform or carry out specific tasks if necessary.
The committee specializes in the following:
- Monitoring, supervising, and verifying the bank's effectiveness in keeping pace with the recent developments within technology fields, and the digital transformation within the banking market, and ensuring that the concerned departments and sectors carry out their work adequately within the limits of their mandate.
- Follow-up on the extent of adherence with the approved strategies and policies through the reports presented to it. On the other hand, the committee submits periodic reports to the Board of Directors.
- Periodically reviewing and approving policies related to technology operations and digital transformation, in line with the nature and volume of the bank's activities, and having them approved by the Board of Directors.
- Submitting its proposals regarding strategies and policies related to technology operations and digital transformation, and the Bank's Board of Directors must approve and ratify them after introducing whatever amendments it deems appropriate.
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 Fund of Zakat:
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.
The Bank’s Strategic Shareholder – Al Baraka Banking Group
Al Baraka Group B.S.C. Licensed as an Investment Company - Class 1 (Islamic Compliant) by the Central Bank of Bahrain and listed on the Bahrain Stock Exchange. Al Baraka Group is one of the pioneers of Islamic financial and investment businesses worldwide, as it provides distinguished financial and banking services to individuals, companies, treasury and investments in accordance with the principles of Islamic Sharia through its banking units in 15 countries.
The group has a wide geographical spread through subsidiary banking units and representative offices that provide services through more than 600 branches. The group currently present in Egypt, Jordan, Tunisia, Bahrain, Sudan, Turkey, South Africa, Algeria, Pakistan, Lebanon, Syria, Morocco and Germany, in addition to two branches in Iraq and a representative office in Libya.
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 because 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 must 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 the Bank’s personnel and their training in this respect; besides the participation in the development of Training Programs associated therewith.
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, considering 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 basically 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, 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 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 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.
Shariah 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 Shariah 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 Shariah in all of its transactions.
This is further evidenced by the Organizational Structure of the Bank, which embodies a Shariah Supervisory Board, directly linked to the Bank’s Board of Directors, and consists of three eminent Scholars specialized in Islamic Shariah and the Islamic financial transactions and recognized and acknowledged for their sound Religious opinions (Fatwa) and deeply versed in the Jurisprudence of transactions. The Shariah 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 Shariah 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 Shariah 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 Shariah mistakes, which can be rectifies forthwith