corporate governance
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Corporate Governance

1. Brief Introduction


During 2018, and through the continuous process of maintaining sound corporate governance, multiple amendments were made in order to cope with the changes and challenges in the banking sector. Here is a summary of the latest:

-The Bank benefited from the wide expertise of the newly joined board member and teamed up with the Board of Directors to assure the implementation of the best banking practices in corporate governance, FCC, and Financial stability.

-The Bank updated the corporate governance code, FCC program, and other policies and procedures to ensure compliance with local and international laws and regulations.

-We kept on enriching the knowledge of our most valuable assets i.e. staff through continuous training to raise the awareness level, knowledge, and culture concerning various topics based on a well-developed training program; also to support the quest to acquire professional certification and assure that the qualifications are up to international standards.


 

2. Organizational Structure

 

3. Bank Committees


3.1 Board Committees:

  • Audit Committee
  • Governance and Remuneration Committee
  • Risk Committee
  • AML and FCC Commitee

3.2 Management Committees:

  • AML / CFT Special Committee
  • Assets & Liabilities Committee
  • Credit Committees (3 Sub Committees)
  • Asset Classification Measurement and Provisioning Committee
  • FATCA Committee
  • Financial & Estate Placements Committee
  • Information Security Committee
  • Procedures & Internal Control Committee
  • Training Committee
  • Archiving Committee

 

 4. Fenicia Bank Board Governance


4.1 Board of Directors Roles and Responsibilities

Fenicia Bank’s Board of Directors has wide authority to implement the decisions of the General Assembly and to exercise the non-day-to-day activities required to run the business. The Board of Directors supervises the setting and implementation of the Bank’s strategy, oversees the performance of the Bank’s management and its execution of the strategy and objectives, and sets standards for evaluations and remunerations.

The Board ensures proper care of the legitimate interests of the shareholders, depositors, and stakeholders. Likewise, it ensures the building of trust in the Bank and sees that proper governance procedures are in place and abided by. The Board ensures the proper implementation of the required control procedures, oversees the financial reporting and audit systems, and follows up on the work of the internal audit unit and the external auditors.

The Board of Directors sets the general policy of risk management at the Bank and ensures its efficient and proper implementation. It is responsible for transparency in relation to the Bank’s activities and results and for its abidance by the applicable laws and regulations.

 

4.2 Responsibilities of the Chairman

The Chairman of the Board of Directors represents the Bank to third parties, executes the Board’s decisions, and facilitates the daily operations of the Bank, as stated by the bylaws and under the supervision and control of the Board of Directors. The Chair provides leadership to the Board and is responsible for the Board’s overall effective functioning.

 

5.3 Composition of the Board

The Bank’s Board of Directors is currently composed of ten members, four of whom are independent, three are non-executive, and three are executive directors.

 

4.4 Board and Committees


 

 

Board Composition

Board Committees

Directors

Date of Joining the Board

Audit Committee

Governance & Remuneration Committee

Risk Committee

AML & FCC Committee

 Category 

 Membership 

 Membership 

Membership

 Membership 

 Membership 

Mr. Abdul Razzak Achour

1992

E

C

 

 

 

 

Mr. Mohsen Naamani

2012

E

M

 

 

M

M

Dr. Assaad Khocheich

2012

E

M

 

 

M

M

Dr. Mohamad Cheaib

1992

I

M

C

 C

 

 

Dr. Georges Najjar

2012

I

M

 

 

C

 

Mr. Michel Fernayni

2012

I

M

 

          

 

C

Mr. Aziz Maacaron

1992

NE

M

M

           M

 

 

Mr. Youssef Merhi

1992

NE

M

M

           M

 

 

Mr. Abdallah Achour

1992

NE

M

 

 

 

 

Mr. Sarkis Yoghourtdjian

2018

I

M

 

 

 

 

 

E=Executive        I=Independent        NE=Non-executive       C =Chairman M=Member

 


 4.5 Board Committees

The Board delegates some of its responsibilities to its committees and maintains the duty to follow up on the actions, findings, and recommendations of these committees and taking the actions deemed appropriate.

 

 4.5.1 Audit Committee

 

4.5.1.1 Membership

The Audit Committee consists of three non-executive directors. The Chairman of the Committee is considered by the Board to be independent.

The Board has determined that the Committee Chair, Dr. Mohamad Cheaib, possesses relevant financial and audit experience required for the Audit Committee to fulfill its tasks.

 

 4.5.1.2 Role & Responsibilities

The main mission of the Audit Committee is to assist the board in fulfilling its supervisory role and responsibilities mainly related to:

  • The autonomy and qualifications of the External Auditors and the Internal Audit Unit.
  • Oversight of the financial reporting process and accounting policies, control of financial statements’ soundness, and review of the disclosure standards adopted by the Bank.
  • The adequacy and effectiveness of the audit systems and the internal control policies and procedures.
  • The follow up on any observations, violations, or recommendations highlighted by the External Auditors, supervisory authorities, the Internal Audit Unit, or the Compliance Department and follow-up on the implementation of the remedial measures.
  • The assurance of proper oversight over the compliance systems and the procedures to address any reported non-compliance.
  • The abidance by the Central Bank circulars and the Banking Control Commission circulars and reports and all other applicable regulations.

 

4.5.2 Governance and Remuneration Committee

 

4.5.2.1 Membership

The Governance and Remuneration Committee consists of three non-executive directors. The Chairman of the Committee is considered by the Board to be independent.

The Board has determined that the Committee Chair, Dr. Mohamad Cheaib, possesses the experience required for the Governance and Remuneration Committee to fulfill its tasks.


 

4.5.2.2 Role & Responsibilities

The main roles of the Governance and Remuneration Committee are as follows:

  • Assisting in setting the various corporate governance policies, recommending them to the Board for approval, and following-up on their implementation.
  • Clarifying the roles and responsibilities of the Board of Directors and its committees and ensuring their proper exercise.
  • Verifying that the Bank is operating within the frame of the corporate governance principles.
  • Regularly reviewing and updating the corporate governance code and principles in compliance with the guidelines issued by the Basel Committee and the supervisory authorities and in line with international best practices.
  • Developing the Remuneration Policy and Remuneration System at the Bank and presenting them to the Board for approval, reviewing them on regular basis, and overseeing their implementation.
  • Recommending the remuneration of senior executives to the Board of Directors.
  • The proper disclosure concerning the remuneration and their related policy according to the regulatory bodies’ recommendations. The proper planning and implementation of the Bank’s Board succession Plan.

 

5.5.3 Risk Committee

 

5.5.3.1 Membership

The Board Risk Committee consists of one independent member and two executive members. The Chairman of the Committee is considered by the Board to be independent.

The Board has determined that the Committee’s Chair, Dr. George Khalil Najjar, possesses the experience required for the Board Risk Committee to fulfill its tasks.

 

 4.5.3.2 Roles & Responsibilities

The main roles of the Governance and Remuneration Committee are as follows:

  • Assisting the Board of Directors in setting the governance structure and principles, updating them and ensuring their proper implementation. In addition to setting the incentives and remunerations systems.
  • Ensuring that the board structure and duties are in harmony with the bank’s corporate governance principles and internal laws and regulations.
  • Continuously updating and periodically assessing the corporate governance policies and remuneration and compensation policy.
  • Properly disclosing remunerations and their related policy according to the regulatory bodies’ recommendations.
  • Properly planning and implementing the Bank’s Board succession plan.
 

 4.4 AML & FCC Committee


4.4.1 Membership

The Board AML & FCC Committee consists of one independent member and two executive members. The Chairman of the Committee is considered by the Board to be independent.

The Board has determined that the Committee’s Chair, Mr. Michel Fernayni, possesses the experience required for the Board AML & FCC Committee to fulfill its tasks.

 

 4.5.4.2 Roles & Responsibilities

The main roles of the AML and FCC Committee are as follows:

  • To support the Board of Directors in its functions and supervisory role with respect to fighting money laundering and terrorist financing and understanding the related risks, and to assist it with making the appropriate decisions in this regard.
  • To review, from a risk-based approach, the reports submitted by the Compliance Unit and the Internal Audit Department on adopted procedures, unusual operations and high-risk accounts, regarding cash deposits and withdrawals, transfers, exemptions from filling Cash Transaction Slips (CTS) and the link between these operations and economic activities, and to also take the relevant decisions.


 

 5. External Auditor


The External Auditors of Fenicia Bank S.A.L. are PricewaterhouseCoopers and KUDOS The External Auditors were appointed by Board of Directors upon a recommendation by the Audit Committee.

The External Auditors are independent from the Bank and its directors. The Audit Committee is responsible for ensuring that the External Auditors remain independent.


 

 6. Conflicts of Interest and Related Party Transactions


The Bank has developed a Conflict of Interest Policy that promotes transparency, fairness and disclosure in issues underlying a conflict of interest or related party transactions. The Policy delineates the procedures for avoiding conflicts of interest to the extent possible with the appropriate disclosure mechanisms, and for identifying and dealing with actual, potential, or perceived conflicts of interest, and disclosing them where un-prevented.

 

 7. Remuneration Policy


In 2014, Fenicia Bank S.A.L. adopted a Remuneration Policy that was set forth by the Governance and Remuneration Committee and approved by the Board of Directors. The Governance and Remuneration Committee oversees the implementation of the Policy and reviews it on a regular basis to ensure its ongoing effectiveness.

 

7.1 Objective and Principles 

The Remuneration Policy applies to all employee levels and aims at having in place a remuneration structure that:

  • Facilitates the attraction and retention of talented and highly qualified employees
  • Incentivizes employees and increases their motivation, productivity, and overall performance
  • Ensures the alignment of employees’ efforts and performance with value creation in light of the Bank’s risk appetite.

In achieving these objectives, the Bank’s Remuneration Policy and its practices rest upon a set of guiding and regulatory principles, among which:

  • Remuneration structures and procedures are fair and transparent throughout the Bank’s departments and branches and consistent across each function level or category in line with the competency based approach.
  • High performance is observed and fairly rewarded and the employee’s potential and career path are duly considered.
  • Remunerations are aligned with the Bank’s strategy and long-term objectives and payments are scheduled over a consistent horizon.
  • Performance targets and expectations are clearly communicated to all employees.
  • The remuneration system is aligned with the Bank’s risk appetite as well as its governance principles and does not reward excessive risk taking.
  • Remuneration levels do not undermine the Bank’s financial performance.

7.2 The Remuneration Components 

The Bank seeks to offer its employees balanced remuneration packages comprising of:


7.2.1 Fixed Remunerations, which consist of the employee’s salary. They are determined based on several factors including the employee’s grade and level at the Bank; the job function, its complexity, underlying responsibilities, and set of required skills; the employee’s performance review; and other individual factors such as the educational and professional advancement and the ethical conduct. Salaries are benchmarked against internal and peer group salary scales to ensure fairness and consistency.


7.2.2 Variable Remunerations, which are performance based and are granted in the form of cash bonuses. Within each unit or branch, variable remunerations are determined based on indicators of the individual, unit/ branch, and Bank overall performance and take due consideration of risk and compliance indicators, the employee’s function and its complexity, and his/her behavior and ethical conduct, among other criteria.

7.2.3 Other benefits, which are granted to employees and are subject to specific criteria and conditions as determined by internal policies and procedures in alignment with the applicable laws and regulations. Examples of these benefits include transportation and food allowances; hospitalization and medical care benefits; family, marriage, maternity, education, and death allowances, and other function-related allowances such as cashier, representation, and responsibility allowances.


7.2.4 End of Service Indemnities, which are granted in accordance with the relevant legal requirements.

The levels of fixed and variable remunerations are duly considered at the Bank’s aggregate level in a way to ensure their alignment with the Bank’s performance and market conditions and analyze their likely impact on indicators of future Bank performance. 


7.3 The Remuneration of Control Functions and Senior Executives

The performance evaluation and remunerations of control functions at the Bank are determined based on their responsibilities and the objectives of their units and are dissociated from the targets of the units they monitor in order to ensure their continued independence and objectivity and achievement of their control objectives. Their remunerations are recommended by the relevant Board committees and approved by the Board.

The remunerations of senior executives are recommended by the Governance and Remuneration Committee to the Board. The remunerations aim at incentivizing management to achieve the strategic objectives of the Bank and create long-term value while acting within the Bank’s risk profile and appetite.


7.4 The Remuneration of Directors

The procedures for setting the remunerations of the Chairperson and the members of the Board of Directors are based on the best practices adopted in the banking sector and particularly among the Bank’s comparable banking institutions. All directors receive an annual fixed fee in return for their board membership. Independent directors receive as well a fixed fee for each committee meeting they attend as part of their committee(s) membership and a fixed fee for each committee meeting they chair. In their capacity as board members, directors do not receive performance based remunerations.

 

 8. Professional Conduct Rules


Fenicia Bank S.A.L. ensures that the Bank at all employee levels abides by the highest standards of legal and ethical conduct. The Bank has developed a Code of Conduct and established mechanisms for monitoring compliance by it and all applicable laws and regulations. It has developed procedures for employees to confidentially report any violations and for the Bank to act upon and resolve the faced issues.

Fenicia Bank s.a.l. is strongly committed to the following values that frame the scheme of its activities within and outside the work environment:

 

Fast Service (We satisfy customer needs at the time they need the service)

Efficiency (We execute operations within a small margin of error)

Neutrality (We show no favors and engage in no discriminatory behavior)

Integrity (We act ethically and honestly towards our organization and stakeholders)

Consistency (We maintain uniformity across our products and services to ensure customer satisfaction)

Innovation (We propose new ideas and/or ways of doing things)

Accountability (We hold the responsibility for and consequences of our actions)