About the bank
Banking Commitment and Governance
Efforts of Agricultural Bank of Egypt
in the field of banking compliance
Agricultural Bank of Egypt, with all its branches throughout the Republic, seeks to consolidate its reputation where the bank strictly adheres to the applied anti – money laundering laws and regulations.
In addition to the bank adherence to the basic international guidelines on anti- money laundering issued by the Financial Action Task Force (FATF), the requirements of anti-money laundering programs generally include the following:
- The existence of internal control system including policies
- The appointment of compliance and anti – money laundering officers
- Staff Training
The bank’s board of directors has approved a comprehensive program for anti- money laundering. This program is implemented through a plan that aims at enhancing and expanding the scope of work of anti- money laundering system to include all the branches of the bank.
Anti-money laundering training programs provided to the bank staff are currently developed. Moreover, an anti-money laundering officer has been appointed in the branches to be subordinated to the compliance officer of the Principal bank. This organizational structure will support the safety and effectiveness of anti- money laundering program and will support carrying out an independent periodic review for anti- money laundering program to ensure that the bank complies with the applicable laws and regulations.
The bank applied internal policies for anti- money laundering to ensure adherence to the different regulatory requirements that include the principle of ” Know Your Customer”, “Due Diligence Procedures” , and following – up customers’ transactions in order to monitor any money laundering operations , terrorism financing , ban or penalties on customers and report the suspected transactions to the competent authorities.
These policies focus on preventing money laundering operations, terrorism financing, and prevent the following strictly:
(a) Dealing with fictitious banks or companies.
(b) Opening anonymous or digital bank accounts.
The stages of anti- money laundering include the following:
- Procedures of opening customers’ accounts
- Banking transactions
- Reporting the suspected money laundering operations or terrorism financing
- Documenting and keeping documents
- Training and setting internal controls
The bank has developed continuous training program for staff, and developed internal control systems that are improved continuously in order to support the effective application for anti – money laundering and terrorism financing policies and procedures.
Agricultural Bank of Egypt has acquired a good reputation among its clients, financial institutions, and foreign banks branches alike.
The compliance function aims at protecting the bank’s reputation through reducing risks arising from non-compliance with anti – money laundering, breaching regulatory requirements or ban programs. It also aims at not exposing the bank to pay penalties. Moreover, all employees are required to abide by all laws and regulations of anti money laundering and the related applicable policies and procedures.
whistle blower policy
whistle blower protection policy
The instructions of the governance systems and internal control in banks issued by the Central Bank of Egypt under no. 95 on 23/8/2011 include sending the whistle blower policy and commitment to the whistle blower protection policy to encourage employees to detect and report violations while protecting them under strict confidentiality.
The process of reporting shall be based on specific documents or information without violating any ethical rules of the Bank. The values applied in the Bank shall stress the critical importance of the explicit discussion of the problems arising in the scope of work and that shall be addressed in time.
1-The objective of the whistle blower policy:
-One of our objectives is to act ethically and honestly on a strong value-based culture that encourages integrity, accountability and transparency.
-This policy aims at providing a secured means of communication for employees to assure them that they will be protected from any retaliatory actions or any damage as a result of reporting any illegal or unethical conduct.
-It also aims at providing protection in case of reporting any practices that are not consistent with the Code of Ethics of our Bank in order to help in discovering any illegal or unethical behavior; hence it will be possible to take appropriate action.
-The policy encourages employees to inform officials it is believed that someone intends to commit something wrong. The reporting employee shall be informed that he will not be exposed to damage if he reports an unacceptable behavior “whistle blowing”.
This policy is applied to all employees of the Agricultural Bank of Egypt in all sectors, branches, and village banks. The processes of reporting and protection procedures continue even if the employee left the work in the bank for any reasons. This policy is applied as long as it does not violate local regulations. Clients can also report their doubts using the available whistle blowing channels.
Definition of unacceptable behavior:
According to this policy, the following types of behavior are dealt with as unacceptable behavior:
-Unethical, illegal, dishonest, fraudulent or corrupt behavior.
-Breach of Bank’s Code of Ethics.
-Manipulation of banking products data in order to achieve the set goals or to get incentives or bonuses.
-Accepting incentives from others either inside or outside the bank in return for providing any service with favorable terms.
-Harassment, discrimination, harming or any kind of violations.
-Unsafe practices in work, or causing environmental or health risks.
-Other practices which may cause financial or non-financial loss for our bank or which conflict with its interests.
-Any Breach of laws or regulations issued by controlling authorities.
Whistle blower protection policy
Agricultural Bank of Egypt is committed to protecting the whistle blower in order to encourage employees to disclose and report violations based on definite documents or information without breaching any ethical rules recognized in the bank. If any employee harms the one who reports illegal practices in good faith, this shall be considered as a breach of this policy.
Examples of damage include:
– Exposure to harm by co-workers.
-Harassment or discrimination.
-Demotion or dismissal.
-Loss of opportunity for promotion.
The Bank’s Board of Directors
BoD formation, maintaining balance and independency:
The Board of Directors is fully responsible for governance starting from setting up the culture of governance and approving the code of ethics which is considered a guide for ABE’s employees and senior management while carrying out their daily tasks, up to taking the necessary steps to highlight the objectives and conduct that shall be followed in the bank. At the same time, the Board shall maintain the interests of owners’ equity and depositors, and shall approve the standards and the values that reflect the bank’s policies to be followed by all the employees, senior management, and the members of the Board of Directors. This includes the bank’s strategic trend. In addition, the Board shall identify the general objectives of the executive management, supervise the realization of such objectives, and ensure the effectiveness of the internal control systems and risk management so as to ensure maintaining the bank’s reputation.
The Board of Directors shall meet at least once a month at the bank’s head office. It shall also meet whenever there is a need and upon the invitation of the Chairman or the acting chairman in case of his/ her absence, or upon a request of at least one third of the board’s members. The Board’s meetings are valid only if the majority of the members attend, provided that the Chairman or the acting chairman attends in case of his/ her absence.
The Board of Directors’ decisions are passed by the majority of votes of the attendees. In case of a tie, the Chairman or the acting chairman shall have a casting vote.
The ABE chairman shall also act as the Chief Executive Officer and the bank shall clarify the reasons for that in the annual report.
ABE shall apply and practice governance, ensure the presence of an effective auditing and budgeting system, and give objective opinions with regard to the bank’s activities and the decisions of its board of directors. This can be achieved through maintaining the balance, independence and objectivity of the Board of Directors by dividing the members into executive and non-executive members who have the skills and experiences that enable each of them to give his/ her opinion in the board’s discussions independently, which will be reflected in the soundness of decision making.
The non-executive member is a part-time member who neither receives monthly or annual salary from the bank, nor gets paid consulting. The board shall disclose in its annual report the names of all non-executive members who are independent of the management and do not have any kind of relationships that may affect their objectivity in decision-making.
The Responsibilities of the Chairman:
•The Chairman or the acting chairman shall legally represent the bank before courts and third parties.
•The Chairman, the acting chairman or any member delegated by the BoD is entitled to individually sign on behalf of the bank.
•The chairman shall ensure that decisions are taken properly, based upon full awareness of the subject and that a proper mechanism is available so that decisions can be effectively and timely implemented and followed up.
•The chairman shall encourage discussions and debates and ensure that opposing opinions can be expressed and discussed within the framework of the decision–making process.
•The chairman shall make sure that the Board is properly carrying out its duties in order to achieve the best benefits for the bank and to avoid any conflict of interests.
•The chairman shall maintain confidence among all the Board members, especially between executive and non-executive members and shall support the relationship between the Board as a whole and the bank’s senior management.
•The chairman shall ensure that sufficient and accurate information are timely available for the Board members and for equity owners.
•The chairman shall verify the effectiveness of the governance system applied in the bank as well as the performance efficiency of the board’s committee.
•The chairman shall ensure that all the Board’s members make self-assessment that includes the compliance of the member with the responsibilities of his/her job and the requirements necessary for raising his/her self-efficiency.
•The chairman shall invite the Board of Directors to meet at least once monthly and set its agenda.
The Secretariat of the Board of Directors:
The bank assigns the tasks of “the Secretariat of BoD” to persons whose role is not limited to writing minutes of the Board’s meetings but also include the following:
•Making preparations for the Board’s meetings, setting the agenda, preparing the information and the details of the topics of the agenda and sending them to the board members in sufficient time before the meeting.
•Following up the execution of the Board’s decisions in the framework of the mechanism designed for this purpose.
•Keeping and documenting all the Board’s decisions and the subjects under discussion, and making sure that important information is timely made available to the Board.
•Coordinating with the compliance officer as well as with all the bank’s departments to submit the results of their work to the Board.
•Coordinating with the Board committees so as to ensure effective communication between such committees and the Board of Directors.
•Coordinating with the Governance and Nominating Committee to provide the necessary information to support the Chairman in assessing the members, the committees, and the proposals submitted by the Board to the General Assembly with respect to selecting or replacing a member.
•Ensuring that the Board’s members are aware of the major recent supervising or legal responsibilities resulting from any developments in the bank’s operations/ activities or any developments in the legal framework governing the bank within the limits of its responsibilities and without conflicting with the departments concerned with such subjects.
•Providing the new members with necessary information about the bank and introducing the new members to the other members.
•Coordinating with the Governance and Nomination Committee to keep the models of self-assessment related to the Board members.
Board of Directors’ terms of reference and its members’ responsibilities:
The Board of directors has full power to achieve the bank’s objectives, to manage the bank, as well as to carry out all the necessary actions to achieve such objectives except for what has been excluded by a special provision of law or by the bank’s bylaw regarding any actions that fall within the responsibilities of the General Assembly. The Board of Directors is responsible for following-up the execution of the substantive strategic objectives, the most important of which are: the bank’s strategy, its employees, and the supervisory role of the Board. In order to support the governance system in the bank and ensure its effectiveness, the Board shall carry out the following functions:
•Approving the strategic guidance as well as the main objectives of the bank, overseeing them and ensuring the access of all objectives and plans to all the bank’s employees.
•Approving the risk policy and the risk management mechanisms.
•Approving the organizational structure and identifying the structure of the authorities and the responsibilities in the bank.
•Selecting the bank’s senior executives, overseeing them, and substituting them if necessary after consulting the chief executive officer.
•Supervising and following up the senior management of the bank.
• Ensuring that the BoD exercises its powers with regard to holding the management accountable and exercises its right to have a clear explanation and interpretation of the accountability issues.
•Making available all true information for the members of the Board of Directors in the suitable time so that they could be able to carry out the process of estimating the management performance.
•Holding regular meetings with the senior management and with the Internal Audit Department of the bank to review and discuss the applicable policies, and to follow up the progress in executing the bank’s strategic objectives.
•Establishing effective communications channels in the bank, and exchanging comprehensive and accurate information on a timely manner.
•The non-executive members of the Board shall meet at least once annually in the presence of the Chairman of the Board of Directors and without the presence of the executive members of the Board.
•Monitoring and supervising the bank’s activities taking into consideration that the Board’s functions shall not include any executive tasks.
•Showing deep understanding and effective practice of the monitoring and oversight roles as well as controlling and managing any potential conflict of interest of the bank’s management.
• Carrying out the required disclosure including disclosure to the Central Bank of Egypt with respect to the bank’s policies of avoiding conflict of interests and information about transactions with affiliated parties.
•Approving the policies of disclosure and reviewing such policies periodically and supervising its execution in accordance with the provisions of law and of the international standards.
•Assessing the efficiency and effectiveness of the policy and practices of governance as well as the bank’s internal control continuously and regularly.
• Managing any potential conflict of interests in order to identify the weak points and to take the necessary actions to avoid them.
•Disseminating the governance culture in the bank and encouraging all the employees and the senior management to apply the governance practices, as well as directing the bank to encourage its customers to apply the governance rules in their institutions.
•Enhancing the soundness and effectiveness of the bank’s performance and conscious understanding of the regulatory and the legal environment of the bank with commitment to the applicable regulations and laws, and establishing effective relationships with the regulatory authorities.
•Allocating the appropriate time and efforts to ensure the sound performance of the BoD’s duties.
•Maintaining high and adequate level of knowledge and experience and working for the development of this knowledge according to the change in the size of the bank’s operations and the extent of its complexity.
• Approving and certifying the strategies and the policies related to the bank’s risk management, and reviewing them regularly as well as reassessing them periodically while having a conscious knowledge of the risks which the bank encounters.
• Determining the acceptable limits to the risks which the bank encounters.
• Ensuring that the management is taking the necessary steps to define, measure, follow up, and control the risks according to the set policies and strategies.
The members of the Board shall exert the utmost effort to achieve the best interest for the bank taking into account the following two main factors:
First: To take into account the bank’s interests. The members of the Board of Directors shall carry out their duties honestly, in good faith, and with due diligence and attention to achieve the bank’s interest.
Second: Acting for the interest of both beneficiaries and depositors through providing equal treatment. Overseeing the transactions of affiliated and related parties as well as seeking to avoid conflicts of interests, and refraining from taking any decision or participating in making any decision in case of suspecting any conflict of interests with respect to the members’ duties.
•The Chairman of the bank shall verify that the members of the Board develop their skills and abilities and update their knowledge regularly with regard to the bank’s operations in order to be able to perform their duties optimally as being members of the Board or members of committees, and the bank shall provide them with the necessary resources in this respect.
•The Board of Directors shall develop a mechanism or more for rewarding the employees according to their rates of performance, as well as the volume and the level of their achievements in accordance with the Law of the CBE, Banking Sector and Money No.88 of the year 2003.
•The BoD shall approve the bylaws and approve the salaries, incentives, and allowances scale in accordance with the Labour Law issued by Law No.12/2003 in this concern. However, salaries, allowances, and remunerations of the Chairman and his two deputy chairmen as well as the remunerations of the members who are not working in the bank, and the Board of Directors’ attendance allowances are decided by the competent authority that is responsible for their appointment and in accordance with the provisions of the law, the decisions, and the executive regulations in this concern.
• The BoD shall approve the policies of the IT management basis, and shall review such policies regularly especially those related to information security and confidentiality.
• The BoD shall approve the bank’s policies.
• The BoD shall approve the bank’s balance sheet.
• The BoD shall approve the bank’s authorized signatures.
• The BoD shall approve the bank’s committees.
• The BoD shall approve the bank’s committees.
• The BoD shall approve the bank’s committees.
• The BoD shall mandate powers and authorities to some committees that shall report to the Board of directors.
BoD’s performance evaluation:
The Bank’s Board of directors shall follow a specified system to carry out self – assessment on the board level as well as on its committees level as a single unit, and on the level of the performance of each member individually. The purpose of assessing the members of the Board individually is to identify and to know the effective participation of each member and the extent of his/ her commitment to perform his/ her duties (including the member’s contributions of time and effort in the Board’s meetings and committees, and his/ her performance of duties).
The Chairman shall be responsible for evaluating the performance of the members, where he identifies the strengths and weaknesses of the Board and makes changes to the Board, if necessary, by reappointing or dismissing some of the Board members.
The Board shall disclose in its annual report how the assessment process is carried out.
In the context of the continuous efforts of Agricultural Bank of Egypt to develop its banking system, and to maintain its safety, the bank applies the best banking practices. The bank formed committees to study the optimal method to set, develop, and support the governance, the internal control, and the compliance systems, and to reinforce the role of the regulatory authorities.
The Board of Directors Committees
The Board shall form standing or temporary committees from amongst its members as well as from the bank employees to help the Board to discharge its duties. The Board shall specify the duties, the competences, and the method of work of those committees, for example, the internal audit committee, and the executive committee, in accordance with the provisions of the law of the Central Bank of Egypt (CBE), Banking sector and Money issued by law No. 88 of 2003 and its executive regulations, and the governance committee in accordance with the instructions of the banks governance issued by the CBE on 23/8/2011.
The Board’s committees play an important role in supporting the board of directors in decision-making process where the committees derive their strength and powers from the mandate of the Board. The Board may delegate some powers but it remains responsible for those powers. The Board shall determine the competences and powers for each case and shall ensure their adequacy. It has the power to appoint the heads of committees and the members thereof, and to determine how the committees will report. It also has the right to oversee the effectiveness of those committees.
The bank shall make available the sufficient information to the committees in order to carry out their duties and commitments. We will address some of these committees in terms of their formation and competences which are referred to in article 82 of the law of the CBE, the Banking sector and Money No. 88 of 2003, and articles 27, 28, 29 of the executive regulations of the same law as well as the instructions of banks governance issued by the CBE that are represented in the internal audit committee, the executive committee and the governance and nominating committee.
The General Assembly
The bank’s general assembly shall be formed in accordance with the bank’s law No.117 of 1976, and the law of the CBE, Banking sector and Money No. 88 of 2003, and the decisions issued in implementation thereof. The general assembly shall be attended by the Chairman, the members of the board of directors and the auditors (they shall be appointed in accordance with the provisions of the law of the Central Auditing Organization) without having counted votes. The general assembly shall be held annually during the three months that follow the end of the bank’s fiscal year in order to review the report of the Board of Directors concerning its activity and its financial position, as well as the auditors’ report, and to ratify the bank’s financial statements that include the balance sheet, the income statement, the cash flow statement, as well as to determine the share of profits to be distributed.
The bank’s general assembly undertakes in particular the following:
- Approving the financial statements and profit distribution.
- Amending the statute including prolonging or shortening the bank duration and increasing or decreasing its authorized capital and its paid-up capital.
- Deciding merging or splitting the bank. The decision issued in this concern shall not be effective unless approved by the competent authorities.
The Governance and Nominating Committee
The formation of the Governance and Nominating Committee:
The governance committee consists of three Non- executive board members.
Terms of Reference of the Governance and Nominating Committee:
The Governance and Nominating Committee is responsible for the following:
- Evaluating the bank’s governance system regularly.
- Suggesting appropriate changes to the governance policies that have been certified by the board of directors.
- Preparing a governance periodic report for the bank as a whole.
- Auditing the annual report of the bank, particularly with regard to the terms of disclosure and other terms related to governance.
- Considering the notes of the Central Bank of Egypt (CBE) on the governance system to be taken into consideration.
- Keeping, documenting and following up the reports concerning the performance evaluation of the board.
- Submitting proposals concerning the nominating of the independent members, as well as submitting proposals related to the appointment or the renewal of the membership or the exclusion of any of the members.
The Risk Committee
The formation of the Risk Committee:
- The Risk Committee consists of three non- executive board members.
- The bank’s risks officials shall be invited to attend the meetings of the committee (as necessary).
- The committee shall convene monthly and the chairman of the committee appoints the secretary of the committee.
- The committee may utilize what it considers appropriate from inside or outside the bank to assist in carrying out its duties and responsibilities.
- If any of the members is not able to attend the meetings, the chairman of the committee may be asked to agree on the attendance of other colleague from the senior management of the same sector.
Terms of Reference of the Risk Committee:
The Risk Committee is Responsible for:
- Developing and implementing the frame work of risk and control.
- Ensuring the development, implementation of the frame work of the risks in the entire bank’s business, as well as ensuring the maintenance of such framework, so that it matches the framework and the principles of governance.
- Submitting proposals concerning the strategy and the policies of how the bank manages risks (including the strategy of the capital and the management of liquidity and credit, market risks, operational risks, compliance, reputation risks and any other risks the bank may face). The bank’s board shall approve and certify these proposals after the appropriate amendments are made.
- Following up the functions of the bank’s risks management and the extent of compliance to strategies and policies of risk management.
Internal Audit Committee
The formation of the internal audit committee:
- The audit committee consists of three non- executive board members who have the appropriate experience to ensure the achievement of the required balance in capacities and knowledge, and the adequate expertise with regard to the financial and accounting issues as appropriate to the bank’s size and the complexity of its operations.
- The committee has the right to choose what it considers most appropriate from the bank staff.
- The committee meetings are attended by the head of the Control and Inspection Sector, the head of the Financial Affairs Sector, and the compliance general manager, in addition to those who are invited by the committee from the other board members or the bank’s executive managers without having counted vote.
- In accordance with article no. 28 of the executive regulation of the Central Bank, the banking sector and money law promulgated by law no. 88 of the year 2003, the committee shall convene at least once every 3 months. The meeting shall be attended by the 2 auditors (the Central Auditing Agency) upon the invitation of its chairman or at the request of any of the auditors. The committee has the right to choose what it deems appropriate to assist in its work.
- The Chairman of the committee submits the minutes of the committee’s meetings and its recommendations to the bank’s board of directors to take the necessary actions.
- The Chairman of the committee appoints the secretary. The committee shall prepare annual report about its work and its recommendations to be submitted to the bank’s board of directors.
- Either of the auditors may request for holding a committee meeting if he considers this necessary.
The Executive Committee
The formation of the executive committee:
The executive committee consists of the executive board members and the chief financial officer of the bank, and is headed by the chairman of the bank. The committee has the right to choose what it considers most appropriate from the bank staff to assist in its work.
The responsibilities of the executive committee:
- Studying and taking decisions on finance and credit facilities in the framework of the powers authorized thereto in accordance with the credit granting rules determined by the bank.
- Studying and taking the decisions on the contributions to the companies’ capitals in the framework of the powers authorized to the committee.
- Expressing opinion on the reports of rating the finance and the credit facilities provided by the bank to its customers, and the provisions proposed to be allocated to meet them, and expressing opinion on the reports of evaluating the contributions to the companies’ capitals, to be submitted to the board of directors with opinion.
- Expressing opinion on modifying the organizational and the functional structure of the bank and on the rules and regulations of the work progress.
The committee is also authorized with responsibilities in the following fields:
–Treating the non- performing debts.
–Investments and contributions.
–Or in other fields.
The committee shall convene monthly or whenever required. The decisions are taken by absolute majority (more than 50%of the members). In case of tie the side of the Chairman shall prevail. The committee may be held in the presence of four of its members; in this case, the consent of all members on the soundness of the decision is required. In case of the absence of the committee Chairman, the members’ unanimous consent is required. And in all cases, the absence shall be registered in the committee minutes.