3.1 (i)
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Safety and soundness of the Bank
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The Board has strengthened the safety and soundness of the Bank through the implementation of the following:
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(a) Strategic objectives and corporate values
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Compliant
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The Bank sets its strategic objectives and goals through the Annual Business Plan which is approved by the Board. These goals and the corporate values approved by the Board are communicated to the business units and other staff. The corporate values are posted on the internal web and all employees are guided by these values.
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(b) Overall business strategy
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Compliant
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The Bank’s strategic plan for the medium term was approved by the Board in January 2018.
The Board engages in the strategic planning and control of the Bank by overseeing the formulation of business objectives and targets, assessing risks by engaging qualified and experienced personnel, delegating them with the authority for conducting operational activities and monitoring the performance through a formal reporting process.
A separate item has been included in the agenda at every Board meeting under the heading “Strategic Discussion” to take up any matter of strategic importance to the Bank. Directors are encouraged to identify and communicate any matter they consider to be of strategic importance.
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(c) Principal risks
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Compliant
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The identification of principal risks, approving of overall risk policy and risk appetite is carried out through the Board Integrated Risk Management Committee and reviewed annually.
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(d) Communication with stakeholders
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Compliant
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The Board approved Corporate Communications Policy ensures that information is made available to shareholders and other stakeholders through timely disclosures made to the Colombo Stock Exchange (CSE), by publicity through the press and electronic media and posts on the Bank’s website. The Bank has an internally developed Code of Conduct for its employees which is posted on the internal web and is accessible by all employees. The Bank has also adopted a separate Code of Conduct for the Directors. During the year, the Code was reviewed and expanded, further bringing it in sync with modern trends.
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(e) Bank’s internal control and management information systems
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Compliant
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The Audit Committee assists the Board in reviewing and evaluating the integrity, adequacy, and effectiveness of the internal control system including management information systems and controls over financial reporting of the Bank. The internal audit carries out periodic reviews to ensure that the internal control systems are functioning as appropriate. The Report by the Board of Directors on internal control over financial reporting is given in the section on Directors’ Statement on Internal Control. The Independent Assurance Report by the External Auditor on the Directors Statement on Internal Control is given in the section on Independent Assurance Report.
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(f) Key Management Personnel (KMP)
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Compliant
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The Board has identified and designated its Key Management
Personnel.
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(g) Authority and responsibility
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Compliant
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Areas of authority and key responsibilities of Directors have been set out in the Corporate Governance Charter which has been adopted by the Board. During the year the Charter was reviewed and updated. The Board has also identified matters specifically reserved for the Board. The duties and responsibilities of other KMPs are formally documented in their job descriptions. Delegation of authority levels for KMPs has also been clearly specified in Board approved circulars.
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(h) Oversight of the affairs of the Bank by KMPs
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Compliant
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Oversight is exercised through Board committees, reporting to the Board as appropriate. Policies and decisions of the Board requiring appropriate follow up are communicated by the Board Secretary to the relevant KMPs.
Minutes of relevant management committee meetings headed by the Chief Executive Officer (CEO) are submitted to the Board for information. KMPs are called upon to clarify matters and make presentations on matters within their purview at the monthly Board meetings.
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(i) Board’s own governance practices
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Compliant
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An annual self-assessment is carried out on a structured format where the Directors submit their individual responses direct to the Board Secretary. The responses are collated by the Board Secretary and submitted to the Board. The effectiveness of the Board’s own governance practices are reviewed by the Board and areas for improvement are discussed for necessary action.
During this year too, in addition to the assessments carried out by the individual members, the Nomination and Governance Committee, based on a separate checklist, carried out an evaluation of the Board and the results were shared with the other members of the Board and an opportunity was provided to them to comment on the findings of the Committee.
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(j) Succession plan for KMPs
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Compliant
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The Bank has in place a succession plan for Senior Management which is reviewed annually by the Nomination and Governance Committee and approved by the Board.
The Committee which was formed comprising a member of the Audit Committee, CEO and Head of HR to improve the process of succession planning met during the year and reviewed the progress on the development initiatives that have been put in place.
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(k) Regular meetings with KMPs to monitor progress
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Compliant
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Meetings are attended by relevant executives when required. Additional information sought by Directors on papers submitted to the Board is clarified by the respective officers. The Board has free access to Senior Management.
The business initiative Board committees established to drive key business areas relating to SME business, and media and branding, continued to function during the year and the members of these committees met KMPs on a regular basis to review the status of implementation of identified strategies.
During the year, the Board held quarterly review meetings in order to monitor progress against the business plan. These meetings provided an opportunity for the Board members to interact with the Senior Management to clarify reasons for variations against the budget and to suggest corrective action.
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(l) Regulatory environment
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Compliant
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The Board Secretary provides all regulatory information required to the Board members.
The CEO briefs the Board on specific issues. Senior Management maintains continuous dialogue with the Regulator to ensure an effective relationship.
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(m) Due diligence in hiring and oversight of External Auditor
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Compliant
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The primary responsibility for making recommendations on the appointment of the External Auditor rests with the Audit Committee.
A formal policy approved by the Board on engagement of External Auditor to perform non-audit services is in place.
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3.1 (ii)
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Appointment and segregation of the roles of the Chairman and CEO |
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Compliant
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The Board elects the Chairman and appoints the CEO. While the Chairman provides leadership to the direction, oversight, and control process exercised by the Board, the CEO is responsible for management of the Bank.
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3.1 (iii)
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Board meetings |
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Compliant
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The Board held 14 Board meetings during the year. The Directors actively participated in the Board’s decision-making process as evident from the Board minutes. Seeking approval of the Board by circulation was done only in exceptional circumstances due to urgency.
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3.1 (iv)
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The Board to ensure that arrangements are in place for Directors to include items and proposals in the agenda of Board meetings |
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Compliant
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Whenever the Directors suggest topics for consideration at the Board meetings, they are included in the agenda under “open discussion” which is an integral part of every Board meeting and other supporting data, reports, documents etc. relevant for the subject matter are circulated among the Directors for information.
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3.1 (v)
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Notice of Board meetings – At least seven days notice of regular meetings and reasonable notice of other meetings to be given |
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Compliant
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Dates for the regular monthly Board meetings are agreed by the Directors at the start of each year and any changes to dates of scheduled meetings are decided well in advance. The Board Circulars and other documents pertaining to meetings are made available well in advance to enable the Directors to participate in deliberations.
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3.1 (vi)
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Attendance at Board meetings |
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Compliant
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All Directors attended more than two-thirds of Board meetings and no Director was absent for three or more consecutive meetings. Click here for Attendance details.
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3.1 (vii)
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Duties and qualifications of the Company Secretary |
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Compliant
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The Company Secretary possesses the qualifications specified in Section 43 of the Banking Act.
The Company Secretary while performing the secretariat services to the Board and shareholders’ meetings, is responsible to the Board in ensuring that Board procedures and applicable rules and regulations are followed.
All new Directors are provided with the necessary documentation on Directors’ responsibilities and specific banking-related directions/policies that are required to perform their function effectively.
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3.1 (viii)
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The Directors’ access to the Company Secretary |
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Compliant
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All Directors have access to the advice and services of the Company Secretary directly.
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3.1 (ix)
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The Company Secretary’s duty to maintain minutes of Board meetings and ensure the Directors’ access to them |
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Compliant
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The Company Secretary compiles the minutes of the Board meetings which are subject to approval of the Board and signed by the Chairman and the Secretary. Copies of minutes are provided and Directors have access to the original minute at all reasonable times.
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3.1 (x)
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The form and contents of the minutes of Board meetings |
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Compliant
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The Board minutes are drawn with reference to Board Circulars with sufficient details to indicate the decisions made by the Board of Directors.
The information used in making such decisions, the reasons and rationale of making them and each Director’s contribution, if considered material, is included in the minutes.
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3.1 (xi)
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Independent professional advice on request for Directors to perform their duties |
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Compliant
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The Board has put in place a procedure where the Directors can obtain independent professional advice, at the Bank’s expense, to perform their duties.
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3.1 (xii)
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The Directors’ avoidance of conflicts of interest |
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Compliant
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The Companies Act No. 07 of 2007 requires Directors who are directly or indirectly interested in contracts or a proposed contract with the Bank to declare the nature of such interest. The Directors have declared their interests in contracts involving the Bank and have not participated in the decision-making.
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3.1 (xiii)
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Schedule of matters reserved for the decisions of the Board |
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Compliant
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Schedule of matters reserved for the Board have been decided on.
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3.1 (xiv)
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Reporting insolvency to the Director of Bank Supervision |
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Compliant
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Solvency is a matter constantly monitored by the Treasury Department, Integrated Risk Management Committee and the Board of Directors. During the year under review, the Bank remained solvent and no event has or is likely to occur that would make the Bank not able to meet its obligations.
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3.1 (xv)
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Adequacy of capital |
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Compliant
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The Bank is capitalised well above the minimum levels required by the Monetary Board in terms of the capital adequacy and minimum required capital.
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3.1 (xvi)
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Corporate Governance Report |
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Compliant
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The annual Corporate Governance Report forms an integral part of the Directors Report of the Bank’s Annual Report.
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3.1 (xvii)
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Self-assessment of the Board of Directors |
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Compliant
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The Board has a structured scheme of self-assessment which is carried out annually. The performance of the respective committees is also evaluated by the other members who are not members of the respective committees in order to ensure that they function effectively. The findings are discussed at the Board meetings and action is taken on areas identified for improvement.
The performance assessment criteria of the CEO is given in 3.5 (xi).
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