Corporate Governance report

Sound corporate governance is central to achieving BBK’s objectives and fundamental in maintaining a leading position within the local and regional banking sectors.

The Bank takes pride in ensuring that exceptional standards of corporate governance are met. Our corporate governance policy is underpinned by international standards of best practice.

Initiatives in 2019

BBK implemented a number of initiatives over the past year to fulfil its corporate governance strategy. The evaluation process for the Board and its committees was successfully completed and recommendations were made for improvement. An action plan was put in place to achieve the short- and long-term recommendations.

The role of the Board’s ad hoc committee for credit approvals continued, concluding with a number of key recommendations.

The Board reviewed the independence of directors through an annual exercise taking into consideration the regulatory requirements, as well as best practice.

The Board Secretariat, in coordination with BBK’s Compliance Department, also conducted testing to ensure compliance with the High Level Controls module of the Central Bank of Bahrain (CBB) rulebook. The Board Secretariat also developed a conflict of interest policy for Board members, which was approved by the Board.

Awareness programmes were arranged for the Board and Executive Management with the objective of continuous development and keeping abreast of updates in the technology sector. A special session dealt with the enhancement of corporate governance, including environmental and social issues and sustainability reporting.

Corporate governance philosophy

BBK shall continue to enhance shareholders’ value, protect their interests, and defend their rights by practising the pursuit of excellence in corporate life. The Bank shall not only comply with all statutory requirements – including the Corporate Governance Code of the Kingdom of Bahrain and the High Level Controls module of the CBB rulebook – but also formulate and adhere to strong corporate governance practices.

BBK shall continuously strive to best serve the interests of its stakeholders, including shareholders, clients, employees, and the public at large.

The adoption and implementation of corporate governance is the direct responsibility of the Board of Directors, and this endeavour is in line with the policies of regulatory authorities and statutory requirements in the Kingdom of Bahrain and other countries where BBK operates.

Risk appetite statement

Risk appetite is the level and type of risk that the Bank is willing to assume to achieve its strategic and business objectives, keeping in perspective the obligations to its stakeholders.

The risk appetite of the Bank is both a qualitative and quantitative measure and reflects its level of risk tolerance in normal as well as in stressed scenarios. It is expressed as a measurable key performance indicator (KPI), a tolerance limit, or as a qualitative guideline.

The Bank has a well-defined Risk Appetite Framework, comprising the Risk Appetite Statement along with: (a) well-defined performance metrics in the form of KPIs; (b) risk limits, exposure criteria, restrictions and controls, lending and investment standards as laid out in the internal risk policies and procedures manual; (c) capital and liquidity benchmarks, which are monitored in the Asset Liability Management Committee meetings; (d) key business and risk management objectives, goals, and strategy, which are defined in business, investment and risk management strategies; and (e) management and oversight structures in the Bank through Management and Board committees.

Our risk appetite defines the desired performance levels, which in turn are embedded into the management of various risks within the Bank as well as the capital of the Bank. Our risk appetite is integrated into the strategic, capital, and risk management planning process across business verticals.

The Bank measures the contribution of each business vertical against KPIs.

The Bank aims to optimise the risk/reward for the benefit of all stakeholders, and this is reviewed and implemented through strategies (business, investment, risk management, internal capital adequacy assessment process), which are closely reviewed annually. The Bank’s primary exposure is to credit risk along with other Basel Pillar 1 and Pillar 2 risks assumed in the normal course of its business. The risk appetite statement is also reviewed though a Risk Management Strategy document by the Executive Management, and recommended for approval to the Risk Committee and the Board annually.

The Bank’s risk appetite requires, among other things:

  • A high level of integrity, ethical standards, respect, and professionalism in our dealings.
  • Taking only those risks which are transparent and understood, and those which can be measured, monitored, and managed.
  • Ensuring that the Bank has adequate levels of capital adequacy on an ongoing basis as mandated by the regulator (currently 14 percent) and as assessed by the Bank in its internal capital adequacy assessment process (ICAAP) document; ensuring that the capital requirements and capital planning are incorporated in the Bank’s capital management strategy.
  • Ensuring that the Bank has access to adequate levels of stable, efficient, and cost-effective funding to support liquidity and lending or investing requirements on an ongoing basis; that the Bank has in place a robust liquidity management framework and contingency plans to monitor and manage liquidity both in normal and stressed liquidity conditions, in addition to monitoring key liquidity ratios (internal and regulatory) in Asset Liability Management Committee meetings on a monthly basis.
  • Adhering to the core principles of lending, which are enshrined in the general lending policy of the Bank.
  • Maintaining a robust credit management framework with focus on geographies where the Bank has physical presence (Kuwait, India, Dubai and Turkey), the GCC region and select MENA and other countries; undertaking exposures to countries within the directives of the Country Risk Committee, and the Bank’s strategy in those countries on a dynamic basis.
  • Having in place a defined monitoring, collection, and restructuring framework for effective recovery mechanism.
  • Limiting exposures to high-risk activities which may culminate in tail risks, jeopardising the Bank’s capital and creditworthiness.
  • Striving for optimum profitability through income generation, cost efficiency, and low impairment.
  • Widening the product basket and delivery channels for increasing customer satisfaction; assessing new credit products in a structured form for approval by appropriate authorities so that the underlying risks, benefits, operational processes, system/technology requirements, and legal requirements are understood and managed.
  • Protecting the Bank’s and customers’ interests through robust operational procedures, internal controls, system support, training, and operational risk management processes to mitigate operational risk.
  • Ensuring full compliance with legal, statutory, and regulatory requirements; ensuring adherence to anti-money laundering (AML) and other obligations under international law; providing adequate training and guidance to mitigate compliance and AML risks.

Shareholder information

BBK’s shares are listed on the Bahrain Bourse. The Bank has issued 1,296,891,745 equity shares, each with a face value of 100 fils. All shares are fully paid.

During 2019, BBK converted its perpetual Tier 1 convertible capital securities of BD 86.1 million to ordinary shares. The securities were issued in 2016 with an option to convert to ordinary shares on pre-set dates and conversion rates. Accordingly, an additional 215,243,793 shares were issued as part of the process. The Bank’s issued and paid-up capital therefore increased from BD 108,164,795 to BD 129,689,175. The conversion was approved by the regulatory bodies and by shareholders at the Extraordinary General Meeting on 20 March 2019.

Annual Ordinary General Meeting, Extraordinary General Meeting and Ordinary General Meeting

The Annual Ordinary General Meeting (AGM) and an Extraordinary General Meeting (EGM) were held on 20 March 2019. An Ordinary General Meeting (OGM) was also convened on 20 June 2019.

The EGM held on 20 March 2019 approved the following:

1. Conversion of the Tier 1 capital Perpetual Convertible Bonds amounting to BD 86,097,511 issued by the Bank to ordinary shares with a nominal value of 100 fils per share to take effect on 2 May 2019 to 2.5 shares per bond (approximately 215,243,793 shares with a conversion price of 400 fils) subject to obtaining regulatory approval.

2. Amending Article 7 of the Memorandum of Association and Article 7 of the Articles of Association (issued and paid up capital) as a result of the increase in issued and paid up capital following the conversion of the perpetual Tier 1 convertible bonds amounting to BD 86,097,511, distributed as follows:

(a) BD 21,524,379 (distributed as approximately 215,243,793 shares with a nominal value of 100 fils per share)

(b) BD 64,573,132 as share premium

So that the issued and paid up capital increases to BD 129,689,175 distributed as approximately 1,296,891,745 shares, noting the impact on ownership and the approximate effect of the diluted earnings per share in BD, estimated on the basis of 4 fils per share following conversion of the Bank’s perpetual Tier 1 convertible bonds to ordinary shares.

The EGM held on 20 June 2019 approved the following:

1. The recommendation of the Board of Directors to issue medium term notes in an amount not exceeding USD 700 million under the program approved by the Ordinary General Meeting on March 7, 2010, for a total amount of USD 2 billion.

2. Authorising the Board of Directors (or any person delegated by the Board) to take the actions required with the concerned authorities in the Kingdom of Bahrain to obtain the necessary official approvals from the regulatory authorities to implement the issuance mentioned under item (1) above, as well as to take all necessary steps to implement and update the notes issuance programme mentioned above and issuance of notes from time to time, and to sign the agreements and take all steps and procedures that the Board deems necessary in accordance with the content of the documents and agreements of the notes issuance programme. Also to authorise the Board to take any decision related to the offer of redemption of the notes in any form within the liability management exercise of the Bank, including buyback of existing notes issued in the year 2015 and/or exchange offer.

Minutes of the AGM, EGMs and OGM are published in this annual report.

The Bank submits a Corporate Governance Report to the AGM annually, covering the status of compliance with the related regulatory requirements.

At the AGM, the Bank discloses and reports to shareholders the details under the Public Disclosure module of the CBB’s rulebook. These disclosures include the total remuneration paid to the Directors, Executive Management, and external auditors. The total amount paid to Directors and Executive Management is also included in this annual report.

Board of Directors’ information

Board composition

The Board’s composition is based on the Bank’s Memorandum of Association and Articles of Association, and comprises 12 members. The Board represents a mix of high-level professional skills and expertise. Furthermore, in compliance with corporate governance requirements, the Board Committees consist of members with the appropriate professional experience. Consequently, the Board has five independent Directors. The Board periodically reviews its composition and the contribution of Directors and Committees.

Distribution schedule of each class of equity

The appointment of Directors is subject to CBB approval. The classification of Executive Directors, Non-executive Directors, and Independent Non-executive Directors follows the definitions stipulated by the CBB. The current term of the Board began in March 2017 and ends in March 2020.

Directors are elected/appointed by the shareholders at the AGM. Experts who are non-shareholders or promoters of the Bank may also be elected as Directors.

The election or re-election of a Director at the AGM is accompanied by a recommendation from the Board based on a recommendation from the Nomination, Remuneration and Corporate Governance Committee, with specific information such as biographical and professional qualifications and other directorships.

Group Corporate Secretary

The Board is supported by the Group Corporate Secretary, who provides professional and administrative support to the General Assembly, the Board, its Committees, and members. The Group Corporate Secretary also assumes the responsibilities of Group Corporate Governance Officer and in this context supports the processes of performance evaluation for the Board, Board Committees, and individual Directors as well as the process of access to independent advice and other relevant issues on a Group level. The appointment of the Group Corporate Secretary is subject to approval of the Board.

BBK’s Group Corporate Secretary is Ahmed A. Qudoos Ahmed, who joined the Bank in 2009. His qualifications include a BSc in Engineering from the University of Bahrain in 1996. He is qualified in Board Secretarial practices from George Washington University. He has attended many advance training programmes in corporate governance both in Bahrain and abroad, accumulating over 22 years of experience in the financial sector.

Directors’ roles and responsibilities

The Board of Directors oversees the implementation of the Bank’s strategic initiatives and its functioning within the agreed framework, in accordance with relevant statutory and regulatory structures. The Board ensures the adequacy of financial and operational systems and internal controls, as well as the implementation of corporate ethics and the Code of Conduct.

The Board has a schedule of matters for its decision to ensure that the direction and control of the Bank rest with the Board. This includes strategic issues and planning, performance reviews, material acquisition and disposal of assets, capital expenditure, authority levels, appointment of auditors and review of financial statements, financing and borrowing activities including the annual operating plan and budget, ensuring regulatory compliance, and reviewing the adequacy and integrity of internal controls.

The Board exercises its judgment in establishing and revising the delegation of authority for Board Committees and the Executive Management. This delegation may be for authorisation of expenditure, approval of credit facilities, or for other corporate actions. Such delegation may be approved and expressed under various policies of the Bank. The thresholds for the identified authorities depend upon the operating requirements of the Bank.

The issues of major capital expenditure, divestitures, mergers and acquisitions, and certain strategic investments are within the Board’s authority.

Each Director holds the position for three years, after which he must present himself to the AGM for reappointment. The majority of BBK Directors (including the Chairman and/or Deputy Chairman) are required to attend Board meetings to ensure a quorum. The Board Charter is published on the Bank’s website.

Material transactions that need Board approval

Lending transactions to Directors, at a certain level of exposure, require Board approval. Credit and investment applications exceeding certain pre-defined exposure levels also require Board approval.

Similarly, related party transactions involving members of the Board require Board approval.

Independent professional assistance

The Bank has procedures approved by the Board for allowing Board members to obtain independent professional advice related to the affairs of the Bank or to their individual responsibilities as members, subject to approval by the Board.

Directors’ induction and professional development

The Board is required to be up to date with current business, industry, regulatory, and legislative developments and trends that affect the Bank’s business operations. Immediately after appointment, the Bank provides formal induction for a full day.

Meetings are also arranged with the Executive Management. This will foster a better understanding of the business environment and markets in which the Bank operates. A continuing awareness programme is essential and may take many forms, through the distribution of publications, workshops, presentations at Board meetings, and attendance at conferences encompassing topics on directorship, business, industry, and regulatory developments. In terms of the Training and Competency module of the CBB rulebook, each approved person (including members of the Board) is required to complete 15 hours of continued professional development.

Board and Committee evaluation

The Board performs a self-evaluation process annually. The Board annually reviews its Charter and its own effectiveness, initiating suitable steps for any amendments. The Board will also review self-evaluations of individual Board members and the Board Committees and consider any recommendations arising out of such evaluation. The relevant policy is published on the Bank’s website.

Remuneration of Directors

The Board has adopted a remuneration policy for Directors with well-defined procedures to apply to the Directors’ various remuneration and compensation components, reflecting their involvement and contribution to the activities of the Board and its ad hoc, temporary and permanent committees. The basic guideline of the policy is that participation is considered in terms of attendance at meetings. Participation in a meeting by telephone/ video conference shall be considered as attendance of the meeting. The relevant policy is reviewed periodically to ensure it is in line with regional best practice. Directors’ remuneration is governed by Commercial Companies Law No 21 for the year 2001, and therefore all payments comply with the provision of the law.

Insurance coverage

The Bank provides personal accident insurance coverage for Board Members during travel on Bank assignments. The Bank also has a liability insurance policy for Directors.

Whistle-blowing policy

The Bank has a whistle-blowing policy with designated officials that employees can approach. The policy provides protection to employees for any reports made in good faith. The Board’s Audit Committee oversees this policy. The whistle-blowing policy is published on the Bank’s website.

Key persons (KP) policy

The Bank has established a ‘Key Persons’ policy to ensure that key persons are aware of the legal and administrative requirements regarding the holding and trading of BBK shares, with the objective of preventing abuse of inside information. Key persons are defined to include the Directors, Executive Management, designated employees, and persons under guardianship or control of Key Persons. The Key Persons policy is entrusted to the Board’s Audit Committee. The Key Persons policy is posted on the Bank’s website.

Code of Conduct

The Board has approved a Code of Conduct for BBK Directors and a Code of Ethics for the Executive Management and employees. These codes outline areas of conflict of interest, confidentiality, and the responsibilities of signatories to adhere to best practices. The high-level responsibility for monitoring the codes lies with the Board of Directors. The Directors’ Code of Conduct is published on the Bank’s website.

Relative recruitment/appointment policy

The Bank has in place policies that govern the recruitment and appointment of relatives to the Bank and across its wholly-owned subsidiaries. The policies are:

1. Employment of relatives of first and second degrees are prohibited, whereas employment of relatives of third and fourth degree may be approved by the Executive Management provided it does not lead to a conflict of interest.

2. Employment of relatives at the Bank’s wholly-owned subsidiaries of first and second degree are prohibited for senior managers and above. Any exception must be approved by the Chief Executive.

3. As part of the annual reporting, the Chief Executive must disclose to the Board those individuals who are occupying controlled functions and who are relatives of any other approved persons within the Bank and its wholly-owned subsidiaries.

Conflict of interest

The Bank has a documented procedure for dealing with situations involving conflict of interest of Directors. In the event of the Board or its Committees considering any issues involving conflict of interest of Directors, decisions are taken by the full Board/Committees.

The concerned Director shall leave the meeting room during the discussion of these issues. These events are recorded in the Board/Committee proceedings. The Directors must inform the Board of conflicts of interest (potential or otherwise) in their activities with, and commitments to, other organisations as they arise and to abstain from voting on the matter. This disclosure includes all material facts in the case of a contract or transaction involving the Director.

Development programmes arranged for board members during 2019

1. Digitalisation – 17 February 2019

2. Artificial Intelligence – 17 February 2019

3. Digital Banking and the role of Data Management and Security in the Banking Industry – 30 April 2019

4. Big Data and Internet of Things (IoT) Application on the Banking Industry – 30 April 2019

5. Corporate Social Responsibility – 28 October 2019

6. ESG and Sustainability Reporting – 28 October 2019

Number of development programme hours attended by board members, arranged by the Bank or otherwise

Board members Total no. of hours
Murad Ali Murad 15
Jassem Hasan Ali Zainal 17.5
Mohamed Abdulrahman Hussain 20.5
Hani Ali Al Maskati 47.5
Sh. Khalifa bin Duaij Al Khalifa 25
Sh. Abdulla bin Khalifa bin Salman Al-Khalifa 22
Yusuf Saleh Khalaf 21
Marwan Mohammed Al Saleh 33.5
Edrees Musaed Ahmad 15
Ashraf Adnan Bseisu 41
Mishal Ali Alhellow 59.5
Nasser Khalid Al Raee 62.5

Corporate social responsibility

BBK’s contribution to the well-being of the community is an integral part of its corporate role. Corporate social responsibility is implemented by the Bank through annual appropriation of a budget allocated for donations to finance community-related projects and initiatives. The projects may vary in nature but ought to fall into any one of the following fields: charity, culture, research, education, philanthropy, environmental protection, and sports.

BBK has an approved high-level donation policy for distribution of the donation budget. The policy outlines guiding principles and sets criteria for the evaluation and selection of donation requests, with the ultimate objective of maximising the return on both the Bank’s social image and the benefit of the community. For details on CSR activities conducted by the Bank, please refer to the Sustainability review section in Part I.

Disclosures relating to the Board of Directors

Directors’ external appointments

Directors’ and related parties’ interests

The number of securities held by Directors as of 31 December 2019 was as follows:

Related parties

1. Al Janabeya Company WLL (a family company owned by Mr Murad Ali Murad and his family) owns 1,216,140 shares, and is related to the Chairman of the Board.

2. Arzan Financial Group – Board Member Mr Jassem Hasan Zainal is the Vice Chairman and CEO of this group that has a term loan facility with the Bank of KD 724,000 maturing in May 2021.

Nature and extent of transactions with related parties

None.

Approval process for related parties’ transactions

The Bank has a due process for dealing with transactions involving Directors and related parties. Any such transaction will require the approval of the Board of Directors.

Material contracts and loans involving Directors

Notes: 1. The materiality amount for such disclosures is considered above BD 100,000.
2. 10 Board members hold CrediMax Credit cards with a total limit of BD 139,087 and outstanding amount at the end of December 2019 of BD 26,400.

Directors’ trading of BBK shares during 2019

None.

Board meetings

The Board of Directors meets at the summons of the Chairman (or Deputy Chairman in the event of his absence or disability) or, if requested to do so, by at least two Directors. The Board meets at least four times a year. A meeting of the Board of Directors is deemed valid if attended by more than half of the members.

Meetings of Independent Directors

Since 2012 the Board of Directors has held separate meetings for Independent Directors. In terms of the Board Charter, minority shareholders look to Independent Directors for representation.

For this purpose, regular Board meetings are preceded by a meeting of Independent Directors, unless the Independent Directors decide that there are no issues to discuss.

The agendas for these meetings are the same as those for the regular Board meetings. During these meetings the Independent Directors express their views about certain issues, especially those relating to minority shareholders. The summary of the proceedings of such meetings is recorded by the Group Corporate Secretary and shared with the Independent Directors.

Board meeting attendance

During 2019, five Board meetings were held in the Kingdom of Bahrain in the following manner:

Board meetings 2019

Major issues discussed by the Board during 2019

(Subjects that fall under the Board Committees’ scope are recommended by the respective Committee for the Board’s approval.)

Date of meeting Subject
18 February 2019
  1. Recommendation to the AGM concerning amendments to the Articles of Association of the Bank due to amendments to the Commercial Companies Law
  2. Corporate Governance report to AGM
  3. Quarterly Liquidity Report
  4. Investment Portfolio performance
  5. Financial results
  6. Re-appointment of external auditors and their fees
  7. Anti-money laundering annual report 2018
  8. Succession plan
  9. Review of the Bank’s strategy for the years 2016 to 2018
  10. Risk policies for review
20 March 2019
  1. Board Chairmanship and Board Committees’ Composition
  2. Board evaluation
29 April 2019
  1. Review of the Board Charter
  2. Financial Results for first quarter of 2019 and reviewing related press release
  3. Cyber security
  4. Review of the Audit Committee’s terms of reference
  5. Investment strategy
  6. Risk policies for review
  7. Succession plan
29 July 2019
  1. Financial results for second quarter of 2019 and reviewing related press release
  2. Independent Board Member evaluations
  3. Quarterly liquidity report
  4. Risk policies for review
28 October 2019
  1. Financial results for third quarter of 2019 and reviewing the related press release
  2. Schedule of meeting of the Board of Director and its Committees for the year 2020
  3. Independent Board Member evaluations
  4. Quarterly liquidity report 5 Risk policies for review
  5. Risk policies for review

Board committees

Board Committees are formed and their members appointed by the Board of Directors each year, after the AGM. They are considered the high-level link between the Board and the Executive Management. The objective of these Committees is to assist the Board in supervising the operations of the Bank by reviewing any issues that are submitted by the Executive Management and making recommendations to the Board for their final review.

The Board reserves the right to form temporary committees and discontinue them from time to time, as necessary. Members of the Board are provided with copies of the meeting minutes of the committees, as required by the regulators. During 2019, the Board established an ad-hoc committee to study the Bank’s needs for technological advancement, the objective being to achieve BBK’s digital transformation. Furthermore, the Board ad-hoc committee – Credit Approvals process completed its mandate during 2019 and raised its recommendations to the Board, which the Board approved. There are no other significant issues of concern to report relating to the work of the Board committees during 2019.

The terms of reference for the Board committees (Executive; Audit and Compliance; Nomination, Remuneration and Corporate Governance; Risk; and Independent Members) are available on the Bank’s website.

Board Committees’ composition, roles and responsibilities

Executive Committee

Members Summary terms of reference, roles and responsibilities Summary of responsibilities
Mohamed Abdulrahman HussainChairman
Sh. Abdulla bin Khalifa bin Salman Al Khalifa Chairman
Yusuf Saleh Khalaf Member
Ashraf Adnan Bseisu Member
Mishal Ali Alhellow Member
Reyadh Yousif Sater Member
  1. No fewer than five members are appointed for a one-year term.
  2. Minimum number of meetings required each year: 8 (actual meetings in 2019: 12)
  3. The Chairman and Deputy Chairman must be a Director and elected by the members of the Committee in the first meeting following the appointment of its members.
  4. The quorum shall be more than half of the members and must include the Chairman or the Deputy Chairman; attendance by proxies is not permitted.
  5. The Chairman or Deputy Chairman shall be available at the Annual General Meeting to answer questions relating to the Committee’s functions.
  6. The Committee conducts an annual self-assessment of the performance of the Committee/members, and reports conclusions and recommendations to the Board.
Reviews, approves and directs the executive management on matters raised to the Board of Directors such as business plans, donations, credit/ investment applications, and such other proposals within its authority, and the periodic review of the Bank’s achievements.

Audit and Compliance Committee

Members Summary terms of reference, roles and responsibilities Summary of responsibilities
Murad Ali Murad Chairman (Independent)
Jassem Hasan Zanial Deputy Chairman (Independent)
Sh. Khalifa bin Duaij Al Khalifa Member (Independent)
Edrees Musaed Ahmad Member
  1. The Board appoints no fewer than four members for a one-year term.
  2. The Chairman must be elected by the members of the Committee, from among the Independent nonExecutive Directors in its first meeting after the appointment of the members; the majority of members should also be independent.
  3. Minimum number of meetings required each year: 4 (actual meetings in 2019: 4).
  4. Quorum shall be more than half of the members and must include the Chairman; attendance by proxies is not permitted.
  5. The Chairman or Deputy Chairman shall be available at the Annual General Meeting to answer questions relating to the Committee’s functions.
  6. The Committee conducts an annual self-assessment of the performance of the Committee/members, and reports conclusions and recommendations to the Board.
  7. To review the effectiveness of the Bank’s system for monitoring compliance with relevant laws and regulations and the measures taken by the Management.
Reviews the internal audit programme and internal control system; considers major findings of internal audit reviews, investigations, and management’s response. Ensures coordination among internal and external auditors. Monitors trading activities of key persons and ensures prohibition of the abuse of inside information and disclosure requirements. Approves and periodically reviews the Internal Audit Charter, which defines the purpose, authority, responsibilities and other aspects of internal audit activity. The Internal Audit Charter is available to internal and external stakeholders on request addressed to the Board Secretary.

Nomination, Remuneration and Corporate Governance Committee

Members Summary terms of reference, roles and responsibilities Summary of responsibilities
Murad Ali Murad Chairman (Independent)
Sh. Khalifa bin Duaij Al Khalifa Deputy Chairman (Independent)
Marwan Mohammed Al Saleh Member
Mohamed Abdulrahman Hussain Member (Independent)
  1. The Board appoints no fewer than three members for a one-year term. The Chairman is an Independent Director and the majority of members should also be independent.
  2. The Chairman and the Deputy Chairman must be elected by members of the Committee in its first meeting after the appointment of the members.
  3. Minimum number of meetings required each year: 2 (actual meetings in 2019: 5).
  4. Quorum shall be more than half of the members and must include the Chairman or the Deputy Chairman attendance by proxies is not permitted.
  5. The Chairman or Deputy Chairman shall be available at the Annual General Meeting to answer questions relating to the Committee’s functions.
  6. The Committee conducts an annual self-assessment of the performance of the Committee/members, and reports conclusions and recommendations to the Board.
Assess, evaluate and advise to the Board on all matters associated with nominations and remunerations of Directors and Executive Management. Also, ensure that the Bank adopts and enhances sound corporate governance practices, which are consistent with the Corporate Governance Code of the Kingdom of Bahrain and the regulatory requirements, and which also reflect best market practices in corporate governance, and makes recommendations to the Board as appropriate.

Risk Committee

Members Summary terms of reference, roles and responsibilities Summary of responsibilities
Hani Ali Al Maskati Chairman (Non-executive)
Jassem Hasan Ali Zainal Deputy Chairman (Independent)
Edrees Musaed Ahmad Member
Nasser Khalid Al RaeeMember
  1. At least four members are appointed for a one-year term.
  2. The Chairman and Deputy Chairman must be a Director and elected by the members of the Committee in its first meeting following the appointment of its members.
  3. Minimum number of meetings required each year: 4 (actual meetings in 2019: 4).
  4. The quorum shall be more than half of the members and must include the Chairman or the Deputy Chairman; attendance by proxies is not permitted.
  5. The Chairman or Deputy Chairman shall be available at the AGM to answer questions relating to the Committee’s functions.
  6. The Committee conducts an annual self-assessment of the performance of the Committee/members and reports conclusions and recommendation to the Board.
Reviews risk policies and recommends to the Board for approval. Also examines and monitors the risk issues to the Bank’s business and operations and directs the management appropriately.

Independent Directors Committee

Members Summary terms of reference, roles and responsibilities Summary of responsibilities
Murad Ali Murad Chairman (Independent)
Jassem Hasan Zanial Member (Independent)
Sh. Khalifa bin Duaij Al Khalifa Member (Independent)
Mohammed Abdulrahman Hussain Member (Independent)
Yusuf Saleh Khalaf Member (Independent)
  1. The Committee comprises Independent Directors.
  2. The Committee meets at least once a year.
  3. The meetings are attended by Independent Directors and the Group Corporate Secretary only.
  4. Attendance should be in person.
  5. The Committee discusses issues on the Board agenda according to its terms of reference.
Provides independent views on certain issues, especially pertaining to minority shareholders.

Note: The full wording for the Board Committees’ terms of reference is available on the bank’s website www.bbkonline.com

Board Committee meetings and record of attendance

Executive Committee meetings in 2019

Audit and Compliance Committee meetings in 2019

Nomination, Remuneration and Corporate Governance Committee meetings in 2019

Risk Committee meetings in 2019

*Unscheduled meeting

Independent Director's Committee meetings in 2019

Other meetings

Mr Murad Ali Murad, Chairman of the Board, attended the periodical CBB prudential meetings on 5 February 2019 and Mr Mohamed A. Rahman Hussain, Board Member, attended the same on 24 September 2019.

Shariah Supervisory Board disclosures

In 2016, the Bank established a Shariah Supervisory Board as the Bank conducts some of its transactions according to the Islamic Shariah and must ensure that these transactions are within Shariah standards and norms as required by the regulatory authority in the Kingdom. The AGM in its meeting on 29 March 2017 had approved forming the Shariah Supervisory Board and nomination of its members for three renewable years. The Shariah Supervisory Board members and the meetings during 2019 are as follows:

Shariah Supervisory Board attendance in 2019

Compliance and anti-money laundering

Compliance with regulatory and statutory requirements is an ongoing process. The Bank is conscious of its responsibilities in observing all regulatory provisions and best international practices in its functioning. The Bank has established an independent compliance function in keeping with Basel and CBB guidelines. The AML and Compliance function acts as a focal point for all regulatory compliance and for adapting other best practice compliance principles. The Bank continuously strives to improve the level of compliance in all its activities. The Bank’s adopted corporate philosophy is: ‘BBK shall continue its endeavour to enhance shareholders’ value, protect their interests, and defend their rights by practising pursuit of excellence in corporate life.’ Anti-money laundering measures form an important area of the compliance function, in addition to areas of corporate governance, disclosure standards, insiders’/key persons’ trading, conflict of interest, and adherence to best practices.

Starting 2014, BBK implemented an automated compliance system for the monitoring and management of regulatory requirements across the Bank. This system facilitates the prompt reporting of any compliance concerns or non-compliance incidents as and when they arise, as well as monitoring the status of compliance with CBB Rulebook requirements as applicable to BBK.

The Bank has a documented anti-money laundering programme, including periodic awareness training for employees, recordkeeping, and a designated Money Laundering Reporting Officer (MLRO). The AML policy and procedures are updated annually and were last approved by the Board of Directors in October 2019.

The Bank has deployed a risk-based automated transaction monitoring system in keeping with the anti-money laundering regulations of the CBB. The automated AML system of the Bank was upgraded in September 2018 and rolled over to all concerned divisions across the Bank in order to further enhance the screening and monitoring of customers and their transactions.

The Bank’s anti-money laundering measures are regularly audited by the internal auditors, who report to the Audit and Compliance Committee of the Board. The Central Bank performs periodic inspections of the Bank’s compliance with anti-money laundering regulations; the last AML/CFT examination by the Central Bank was concluded in December 2019. The annual inspection of the central bank covers all areas in the bank including Compliance and AML activities. Additionally, the Bank’s anti-money laundering measures are audited by independent external auditors every year. The audit applies to BBK as a Group. The 2019 external audit report for BBK Bahrain was submitted to the CBB in October 2019. The overseas branches in India and Kuwait and the subsidiary, CrediMax, have designated compliance and MLRO functions to ensure implementation of applicable regulatory requirements. The Bank is committed to combating money-laundering and, towards this end, implements all ‘Prevention of Money Laundering Regulations’ as stipulated in the Financial Crimes Module of the CBB Rulebook and other guidelines issued by the CBB. These regulations and guidelines are consistent with the revised FATF recommendations, ‘Customer Due Diligence for Banks’ paper of the Basel Committee, and best international practices.

BBK is periodically subject to regulatory examination as part of the Central Bank’s supervisory and monitoring role, due to the Bank’s critical role in the national and regional economy. The examination includes Bahrain, India and Kuwait operations, as well as our subsidiary Credimax. The Board of Directors and the Executive Management of the Bank treat all examinations with priority and the Audit and Compliance Committee as well as the Board on regular basis review the progress in addressing any observations raised in order to ensure compliance with the regulatory requirements.

Communication strategy

The Bank has an open policy on communication with its stakeholders, and has adopted a communication disclosure policy consistent with Basel II requirements. Shareholders are invited by the Chairman to attend the annual general meeting (AGM). The Chairman and other Directors attend the AGM and are available to answer any questions. The Bank is at all times mindful and conscious of its regulatory and statutory obligations regarding dissemination of information to its stakeholders.

The Bank provides information on all events that merit announcement, either on its website – www.bbkonline.com – or through other forms of publication. The Bank’s annual report and three years’ financial statements are also published on the website, as well as the Bank’s Corporate Governance Report, Corporate Governance Framework, Whistle-Blowing Policy, Board Charter, Code of Conduct, Key Persons’ Dealing Policy, and Terms of Reference of all Board Committees. Shareholders can complete an online form, which can be found on the website, to forward any queries they may have.

The Bank uses a bulletin board for communicating with its employees on general matters, and sharing information of common interest and concern.