Corporate Governance

Bankmed is committed to practicing and promoting a responsible and sound corporate governance policy. The Board of Directors is actively involved in setting the highest standards of Corporate Governance and exercising strong oversight of the management team. The Bank emphasizes a set of fundamental principles that include: protecting shareholders’ rights, respecting and treating equitably the interests of all stakeholders, defining the responsibilities of the Board of Directors and the Executive Management, pursuing a policy of full disclosures, transparency, and sound practice, in addition to empowering the functions of internal and external auditors as well as those of other banking supervisors. The Board appoints senior and executive managers for key positions at the Bank and ensures that these managers have the necessary skills and knowledge to manage their divisions as well as the appropriate control over the key individuals in those areas.

In this context, the Board of Directors approved the Bank’s Corporate Governance Guidelines.

The Board of Directors of Bankmed is actively involved in setting the highest standards of Corporate Governance and exercising strong oversight of an independent management team. These standards are founded on the core principles of transparency and accountability at all levels of the organization and are ultimately safeguarded by a strong commitment to a high moral standard of honesty and integrity.

The Board and the Bank’s Management are committed to fully comply with established best practices in Corporate Governance including those set by the Central Bank of Lebanon, Banque du Liban (BDL) namely those stipulated in Circular No. 106 and Corporate Governance Guidelines adopted by the Association of Banks in Lebanon (ABL) based on Basel Committee’s recommendations concerning the Principles for enhancing Corporate Governance.

Summary of the Code of Ethics and Professional Conduct

The “Code of Ethics and Professional Conduct” (the “Code”), which is regularly updated and communicated to the Bank’s entire staff, requires all employees to avoid activities that may result in conflict of interest between customers and employees. It also requires all employees to be alert against money laundering activities and exercise honesty and due diligence when performing their duties.

The Board of Directors assesses the appropriateness of the strategy and the extent of its success.

The Board Committees include the: Audit Committee, Risk Committee, Remuneration Committee, Compliance and Combatting Financial Crimes Committee, as well as the Corporate Governance and Nomination Committee.

The Board and its relevant Committees meet regularly with the Heads of Internal Audit, Risk and Financial Control to review policies and to ensure that control functions are properly staffed and that their responsibilities are carried out effectively. The Board, through its Committees and Senior Management, assesses the quality of Corporate Governance at the Bank on an ongoing basis. The assessment is based on the reviewed results of the activities at the Bank, completed by all control units and by the Bank’s independent examiners.

• Board of Directors (Chairman) — ultimate oversight and strategic direction
• Board committees — Audit, AML/CTF & Compliance, Governance & Nomination, Remuneration, and Risk
• Control functions — Internal Audit and Compliance report to relevant board committees
• Executive General Manager — leads day-to-day management
• Assistant EGMs — Treasury & Financial Markets, Chief Financial Officer, Corporate Banking, Remedial Banking & Real Estate, Chief Operating Officer
• Functional heads — Chief Risk Officer, Credit Risk, Compliance, Internal Audit, Marketing & Communication, General Counsel & Corporate Secretary, Senior Advisor to EGM — Retail Banking, Customer Protection

Asset & Liability Committee (ALCO)

The Asset and Liability Committee (ALCO) provides significant oversight and governance of the balance sheet as per the requirements of the Banking Control Commission Circular 250. Its main objective is to monitor and manage the Bank’s assets and liabilities and verify compliance with the Lebanese Central Bank and Banking Control Commission policies and regulations.

• Manages the market and liquidity risks and funding resources
• Sets the Foreign Exchange position limits allowed on currencies for the Bank and its affiliates
• Designs the overall interest risk policy of the Bank and sets the ceilings and limits for the operations allowed

Executive Credit Committee (ECC)

The Executive Credit Committee (ECC) has the Bank’s wide responsibility for maintaining sound, effective credit risk management process. ECC is authorized to assess, review, and approve (within its limits) all the major credits and retail products offered by the Bank.

• Reviews, approves, and delegates approvals to other authorities (within its limits) of all the major credits
• Approves credit retail and consumer products offered by the Bank
• Approves Correspondent Banking lines and the allocation and placement of the Bank’s assets
• Ensures the classification of loans and the transfer of problematic loans to litigious accounts and/or to Remedial Management Division

International Committee

The International Committee’s objective is to abide by the requirements of BDL Circular No.110 concerning the relationship between the Lebanese banks and financial institutions and their affiliates abroad.

• Monitors the international operations of the Bank as well as the progress toward achievement of the agreed upon goals and objectives
• Reviews and expresses an opinion on the financial position and business letters submitted by the affiliates
• Provides the Bank’s Board of Directors with an executive summary of all the Committee’s minutes of meetings

Anti-Money Laundering and Countering Terrorist Financing Management Committee

The Anti-Money Laundering and Countering Terrorist Financing Management Committee (AML/CTF) assesses the effectiveness of the Bank’s systems in fighting Money Laundering and Terrorism Financing activities and provides the Compliance and AML/CFT Committee with recommendations in this respect.

• Reviews the Guide for implementing the provisions of the law on Fighting Money Laundering
• Ascertains the proper implementation and effectiveness of the AML/CTF procedures and regulations
• Reviews the reports submitted by the Compliance Unit and the Internal Audit Unit on adopted procedures and high-risk accounts

Information Technology (IT) Overseeing Committee

The Information Technology (IT) Overseeing Committee ensures that the Bank’s IT strategies, plans policies and projects conform to the business objectives of the whole Bank, and reviews IT operational efficiency.

• Prioritizes IT initiatives and projects across the business units and reviews progress
• Oversees IT deliverables and ensures that it has needed resources to perform its tasks
• Approves the IT Strategy and Operating Plan, annually and as updated

Information Security Committee

The Information Security Committee (ISC) determines the Information Security Policy as well as ensures the proper implementation of corrective measures recommended by the various internal control units in the Bank.

• Defining and aligning the Information Security Policy, scope, and applicability
• Ensuring the implementation of the recommendations and issues raised by the IT Security
• Reviewing and approving the Business Continuity Plan for the Bank

Purchasing & Disbursing Committee

The objectives of the Purchasing and Disbursing Committee are to decide on the disbursements for certain amounts, to approve purchases within certain limits, to qualify and determine suppliers and to inform senior management about the status of work-in-progress projects.

• Allocates and approves the disbursements for certain amounts of purchases
• Approves purchases of assets and Bank applications within certain limits
• Completes bidding and obtains offers from suppliers or service providers for intended purchases

Authorized Signature Granting Committee

The Authorized Signature Granting Committee reviews requests to grant and modify authorized signatures to employees.

• Reviews applications and requests to grant (or cancel) authorized signatures to/from employees at the Bank
• Ensures proper segregation of duties and absence of conflict of interest in granting authorized signatures
• Ensures that the ethical and professional background of authorized signatories fit the predetermined criteria

The Compliance Function assists the Management in verifying that the Bank and its subsidiaries meet relevant regulatory requirements in protecting and enhancing its reputation with its stakeholders to minimize and avoid financial losses.

It ensures proper implementation of the Directives issued by the Central Bank of Lebanon (BDL) and other regulators, in fighting money laundering and countering financing of terrorism by following the highest standards and best practices in implementing the proper due diligence on customers’ accounts and transactions and verifying compliance with relevant laws and regulations. The Compliance Function has succeeded in opening communication channels with the branches, front liners, monitoring units, and the Legal Management Division in Bankmed and other subsidiaries in the Group on one hand, and with the correspondent banks (in coordination with the Financial Institutions Division) and the Special Investigation Commission (SIC) on the other hand in order to ensure proper understanding and full abidance with the Anti-Money Laundering (AML) and Countering Financing of Terrorism (CFT) and Financial Crimes regulations.

The Function also verifies compliance with all relevant laws and regulations and assists Senior Management in identifying compliance risks. The Function reports deviations to the Board AML/CFT and Compliance Committee and Management Compliance Committee.

The Function holds the responsibility for ensuring compliance with General Data Protection Regulations (GDPR), and has the Data Protection Officer (DPO) function under its umbrella.

The Compliance Function is independent from any business and other control activities of the Bank.

Furthermore, the Compliance program is subject to regular independent reviews by the Bank’s Internal Auditors, External Auditors, and SIC who assess the efficiency of the program and assess the Bank’s compliance with the AML directives.

The staff of Compliance collectively have a thorough understanding of banking and financial laws and regulations and are requested to become AML certified through the Certified Anti-Money Laundering Specialists (CAMS) certification.

Bankmed Group Internal Audit Division (GIA) assists the Bank in accomplishing its objectives by bringing a systematic and disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. The GIA operates in accordance with an approved Internal Audit Charter which clearly specifies the reporting level, mission and scope of work of the Internal Audit.

Specifically, GIA applies a systematic and disciplined approach to its assessments to provide reasonable assurance that:

• Risks are appropriately identified and managed
• Governance issues impacting the Bank Group are recognized and addressed appropriately
• Significant financial, managerial, and operating information is accurate, reliable, and timely
• Bank’s policies and procedures are complied with
• Resources are acquired economically and used efficiently
• Bank assets (physical and intellectual), records and data are safeguarded

While the IA coverage at the Bank is guided primarily by the regulations of the Central Bank and the Banking Control Commission of Lebanon, yet this coverage continuously exceeds such requirements and rigorously complies with International Auditing Standards as well as standards of other related supervisory authorities.

The GIA uses a “risk-based” audit approach, a methodology that links internal auditing coverage to the Bank’s overall risk management framework. Such a methodology relies heavily on the efficient and effective use of technology in the conduct of its business.

The GIA maintains sufficient and adequate audit coverage and techniques while maintaining a cost effective approach through developing the GIA electronic audit methodology, namely the “continuous auditing”. Such methodology proved effective and efficient during the pandemic lockdown. It also provided management with continuous assurance regarding special control measures.

The GIA, independent of the Bank’s Management, is managed by the Head of the Group Internal Audit Division who, in turn, reports to the Group Board Audit Committee and to the Chairman of the Board.

The GIA staff, under the supervision of the Head of the Group Internal Audit Division, have unrestricted access to all functions, records, property, and personnel; in order to allocate resources, set frequencies, select audit domains, determine scopes of work, and apply the techniques required to accomplish the audit objectives.

Collectively, the GIA has extensive experience and know-how pertaining to auditing tools and techniques and is composed of dynamic, flexible, and experienced audit Staff. Currently, several GIA managers and staff members hold professional auditing certificates such as CIA, CISA, CPA, CRMA and CRISC Certifications.