Corporate Governance Landscape

INTRODUCTION

At Saradar Bank, we are committed to upholding the highest standards of corporate governance and integrity.

We believe that effective board and management oversight, combined with solid corporate governance practices, drive the long-term success of our Bank. We continuously seek to enhance and promote exemplary core values and strong ethics throughout the organization.

Our systems, processes, and policies are aligned with industry leading standards to ensure full compliance with laws and regulations. We continuously monitor our structures to identify potential improvements, and implement international best practices with regards to transparency and corporate governance.

We seek to lead by example: we have established high standards at all levels and make every effort to meet them. We understand that trust, confidence and engagement with our clients, employees, shareholders and the wider community are at the heart of our business; achievements are a source of pride when reached through the right set of values.

HOW WE OPERATE

At Saradar Bank, the Board sets the tone at the top, working in close collaboration with management to ensure the proper conduct of business. The Board promotes integrity and corporate values, through a sound corporate governance framework.

We are very proud of the Bank’s leadership in corporate governance. Indeed, Saradar Bank received CFI.co’s Best Bank Governance Award in Lebanon for 2016. We continued to build on these strong foundations to properly implement our strategy, deliver a strong performance and sustained growth.

Board Governance Framework

Saradar Bank boasts a clear, well-structured governance framework to support the Board in achieving its long term strategic goals and generating sustainable returns for shareholders. This framework defines the role of the Board and management by setting out their respective priorities and ensuring all critical concerns are addressed.

Corporate Governance Approach

The Board is composed of a number of Directors sufficient for it to exercise its duties and responsibilities, and function efficiently. This number may vary between three and 12 members, and currently, stands at 10.

The Directors’ deep commitment is essential to the Bank’s successful performance. It is ultimately responsible for ensuring the proper conduct of business and for overseeing the management of the Bank. The Board is primarily responsible for improving the Bank’s value to its shareholders by defining strategic direction and objectives, providing leadership and guidance, putting in place a sound corporate governance framework, promoting corporate values and ensuring that effective internal control processes are in place.

In order to preserve its necessary independence from management, the Board aims to increase its number of independent non-executive Directors in future exercises. The Corporate Governance standards set forth herein reflect best practices in the industry. In light of changing circumstances, the Board reevaluates governance principles from time to time and where deemed necessary, to ensure the Bank remains at the vanguard of leading corporate governance practices.

Ownership Breakdown

The Bank’s shareholders are local and international visionaries, including global leaders such as Carlos Ghosn, the Wiederkehr Group, and prominent figures on the Lebanese scene, including the Saradars, Bustanis, Mecattafs, Mikatis, El-Khazens and Shammas.
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Composition of The Board of Directors

A minimum of four Board meetings are scheduled per year, two of which should be held in Lebanon. Board members are required to attend all Board meetings, with exceptions made for extraordinary extenuating circumstances.
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Board Committees

The composition of each Committee is approved by the Board in line with applicable rules and procedures and any other relevant considerations. In endorsing suitable membership on Committees, the Board ensures that the Directors appointed are qualified and have the experience and insights needed to make better decisions.

Board Committees	Chairperson	Members
AML/CFT Committee	Mr. Fady Zeidan (pending BDL’s approval)	Mrs. Laura El-Khazen Lahoud Mr. Joe Issa-El-Khoury Mr. Michel Ferneini (pending BDL’s approval)
Audit Committee	Mr. Joseph Saddi	Mrs. Laura El-Khazen Lahoud Saiﬁ Invest Holding SAL represented by Mr. Christian Mecattaf Mr. Joe Issa-El-Khoury Mr. Christian Steinfels
Remuneration Committee	Mr. Joseph Saddi	Shammas Economic Institute represented by Mr. Nizam Shammas Saiﬁ Invest Holding SAL represented by Mr. Nabil Moukattaf Mr. Joe Issa-El-Khoury
Risk Committee	Mr.Edmond Carton (pending BDL’s approval)	Saiﬁ Invest Holding SAL represented by Mr. Christian Mecattaf Sheikh Jamil El-Khazen Mr. Michel Ferneini (pending BDL’s approval)

BOARD AUDIT COMMITTEE

Assists the Board in fulfilling its duties and supervisory roles regarding the requirements of internal control, internal audit, external audit and compliance with regulations.

Monitors the internal control efficiency and effectiveness.

Follows up on the implementation of remedial measures.

Oversees the internal audit department and supervises its performance.

Verifies that Senior Management tackles recommendations raised in the reports.

Approves the internal audit charter, the audit cycle, and the annual audit plan.

Assesses the external auditors’ performance, autonomy and objectivity.

Discusses with Senior Management and external auditors the financial statements to be published.

Reviews the efectiveness of the system for monitoring compliance with laws and regulations and follows up on any instances of non-compliance.

BOARD RISK COMMITTEE

Assists the Board in fulfilling its oversight responsibilities with regards to risks inherent to the Bank’s strategy and activity.

Monitors overall risk framework.

Reviews and monitors risk policies in line with the Bank’s strategy and business plan.

Reviews and monitors the Risk appetite and tolerance statement.

Ensures that risks are identified, measured, monitored and managed in line with the Bank’s risk appetite and the risk strategy.

BOARD REMUNERATION COMMITTEE

Advises the Board in defining and overseeing the Bank’s policy on remuneration, bonuses and incentives.

Ensures that compensation measures support the strategic goals of the Bank and allow for the recruitment, motivation and retention of senior executives.

Oversees the establishment, maintenance and administration of the Bank’s remuneration programs and employee benefit plans.

Ensures that the Bank’s compensation practices are consistent with the Bank’s vision, values and overall corporate objectives.

BOARD AML/CFT COMMITTEE

Assists the Board in exercising its functions and supervisory role, and in taking appropriate action to fight money laundering and terrorist financing.

Reviews Compliance and Internal Audit reports on adopted procedures, unusual operations and high risk accounts, and regulators and external auditors on the Bank’s compliance with the AML/CFT regulations.

Identifies, assesses and mitigates AML/CFT risks.

High Level Structure

Business Lines

Retail Banking
Private Banking
Investments
Treasury & Capital Markets
Corporate & Commercial banking
Correspondent Banking
Factoring

Management Committees

General Management Committee
Assets & Liabilities Committee
AML/CFT Committee
Credit Committee
Fiduciary Committee
Information Security Committee
Organization and Compliance Committee
Control and Risks Committee
Purchasing and Procrurement Committee
Non-Performing Loans Committee
Digital and Transformation Committee
Performance Management Committee

Support Functions

Compliance
Credit Risk
Finance
Human Resources
Information Technology
Internal Audit
Legal
Operations
Risk Management

Legal Advisors

El Khoury & Partners Law Firm
Roger Najjar Law Firm
Hachem Law Firm

Auditors

Deloitte
Ernst & Young

Remuneration Policy

It establishes clear and transparent remuneration and benefits practices aligned with the Bank’s culture, long-term business objectives, risk strategy, performance, and legislative and regulatory frameworks. The policy and general incentive structures reflect the Bank’s goals for sound Corporate Governance and allow the Bank to strike a sustainable balance between short and long-term value creation and responsibility for its employees, shareholders and communities. It also ensures that employees are offered a competitive remuneration package in line with the market, encouraging them to generate sustainable results and aligning their interests with those of shareholders, clients and colleagues.

The Bank makes every efort to ensure that compensation packages are commensurate with the relevant duties and responsibilities of each individual, are fair and equitable, and integrate incentives clearly and measurably linked to performance both on an individual and corporate basis. Remuneration is designed to be sustainable in the long-term.

STRUCTURE

In the first quarter of every year, the Remuneration Committee examines the Bank’s remuneration strategy and plans in light of the Bank’s performance, local industry practices and market conditions.

The Board reviews, assesses and endorses the remuneration and incentive schemes for the coming year based on the recommendations of the Remuneration Committee. The total bonus amount to be paid is reviewed by the Remuneration Committee and approved by the Board. The cumulative consolidated remuneration disbursed by the Bank is incorporated in the Bank’s budget and endorsed by the Board.

PERFORMANCE EVALUATION

The Bank believes that its main strength is its human capital. The professional growth of its employees is central to attaining the Bank’s vision, mission and strategy. The Bank established a general assessment of its employees to systematically analyze the strong and weaker aspects of individual performance.

Annual performance evaluations are central to the development of employees and the determination of remuneration. Performance evaluations are designed to ensure transparency, and have well-defined, pre-determined KPIs in line with the Bank’s overall remuneration and incentive strategy.

FIXED REMUNERATION

PERFORMANCE EVALUATION

Performance-based incentives are designed to motivate and recognize high performers depending on their contribution to the Bank’s results, performance in line with defined expectations and clear KPIs. Incentives are awarded based on the Bank’s overall financial results, the performance of the business line and/or unit, and individual performance. Both financial and behavioural criteria are taken into account when defining the individual’s bonus

EMPLOYEE BENEFITS

The Bank meets or exceeds benefits described in the Collective Labour Agreement. Various allowances are awarded to employees covering mainly individual and family medical coverage, family and education allowances, housing and transportation in addition to other auxiliary benefits.