Terms of Reference of the Board of Directors. Deutsche Bank (Malaysia) Berhad (As of July 27, 2017)

Transcription

1 Terms of Reference of the Board of Directors Deutsche Bank (Malaysia) Berhad (As of July 27, 2017) 1. Scope and responsibilities 1.1 Mission This Terms of Reference seeks to demarcate the roles and responsibilities of the Board of Deutsche Bank Malaysia Berhad ( DBMB ), the CEO and the s of the Board and Management of DBMB. Interpretation: ALCO means Asset and Liability ; DBMB means Deutsche Bank (Malaysia) Berhad; BNM means Bank Negara Malaysia; Board means the Board of Directors of DBMB; Business means the Conventional and Islamic Banking business of DBMB; CEO means the Chief Executive Officer of DBMB; Chairman means the Chairman of the Board; EXCO means Executive ; FSA means the Financial Services Act 2013; Group means the Deutsche Bank Group; ICAAP means Internal Capital Adequacy Assessment Process; IFSA means the Islamic Financial Services Act 2013; Management means the CEO, EXCO and OPCO members; Member means member of the Board; OPCO means Operations ; Senior Management comprises the CEO, COO, Head of Risk, Head of Finance, Head of Operations and Head of Compliance; Shareholder means Deutsche Bank Aktiengesellschaft; Shariah means Shariah of DBMB 1.2 Principal Responsibilities of the Board Relationship with Shareholder (a) It should be noted that the Board is not responsible to the Shareholder for the revenue or profitability of the Business; and (b) All decisions by representatives of the Shareholder, whether at a regional or global level, which may affect any of the responsibilities of the Board as delineated in these Page 1 of 12

2 terms of reference or by reason of any statutory, legal or regulatory requirements must be notified to the Board as soon as possible for its review and consideration Effective Supervision Over Affairs of DBMB Transactions of fundamental importance to DBMB, such as major strategic decisions or other actions that may have a significant impact on DBMB s assets and liabilities, financial condition or operations must obtain the approval of the Board. This would include the granting of powers of attorney, major acquisitions or disposals of assets or participation in companies, granting of loans and such other transactions which under the Articles of Association of DBMB, FSA/IFSA or the Companies Act 1965 would require the approval of the Board Strategies and Business Plans The Board will review and provide its input on business strategies/plans and target numbers proposed by the various business units or by representatives of the Shareholder from a regional or global level. The Board will receive regular reports from the respective business areas to assess if these strategies and plans are being achieved and reasons for any changes or adjustments. Business plan of DBMB is developed on a yearly basis and updated in the ICAAP Business & Risk Strategies document DBMB Policies (a) Where there are Group policies or changes to Group policies affecting the core operations and main business activities of DBMB these shall be brought to the attention of the Board by the Management. Such policies shall include, but is not limited to policies pertaining to credit administration and control, asset and liability management (i.e. management of liquidity risk, credit risk, market risk, operational risk) human resources, accounting practices & approach, liquidity management (including adequacy of capital), cost containment issues, anti-money laundering, information technology and audit; (b) The Management must fully brief the Board on the proposed policy or changes to the policy, the implications if implemented in DBMB and highlight whether such policies are in conflict with any local statutory/regulatory or legal requirements. All such Group policies must first be tabled in a Management meeting for review and approval before it is referred to the Board for its decision; and (c) The Board in considering and reviewing such policies will have a right to veto or propose variations to such policies taking into consideration local regulatory/statutory requirements and reputational risks issues and/or implications to the Malaysian franchise if applicable. A consensus must also be reached with the head of the relevant business area. All Members are to apply reasonableness in considering the application of the proposed policy upon DBMB and its broader implication for the franchise Selection of Key Personnel The Board shall approve the appointment of DBMB s Senior Management. The Board shall ensure that such proposed candidates are qualified and competent to administer the affairs of the banking institution effectively and soundly. Page 2 of 12

3 1.2.6 Maximum Tenure of Independent Directors (a) Any Independent Director appointed to the Board and the tenure of such appointment shall be subject to BNM's approval; (b) With effect from January 2017, the maximum tenure of a new Independent Director appointed to the Board shall be capped at 9 years, subject to the approval by the Board and BNM for such tenure to extend beyond 9 years; and (c) Existing Independent Directors may continue to serve on the Board until the expiry of their term as approved by BNM Risk Management All Group policies pertaining to risk management including ICAAP policy documents must be submitted to the BRMC for its review and the Board for approval as outlined in Section 3.4. (a) The Board has established the BRMC to regularly review reports on credit, market, liquidity and operational risks and be made aware of the risk exposure of DBMB and its ongoing risk management strategies periodically. The BRMC should be made aware by Management of any litigation and reputational risks in DBMB. It should also be made aware of DBMB s credit risk strategies and credit portfolios, and approve such loans that may require a resolution pursuant to the law or the Articles of Association; (b) The Board must ensure that Group risk management processes which are adopted at the subsidiary level are suitable to the context of local regulations and operating environment; (c) The Board has established a Risk Exposure Executive ( REEC ) comprising the Head of Risk as permanent chair, the Chief Executive Officer, the Chief Operating Officer, and Heads of Finance, Operations and Compliance which shall endorse new products for the BRMC s review and approve all credit applications, except for housing loans and excluding any credit transactions with connected parties, upto the prevailing internal SCEL. The BRMC shall receive regular reports from the REEC on all credit applications approved by it. In addition, the BRMC shall review and approve all recommendations for new products as required under BNM s Guidelines on Introduction of New Products Compliance Risk The board is responsible for overseeing the management of compliance risk, including: (a) Approve the compliance policy and oversee its implementation; (b) Approve the establishment of the compliance function and the position of the Head of Compliance, and ensure that the compliance function and the Head of Compliance are provided with appropriate standing, authority and independence; (c) Discuss compliance issues regularly, ensuring that adequate time and priority is provided in the board agenda to deliberate compliance issues and that such issues are resolved effectively and expeditiously; (d) Provide the Head of Compliance with direct and unimpeded access to the Board; and (e) Annually, evaluate the effectiveness of the overall management of compliance risk, having regard to the assessments of senior management and internal audit, as well as interactions with the Head of Compliance. Page 3 of 12

4 1.2.9 Shariah Compliance To ensure DBMB comply with BNM s Guidelines on the Governance of Shariah for Islamic Financial Institutions and the Shariah Governance Framework (2011), the Shariah will advise and report to the Board on Shariah matters in the Islamic Banking business operations. (a) The Shariah shall review and endorse new and existing Islamic products and services including its key operation procedures manuals to ensure Shariah compliance; and (b) The Shariah as an independent committee report functionally to the Board of DBMB on all Shariah matters and shall provide periodic reports on its deliberation and decisions on Shariah related issues including Minutes of Shariah Meeting Conflicts of Interest (a) To avoid any potential conflict of interest (actual or perceived), Members should not provide business or professional services of an ongoing nature to DBMB; and (b) Any Member is, while holding office, at liberty to accept other Board appointments or conduct other business activities so long as these appointments or business activities are not in conflict with DBMB s business/operations, their duties to DBMB and does not detrimentally affect the Member s performance as a Board Member Confidentiality (a) Members are expected to strictly observe the provisions of FSA/IFSA with regard to banking secrecy and customer information and all other confidential matters of DBMB which come to their knowledge in their capacity as Members and also after leaving their office as Members. This applies in relation to the confidential Board papers and reports they receive and to confidential deliberations. At the end of their respective terms of office, they must return all confidential documents to DBMB; and (b) Any member shall be allowed to seek and obtain the services of auditors, legal advisors and other internal and external consultants in order to discharge their duties with the prior consent of the Chairman provided that the fees for such service do not exceed MYR50,000. Where such fees exceed the amount of MYR50,000 the approval of the Board will be required. 1.3 Delegation and sub-committees Tasks and responsibilities delegated to Sub-Board / Independent s: (a) The Board has established a Nominating and Remuneration ( NRC ) to deliberate on matters pertaining to Board appointments, composition, performance and developing remuneration policy for directors, CEO and Senior Management. The NRC and Board must ensure the overall remuneration policy and compensation plan is aligned and risk adjusted to promote prudent risk taking activities in DBMB, and oversee its implementation to ensure that it operates as intended. The terms of reference of the NRC are as outlined and approved by the Board. (b) The Board has established an Audit and Examination ( AEC ) to provide independent oversight of DBMB s financial reporting and internal control system and ensuring checks and balances within the licensed institution. The Board shall ensure Page 4 of 12

5 the effective functioning of its AEC by regularly reviewing its deliberations and recommendations at each Board meeting. This may be done through a verbal report by the Chairman of the AEC and through the tabling of the minutes of AEC meetings at Board meetings. The Chairman of the Board may also direct the CEO to address such gaps or issues as may be identified by the AEC. The terms of reference of the AEC are as outlined and approved by the Board. (c) The Board has established a Board Risk Management ( BRMC ) to provide independent oversight of DBMB s risk reporting and ensuring risk reports are robust and reflective of the risk appetite of DBMB. The Board shall ensure the effective function of the BRMC by regularly reviewing its deliberations and recommendations at each Board meeting. This may be done through a verbal report by the Chairman of the BRMC and through the tabling of the minutes of the BRMC meetings at Board meetings. The Chairman of the Board may also direct the CEO to address any gaps or issues as may be identified by the BRMC. The terms of reference of the BRMC are as outlined and approved by the Board. (d) The Board has established a Shariah ( SC ) to provide independent oversight of DBMB s compliance with BNM s Guidelines on the Governance of Shariah for Islamic Financial Institutions and the Shariah Governance Framework (2011), the Shariah will advise and report to the Board on Shariah matters in the Islamic Banking business operations. The terms of reference of the SC are as outlined and approved by the Board Tasks and responsibilities delegated to Management committees: The Board, in addition, directs that the day-to-day business decisions that affect DBMB as a whole be deliberated and agreed by consensus through DBMB s Management s such as the EXCO, the OPCO, the ALCO and the Liquidity. The CEO may determine the membership of each of these management committees and the voting or non- voting status of each respective member as the case may be. Members of these Management s are accountable to the Board for all such decisions affecting DBMB as a whole and must seek the Board s endorsement for all policies affecting DBMB as per section All Minutes of the proceedings of these Management s will be regularly tabled to the BRMC for their information to enable the BRMC to escalate matters to the Board. The Chairman of the Board may also direct the CEO to address any gaps or issues should the need arise. The terms of reference of these Management s are as outlined and approved by the Board. 2. Membership 2.1 Chairman and Vice-chairman The Chairman of the Board must be approved by Bank Negara Malaysia. The Chairman must not be an executive, and must not have served as a CEO of the Bank in the past five years. In the Chairman s absence or upon the Chairman s request, all roles and responsibilities as defined herein shall be delegated to the Vice-chairman. Page 5 of 12

6 2.2 Further Members with voting rights The Board shall have a minimum of five Members, of which majority are independent directors at all times.. The Board must not have more than one executive director, unless Bank Negara Malaysia approves otherwise in writing. Together with the Chairman and the Vice-chairman, the Members are the Voting Members. Annex 1 contains a list of all current Board Members. 2.3 Members without voting rights The Board does not have Non-voting Members. 2.4 Membership size The should not have at any time less than five Members. 3. Secretary The Chairman shall appoint a Secretary of the who is not a Member but has the responsibility for, among other things, preparing and coordinating the meetings, including distribution of documents, taking minutes, maintaining a log of actions / issues, reporting to the any open action items and following up with Members on any deliverables. The Secretary shall also be responsible for ensuring the retention of all key committee documents, including agendas, minutes and log of actions / issues. The appointment and removal of the company secretary must be approved by the Board. 4. Decision-making procedures 4.1 Quorum The quorum for all Board meetings shall be a minimum of three directors or 50% of the total number of directors, whichever is higher. 4.2 Majority requirements Decisions of the Board are taken by a majority of the votes cast. Page 6 of 12

7 5. Meetings 5.1 Frequency The Board shall endeavour to hold monthly meetings but may vary such number of meetings with reasonable notice to all members provided always that the minimum number of meetings required by DBMB s articles of association and regulatory/statutory requirements are met. 5.2 Attendance Members must attend at least 75% of the board meetings held in each financial year. Attendance by way other than physical presence, remains the exception rather than the norm, and is subject to appropriate safeguards to preserve the confidentiality of deliberations. 6. operations 6.1 Minutes The Secretary shall take written minutes of each meeting. Such minutes shall include the names of each attendee, all decisions taken and the major discussion points. 6.2 Notification, Information and Periodic Reports The Board must be informed regularly at its meetings on the intended business policy and on other fundamental matters relating to DBMB especially its assets, liabilities, financial and profit situation, risk positions including compliance risk. At its regular meetings the Board will: consider major issues and opportunities for DBMB; review financial updates, CCO Report, including Islamic Banking ; review reports/minutes of the NRC and approve the localised compensation policies and remuneration practices of DBMB; review reports/minutes of meetings of the AEC, audit reports and financial statements of DBMB; review reports/minutes of the BRMC to be made aware of the key risk activities and risk management reports of DBMB; review reports/minutes of the SC to be made aware of the Shariah compliance activities and issues; review reports on compliance to legal and regulatory requirements; review and endorse specific proposals for capital expenditure and acquisitions, if any; approve any IT expenditure in excess of MYR100,000 which has not been previously included under the annual IT budget; review and approve any changes in Power of Attorney and Limits of Authority for DBMB; review and approve updated DBMB policies; Page 7 of 12

8 review, ratify and approve all credit applications exceeding the prevailing internal SCEL; review, ratify and approve all credit transactions with connected parties, considering arm s length principle on approving; on a quarterly basis, the Board will review and approve DBMB s quarterly unaudited financial statements which are submitted to BNM; the Board will annually review and approve DBMB s audited financial statements at the recommendation of the AEC prior to submission to BNM; and the Board will annually review and approve the annual IT budget as recommended by representatives of the Shareholder, whether at a regional or global level. 6.3 Role of the Chairman The Chairman is accountable with regards to organisation of the procedures and tracking of tasks. The key role of a Chairman is to ensure, among others: the smooth functioning of the board, the governance structure and inculcating positive culture in the board; guidelines and procedures are in place to govern the board s operation and conduct; all relevant issues are on agenda for board meeting and all directors are able to participate fully in the board s activities; board debates strategic and critical issues; board receives the necessary information on a timely basis from the management; avenues are provided for all directors to participate openly in the discussion; and that he provides leadership to the board and is responsible for the developmental needs of the board. There shall be clear separation between the roles of Chairman and CEO, to ensure an appropriate balance of role, responsibility, authority and accountability. The non-executive Chairman assumes an important role in encouraging a healthy debate on critical issues and brings to the board the required level of independence and professional scepticism. 6.4 Role of the CEO The key role of a CEO, among others, includes: developing the strategic direction of the Licensed Institution; ensuring that the Licensed Institution s strategies and corporate policies are effectively implemented; ensuring that board decisions are implemented and board directions are responded to; providing directions in the implementation of short and long-term business plans; providing strong leadership that is, effectively communicating a vision, management philosophy and business strategy to the employees; keeping board fully informed of all important aspects of the Licensed Institution s operations and ensuring sufficient information is distributed to board members; and ensuring the day-to-day business affairs of the institutions are effectively managed. The CEO s Terms of Reference is as outlined and approved by the Board. Page 8 of 12

9 Annexes Annex 1: Chain of delegated authority Level name or functional title of individual First delegation chain Second delegation chain (if applicable) Third delegation chain (if applicable) Level 1 Member of the Management N/A N/A Board responsible for Regional Management APAC Level 2 CEO APAC N/A N/A Level 3 Board of Directors N/A N/A Page 9 of 12

10 Annex 2: List of delegated authority to sub-committees or individuals or individual receiving delegated authority Nominating & Remuneration Audit & Examination Board Risk Management Shariah Executive Operating Asset & Liabilities Delegated tasks & responsibilities Deliberate on matters pertaining to Board appointments, composition, performance and developing remuneration policy for directors, CEO and Senior Management. Provide independent oversight of DBMB s financial reporting and internal control system and ensuring checks and balances within the licensed institution. Provide independent oversight of DBMB s risk reporting and ensuring risk reports are robust and reflective of the risk appetite of DBMB. Provide independent oversight of DBMB s compliance with BNM s Guidelines on the Governance of Shariah for Islamic Financial Institutions and the Shariah Governance Framework. Coordinate and oversee Regional Management-related country activities and governance. Coordinate and oversee operations and all governance and regulatory issues. To manage capital, funding and liquidity risk. Procedures of escalation Page 10 of 12

11 Annex 3: List of Members and Secretary Functional title Chairman Chairman Member name Tunku Dato Mahmood Fawzy bin Tunku Muhiyiddin Legal entity DBMB Country Malaysia address Vice-chairman Vicechairman Mr Steven Choy DBMB Malaysia Members Member Dato Yusof Yaacob DBMB Malaysia Member Madam Koid Swee Lian DBMB Malaysia Secretary Company Secretary from Boardroom Limited Ms Wong Siew Yeen DBMB Malaysia Page 11 of 12

12 Annex 4: Periodic reports Report name Recipient Frequency Financial Updates & CCO Report, including Islamic Banking Members Monthly Compliance Report & Regulatory Updates Members Monthly Outsourcing Updates Members Monthly Policies & Key Operating Procedures Members Monthly Limits of Authority & Power of Attorney Members Monthly Unaudited consolidated interim financial statements Members Quarterly Pillar 3 Disclosure Report Members Semi-annual Audited financials Members Annually Business Plan and IT Budget Members Annually ICAAP Risk Management Framework (RMF) Members Annually ICAAP Business & Risk Strategy (BRS) Members Annually Stress Test Policies Members Annually Minutes of Board Meetings Members As and when Page 12 of 12