Corporate Governance Report 2018
QNB Corporate Governance Report - 2018 — 1 Table of Contents
Chairman’s Foreword ...... 5
Introduction ...... 6
1. The QNB Framework for Corporate Governance ...... 6
2. QNB Group Achievements during 2018 to Enhance the Corporate Governance Framework ...... 9
3. Key Corporate Governance Participants: The Board of Directors (Board/BOD) ...... 26
4. Segregation of the Chairman and Chief Executive Officer Roles ...... 35
5. Remuneration of the Board of Directors and Executive Management Members ...... 35
6. Key Corporate Governance Participants: Executive Management ...... 36
7. Risk Management ...... 41
8. QNB Group Organisation Structure and Succession Plan ...... 42
9. Internal Control System ...... 43
10. External Audit ...... 46
11. QNB Global Ratings ...... 46
12. Capital and Shares ...... 46
13. Shareholders’ Rights ...... 46
14. Transparency and Disclosure ...... 47
15. Conflicts of Interest and Insider Trading ...... 47
16. Handling Customers’ Complaints ...... 48
17. Sustainability and Corporate Social Responsibility ...... 48
18. Spotlight on Specific Corporate Governance Practices at QNB Group ...... 49
Conclusion ...... 51
Appendix (1) The Board of Directors – Biographies ...... 52
Appendix (2) Executive Management – Biographies ...... 54
Appendix (3) QCB Corporate Governance Disclosure Requirement ...... 56
2 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 3 Chairman’s Foreword
Dear Shareholders,
Greetings,
Recognizing the importance of implementation of the best standards and practices of good governance as the cornerstone of maintaining QNB Group’s reputation and enhancing the confidence of potential shareholders, investors and stakeholders, QNB Group continuously develops and enhances the processes of disclosure, internal controls and the decision- making mechanisms as the outputs of governance system and as an integral part of the values and culture of the Group.
In 2018, QNB Group was keen to continue the adaptation and implementation of the best practices in the field of Corporate Governance, in line with the relevant instructions issued by Qatar Central Bank and Qatar Financial Markets Authority. This is reflected in several pioneering initiatives, including the adoption of the policy to protect the rights of stakeholders along with the disclosure and transparency policy, the review and update of the relevant policies and procedures and the rules of the code of conduct, as well as the promotion and dissemination of culture of commitment among all the staff across QNB Group.
Furthermore, this report reflects the vision of the Board of Directors and their strategy which is based upon increasing the levels of effective supervision and their role in monitoring the implementation of the tasks and duties entrusted to the executive management of the bank, while continuously reviewing the challenges and the risks facing the Group and carrying out self- assessment for the performance of the Board of Directors, individually and collectively in line with best practices.
In addition, QNB Group has developed mechanisms for supervising overseas branches and subsidiaries by unifying policies and expanding supervision and oversight, as well as evaluating the performance of QNB Group’s representatives on the Board of Directors of the subsidiaries and associates of the Group, to ensure consistency and complementary vision and of the strategic objectives at the level of the Group as a whole.
We express our appreciation of all the efforts exerted by all the supervisory bodies in the State of Qatar, to raise the standards of Corporate Governance of national companies to cope with the international standards and emphasize that QNB Group is committed to the continuous development of its activities and financial and banking services and to safeguard the interests of its shareholders and clients in a manner that serves the stability of the financial sector and the development efforts in the state of Qatar.
Accordingly, I am pleased to present the Annual Corporate Governance Report of 2018, which summarizes QNB Group’s performance and practices in the area of Corporate Governance, according to the regulatory requirements of Qatar Central Bank and Qatar Financial Markets Authority and leading international practices.
Ali Shareef Al- Emadi Chairman of the Board of Directors
4 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 5 Introduction 1. The QNB Framework for as evidence of a demonstrable commitment to delivering • The Group Board Audit and Compliance Corporate Governance long-term value and sustainability. The Manual was Committee (GBACC) maintains and manages the QNB has a robust set of Corporate Governance measures structured in two parts where the first one sets out the role relationship with the external auditor, oversees in place across the Group that combines all aspects of QNB Group operates a world-class Corporate Governance of the BOD, the Chairman, the Chief Executive Officer and the Group’s annual financial statement audit internal control, risk and compliance. These help QNB to framework that ensures it is fully compliant at every the established committees of the Board and the Executive and internal controls over financial reporting, successfully navigate the constantly changing regulatory level in every country and are able to effectively manage Management. The second part was dedicated to the Risk and oversees the bank’s risk management and landscape, allowing it to meet customer expectations and all risks. QNB’s corporate governance framework is Management and Internal Control Framework, External compliance programs. deliver sustainable value to its stakeholders. Corporate fundamental to the success of its business, reinforcing the Auditor and Shareholders and Stakeholders rights Governance continues to remain a vital component for trust in the brand that allows QNB to deliver sustainable • The Group Board Nomination Remuneration QNB Group in maintaining its robust reputation, both and comprehensive change. QNB Group believes 1.1 Key Corporate Governance Guiding Principles Governance and Policies Committee (GBNRGPC) locally and internationally. In its essence, Corporate that good Corporate Governance facilitates effective, plays a leadership role in shaping the corporate Governance involves maintaining a set of balanced entrepreneurial and prudent management that can deliver In application of article (3) of the QFMA Corporate governance practices of the Group, strives to relationships and interests between a company’s long-term success for the Group and maintain a culture Governance Code, principles of Corporate Governance build an engaged and diverse Board whose management, its board, its shareholders, the community that is in line with QNB Group values. are intended to assist public companies boards composition is appropriate in light of the Bank’s and other stakeholders. and management in their efforts to implement needs and strategy, and actively conducts Corporate Governance standards across QNB Group appropriate and effective corporate governance succession planning for the Board. The Group has adopted various undertakings to improve are naturally pursued in a manner consistent with the practices. Although there is no “one size fits all” our transparency around reporting financial and non- applicable local laws, regulations and codes. It also approach to governance that will be suitable for all • The Board and Management engage with long- financial information to our stakeholders. QNB’s approach follows the recommendations of the international best companies, QNB Group believes that the creation term shareholders on issues and concerns that is vital for evaluating the existing Corporate Governance practices issued by the Basel Committee on Banking of sustainable long-term value is the ultimate are of widespread interest to them and that infrastructure and engaging with our stakeholders across Supervision (BCBS), the Organisation for Economic measurement of successful corporate governance affect the Group’s long-term value creation. the Group to ensure that the level of reporting is robust Cooperation and Development (OECD), the International approach, and it is important that shareholders and Shareholders that engage with the Board and and can withstand public scrutiny. Corporate Governance Corporate Governance Network (ICGN), International other stakeholders understand why the bank has Management in a manner that may affect also provides the structure through which the goals and Chamber of Commerce (ICC) and other leading chosen to use particular governance structures, corporate decision making or strategies, are objectives of the company are set, and the means of international institutions. practices and processes to achieve this objective. encouraged to disclose appropriate identifying attaining those objectives and monitoring performance information and to assume some accountability are determined. Effective Corporate Governance is not an QNB Group’s BOD reviews, maintains and approves a QNB Group adopts and maintains the following for the long-term interests of the Bank and end in itself, it is a means to the proper functioning of a comprehensive set of Corporate Governance policies and primary guiding principles for corporate governance: its shareholders as a whole. As part of this financial institution and the banking sector overall. The procedures to assure and ensure that effective vigilance responsibility, shareholders should recognize commitment to Corporate Culture motivates directors, is exerted by the BOD and Executive Management in the • The Board approves corporate strategies that are that the Board must continually weigh both managers and employees to maximise operational management of the Group’s businesses and activities. intended to build sustainable long-term value; short-term and long-term uses of capital when efficiency and comply with sound principles of conduct, Care and attention is devoted to ensure that Corporate selects the Group Chief Executive Officer (GCEO); determining how to allocate it in a way that is hence ensuring high returns on investment and long-term Governance measures employed are compatible with the oversees the GCEO and Executive Management most beneficial to shareholders and to building productivity growth. legal and regulatory requirements and that they reflect in operating the company’s business, including long-term value. the actual orientation to comply with the international allocating capital for long-term growth and QNB’s well-being, reliability, trustworthiness, safety standards. The roles and responsibilities of the BOD are assessing and managing risks; and sets the “tone • In making decisions, the Board may consider and dependability are key to the financial stability of the segregated from the functions of Executive Management, at the top” for ethical conduct. the interests of all of QNB Group components, Group, and the manner in which it conducts its business whereby the Board assumes the overall supervision including stakeholders such as employees, and corporate governance activities, therefore, is central of the Group and provides strategic direction through • Management develops and implements corporate customers, suppliers and the community in to creating market confidence and business integrity in the approval of the strategic initiatives, policies and strategy and operates the company’s business which the Group operates. the region and across the jurisdictions where it operates. objectives, while the daily affairs of the Group are carried under the Board’s oversight, with the goal of out by the Group Chief Executive Officer, duly supported producing sustainable long-term value creation. QNB Group strongly considers that good Corporate This Corporate Governance Report, reflects QNB Group’s by the Executive Management team. Governance complements and significantly helps efforts to comply with the supervisory and regulatory • The Management, under the oversight of the its long-term business success. This success has requirements issued by Qatar Central Bank (QCB), Qatar QNB Group maintains a Corporate Governance Manual Board and its Group Board Audit and Compliance been the direct outcome of the Group’s key business Financial Markets Authority (QFMA) and all relevant based on the latest regulatory updates from both QCB Committee (GBACC), produces financial strategies, including the commitment of the Board regulatory authorities across our operating footprint. and QFMA in addition to the international best practices. statements that fairly present the Group’s to the quality, integrity and transparency of QNB’s The Corporate Governance Manual is an important policy financial condition and results of operations and financial reports. document, which defines the Corporate Governance makes timely disclosures that investors need, to approach of the Group, the structuring and responsibilities assess the financial and business soundness and of the Board and Management committees. The Manual risks of the company. is also an extremely sought after document for any businesses, shareholders, rating agencies, investors and other stakeholders as they are all increasingly focusing on the application of sound Corporate Governance processes
6 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 7 1.2 Approach to Establish Effective Corporate 1.3 Commitment to Ensuring Compliance with Corporate 2. QNB Group Achievements during 2018 In 2018, in line with regulatory requirements in Governance Governance Regulations to Enhance the Corporate Governance Qatar, Group Compliance conducted a comprehensive Framework assessment to evaluate the independence of the QNB Group`s approach to Corporate Governance The Board of Directors (BOD) and Executive QNB Board. Strengthening the transparency is founded upon a rich legacy of fair, ethical and Management believe that Corporate Governance Risk, Governance and Compliance aspects evolve rapidly and accountability of the Board, including its transparent governance practices, many of which is an essential element to enhance shareholder and there is an inherent need for banks to move away Independent Non-Executive Directors was among the were in place even before they were mandated by confidence, specifically that of minority shareholders from silo-based working cultures and shift towards a main areas of the assessment, which also assessed adopting the highest standards of professionalism, and stakeholders, by increasing the level of collaborative approach by working side by side internally, the Director’s time commitment, board diversity, honesty, integrity and ethical behaviour. As a global transparency of the ownership and control, and the with the various divisions, as well as with external factors affecting the independence of Independent organization, the Corporate Governance practices implementation of effective monitoring systems for parties such as regulators and shareholders. Enhanced Directors, to ensure the appropriateness and followed by the Group are compatible with leading strategic business management. Hence, during 2018, levels of compliance are hard to achieve without a fulfillment of the independence criteria under QCB’s international standards and best practices. Through all necessary efforts were focused towards continuing strong culture starting right at the top, and adoption principles and QFMA’s Corporate Governance code the Governance mechanism in the Group, the Board to create and maintain awareness of the importance of the ‘Spirit of Compliance’ Model. For QNB Group, and rules. along with its Committees undertake the fiduciary of Corporate Governance within QNB Group and on tone at the top is critical and hence Compliance and responsibilities to all the stakeholders by ensuring enhancing Corporate Governance measures. Corporate Governance are core focus areas for the Board Intensive Board Performance Assessment for an transparency, fairness and independence in the of Directors, Board Committees, Executive Management Optimal Leadership Structure decision-making process. In application of article (4) of QFMA Corporate and all other employees and members of QNB Group. As part of its engagement to provide the Board with Governance Code, the annual Corporate Governance This culture is fostered through effective compliance useful tools, recommendations and considerations The Corporate Governance approach is further report submitted annually to both regulators (QCB monitoring and awareness programs across the Group and for increasing Board effectiveness through an strengthened with the adherence to the proprietary and QFMA) aims to ensure a transparent disclosure across different levels. enhanced approach, Group Compliance coordinated QNB Group Business Excellence Model as a means to of the governance practices within QNB Group. It the conduct of a thorough annual self-assessment to drive excellence along with the Balanced Scorecard embodies the Group’s values and policies that all QNB Group is committed to high standards of corporate aid QNB Group’s Directors to optimise their holistic methodology for tracking progress on long-term parties must conform to. The report includes and governance. As part of building a strong ‘Corporate performance. Annually, Directors complete surveys strategic objectives. Furthermore, QNB’s ‘Code of covers areas including, the capital structure, control Governance Culture’ across the Group, QNB witnessed and provide their feedback on Board effectiveness, Conduct’, serves as a guide to the Group, its Directors, measures, key corporate governance achievements, during 2018 several initiatives and developments across composition, culture, focus, optimal leadership management and employees, in articulating and shareholders’ rights and fair treatment, description all levels in terms of corporate governance practices and structure, governance practices and enhancements. reinforcing QNB’s values, ethics and business of BOD charters and its committees, related parties’ arrangements. These new developments targeted either The outcomes are evaluated based on QNB Group principles. It is supplemented with an appropriate transactions policy, succession planning, and periodic the organisational aspects or specific processes at QNB. long-term strategy, business needs, and the evolving mechanism to report any concern pertaining to non- review of professional conduct principles, in order to regulatory environment. adherence to the said Code. ensure the application of best professional practices The below topics summarize QNB’s key efforts in 2018, that meet QNB Group’s needs and objectives. with respect to the enhancement of the Corporate Board annual assessments are the key to ascertaining In 2018, QNB Group ensured effective application of Governance Framework: that fit and proper Directors are working together all aspects of the QFMA issued ‘Corporate Governance effectively, which constitutes in itself a real Code’ and which provides a comprehensive framework 2.1 Enhanced Corporate Governance Practices and strategic asset to the Group since on-going reviews for corporate governance of listed companies Arrangements and reflection of Board performance and dynamics including the main principles for the protection of contribute to organisational, Board and individual the shareholders’ rights and focuses on the principles As part of building a strong Corporate Governance Director improvements. pertaining to strengthen the internal control Culture across the Group, QNB witnessed during systems in the company and to apply and fulfil the 2018 several developments at all levels in terms of Regular Review of Board Policies: Providing Clarity requirements contained therein. Going forward QNB Corporate Governance practices and arrangements. on Roles and Responsibilities Group is also working towards further enhancing, The below topics summarize QNB’s key efforts Maintaining updated and unified Board related managing and reporting it’s environmental, social and in 2018, with respect to the enhancement of the charters, policies and processes is a fundamental governance (ESG) measures. Corporate Governance Framework: part of Group Compliance commitment to providing clarity on the roles of directors and the board as a QNB is in full compliance with Qatar Central Bank Independence Assessment: Independence of Mind whole with the purpose of accelerating decision- and Qatar Financial Markets Authority obligations and Perspectives making and avoiding unnecessary director conflicts. with respect to Corporate Governance. An important role of Group Compliance is to promote good Corporate Governance across QNB Group, and Recent regulatory updates with respect to QFMA’s at the center of sound governance is an effective Corporate Governance Code and new measures Board of Directors (BOD). The long-term success pertaining to Board interactions with stakeholders of the Group is dependent on a quality Board have been outlined and reflected by Group where the Directors are competent, well qualified, Compliance in the relevant charters and policies. committed, with diverse backgrounds and who have independence of mind and perspectives. Consistent and pertinent update of Board documentation contributes to identifying gaps in
8 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 9 knowledge and expertise related to rapid changes Corporate Governance Guidelines for Overseas Disclosure and Transparency Policy: A mind-set of 2.2 Promoting Ethical and Professional Behavior in technology, regulatory and other associated Branches and Subsidiaries: A Strategic Oversight Openness, Authenticity and Integrity aspects, risks and opportunities for the Group. It also While a comprehensive and adequate foundation of To make sound investment decisions, investors need Tone at the Top facilitates developing deeper understanding of the Corporate Governance has been established by Group to trust markets and companies. They also require One of the most critical responsibilities for the robust and well-defined Director’s role along with Compliance within QNB Group, which articulates robust information that is reliable, transparent, Executive Management at QNB Group is to instill a associated governance dynamics. the framework of sound governance, when it accurate, and comprehensive and in accordance culture of ethical and professional behavior. The tone comes to governance of international branches and with accepted international practices. The impact of at the top sets out QNB management’s desire and Assessment of QNB Representatives at QNB subsidiaries, a variety of challenges may arise. As disclosure and transparency on corporate governance commitment towards honesty and integrity whilst Subsidiaries BOD: Enhancing Oversight Methodology the Group grows in size and expands its operations endeavors denotes a shift toward a more intangible ensuring professional standards within the Group. QNB Group owns several subsidiaries globally and to international markets, the number of overseas economy, a more pronounced focus on long-term Starting from the Board of Directors, QNB Group consequently have numerous decision-making branches and subsidiaries tends to increase and results and demand from regulators and other continuously encourages its senior members to be a levels and interactions. Therefore, a number of the decision-making interactions between entities stakeholders for greater transparency. role model for others to follow as the tone at the top challenges may arise with respect to strategic become more challenging. has a trickledown effect on all employees within the objectives, implementation and monitoring of plans, QNB Disclosure and Transparency Policy outlines Group. This also serves as an effective risk mitigation dissemination of corporate culture, risk management, A set of guidelines was released to address certain step-by-step guidance for the concerned divisions tool against fraud, corruption and bribery, insider reporting and mitigations of potential conflicts of specific aspects of subsidiary governance such as on the disclosure of financial, strategic, governance, dealing, conflict of interest, etc. interests, among other matters. As a result, it was of the composition of the subsidiary boards, time spent and performance information taking into account great importance to nominate representatives at the by its Board on the oversight, the approval and differences in banking areas, organizational QNB Group Code of Ethics: Enforcement Board level of each QNB entity/subsidiary in order to executive process at the branches/subsidiaries, the complexities, operational and functional specific One of the key responsibilities of QNB Group is for align interests, protect QNB stakeholders including synergy between domestic and overseas divisions contexts while ensuring that the information is ensuring active application of the Group’s Code of shareholders and create an adequate setting for the and adoption of the Group wide policies and thorough and reliable. Ethics across the Group. Accordingly, Compliance at sustainable development of the Group. procedures at QNB entities. QNB has in place a well-defined mechanism as per The policy is intended to develop periodic reports that industry best practice to identify and report to the In this context, an assessment exercise was conducted The guidelines provide insights in extending incorporate relevant material environmental, social, Board of Directors and Executive Management for any to evaluate the performance of QNB representatives’, sound Corporate Governance practices and policies and governance (ESG) information that investors instances of breach to the code. During 2018, the Bank which are primarily executive managers from QNB downstream to overseas branches and subsidiaries, and other stakeholders increasingly seek going enhanced several standards and guidelines, which Qatar (as the holding company) at QNB subsidiaries’ to ensure appropriate control structures and forward. Adhering to these standards will positively included; data privacy, outsourcing and relationships BOD. The 2018 assessment covered various arrangements, which would best contribute to an encourage more investors to consider adding well- with vendors, declaration on conflicts of interest, Governance aspects pertaining to the establishment of effective chain of Group’s oversight. governed companies to their investment portfolios. and management of staff accounts, investments by a clear communication of the Group common strategy, employees, disclosing confidential information, etc. having regular monitoring meetings and escalation Conflict of Interest and Insider Dealing Policy: Working Cohesively to Protect Shareholders’ Rights channels among representatives to follow-up on It Begins with Top Management The protection of shareholder rights is central to 2.3 Strengthened Financial Crime Compliance the implementation of directives, performance and QNB Group stands committed to maintaining Corporate Governance, and is a focal articulation Structures, Frameworks and Tools deficiencies remediation. the highest levels of fairness, integrity and of companies operating worldwide. In QNB, the responsibility. In this respect, the established protection of shareholder rights begins with an ethical Group Compliance strategically manages QNB’s Monitoring of Shareholding Limits: An Antitakeover Conflict of Interest and Insider Dealing Policy guides corporate behavior, an accurate legal and regulatory Anti-Money Laundering and Combating Terrorism Defense to Safeguard Value Creation all employees from top management to entry-level framework, and robust enforcement of policies and Financing (AML/CTF) framework and related The 5% ownership limit per single shareholder is, in employees, as they make every effort to meet their procedures. It is established by contractual relations activities, where robust systems and controls are theory, used to prevent against a legitimate takeover obligations to QNB’s Board, shareholders, clients, and commitments that are continuously respected and in place to detect and deter the flow of illicit funds bid, particularly in cases where the public interest is personnel and all stakeholders. culturally accepted in the business. through the banks’ financial system. The AML/ under threat. CTF framework is designed to accurately identify The policy addresses potential conflicts of In this regard, the Shareholders’ Rights Protection QNB’s customers in order to conduct regular account Accordingly, any increase over the limit is closely interest between QNB and its employees, contains Policy defines the Group’s various stakeholders and reviews, and monitor and report any suspicious supervised as part of the monitoring of shareholding prohibitions, restrictions and disclosure requirements promotes cooperation between them and the Bank transactions. During 2018, as part of QNB’s limit process, which consists of a set of actions that help identify and manage these risks, and in creating wealth, growth and sustainability. It also ‘Diagnostic Assessment’ to achieve its AML/CTF taken by the bank in monitoring the threshold of ultimately protect the Group’s reputation. It lays out establishes clear rules and mechanisms on the fair framework objectives, the following initiatives were 5% on the shares ownership for each shareholder in the expectations that the Group has for each banking treatment and protection of stakeholders. implemented across the Group: accordance with QNB Group Article of Association area and function and provides the information and and regulatory obligations in this respect. the resources needed to conduct business ethically This key component of QNB’s Corporate Governance Employing Reliable and Secure AML/CTF Systems and in compliance with laws and regulations framework encourages taking the interests of all and Technologies The core objective of this practice is to identify everywhere the Group operates. stakeholders into consideration during the decision- Robust AML/CTF technologies and systems form an shareholders that exceed the limit (under certain making processes, instead of making choices based essential part of an effective AML/CTF Framework for criteria), communicate with them and mutually agree solely upon the interests of shareholders. countering money laundering and terrorist financing on the required actions to remedy the situation. and assist in addressing the ‘de-risking’ within QNB.
10 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 11 In line with QNB’s strategic plan for 2018, Group Your Product, Whistleblowing and Chinese Walls. Spreading the Sanctions Culture: Sanctions Sanctions Documentation Infrastructure Compliance implemented a new ‘Global Screening’ Moreover, Group Compliance periodically circulates Boundless Awareness QNB Group keeps abreast of new sanctions platform for Head Office and overseas branches guidelines across QNB Group with a view to promoting Group Compliance is committed to inculcating a regulations, updates and international political as the main system for the real time screening of employee awareness on new AML/CTF updates and culture of compliance related awareness across QNB challenges and trends. During 2018, Group customers and execution of financial transactions. challenges at both the local and international levels. Group. In accordance with this goal, it developed Compliance developed new guidelines and strategic Furthermore, Group Compliance also developed a Elevating the level of culture is again in line with the targeted Sanctions training programs, customized reports in response to new domestic and international proprietary in-house system i.e. the ‘’Spider Fund top down approach to Corporate Governance. for departments / business units across QNB Group requirements related to sanctions and defined the Tracker System’’, which was deployed domestically including domestic and overseas international minimum standards that QNB Group should comply and across all overseas branches, and which allows Know Your Customers: Our New Compliance Asset branches. This was supplemented with awareness with related to sanctions. The new developed QNB to tailor its scope of AML/CTF reviews for more Group Compliance devotes focused attention to emails and circulars, on-site visits, and ‘’Train the guidelines and reports have resulted in changes to efficiency and visibility while investigating cases ensure proper identification of QNB’s customer Trainer’’ programs to Compliance Officers at some of the existing policies and procedures as well thus creating a more robust AML/CTF Framework. domestically and internationally, and employs overseas branches. as the mechanisms of processing QNB’s business regular and structured KYC assessments to ensure transactions. Group Compliance proactively revisits Harmonizing Screening Mechanisms adherence to this aspect. In this regard, Group To increase customer awareness on sanctions its sanctions policy and related documentation During 2018, Group Compliance launched an Compliance has also established a ‘’Group Compliance programs, Group Compliance developed new infrastructure to enhance its Sanctions Framework initiative to harmonize the mechanism for monitoring KYC Helpdesk’’, within Group Compliance, in Sanctions brochures and flyers, which were based on the impact of such local and international and screening the customers’ database as well as order to enhance the existing KYC monitoring circulated to QNB Corporate customers. These sanctions updates. transactions across QNB Group to ensure that all capabilities within the Group. In addition, a global brochures provided customers with an overview on domestic units, overseas branches and subsidiaries KYC platform across QNB Group is in the process of Sanctions and related programs in place at QNB and 2.5 Building the Fraud Control Framework at QNB Group are transparent and consistent in approach, principles being implemented via a phased approach, which is highlighted what QNB expects from such customers. and methodologies. In this regard, Group Compliance expected to give an accurate view of the quality of During 2018, the Fraud Control Unit under Group focused on the oversight and monitoring of QNB’s the customers’ KYC information and to enhance the Sanctions Safeguards: Tailoring Fundamental Compliance started the foundation of a robust Fraud overseas branches and subsidiaries and reassessed profiling and monitoring processes. Mechanisms Management program, leveraging on industry best the related processes, mechanisms and guidelines To ensure the right safeguards are in place, QNB practices and standards. The Fraud Risk Management for customer and data screening. In addition, KPIs 2.4 Reinforcing the Sanctions Compliance Framework Group diligently maintains a dynamic and updated Program demonstrates the expectations of the Board representing the effectiveness of the monitoring and and Programs across QNB Group list of ‘high-risk countries’ that require focused of Directors and Executive Management and their reporting mechanism were developed to monitor the compliance attention, due diligence, interaction and commitment to high integrity and ethical values achievements of closing alerts at the overseas branches. The ‘Sanctions Compliance Framework’ is a core involvement before processing transactions linked regarding managing fraud risk. A Group Wide Anti- component designed and maintained by Group with such countries. This list is regularly monitored Fraud Policy was approved by the Board of Directors Reporting: Focus on Effective and Efficient Compliance and implemented across QNB Group. and updated by Group Compliance, to keep pace with and rolled out across QNB Group, including its Communication The framework is designed to prevent terrorism and the new challenges and regulatory updates locally International Branches and Subsidiaries. The key QNB firmly believes that better reporting channels organized crime risks, minimize the risk of sanctions and internationally. components of the Fraud Control activities during the and communication systems create a more efficient breaches, abuse of the Group’s products and services year consisted of the following: work environment. In 2018, Group Compliance and to protect the bank’s channels from being used In 2018, Group Compliance conducted a number enhanced its domestic AML/CTF reporting system for illicit purposes. Through the framework, the of sanction related reviews and assessments over Fraud Risk Assessment and re-established the mechanism and template strategic sanctions plan and related programs and QNB’s overseas branches and subsidiaries to tailor The Fraud Control Unit has conducted a structured for Suspicious Transactions Reporting to external initiatives, QNB monitors emerging risks and trends new safeguards and controls. The objective was to and comprehensive fraud risk assessment across and internal stakeholders. The enhanced system linked to sanction breaches, in order to avoid being ensure that QNB Group is not directly or indirectly major products and channels, to identify specific employs balanced checks and measures to avoid any directly or indirectly part of any illegal activity. In involved in any transactions that may breach any of fraud schemes and risks, assess their likelihood and miscommunication or human errors while reporting. 2018, a numbers of sanction related initiatives were the international sanctions programs. Moreover, QNB significance, evaluate existing fraud control activities, Moreover, the criteria for defining Suspicious implemented across the Group, as follows: implemented a new ‘Sanctions Reporting Mechanism’ and implement actions to mitigate residual fraud Transactions was revamped along with employing between Head Office (Group Compliance) and all risks. The Fraud Risk Assessment was performed on a dedicated resources and skilled personnel. Sanctions Systems and Technologies: Safe, international branches and subsidiaries to ensure risk-based approach related to the products, processes, Proficient and Effective that the entire Group follows the same methodology risks (existing and anticipated), and controls. Spreading the AML/CTF Culture: Opportunity In 2018, Group Compliance focused on implementing in handling sanctions related matters and activities is to Discover ‘’Safe, Proficient and Effective’’ automated processes in place. Fraud Monitoring, Prevention and Group Compliance has developed a specialized AML/ at the local and international levels to execute Detection Activities CTF training program, and regularly delivers AML/ transactions with a view to protect QNB and its The Fraud Control Unit performs ongoing monitoring CTF related trainings customized for domestic QNB customers from risks that could potentially occur due of alerts and exception reports to mitigate the risk departments / business units and overseas branches to the human errors. In this regard, an automated of fraud events occurring or not being detected in and subsidiaries. These trainings involve face-to-face system that replaced manual processing of Trade a timely manner. The Fraud Control Unit has also training sessions, awareness emails and circulars, Finance transactions was implemented in order rolled out fraud awareness sessions for employees on-site visits to domestic branches and video calls to avoid human errors, to enhance oversight for across the Group, and has put in place fraud reporting to overseas branches and subsidiaries. In addition to completing required checks and to streamline the mechanisms for International Branches and AML/CTF, the trainings also cover various related process to obtain relevant internal approvals Subsidiaries. aspects such as Know Your Customer (KYC), Know within QNB.
12 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 13 Enterprise Fraud Management System evasion. The Tax Compliance Unit is responsible developed an end-to-end proficient and sustainable content of the CSAQ; added new sections related to In line with the QNB Group Compliance ‘Strategic for managing the entire gamut of FATCA and CRS monitoring mechanism to ensure proper and timely outsourcing, privacy and customer data protection, Plan for 2018’ to improve efficiencies, visibility and related responsibilities across QNB Group. implementation of the new regulatory requirements. automatic exchange of information (tax) and enhance control environment for anti-fraud efforts, enhanced the scoring methodology so that it better we have initiated a clear plan for the implementation The Tax Compliance Unit serve as subject matter Any new requirements are carefully interpreted, reflects the actual compliance risk relevant to QNB’s of an Enterprise Fraud Management system, due to experts in FATCA and CRS aspects and work with discussed and implemented within the given domestic and international activities. roll-out during 2019. This will ensure real and near the different business-units domestically and timeframe keeping in mind the overall impact on QNB real time screening of financial transactions, including with compliance officers at overseas branches and Group. This monitoring mechanism is formalized Compliance Self- Awareness at Overseas Branches non-monetary activities, across users, accounts, subsidiaries to serve as the liaison point in FATCA/ and well documented in the Group’s Compliance and Subsidiaries products and channels, to identify and prevent CRS implementation and reporting programs. In policy with clear instructions on the roles and To improve and enhance the Compliance Self- internal and external fraud across QNB Group. 2018, the Tax Compliance Unit successfully led responsibilities of each relevant party starting from Awareness exercise across overseas branches comprehensive initiatives and programs to ensure the senior management and cascaded down to the and international subsidiaries, Group Compliance Fraud Investigations that the required FATCA and CRS reportable data relevant process owners. During 2018, enhancements tailored the QNB Group ‘Compliance Self-Awareness The Fraud Control Unit has an established set by the regulatory authorities in Qatar and by were made domestically to procedures related to the Questionnaire (CSAQ)’ scoring methodology to process for receiving, evaluating, and treating applicable jurisdictions in overseas branches and handling QCB as well as QFMA circulars and directives deploy the same approach across the entire QNB communications relating to potential fraud and subsidiaries were duly submitted. by clearly chalking out the methods of relaying the Group Network. conducts investigations into potential fraud, taking necessary requirements across the business. into account the scope, severity, plausibility, and 2.7 Enhanced Compliance Monitoring and Oversight The scope of the Compliance Self-Awareness implications of the reported matter. Reports are Compliance Self-Assessment Framework and Questionnaire for overseas branches covers core shared with Management so that appropriate Compliance Monitoring Program Mechanism Enhancements compliance areas (i.e. governance, whistle blowing, corrective actions could be taken, including QNB Group has set in place a robust, detailed and In 2018, Group Compliance sustained its efforts to compliance with QNB policies and procedures, discipline, remediation, asset recovery, training, civil effective Compliance Monitoring Program (CMP) enhance QNB’s comprehensive ‘Compliance Self- compliance with AML/CTF, sanctions requirements, action, and/or criminal referral. across QNB Group. The CMP provides a thorough Assessment Framework’ across QNB Group. The Chinese walls, branch specific ‘Compliance snapshot of where the Bank stands particularly in main objective behind this framework is to identify Monitoring Programs’, systems and regulatory 2.6 Tax Reporting: Enabling Transparent and Effective relation to applicable regulatory requirements. During areas that pose the greatest compliance risks requirements). Group Compliance examines and Tax Information Exchange across QNB Group 2018, QNB’s CMP was remodelled and enhanced to i.e. relevant to corporate governance, sanctions, discusses the outcomes of the self-assessment include the compliance status of every regulatory regulatory compliance and AML/CTF activities. This with the Heads of Compliance and Internal Control Increasing customer tax reporting requirements requirement, the process owner for the same, the undertaking helps QNB prioritize compliance risks at overseas branches in order to implement around the world and the digitisation of the applicability level (i.e. at the Bank domestically or assessments by assigning proper ratings, mapping improvement initiatives. administration of tax has increased QNB’s tax at the Group level), level of importance, the need them to the applicable risk owners and effectively compliance burden. Non-compliance could expose the to update the relevant policies and procedures and allocating resources to perform risk mitigation tasks. For QNB’s international subsidiaries, Group Group to financial costs or penalties or reputational frequency of periodic review. The framework also incorporates a ‘self-awareness Compliance initiated specific new guidelines to damage because of failing to comply with required questionnaire’ directed towards the bank domestic enhance the development of the CSAQ “Compliance laws and practices. The CMP is developed using a risk-based approach divisions, overseas branches and subsidiaries and Self-Assessment Questionnaire” framework and align and is subject to oversight by the Group Chief the feedback is evaluated and validated to identify it with the approach applied at Head Office. All the QNB applies the letter and spirit of the law in all Compliance Officer to ensure appropriate coverage weaknesses and work on areas of improvement. final “Compliance Self-Awareness Questionnaire” regions where we operate. The Tax Compliance Unit across businesses and co-ordination with the risk outcomes at international subsidiaries are within Group Compliance continues to strengthen management functions. Compliance Self-Awareness Questionnaires (CSAQ) communicated to Group Chief Compliance Officer. QNB’s processes to help ensure that QNB’s banking Tied to the ‘Compliance Self-Assessment services are not associated with any arrangements Group Compliance has also implemented a Framework’, the ‘Compliance Self-Awareness 2.8 Augmenting the Capability and Skillset of the Group known or suspected to facilitate tax evasion. The Tax customized version of the compliance monitoring Questionnaire (CSAQ)’ was initiated and developed Compliance Team Compliance Unit applies global initiatives to improve program for analyzing the key regulatory by Group Compliance in 2014 with the objective tax transparency across QNB Group such as: developments at QNB’s overseas branches of testing domestic divisions/subsidiaries and QNB attaches great importance to the professional jurisdictions that could affect their operations, overseas branches and subsidiaries awareness with improvement of its employees and supports them in • The US Foreign Account Tax Compliance Act structures and procedures. An effective compliance regards to their compliance responsibilities and obtaining trainings, certifications and professional (FATCA) monitoring program ensures a well-organized in disseminating the Compliance Culture across development opportunities in an effort to increase Corporate Governance vision. QNB Group. The exercise is used as a multipurpose the work quality and ensure compliance with • The OECD Standard for Automatic Exchange of tool, intended to help QNB determines whether international standards. In this sense, employees Financial Account Information (also known as Effective Implementation Mechanism of Evolving good business practices and adequate internal within Group Compliance are encouraged to pursue the Common Reporting Standard (CRS)) Regulatory Requirements controls, which are required by the regulators as continued development and obtain internationally QNB Group Compliance is in the driving seat when well as through the Policies and Procedures of QNB accepted certifications, professional qualifications The worldwide regulations highlighted above are it comes to complying with the ever changing Group, are being observed and complied with by and credentials in the field of Financial Crime, designed to put in place adequate agreements and complex regulatory landscape. It has been the respective divisions, branches and subsidiaries Regulatory Compliance and Governance to help QNB between different countries to exchange customers’ at the forefront for dealing with new local and of QNB Group. During 2018, Group Compliance Group create a difference in the industry. information aimed, primarily, at combatting tax international regulatory requirements. QNB has continued its efforts to review and update the
14 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 15 In this regards; Group Compliance plans and assigns the program effectiveness. The designed courses 2.11 Preventing Bribery and Corruption measures are embedded within relevant QNB policies training courses to all staff across levels, as per an focused on providing practical insights into actual and procedures. Bribery, fraud and other forms of analysis of their training needs, and initiates proper compliance issues faced by the staff or spotted by Bribery can take place in many types of activities. corruption are regularly assessed and updated using certification programs as appropriate’ such as the Group Compliance during the day-to-day activities. It usually designed to obtain financial benefits or the fraud risk assessment program, which reviews ACAMS Certification training and CISI – QFMA other personal gain. For example, bribes are intended different products, processes, key functions and Regulations Certification Training. A majority of 2.10 Relationship with Regulators in Different to influence behavior – they could be in the form of divisions to assess the inherent corruption and the Compliance staff hold internationally accepted Jurisdictions money, a privilege, an object of value, an advantage, bribery risks. certifications, professional qualifications and or merely a promise to influence a person in an credentials in the field of compliance, AML/CTF, “Compliance” as Single Point of Contact official or public capacity. 2.12 The International Compliance Structure for fraud risk management, fraud investigations, QNB Group Compliance is the focal point of interaction Enhanced Governance financial crime, etc. Group Compliance consists of between the Bank and Regulatory Authorities and QNB’s Framework to Combat Bribery and Corruption qualified experts and helps QNB create a difference in hence it is crucial to maintain a close and clearly At QNB Group, the way of doing things is just as General Data Protection Regulation (GDPR) the industry. established working relationship with all relevant important as what to do. QNB Group seek to create The General Data Protection Regulation (GDPR) is parties including the business units. During 2018, and maintain a work place where every employee a European Union (EU) Regulation that took effect 2.9 Group Compliance Training and Awareness towards QNB Group’s relationship with the regulators was is empowered to achieve the highest business and on 25 May 2018 and provides EU citizens/residents QNB Staff: Incorporating Leading Practices into further strengthened by having clear and transparent personal standards, and where everyone feels proud across the globe with enhanced rights in relation to Compliance Awareness and Training Programs communication channels. Correspondence with to be part of the QNB Group and the job which he the protection of their personal data. As per GDPR, regulators typically includes handling responses to or she does. QNB Group adopts a zero-tolerance European regulators can impose fines up to 4% of QNB Group embraces and continually emphasizes inquiries, customer complaints through the regulatory approach to bribery and corruption and is committed global revenue or EUR 20 Million on organizations the importance of delivering compliance related authorities’ inspection reports. to implementing the highest standards of acting that fail to comply with its requirements. awareness and trainings initiatives as a key part for professionally, fairly and with integrity in all molding QNB culture and for nurturing a positive Regulatory Approvals Support business dealings and relationships, wherever it Group Compliance is the project and function owner environment towards compliance. QNB Group as the market leader in offering cutting operates, by implementing and enforcing effective for GDPR implementation across QNB Group. In 2018, edge and innovative products and services especially processes, measures and systems to counter bribery Group Compliance initiated the implementation Group Compliance on an ongoing basis reviews, in light of the ever growing digitalized environment and corruption. of a robust GDPR program across QNB Group and adopts and implements within its training programs, and breakthroughs across the world, it is critical for particularly for the EU entities where it operates (i.e. regulatory requirements and compliance related the Group to ensure that any new initiatives and QNB maintains a comprehensive group-wide ‘Anti- UK, France and Switzerland). Implementation of global best practices, including but not limited to innovations which impact our business, operations, Bribery and Corruption’ policy and framework, to GDPR has been undertaken via a phased approach those issued by the ‘Qatar Central Bank (QCB)’, Qatar systems and controls are line with relevant laws and provide information and guidance to those working and Group Compliance has been actively working Financial Market Authority (QFMA), The Qatar regulations. In 2018, Group Compliance assisted the for the Bank on how to recognize and deal with bribery with involved stakeholders across the Group to Financial Centre Regulatory Authority (QFCRA) business units and support functions in seeking the and corruption issues and to specify clearly the ensure an efficient and effective implementation. and the ‘Financial Action Task Force (FATF)’ necessary regulatory approvals from QCB, QFMA and obligation of the Board of Directors, Management and recommendations on ‘Continuous Training and other regulatory authorities for numerous activities, employees in relation to their duties in the prevention Assessing the Compliance Framework at Education for Employees’ and international best which included offering new products and services as and fight against corruption and bribery. QNB also International Representative Offices practices, at all levels of the organization across QNB well as development of existing ones. encourages reporting of suspicions through the In 2018, Group Compliance initiated a new framework Group. This approach serves to enhance compliance appropriate communication channels (such as through for assessing the compliance function and activities awareness and sensitivity among QNB’s employees, Regulatory Reports QNB’s confidential Whistle Blowing mechanism) to of the international representative offices in thus aiming to protect and enhance QNB Group’s QNB Group has in place a highly efficient mechanism protect the Bank’s image and reputation. cooperation with Group Strategy, with the objective reputation globally. to collate and report all required information from of testing the entity’s’ awareness with regard to their a regulatory perspective in a timely and accurate Strengthening our Integrity compliance responsibilities. The framework serves Compliance Strategy: Risk Based Approach towards manner. In this mechanism, the responsibility of Corruption and bribery violates the public’s trust, as a multipurpose tool, intended to assist the Group Awareness and Training Programs submitting required regulatory reports rests with the threatens economic and social development, and in determining whether good business practices and A key focus of QNB’s compliance awareness and various business units. Group Compliance coordinates hurts fair trade and the employees at QNB Group adequate internal controls, which are required by training programs are to ensure that QNB Group and and ensures that the information shared is true and are committed to act lawfully, ethically and with the regulators as well as through the codes, policies its employees operate in compliance with relevant accurate and is submitted within the given deadlines. integrity. As part of this commitment all forms of and procedures of QNB Group, are being observed laws and regulations across the jurisdictions where Group Compliance has also taken the lead to provide corruption and bribery are unacceptable and the and complied with by the respective representative it operates. Consequently, the programs focus assistance to the regulators on any inquiries and Bank ensures that anti-bribery and anti-corruptions offices at the Group level. on increasing the Group’s reputation regarding inspections in order to resolve pending issues that may measures to ensure transparency and fairness in compliance aspects and ensuring that QNB’s global lead to violations or financial penalties. all its dealings, and when dealing with any third brand is not exposed to jeopardy or risk of impairment. parties, outsourcing and external vendors. The fundamental standards of integrity under which In 2018, the compliance training strategy was QNB Group operates do not vary depending on where enhanced in order to further align the content of the we work or whom we are dealing with. Controls and training courses with QNB employee needs, while checks are also in place across QNB Group to make enhancing the trainees experience and thus improving sure anti-corruption and anti-bribery related risk
16 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 17 Compliance Documentation Infrastructure Alignment of strategic risk management (SRM) structures has Notifiable Event Process’ (QNEP) and ‘Events Loss of international accounting and reporting standards at QNB International Subsidiaries been implemented. The goal of this initiative is to Data Management’ (ELDM) at a Group wide level was to produce precise financial information that Group Compliance introduced a ‘document better align responsibilities and functional team also enhanced. A new methodology for ‘Risk Control accurately reflects QNB’s financial position. infrastructure alignment project’ in 2018, which mandates with respect to management of Enterprise Self-Assessment’ (RCSA) was also developed and focused on aligning the compliance related Risk, Portfolio Management, Risk Systems/MIS, which incorporated a process based approach. Adoption of IFRS 9 documentation at QNB Subsidiaries with QNB Change Management, ALM/Liquidity/Market Risk In line with the International Financial Reporting Group policies and standards. Operating in different and Global Risk Support. In terms of systems and tools, a new operational risk Standards (IFRS), QNB Group has adopted IFRS 9 jurisdictions is challenging given jurisdiction specific tool and third party risk management module was with effect from 1 January 2018. The key changes obligations and requirements. The goal of this Addressing QCB’s Requirements under Basel III implemented at QNB. QNB also implemented and related to new standards include: initiative was to allow the QNB subsidiary network As part of ‘internal capital adequacy assessment enhanced its card fraud monitoring platform ‘Smart to benefit from and to leverage Group Compliance’s process’ (ICAAP) recommended enhancements, Vista’ (BPC) to enable effective risk-based monitoring • Classification and measurement of financial robust compliance documentation infrastructure the standards for model review and validation alerts and analysis of QNB card customer transactions. assets after initial recognition when developing new compliance documentation or was formalized at QNB through publication of the Additionally, risk controls were implemented for • Impairment of financial assets with the enhancing existing documentation. This initiative related Group policy. In addition, an ‘Enterprise ‘Manual Key Entry’ card payment transactions of QNB introduction of Expected Credit Loss (ECL) is being conducted in a phased approach and in the Stress Testing’ framework was developed for firm- acquired ‘Point-of-Sale’ card transactions. model initial phase where we focused on analyzing the wide implementation in 2019. In line with QCB’s compliance documentation at three of QNB’s largest requirements, a capital risk report was introduced Strategic Risk Management System Enhancements IFRS 9 implementation has brought about for subsidiaries. In subsequent phases, the project will that included a comparative analysis of the ‘internal QNB undertook implementation of a ‘credit financial institutions more stringent controls and extend to the remaining subsidiaries. ratings-based’ (IRB) approach and related impacts impairment measurement solution’ to meet reviews of data to support granular reporting to QCB and which is reported through the appropriate compliance requirements of IFRS 9 and QCB along with enhanced financial auditable disclosures. 2.13 Strategic and Operational Risk Management committees at QNB. and in order to enable regular streamlined IFRS 9 is embedded as a part of management Governance Measures management reporting. The related operating model reporting at QNB. Incorporation of Group Structures at Overseas enhancements for IFRS9 include the establishment Risk management within QNB Group is a key focus Entities for Effective Risk Management of a third party review mechanism that addresses Preparedness for Implementation of Value Added Tax area across all levels of the bank. QNB enjoys a Group Risk implemented enhanced oversight of modeling outputs, staging analysis as well as (VAT) in Qatar robust risk management framework and governance overseas branches through cascading of limits accounting and reporting requirements. With the upcoming implementation of the Value structure that ensures a crucial balance between and controls as well as by establishing deeper Added Tax (VAT) regime in Qatar, QNB has begun risk and reward. QNB Group adopts a centralized engagement and reporting lines with international In relation to new securitization funding trades, preparing itself for the implementation of VAT with approach to risk management, complemented subsidiaries to achieve alignment with group wide Group Risk have developed and maintained pricing the assistance of an external consultant to guide the by local expertise and knowledge. This ensures adopted standards. A model governance framework models to enable the bank to independently monitor implementation process at QNB Group and to identify proactive risk governance and management at the was also implemented, including the establishment these transactions to validate margin requirements key areas for improvement, to comply with the consolidated and the local level. of a technical committee. and to assess requirements for collateral levels to upcoming tax regulations in this regard. manage risks on these trades. New retail scorecards Group Risk launched several initiatives during 2018 Risk SLAs were revisited across QNB’s international were also developed to improve decision-making and Corporate Governance Framework Enhanced to to tackle the evolving challenges across the globe in network to ensure alignment of responsibilities and which aid efficiency. Ensure Effective ‘Internal Controls Over Financial order to consolidate the risk management framework, to align local risk committee structures and charters Reporting’ (ICOFR) enhance governance measures and preserve the with group standards. There was also focused group 2.14 Financial Disclosure Regimes Synchronized with the Based on regulatory developments issued by QFMA safety of QNB Group. oversight on the review of international risk policies Corporate Governance Framework during 2017, QNB Group engaged an external auditor and procedures, which resulted in enhanced overall in 2018 who performed an extensive risk assessment Operational Risk Governance Framework Group Risk reporting and controls in relation to The importance of transparent and timely financial of QNB Group’s ‘Internal Controls Over Financial During 2018, QNB implemented and published a new overseas branches and subsidiaries. disclosures, as a component of the Corporate Reporting (ICOFR)’ for the purpose of ensuring group wide ‘Operational Risk’ framework document Governance framework, greater investor relations full compliance with QFMA’s issued ‘Corporate for heightened governance of operational risk New Operational Risk Mitigation and Monitoring and enhanced international regimes is growing and Governance Code’ including: aspects. There was also restructuring and expansion Systems / Programs focus on the financial control role has increased of the Group Operational Risk division to enhance 2018 witnessed the creation of a new ‘Third Party Risk in terms of producing pertinent and transparent • QNB’s compliance with the implementation of operational risk mitigation measures across QNB Management’ department within the Operational Risk financial information with no margin of error to the leading international standards in auditing and Group. A ‘Group Operational Risk Management division at QNB to analyze, control and manage risks financial community in general. the preparation of financial reports as well as Sub-Committee’ was also created for evaluating the presented to QNB, its data, performance, security, its compliance with international auditing and operational risks at domestic and overseas branches. operations and financial position by third (other) Financial reporting disclosures are essential to the accounting standards (IFRS/IAS) and (ISA) and parties. A new ‘Merchant Risk Acquiring’ function was shareholders of a company because they frequently their requirements Realignment of Strategic Risk Management also created within the Fraud Oversight unit, with a use these disclosures for their economic decisions • Appropriateness and effectiveness of internal Structures focus on merchant card payment transactions fraud about the business. Investors and shareholders thus control systems implemented at QNB Group Following the segregation of Credit Lending division control, and for effective risk governance of new QNB- consider transparent financial disclosures as a key • QNB’s compliance to develop the required at QNB and based on recommendations from an acquired merchants. To further mitigate operational part of corporate governance and a strong indicator internal policies and procedures independent review of risk capabilities, a realignment risks during 2018, the escalation process for ‘QNB of the strength of a company’s practices. QNB Group continually strives for stringent and timely adoption
18 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 19 • QNB’s compliance to its Articles of 2.16 Strengthened Governance Mechanisms for Boosting Global Credit Practices through Focus on patches and preventing associated vulnerabilities. Associations and with the provisions of the Credit Practices Skills and People The Patch Management Solution including the Law and the authority’s relevant legislations, During 2018, QNB deployed Head Office credit staff software monitoring solution is also rolled out to all including the provision of the QFMA Corporate Focusing on Credit Process Improvements to overseas branches and subsidiaries. These staff QNB International branches. Governance code In 2018, the Group Credit division at QNB undertook deployed overseas report to Head Office Credit Senior standardization of credit submissions from all Management. They have a key objective of ensuring New Trading System 2.15 Reinforcing Governance of Information QNB branches and subsidiaries using a set of fit for common standards in the processing of credit and QNB’s Asset and Wealth Management Division is Security Measures purpose credit templates and financial spreading. to act as a point of reference to local staff to achieve in the process of implementing a new IT system for Moody’s Risk Analyst (a ratings tool) was also a better awareness of the Group’s risk appetite, trading, which will increase automation, generally, New Cyber Security Committee to Enhance adopted at two international subsidiaries, Egypt and risk acceptance criteria, analytical approach and and diminish the risk of human error. The system- Information Security and Management of Switzerland – both of which previously operated underwriting standards. This in turn is expected to customization phase was initiated in 2018 and the Cyber Risks using legacy ratings tools. This has enhanced QNB’s improve QNB’s overall time to market performance new system is expected to be operational in 2019. QNB is implementing enhanced governance ability to benchmark exposures in these countries through the ‘right first time’ philosophy. committee structures to enhance management against its global portfolio and ensure consistent Enhanced Systems and Controls at of cyber related and information security risks ratings practices across the QNB network. 2.17 IT Infrastructure Enhanced to Support Overseas Branches across the Group. This is also in line with the QCB’s Governance Measures During 2018, QNB Group implemented a number requirements which advocate measures to enhance Credit Risk Dashboard for Improved Reporting of key initiatives to strengthen risk management information security and management of cyber risks To improve management information reporting QNB launched several initiatives during 2018 to measures and ensure effective oversight of systems across financial institutions. To align with QCB’s across QNB Group, a new ‘Credit Risk Dashboard’ was tackle the continuously evolving IT challenges and and controls at overseas branches. In accordance with requirement on technology risks and QNB’s goal to created and implemented in 2018 by the Credit and to implement effective systems and controls with a these initiatives and to align with leading practices adopt leading measures, QNB has formalized the Risk divisions. This dashboard enhances reporting view to minimizing risks. Key initiatives include: employed at Head Office, QNB’s international money creation of a new ‘Group Cyber Security Committee’ and monitoring at a portfolio level across QNB’s and security transfers system, at overseas branches, (GCSC) structure, to enhance management of cyber branches. Key data (for example: NPL Rates, Expired Global KYC Platform was enhanced by implementing heightened control related and information security risks across the Accounts, Sector Exposures, Weighted Ratings, A completely new platform for ‘know your limit access and time bound measures. In addition, Group. This committee will be classified as a ‘Tier 1’ etc.) will be available from a single source system. customer’ (KYC) validation is in the process of being the core banking system at overseas branches was committee who will monitor, amend and implement Furthermore, this report will follow a uniform implemented in Qatar and across the network of reinforced to ensure synergy in systems across QNB the Group’s cyber security strategy in line with the structure and format for all branches. overseas branches. Group, along with application of an authorization expectations of the Board. The committee will also matrix for adopting the four eyes concept. develop and monitor the implementation of the IT International Credit Governance Model Enterprise Payment Hub solution (EPH) and cyber security strategy and plans across the A new ‘International Credit Governance’ project The implementation of a centralized payment 2.18 Effective Integration with Internal Audit to Support Group. The ‘Group Cyber Security Committee’ will was undertaken by QNB during 2018, in association processing engine, ‘Enterprise Payment Hub’ (EPH) Corporate Governance Processes also have oversight over QNB’s IT security program. with external consultants and a target governance was completed in the beginning of 2018. EPH was The committees will comprise responsible parties model and roadmap produced to further integrate also rolled out to QNB’s international branches Oman, Internal audit is an independent and important from various functions and levels within QNB. subsidiaries to standardize the structures, processes Kuwait, India, Paris and London. It is in the process of managerial control tool, directly linked to the rules and credit operating model across the Group and being rolled out to additional QNB network countries of the business in the way it offers fundamental Implementation of Improved Systems to Support to cascade sector, geographic and product limits during 2019. security by providing the necessary level of Compliance to the Technology Risks Circular (from throughout the Group. Furthermore, an ‘International reasonable and expected assurance related to the QCB) and Global Leading Practices Portfolio Monitoring and Risk Review’ team was CBX System internal control system, which is one of the corporate In 2018, following regulatory directives regarding established to review QNB’s international operations QNB is upgrading its Cash Management System to governance pillars. In this context, QNB Group management of technology risks and in line with by entity with a focused deep dive into a different the state-of-the-art ‘CBX platform’, which will enable Internal Audit Division (GIAD) have undertaken international best practices, QNB allocated the overseas branch or subsidiary each month. handling of higher volumes, improve efficiency several developments during 2018, focusing on necessary budget to purchase and deploy three and address the full range of financing needs across supporting this role for safeguarding effective solution enhancements; namely related to ‘Privileges Enriching Credit Systems multiple channels. Corporate Governance across QNB Group. Access Management’, ‘Data Leakage Prevention’, During 2019, Group Credit introduced a new and ‘Data Classification’ to enhance management ‘Covenants and Monitoring’ system and a new ‘Early Mobile Banking Enhancements Oversight of Regulatory Obligations of technology and information security risks across Warning’ system to improve its processes, increase QNB’s ‘Mobile Banking Platform’ has been enhanced QNB continually ensures that internal audit related QNB Group. The deployment of the solutions will efficiency, enable better monitoring and better risk to add additional customer friendly features and assignments, particularly those set by regulators take place during 2019. management capabilities. QNB is of the view that the the platform is being rolled out to overseas branches during 2018, are effectively performed; such as right technologies could have a meaningful impact as well. the examination of reconciliation of collaterals of for the bank, particularly while detecting early securities and immovable property as against records warning signals of risk deterioration. Patch Management Solution at the ‘Securities Exchange and Land Registry’ and A patch management solution for the automatic examination of the process underlying ‘Capital patch distribution, patch implementation, patch Adequacy’ and ‘Stress Testing’ methodologies monitoring of servers, workstations and network relating to operations in various jurisdictions. Group devices was implemented for timely update of Internal Audit also performed ad-hoc assurance
20 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 21 activities in response to requirements of home and operating between “Met Expectations” and “Above (LDP) and Management (MDP) continued to target Revising Organization Charts host regulators. Expectations” in all its activities. the promising talent identified both local and Key organization revisions and enhancements, international entities. particularly in business and risk areas were Initiatives and Awareness Programs for Effective Focusing on Nurturing Talent in Internal Audit implemented within QNB in 2018. The expansion of Risk Management GIAD has continued to place importance on resource Career Development QNB’s international business operations triggered • Internal Audit launched a risk and control development, with due emphasis and priority placed Career development remains one of the key these movements in order to streamline international awareness program across international on development of Qatari nationals. Currently over strategic initiatives of QNB Group. During 2018, entities with the parent base organization for branches to help improve the risk culture 60 percent of GIAD staff hold recognized professional QNB continued to extend support to staff to smooth liaison in business activities. Revisions within the Group. This program will continue in qualifications, certifications and credentials required take-up wide ranging and relevant external and and enhancements also effected existing country 2019 and similar programs will be rolled out to for their respective roles which include banking, audit, professional certifications as part of the mentoring structures under the International Business Division domestic branches. risk management, anti-money laundering controls, process of current and future leadership. The Career at QNB. anti-terrorist financing controls, fraud investigations, Management team, in partnership with direct • Internal Audit supports the continuous governance, technology audit, cyber security, etc. managers and department/division heads, provides Governance of International Subsidiaries improvement of the Group’s risk management Particularly, Qatari national audit staff are encouraged, targeted support to develop self-motivated employee Group Human Capital is actively engaged in QNB’s framework by highlighting emerging risks as well as supported, to pursue professional pools at all levels with the simple objective of helping governance of international subsidiaries by providing related to various business and operations certification/designation relevant to internal audit and them to grow in their respective roles and fulfil their support in administering the revision of QNB’s processes. banking, in some cases, university education. For 2019, career aspirations. Appropriate career development positional organization structures and job descriptions. continued focus will be placed on developing Qatari opportunities and development road map options • Internal Audit continued its contribution to nationals in their all-round development in banking are created for employees to meet both individual Employment Engagement Survey (EES) cyber-security risk control, monitoring and and professional auditing skills. and business needs. Aligned to this and through To better identify staff aspirations, the annual improvement of security. divisional partnership, guidance is provided to EES was conducted in 2018. All QNB employees Plans for Enhancing Internal Audit Governance enable the identification and fast-track learning and from Qatar as well as from the overseas branches • High-level governance reviews on the Group’s Activities in 2019 development of high potential employees as part of a took part in the survey to express their views and international subsidiaries were conducted to • Establishment of a ‘Global Specialized/Focused formal talent pool. opinions about QNB. The survey is conducted and ensure alignment with the Group standards. Audit Unit’ to cover Group-wide financial crime administered by a leading external third party audit, thus supporting various initiatives to An appropriate mix of ‘on job trainings’ (OJT), agency to encourage transparency and fairness for • The internal audit documentation infrastructure combat financial crime and taking cognizance development experiences at the workplace driven by employees. Based on the results and findings, the was reviewed and updated during 2018 to of the fact that financial crime represents a top employees and their Direct/ Department Manager, culmination of this activity is to formulate action reflect necessary changes in the regulatory concern of regulatory bodies. coupled with formal learning via classroom and plans on improve initiatives identified by employees. environment, emerging risks and alignment eLearning through web-based technologies now Further implementation of vital points derived from with the Group entities. • Implementation of an enhanced ‘governance’ forms part of the development plan creation. the EES results will be through action plans linked operating model over the internal audit Development plans are reviewed on regular basis to divisional performance indicators to achieve the External Quality Assurance Review functions of the Group’s large subsidiaries. to monitor effectiveness of implementation and desired results. Group Internal Audit Division (GIAD) engaged the application of learning most importantly there services of the ‘IIA-USA Quality Assurance Services’ 2.19 Corporate Governance and Human Resources is an engrained culture across the business that Global Mobility for conducting an external quality assurance review Management: Strategic Partners encourages career development amongst employees. Successful staff deployments to international QNB of the internal audit function. This was in conformity entities continued and this numbered over sixty with ‘Standards for Professional Practice’ of internal QNB Group Human Capital plays an important role 360° Assessment placements. 2018 deployments aimed to achieve audit and part of continuous improvement that in building and maintaining trust relationships The 360-degree assessment and feedback two targets i.e. qualified Qatari Nationals to receive underpins professionalism. This review displayed between QNB Group and its employees. During 2018, mechanism tool was introduced for QNB Senior and advanced development through international that QNB’s internal audit’s activities in Qatar QNB Human Capital Division launched/carried out Middle Management in 2018, and aims to enable exposure and specialist staff to subsidiaries to “generally conforms” to the standards and the IIA several initiatives and enhancements to improve them to identify their strengths and potential improve control and coordination within the Group. code of ethics, demonstrating GIAD’s commitment the relationship and confidence that QNB has in its development needs. to maintaining professional standards and ensuring employees and in turn to provide the Group with the Employee Rewards Programs high quality in all aspects of internal audit services. best talent and skills required to achieve QNB’s vision. Group Wide Trainings The ‘Gawakkoum Alla’ staff appreciation campaign The Bank continued to hold a number of its training which was a great success in 2017 continued at Internal Quality Assurance Review Leadership Continuity (Succession) Planning courses aimed at developing the skills of its staff and QNB with enhancements in 2018. In 2018, reward During 2018, GIAD launched a survey targeting key To ensure readiness of capable leadership talent promote their professional development. Learning vouchers were extended to first time nominees of stakeholders to seek their feedback to assess internal better prepared to assume higher and complex offerings were focused on a broad curricular of ‘Employee of the Month’ and the nomination eligibility audit’s services, alignment with business objectives, responsibilities, periodic planning reviews continued technical and behavioural development opportunities revised. Additionally, a new recognition policy was risk identification and assessment, and continuous for key leadership positions. Additional emphasis has to staff in both local and international operations. implemented to encourage innovation initiatives by improvement. Results of this survey enabled GIAD been placed on development of potential successors A number of new ‘Risk’ related courses were launched employees, namely the ‘Innovation Award’. to evaluate the level of contribution of audit services through a more rigorous approach to identification i.e. operational/anti-fraud awareness/audit risk and and identify inputs for further consideration. of development needs and effective development risks related to compliance. The results of the survey showed that GIAD is planning. Development programs on Leadership
22 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 23 2.20 Corporate Social Responsibility: Preserving the International Women’s Day CMU Quick Startup 2018 a strategic ‘Innovation Committee’ was initiated Reputation, Integrity and Ethics of QNB Group QNB marked the International Women’s Day Carnegie Mellon University (CMU) in Qatar organized during 2018, chaired by the GCEO and attended by celebrated annually worldwide on 08 March, by the ‘Quick Startup 2018’ event, which was sponsored the Executive Management Team. The Innovation Corporate social responsibility (CSR) is concerned distributing flowers to all women in its offices, in by QNB. This event is positioned as a training Committee reviews and selects innovation proposals with striking a balance between economic and recognition of their social, economic, cultural and program for entrepreneurs mentored by business from across the QNB divisions for implementation. social goals and between individual and communal political achievements. professionals. Students begin the program with a goals. The corporate governance framework at QNB concept and end with a business plan and investor A Dedicated ‘Sustainability Team’ encourages the efficient use of resources while Shelli Yseer Play (theatre) pitch. A panel of judges evaluates the pitches and A new ‘Sustainability Team’ has been established maintaining accountability for the stewardship of QNB sponsored and organized a day for the staff to award prizes or certificates to the top three ideas. The within Group Strategy at QNB, to define the strategy, those resources. Both corporate governance and attend a Qatari political and comedy play at Qatar competition was open to college students and recent drive the culture, manage initiatives, measure the CSR activities within QNB focus on adopting ethical National Theatre. graduates in Qatar. Environmental, Social and Governance (ESG) impacts practices in its business and commitment towards across the Group and report accordingly to stakeholders. its stakeholders and the environment in which it Qatari Society for Rehabilitation of Special Needs Education City Summer Camp The Sustainability Team have the mandate to maintain operates. These responsibilities are necessary to QNB organized a social initiative with the Qatari QNB sponsored the ‘Education City Summer Camp’ oversight of sustainability risks and opportunities and ensure economic prosperity, environmental quality Society for ‘Rehabilitation of Special Needs’ during to offer various programs and activities for children. advise management teams accordingly. and social justice. Drawing on the tight relationship the holy month of Ramadan. The event aimed at The aim was to foster in children and young adults between corporate governance and CSR, QNB highlighting the importance of small contributions, a love for learning through fun and stimulating Reporting to Head Office Group, through the Corporate Communication made in whatever available capacity, in changing educational activities. The camp recognized physical Management teams at subsidiaries currently report division demonstrated strong commitment to social other people’s lives. education as an essential component of a child’s directly into their respective Board of Directors. responsibility initiatives to enhance the impact and development and wellbeing, and used character Critical control functions, such as Finance, Internal perception of QNB within its environment, while World Environment Day building to encourage teamwork and cooperation. Audit, Compliance and Risk maintain strong encouraging all QNB Group employees to participate QNB demonstrated its commitment towards the functional links with all majority-owned subsidiaries in QNB’s corporate social responsibility activities. World Environment Day by launching a new Garangao Night and collect regular information on day-to-day recycling initiative in support of the UN World Embracing its Qatari culture, QNB celebrates the operations. As part of an initiative undertaken in During 2018, some of the main initiatives undertaken Environment Day and Qatar 2030 Vision goals. The Garangao night every year on the fifteenth night of 2018 to further strengthen the management and by the Group to demonstrate a strong commitment to initiative aimed at encouraging the staff to recycle all the holy month of Ramadan. In 2018, QNB organized governance of the Group, the functional links are CSR include: paper waste through dedicated bins located within diverse events to celebrate the event and distributed being expanded to the rest of the organization, such every filing and printer room. This initiative was gifts to children in Qatar. that it includes business and other support functions. A. Participation in Social Activities launched in collaboration with Elite Paper Recycling, a local Qatari recycling company that produces Kawader Planning and Evaluation of Strategic Initiatives Autism Awareness Day quality craft paper and carton packaging. QNB sponsored Kawader program that featured 31 QNB maintains a portfolio of the various strategic QNB Group organized various activities in newly graduated Qatari students and talented young initiatives – and exercise governance of project collaboration with Qatar Autism Society for World Health Day professionals who undergo a three-month intensive execution with regular updates provided to the Senior World Autism Awareness Day 2018 observance QNB celebrated the World Health Day in 2018 by training course designed to develop their skills, boost Management Committee, and key projects and topics “Empowering Women and Girls with Autism.” organizing several activities for QNB staff. This their experience, and develop their personalities and discussed. Planning and performance management In addition, QNB extends its efforts to support involved aspects such as staff examining their Body professional capacities. Kawader was launched by has been improved with the introduction of autism patients, develop their skills and help them mass index (BMI Test) and professional tips for Qatar Finance and Business Academy (QFBA), in a dedicated tool (PMS) allowing for improved become a key component of the society by aiding maintaining a healthy lifestyle. cooperation with the Qatar Financial Centre independence and objectivity in the development, Governmental Health Communication Center’s (QFC) Authority. monitoring and assessment of performance. National Autism strategy in line with the aspirations B. Cultural and Educational Events of the Qatar National Vision 2030. TEDEX Adopting Sustainable Practices Camel Race QNB was the Platinum sponsor of TEDEX, an QNB has undertaken implementation of sustainable Dreama QNB was the main sponsor for H.H. The Emir Sword educational conference and social exhibition for practices into its Credit Analysis processes. As QNB participated as an official sponsor in the and H.H. The Father Emir Sword, as part of supporting developing, sharing, and empowering young leaders’ part of this, QNB in 2018, in line with the Bank’s celebration of “Dreama Day”, held under the slogan the local cultural sport of Camel (Hijin) Racing. to share ideas. sustainability strategy, have integrated the (With you, not only today, but always). Dreama is a Equator Principles within our Wholesale Credit pioneering Qatari foundation focused on providing CCQ First International Business Conference 2.21 Governance of Strategic Planning Decisions policy, providing a risk management framework to care to orphans and integrating them into the society. QNB was the platinum sponsor for the first CCQ determine, assess and manage environmental and International Business Conference. The theme for the Focus on Innovation: Establishment of an social risks in project finance loans that (i) exceed Expressions Drawing Competition 2018 conference was “Competitive knowledge-based ‘Innovation Committee’ $10 million and (ii) have a tenor greater than two QNB was the title sponsor of Babyshop’s economy in Qatar: Challenges and Opportunities”. QNB lays emphasis on strategic innovation measures years. This will strengthen QNB’s due diligence “Expressions” Drawing Competition for children. The The purpose of the conference is to explore and to compete in today’s dynamic market environment measures and support responsible risk decision- event aimed at encouraging children to express their examine the various difficulties and possibilities and continuously encourages its employees across making. QNB is committed to adopting the Equator creativity through colors. for Qatar’s knowledge-based economy through the Group to come up with innovative ideas and Principles and plan to become a formal signatory presentations within the fields of accounting, solutions that align with the goals and vision of the early in 2019. business ethics, finance, economics, etc. Bank. To aid innovation measures within the Bank
24 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 25 3. Key Corporate Governance Participants: the GCEO succession planning process are some of Board of Qatar Airways and member of the Supreme 3.4 Board Qualifications The Board of Directors (Board / BOD) the most important functions of the Board. Committee for Delivery and Legacy. H.E. is also member of the Board of Directors of Qatar Investment Members of the BOD have the requisite expertise Effective corporate governance requires a clear The Board delegates to the GCEO and through the Authority (QIA) and Qatar Petroleum (QP). and management skills that qualify them to conduct establishment and understanding of the respective GCEO to other Executive Management the authority their duties towards the Bank’s best interests. Board roles of the Board, management and shareholders, their and responsibility for operating the Bank’s daily 3.3 Board Term and Renewal members are selected according to the criterion of “the relationships with each other and their relationships with business. BOD members exercise vigorous and right person in the right place”, taking into account other corporate stakeholders. In addition to the core guiding diligent oversight of the Bank’s affairs, including During the General Assembly held on 31th of January the efficiency and competence of the Members. They principles of corporate governance described above, this key areas such as strategy and risk, but they do not 2016, (5) Members of the BOD from the private sector are also committed to investing the required amount report describes the roles of the key corporate participants manage or micromanage the Bank’s business by were elected and Qatar Investment Authority (QIA) of time and attention towards the accomplishment of in the following sections, with particular focus on the Board performing or duplicating the tasks of the GCEO and appointed the other (5) Members. The term of the their duties for the duration of their term. of Directors and the Executive Management. Executive Management team. current Board expires in January 2019. There were no new appointments made to the Board of Directors 3.5 Independent and Non-Executive Board Members 3.1 Roles and Responsibilities of the Board of Directors The Board has also adopted the Board Charter that during 2018. For the next BOD elections will take is reviewed annually, which provides a framework place early 2019. During 2018, all of QNB Group’s BOD members are The Board of Directors are responsible for the on how the Board operates as well as the type of non- executive Members and none of them assumes leadership, oversight, control, development and long- decisions to be taken by the Board and which decision The Group Board Nomination, Remuneration executive responsibilities, moreover, at least one third term success of the Group. They are also responsible for should be delegated to management with periodic Governance and Policies Committee (GBNRGPC) of the BOD members are independent and no member instilling the appropriate culture, values and behavior reports submitted to the Board on the exercise of the is responsible to adopt the highest transparency holds a full-time or part-time job within the Group. throughout the organization. The BOD is entrusted by delegated powers. The Board Charter can be found on standards in the nomination process for Board the shareholders with the authority to govern QNB QNB Group website and is also available in print to membership. This Committee is in charge of BOD members challenge management proposals Group and to discharge the following responsibilities: any shareholder upon request. recommending Board Members’ for election in the constructively; they also examine and review General Assembly Meeting based on the applicable management performance in meetings against • Governing QNB Group and overseeing its 3.2 Board of Directors Structure and Composition QCB and QFMA requirements as well as initiating agreed objectives and targets. In addition, they draw operations the annual performance self-assessment of the Board on their experience and knowledge in respect of any • Setting the Group’s vision, mission, and According to the Articles of Association, ten (10) and Board Committees, the candidate for Board challenges facing the Group and in relation to the objectives members of the BOD are elected or nominated for membership shall provide a written acknowledgment development of proposals on strategy. • Providing effective governance over the Bank’s three years renewable for the same period. The major stating that he is not undertaking any legally key affairs shareholder in QNB which is the Government of prohibited job position to combine it with the QNB QNB considers the current size and composition • Setting the overall strategic direction and Qatar, through the Qatar Investment Authority (QIA) Board membership. of the Board to be within an appropriate range. oversight through the reviews and approvals of (holding 50% equity stake) is entitled to appoint five Moreover, the current size of the Board is sufficient to Board level policies and various group policies to (5) of these members while the other shareholders In coordination with The Group Board Nomination, enable its Committees operating while being dynamic ensure the adherence to specific standards have the right to elect the remaining five (5) Remuneration Governance and Policies Committee, and responsive to the needs of the Group. The Board • Minimize the Group`s Risk exposure, including members. The BOD members shall elect its Chairman Group Compliance ensures the preparation and the has the appropriate blend of skills, knowledge and the appointment and the oversight of the and Vice Chairman among its members by a majority submission of the induction file to the new Board experience, from a wide range of industries and Executive Management secret vote of the Board. The Board of Directors members to ensure proper awareness of all the backgrounds, necessary to lead the Group. • Establishing compensation, performance have the widest authority to manage the Bank and responsibilities and assigned tasks. evaluation and ensuring succession planning has also the right to appoint several managers or 3.6 Prohibition of Combining Positions • Ensuring the accuracy of the Group’s financial authorised persons and to vest in them the right to Nominations and appointments are made in statements including the timely reporting and sign jointly or separately on behalf of the Bank. accordance with an approved mechanism to accept In 2018, none of the Board members is a Board disclosure of financial information to regulators candidates in line with QCB and QFMA requirements. Chairman or a vice-chairman for more than two and shareholders On the 7th of July 2013, QIA appointed H.E. Mr. Moreover, for this specific purpose, the BOD has Companies that have their headquarters located in • Providing a system by which information on Ali Shareef Al-Emadi, the Minister of Finance, as adopted a clear policy in light of international the State of Qatar. Also, none is a BOD member for unlawful or unethical behaviors can be reported Chairman of the BOD. H.E. Ali Shareef Al Emadi was professional and technical standards to measure more than three shareholding companies’ which have to the Board and; the former Group Chief Executive Officer of QNB the eligibility of individuals to apply for Board their headquarters located in the State of Qatar, and • Ensuring compliance with new laws and Group and has predominant experience in financial Membership. QNB Group is required to send a list of not a Managing Director in more than one Company regulations as well as QNB Group Articles sector spanning over 26 years. He started his career names and data of Board membership candidates which is headquartered in the State of Qatar, and do of Association. with Qatar Central Bank at the Banking Supervision along with candidate’s curriculum vitae and original not combine two memberships of two Companies and Control Department and progressively held copies of candidacy requirements to QFMA at least exercising a homogenous activity. The Board of Directors have the vital role of higher posts, culminating in being the GCEO of QNB two weeks prior to the Board election date. overseeing the Bank’s management and business from 2005 to 2013. H.E. has Bachelor of Science, Since 2017, the Chairman and the members of the strategies to achieve long-term value creation. Finance from the University of Arizona. Besides the Board provide an annual acknowledgment that none Selecting a well-qualified Group Chief Executive above mentioned positions, H.E. is also Member and of them combines the prohibited positions according Officer (GCEO) to lead the bank, monitoring and Secretary General of the Supreme Council of Economic to the regulatory requirements. The Board Secretary evaluating the GCEO’s performance, and overseeing Affairs and Investment, the President of the Executive maintains such acknowledgments in the file prepared for this purpose.
26 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 27 3.7 Board Members Duties Each Board Member owes the Bank the fiduciary 3.9 Board Secretary The Group’s Articles of Association also provide duties of care, loyalty and compliance with the rules detailed information on the attendance, quorum, All Board Members comply with the following duties: set out in related laws and regulations, including QCB The BOD is supported by a Secretary who under voting and meeting requirements. Corporate Governance Instructions, QFMA Corporate the direction of the Chairman ensures that • Attending meetings of the Board and Governance Code and the Board Charter, Board Policy, communication and information flows between In line with QFMA requirements, QNB Articles committees regularly, and not withdrawing from Terms of Reference and Code of Ethics and Conduct. Board members. The Board secretary is also of Association, (article 28) state that the absent the Board; responsible, in coordination with Group Compliance member may, by written request to the Chairman, Board Members act at all times on an informed basis, Division, for assisting the Chairman in all matters delegate any other Board member to represent him • Giving priority to the interest of QNB Group, judiciously, in good faith, with due diligence and in relating to corporate governance, and provides in attendance and voting. A Board member cannot shareholders and all stakeholders over their own the best interests of the Group and all shareholders, assistance for the Chairman and all members in represent more than one member. interests; exercise independent judgement and observe conducting their duties. confidentiality and act effectively to fulfil their The Board meets periodically in order to ensure that • Providing opinion on the Bank`s strategic responsibilities towards QNB Group. The BOD has appointed a Secretary of the Board it is adequately fulfilling its roles and responsibilities. matters, policy of projects implementation, that can be removed only by Board resolution. The In 2018, the BOD held six meetings. staff accountability systems, resources, key 3.8 Board and Committees Evaluations BOD secretary is entrusted to record, coordinate appointments and operation standards; and register all the Board’s meetings, in addition 3.11 Board Members Resignation The Board have an effective mechanism for to keeping custody of records, books and reports • Monitoring the Bank’s performance in realizing evaluating its performance on a continuing basis. sent and received by the Board. The Secretary’s Following the commercial companies law No. 11 its agreed objectives and goals and reviewing its Meaningful board evaluation requires an assessment functions also include the distribution of information for the year 2015, the provisions of the article (105) performance reports including the Company’s of the effectiveness of the full Board, the operations and coordination among Members of the Board have been considered in QNB Articles of Association annual, half yearly and quarterly reports; of Board committees and the contributions of and between the Board and stakeholders within article (27), stating that in the event that a Board individual Directors on an annual basis. The results the Group, including shareholders, Executive Member is absent in three consecutive (or four non- • Supervising the development of the procedural of these evaluations are reported to the full Board, Management and employees, and to ensure the consecutive) Board meetings, with no acceptable rules for the Group’s governance to ensure and there will be a follow-up on any issues and timely access of Members of the Board to all minutes excuse by the Board, the member shall be legally their implementation in an optimal manner in concerns that emerge from the evaluations. The of meetings, information, documents and records considered as having resigned, to be in line with accordance with QFMA and QCB requirements. Board, under the leadership of the Group Board related to the Group. The Secretary may, upon the QFMA requirements. Nomination Remuneration Governance and Policies Chairman’s approval, require the assistance of any • Using their diversified skills and experience Committee (GBNRGPC), periodically considers what employee of the Bank to perform his duties. In line with QCB requirements, QNB BOD policy has along with diversified specialties and best approach will result in a meaningful assessment been amended to include a new provision regarding qualifications for effective and productive of the Board and its committees. Mr. Mohamed Mahmoud Muslim Arar - Secretariat the resignation of BOD members stating that a Board management of the Group, and working to Management Diploma- is the Secretary of the Board member may resign by delivering written notice, achieve the interests of the Bank, partners, Accordingly, the Group Board Nomination of Directors since 1990. He has previous experience signed by the Board member, to the Chairman and shareholders and other stakeholders. Remuneration Governance and Policies Committee in banking and secretarial work, as he has been transmitted to the Board. In case of resignation for (GBNRGPC) initiate the annual assessment exercise a member of the Bank since 1974 in the Current reasons of irregularities observed by the member, the • Effective participation in the general assemblies, of the BOD committees and the BOD members. The Accounts Department then moving to Credit Facility written letter should be addressed with a statement and achieving its members’ demands in a BOD undertook the process of an annual assessment Management in 1980. He was appointed as Office explaining all related details and must be documented balanced and fair manner. according to the BOD performance methodology. Manager of the Group CEO in 1988. in the Board of Directors minutes of meeting. The assessment allows the BOD to demonstrate that • No one make any statements, share data or it is accountable for its decisions and the overall Mr. Faisal Mubarak Al-Hitmi - Diploma in Business 3.12 Board Decisions information without prior written permission operations of QNB Group: Full-Board Assessment. Administration, Accounting – is a Senior Officer at from the Board of Directors, and an official the Board Office since June 2016. He has previously In line with QFMA requirements, QNB Articles of spokesperson will be appointed for the Group for Moreover, all BOD members completed a self- worked in the Tenders and Vendors Management Association (article 29), state that the resolutions of this purpose. evaluation exercise indicating to what extent they section in the Legal Department under Group Risk the Board of Directors shall be passed by majority of are comfortable with their individual performance as since June 2014. votes of the members who are present. If the votes • Disclosure of financial and trade relations, and members of the BOD: Board Members Self-Assessment. are equal, the vote of the Chairman or his substitute litigants, including the judicial, recourses that 3.10 Board Meetings shall prevail. The Board, in case of urgency, may pass may affect negatively on carrying out the tasks The BOD performance assessment task related its resolutions by circulation provided the consent of and functions assigned to them. to 2018 was launched at the end the year and the According to QNB Group’s Articles of Association, all members is procured in writing and the resolutions results of the assessment will be reflected to the the Board should hold at least six meetings during are discussed in the next meeting and recorded in the The Board members, at the Bank’s expense, may shareholders in the General Assembly Meeting the year. The meetings are held regularly or minutes of meeting. request an opinion of an independent external scheduled early 2019. when called for by the Chairman or by two Board consultant in issues relating to any of the bank’s affairs. Members. The invitation for the Board meeting should be communicated to all members at least one week prior to the meeting. In this regard, any member can add a subject to the meeting’s agenda.
28 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 29 3.13 The Committees of the Board • Review and endorse for the Board approval • Report the committee’s activity to the BOD • Review interim financial reports with annual business plans and budgets across on a periodic and annual basis, including the management and the external auditors and As per Corporate Governance practices, regulatory QNB Group in line with the long term strategy identified and key issues / approved decisions consider whether they are complete and (QCB and QFMA) requirements, QNB Group BOD and changes in economical, market, and and recommended actions to be taken by the consistent before filing with regulators. established several committees to assist in carrying out regulatory environments. Board of Directors when required. its supervisory responsibilities composed of Members of • Consider with internal and external auditors the Board who report directly to the BOD. In application • Review and approve budgetary reallocations The Committee held five meetings during the any fraud, illegal acts or deficiencies in internal of article (19) of QFMA Corporate Governance Code, the against budget approved items as per the year 2018. control or other similar areas. Chairman of the Board of Directors is not a member of quarterly management reports. any of these committees, but one of the Board members Group Board Audit and Compliance Committee • Review any legal matters that could chairs more than one committee, QNB will consider • Monitor QNB Group quarterly performance (GBACC) significantly impact the financial statements of remedying this situation as soon as practical. against strategy, business plan and budgets. The Group Board Audit and Compliance Committee the Group. is composed of three Board Members, majority are Each Board Committee is assigned to handle one or • Review and approve QNB brand vision and independent members. The Chairman of the Group • Review with Group Compliance and external more of the tasks of the Board. The responsibilities defined values with all associated brands across Board Audit and Compliance Committee must be auditors any fines imposed by the regulators of the Board Committees are duly documented in the the Group. a financial expert and the other board members and/or other bodies. terms of reference, which are approved by the BOD. must have financial reporting background and The ultimate responsibility for QNB Group rests with • Review and approve QNB corporate social knowledge. Members of the GBACC cannot be a The committee has the following responsibilities the Board even if it sets up committees. During the responsibility strategy in light of QNB brand member of any other Board Committee, and the pertaining to Internal Control: year 2018, the Board of Directors has not delegated values across the group. Chairman of the GBACC cannot be a member of any any of its power to a third party and does not issue a other Board committee. • Understand the scope of internal and external general or an open-ended delegation. • Review and consolidate marketing and auditors’ review of internal controls over communication plans and resource distribution The committee has the following responsibilities financial reports and obtain reports on QNB Group BOD committees are the following: plans to efficiently and effectively align it to pertaining to Financial Statements: significant findings and recommendations, support QNB business development and growth. together with management’s responses. a. Group Board Executive Committee (GBEC). • Review significant accounting and reporting b. Group Board Audit and Compliance Committee • Facilitate the effective supervision and issues, including complex or unusual • Obtain explanation from management and (GBACC) overall control of the Group’s business transactions, in the light of regulatory internal and external auditors on whether the c. Group Board Nomination, Remuneration, by reviewing overall customer credit and directives and professional pronouncements Group’s financial and operating controls are Governance and Policies Committee investment exposures. and correlate their impact on the financial functioning adequately and effectively. (GBNRGPC). statements of the Group. d. Group Board Risk Committee (GBRC). • Review and consolidate business development, • In coordination with Group Board Risk Committee, products alignment, and resources distribution • Review judgments by executive management consider the effectiveness of the group’s QNB Board of Directors conducts periodic evaluations across QNB Group. in relation to responsibilities pertaining to management of risks and internal controls over of its committees` achievements and believes and financial statements. annual and interim financial reporting, regulatory maintains that the BOD Committees have clear roles, • Authorize those individual transactions and and other reporting, including information well understood and supported by all Board members. sectorial limits that fall within the authority • Review and endorse the annual financial technology security and controls. BOD Committees serve as a valuable resource to delegated to the Group Board Executive statements, and consider whether they are the Board Chairman and the GCEO in guiding the Committee by the Board of Directors. complete, consistent and reflect appropriate • Consider how management is held to account organization and improving the overall Board accounting standards and principles before for the security of computer systems and performance. • Review credit proposals as per the QNB Group submission to the BOD for final approval. applications, and the contingency plans for approved authority matrix. processing financial information in the event of The following is a summary on the composition, duties • Review the Group’s financial statement, a systems breakdown. and the working mechanism of these committees: • Review and recommend the action to be notes thereto, related regulatory filings, and taken on impaired loans in line with the consider the accuracy and completeness of the The committee has following responsibilities Group Board Executive Committee (GBEC) delegated limits and authorities as approved information before release. pertaining to Internal Audit: The Group Board Executive Committee is composed by the Board of Directors and in line with Qatar of three Board Members; one of them is selected by Central Bank regulations. • Review with management and the external • Appoint/remove the Group Chief Audit Executive. the BOD as Chairman. The Group Chief Executive auditors all matters required to be communicated Officer attends all meetings, without voting rights. • Review and recommend the action to be taken or disclosed under generally accepted auditing • Review and approve the charter, plans, GBEC main responsibilities are the following: on impaired loans in line with the delegated standards, or regulatory requirements. activities, staffing and organizational structure limits and authorities as approved by the BOD of Group Internal Audit Division. • Review and endorse for the Board approval and in line with QCB regulations. • Understand how management develops interim the long term strategy of QNB Group based on financial information, and the nature and extent economic and market conditions and Board of of internal and external auditor involvement. Directors’ directives.
30 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 31 • Ensure that there are no unjustified restrictions • Review the effectiveness of the system • Review the performance of the external auditors. Group Board Nomination, Remuneration, Governance or limitations on the functioning of Group for monitoring compliance with laws and and Policies Committee (GBNRGPC) Internal Audit, as well as on internal audit’s regulations and the results of investigation and • Make recommendations to the Board of Directors The Group Board Nomination, Remuneration, access to the Group’s records, documents, follow-up (including disciplinary action) of any regarding the appointment / reappointment / Governance and Policies Committee (GBNRGPC) personnel as and when required in performance instances of non-compliance within the Group. removal of the external auditors and their fees. is composed of three Board Members who are in of their functions. majority non-executive and independent members. • Review the findings of any inspection by QCB • On a regular basis, review the results of the • Review the effectiveness of the internal audit and any other regulatory body and follow up on external auditors and meet separately with GBNRGPC main responsibilities are the following: function, including compliance with The the corrective action to any identified issues and them to discuss any matters that the committee Institute of Internal Auditors’ Standards for the ensure proper implementation of measures to or external auditors believe they should be • Identify eligible and qualified candidates for Professional Practice of Internal Auditing and prevent recurrence. discussed privately, including management Board and Senior Executive Management other applicable standards and best practices. responses to their reports and follow up on the positions according to the fit-and-proper • Review the communication and enforcement corrective action to any identified issues and criteria set by the Committee in addition to the • On a regular basis, review the results of Internal of the code of conduct to group personnel and ensure proper implementation of measures to Independency/Non-Executives requirements. Audit and meet separately with the Group Chief monitoring compliance therewith. prevent recurrence. Audit Executive to discuss any matters that • Assess all candidates as per QCB, QFMA, and the committee or internal audit believes should • Ensure there is an effective mechanism for • Review and confirm the independence of the Commercial Companies law conditions and be discussed privately and follow up on the control, monitoring and reporting on the anti- external auditors by obtaining statements from minimum requirements where applicable. corrective action to any identified issues and money laundering and combating terrorism the auditors on relationships between the auditors ensure proper implementation of measures to financing as well as international sanctions and the Group, including non-audit services. • Ensure that a list of all accepted/rejected prevent recurrence and report the results of the programs and related issues. candidates along with their supporting committee review to the BOD on regular basis. The committee has the following responsibilities documents are sent to QCB for prior approval • Reviews the effectiveness of the Whistle- pertaining to Reporting Responsibilities: before election and detailing the reasons/ • Ensure that management responds to Blowing policy and recommends related actions/ justifications for acceptance/rejection. recommendations by the internal auditors and amendments to the BOD. • Evaluate the critical issues reports, submitted by that all information, records…etc. sought for and Group Chief Compliance Officer and Group Chief • Ensure that all new Directors receive proper required by internal auditors in the performance • Review and recommend the Corporate Audit Executive, including those critical issues induction program upon joining the Board of their formal duties is/are made available to Governance annual report, prepared by Group related to QNB Group subsidiaries. by issuing a formal appointment letter and them by management in an unhindered manner. Compliance, in accordance with regulatory providing all Directors with induction Handbook requirements. • Regularly report to the Board of Directors containing all important information and The committee has following responsibilities about the committee activities and result of documents that are relevant to the Director. pertaining to Compliance: • On a regular basis, review the results of the the committee review of issues identified by compliance reviews and meet separately with the regulators, external auditors, internal audit and • Monitor the induction, training and continuous • The Committee will be responsible to appoint / Group Chief Compliance Officer to discuss any Compliance and related recommendations. professional development of directors pertaining remove the Group Chief Compliance Officer. matters that the committee or Group Compliance to Corporate Governance matters. believes they should be discussed privately and • Subject to applicable regulatory requirements, • Review and approve the charter, plans, follow up on the corrective action to any identified report annually to the shareholders, describing the • Assess and review annually the independency/ activities, staffing and organizational structure issues and ensure proper implementation of committee’s composition, role and responsibilities Non-Executive criteria of each Board member. of Group Compliance Division. measures to prevent recurrence. and how they were discharged, and any other information required by regulations. • Submitting the list of BOD membership • Ensure the efficiency of the compliance function The committee has the following responsibilities candidates to the Board including its in detecting the deviations and breaches within pertaining to External Audit • Review any other reports the group issues that recommendations, and sending a copy to QFMA. the group, and ensure the non-existence of any relates to Group Board Audit and Compliance factors that would impact its independence • Review the external auditors’ proposed audit Committee’s area of responsibility. • Ensure the remuneration framework and objectivity as well as proper reporting scope and approach, including coordination of and principles in place is in line with the of the compliance function with appropriate audit effort with internal audit to ensure their • The Committee is required to meet Minimum remuneration policy and the Board’s guidelines consideration to Basel Committee requirements compliance with the implementation of the four times per year in addition to immediately taking into consideration the balancing between and FATF (Financial Action Task Force on best International Standards on Auditing and prior to publication of the annual, half yearly achieved and realized profits and risk associated Money Laundering) recommendations. preparing the financial reports in accordance and quarterly results. During 2018, The with the business activities. with International Financial Reporting Standards Committee met a total of eight times which (IFRS / IAS) and (ISA) and their requirements is above the minimum number of meetings • Approve and review the Group’s remuneration required by article (19) of QFMA Corporate and incentives guidelines and ensure that the • Ensure timely reply by the Board to the queries Governance Code. remunerations of the Board of Directors and and matters contained in the external auditor’s Executive Management are in line with the letters and reports. criteria and limits set forth by QCB/QFMA and Commercial Companies law.
32 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 33 • Arrange the annual evaluation of performance Policies and control structures in accordance 4. Segregation of the Chairman and 5. Remuneration of the Board of Directors and of the Board, its Committees and individual with the approved strategy by the Board and Chief Executive Officer Roles Executive Management Members Directors consistent with BOD Policy and oversee implementation of policies pertaining to provide related information at the Annual the bank’s internal control system. The role of the Chairman of the BOD and Group Chief The remuneration system within the Group forms a key General Assembly Meeting. Executive Officer (GCEO), at QNB, are distinct and component of the governance and incentive structure • Ensure the effectiveness of the risk control separate in accordance with leading practices, such as through which the Board and Executive Management • Direct and oversee the preparation and update of framework and oversee the evaluation outcomes the QFMA Corporate Governance Code, article (7) and the promote good performance, convey acceptable risk-taking the Corporate Governance Manual in collaboration of the GMRC. Corporate Governance instructions issued by QCB. behaviour and reinforce the Bank’s operating and risk with the Executive Management and Group Board culture. Audit and Compliance Committee. • Approve and oversee stress testing scenarios The Chairman of the Board is responsible for heading and results, as well as management action plans. the Board of Directors meetings and ensuring the proper The Board through its Group Board Nomination, • Prepare required recommendations and functioning of the Board in an appropriate and effective Remuneration, Governance and Policies Committee proposals to the Board of Directors for approval • Approve the Group’s capital management manner, including timely receipt by the Board Members (GBNRGPC) (by delegation) is responsible for the overall pertaining to the scope of work of related framework and any further enhancement of complete and accurate information. He also has to oversight of management’s implementation of the management committees dealing with the proposed by GMRC. approve the agenda of every meeting of the Board of remuneration system for the entire bank. In addition, the GBNRGPC as well as other recommendations Directors taking into consideration any matter proposed GBNRGPC regularly monitors and reviews outcomes to raised by Executive Management through • Oversee the monitoring processes performed by any other Board Member. This may be delegated by assess whether the Bank-wide remuneration system is appropriate channels. by GMRC and control framework for the risk the Chairman to a Board Member, but the Chairman creating the desired incentives for managing risk, capital management and the defined related roles and remains responsible for the proper discharge of this duty and liquidity. The Board reviews the remuneration plans, • Review on regular basis the BOD structure and responsibilities across the Group. by the said Board Member. The duties of the Chairman, processes and outcomes on an annual basis. composition and consider/assess the need to in addition to the provisions of the Board Charter, also appoint independent BOD members • Evaluate the monitoring process made by endeavour to encourage all Board Members to fully and In accordance with applicable laws and regulations, GMRC on Group entities in the identification effectively participate in dealing with the affairs of the such as the Commercial Companies Law provisions, as • Oversee the overall Human Capital Policies of Operational, Credit, Market, Strategic, Board of Directors for ensuring that the Board of Directors well as the QCB circular related to the remuneration and ensure the BOD and Senior/Executive Legal and Reputational risks, and action plans is working in the best interest of the company in addition of the Board of Directors’ Chairman and members and Management succession planning. implemented to monitor and manage these risks. to ensuring effective communication with shareholders QFMA requirements, QNB Group adopted a special and the communication of their opinions to the Board of remuneration policy for the BOD in line with the said Oversee the Annual review of all major policies • Evaluate and approve Contingency Funding Directors. The Chairman is also responsible for inspiring regulations, whereby the Group’s Articles of Association across the Group. Planning (CFP) document and ensure if any effective participation of all the Board Members and have established a framework for the Board Members’ material conditions occur that will invoke promoting constructive relations between them. remuneration which is far below the limits referred to in The Committee held five meetings during the the CFP. the Commercial Companies Law. year 2018. • Oversee the monitoring process of legal issues The remuneration policy of the BOD Members is duly Group Board Risk Committee (GBRC) including major litigation cases and compliance acknowledged to be in line with QCB instructions and The Group Board Risk Committee is intended to with laws, policies and procedures. QFMA requirements; whereas the remuneration of the meet BOD oversight responsibility over the Risk BOD Members is presented on an annual basis to the Management and QCB and other related regulatory • Review Executive Management action planes to General Assembly for approval. The GBNRGPC defines requirements. The committee is composed of three resolve substantial Audit, Compliance observations a specific policy for remuneration of the Executive members one of them is selected by the BOD as and/or QCB or other regulatory reports. Management before presenting it to the BOD for approval. Chairman. • Carry out any other function that may arise The policy defines a mechanism whereby the GBRC main responsibilities are the following: from time to time as a result of Board Directions, remuneration is directly linked to the effort and QCB, QFMA, QFCRA regulation, and applicable performance at both department and employee levels, • Review and endorse for the Board approval of foreign regulation or market developments. through the achievement of assigned goals and objectives the risk management strategy of the Group in accordance with the profitability, risk assessment and as well as Group Risk Appetite and Portfolio • Ensure that no material impact/risk identified the overall performance of the Group. Strategies recommended by Group Management by GMRC related to Anti Money Laundering and Risk Committee (GMRC) and review any Terrorist Financing as well as the ‘know your changes in risk strategy/risk appetite arising. customer’ (KYC) requirements.
• Review and compare the Group portfolio risk • Review any breaches of risk limits or internal profile with the approved Group Risk Appetite control failures (if any) and review investigation and endorse GMRC recommended portfolio results performed by GMRC. strategies for approval by the Board. The committee held six meetings during 2018. • Approve risk frameworks, and Group Risk
34 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 35 6. Key Corporate Governance Participants: legislative requirements and the BOD’s instructions QNB Group subsidiaries form their respective Group Board Risk Committee the annual evaluation Executive Management in a way that strengthens the control environment management committees according to their own for approval by the Board, monitors risk management in the various processes and banking activities; needs, size and nature taking into consideration the activities from several perspectives: operational, 6.1 Governance and Structure this includes determining the deviations from the corporate governance framework of QNB Group. credit, market, strategic, IT risk, legal and reputational objectives, ensuring the convergence of operations For supervision and coordination purposes, those and ensures implementation of action plans to monitor The Board of Directors of QNB Group appointed in to achieve the desired goals and implementing committees report and coordinate directly with the and manage these risks. The review of the Committee’s November 2018, Mr. Abdulla Mubarak Al-Khalifa as corrective actions when required. corresponding General Manager at QNB Group Head policies and supervision of its activities falls under the the new Acting Group Chief Executive Officer. Mr. Office level. responsibilities of the Board. The Committee reviews Abdulla Al-Khalifa took over the post of the Acting Executive Management is also committed to compliance with policies and procedures, audit GCEO from Mr. Ali Ahmed Al-Kuwari who served assessing the behaviour of individuals and The overseas branches form one or more recommendations, regulatory requirements, including as the GCEO of QNB Group from 2013 to 2018. Mr. organisational units through the development committees to strengthen the control environment combating Money Laundering and Counter Terrorist Ali Ahmed Al-Kuwari now assumes the position of of effective internal controls which enhance the in the various processes and banking activities. Such Financing requirements. Minister of Commerce and Industry in Qatar. monitoring of business performance and risk committees depend on the volume of business and measurement. In addition, soft controls have been the country risk where QNB Group operates and are The Committee also implements and manages the Prior to being appointed as the Acting GCEO of QNB implemented, such as incremental audit checks, decided by QNB management. The overseas branch Crisis Management Plan and framework and provides Group, Mr. Abdulla Mubarak Al-Khalifa was serving segregation of duties, and restriction of powers, committees report the critical issues handled by them strategic directions during a crisis, including the as the Executive General Manager and Chief Business in addition to the implementation of ceilings on to the relevant QNB Head Office division. management of external communications, liaising Officer at Qatar National Bank Group. Mr. Al-Khalifa all banking operations through the adoption and with media, regulatory authorities, emergency joined QNB in 1996 and has more than 22 years of monitoring of an authority matrix. A summary of the key tasks of the various services and government agencies. It also provides banking experience. He is the Vice Chairman of the committees are highlighted in the following section. the Group Risk report and dashboards to the Group Housing Bank for Trade and Finance in Jordan, Board 6.2 Executive and Management Committees Board Risk Committee as and when required. It Member of QNB Al-Ahli in Egypt, QNB Finansbank 6.2.1 Group Management Risk Committee reviews the approach of the Group Risk Department in Turkey, Ecobank in Togo and QNB Capital in Qatar. The Executive Management at QNB Group have regarding effective monitoring and coordination at Mr. Al-Khalifa holds a Bachelor’s degree in Business formed a number of executive and management The Group Management Risk Committee (GMRC) Overseas Branches and reviews the formation of risk Administration from Eastern Washington University committees in order to effectively and efficiently is headed by the GCEO, with the General Manager committees at the Subsidiary level in line with the in the United States. handle their responsibilities and run the day-to-day – Group Chief Risk Officer as the Vice Chairman. Corporate Governance structure/framework adopted activities of the Bank. The Committee also includes the Executive General by QNB Group. The GCEO is assisted in his duties by a specialised, Manager – Group Chief Business Officer, Executive seasoned and highly qualified Executive The committees are suitably endowed with full General Manager – Group Chief Operating Officer, The committee held four meetings during 2018. Management team. Six (6) Chiefs, report directly executive powers to take into force decisions and General Manager – Group Chief Financial Officer, to the GCEO. Our Executive Management team has actions related to their field, scope, and structured General Manager - Group Chief Credit Officer and 6.2.2 Group Credit Committee 29% female representation, one of the highest for hierarchy. General Manager – Group Chief Strategy Officer. any major bank in the region and demonstrating our The Group Chief Audit Executive and Group The Group Credit Committee is headed by the commitment to enhancing gender diversity at senior Currently, the executive and management Chief Compliance Officer attend the meetings as GCEO, with the General Manager – Group Chief positions: committees established at the Head Office are required observers. The AGM Group Strategic Risk Credit Officer as the Vice Chairman. The Committee structured as follows: Management acts as Secretary for this Committee. also includes the Executive General Manager – • Executive General Manager – Group Chief The Committee holds quarterly meetings at Group Chief Business Officer, General Manager Business Officer; • Tier 1 “Executive Committees”; the “decision minimum, provided that the majority of the – Group Chief Risk Officer, General Manager of • Executive General Manager – Group Chief making” Committees which include (Central Committee Members at least attend, including the Group Corporate and Institution Banking, General Operating Officer; Purchasing, Risk, Credit, ALCO, Strategy and Chairman of the Committee or his deputy. The Manager – Group Asset and Wealth Management, • General Manager – Group Chief Risk Officer; Cyber Security) and who report to the Board decisions taken are by majority of the attendees, with General Manager – Group International Banking • General Manager – Group Chief Financial via the appropriate Board of Director related the Chairman’s vote deciding in case of a tie. and Assistant General Manager – Group Credit. The Officer; Committee. Senior Credit Officer – Group Credit acts as Secretary • General Manager – Group Chief Credit Officer The Group Management Risk Committee establishes, for this committee. The Committee is supposed to • General Manager – Group Chief Strategy Officer • Tier 2 “Management Committees”; the reviews and recommends QNB Group’s risk hold monthly meetings at a minimum, provided “working committees” which include management strategy and defines the risk appetite that a majority of the Committee Members at least There are two (2) independent Chiefs appointed by (Business Development, IT, HR and Operations and risk policies. It reviews the processes and attend, including the Chairman of the Committee or the ‘Group Board Audit and Compliance Committee’, and Services) and who report to the appropriate control framework for the management of risks and his deputy. The decision consensus is unanimous. who are responsible for generating reports and parent Committee in Tier 1. defines related roles and responsibilities across the Any proposal not supported by all members present reporting on violations and concerns to the GBACC QNB Group. The Committee also reviews the Group is rejected. Committee and GCEO i.e. the Group Chief Compliance • “Senior Management Committee”; chaired portfolio risk profile and recommends portfolio Officer and the Group Chief Audit Executive. by the GCEO and represented by the five chiefs risk management strategies to Group Board Risk The Group Credit Committee reviews, recommends (Executive GM- Group Chief Business Officer, Committee for endorsement in order to obtain BOD and implements approved credit policies, guidelines QNB’s Executive Management team is fully aware Executive GM- Group Chief Operating Officer, approval, reviews the effectiveness of the operation and procedures related to corporate, financial of their role in terms of Corporate Governance Group Chief Financial Officer, Group Chief Risk of the risk control framework and submits to the institution and retail assets across the Group. The through their commitment to implementing the Officer and Group Chief Credit Officer).
36 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 37 Committee also reviews and recommends the risk positions, and responsible for aligning all IT and 6.2.5 Group Strategy Committee The Centralised Purchasing Committee ensures the investment strategy, policies and procedures to operational activities across the Group with QNB`s compliance of the Group with the Tenders and Auction the Group Board Executive Committee and BOD. vision, mission and business plan and to review The Group Strategy Committee is headed by the Policy directives, manages relevant contractual The Committee reviews the delegated authorities Group wide IT standards. GCEO, with the Executive General Manager – Group relations, and is committed to disclose any situation related to credit and investments and recommends Chief Business Officer as the Vice Chairman. The of conflicts of interest emanating from members. It amendments to the BOD where appropriate. The The Committee held twelve meetings during 2018. Committee also includes the Executive General reviews and approves the procedures for purchases Committee also assumes the responsibility to review Manager – Group Chief Operating Officer, General and auctions, along with the formation of auction and approve the range of credit and investment 6.2.4 Group Asset and Liability Committee Manager – Group Chief Risk Officer, General Manager working groups to oversee bid openings, selection products across the Group and approves acceptable – Group Chief Financial Officer, General Manager and evaluation. The Committee also reviews and brokers/ dealers and custodians for the Group. It The Group Asset and Liability Committee (ALCO) – Group Chief Credit Officer, and General Manager – approves vendor lists and associated products and also monitors and reviews the performance of all the is headed by the GCEO, with the General Manager – Group Chief Strategy Officer. The Assistant General services, and the awarding of tenders and auctions. investment portfolio activities. The Committee also Chief Financial Officer as the Vice Chairman. Other Manager – Strategy and Business Development acts It has the authority to form sub-committees in other ensures Group entity compliance with investment members of this Committee include the Executive as Secretary for this Committee. The Committee is jurisdictions where required. limits and ratios approved by the Board of Directors, General Manager – Group Chief Business Officer, scheduled to meet at a minimum on a quarterly basis, QCB, foreign regulators and senior management. Executive General Manager – Group Chief Operating provided that a majority of the Committee Members 6.2.7 Group Information Technology Committee In addition, the Committee monitors and reviews Officer, General Manager – Group Chief Risk Officer, attend including the Chairman of the Committee or country risk exposures for compliance with the General Manager – Group Chief Credit Officer, his deputy. The decisions are taken by majority, with The Group Information Technology Committee is approved investment limits and ratios. The General Manager – Group Chief Strategy Officer and the Chairman’s vote deciding in case of a tie. headed by the Executive General Manager – Group Committee also provides investment and credit risk General Managers of Treasury and Corporate. Other Chief Operating Officer, with the General Manager of reports to the Board as and when required. members of senior management may be invited to The main function of this Committee is to develop the Group Information Technology as Vice Chairman. The attend if needed. The Assistant General Manager - vision and business strategy for QNB Group, which Committee includes, the General Manager – Group The Committee held thirty-four meetings Trading (group Treasury) acts as the Secretary for is submitted to the BOD for review and approval. Chief Strategy Officer, General Manager of Group during 2018. this Committee. The Committee meets every month, The Committee monitors and analyses market Operations, General Manager – Group Administration provided that a majority of the Committee Members at developments and the competitive positioning against and General Services, General Manager – Group Retail, 6.2.3 Senior Management Committee least attend, including the Chairman of the Committee peers, particularly in the Middle East, Africa and General Manager – International Banking and the AGM or his deputy. The decisions are taken by majority, Southeast Asia Regions. The committee also reviews of Group Operational Risk, and Heads of Infrastructure The Senior Management Committee is headed with the Chairman’s vote deciding in case of a tie. and consolidates business development, products and Development and User services. The Executive by the GCEO, and includes the Executive General alignment, and resources distribution across the QNB Manager- IT Strategy and Governance acts as a Manager- Group Chief Business Officer, Executive The Committee monitors, manages and devises Group. The Group’s strategic plan was approved by the Secretary for this committee. The Committee meets General Manager- Group Chief Operating Officer, the strategy to manage the assets and liabilities BOD and communicated to the Group. quarterly at minimum provided that a majority of the the General Manager – Group Chief Risk Officer, the of the Group against various risks. It reviews and Committee Members at least attend, including the General Manager – Group Chief Financial Officer and recommends the strategies, policies and procedures The Committee held six meetings during 2018, in Chairman of the Committee or his deputy. The decisions the General Manager – Group Chief Credit Officer. related to Asset Liability Management across the addition to two Strategy Conferences, which served are taken by majority, with the Chairman’s vote deciding The General Manager – Group Chief Strategy Officer Group to the Group Board Executive Committee. to update all senior managers and country GMs on in case of tie. acts as Secretary for this committee. The Committee It also monitors and reviews performance of all the QNB Group 2020 strategy and other key topics. meets at least every month, provided that a majority Treasury activities and products across the Group, The Group Information Technology Committee is of the Committee Members attend, including the including banking and trading book portfolios; 6.2.6 Centralised Purchasing Committee responsible for establishing IT standards and aligning Chairman of the Committee or his deputy. The interest rate risk; liquidity risk and foreign exchange all IT activities across the Group to meet business decisions taken are by majority of the attendees, with risk. The Committee also ensures compliance with The Centralised Purchasing Committee is headed by plans and objectives. The Committee also formulates the Chairman’s vote deciding in case of a tie. Treasury’s limits and ratios. The Committee oversees the GCEO, with the General Manager – Group Chief and monitors the implementation of the annual IT inter-group transfer pricing policy. It also monitors Financial Officer as Vice Chairman. The Committee strategy throughout the Group, including capital The Committee is the parent committee of Group monthly financial performance and budget targets includes the Executive General Manager – Group and operating expenditure budgets assigned to IT Information Technology Committee, Group Operation and market share targets against performance. Chief Business Officer, Executive General Manager – projects and services. It is also the responsibility of and Services Committee and Group Human Capital Group Chief Operating Officer, the General Manager the Committee to prioritise the management of IT Committee and submits memos to all the BOD The Committee held twelve meetings during the – Group Chief Risk Officer and the General Manager – projects across the Group and to monitor the progress Committees as well as the BOD as and when required. year 2018. Group Chief Credit Officer. Required observers in this towards their implementation. In addition, this Committee include the Group Chief Audit Executive, Committee sets, monitors and reports on the aspects The main functions of this Committee are to assist Group Chief Compliance Officer, Head of Legal and related to technology key performance indicators the Board of Directors in overseeing the activities a representative from the concerned department. (KPIs) and key risk indicators (KRIs). The Committee of the related management committees, discuss The Head of Tenders and Contracts Admin acts as a also makes relevant recommendations for enhancing critical topics and strategic matters related to QNB Secretary for this committee. The Committee meets the value and contribution of the Group’s information Group activities, for safeguarding an information as and when required, and the decisions are taken by systems, as appropriate. flow which provides the Board at any time an majority, with the Chairman’s vote deciding in case adequate basis for steering the Bank as a whole and of a tie. The Committee held four meetings during 2018. for meaningful and up-to-date information on its
38 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 39 6.2.8 Group Business Development Committee IT, Group Retail, Group International Banking, majority of the Committee Members at least attend, are to develop and monitor the implementation Group Corporate and Institution Banking and the including the Chairman of the Committee or his of the IT Security and Cyber Security governance The Group Business Development Committee is Assistant General Manager of Operations Control deputy. The decisions taken are by majority, with the and framework, including strategy, plans, headed by the Executive General Manager – Group and Excellence. The Assistant General Managers of Chairman vote deciding in case of a tie. policies, controls, capabilities, skills and roles and Chief Business Officer, with the General Manager of Group Operational Risk, Central Operations, Treasury responsibilities across the Group The committee will Corporate Banking as Vice Chairman. The Committee and Assets Operations and International Operations The Group Human Capital Committee handles all monitor the implementation of the cyber security includes the General Manager – of Asset and Wealth Affairs are observers. The Assistant General Manager human capital matters across the Group, including strategy, initiatives and plans across the Group. Management, General Manager – Group Retail, of Operations Control and Excellence also acts as work force planning, recruitment, job evaluations, General Manager – International Banking, General Secretary for this Committee. The Committee meets promotions, disciplinary actions, and compensations 7. Risk Management Manager – Group Treasury, General Manager – Group quarterly at minimum, provided that the majority of and benefits review. The Committee also handles Chief Strategy Officer, General Manager – Group the Committee Members at least attend, including the integrated performance management QNB Group’s reputation and continued profitability Communications and the CEO of QNB Capital. the Chairman of the Committee or his deputy. The and development, learning and development depends on our ability to identify, assess and manage The Head of Global Cash Management acts as a decisions taken are by majority, with the Chairman’s initiatives, staff rewards and recognition, and the risk at all levels. As a result, we have a robust Risk Secretary for this committee. The Committee meets vote deciding in case of a tie. implementation of staff suggestion schemes. The Management Framework and Governance Structure that on a monthly basis, provided that a majority of Committee regularly reviews the Human Resources ensures a crucial balance between risk and reward. Risk the Committee Members at least attend, including The Group Operations and Services Committee policies and recommends changes as needed, and management within QNB Group is a key focus across the Chairman of the Committee or his deputy. The ensures follow-up and conducts regular reviews of the deals with the fulfilment of the nationalisation all levels of the bank. QNB Group adopts a centralized decisions taken are by majority, with the Chairman’s Bank’s operational activities, transaction monitoring, program objectives. approach to risk management, complemented by local vote deciding in case of a tie. procedure execution and improvements, operational expertise and knowledge. This ensures proactive risk efficiencies, oversight of premises and facilities, and The Committee held four meetings during 2018. governance and management at the consolidated and the The Group Business Development Committee insurance and back-office centralisation initiatives. It local level. formulates the implementation framework for creates and reviews the operations strategy across the 6.2.11 Group Cyber Security Committee realising expansion plans and aligns the required Group. The Committee aligns all operation activities QNB risk exposures are mitigated through various regulatory, business, support and marketing resources. with QNB Group’s vision, mission and business plans. In 2018, QNB Group formalized the creation of a new specific mechanisms for risk assessment and control. The The Committee develops the international expansion It conducts a regular reengineering program to support ‘Group Cyber Security Committee’ (GCSC) structure success of risk management in QNB Group is generated plan in line with QNB Group’s strategy and business continuous process and service improvement. The with the objective to enhance management of cyber from the ability to focus on the roles and responsibilities plans. It also reviews mergers and acquisitions to Committee prioritises the management of relevant related and information security risks across the defined for the BOD, various committees, Executive implement appropriate integration standards across projects and manages QNB Group’s real estate Group. The formation of this committee is in line Management, officers and staff. Risk management is QNB Group’s business. The Committee reviews the interests. It reviews and monitors branch, office and with QCB’s requirements and recommendations considered an important element for QNB Group to new business and product initiatives, as well as market ATM expansions across the Group. It also defines and advocating measures to enhance information ensure continued profitability, and every employee in share and competitor information and recommends monitors the implementation of security and safety security and management of cyber risks and QNB’s the Group is responsible for dealing with potential risks business plan amendments as needed. It also reviews standards across the Group. The Committee also goal to adopt leading measures. This committee is when carrying out his/her duties. The BOD assumes the regulatory developments and their impact on business monitors the implementation of internal and external classified as a ‘Tier 1’ Committee. ultimate responsibilities for monitoring QNB Group’s risks strategy and products. The Committee develops and signage and branding standards, and monitors by assuming the responsibility of risk assessment and monitors the implementation of operational standards capital and operating expenditure budget utilisation The Group Cyber Security Committee is headed by supervision in coordination with the GCEO, the Board across the Group and reviews the performance of and reassignments reports. It reviews outsourcing the GCEO, with the Executive General Manager – Group Risk Committee, the Group Management Risk Business Departments. It maintains inter-group activities to ensure sufficient quality assurance and Group Chief Operating Officer as the Vice Chairman. Committee, the Group Board Credit Committee, and the working priorities in areas of business and operations, monitoring. The Committee also includes the Executive General Group Assets and Liabilities Committee. at the same time it reviews support units’ delivery Manager – Group Chief Business Officer, General against business objectives. It is also the Committee’s The Committee held four meetings during 2018. Manager – Group Chief Risk Officer, General The BOD also performs complete supervision over credit, responsibility to review and recommend marketing Manager of Information Technology and Group Chief market and operational risks affecting the Group. The plans and branding opportunities, as well as the 6.2.10 Group Human Capital Committee Information Security Officer. The Group Chief Audit BOD has determined the objectives and framework of participation in events and to ensure maximum Executive attends the meetings as a required observer. the Group’s risk management policy and is committed benefit from staff and management engagement. The Group Human Capital Committee is headed The Group Chief Information Security Officer acts to monitoring the various risks on a daily basis through by the Executive General Manager – Group Chief as Secretary for this Committee. The Committee is the various committees that are responsible for the The Committee held twelve meetings during the Operating Officer, with the General Manager scheduled to meet at a minimum on a quarterly basis, establishment of the risk management policy based on year 2018. of Group Human Capital as Vice Chairman. The provided that a majority of the Committee Members the objectives and mechanisms identified by the Board. Committee includes the General Manager – Group attend including the Chairman of the Committee or his The Group Risk Management Division, headed by the 6.2.9 Group Operations and Services Committee Chief Strategy Officer, General Managers of Group deputy. The decisions are taken by majority, with the General Manager – Group Chief Risk Officer, undertakes Retail and International Business, the Assistant Chairman’s vote deciding in case of a tie. the implementation of the policy. Risk management The Group Operations and Services Committee General Managers of ‘Human Resources Strategy policies and procedures are established in order to is headed by the Executive General Manager – and Integration’ and ‘Human Resources Services’ The main function of this Committee is to develop identify, assess and monitor the risks at Group level. Group Chief Operating Officer, with the General and the Executive Manager of International Human and implement the Group’s cyber security strategy The process of independent risk oversight is a part of Manager - Group Operations as Vice Chairman. Resources Integration who also acts as Secretary in line with the threat landscape and expectations the strategic planning for QNB Group, and includes The Committee includes the General Managers of for this Committee as well. The Committee holds of the Board. The key objectives of this committee business risks such as variables that may arise in the Group Administration and General Services, Group quarterly meetings at minimum, provided that the
40 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 41 environment, technology and business. The BOD assumes The Group Risk Division is considered the ultimate 8.2 Leadership Continuity Planning and Organisation work through challenges and opportunities and full responsibility for the development of strategic risks administrative authority vested to deal with the various Structure build out ideas that will advance and improve QNB and the application of the relevant principles, frameworks risk aspects at Group level. The Department undertakes the business. Workshops can be “Blue-Sky”, with no fixed and policies. This includes the implementation of formulation and review of the risk management strategy, As part of on-going Corporate Governance initiatives, agenda, or focused on a specific area or discussion appropriate restrictions with respect to products, issuer, defines the risk management policies, evaluates the the BOD is keen to ensure that the organisation topic. Participants brainstorm in an open forum and, geographic location, and maturity. However, separate and activities of risk management and control mechanisms, and structure of the Bank is updated, efficient, effective through productive and focused discussions, agree on independent entities responsible for the management and assesses and determines the Group’s operational, credit, and in line with international best practices to clear directions and next steps. control of certain risks are nominated and pre-defined. market, strategic, legal, and reputational risks. support the application of Corporate Governance Accordingly, QNB Group’s Treasury, Risk Management principles and to enhance the internal control of 9. Internal Control System and Internal Audit Divisions are responsible for the Group Risk also ensures the implementation of operational various management levels. The updates also monitoring of the Group’s commitment to trading plans to monitor and manage these risks, reviews and fulfil the regulatory requirements and cover future The BOD assumes full responsibility for the QNB restrictions imposed by the BOD. In this regards, detailed monitors cases of fraud and operating losses, and oversees plans of internal and external growth as well as Group System of Internal Controls, whereby specific monthly reports are submitted to the Group Assets and the legal disputes at all levels of QNB Group the development of financial and banking services policies, guidelines and controls covering the entire Liabilities Committee. locally and abroad. Changes and enhancements to Group’s transactions have been devised. Moreover, the 8. QNB Group Organisation Structure and the organizational structures both in Business and determinations of responsibility limits, performance Succession Plan Support areas are implemented to keep pace with monitoring, privileges and authorisations on all banking international business expansion plans and to ensure operations have been implemented in addition to a 8.1 QNB Group Organisation Structure alignment of entities with Qatar base. clear policy for segregation of duties and dual control. Board of Directors QNB Group’s Executive Management is considered QNB Group also continues to drive Leadership responsible for the overall control of these systems in Continuity Planning as one of the strategic initiatives coordination with the concerned General Managers, to ensure that a comprehensive business continuity Divisional Managers and domestic and overseas Branch framework is in place and to develop a capable Managers. The responsibility of implementing efficient Chairman’s Group Board Board Board Subsidiaries’ Group Board Group Board Group Board Audit Secretariat Advisory Associates’ Executive Risk Committee Nominations, leadership pipeline. This exercise is reviewed internal control systems at the Group level is the direct Compliance Boards of Committee Remuneration, periodically to help identify leadership talent and responsibility of every employee at the Group. Committee Directors Governance Policies further grooms the talent to assume higher and Committee complex responsibilities that can support current The Group Board Audit and Compliance Committee, on business growth. behalf of the BOD, performs on a regular basis a review
Group Group Internal of the framework of internal controls and assesses the Compliance Audit 8.3 Training and Development of Future Leadership internal systems through the evaluation of processes carried out by the Group Internal Audit Division and QNB Group continues to deliver the Leadership Group Compliance Division in addition to the reviews Development Program (LDP) and Management that the external auditors conduct. The BOD is notified Development Program (MDP) for the middle on a quarterly basis of control issues (including risk management, supervisors and team leaders in Qatar management); it confirms the adequacy of the existence QNB Financial and Group’s international locations in collaboration of effective internal controls at Group level based on the Services BOD with renowned global institutions to assist in recommendations and advice presented by the Group fulfilling career aspirations. Board Audit and Compliance Committee as supported by GM Group QNB Capital the Group Internal Audit and Group Compliance divisions. Strategy BOD 8.4 Innovation workshops As per QFMA Corporate Governance Code Article (4), the Fully subsidiary owned QNB’s Innovation Department has been established Corporate Governance report should include disclosure to take new ideas and build them up for assessment, of the Internal Controls failures, wholly or partly, or Group Chief Group Chief Group Chief Risk Officer Credit Officer Financial Officer selection, and execution. As QNB GCEO stated: “Our weaknesses in its implementation, contingencies that vision is to become a leading bank in the Middle have affected or may affect the Company’s financial East, Africa and Southeast Asia (MEASEA) by performance, and the procedures followed by the Company GM Group Corporate GM Group GM Group GM Group 2020”, innovation is key to achieving this vision in addressing Internal Controls failures. Institutional Retail Administration and Operations Banking General Services and maintaining competitive edge and QNB and its employees are continuously innovating. We now Based on that, QNB Management assessed the
GM International GM Group GM Information GM Group have a dedicated department to become the driving appropriateness of QNB’s internal control over financial Business Treasury Technology Communications force towards change. reporting as of December 31, 2018. Management’s assessment included an evaluation of the design The Innovation Department has started running effectiveness and implementation of QNB’s internal control Countries/branches GM Group Asset GM Group Human and Wealth Capital ideation workshops across QNB divisions. Lean over financial reporting. Management reviewed the results Management trainings and Innovation workshops are held, which of its assessment and shared with the Group Board Audit considers teams of colleagues getting together to and Compliance Committee. Based on this assessment,
42 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 43 management determined that, as of December 31, 2018, GIAD are professionally qualified and hold globally activities, including the risk of legal sanctions, The Group Board Audit and Compliance Committee QNB maintained effective internal control over financial recognized professional certifications. Team members legislative and financial losses, or damage to the approve the annual compliance plans, which are reporting. undergo continuous professional development, reputation of the Group as a result of failure to abide executed in accordance with the Group Compliance awareness and training. GIAD maintains a quality by laws and regulations, the charter of professional Charter and its policies and procedures. Group In addition, QFMA Corporate Governance Code Article assurance and improvement program that covers conduct and the standards of good practices. Compliance submits periodic reports to the Group (24) requires that the external auditors report must include all aspects of the internal audit activity to increase Board Audit and Compliance Committee and the whatever informs shareholders with the control works the efficiency and effectiveness of the internal Group Compliance is also considering ways to GCEO concerning compliance issues, irregularities, and performance assessment in the company, especially audit activity and identifies opportunities for measure compliance risk by implementing a Key and the corrective actions hence implemented. related to the appropriateness and effectiveness of the improvement. GIAD continues to develop its data Risk Indicators (KRIs) and use such measurements Internal Control System implemented in the Company. analytics capability and extrapolation techniques to enhance the compliance risk assessment that Group Compliance ensures the proper reporting to to be able to identify systemic issues and execute is relevant to the second line of defence. The all regulatory authorities as appropriate and reports KPMG, an independent registered public accounting firm, efficient audits. Compliance function assesses the appropriateness of any suspicious activities to the Financial Information who audited and reported on the consolidated financial the Group’s Compliance procedures and guidelines, Unit “FIU” on timely basis; In addition, it has statements of QNB, has audited the design effectiveness GIAD helps the BOD and GBACC in effective discharge promptly follows up any identified deficiencies, established arrangements for timely interactions and implementation of QNB’s internal control over financial of their responsibilities to serve the best interests and, where necessary, formulates proposals for with the Regulators for proper clarification on reporting as of December 31, 2018, as stated in their report. of shareholders. GIAD is headed by the Group Chief amendments. Group Compliance monitors and regulatory requirements and as appropriate. Audit Executive (GCAE) who reports to the Group tests compliance by performing sufficient and 9.1 Group Internal Audit Division Board Audit and Compliance Committee (GBACC) representative compliance testing in line with Group Compliance actively participates in the of the BOD. For the purpose of fulfilling its role in its internationally recognised frameworks. The Group deliberations of the Group Management Risk The Group Internal Audit (GIAD) is an independent professional capacity, GIAD is authorized to have full Chief Compliance Officer reports on a regular basis Committee as an Observer and updates Risk Analysis function within QNB Group that intends to add and unrestricted access to any of the Group’s records, to the Group Board Audit and Compliance committee of Business as appropriate and fit for purpose. value to the Group’s operations and improve their documentation, systems, properties and personnel, and the Executive Management on compliance performance. It is the responsibility of the Group including Executive Management and the BOD. The matters. Group Compliance is continually working to develop Internal Audit Division to determine and report GIAD charter and policy have been enhanced to align and enhance the Compliance Function with a vision on the failures or weaknesses in the systems with the Basel Committee on Banking Supervision’s Group Compliance adopts a professional and to maintain a healthy environment and practices. No and operations of the Group in order to control recommended standards, to keep pace with the comprehensive approach when carrying out tasks penalty of whatever nature was imposed on QNB Group its activities and adequately manage its risks. business expansion of the Group, and to provide to key stakeholders, extra attention is paid to due by any regulatory authority during the year 2018. The department also reviews the systems and adequate oversight of the Group’s subsidiaries. diligence as the culture amongst the compliance internal controls for the activities of the Group by staff is one of professionalism and integrity. To assessing the efficiency and effectiveness of the 9.2 Group Compliance Division maintain high technical standards amongst the systems and the implemented procedures and by compliance staff, scheduled specialist training are ensuring compliance with the control mechanisms Compliance within QNB Group is an independent assigned to all staff that including ACAMS and CISI implemented by management. The department function whose primary responsibilities are to assist – QFMA certification. These courses are deemed to also ensures compliance with all rules, regulations the Board as well as the Executive Management to add a further layer of specialism to the employees and internal procedures, and reviews the validity effectively mitigate the compliance risks faced by and is reflected in the quality of work carried out. and reliability of the information that is provided the bank. It is characterised by an official status Compliance staff frequently hold brainstorming to management. Group Internal Audit submits its within the Group through a formal charter and and sharing best practice sessions, this breeds a reports directly to the BOD or through the Group policies approved by the GBACC and carried out by culture of continuous development and value add Board Audit and Compliance Committee. the Group Compliance Division, which undertakes to stakeholders. Further, Group Compliance has its endeavours through appropriate mechanisms continued the ‘Train the Trainer’ program to align The remuneration of the department is determined by enabling the Group Chief Compliance Officer to knowledge to divisional staff. the Group Board Audit and Compliance Committee, perform his responsibilities in an effective manner. which enhances its objectivity and independency. In order to enable Group Compliance to efficiently The Group Chief Audit Executive is nominated by the The QNB Compliance strategy focuses on effective perform its functions and responsibilities, it has been Group Board Audit and Compliance Committee and management of the Compliance Function at the Group granted authority to deal with compliance matters submits periodic reports directly to the Committee in order to consolidate the Group competitive position within the Group’s activities and has been given and the GCEO. and building trust relationships with all investors and unrestricted access to all information, employee stakeholders. Moreover, a robust Compliance Function records and Group operations in Qatar and abroad. GIAD has adopted the International Professional helps QNB Group to protect its reputation, lower the Group Compliance is also empowered to conduct Practice Framework (IPPF) of the Institute of cost of capital, reduce costs and minimise the risk of investigations relevant to any possible irregularity. Internal Auditors (IIA) as well as Basel Committee investigation, prosecution and penalties in addition Group Compliance’s responsibilities are carried out recommendations and other leading standards. to building a culture that is in line with QNB Group through the implementation of a compliance program The GIAD team is composed of individuals with values. On a proactive basis, the division identifies, that specifies its activities. experience from leading financial institutions and evaluates, monitors, documents and reports on audit firms across the globe. More than 60% of compliance risks associated with the bank’s business
44 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 45 10. External Audit 12. Capital and Shares In case of an extraordinary meeting, an application a dedicated Policy has been issued to detect the excess of in writing shall be addressed to the Chairman by ownership in QNB`s capital and to monitor the process of a According to the Commercial Companies Law number (11) The authorised, issued and fully paid up share capital of the shareholders holding at least (25%) of the company shareholders vote in the General Assembly meetings. of 2015, Article (141) provisions, and QCB instructions; Bank totalling QR 9,236,428,570 consists of 923,642,857 share capital. Notification of the General Assembly QNB Group’s General Assembly appoints an external ordinary shares of QR 10 each. The ownership structure of meeting as well as the meeting agenda are published QNB Group affirms that all statements supplied in this auditor for one fiscal year based on recommendations QNB Group has been stable since its establishment in 1964. prior to its date as per the Commercial Companies Law regard are true, accurate and not misleading, to the best of made by the Group Board Audit and Compliance Qatar Investment Authority holds 50% of the ordinary and the Bank’s Articles of Association, and is published its knowledge and belief. Moreover, all of the QNB Group Committee to the BOD, where the General Assembly shares of the Bank with the remaining 50% held by members on the Bank’s website. Copies of the Annual Report and annual financial reports comply with the International assesses the evaluation of his remuneration. of the public whereby any natural or legal person, except QIA financial statements are also published at least 15 days Financial Reporting Standards (IFRS) and the applicable and the General Retirement and Social Insurance Authority, prior to the annual General Assembly meeting, to give the provisions of Qatar Central Bank regulations. The External In 2018, KPMG was appointed as the External Auditor cannot, at any time, possess more than (5%) of the shares shareholders reasonable time to obtain and to discuss the Auditors’ report includes affirmations that they have for QNB Group in accordance with the applicable other than by way of inheritance or testament. All shares Bank’s performance with the Chairman of the BOD and received all required information and that the audit was QCB regulations and QFMA corporate governance issued are of the same class and carry equal rights. other Members of the Board. conducted in accordance with the International Standards requirements. QNB Group issues a public tender in order on Auditing (ISA). to select a suitable external auditor for the financial This is considered as an important aspect designed to The General Assembly may hear any proposal included in year. Based on the technical evaluation and commercial reduce the dominance of the majority shareholders the agenda by the Board of Directors, and such proposal Regarding Article (28) of the QFMA code relevant to proposal, the Centralized Purchasing Committee (CPC) on minority shareholders. Consequently, the BOD may be presented by a number of shareholders owning conflict of interest that requires the Board Members to makes its recommendation to the Group Board Audit and composition reflects the ownership structure whereby not less than a tenth of the total number of shares. disclose their trading activities in company’s stocks and Compliance Committee for the appointment of the new five members of the ten BOD Members, including the Shareholders have the right to vote during the General other financial securities, Qatar Stock Exchange discloses External Auditor subject to approvals by Qatar Central Chairman, are representatives of QIA, while the remaining Assembly in person or be replaced by another shareholder on daily basis the” Intraday Insiders Trades Report” that Bank and the General Assembly. five members are from the private sector and are elected as a proxy. The BOD presents its suggestions on the specify the traded volume (buy/sell) in QNB`s Capital. by shareholders at the General Assembly meeting. dividends distribution to the shareholders in the General The external auditors inform the Board, in writing, about Assembly based on QNB Group’s performance and results, 15. Conflicts of Interest and Insider Trading any risk to which the Bank is exposed to or expected to be 13. Shareholders’ Rights along with the Group strategy. exposed to, and about all of the violations immediately QNB Group has established its own internal policy upon identification, as well as sending a copy of that The Corporate Governance practices within QNB protect and The shareholders have the sole authority to approve applicable to related parties, personal account dealing, notice to QFMA. In this case, the External Auditor shall facilitate the exercise of shareholders’ rights and ensure the and decide about the profit allocation, together with the tenders, auctions and outsourcing based on the have the right to invite the General Assembly to convene equitable treatment of all shareholders, including minority modalities. Commercial Companies Law and Qatar Central Bank pursuant to the Law provisions in this regard, provided shareholders. QNB Group maintains open and transparent instructions in this regard. According to this policy, all the they inform QFMA thereof. channels of communication with its shareholders and has 14. Transparency and Disclosure QNB Group employees are required to periodically disclose published all the information for investors and stakeholders any personal interests and dealing in the Bank’s shares, The external auditors attend the General Assembly on a regular basis through its website, as well as other The Corporate Governance framework within QNB ensures including third parties that have relations with the Bank. meetings to present their report and answer shareholders’ media. The QNB Group has also developed a modern version timely and accurate disclosure is made on all material questions. Based on QCB’s instructions, and in line with on its website www.qnb.com that provides detailed reports matters regarding the Group, including the financial In 2018, the Board confirmed that it was not aware of any International Standards, the External Auditor conducts the to shareholders on Corporate Governance, financial data and situation, performance, ownership, and governance of the conflict of interest situation that exists or is likely to exist review and the audit of the financial statements quarterly other important information on the disclosure of financial Bank. It abides by all disclosure requirements and furnishes in relation to the QNB Group. and annually according to the relevant International and non-financial information. all financial information and audit reports accurately and Standards on Auditing. The External Auditor presents his transparently to remain in line with international best With reference to article (4.10) of QFMA corporate reports to the BOD and the General Assembly as well as A dedicated work team, led by the General Manager – practices as well as local regulatory requirements including governance code, all the disputes, lawsuits in which the sending a copy to QFMA in line with QFMA requirements. Group Chief Financial Officer and the Assistant General financial data, Qatar Central Bank’s reports and the Bank is a party are properly handled and tracked by the Manager – Economic Financial Analysis and Research, disclosures made to the Qatar Stock Exchange. Legal division of the Bank. These cases together with 11. QNB Global Ratings are entrusted to provide analysts and shareholders with the latest updates are regularly reported to the Group the latest updates on QNB Group’s activities. The Bank’s QNB is considered among the first companies to publish Management Risk Committee and the Group Board Risk During 2018, Standard and Poor, Capital Intelligence and Articles of Association also confirm that all capital shares its financial statements in the Middle East and North Committee for information and proper decision. As part of Moody’s affirmed QNB’s strong rating and outlook. The hold equal rights, without discrimination, in terms of Africa region. The Bank is also committed to a clear policy the regulatory scope, the External Auditor also reviews all QNB Group credit rating is considered amongst the highest ownership in the Bank’s assets, profits, attendance to the of transparency and disclosure, in fact the Corporate the disputes and lawsuits cases for proper assessment. in the region. The following table highlights the rating of General Assembly meetings and voting, in application of Governance Report intended for QFMA and QCB includes QNB Group’s by some of the key important rating agencies the principle of “one vote per share”. information on the Board of Directors along with brief In application of article (25) of QFMA corporate worldwide: summaries of their roles and qualifications, as well as governance code, QNB Group has a clear policy on dealing In accordance with the Commercial Companies Law, the their membership in other companies’ Boards of Directors with rumors disclosed by third parties and more generally Capital QNB Group Fitch SandP Moody’s Articles of Association states that the General Assembly (Appendix). Since there are no major shareholders other anything that may damage the reputation of the Bank. Intelligence shall hold one ordinary meeting within four months than Qatar Investment Authority, which owns 50% of Long-Term A+ AA- A Aa3 following the end of each financial year. The Board of the Bank’s Capital, no further details require disclosure This policy provides for a specific treatment and Rating Directors may call for a meeting of the General Assembly regarding the major shareholders, For this purpose and in escalation of the rumors incidents on case by case basis Short-Term at its own discretion or whenever requested to do so for a line with QCB instructions issued regarding the ownership considering their origin, sources, expected impact and F1 A1+ A-1 P-1 Rating certain purpose by the External Auditor or by shareholders limits and restrictions in the Financial Institutions, whether any case was filed before the courts. holding at least one tenth of the capital.
46 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 47 16. Handling Customers’ Complaints commitment to the local and international communities in 18. Spotlight on Specific Corporate Governance to Overseas Branches and to address/reinforce the which it operates. Practices at QNB Group appropriate governance structures and reporting Customers’ complaints are a crucial source of information mechanisms, which would best contribute to an effective in order to enhance and develop the Group’s activities, QNB vision in the many domains of intervention in terms This section of the Corporate Governance report highlights chain of oversight of the Bank. whereby customers are considered key to success and of CSR is detailed below: specific practices and tools being applied at QNB Group as prosperity. Organisations consider the customer as the part of the Corporate Governance Framework. The purpose Framework and Methodology for Assessment: Growing backbone for their survival, continuity and success; Culture and Arts: Culture and arts are the medium is to allow all the users of this report to gain further Demand for Business Wide Synchronous Responsibilities therefore, the establishment of a Customer Satisfaction through which a nation manifests its heritage. They also knowledge and better information of QNB best practices QNB’s proprietary framework employed for assessment Unit that addresses their complaints has become a help embed past traditions in future generations. as part of its commitment to enhancing and strengthening of overseas branches assessed key areas, some of which major and crucial objective for the Bank Executive the Bank’s Corporate Governance practices. included: the overall governance framework, laws and Management in developed institutions. In light of Economic and International Affairs: Hosting and regulatory guidelines, executive management roles progress in legislation, laws and regulations that govern participating in conferences and knowledge-sharing Implementation of Corporate Governance Guidelines at and responsibilities, compliance function governance, the relationship with the customers, and for the purpose activities in economic and international affairs helps Overseas Branches management committees, policies and procedures, of promoting and developing the transparency with diversify national revenue sources, in Qatar and in 2017 and 2018 have been years of enhanced focus on management information systems, reporting and stakeholders, QNB Group has established the framework emerging economies – a key aspiration. Corporate Governance activities across QNB Group, interaction with Head Office and training programs. The and the appropriate mechanism for an independent with increasing scrutiny from governments, regulators, methodology assessment comprised the following core unit specialised in managing customers’ complaints Health and Environment: Health infrastructure and businesses and the wider public over financial components including: (Complaint Management). services are fundamental to human well-being – as is a institutions. In line with regulatory requirements respect for the environment. and leading practices QNB maintains a consolidated • Process: A “survey-based questionnaire approach” 17. Sustainability and Corporate Social supervision approach in order to strengthen the was employed to assess the implementation Responsibility Social and Humanitarian Affairs: By promoting a governance, oversight and monitoring over QNB Group of Corporate Governance guidelines across the spirit of volunteering, QNB Group helps creating more entities, i.e. overseas branches and subsidiaries. During overseas branches. The evaluation process was QNB Group is continuously seeking to enable economic harmonious, united communities. 2017, QNB had issued comprehensive guidelines to based on criteria defined in the questionnaires. Each and social development across the network, particularly enhance Corporate Governance practices across its overseas branch and Head Office Division conducted in developing and emerging economies. Through our Supporting Local and International Sports Events: overseas branches as an integral part of the consolidated independent evaluations and self-assessments. services, we help individuals and companies achieve Sporting participation and events are a hallmark of supervision approach. This method intends to assist QNB their aspirations. But underpinning the substantial value progress and a means to achieve healthy, vibrant people overseas branches in benchmarking their governance • Questionnaires: The assessment included two we create in doing so, it is our aim to also raise living and communities. practices against the QNB Group Governance Framework questionnaires. The first questionnaire was standards and help communities more broadly. and with specific focus on functioning, operating and directed towards the Overseas Branches to assess Youth and Education: Education and how communities reporting structures of the management committees at their contribution toward Corporate Governance With more than 80 different nationalities working engage and give opportunities to their young people is a QNB Overseas Branches. responsibilities. The second questionnaire was together in more than 31 countries, QNB Group is proud cornerstone of social and economic development. directed towards the Head Office Divisions to assess of and deeply respects its diversity. We work in an In 2018, QNB Group built on this foundation and initiated their contribution toward Corporate Governance atmosphere of mutual respect and support and share Details of the key initiatives and events sponsored/ a comprehensive project to review and analyze the related responsibilities over Overseas Branches. the same values that define our bank and our approach conducted by QNB in the above mentioned fields are implementation of corporate governance guidelines at the to business. It is perhaps because of this that we have presented in Section 2 of this report. overseas branches. • Conduct and Distribution: The questionnaires were such a strong sense of belonging and a consistently high distributed to Overseas Branches and Head Office engagement score. Putting into Practice Enhanced Governance Standards at Divisions simultaneously. Group Compliance then Overseas Branches performed comprehensive evaluations, analysis and QNB Group has continued achieving its lofty goals with Group Compliance established the “Corporate Governance studies subsequently to synthesize the results and regard to its social responsibilities towards the local and Guidelines” for overseas branches to outline the develop action plans. the international communities for this year through the mechanisms for effective consolidated supervision and support of many initiatives that are intended to contribute monitoring of the relationship between QNB Head Office Trust: A Key Reason Why Global Investors Commit Their to support the development within the countries where (HO) units and the overseas branches. Accordingly, Capital to QNB Group it operates. Moreover, the many events hosted by the overseas branches were meant to use the guidelines to Furthermore, the methodology adopted focused on Group reflect its orientation and highlight its activities assess the quality of their governance framework, taking enhancing the existing governance structures and in the various areas that underpin the Group’s corporate into account the nature of risks and challenges they face, compliance elements at overseas branches. Accordingly, social responsibility, especially the activities carried out and their underlying corporate structure. Where Corporate amendments would be proposed and shared with relevant by the Group in foreign countries through its branches and Governance related gaps between principles and actual teams at the overseas branch and the recommendations representative offices located abroad. business practices and needs are identified, overseas were considered and implemented. branches in coordination with the appropriate QNB HO The Group also considers spreading its social division should align their business practices with the A Proportionate, Principles-based Framework for responsibility policy as a top priority, as the culture of principles of the guidelines. The purpose of the guidelines Governance Helps Achieve Accountability promoting social awareness among individuals fosters and related assessments undertaken were to extend sound QNB Group is pleased to highlight that overseas branches interconnection between all and reflects the Group’s Corporate Governance practices and policies downstream utilized guidelines provided to assess the quality of their
48 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 49 governance framework, taking into account the nature of Adequate communication is paramount to ensuring Conclusion risks and challenges they are facing, and their underlying transparency and, therefore, public disclosure of required corporate structure. Where gaps between principle and Group policies is fundamental. As a result, QNB Group’s In line with the increasing challenges and risks facing the At the level of the activities of the overseas branches actual business practice needs were identified, overseas Board has a focused oversight on continually enhancing banking sector at both the regional and the global levels, and subsidiaries, the Group sought to strengthen the branches in collaboration with Group Compliance have the Group’s policies and guidelines for the management of QNB Group, represented by the Board of Directors and supervision methodology by establishing and developing initiated programs to align their business practices with all overseas branches as well as the general supervision the Executive Management is keen to continuously raise communication channels, reporting, setting new the principles of the Guide along with their required local of the development of these guidelines and decisions on and enhance its corporate governance practices and gains mechanisms to evaluate the performance of members of jurisdiction requirements. strategic issues at the Group level. by adopting a long term strategic vision that supports its the Board of Directors of the subsidiaries and of the works position as one of the leading banking institutions in the of Executive Committees at the overseas branches. This Transparency Continues to Rise MENA and South East Asia region. The adoption of the is in addition to working upon integration of the work The adoption of QNB Group standards is an evolving highest standards of good governance and honouring the policies in a manner, which does not contradict the laws of dynamic process that needs to be maintained in principles of transparency and integrity is considered one of the countries in which they are present. accordance with the context of the Group’s practices. the most important principles of this strategy, particularly It is vital that the Group’s governance, relationship and the standards and the principles developed by Qatar Central In conclusion, QNB affirms its commitment to the interaction with its overseas branches must be clearly laid Bank and Qatar Financial Markets Authority. regulatory governance requirements issued by Qatar out and documented. Central Bank and Qatar Financial Markets Authority QNB Group recognizes the importance of continuous as well as the international best practices, in order to development of the governance system and adopts maintain the stability and growth of the institution and Key Success Factors in the Framework Employed increasing standards of transparency and disclosure to enhance the confidence of shareholders, investors and of information immediately and accurately in order to other stakeholders. In addition, QNB’s external auditor increase the trust of shareholders, stakeholders and all (KPMG) positively assessed and verified the compatibility QNB's survey-based questionnaire approach helped understand and evaluate related parties. This contributes efficiently to raising work of the framework and system of governance adopted by governance processes of the Overseas Branches and how QNB Group manages efficiency and is a driver of the performance of the Group the bank, with the regulatory requirements issued by Corporate Governance activities across Overseas Branches as a whole. The periodic review and evaluation of the Qatar Central Bank and Qatar Financial Markets Authority governance system and consolidation of all governance during their audit. requirements in all the fields and activities of the bank The survey questionnaire addressed certain specific aspects of Overseas evidence this. We would like finally to confirm on our continuous Branches governance such as reporting lines with compliance division, adherence to the Corporate Governance regulatory escalation mechanism and interaction with QNB HO and adoption of the QNB As highlighted within this report, QNB Group has requirements issued by QCB and QFMA. Our External Group's Corporate Governance guidelines undertaken many new measures during 2018 to Auditor in the due course of their audit process assessed strengthen its governance system, including establishing the conformity of the bank Corporate Governance a framework to protect stakeholders and; by committing Framework and Arrangements with the regulatory to the development of the society and the protection of requirement of QCB and QFMA. The analysis resulted in key recommendations and also provided insights into some of the important aspects of Overseas Branches governance environment proactively. The management of the Group also worked on achieving gains during the past year, by continuous evaluation of its performance and through the development and permanent update of the internal The recommendations served as useful pointers and a guide to the governance policies and procedures while ensuring the Group’s framework of Overseas Branches. It also presented essential conclusions commitment to follow up and apply the requirements of and potential actions to be undertaken and ultimately to determine areas of governance in the daily business activities. strength and areas of improvement for each overseas branch
Mansoor Ibrahim Al-Mahmoud Ali Shareef Al-Emadi Member of the BOD Chairman of the Board of Directors Chairman of the GBACC
50 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 51 Appendix (1) The Board of Directors - Biographies Appendix (1) The Board of Directors - Biographies
Name of the Director Brief Biography Summary Name of the Director Brief Biography Summary
H.E. Mr. Ali Shareef Al Emadi H.E. was appointed as Chairman of QNB Group since 2013. He currently Mr. Ali Hussain Ali Al-Sada Mr. Ali Hussain Ali Al-Sada is a member of the Board since 1998 and a member serves as the Minister of Finance, Member and Secretary General of the of the Group Board Risk Committee and the Group Board Executive Committee. The Chairman Supreme Council of Economic Affairs and Investment, The President of the He also serves as Board member of Qatar Shipping Company and Board Member Executive Board of Qatar Airways, and Member of the Supreme Committee and General Manager of Al Rouayes Real-estate and Investment. He is also for Delivery and Legacy. H.E. is also member of the Board of Directors of Qatar Chairman of Qatar Syrian Company for Investment and Development, Vice Investment Authority (QIA) and Qatar Petroleum (QP). His Excellency has an Chairman of Tharawat Investment House, as well as being a member of the extensive experience in the fnancial sector spanning more than 26 years, with Board of Safwah Financial Services and Dlala Holding. progressively higher posts culminating in being the GCEO of QNB from 2005 to 2013. Under his leadership, QNB Group became the largest and most proftable Mr. Bader Abdullah Darwish Mr. Bader Abdullah Darwish Fakhroo is a member of the Board since 2001. He bank in the Middle East and North Africa, securing one of the highest credit Fakhroo is a member of the Group Board Risk Committee and the Group Board Executive ratings and brand value. Earlier, H.E. started his career at the Banking Control Committee. He is also Chairman and CEO of Darwish Holding, Board Member of Department at Qatar Central Bank. the Supreme Education Council and Qatar Chamber of Commerce and Industry, and also Chairman of the Commercial Arbitration Center for the Gulf Coopera- H.E. Sheikh Abdullah Bin H.E. was appointed as a Board member since 2015 and he was elected Vice tion Council and Chairman of the Internal and External Affairs Committee in Mohammed Bin Saud Al-Thani Chairman in 2016. H.E. is currently the Minister of State, Member of the Qatar Chamber of Commerce and Industry. Supreme Council for Economic Affairs and Investment, and Chairman of Vice Chairman Ooredoo. H.E. is also member of the Advisory Board of the World Economic H.E. Mr. Fahad Mohammed Fahad H.E. Mr. Fahad Mohammed Fahad Buzwair is a member of the Board since 2001. Forum’s Gender Parity Program, and a Commissioner to the United Nations ITU Buzwair H.E. is Chairman of the Group Board Nomination, Remuneration, Governance Broadband Commission for Digital Development. and Policies Committee and also Chairman of Buzwair Group Holding.
H.E. Sheikh Abdurahman Bin H.E. is a Board member since 2016 and a member of the Group Board Mr. Mansoor Ebrahim Mr. Mansoor Ebrahim Al-Mahmoud has been appointed as a Board member Soud Bin Fahad Al-Thani Nomination, Remuneration, Governance and Policies Committee. H.E. is Al-Mahmoud since 2004. He is Chairman of the Group Board Audit and Compliance currently the Minister of State, member of the Arab Thought Forum in Amman Committee since 2016. In September 2018, he was appointed as the CEO of and the Advisory Council at the Centre for Contemporary Arab Studies at Qatar Investment Authority (QIA); in addition, he serves as a member of the Georgetown University in Washington. H.E. is also chairman of Qatar Sports Board of Directors of Qatari Diar and Doha Film Institute. He is also the Special Federation of special needs, Board member of Invest Group, Qatar Insurance Advisor to H.E chairperson of Qatar Museums. Company and Qatar Navigation Company. Mr. Ahmad Yousuf H.A. Kamal Mr. Ahmad Yousuf H.A. Kamal has been appointed as a Board member in 2016. H.E. Sheikh Hamad Bin Jabor Bin H.E. has been appointed as a Board member since 2004. He is the Chairman of He is currently a member of the Group Board Audit and Compliance Committee Jassim Al Thani the Group Board Risk Committee and the Group Board Executive Committee, and a member of the Board of Directors of Qatar Industrial Manufacturing Co. and a member of the Group Board Nomination, Remuneration, Governance and Policies Committee. H.E. is also currently a member of the Board of Directors of Mr. Khaled Hamad Al-Hajri Mr. Khaled Hamad Al- Hajri has been appointed as Board member in 2016 and Qatar Electricity and Water (QEWC), Qatar Chemical Company (Q-Chem), Qatar is currently member of the Group Board Audit and Compliance Committee. He 2022 Supreme Council, and Board Member of Trustees of Qatar University. H.E. is is also the Director of Financial Control Department at the Ministry of Finance also the Chairman of Business Advisory Council for the College of Business and and Member of the Board of Directors of Qatar Media Services W.L.L (ELAN) Economics of Qatar University, Member of the Strategic Advisory Panel - Qatar and Qatar Satellite Company (Es’hailSat) and the Chairman of their Audit Financial Centre, and Chairman of the National Legacy Committee 2022. H.E. is Committees. also Chairman of the National Advisory Statistics Committee, Vice-Chairman - Governing Board of UNESCO Institute for Statistics (UIS) and member of the Board of Statistical Centre for the Gulf Cooperation Council (GCC).
52 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 53 Appendix (2) Executive Management – Biographies Appendix (2) Executive Management – Biographies
Name and Position Brief Biography Summary Name and Position Brief Biography Summary
Mr. Abdulla Mubarak Al-Khalifa Mr. Abdulla Al-Khalifa was appointed as the Acting GCEO in November 2018. Mrs. Fareeda Ali Abulfath Mrs. Fareeda Abulfath joined QNB in April 1996 and currently serves as the Prior to that, he was the Executive General Manager and Chief Business Officer Group Chief Credit Officer. Mrs. Fareeda has more than 25 years of experience Acting Group Chief Executive at Qatar National Bank Group. Mr. Al-Khalifa joined QNB in 1996 and has more Group Chief Credit Officer in the banking sector. She holds a Bachelor Degree from Qatar University and a Officer than 22 years of banking experience. He is the Vice Chairman of the Housing Master’s Degree from Manchester School of Business. Mrs. Fareeda is member Bank for Trade and Finance in Jordan. He is also the Board Member of QNB Al- of the Senior Management Committee since February 2017 and Vice Chairman Ahli in Egypt, QNB Finansbank in Turkey, Ecobank in Togo and QNB Capital in of the Credit Committee in QNB since 2010, She is also Board Member of the Qatar. Mr. Al-Khalifa holds a Bachelor’s degree in Business Administration from CBI - Commercial Bank International- Dubai since 2012, Board Member and Vice Eastern Washington University in the United States. Chairman of QNB Financial Services since 2012, Board Member of QNBAA since 2017 and Member of Board of Commissioners of QNB Indonesia since 2018. Mr. Ali Rashid Al- Mohannadi Mr. Ali Rashid Al-Mohannadi joined QNB in 1996 and currently serves as the Executive General Manager and Group Chief Operating Officer. He was Mr. Christian Eichner Mr. Christian Eichner joined QNB in 2009 and serves in his role as the Group Executive GM - Chief Operating previously General Manager, Retail Banking and General Manager, Information Chief Strategy Officer. Prior to joining QNB, Mr. Eichner worked in the strategy Officer Technology. Mr. Al-Mohannadi is the Chairman of QNB Tunis, Board member Group Chief Strategy Officer consulting arena, focused on fnancial services. He frst served clients in of QNB Al-Ahli in Egypt and QNB Finansbank in Turkey; he is also a member Germany and the German speaking countries in Europe before transferring to the of the board of directors of QNB Capital in Qatar and CBI in the U.A.E. Mr. Al- Middle East in 2006 where he served clients in the GCC and MENA region. Mr. Mohannadi has more than 22 years of experience in the fnancial sector and has Eichner has more than 19 years of work experience and holds a Master’s degree a Bachelor’s degree in Computer Science from Qatar University. in Business Administration from the University in Cologne, Germany.
Mr. Ramzi Mari Mr. Ramzi Mari joined QNB in 1997 from the Bank of Jordan and currently serves Mr. Khaled Gamal Eldin Mr. Khaled Gamal Eldin joined QNB in March 2014 as the Group Chief Audit as the General Manager, Chief Financial Officer. Mr. Mari has more than 26 years Executive with 30 years of banking experience in leading banks in the region. Group Chief Financial Officer of experience in the banking sector and passed the certifed public accountant Group Chief Audit Executive Prior to joining QNB, Mr. Gamal Eldin worked as GM – Chief Internal auditor for exam in the State of California in 1989. Mr. Mari holds a Master’s degree in Al Rajhi Bank in Saudi Arabia and as GM – Chief Internal Auditor for Gulf Bank Accounting from California State University in the USA. He is a member of the in Kuwait. In addition, Mr. Gamaleldin was previously working with QNB for Board of the Housing Bank for Trade and Finance in Jordan, QNB Al-Ahli in 11 years in different roles in Internal Audit and as the Head of the Compliance Egypt, QNB Finansbank in Turkey and QNB Capital in Qatar. Department. In addition, he worked as an Examiner in the Banking Control Department in the Central Bank of Egypt. Mr. Gamal Eldin is a Certifed Public Accountant (CPA) from the State of Colorado, a Certifed Fraud Examiner (CFE), Ms. Fatma Al Suwaidi joined QNB in 2000 and currently serves as Group Chief Mrs. Fatma A Al-Suwaidi and Certifed Anti-Money Laundering Specialist (CAMS) and has an MBA in Risk Officer having previously held the role of Assistant General Manager of International Finance and a Diploma in Risk Management. Group Chief Risk Officer Credit Risk Management. Ms. Al Suwaidi has almost 18 years of experience in banking and is a member of the Board of QNB Finansbank in Turkey and Mr. Saleh Nofal Mr. Saleh Nofal joined QNB in June 2003 and currently serves as the Group QNB Tunisia. As well as a BSc in Accounting, she has a Master’s in Business Chief Compliance Officer. Prior to joining QNB, Mr. Nofal was with Arab Bank, Administration from Qatar University and an MSc in Risk Management from Group Chief Compliance Officer Jordan, National Bank, the Arab World Auditing Bureau and a Jordanian public the University of New York. Ms. Al Suwaidi holds a particular interest in accountancy frm. Mr. Nofal has more than 30 years of experience in the banking innovation and is also currently in the advanced stages of completing a banking sector and the Internal Audit feld. Mr. Saleh holds a Bachelor’s degree Doctorate in Business Administration from Grenoble University, France on the in commerce; he is a Certifed Internal Auditor, a Certifed Fraud Examiner and subject of ‘Innovation in Banking and Financial Markets’, focusing on crypto a Certifed Compliance Officer and has a professional Diploma in Audit and currencies and is a Juris Doctor candidate in Hamad Bin Khalifa University. Accounting and is a professional member of CAMS, IIA and ACFE.
54 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 55 Appendix (3) QCB Corporate Governance Disclosure Requirement
Clause Description Disclosure Clause Clause Description Disclosure Clause
1.1 Shareholding breakdown by Nationality Qatar 90.05%-Others 9.95% (as 31/10/2018) 3.1 Board Committee Names and Responsibilities Please refer to Section 3.13
Total number of shareholders 2,671 and total 3.2 Committee Members Attendance Please refer to QNB Annual Report Shareholding breakdown by Number of 1.2 number of shares is 923,642,857 Board Shareholders 3 (as 31/10/2018) Committees 3.3 Total Committee Members Remuneration Please refer to Section 5 1 Shareholding Please refer to Sections 3, 4 and 5. Major Issues 1.3 Governments Shareholding 50% 3.4 Committees Scope and Major Issues/ Outcomes Disclosed to Qatar Exchange 1.4 Principal Shareholders (Above 10%) Only QIA own more than 10% Corporate 4.1 Separate Section within the Annual Report Please refer to QNB Annual Report 4 1.5 Signifcant Shareholders (Above 5%) Only QIA own more than 5% Governance 4.2 Reference to the Corporate Governance Manual Please refer to Section 1
2.1 Board Detailed Functions Please refer to Section 3 5.1 Audit Scope Related Fees QR 2,865,900 for the year 2018 External This is subject to the General Assembly 2.2 Types of Transactions requiring Board Approval Please refer to Section 15 5 Reasons for replacing/reappointing the Auditors 5.2 Meeting decision based on the Please refer to the BOD Biographies External Auditor 2.3 Board Members recommendation of GBACC to the BOD Appendix(1) 6.1 Related Party Transactions Please refer to Section 15 2.4 Independent Members Please refer to Section 3.5 6.2 Communication with Shareholders and Investors Please refer to Section 13 2.5 Executive/ non-executive Members Please refer to Section 3.5 6.3 Risk Management Please refer to Section 2.13 and 7 BOD Shareholding 6.4 Review of Internal Audit procedures Please refer to Section 2.18 and 9 Mr. Ali Hussain Ali Al-Sada 40,000 Please refer to QNB Annual Report and 6.5 Financial Statement 2.6 Website Mr. Bader Abdullah Darwish Fakhroo 1,545,046 Please refer to QNB Annual Report and 6.6 Balance Sheet Mr. Fahad Mohammed Fahad Buzwair 1,339,800 Website Please refer to QNB Annual Report and 6.7 Income Statement 2.7 New Board Members Induction measures Please refer to Section 3.3 Website Other 6 Please refer to QNB Annual Report and 2.8 Board Election Process Please refer to Section 3.2 and 3.5 Disclosures 6.8 Cash flow statement Website Qatar Exchange Website, “Intraday Insiders Please refer to QNB Annual Report and 2.9 Insider Trades 6.9 Statement of Changes in Equity Trades Report” Website Board of Please refer to QNB Annual Report and 2.10 Membership Termination Arrangements Please refer to Section 3.11 and 3.12 6.10 External auditor certifcate Directors Website 2 and Executive Please refer to Section 3.10 Statement of responsibility by the Board of Management 6.11 Please refer to Section 3 and BOD Charter Directors 1st Meeting: 16 January 2018 Detailed Steps to ensure independent decision 2nd Meeting: 19 March 2018 6.12 Please refer to Section 15 making on related-party Transactions/Agreements 2.11 Number of Board Meetings and dates 3rd Meeting: 08 May 2018 Evaluating the Performance of the Board and 6.13 Please refer to Section 3.8 4th Meeting: 11 June 2018 Directors
5thMeeting:17 September 2018
6thMeeting: 26 November 2018
2.12 Attendance record Please refer to QNB Annual Report
Board and Executive Management 2.13 Please refer to Section 5 Remuneration Policy
Executive Management Biographies Section 2.14 Key Senior Management Appendix (2)
Key Executive Managers do not hold any 2.15 Executive Management Shareholding QNB shares
Please refer to QNB Policy, BOD Charter and 2.16 Business Ethics Charter QNB Code of Ethics
56 — QNB Corporate Governance Report - 2018 QNB Corporate Governance Report - 2018 — 57 Corporate Governance Report - 2018