Standard Bank Group Risk and Capital Management Report and Annual Financial Statements 2012 Worldreginfo - 903Cd911-9Aa3-4282-8D0b-680D8a517a96 Contents
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Standard Bank Group Risk and capital management report and annual financial statements 2012 WorldReginfo - 903cd911-9aa3-4282-8d0b-680d8a517a96 Contents Risk and capital Our reports management report We produce a full suite of reporting publications Cross-referencing tools to cater for the needs of our diverse stakeholders. Overview 1 The following reports, which support our primary Capital management 19 annual integrated report, are tailored to readers Credit risk 25 requiring specific information. Indicates that additional Country risk 55 information is Liquidity risk 57 ¡ Financial results presentation and booklet available online. Market risk 66 Provides management’s analysis of financial The following icons refer Insurance risk 79 results for the period and the performance of the group’s divisions. readers to information Operational risk 84 www.standardbank.com/reporting relevant to a specific Business risk 91 section elsewhere in this Reputational risk 92 ¡ Sustainability report report, or in other reports Restatements 93 Presents a balanced and comprehensive that form part of the analysis of the group’s sustainability group’s suite of reporting Annual financial statements performance in relation to issues material publications: Directors’ responsibility for to the group and stakeholders. 95 financial reporting www.standardbank.com/sustainability AIR Group secretary’s certification 95 Report of the group audit committee 96 ¡ Risk and capital management report Annual Directors’ report 98 Provides a detailed discussion of the management of strategic risks related to the integrated report Independent auditors’ report 103 group’s banking and insurance operations, Statement of financial position 104 including capital and liquidity management SR Income statement 105 and regulatory developments. Statement of other comprehensive income 106 www.standardbank.com/reporting Sustainability report Statement of cash flows 107 Statement of changes in equity 108 ¡ Annual financial statements RCM Accounting policy elections 110 Sets out the full audited annual financial AFS statements for the Standard Bank Group Notes to the annual financial statements 112 (the group), including the report of the Standard Bank Group Limited – Risk and capital 206 group audit committee (GAC). company annual financial statements management report www.standardbank.com/reporting and annual financial Annexure A – restatements 212 statements Annexure B – subsidiaries 213 ¡ The Standard Bank of South Africa (this report) Annexure C – associates and Limited annual report 218 joint ventures The Standard Bank of South Africa is the Annexure D – group share group’s largest subsidiary. The group’s other 221 Audited incentive schemes subsidiaries, including Standard Bank Plc, also produce their own annual reports. Annexure E – detailed accounting policies 229 These reports are available at Denotes text in the risk and Annexure F – emoluments and www.standardbank.com/reporting capital management report share incentives of directors 252 that forms part of the and prescribed officers ¡ As a separate listed entity, Liberty Holdings group’s audited annual Annexure G – special resolutions 264 Limited (Liberty) prepares its own annual financial statements Annexure H – third-party funds 265 integrated report which is available at under management www.libertyholdings.co.za Annexure I – seven-year review 266 Annexure J – segmental statement 278 of financial position Annexure K – banking activities average statement of financial 280 position (normalised) Additional information Financial and other definitions 282 Feedback Acronyms and abbreviations 285 We welcome the views of our stakeholders. Please contact us at [email protected] with your feedback. Contact details 287 WorldReginfo - 903cd911-9aa3-4282-8d0b-680d8a517a96 Standard Bank Group Risk and capital management report 2012 > Overview Risk and capital management report Overview Introduction 1 Introduction Board responsibility 1 Effective risk and capital management continues to be Statement from the chairman of the fundamental to the business activities of the group. group risk and capital management 2 committee Risks are controlled at individual exposure level as well as in aggregate within The year in brief 4 and across all three business lines, legal entities and risk types. Focus areas for 2013 5 Capital is managed using regulatory and economic capital metrics at both Regulatory developments 7 business line and legal entity level. Reporting framework 10 Risk types 12 The group’s three business lines are: Risk management framework 13 ¢ Personal & Business Banking (PBB) Risk governance committees 14 ¢ Corporate & Investment Banking (CIB) ¢ Liberty. Risk governance process 14 The group’s approach to risk appetite 17 Board responsibility The group’s approach to stress testing 18 The Standard Bank Group board of directors (board) has ultimate responsibility Basel II approaches adopted 18 for risk and capital management. Various committees within the governance structure enable the board to evaluate the risks faced by the group and the effectiveness of the group’s management of these risks. The board relies on quarterly reports from these committees, as well as periodic attestations by senior risk managers and group internal audit (GIA), to satisfy itself that the group’s risk management processes are fit for purpose and are operating effectively. During the year under review, the business activities of the group and its subsidiaries have been managed within the board-approved risk appetite. The board is satisfied that the group’s risk management processes operated effectively in the period under review. 1 WorldReginfo - 903cd911-9aa3-4282-8d0b-680d8a517a96 Risk and capital Annual financial Additional management statements information report Overview continued Statement from the chairman of the group risk and capital management committee I have been chairman of the group risk and capital management committee (GRCMC) since July 2010. Other members of the committee during 2012 were Doug Band, Richard Dunne, Saki Macozoma, Fred Phaswana, Ted Woods (who became a member in March 2012) and Hongli Zhang (alternate: Yagan Liu). With the exception of Hongli Zhang and Saki Macozoma, all members of the GRCMC are independent non-executive directors. Myles Ruck Chairman of the GRCMC 6 March 2013 Attendance of each member at meetings of the The GRCMC is responsible for: AIR GRCMC in 2012 can be found in the corporate ¢ determining the group’s risk appetite governance statement on page 108 ¢ monitoring the risk profile and potential future risk exposures of the group to ensure that the group is managed within risk Richard Dunne is also the chairman of GAC, and Ted Woods appetite is chairman of the remuneration committee. This common membership enables effective oversight of all finance and risk ¢ approving macroeconomic scenarios used for stress testing, issues, and that relevant finance and risk matters are considered and evaluating the results of stress tests in the determination of appropriate levels of compensation. ¢ providing oversight and advice to the group, including The Standard Bank of South Africa Limited (SBSA) and other The main purpose of the GRCMC is to provide independent and material subsidiary boards, in relation to current and potential objective oversight of risk and capital management in the group. future risk exposures of the group The committee also reviews and assesses the adequacy and ¢ reviewing and providing oversight in respect of the adequacy effectiveness of risk governance standards and the integrity of and effectiveness of the group’s risk management framework risk controls and systems. ¢ approving risk and capital management governance standards, frameworks and policies The key terms of reference of the GRCMC can be found ¢ reviewing the impact of significant transactions entered into AIR in the corporate governance statement on page 104 by the group on capital and these are considered annually by the GRCMC and approved by the board ¢ overseeing the implementation of an IT governance framework and monitoring significant IT investments A total of six meetings of the GRCMC were held during 2012: ¢ evaluating and approving significant outsourcing four scheduled quarterly meetings, a special meeting on the arrangements group’s recovery and resolution plan and one to approve the ¢ assisting on such other matters as may be referred to it by interim risk and capital management report. the group risk oversight committee (GROC) 2 WorldReginfo - 903cd911-9aa3-4282-8d0b-680d8a517a96 Standard Bank Group Risk and capital management report 2012 > Overview ¢ promoting a risk awareness culture within the group with the group’s minimum control requirements, as articulated in ¢ reporting to the board any matters within its remit in respect the group’s risk governance standards. of which it considers that action or improvement is needed and making recommendations as to the steps to be taken. The GRCMC received regular reports on the development of the group’s risk appetite, and potential future risk exposures of the The GRCMC considered the group’s risk profile relative to the group, thereby making recommendations to the board on risk group’s strategy. The committee reported to the board following appetite as part of an ongoing process. each meeting on its consideration of the risk profile of the group and any longer-term macro or perceived strategic threats to the During 2012, an internal self assessment