Corporate governance report
Our philosophy The Board of MCB Ltd is committed to high standards of corporate governance with a view to upholding the organisation’s long-term business sustainability and creating value for its stakeholders whilst acting in a way that is good for the society at large. The Board fosters principles of integrity, accountability and transparency throughout the organisation by way of bank-wide awareness of its operating beliefs and values. It constantly reviews and adapts its practices and frameworks in line with the dynamic environment, influenced by, inter alia, cultural shifts in the workplace, digital trends, climate change risks, information security requirements, in order to ensure that the Bank acts in the best interests of its stakeholders. The Bank’s sound governance standards and practices are anchored on key pillars as highlighted below.
Strong commitment to ethics and values Strict compliance to rules and regulations
• Adherence to the Mauritius Bankers • Compliance with the National Code of Association’s Code of Ethics and Banking Corporate Governance for Mauritius (2016) ractice (2016) • Adherence to Bank of Mauritius Guidelines • Application of the Group’s ‘Code of Ethics’, • Compliance with international reporting approved and monitored by the Board requirements as applicable • Whistleblowing olicy allowing employees to • Adoption of the underlying Basel principles report matters of concern in strict confidentiality
Robust risk governance and internal control Continuous multi-stakeholder engagement
• Board responsible for oversight and • Contribution to economic development by monitoring of risk profile against risk appetite helping customers achieve their goals through adapted frameworks • afeguard of cultural and environmental • Dedicated functions in place to ensure risks heritage are properly identified, measured and • romotion of community well-being and monitored fostering of staff development and welfare • rovision of independent assurance by both • ngoing dialogue with the investment internal and e ternal auditors community and authorities
80 The Mauritius Commercial Bank Limited Annual Report 2020 relationships amongtheBoard,BoardCommitteesandLeadershipTeamaswelltheirmainrolesareillustratedinfollowingdiagram. to theLeadershipTeam,withtheirperformanceandeffectivenesscloselymonitoredagainstsetobjectivespolicies.Thefundamental While theBoardsetsoutstrategicdirection,operationalmanagementandday-to-dayrunningoforganisationareentrusted activities. Bank’s the affecting matters on guidance expertise specific and counsel provide to mandated each committees, five established and authority of delegation for provides which framework, clear linesofresponsibilitywhileenablingtheBoardtoretaineffectivecontrol.Inordercarryoutitsdutieseffectively,has governance defined clearly a within operates Bank The organisation. the of MCB Ltd is led by a committed and unitary Board, which is collectively responsible for the leadership, oversight and long-term success Governance framework Governance structure regularly reporttotheBoardon operational andfinancialperformance oftheBank. They Board. the by endorsed as accountabilities well-defined with business, the of running day-to-day the for responsible Teamis Leadership The Role ofLeadership Team oversight andguidance,ChairpersonsofBoardCommitteesescalateallsignificant mattersaffectingtheaffairsandreputationofBanktoBoard. providing of role their fulfilling In areas. specific on focus in-depth provide and responsibilities Board’s the of discharge the facilitate Committees Board Committees Role ofBoard sound internalcontrols,alongsideensuringadherenceoftheCompany torelevant legislations,policiesandnorms. The Board provides effective leadership and strategic guidance towards the achievement of the Bank’s strategy within a framework of robust risk management and Board Role ofthe Risk Monitoring Committee Committee Audit Nomination Remuneration Board ofDirectors Leadership Team Committee Conduct Review Committee The MauritiusCommercial BankLimitedAnnualReport2020 Supervisory Monitoring Supervisory Committee 81 CORPORATE GOVERNANCE REPORT Corporate governance report
The roles and responsibilities of the Chairperson, executive and non-executive directors as well as the Company Secretary are clearly defined in the Board Charter and Position Statements, which have been approved and are regularly reviewed by the Board. The role of the Chairperson is distinct and separate from that of the Chief Executive Officer and there is a clear division of responsibilities with the Chairperson leading the Board and the Chief Executive Officer managing the Bank’s business on a day-to-day basis. The Board ensures that the external obligations of the non-executive directors do not hinder the discharge of their duties and responsibilities. In this context, it is worth noting that the external commitments of the Chairperson did not change during the financial year under review.
Key roles and responsibilities
Chairperson Chief Executive Officer Directors
• Provides overall leadership to the Board • Manages the day-to-day operations • Contribute to the development of Bank’s strategy • Ensures that the Board is effective • Develops and executes the plans and in its duties of setting out and strategy of the business in line with the • Analyse and monitor the performance implementing the Bank’s strategy policies set by the Board of the Leadership Team against the set objectives • Ensures that committees are properly • Consults regularly the Chairperson and structured with appropriate terms of Board on matters which may have a • Ensure that the Bank has adequate and reference material impact on the Bank proper internal controls as well as a robust system of risk management • Presides and conducts meetings • Acts as a liaison between the Leadership effectively Team and the Board • Ensure that financial information released to markets and shareholder is • Advises and provides support and • Provides leadership and direction to accurate supervision to the Chief Executive Business Executives Officer • Actively participate in Board decision- • Builds, protects and enhances the Bank’s making and constructively challenge, • Ensures that directors receive brand value if necessary, proposals presented by accurate, timely and clear information • Ensures the Bank has implemented the Management • Ensures that development needs of necessary frameworks and structures to • Provide specialist knowledge and the directors are identified and that identify, assess and mitigate risks experience to the Board appropriate training is provided to • Ensures the maintenance of a sound continuously update their skills and • Remain permanently bound by fiduciary internal control system knowledge duties which include duties of loyalty, care and disclosure • Oversees the succession planning process • Maintains sound relations with the shareholder
Company Secretary
• Ensures compliance with all relevant statutory and regulatory requirements
• Develops and circulates the agenda for Board meetings
• Ensures good information flows as well as provides comprehensive practical support to directors
• Facilitates proper induction of directors and provides guidance to them in terms of their roles and responsibilities
• Assists the Chairperson in governance processes such as Board and Committee evaluation
• Ensures effective communication with the shareholder and guarantees that shareholder’s interests are duly taken care of
More information on the key roles is available on the website
82 The Mauritius Commercial Bank Limited Annual Report 2020 • - variation ofrightsattachedtoaclassshares. - putting theCompanyintoliquidation;and - approval ofanamalgamationtheCompanyundersection246Act; - approval ofamajortransaction; - reduction ofthestatedcapitalCompanyundersection62Act; - adoption ofaConstitutionorthealterationrevocationConstitution; • • • • • • • The salientfeaturesoftheBank’sConstitutionarehighlightedbelow: Constitution ofTheMauritiusCommercialBankLimited who havebeenlongestintheofficesincetheirlastelection. to, but not exceeding one-third, shall retire from office and shall be eligible for re-election. The directors to retire every year shall be those at eachAnnualMeeting,one-thirdofthedirectorsfortime being,oriftheirnumberisnotamultipleofthree,thenthenearest shareholders’ Such Limited. Group resolutions include: MCB of shareholders the of consent prior without Act the of 114 or 108 105, sections under rights of theshareholdershallnotvoteonashareholder’sresolutionTheMauritiusCommercialBankLtdwhichwouldtrigger shareholder’s the ConstitutionofMCBInvestmentHoldingLimited(MCBIH)providesforReservedMatters.Theseprovidethat representatives and shallthenbeeligibleforre-election; Shareholders of Meeting Annual following next the until only office hold shall appointed directors The Constitution. the with accordance casual a fill to either director, a be to person any vacancy or as appoint an addition to to the existing time directors but so any that the total at number of power directors shall not the at any time have exceed the shall number fixed in directors the Act, Banking the to subject present atthemeeting; a directorwhohasdeclaredhisinterestintransactionorproposedwiththeCompany,shallnotbecounted inaquorum the quorumforameetingofBoardismajoritydirectors; Test immediatelyafterthedistribution; the Board may authorise a distribution by the Company, if it is satisfied on reasonable grounds that the Company will satisfy the Solvency the Actandmayholdacquiredsharesinaccordancewithsection 72oftheAct; the Companymaypurchaseorotherwiseacquireitsownsharesinaccordancewith,andsubjectto,sections68to74,108110of unless suchissuehasbeenapprovedbyordinaryresolution; issue sharesofanyClassattime,to person andinsuchnumbersastheBoardmayapprove.Theshallnotissuefurthershares shares, existing any of issue of terms the and Constitution its and (“Act”) Mauritius of 2001 Act Companies the to subject may, Board the The MauritiusCommercial BankLimitedAnnualReport2020 is availableonthewebsite More informationontheConstitution 83 CORPORATE GOVERNANCE REPORT Corporate governance report
The Board Key facts (FY 2019/20)
Mandate 9 3-4 The Board defines the Bank’s purpose, strategy and value and determines um er A era e len th all matters relating to the directions, policies, practices, management and o irectors o tenure ears operations of the Bank. The Board thereafter ensures that the Bank is being managed in accordance with its directions and delegations. 10 96 um er o A era e meetin meetin s attendance
Responsibilities
The methods through which the Board exercises its powers and discharges its responsibilities are set out in the Board Charter of MCB Ltd, which provides, inter alia, for the following: • the composition of the Board, which shall comprise executive, non-executive and independent directors in compliance with applicable rules and regulations; • the Chairperson of the Board who shall be an independent or non-executive director; • the creation of Board Committees; • the adherence to the Group’s ‘Code of Ethics’; • the approval of strategic objectives, policies and corporate values as well as their communication throughout the organisation; • the monitoring of the Leadership Team in respect of the implementation of Board plans and strategies, and compliance with set policies; • the existence of clear lines of responsibility and accountability throughout the organisation and compliance with all relevant laws, regulations and codes of business practice; • a formal and transparent directors’ remuneration policy; • the review of procedures and practices to ensure soundness and effectiveness of the internal control systems; • the existence of a robust Enterprise Risk Management system, with a view to ensuring that key risks across the Bank are effectively addressed and that risk discussions are elevated to the strategic level; • the setting of principal policies in respect of risk and conduct of business for the Company; and • the provision of timely and accurate information to relevant stakeholders.
Approval of the Board is specifically required for, amongst other important matters, modifying the Company’s Constitution, issuing fresh capital or buying back its own shares, declaring dividends, acquiring or divesting sizeable stakes in subsidiaries or associates, making appointments of senior officers, and establishing the remuneration of directors and chief executives.
84 The Mauritius Commercial Bank Limited Annual Report 2020 members stoodataround60years.TheBoardcompositionfortheyearunderreviewisshownhereafter. Board of age average The experience. and knowledge skills, of mix diverse a with members, 9 of consisted Board the 2020, June 30 at As been re-electedasDirectors,inlinewiththeBank’sConstitution. have Crichton Jonathan Mr and Gujadhur Uday Mr Min, Law Alain Mr vein, same the In 2019. December in resigned Rey Pierre Simon Mr under review, there have been two new appointments, namely Mrs Su Lin Ong in November 2019 and Mr Simon Walker in June 2020 while year financial the During directors. Otherwise, non-executive the of status independence Guidelines. the including composition, size, Board the (BoM) reviews regularly Mauritius of Bank with line in directors independent independent directorsshouldmakeupforatleast50%oftheBoard.TheBoard,assistedbyNominationandRemunerationCommittee, independent of an 40% is least Chairperson at the case comprise In shall director. Board non-executive the a director, or independent an be shall Board the of Executive Chairperson Chief the The including directors Officer. twelve of maximum a and five of minimum a of consist shall Board the Charter, Board the per As Composition Composition andmeetings 22 ears ears 2 ears 0 ear 22 Board Composition Length oftenure 56 on ecuti e 2 ecuti e 2 ndependent on ecuti e Re ional A rica A riculture ner Manu acturin Transport ospitalit ropert conomics La o ernance Audit Accountin Consultanc Bankin inancial ser ices 11 Mix ofskillsandexperience Gender The MauritiusCommercial BankLimitedAnnualReport2020 89 emale Male 85 CORPORATE GOVERNANCE REPORT Corporate governance report
Meetings The Board determines the frequency of Board meetings in such a way as to ensure that it can focus on key issues at the appropriate time. In this respect, the Board Charter requires that meetings be conducted at least on a quarterly basis. Although the Board maintains a scheduled programme of meetings, the agenda for Board meetings remains sufficiently flexible to include specific items as and when required, in order to respond to changing circumstances and emerging business priorities. Meetings are convened so that directors are able to attend and participate in person. In case personal attendance by some or all of the directors is not possible, meetings are conducted by means of audio and/or video conferences, as has been the case since the last quarter of the financial year, due to the COVID-19 pandemic. On another note, members of the Leadership Team and/or external advisors are sometimes invited to attend meetings to discuss topical issues identified by the Board. Directors receive Board papers in a timely manner to facilitate meaningful discussions and help make informed decisions at the meetings. All materials for Board meetings are uploaded onto a secure portal, which can be accessed by directors on tablet devices. The Chairperson presides over the Board meetings to ensure their smooth functioning and promotes open and frank debates where different views emerge, with the ultimate objective of continuously improving the quality of decision-making. The agenda-setting process is described in the diagram hereafter.
Agenda-setting process
A dra t a enda is prepared Matters ma e added to the a enda the Compan ecretar The draft agenda is finalised in response to external events, to determine the list of key in consultation with the director requests or developments usiness topics or Board meetin s Chief Executive Officer in the operating environment of the Bank
Review Communication
2 Preparation Discussion Finalisation
The Chairperson re ie s nce a reed the dra t a enda the a enda is sent ith the to the directors Compan ecretar prior to the meetin s
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87 CORPORATE GOVERNANCE REPORT Board focus areas Corporate governance report
Board focus areas A summary of the main undertakings of the Board during the financial year is provided below:
TRAT A R RMA C R A C A R
A C AL R C RR T A A T M
iscussed and assessed the impact o C on the Assessed and monitored the Bank’s financial Re ie ed and appro ed the structure si e and Appro ed the minutes o proceedin s Mauritian econom and on usiness acti ities o the Bank per ormance a ainst ud et composition o the Board and Board Committees Re ie ed reports rom Chairpersons o Board Re ie ed and endorsed the strate ic orientations and iscussed and appro ed di idend pa out proposal Appro ed upon the recommendation o the Committees ud et plans o the Bank omination and Remuneration Committee the Re ie ed reports rom the Audit Committee Re ie ed and appro ed the Bank s accounts on a appointment o Mrs u Lin n and Mr imon alker Assessed the de elopment o the ro th pillars o the Bank uarterl asis Recommended the appointment o eloitte as e ternal as ne Board mem ers Monitored the pro ress o the i ital Trans ormation auditors or 2020 2 pdated on de elopments in the operatin Brie ed on the ne o ernance structure to o ersee and R Trans ormation pro ects as ell as the re ampin en ironment such as the ational Bud et 2020 2 Approved financial budget the Corporate ustaina ilit ro ramme o the Treasur and MCB ri ate Bankin ealth and inclusion o Mauritius on the uropean nion Mana ement unctions Re ie ed the Board and Committee Charters and lacklist other constituti e documents Brie ed on head a made ith respect to the Corporate ustaina ilit ro ramme uccess Be ond Re ie ed recommendations o the Board e aluation um ers e ercise and monitored the implementation o the related action plan Appro ed the hostin o the lima con erence and initiati es launched under the Lokal is Beauti ul Assessed and discussed specific regulatory changes campai n Re ie ed and appro ed the Bank s risk appetite Approved the appointment of new senior officers to the Appro ed the pro isionin polic and the methodolo Leadership Team adopted in the determination o pected Credit Loss in the conte t o the C crisis Assessed findings of risk committees (Audit, Risk Monitorin Conduct Re ie and ollo up on action plans Appraised findings of Bank of Mauritius and external auditors as ell as ollo up on action plans Appro ed policies
88 The Mauritius Commercial Bank Limited Annual Report 2020 Board focusareas Board TRAT A R RMA C Leadership Team campai n initiati es launchedunderthe Lokal isBeauti ul um ers Corporate ustaina ilit ro ramme uccessBe ond Mana ement unctions o theTreasur andMCB ri ateBankin ealth and RTrans ormation pro ectsas ellthere ampin ud etplanso theBank Mauritianeconom and on usinessacti itieso theBank Approved theappointmentofnewseniorofficersto Appro ed thehostin o lima con erenceand Brie ed onhead a made ithrespecttothe Monitored thepro resso i italTrans ormation Assessed thede elopment o the ro thpillarsBank Re ie ed andendorsedthestrate ic orientationsand iscussed andassessedtheimpacto C onthe auditors or 2020 2 per ormancea ainst ud et A C AL Approved financialbudget Recommended theappointmento eloittease ternal Re ie ed reports romtheAuditCommittee iscussed andappro ed di idendpa out proposal Assessed andmonitoredtheBank’sfinancial R A C A R auditors as ell ollo uponactionplans plans Monitorin ConductRe ie and ollo up onaction intheconte t o theC crisis adoptedinthedeterminationo pectedCreditLoss relatedactionplan e ercise andmonitoredtheimplementation o the otherconstituti e documents theCorporate ustaina ilit ro ramme asne Boardmem ers appointmento Mrs uLin n andMr imon alker ominationandRemuneration Committee the compositiono theBoardandCommittees Appro ed policies Appraised findingsofBankMauritiusandexternal Assessed findingsofriskcommittees(Audit,Risk Appro ed thepro isionin polic andthemethodolo Re ie ed andappro ed theBank s riskappetite Assessed anddiscussedspecificregulatorychanges Re ie ed recommendationso theBoarde aluation Re ie ed theBoardandCommitteeCharters and Brie ed onthene o ernance structuretoo ersee Appro ed upontherecommendationo Re ie ed andappro ed thestructure si eand lacklist andinclusiono Mauritiusonthe uropean nion en ironment suchasthe ationalBud et2020 2 uarterl asis Committees R C RR T A A T M pae nd lpet nteoeai pdated onde elopments intheoperatin Re ie ed andappro ed theBank saccountsona Re ie ed reports romChairpersonso Board Appro ed theminuteso proceedin s The MauritiusCommercial BankLimitedAnnualReport2020 89 CORPORATE GOVERNANCE REPORT Corporate governance report
Directors’ profiles The Board comprises 9 directors who have a proven track record in various fields. Profiles of directors who held office at the end of the financial year as well as their directorships in other listed companies (where applicable) are given hereafter. Unless otherwise stated in their respective profile, directors reside in Mauritius.
Chairperson
Jean-François DESVAUX DE MARIGNY – Age 66 Non-Executive Director
Date of first appointment: April 2013 as Executive Director (until his retirement in June 2015) December 2018 as Non-Executive Director
Qualifications: Chartered Accountant (UK)
Skills and experience: Jean-François has accumulated wide-ranging experience in the banking and financial sector, having worked as an Auditor in Europe for several years before joining MCB in 1986. During his career at the Bank, he shouldered various high-level responsibilities in his capacity as Head of Finance, Company Secretary and Deputy Chief Executive, amongst others. He has participated actively in the development of MCB’s regional network and was also involved in the launching of the Stock Exchange of Mauritius in 1989. He is currently a director of several companies within the MCB Group.
Board Committee memberships: Nomination and Remuneration Committee (Chairperson); Supervisory and Monitoring Committee (Chairperson); Risk Monitoring Committee
Directorships in other listed companies: Attitude Hotels Group
90 The Mauritius Commercial Bank Limited Annual Report 2020 Board Committeememberships:SupervisoryandMonitoring (also actsasSecretary) Maldives amongstothers.HeisalsoaboardmemberoftheUnitedNationsGlobalLocal CompactNetwork (IndianOcean). Madagascar,MCB GénéraleMoçambique, Société namely SeychellesMCB Group, MCB severaland the of within member entities Board a Reconstruction Bank European and Bank World Development several institutionalstrengthening studies.HeiscurrentlytheChairpersonofAssets&LiabilitiesCommitteeBankand through economies transitional and developed both in institutions financial to he severalspent strategycorporateyearsauditing, and where France in restructurings in consulting, advisory exposedbeen has He Europe. East and PricewaterhouseCoopers with worked he career, his in Earlier segments. banking wholesale international and domestic the of Fund andwasHeadofInternational.In2016, hewasappointedHeadofCorporate andInstitutionalBankingafteroverseeing themerger experience: and Skills Qualifications: Date offirstappointment: Deputy ChiefExecutive Officer Raoul GUFFLET Board Committeememberships: Bankers AssociationLtd. director ofMCBLeasing Ltd andMCBForward Foundation, both subsidiariesofMCBGroupLtd.HeisalsotheChairpersonMauritius a currently is He consulting. strategy and financial in specialising Mée’sdivision, Du Consulting Chazal De at Manager Senior was he Bank, Banking division. He acted Corporate as Project Director for the Business Process the Re-engineering exercise within initiated with Accenture in 2001. Before finance joining the Project Structured for responsible being also while services banking private and factoring leasing, ‘Retail ‘Operationsand Product’ the launched successfully he the and Projects Service’of and Head as 1995 in Ltd MCB at career his started He units. as well as network, branch the including distribution, multi-channel the segments, customer Business and Individual Affluent, experience: and Skills Qualifications: Date offirstappointment: Chief Executive Officer Alain LAW MIN–Age61 Executive Directors Master’s degreeinEconomicsand‘DESS’InternationalFinance(France) BA (Honours)inEconomics,CharteredAccountantandMBA(UK) – Age52 Prior to being appointed Chief Executive Officer in 2017, Alain was the Head of the Retail SBU, responsible for the for responsible SBU, Retail the of Head the was Alain 2017, in Officer Executive Chief appointed being to Prior Since joining MCB Ltd in 2004, Raoul has had a long experience in the debt market, helped set-up the MCB Equity MCB the set-up helped market, debt the in experience long a had has Raoul 2004, in Ltd MCB joining Since August2015 August2015 SupervisoryandMonitoringCommittee;RiskCommittee;NominationRemuneration Committee The MauritiusCommercial BankLimitedAnnualReport2020 91 CORPORATE GOVERNANCE REPORT Corporate governance report
Non-Executive Directors
Jean Michel NG TSEUNG – Age 52
Date of first appointment: August 2015
Qualifications: BSc (Honours) in Mathematics and Chartered Accountant (UK)
Skills and experience: Jean Michel joined MCB Ltd in January 2004 and was Head of Corporate of the Bank until July 2015, when he was appointed Chief Executive Officer of MCB Investment Holding Ltd. He trained as a Chartered Accountant with Arthur Andersen in London before becoming Partner and Head of the Audit and Business Advisory Department of De Chazal Du Mée and subsequently of Ernst & Young in Mauritius. Whilst currently a Board member of several companies within MCB Group namely MCB Group Ltd, MCB Investment Holding Ltd, MCB Seychelles, MCB Maldives, MCB Madagascar and Banque Française Commerciale Océan Indien, he also sits on the Supervisory and Monitoring Committee and Risk Monitoring Committee of MCB Group Ltd.
Board Committee memberships: Risk Monitoring Committee
Independent Non-Executive Directors
Jonathan CRICHTON – Age 65
Date of first appointment: December 2013
Qualifications: Combined Honours Degree in History and Politics (UK), ‘Diplôme IEHEI’ (France), Associate of the Institute of Financial Services (UK), and Fellow of Finsia (Australia))
Skills and experience: Jonathan retired in 2012 from HSBC after 32 years as an International Manager. He held a wide range of senior positions in the EMEA and Asia Pacific regions of the group covering corporate and retail banking as well as control support functions such as Audit and Risk. He was a board member and Chairperson of several HSBC bank subsidiaries.
Board Committee memberships: Risk Monitoring Committee (Chairperson until June 2020)
Uday GUJADHUR – Age 65
Date of first appointment: December 2017
Qualifications: Chartered Certified Accountant (UK)
Skills and experience: Uday has over 40 years of professional experience in the fields of auditing, taxation, consulting and structuring. He has been involved in advising both local and international firms in various business sectors including investment funds seeking listing on the Stock Exchange of Mauritius. Between 1986 and 1994, he carried out several audits of companies and projects financed by the World Bank and African Development Bank in African countries. Until October 2008, he was the Chief Executive Officer, director and shareholder of a major Trust and Fiduciary company in Mauritius. He was a member of the Consultative committee set up by the Government of Mauritius to advise on the reforms to the non-banking financial services sector in 2000 which led to the setting up of the Financial Services Commission and the enactment of a new legal and regulatory framework in 2001. He is the Founder member of the International Fiscal Association (IFA) (Mauritius branch) and currently serves as an independent non-executive director of companies including investment funds and entities listed on the Stock Exchange of Mauritius. He is a resident director of Essar Capital (Mauritius) Limited. He is a member of the Institute of Directors (UK).
Board Committee membership: Audit Committee (Chairperson); Conduct Review Committee
Directorships in other listed companies: Bravura Holdings Limited; Dacosbro; Quality Beverages Ltd; RHT Holding Ltd; Soap & Allied Industries Ltd
92 The Mauritius Commercial Bank Limited Annual Report 2020 Board Committee memberships: as eitherdirectororboardmember. Silvercompany portal held web also a Simon Ltd, field. Sparkle services support educational the in acting institutions, various in positions external General Regional as stint three-year a had Manager for Europe at Qatar National Bank SAQ he in London Thereafter, until the end of 2015. Prior to his retirement in 2019, he was the Founder and CEO of worldwide. offices various its in others, amongst Audit Group of Head CEO, Deputy Manager,Country as namely acting group, the within executivepositions senior of array an shouldered has he period, this Over years. 30 nearly experience: and Skills Finance (Australia) andExecutive MBA(Brazil) Qualifications: Date offirstappointment:June2020 Non-Resident Simon WALKER –Age59 Directorships inotherlistedcompanies: Board Committeememberships: several BoardsinMauritius. non-executiveon independent director an as sits she 2019, November Since industries. across companies with international workedand regional has local, major career,she her Throughout Mauritius. in Accountants Chartered of Society the of President past a is and Committee CSR the of Chairperson the was She management. risk and audits internal on projects Advisory,leading KPMG at director a and integration systems and digitalisation in projects leading Consulting, Mée Du Chazal De Partnerin a been also has She division. consulting the Partnerin a as Mauritius in Deloitte, Haskins & Sells where she worked for 8 years before joining Coopers & Lybrand (which subsequently became PricewaterhouseCoopers) experience:and Skills Qualifications: Date offirstappointment: Su LinONG Conduct Review Committee Board Committeememberships: section inMauritius. corresponding the of President and France for advisor trade foreign a been has Previously,(CEMAC).Philippe Community Monetary and Economic African Central the of States Member the to exchangecommon stock regional a of up setting the Mauritius, of Exchange Stock privatisation ofastateownedcompany inMadagascar, studyingthefeasibilityofatransatlantic airlinecompany and,inconsortiumwiththe Among hismany assignments,hehasbeeninvolved asaleadingcounselforinvestments inhotelandrealestateindustriesMauritius, negotiation and drafting of commercial agreements as well as in tax planning, particularly through offshore vehicles registered in Mauritius. consultancy groupsandhespecialisesinmergersacquisitions,restructuringprivatisationprocess,drafting ofnewlegalframeworks, institutions, banks and private groups in various countries. He has a dual experience both as an in-house lawyer and as a lawyer within large experience: and Skills Qualifications: Date offirstappointment:August2015 Philippe LEDESMA –Age59 BSc (Hons)inGeography (UK),AssociateoftheChartered InstituteofBankers (UK),Fellow ofAustralasian InstituteofBanking& BA (Hons) Master’s Degree(DESSandDJCE)inBusinessCompany Law (France)
Su Lin has 37 years of professional experience in audit and advisory. She trained as a Chartered Accountant in London with Londonwith in Accountant Chartered advisory.a and trainedas audit experienceShe in professional of years 37 has Lin Su Philippe has more than 35 years of practice as a tax and business law adviser for governments, international financial governments,international for adviser law business and tax a as practice of years 35 than more has Philippe Simon built a diversified international career in the financial services industry, having worked for HSBC Holdings plc for for plc Holdings HSBC for worked having industry, services financial the in career international diversified a built Simon –Age62 November 2019 in EconomicsandCharteredAccountant(UK) RiskMonitoring Committee(Chairperson as from July2020);Nominationand Remuneration Committee Conduct Review Committee(Chairperson); AuditCommittee Risk MonitoringCommittee;NominationandRemuneration Committee;Audit Tropical Paradise CoLtd The MauritiusCommercial BankLimitedAnnualReport2020 93 CORPORATE GOVERNANCE REPORT Corporate governance report
Remuneration philosophy With human capital viewed as critical to the development of its strategy, the Bank lays significant emphasis on employing the right people with the right skills and behaviour while rewarding them adequately. A summary of the remuneration philosophy of employees and directors is provided hereafter.
Employees Employee remuneration policy
The Bank aims at promoting a fair and competitive Generally, the remuneration package is anchored staff remuneration that incentivises performance on a range of factors including qualifications, skills and assists in attracting and retaining talent, scarcity, past performance, individual potential, amongst others. market practices, responsibilities shouldered and experience.
Our remuneration policy is based on meritocracy With a view to attaining appropriate remuneration and ensures that: levels, the Bank is guided by the following • Full protection is provided, at the lower end of the considerations income ladder, against cost of living increases • Fairness and equity are promoted throughout the • Market conditions are regularly surveyed in organisation order to ensure that remuneration packages are • Opportunity is given to employees to benefit from motivating and competitive • Superior team performance is strongly encouraged Fair remuneration the financial results and development of the Bank:
and rewarded with strong incentives Remuneration package - Staff members of the Bank receive an annual • Remuneration practices are regularly reviewed bonus based on the Company’s performance to reflect the current context while putting as well as an assessment of their contribution due emphasis on both individual and team thereto and for demonstrating behaviours in line performances with the Bank’s values. - Staff members have the added possibility to be incentivised further through a share option scheme at the level of the Group.
Employee benefits The Bank provides a range of fringe and other benefits to its employees to help them in their personal life. Examples of such benefits at the level of MCB Ltd are as follows:
• The Bank currently contributes 18.1% of employees’ basic salaries to an in-house pension scheme to provide for a retirement pension at the end of their professional career; • The Bank provides employees with loans under preferential conditions to help them meet their endeavours; • The Bank grants employees a monthly travelling allowance, with the amount varying according to their job grades; • The Bank also provides medical coverage for all employees and their dependents; and • The Bank offers its staff the flexibility of saving part of their monthly emoluments for their holidays. Staff can save the equivalent of 6% of their Basic Salary on an annual basis to cater for their holidays expenses, be it abroad or in a resort in Mauritius. This amount is made available at the beginning of each financial year and arrangements can be made to pay directly to our preferred travel agent, or to obtain refund upon presentation of a receipt. Employees also benefit from a tax rebate on this scheme, as prescribed by the Income Tax Act.
94 The Mauritius Commercial Bank Limited Annual Report 2020 • • • • • is Group, the within position executive an hold not do summarised asfollows: who directors, non-executive concerning philosophy remuneration Bank’s The Non-executive directors the Groupandindividual. their responsibilitiesandexperience,aswellavariableelement In linewiththepolicyforemployees,remunerationexecutivedirectorsconsistsofabasesalaryandshort-termbenefits,whic h reflect Executive directors Directors under options their exercised not GESOS forthethirdwindowgiventhatexercisepricewashigher have employees note, Of year. financial last the in Bank the of employees by exercised options and the of to details granted gives table following The Ltd. Group MCB of shares existing the with respects other all in and rights voting capital, 10% is applied. Members of Management are, however, not entitled to such discount. Once issued, the shares rank pari passu as to dividend, price isbasedontheaverageofshareoverquarterpriortodatewhichoptionsaregranted,adiscount options, which can be exercised over a period of one year through four specific windows, carry a retention period of three years. The option The bonus. performance annual their of 25% of maximum a to up with shares Ltd Group MCB buy to options non-transferable granted are employees scheme, the Under organisation. the across commitment and motivation upholding alongside culture performance a promote to partakeinthegrowthandprosperityofGroupthroughanacquisitionastaketherein.Thisschemeactsasadditionallever Employees of the Bank are entitled to the MCB Group Employee Share Option Scheme (GESOS), which provides them with the opportunity *Based oninitialoptionprice Number ofoptionsgrantedinOctober2019 Number ofoptionsexercisedtodate Initial optionprice(Rs) Value (Rs)* Percentage exercised(%) Number ofemployees Available forthe4 hr i a atnac fe o nneeuie ietr i rset o hi peec a meig o te or ad hi respective their and Board No shareoptionorbonusisgranted tonon-executivedirectors,exceptthosewhoholdanexecutive positionwithintheGroup. the of meetings at presence their to respect in directors Committees, and non-executive for fee attendance an is There the rationaleoutlinedinprevious point; the frequencyanddurationofmeetings.Chairpersons Committeesarepaidahigherbasicretainerfeethanmembers,inlinewith Committee retainer fees also apply to non-executive directors, with the fees differing in accordance with the time required for preparation, and aheavierworkload,comparedtoothernon-executivedirectors; The basic retainer fee paid to the non-executive Chairperson commensurately reflects the fact that he has a wider scope ofresponsibilities complexity(national/ the and size the workload, the international) ofthebusinessaswellresponsibilityinvolved; reflecting director non-executive individual each for fee retainer basic a is There th windowandexpiringinmid-October2020 in theformofanannualbonus,determinedbyperformanceofboth thantheprevailingmarketprice. Management 19,344,292 19,344,292 27,828 93,737 65,909 65,909 293.50 70.3 70.3 17 17 The MauritiusCommercial BankLimitedAnnualReport2020 Other Employees 38,606,304 38,606,304 423,840 570,076 146,236 146,236 264.0 264.0 25.7 25.7 613 613 57,950,596 57,950,596 451,668 663,813 212,145 212,145 Total 32.0 32.0 630 630 - 95 CORPORATE GOVERNANCE REPORT Corporate governance report
The following table highlights the remuneration and benefits received by the directors during the financial year.
Remuneration and benefits received Rs ‘000
Jean-François DESVAUX DE MARIGNY 2,717
Jonathan CRICHTON 1,003
Uday GUJADHUR 1,014
Philippe LEDESMA 1,250
Su Lin ONG (as from November 2019) 569
Simon Pierre REY (until December 2019) 518
Simon WALKER (as from June 2020) 73
Total Non-Executive 7,144
Alain LAW MIN 33,277
Raoul GUFFLET 31,449
Total Executive 64,726
Total (Non-Executive and Executive) 71,870
Remuneration and benefits received by Jean Michel NG TSEUNG are paid by MCB Investment Holding Limited in his capacity as Chief Executive of the latter.
Directors’ interests and dealings in securities MCB Investment Holding Ltd being the sole direct shareholder of MCB Ltd, the directors do not hold shares of their own company. However, regarding directors’ dealings in the Group’s securities, the directors confirm that they have followed the absolute prohibition principles and notification requirements of the model code for securities transactions by directors as detailed in Appendix 6 of the Stock Exchange of Mauritius Listing Rules.
The Company Secretary maintains a Register of Interests. Upon their appointment, all new directors are required to notify in writing to the Company Secretary their interest as well as the interest of their closely related parties in the Group’s securities.
The following tables itemise the interests of the directors in the Group’s listed securities as at 30 June 2020 as well as the transactions effected by them during the financial year.
Number of Ordinary shares Interests in MCB Group Ltd Ordinary shares as at 30 June 2020 Direct Indirect
Jean-François DESVAUX DE MARIGNY 386,823 251,133
Raoul GUFFLET 99,823 20,975
Uday GUJADHUR - 142
Alain LAW MIN 235,374 1,817
Philippe LEDESMA - 48,520
Jean Michel NG TSEUNG 36,683 -
Su Lin ONG 10,000 41,045
Simon WALKER - 1,858
96 The Mauritius Commercial Bank Limited Annual Report 2020 presented hereafter. Audit Committee,RiskMonitoringNomination andRemunerationCommitteetheConductReviewCommittee,are composition and main focus areas covered during the financial year of the five Committees namely, Supervisory and Monitoring Committee, Board and reviewed as required, which sets out, inter alia, its roles, responsibilities, composition and meetings requirement. The mandate, established reportingmechanisms,onareasandmattersdelegated tothem.Eachcommitteehasitsowncharter,asapprovedbythe The Board has delegated authority to various Board Committees to provide specialist guidance and make recommendations, through Board Committees There werenoservicecontractsbetweentheCompanyand itsdirectorsduringthefinancialyear. Directors’ servicecontracts Simon WALKER Alain LAWMIN Jean-François DESVAUXDEMARIGNY as at30June2020 Interests inFincorpInvestmentLtd Alain LAWMIN as at30June2020 Interests inMCBGroupLtdPreferenceshares Alain LAWMIN Raoul GUFFLET Transactions duringtheyear Jean MichelNGTSEUNG Philippe LEDESMA Alain LAWMIN Unsecured Notesasat30June2020 Interests inMCBGroupLtdFloatingRateSenior Direct 25,688 18,193 18,260 Purchases Number ofPreferenceshares Number ofOrdinaryshares Indirect Direct 88,225 52,270 Direct Direct Number ofshares Number ofnotes 806 ------The MauritiusCommercial BankLimitedAnnualReport2020 Direct Sold - - - Indirect Indirect Indirect Indirect 11,346 11,124 10,320 300,000 4,100 1,000 - - - 97 CORPORATE GOVERNANCE REPORT Corporate governance report
Supervisory and Monitoring Committee (SMC) Key facts (FY 2019/20) Mandate
The SMC assists the Board in setting the development strategy and objectives 3 4 um er A era e len th of MCB Ltd whilst monitoring and measuring the Bank’s performance against o irectors o tenure ears such strategy. It oversees the overall management of the Bank in accordance with set policies. 22 96 um er o A era e meetin meetin s attendance Composition and meetings As per its Charter, the SMC shall consist of the Chairperson, the Chief Executive and Deputy Chief Executive/s. The SMC shall meet regularly and on an ad hoc basis when required.
The directors who served on the SMC and their attendance at committee meetings during FY 2019/20 are provided in the following table:
Members Committee Board status Meeting
member since attendance
Jean-François DESVAUX DE MARIGNY C airperson January 2019 Non-Executive Director 22/22
Raoul L T (also acts as Secretary) ul 20 ecuti e irector 22
Alain LA M ul 20 ecuti e irector 22 22
Focus areas in FY 2019/20
Key topics discussed • Impact of COVID-19 on the strategy, financial performance and operations of the Bank • Progress on key organisation wide initiatives, including major transformation projects • Prospective candidates for senior positions • Development of the growth pillars of the Bank • Operating environment of the Bank • Major credit risk issues • Legal, operational and compliance issues • Corporate Sustainability Programme (‘Success Beyond Numbers’) • Requests for early retirements • Foreign currency liquidity position of the Bank • Large credit exposures ratification • Funding initiatives • Bank of Mauritius support schemes More information on the Supervisory and Monitoring Committee Charter is available on the website
98 The Mauritius Commercial Bank Limited Annual Report 2020 relevant lawsandregulations. MCB Ltd.Itmonitorsinternalcontrolprocessesandensurescompliancewith the balance, integrity and transparency of the financial information published by ensure to process reporting financial the overseeing in Board the assists AC The • Appointment ofexternalauditorsforrecommendation totheBoard • Ongoingactivitiesofsomeselected businesssegments • Assessedimpactofnewregulatory guidelines • Adequacyofallowanceforcredit impairment • Operationalandinformation riskreports • Followupontheactionplanofauditrecommendationsby theBankof Mauritius • Complianceplanandreport • Reviewofcompliancepolicieswithrecommendationstothe Board • Auditplansofinternalandexternalauditors • Reportsfrominternalandexternalauditorsactionstaken acc • Interimandauditedfinancialstatementspublishedbythe Bankwi • TheCOVID-19PandemicResponseTeamPreparednessaction plan andtheBusinessContinuity Managementplan Key topicsdiscussed Focus areas inFY2019/20 The directorswhoservedontheACandtheirattendanceatcommitteemeetingsduringFY2019/20areprovidedinfollowi ng table: corresponding totheCompany’squarterlyreportingcycleandonanadhoc basiswhenrequired. Chairperson shallbenominated.TheoftheBoardnotamemberAC.ACmeetsatleast fourtimesayear As peritsCharter,theACshallcomprisebetweenthreeandfivemembersconsistsolelyofindependentdirectorsf rom whomthe Composition andmeetings Mandate Audit Committee(AC) (until December 2019) imon ierreR (untilDecember u Lin hilippe L MA Secretary to the Board MCB roup Corporate Services td (represented byMarivonne EN AM) (represented theBoard MCB roupCorporateServices td to Secretary Uday GUJADHUR M e mb e r s
C a
irp ers on
December 2017 December anuar 20 o em er 20 ecem er 20 member since Committee
ordingly th recommendationsmadetotheBoard
Independent Non-Executive Director Non-Executive Independent n n ndependent on ecuti e irector Bo d d ar e e p p d e e n n u stat d d e e n n t t on thewebsite More informationontheAuditCommittee Charterisavailable s
o o n n e e The MauritiusCommercial BankLimitedAnnualReport2020 c c u u o irectors t t um er o i i meetin s e e um er 8 3 i i Key 2019/20) facts(FY r r e e c c to to r r A era e meetin 96 o A era e len th attendance tenure ears attend M 2 eeti 8/8 an n
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99 CORPORATE GOVERNANCE REPORT Corporate governance report
Risk Monitoring Committee (RMC) Key facts (FY 2019/20) Mandate 6 4 The RMC assists the Board in setting up risk mitigation strategies and in um er A era e len th assessing and monitoring the risk management process of the Bank. It o irectors o tenure ears also advises the Board on risk issues and monitors the risk of the different portfolios against the set risk appetite, in compliance with relevant regulations and advocated norms. 5 100 um er o A era e meetin meetin s attendance Composition and meetings As per its Charter, the RMC shall consist of the Chief Executive and at least three non-executive directors. The Chairperson of the Committee shall be an independent non-executive director. The RMC meets at least quarterly and on an ad hoc basis when required.
The directors who served on the RMC and their attendance at committee meetings during FY 2019/20 are provided in the following table:
Members Committee Board status Meeting
member since attendance
Simon WALKER C airperson as rom ly 2 2 June 2020 Independent Non-Executive Director 1/1
onathan CR C T (Chairperson until June 2020) anuar 20 ndependent on ecuti e irector
hilippe L MA ecem er 20 ndependent on ecuti e irector
ean ran ois A MAR ecem er 20 on ecuti e irector
ean Michel T Au ust 20 on ecuti e irector
Alain LA M anuar 20 ecuti e irector
Secretary: Frederic PAPOCCHIA (Chief Risk Officer)
Focus areas in FY 2019/20
Key topics discussed
• Impact of COVID-19 on asset quality, provisioning, expected credit losses under IFRS 9 • The Bank’s risk appetite • Country risk appetite and corresponding country limits • Risk portfolios against set limits • Principal risks such as credit, market, information and operational risks and actions taken to mitigate them • Adequacy of funding and liquidity requirements • Credit Risk policy review
More information on the Risk Monitoring Committee Charter is available on the website
100 The Mauritius Commercial Bank Limited Annual Report 2020 The directorswhoservedontheNRCandtheirattendanceatcommitteemeetingsduringFY2019/20areprovidedinfollowi ng table: twice ayearandonanadhocbasiswhenrequired. non-executive independent be shall which directors. The Chairperson shall be a non-executive director and of the Chief Executive may be a member of the NRC. The NRC meets at least majority the members, five and three between comprise shall NRC the Charter, its per As Composition andmeetings Mandate Nomination andRemuneration Committee(NRC) • Review of the Board evaluation exercise carried out by an external consultant and implementation of an action plan based on the findings • Appointmentofseniorofficers totheLeadershipTeamwithrecommendationssubmitted Board • Directors’feesforBoardandCommittees • Reviewandapprovalofsalaryreviewsbonuses • PerformanceevaluationandrewardsystemoftheBank • Successionplanforleadershiproleswithintheorganisation • BoardCommitteescomposition • IdentificationoftwonewBoardmembersandrecommendation madetotheBoardfortheirappointment Key topicsdiscussed Focus areas inFY2019/20 Alain LA M imon AL R 2019) imon ierreR (untilDecember hilippe L MA Jean-François DESVAUXDEMARIGNY M e retary C airperson Team oftheBank. Leadership the of part form who Officers Executive/Senior Chief as well as nominations andremunerationsfortheBoardCommitteemembers The NRCassiststheBoardbymakingrecommendationsinrespectof e mb e r s
anuar 20 une 2020 anuar 20 ecem er 20 2018 December member since Committee
ecuti e irector ndependent on ecuti e irector ndependent on ecuti e irector ndependent on ecuti e irector Director Non-Executive Bo ar d u stat Charter isavailableonthewebsite More informationontheNominationand RemunerationCommittee s
The MauritiusCommercial BankLimitedAnnualReport2020 o irectors um er o meetin s um er 4 4 Key 2019/20) facts(FY 100 A era e meetin o A era e len th attendance 2-3 tenure ears attend M eeti 4/4 an
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Conduct Review Committee (CRC) Key facts (FY 2019/20) Mandate 3 2 um er A era e len th The CRC assists the Board in monitoring and reviewing related party o irectors o tenure ears transactions, their terms and conditions, and ensuring the effectiveness of established procedures and compliance with the Bank of Mauritius Guidelines. 4 100 um er o A era e meetin meetin s attendance Composition and meetings As per its Charter, the CRC shall consist of between three and five independent non-executive directors, from whom the Chairperson shall be nominated. The CRC meets at least four times per year and on an ad hoc basis when required.
The directors who served on the CRC and their attendance at committee meetings during FY 2019/20 are provided in the following table:
Members Committee Board status Meeting
member since attendance
Su Lin ONG C airperson as rom e ember 2 1 November 2019 Independent Non-Executive Director 3/3
imon ierre R (until December 2019) anuar 20 ndependent on ecuti e irector 2 2
da A R ecem er 20 ndependent on ecuti e irector
hilippe L MA ecem er 20 ndependent on ecuti e irector
Secretary: Frederic PAPOCCHIA (Chief Risk Officer)
Focus areas in FY 2019/20
Key topics discussed
• Credit facilities granted to related parties • Reporting to the BoM on related party exposures • Reports with respect to deposits of related parties • Financial positions (exposures and deposits) relating to external auditors as well as partners in charge of the audit of the Bank
More information on the Conduct Review Committee Charter is available on the website
102 The Mauritius Commercial Bank Limited Annual Report 2020 d for re-election. one thirdofBoardmembers,notablythosewhohavebeenlongestinoffice,arerequiredtoretire,whilebeingeligiblestandforre-election. to ensurethatthereisagoodbalancebetweencontinuityandfreshperspectivesontheBoard.ItworthhighlightingateachAnnualMeeting, Whilst seeking to retain a core set of directors with long-standing knowledge, the Board recognises the importance of rotation of Board members candidates intheirassessment.ThenominationandappointmentprocessofdirectorsfortheBoardishighlighteddiagrambelow. the of independence and commitment time diversity, gender considers also NRC The experience. and knowledge expertise, skills, specific potential directorstotheBoardforitsapproval.Theselectioncriteriausedassessprospectivecandidatesrelate,amongstothers,their a constantlychangingmarketenvironment.TheNRCisresponsibleforidentifyingcandidates,carryingoutinterviewsandrecommending in strategy long-term Bank’s the of execution smooth a enable to perspectives of diversity promote to seeks it doing, so In considered. are and successionplanning.TheNRCreviewsthesize,structurecompositionofBoardonanannualbasisorwheneverappointments is supportedbytheNominationandRemunerationCommittee(NRC),whichresponsibleforoverseeingboarddirectorship’srenewal Board the duty, this fulfilling In directors. of appointment and nomination the for place in process transparent and formal a has Board The Nomination process Board effectiveness Identification of candidates Interviews 2 Approval Board Nomination and appointment process Nomination andappointment Nomination andappointment Regulatory Approval process Election atAnnual/ Special Meeting Special The MauritiusCommercial BankLimitedAnnualReport2020 appointment processisavailableonthewebsite More informationonthenominationand appointment Letter of Regulatory filling 103 CORPORATE GOVERNANCE REPORT Corporate governance report
Board induction and training On appointment to the Board, new directors are invited to attend and participate in a comprehensive induction programme. The latter seeks, inter alia, to familiarise them with their legal duties and to provide them with an overview of the Bank’s business operations and their main drivers as well as the operating environment. The programme’s objective is to enable directors to be well equipped from the outset to effectively contribute to strategic discussions and oversight of the Bank. As part of its commitment for continuous improvement, the Board has established an ongoing training and development programme for directors, which is reviewed on a regular basis to ensure its pertinence, with a training log maintained for each director by the Company Secretary.
During the last financial year, directors attended a presentation delivered by the President of the Institute of Chartered Accountants in England and Wales (ICAEW) on the local and international implications of Brexit. Moreover, various interactive sessions were organised to provide directors with a greater understanding of specific strategic focus areas. Furthermore, the Board held deep dive sessions pertaining to the Digital Transformation Programme, with a local site visit to the MCB Digital Factory undertaken in November 2019. An outline of the induction and training programme is set out in the diagram hereafter.
Induction/training programme
Induction/training programme
ncludes in ormation on a road ro ide directors ith an ran e o matters relatin to the role o er ie o the Bank s o directors Compan s Constitution or anisational structure Board and Board Committees financial performance and Charters recent Board papers strate ic orientations acti ities disclosure re uirements ith respect o the di erent usiness to directors interests segments as well as specific areas o interest One-to-one Ongoing professional briefings development training
2 Induction Presentation Pack sessions ro ide directors ith the na le directors to update their opportunit to interact ith the skills and kno led e Chairperson Compan ecretar pro idin insi ht into areas o and senior e ecuti es across the strate ic ocus and current topics Bank ith the nature and e tent o o interest as ell as other these consultations dependin on training with respect to specific the specific needs of the directors re uirements o directors
Note: Briefing and reading materials are made available on the Board portal for consultation
104 The Mauritius Commercial Bank Limited Annual Report 2020 methodology used is provided in the diagram hereafter. methodology usedisprovidedinthediagramhereafter. process evaluation the of outline An timeframe. reasonable a within consideration, due given are identified issues that ensure to plan action the governance the formalise action plansubsequentlyagreedupon.TheChairpersonoftheBoard,withsupportNRC,hasbeenmonitoringimplementation to required documents key that and requirements arrangements areinplace.Italsocontainedafewrecommendationsforenhancingperformance,whichwerepresentedtotheBoard,withan compliance and performance minimum the exceed generally on areviewofgovernancerelateddocumentsandviewsdirectorsrangetopics.Thereportconcludedthatcurrentpractices An evaluation exercise was conducted in August 2019 by Ernst and Young Ltd on various governance aspects. The assessment was notably based and RemunerationCommittee(NRC). Nomination the of oversight the under facilitator external independent an of support the with undertaken is evaluation The members. individual In itsquestforcontinuousimprovement,theBoardregularlyassessesperformanceandeffectiveness,aswellthatofcommittees Board/Director’s performance directors todiscusstheir ne to one meetin s responses tothe ith asampleo uestionnaires 2 o uestionnaire eachdirector Completion Evaluation processmethodology Evaluation processmethodology Consolidation offindingsand and eachcommittee report su mitted Board mem ers discussion ith of findingsand resentation to the oard The MauritiusCommercial BankLimitedAnnualReport2020 address aps Action plan a reed to mplementation and monitorin o actionplan 105 CORPORATE GOVERNANCE REPORT Corporate governance report
Risk governance
Risk management and internal control
The Board has the ultimate responsibility to maintain a robust risk management and internal control system, which it regularly reviews to cater for new emerging risks and threats emanating from the operating context. As a key focus area, MCB Group has, during the period under review, activated its Pandemic Preparedness Plan to help underpin business continuity in the wake of the pandemic spread and the associated lockdown periods, while duly safeguarding the health and safety of its stakeholders.
Supported by the Risk Monitoring Committee, the Board ensures that the necessary structures, processes and methods for identification, evaluation and monitoring of the principal risks faced by the Bank are integrated into the latter’s overall risk governance framework. The Board, assisted by the Audit Committee, ensures that the internal control framework in place results in an acceptable level of risk exposure whilst guaranteeing compliance with internal established policies and procedures and relevant laws and regulations. In addition, the Audit Committee receives reports from the Company’s external auditor and has a discussion with the latter without Management being present to ensure that there are no unresolved material issues of concern. Based on the work performed by internal and external auditors, reviews by Management and regular reporting from the Chairperson of the Audit Committee, the Board is of opinion that the internal control systems are adequate and effective.
More information is available in the ‘Risk and Capital Management Report’ on pages 117 to 160
Information Governance
The Bank attaches significant importance to the confidentiality, integrity and availability of information, backed by a robust framework that protects its information asset and upholds the security and performance of information and Information Technology (IT) systems. The Board is responsible for setting and regularly reviewing relevant policies and for ensuring that they are appropriately implemented through adequate structures and processes. In this respect, access to information is only available to authorised parties while physical and logical access controls are in place at all times with staff being regularly made aware of relevant requirements. The Bank continues to invest in technology to enhance its operational resilience with significant investments being monitored by the Board. Several initiatives were deployed during the year to assess and enhance the robustness of its information security, including cyber-attacks simulations on the organisation’s information system. The Internal Audit function provides for an independent assurance to assess the suitability of the Bank’s information and IT policies while the Audit Committee evaluates the effectiveness of related internal control systems.
More information is available in the ‘Information, Information Technology and Information Security Governance Policy’ on the website
106 The Mauritius Commercial Bank Limited Annual Report 2020 for externalstakeholders. Note that the fees for other services relate to ad hoc tax assessments settlement, annual internal control reviews, annual tax compliance, quarterly reviews of our abridged unaudited financial statements and specific comforts Auditors’ feesandforotherservices limited toadhocadviceandotherassurancerelatedservices,arepre-approvedbytheAuditCommittee. auditors intheconductofauditresultingfromprovisionnon-auditservicesbythem.Assuch,services, whichare MCB Ltd, via the Audit Committee, has a process in place to ensure that there is no threat to the objectivity and independence of external Non-audit services year wasapprovedbyshareholdersattheAnnualMeetingofMCBLtd,heldinDecember2019. in a timely manner were considered, amongst others. The proposals to appoint PwC for FY 2019/20 and Deloitte for the following financial audit the complete to ability and resources of availability credentials, general Deloitte’s as such factors Several year. financial next the for issue of a Request for Proposal (RFP) in consultation with the Audit Committee, Deloitte was recommended to the Board as external auditor a years, tender for five external audit than services was more initiated in of May 2019 for period the replacement a continuous of PwC. Following the for selection process, institution which involved financial the a audit to allowed not is firm audit an that stipulates which 2004, Act Banking with line In Bank. the of auditor external as reappointment for Board the to recommended was 2015, May in appointed first was which (PwC), PricewaterhouseCoopers Committee, Audit the by out carried exercise evaluation annual the of part As retention. and effectiveness and eligibility of the external auditor on an ongoing basis before making a recommendation to the Board on their appointment With aviewtoensuringtheoveralladequacyofBank’sinternalcontrolframework,AuditCommitteeevaluatesindependence, External auditors PricewaterhouseCoopers PricewaterhouseCoopers Fees forotherservicesprovidedby: PricewaterhouseCoopers Audit feespaidto: The MauritiusCommercial BankLimitedAnnualReport2020 Rs ‘000 19,493 19,493 2020 4,076 4,076 Rs ‘000 20,206 20,206 2019 9,884 9,884 107 CORPORATE GOVERNANCE REPORT Corporate governance report
Business Executives The conduct of business is entrusted to the Leadership Team of the Bank which has the responsibility to operate within the strategic framework, risk appetites and policies set by the Board while adhering to regulatory requirements. To this end, various committees involving the Bank’s senior officers are in place to deliberate on key issues for informed decision making. Business Executives assist the Chief Executive Officer and Deputy Chief Executive Officer to manage the day-to-day running of the Bank’s business and affairs. Of note also, oversight and monitoring of the various risk areas within the business are exercised through dedicated standing committees, namely the Executive Credit Committee, Country Risk Committee, Asset and Liability Committee, Information and Operational Risk Committee and Compliance, Anti-Money Laundering and Legal Committee.
Profiles of Business Executives
The profiles of Business Executives – excluding those for Alain LAW MIN and Raoul GUFFLET, which appear in the Directors’ Profiles section – are given hereunder.
Vincent CHATARD – Age 56 Chief Operating Officer
Qualifications: Masters of Engineering (France) and MBA (France)
Skills and experience: Vincent was appointed Chief Operating Officer in September 2015 and since February 2018, he is also steering the Digital Transformation Programme. He has accumulated wide-ranging experience in the banking sector, having occupied a number of senior executive positions in international banks. He spent 7 years working for Crédit Lyonnais International before joining KPMG France as a Management Consultant in 1995. In 1997, he was appointed as Head of Information Technology and Organisation of Banque Robeco France (a Personal Banking Unit of the Rabobank Group). From 2000 to 2008, he was appointed Chief Information Officer and Senior Vice- President Business Development of ING Direct, to establish the units both in France and the UK. From 2008 to 2011, he launched and was the Chief Operating Officer of BforBank, the direct banking unit of Crédit Agricole. He then acted as Chief Operating Officer, Chief Business Development Officer and Executive Board Director of MeDirect Bank, a privately owned investment and wealth bank operating in Malta and Belgium prior to joining MCB Ltd.
Thierry HEBRAUD – Age 58 Head of Corporate and Institutional Banking
Qualifications: Diplôme d’Etudes Supérieures de Commerce, Administration et Finance (France)
Skills and experience: Thierry joined MCB in October 2019 as Head of CIB, with the responsibility to oversee the ‘Corporate Banking’, ‘Energy and Commodities’, ‘International Structured Finance’, ‘Institutional Banking’, ’Global Banking’, ‘Credit Origination and Structuring’ and ‘Transaction Management and Monitoring’ units, whilst also being mandated to optimise the SBU’s organisational structure. Prior to joining the Bank, he has accumulated extensive experience in Corporate and Investment Banking over the last 35 years, holding leading positions within Crédit Agricole Group in Eastern and Central Europe, Asia, and North Africa.
Bhavish NAECK – Age 49 Head of Finance
Qualifications: BSc (Honours) in Economics with specialisation in Accounting and Finance and Fellow Chartered Accountant (UK)
Skills and experience: Bhavish, who is the first MCB Foundation scholar, spent some years in Singapore, working in the Audit and Business Advisory division of Deloitte & Touche and as Financial Controller at JDA Asia, a subsidiary of a listed NASDAQ entity. After a stint at Sun Resorts, he joined MCB in May 2000 as Manager – Investment Administration and then worked as Project Leader on the Business Process Re-engineering project in 2001. Since January 2014, he heads the Finance SBU where he is responsible for the provision of internal and external financial/regulatory reports and the team of finance business partners which provides key support to the main committees of the Bank. He is currently the Project Sponsor on the Finance Transformation Project, initiated in September 2019, with the aim to better respond to stakeholders’ expectations in the light of the growing internal, external and technological changes.
108 The Mauritius Commercial Bank Limited Annual Report 2020 Note: TheaboveBusinessExecutivesdonotholdanyshareinFincorpInvestmentLtd andC The followingtablegivestheinterestsofBusinessExecutivesinG Interests inshares sound oversight ofthedifferent businesslines,tobettershapeHRstrategies toaccompany themtomeettheirbusinessgoals. as HeadofRetailsinceAugust2017.HewasappointedHumanResourceseffective May 2018.HiscareerwithintheGroupgives hima joining the Retail SBU. He held various positions therein namely as Regional Manager, Retail Operations and Service Manager and subsequently experience:and Skills Qualifications: Head ofHumanResources Mike SOPHIE– stress-testing frameworks andthereview ofcreditoriginationframeworks. of development the reforms, 2.5 Basel and 2 Basel the of implementation the including assignments various on working Paribas, BNP and Générale Societé America, of Bank as such banks severallarge with engaged he which during regulation, and management risk of areas in particularly consultancy management extensivein experienceaccumulated had he MCB, joining to Prior Board. the of Committee Review responsibilities, he also acts as Secretary to the Executive Credit Committee of the Bank and to the Risk Monitoring Committee and Conduct the CreditRisk,Management,Modelling,Recovery BusinessandMarket RiskunitsoftheBank.Asparthisongoing Chief Executive and worked on various projects in the risk arena. He then took office as Deputy Chief Risk Officer in April 2014 and oversees experience:and Skills Qualifications: Chief RiskOfficer Frederic PAPOCCHIA – Bhavish NAECK Interest asat30June2020 Frederic PAPOCCHIA Mike SOPHIE Fellow memberoftheAssociationCharteredCertifiedAccountantandMBA(UK) Master’s DegreeinFinanceandMBA(France) Age 51 Mike has a vast experience in banking. He spent 9 years in overseas subsidiaries of the Group from 1999 to 2008 before before 2008 to 1999 from Group the of overseassubsidiaries in years 9 spent He banking. experiencein vast a Mikehas Frederic was appointed Chief Risk Officer in January 2016. He joined MCB in July 2012 as a Consultant to the Group the to Consultant a as 2012 July in MCB joined He 2016. January in Officer Risk Chief appointed Fredericwas Age 46 MCB GroupLimitedshares Direct 28,644 14,771 12,857 Indirect 6,541 - - OVIFRA. roup’s listedsecuritiesattheendoffinancialyear. 100,000 Direct MCB GroupLimited Preference shares - - Indirect 150,000 - - The MauritiusCommercial BankLimitedAnnualReport2020 Rate SeniorUnsecuredNoted MCB GroupLimitedFloating Direct 4,333 - - Indirect 500 - - 109 CORPORATE GOVERNANCE REPORT Corporate governance report
Remuneration
The aggregate amount paid to the Business Executives in terms of remuneration can be found in Note 35 of the Financial Statements.
Related party transactions
For the purposes of these Financial Statements, parties are considered to be related to the Bank if they have the ability, directly or indirectly, to control the Bank or exercise significant influence over the Bank in making financial and operating decisions, or vice versa, or if they and the Bank are subject to common control. Related parties may be individuals or other entities. The Bank of Mauritius Guideline on Related Party Transactions, issued in January 2009 and revised in June 2015, is articulated around three main elements:
• the role of the Board of Directors of a financial institution, its Conduct Review Committee and that of its Senior Management in establishing and implementing appropriate policies on related party transactions and administering the process for handling the transactions;
• the definition of the different types of related party transactions and the setting out of regulatory limits on credit exposures to related parties; and
• the definition of basic rules for monitoring and regulatory reporting of related party transactions and their disclosure in the Annual Report. In fact, the Guideline is more stringent than the applicable International Accounting Standard (IAS 24) in that a person holding directly or indirectly 10% or more of the capital or of the voting rights of the Bank also falls within the definition of related party. As a general rule, all transactions with a related party must be carried out at arm’s length i.e. on terms and conditions that are at least as favourable to the Bank as market terms and conditions. Related party transactions include:
• loans, finance leases and service agreements;
• guarantees issued on behalf of a related party;
• investments in any securities of a related party;
• deposits and placements; and
• professional service contracts.
As regards regulatory reporting on exposures to related parties, the latter are classified into three categories:
1. Directors, their close family members and any entity where any of them holds more than a 10% interest; Shareholders owning more than 10% of the financial institution’s capital; Directors of any controlling shareholder; and Entities (excluding subsidiaries) where the financial institution holds more than a 10% interest.
2. Senior Management, their close family members and any entity where any of them holds more than 10% interest; Senior Management of any controlling shareholder; and Subsidiaries of the financial institution.
110 The Mauritius Commercial Bank Limited Annual Report 2020 to acompanyinwhichrelatedpartyhasstake. None of the loans granted to related parties was non-performing as at 30 June 2020, except for a small exposure of Rs 0.7 million in relation 622 millionandRs578million.Thesebalancesrepresented6.2%,2. Exposure of the Bank’s top six related parties as at 30 June 2020 were Rs 3,175 million, Rs 1,096 million, Rs 1,085 million, Rs 986 million, Rs as at30June2020. sheet) and Rs 2,563 million (off-balance sheet), which represented respectively 2.9% and 3.7% of Bank loans and Bank contingent liabilities (on-balance million 6,925 Rs to amounted companies subsidiary to Bank the of exposure including parties, related of exposure Aggregate Statements setsouton-andoff-balancesheetexposurestorelate applicable totransactionsenteredintowiththemandreportingprocedurestheConductReviewCommittee.Note35Financial conditions and terms the parties, related of identification the governing rules the out sets transactions party related on policy Bank’s The are set,inaggregate,at60%ofTier1capitalforcategoryand150% thereofforthetotalofcategories1and2. Category 3 above, as well as exposures representing less than 2% of the institution’s Tier 1 capital, are excluded from regulatory limits which 3. SeniorManagement,providedtheirexposuresarewithintheter by theBankofMauritius,hasnotdeclaredanydividend to itsshareholderforthe periodunderreview. issued directives with line in and circumstances exceptional current the In path. dividend predictable relatively and stable a have to Group Although thereisnoformaldividendpolicy,theCompanyaims tosupplyitsshareholderwithadequatereturnsmeettheobjectiveof Dividend policy There iscurrentlynoshareholdersagreementaffectingthegovernance oftheCompanybyBoard. Shareholders agreement www.mcb.mu, providesforanadaptedandcomprehensiveself-service interface. at hosted website, Bank’s the conferences, press occasional announcements, press official to addition In channels. communication various All material business developments that influence the Bank are communicated to stakeholders in a transparent and timely manner through The Boardiscommittedtobuildingopenandtrustedrelationshipswithstakeholdersthepublicatlargethroughregular engagement. Stakeholders’ relationsandcommunication d partiesasat30June2020. ms andconditionsoftheiremploymentcontract. 1%, 2.1%,1.9%,1.2%and1.1%respectivelyoftheBank’sTier1capital. Party TransactionsPolicy’isavailableonthewebsite More informationonthe‘ConflictsofInterestandRelated The MauritiusCommercial BankLimitedAnnualReport2020 111 CORPORATE GOVERNANCE REPORT Corporate governance report
Statement of Directors’ responsibilities Company law requires the directors to prepare Financial Statements for each financial year, which give a true and fair view of the state of affairs of the Bank. In preparing those Financial Statements, the directors are required to:
• ensure that adequate accounting records and an effective system of internal controls and risk management have been maintained;
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been adhered to, subject to any material departures disclosed, explained and quantified in the Financial Statements;
• prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Bank will continue in business;
• keep proper accounting records which disclose with reasonable accuracy, at any time, the financial position of the Bank while ensuring that the Financial Statements fairly present the state of affairs of the Bank, as at the financial year end, and the results of its operations and cash flows for that period; and
• ensure that the Financial Statements have been prepared in accordance with and comply with International Financial Reporting Standards, the Mauritian Companies Act 2001 as well as the requirements of the Banking Act 2004 and the guidelines issued thereunder.
The external auditor is responsible for reporting on whether the Financial Statements are fairly presented. The directors are also responsible for safeguarding the assets of the Bank and, hence, for taking reasonable steps for the prevention and detection of fraud and other irregularities. Other main responsibilities of the directors include the assessment of the Management’s performance relative to corporate objectives; overseeing the implementation and upholding of the Code of Corporate Governance; and ensuring timely and comprehensive communication to all stakeholders on events significant to the Bank. The directors report that:
• adequate accounting records and an effective system of internal controls and risk management have been maintained;
• the Financial Statements fairly present the state of affairs of the Bank, as at the financial year end, and the results of its operations and cash flows for that period;
• appropriate accounting policies supported by reasonable and prudent judgements and estimates have been consistently used;
• International Financial Reporting Standards, the Mauritian Companies Act 2001, as well as the requirements of the Banking Act 2004 and the guidelines issued hereunder have been adhered to; and
• the Financial Statements have been prepared on the going concern as the Bank is likely to continue in business.
On behalf of the Board.
Jean-François DESVAUX DE MARIGNY Alain LAW MIN Chairperson Chief Executive Officer
112 The Mauritius Commercial Bank Limited Annual Report 2020