7 Structure and Strategy Byblos Bank S.A.L. Structure and Strategy | 08 Structure Structure and Strategy | 08 Byblos Bank S.A.L. Governance: Traditional Values at Work 8 in a Changing World As a strong proponent and avid practitioner of transparent business practices, responsible lending policies and careful investment strategies, the Byblos Bank Group conducts Founded in 2004, our Group regular reviews to ensure Risk Management (GRM) that its governance model division uses the guidelines set remains appropriate to both down by Basel II as a starting regulatory requirements and point. GRM appraises the market developments and is Group’s position according to being adhered to. Our systems, several factors, including credit, codes of conduct and internal operational, and market risks, controls are designed with as well as those associated with an eye toward meeting the interest rates, liquidity, and credit requirements of Basel II and concentration risks (measured other international standards. by country, industry, borrowers Since many of these follow and connected groups thereof). definitions of “best practice” as GRM has also authored a Risk determined by thoroughgoing Management Charter aimed and carefully studied research, at obtaining organizational they are also consistent with structures suitable for the a determination to develop a management of the Group’s Group-wide approach to risk that strategic, operational and facilitates accurate assessment financial risk, as well as its and successful management by compliance goals. individual departments. In keeping with Basel II’s emphasis on accurately managing and quantifying credit, market and operational risks, Byblos Bank relies on departments established within the GRM Division. Portfolio Management and Credit Risk Analytics (PMCRA) keeps track of the commercial portfolio, while Operational Risk Management (ORM) addresses mostly non- credit factors that are also telling on the bottom line. Market Risk Management undertakes the measurement of market risk for the Group, stress- resting and assessing impact on liquidity and interest rate risk. PMCRA uses Moody’s Risk Analyst (MRA), one of the most respected platforms on the market, to rate the credit risk to which Byblos Bank is exposed by its commercial portfolio. In addition, while the MRA’s multidimensional criteria are highly effective in creating clear pictures of both individual and collective credit risk, Governance: Traditional Values at Work in a Changing World 9 Byblos Bank has undertaken a detailed customization effort aimed at All of these examples demonstrate the power and versatility derived improving the platform’s sensitivity to the particular conditions of the from adhering to the values associated with traditional banking – a Lebanese marketplace. PMCRA is also in the process of continuously conservative approach to risk, total commitment to the many overlapping updating the Bank’s credit policies and procedures, and expanding its interests of our customers, investors, and employees, attention to detail credit-loss database. bordering on obsession, and boundless faith in hard work. Simultaneously, ORM has been implementing its mandate to provide Our adherence to these values reflects a determination to remain Byblos Bank with a carefully conceived framework to deal with concentrated on what we know best: commercial banking, retail banking, operational risk. This has involved the crafting of an overall strategy and trade financing. It also serves as a prophylactic against the high- to deal with operational risk and ensure its centrality to governance. (not to say incalculable) risk instruments and strategies that imploded Within that strategy, policies and procedures have been refined and with such devastating consequences around the world in late 2008. Our continue to be refined. In addition, specific responsibilities have been values encourage us to constantly update our products and services assigned to particular individuals and departments, each of which has in order to meet the diverse and evolving needs of our clients. They do been provided with the necessary tools to help provide a fuller picture not, however, permit us to so much as consider irresponsible gambles of the group’s risk profile. on unproven practices that might provide higher returns in the short and medium terms but which threaten severe losses over the long haul. At Byblos Bank, the constant evolution of processes relating to assessing, managing and reducing risk are not just a collection of For the Byblos Bank Group, traditional values provide solid footing as tasks: they are part and parcel of our corporate culture, a way of life, we engage in a never-ending process of change in order to increase our even, for those members of our team responsible for this aspect our competitiveness in an ever-evolving market. By doing so, they are also a business. This attention to detail can only be upheld by individuals primary source of added value for all our stakeholders in all that we do. committed to our core values, all of which revolve around being there for our customers through thick and thin, and by structures designed to maintain these standards in the face of every conceivable obstacle, from day-to-day challenges to circumstances that can never be predicted, only accounted for. This is why, for instance, Byblos Bank has established a dedicated facility, backed by comprehensive contingency plans, in order to minimize service disruptions and protect our clients’ interests in the event of a natural disaster or some other catastrophic event. It is also why the Group is currently in the process of carrying out at three-year project aimed at reviewing and updating a variety of policies, systems and procedures – from human resources to headquarters’ docking mechanisms with our increasingly important foreign subsidiaries – in order to ensure that the current level of Values Governance: Traditional in a Changing World at Work growth is sustained in a healthy fashion. As we move into more markets, we need larger numbers of qualified people and a greater capacity to measure and improve the performance of our subsidiaries: neither of these requirements leaves any room for complacency. Byblos Bank S.A.L. Structure and Strategy | 08 Structure Structure and Strategy | 08 Byblos Bank S.A.L. Profile of 10 the Group OUR MAJOR LINES OF BUSINESS OUR Established in Byblos, Lebanon, --- Consumer Banking in 1950, the Byblos Bank Group --- Commercial Banking HISTORY is a leading financial institution --- International Banking focused on domestic and --- Financial Markets selected overseas markets. After nearly six decades of consistent growth, Byblos Bank now has OUR an extensive branch network spread evenly across Lebanon. VALUES The Group also has expanded to several other countries, including --- Integrity Armenia, Belgium, Cyprus, --- Mutual Respect France, Iraq, Nigeria, Sudan, --- Professionalism Syria, the United Arab Emirates, --- Accountability and the United Kingdom. --- Customer Focus --- Teamwork OUR MISSION OUR The focus of Byblos Bank’s “Byblos Bank Group is a universal strategy is to build on our institution that is focused on the STRATEGIC leading position in the Lebanese domestic and regional markets market while diversifying into while striving to offer world- GOALS foreign ones. To do this, we class services to its customers, strive to be a full-service bank fulfillment to its employees, providing comprehensive and economic benefit to the solutions for our customers in communities it serves.” commercial, trade and project financing, retail banking, private banking, asset management, and assorted advisory services. Our past gives us vision and strength KEY DATES and shows us the way to better seize all available future opportunities. Establishment of Société Com- Company’s name Acquisition of merciale et Agricole Byblos Bassil changed to Byblos Banque Beyrouth Frères & Co., engaged in natural Bank S.A.L. and pour le Commerce silk and leather tanning and registration with (BBC) agricultural credit activities. Central Bank of Establishment of Listing of 30% Acquisition of Bank of Nova Lebanon. Adonis Insurance of its shares on Scotia’s Lebanon branch. and Reinsurance the Beirut Stock Company’s name Establishment Company S.A.L. Exchange. changed to Société of Byblos Bank (ADIR). Full integration of Bancaire Agricole Europe in Brussels the subsidiary in Byblos Bassil (Branches in Paris Europe as Byblos Frères & Co. and London). Bank Europe S.A. 1950 1961 1963 1976 1983 1997 1998 1999 2000 2002 2003 2004 2005 2006 2007 2008 Profile of the Group 11 ADONIS INSURANCE AND REINSURANCE PARTNERSHIP WITH NATIXIS ASSURANCES – FRANCE ADIR is a subsidiary of Byblos Bank established in 1983. a 34 percent stake in ADIR, with Byblos Bank retaining a controlling The company combines financial stability with an ongoing quest interest of 64 percent. The Group believes that the association with for product innovation and an uncompromising commitment to its the French banking giant will continue to facilitate the offering of customers in terms of service, coverage, and proper handling of bancassurance services to Byblos Bank customers in Lebanon and claims. ADIR provides a comprehensive range of standard and other selected markets where ADIR seeks to forge local partnerships. tailored insurance products to both individual and institutional clients, including life, fire, general accident and medical coverage, among others. In 2001, Natixis Assurances, the