Corporate Governance Statement
Corporate Governance is the system by which business corporations are directed and controlled. The Corporate Governance structure specifies the roles of different participants in the corporation, such as the Board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the entity’s objectives are set, measured and monitored.
The Board of Directors of Bank Muscat SAOG (Bank Muscat or the Bank) is committed to the highest standards of Corporate Governance. The Bank is committed to raising the bar even further so as to set a leading example of the letter and spirit of the Code of Corporate Governance laid out by the Capital Market Authority (CMA) and the regulations for Corporate Governance of Banking and Financial Institutions issued by the Central Bank of Oman (CBO). This commitment was reflected in the Bank being awarded first place in the CMA Corporate Governance Excellence Awards in the Financial Sector for the year 2011. In addition, the Bank won the overall CMA award which included participation from listed companies across Financial, Industrial and Services sectors. These two prestigious accolades were a follow on from being awarded second prize in the Middle East North Africa (MENA) region for Corporate Governance excellence by the Hawkamah Institute in 2010. Following on from this success, the Bank also took first place in the Hawkamah Corporate Governance awards in 2012 and won a further Hawkamah award in 2013, demonstrating continued excellence in this area.
Board of Directors
The roles of the Chairman of the Board of Directors (the Board) and Chief Executive Officer (CEO) are separated with a clear division of responsibilities at the head of the Bank between the running of the Board and the executive management responsibility for running Bank Muscat’s business. The Board is responsible for overseeing how management serves the long-term interests of shareholders and other key stakeholders.
Committees of the Board and their functioning
There are three committees of the Board which provide able and effective support to the full Board in carrying out its responsibilities. The three committees and their primary responsibilities were as follows:
1) Board Risk Management Committee
The Board Risk Management Committee (BRMC) at Bank Muscat oversees the risk management function and provides recommendations to the Board of Directors on the risk-reward strategy, risk appetite and policies, capital management and framework for managing all applicable risks. The Board reviews and approves the risk management strategy and defines its risk appetite. The BRMC supervises the risks the Bank operates in to ensure compliance with the risk appetite set by the Board of Directors in the achievement of its business plans
Its key responsibilities are as follows:
• Formulates risk policy including credit, market, operational risks and protective service with a view to achieving the strategic objectives of the Bank.
• Ensures that the Bank maintains a good quality risk portfolio.
• Oversees risk policy implementation to ensure these policies are in compliance with the relevant laws and regulations.
• Fosters transparency and integrity in stakeholder reporting relating to risk assets
• Embrace and spread awareness in improved risk management practices and risk governance in the bank.
2) Board Audit Committee
The primary responsibilities and functions of the Audit Committee are to provide assistance to the Board of Directors in fulfilling its responsibilities of monitoring/overseeing the financial reporting process, the adequacy and effectiveness of the systems of internal control, the effectiveness of the audit process and the Bank’s process of complying with the relevant laws and regulations. The Audit Committee meets frequently to review the work of the Internal Audit Department, challenge the Bank’s management and to assess the overall control environment prevailing in the organization. It reviews the reports presented by Internal Audit and other bodies in its deliberations and offers guidance and direction in the area of risk management including fraud and related controls.
The Audit Committee reviews on an annual basis the Audit Committee Charter, Management Control Policy, Internal Audit Activity Charter and has approved a Code of Ethics policy for all internal auditors within the department. These are key to reinforce the organizational independence of internal audit and to establish their rules of engagement throughout the Bank. The Audit Committee has adopted a risk based approach and accordingly reviews and approves the Annual Audit Plan on that basis. The Audit Plan contains sufficient flexibility to adapt to new and emerging risks, changing circumstances, business strategy, products and services.
The Audit Committee views a robust fraud management framework as a priority and has sponsored a number of initiatives in this area including the requirement for all staff to complete a fraud awareness programme and successfully complete the associated examination. . Additionally, Bank Muscat is one of a few entities in the Sultanate to have approved a Whistle Blower Protection Policy and encourages all employees to report wrongdoing wherever they see it.
3) Board Nomination and Compensation Committee
The Board Nomination and Compensation Committee is responsible for:
• leading the process for Board and Management appointments, through the identification and nomination of relevant candidates for Board approval.
• Setting the principles, parameters and governance framework of the Bank’s Compensation policy.
|Name of the director
||Board position and membership of committees|
|Sheikh Khalid bin Mustahail Al Mashani
“Sheikh Khalid bin Mustahail Al Mashani is the Chairman of the Board of Directors of the bank and the Chairman of the Board’s Nomination and Compensation Committee since April 2011. He served as Deputy Chairman of the Board of Directors since March 1999 until his appointment as a Chairman in April, 2011. Sheikh Khalid bin Mustahail Al Mashani has a BSc. in Economics from the UK and a Masters Degree in International Boundary Studies from the School of Oriental and African Studies, the University of London, U.K.”.
|Mr. Sulaiman bin Mohamed Al Yahyai
|| “Mr. Sulaiman bin Mohamed bin Hamed Al Yahyai is the Deputy Chairman of the Board of Directors since June, 2011, a Chairman of the Board’s Risk Committee and member of the Board’s Nomination & Compensation Committee. Mr. Al Yahyai holds a certificate in Assets Management-Lausanne University, Switzerland (2002), MBA- Institute of Financial Management-University of Wales, UK (2000), and a certificate in Financial Crisis-Harvard University, USA (1999). Mr. Al Yahyai is an Investment Advisor at the Royal Court Affairs, a Chairman-Oman Chlorine Co. "SAOG", a Director-Al Madina Real Estate Co. “SAOC”, a Director-Falcon Insurance “SAOC”, Chairman of Oman Fixed Income Fund, Chairman of Integrated Tourism Projects Fund, Chairman of Telecom Oman, Chairman of the National Bank of Oman GCC Fund and a Director in Al Salam Bank (Kingdom of Bahrain).|
|BRIGADIER GENERAL Nasser Mohammed Salim Al Harthy
||“Brig. General Nasser bin Mohamed Al Harthy, is a Director of the bank since March, 2007 and Chairman of the Board’s Audit Committee. Brig. General Nasser is Head of Internal Audit in the Ministry of Defence, he has held various important positions in the Ministry of Defence, including General Manager, Manpower and Administration and General Manager Organization and Plans. Brig. General Nasser holds a Master Degree in Military Science from Egypt and a Master of Business Administration from the UK, where he is a member of the MBAs Association”.|
|Hamoud bin Ibrahim Soomar Al Zadjali
||“Mr. Hamoud bin Ibrahim Soomar Al Zadjali is a Director of the bank since January, 2001 and a member of the Board’s Risk Committee. Mr. Al Zadjali is the General Manager of Royal Oman Police Pension Fund “LLC”.|
|K.K. Abdul Razak
||“Mr. K.K. Abdul Razak is on the Board of Directors of the bank since March 1996 and a member of the Board’s Audit Committee. Mr. K.K. Abdul Razak is the Group Chief Financial Officer of Muscat Overseas “LLC”. He holds a Masters Degree in Economics from the University of Kerala. Mr. Abdul Razak also sits on the boards of Al Omanyia Financial Services Co. “SAOG”, Gulf Investment Services Holding “SAOG”, Gulf Baader Capital Markets “SAOC” and Oman Porcelain Co. “SAOC”..|
|Sheikh Said bin Mohamed bin Ahmed Al Harthy
“Sheikh Said bin Mohamed bin Ahmed Al Harthy is a Director on the Board of Directors of the bank since July 2011 and a member of the Board’s Audit Committee. Sheikh Said is the Deputy Director General of Supplies at the Royal Court Affairs. Sheikh Said has a Master of Business Administration from Victoria University, Melbourne/Australia and Bachelor degree in Business Administration (Management), Minor in Computer Information System (CIS) from California State University Stanislaus, USA”.
|Sheikh Saud bin Mustahail Al Mashani
||“Sheikh Saud bin Mustahail Al Mashani is a Director on the Board of Directors of the bank since March 2013 representing Muscat Overseas “LLC” and a member of the Board’s Audit Committee. Sheikh Saud is a Director of Marketing and Business Development in Muscat Overseas Group of companies since 2008. Muscat Overseas Group is a diversified group of companies that has interests in financial sector, real estate, trading, travel, insurance, joint venture projects...etc. In 2011, Sheikh Saud joined the Ministry of Foreign Affairs- International Organizations. Sheikh Saud graduated in Business Management from the Staffordshire University (UK) in 2010”.|
|Khalid bin Nasser bin Humaid Al Shamsi
||Mr. Khalid Nasser Humaid Al Shamsi is a Director on the Board of Directors of the bank since October, 2015 and a member of the Board’s Risk Committee. Mr. Khalid Al Shamsi has experience varies across public and private assets, real estate and alternative investments. He serves on the boards of several publicly listed and private companies. Mr. Khalid Al Shamsi has a BSc (Hons) in Accounting and International Business and is an INSEAD certified Director in corporate governance (IDP-c).|
||Mr. Sunder George is a Director of the bank since March, 2016, a member of the Board’s Risk Committee and a member of the Board’s Nomination and Compensation Committee. He is an experienced banker with over 40 years of banking experience with close to 35 of those years in Oman. At the end of December 2012, Mr. George retired from the bank as Deputy Chief Executive, where he was not only an integral part of the decision making process with regard to the corporate vision and strategic direction of the bank, but also keenly involved with the general management of the bank. The bank grew from one branch to the largest bank in the country with an asset base of over US$ 20 billion during his tenure with the bank. On his retirement from the bank in December, 2012, the bank had appointed Mr. George to the position of Chief Advisor to the bank, advising the bank on strategic issues, from January 2013 to Dec 2013. Mr. Sunder George is an Omani national of Indian origin. He was conferred Omani citizenship in the year 2001 considering his dedicated services to Oman in general and banking sector in particular. Mr. Sunder George is a Science graduate from Madras University, India and holds an MBA from IMD, Lausanne Switzerland. He is also a Fellow of the Chartered Institute of Bankers, London and an Associate of the Indian Institute of Bankers. Mr. Sunder George also sits on the Boards of Renaissance Services “SAOG”, Halcyon Capital “SAOC”, Oman Fixed Income Fund and Integrated Telecommunication Company (TeO) “SAOC”. He is also on the Advisory Board of Oman Medical College and Middle East College of Information Technology.|