Bahrain Islamic Bank B S C : Corporate Governance Report 2022

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CORPORATE GOVERNANCE REVIEW

Corporate Governance Framework

Bahrain Islamic Bank B.S.C. ("BisB" or the "Bank") is committed to upholding the highest standards of corporate governance by way of balancing entrepreneurship, regulatory compliance, and industry best practices, while creating value for all stakeholders. It also involves having the right checks and balances in place throughout the organization to ensure that the Bank's processes are within an adequate, efficient, and robust internal control and governance framework.

Statement of Responsibility

The Board of Director (the "Board") is ultimately accountable to the shareholders for the creation and delivery of strong sustainable financial performance and long-term shareholder value through strategic initiatives. The Chairman is responsible for leading the Board, ensuring its effectiveness, monitoring the performance of the Executive Management and maintaining a dialogue with the Bank's shareholders. The Board has established the following Committees to assist it in carrying out its responsibilities:

1. Executive Committee ("EC");
2. Audit Committee ("AC");
3. Nomination, Remuneration, Governance, and Sustainability Committee ("NRGSC");
4. Board Risk and Compliance Committee ("BRCC"); and
5. Board Independent Committee* (BIC).

• The Board Independent Committee has been formed to handle an advisory role and provide advice and recommendations to the Board of Directors on issues related to integration and synergies between National Bank of Bahrain (NBB) and Bahrain Islamic Bank (BisB). BisB's corporate governance framework is built on a code of business conduct, policies, procedures, internal controls, risk management, Shari'a review and audit, internal and external audit and compliance functions. The framework is based on effective communications, transparent disclosures, performance measurement and accountability. An independent Internal Audit function is established within the Bank that reports functionally to the AC.

Code of Business Conduct

BisB conducts its business in accordance with the highest standards of ethical behavior. A Code of Business Conduct has been developed, based on the Central Bank of Bahrain ("CBB") Principles of Business regulations, to govern the personal and professional conduct of the directors and employees of the Bank. The code is based on the following principals:

1. Integrity;
2. Conflicts of Interest;
3. Due Skill, Care and Diligence;
4. Confidentiality;
5. Market Conduct;
6. Customer Assets;
7. Customer Interests;
8. Relations with Regulators;
9. Adequate Resources;
10. Management, System and Controls.

The requirements under each of the above principles are made available to the Board and employees of the Bank. The Board monitors any exceptions to the above principles by way of reviewing formal reports issued to the Board's AC.

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Compliance

Compliance is an independent function that reports to the BRCC. The Compliance function, guided by the Board's approved policies, works with various business and control functions of the Bank to ensure compliance with the applicable rules and regulations of the relevant regulatory authorities. Given the digital business strategy of the Bank, as well as the expanding regulatory scrutiny and enforcement, the Compliance Department of the Bank is keeping up with the digital advancements by participating in the risk management process from regulatory compliance perspective.

Communications

BisB conducts all communications with its stakeholders in a professional, honest, transparent, understandable, accurate and timely manner. Main communication channels include the annual report, website, and regular announcements in the appropriate local media.

Governance Structure

NBB Group Chiefs		Shareholders

Group Chief

Internal

Auditor

Group Chief

Compliance

Officer

Group Chief Risk Officer

Group Chief

Legal & Corporate

Secretary

Board of		Shari'a
Directors		Supervisory
		Board

			Nomination		Board Risk &
Audit		Remuneration
		Compliance
Committee		Governance &
		Committee
			Sustainability
			Committee

Chief Internal	Chief	Chief
Compliance
Audit Officer	Risk Officer
Officer

BisB			Board		Board		Shari'a
		Executive		Independent				Executive
Corporate
		Committee		Committee				Committee
Secretary

Chief

Executive

Officer

Shari'a

Coordination &

Implementation

Shari'a

Internal Audit

Information

Operational

Provisioning

Asset/

Management

Credit &

Zakah &

Group Tendering

Security

Risk

Liability

Investment

Al Qard Al Hasan

& Asset Disposal

Committee

Committee

Committee

Committee

Committee

Committee

Committee

Committee

* Group Centralized Committee

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Bank's Structure

Chief Executive Officer

Group Chief

Internal

Audit

Group Chief

Compliance

Officer

Group Chief Risk Officer

Shari'a

Coordination &

Implementation

Shari'a

Internal Audit

Chief

Retail Banking

Officer

Branches

& Sales

Priority

Banking

Wealth

Management

Retail

Product

Retail

Segment

Customer

Experience,

Process &

Governance

Marketing

Chief Corporate

• Institutional Banking Officer

Corporate Banking

• Small Medium Enterprises

Financial

Institution

Chief

Internal Audit

Officer

Corporate

Communications

Chief

Compliance

Officer

Anti Financial

Crime

Regulatory Compliance

Policy

Custodian

Complaints

Chief

Risk Officer

Corporate

Risk

Operational

Risk

Retail

& SME Credit

Information

Security

Remedial &

Special Assets

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Group Chief Executive Officer

Credit

Administration &

Debit Recovery

Group Chief

Operating

Officer

Group Property,

Procurement &

Administration

Group Chief

Executive

Corporate &

Institutional

Investment

Banking

Treasury

Group Chief

Financial

Officer

Chief

Financial

Officer

Financial &

Regulatory

Reporting Unit

Group Chief

Information

Officer

Group Chief

Human

Resources and

Sustainability

Officer

Chief Human

Resources

Officer

Group Chief Legal Officer

• Corporate Secretary

Corporate

Secretary

Group Chief

Executive

Financial

Restructuring

BisB Credit

Admin

BisB Debt Recovery

Liquidity & Market Risk

Business

Continuity

Information

Security

Group Data

Strategy

Group Cash

Management

Enterprise Project

Management

Office

Bank

Operations

BisB Islamic

Operation

Group

Operations

Management

Structured

Finance &

Transaction

Banking

Group

Account

Management

Debit Capital

Market &

Syndication

Management

Reporting &

Planning Unit

Account

Payable

Taxation

Internal

Control

Projects &

Insurance

Technology

Applications

Cyber

Security

Infrastructure

Delivery

Production

Services

				Legal &
	Strategy &
		Governance
	Business
	Development
				Notarization

Centralized Function

Centralized Function with BisB Team (as per Approved Group Structure)

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Board of Directors Composition*

No.	Director	Designation	Start Date	Term
1.	Dr. Esam Abdulla Fakhro	Non-Executive & Non-Independent	23 Mar 2016	Third
2.	Mr. Khaled Yusuf AbdulRahman	Non-Executive & Non-Independent	23 Mar 2016	Third
3.	Mr. Jean Christophe Durand	Executive Director	05 Feb 2020	Second
4.	Mr. Khalid Abdulaziz Al Jassim	Non-Executive & Independent	21 Mar 2019	Second
5.	Mr. Marwan Khaled Tabbara	Non-Executive & Independent	21 Mar 2019	Second
6.	Mr. Mohammed Abdulla Nooruddin	Non-Executive & Independent	21 Mar 2019	Second
7.	Mr. Saqer Abdulmohsin Alsijari	Non-Executive & Independent	25 Mar 2019	First
8.	Mr. Yaser Abduljalil Alsharifi**	Executive Director	05 Feb 2020	Second
9.	Ms. Dana Abdulla Buheji	Executive Director	05 Feb 2020	Second
10.	Mr. Isa Hasan Maseeh	Executive Director	19 Apr 2020	Second

• 10% of the Board Members is represented by women.
• Resigned from BisB Board on 13 Sep 2022.

The detailed profiles of the Board members are available on the Bank's website.

Board of Directors' Responsibilities

The primary responsibility of the Board of Directors is to provide effective governance over the Bank's affairs for the benefit of its stakeholders and to balance the interests of its diverse constituencies, including associated concerns, employees, and other stakeholders. In all actions taken by the Board, the Directors are expected to exercise their business judgment in what they reasonably believe to be in the best interests of the Bank.

The Board will approve and oversee the implementation of the Bank's strategies and will review and approve the Bank's strategic plan. As part of its strategic review process the Board will review major action and business plans, set performance objectives, and oversee major investments, divestitures, and acquisitions. The Board is also ultimately responsible to ensure effective risk management function, regulatory compliance, adequate internal controls, preparation of financial statements as well as compliance with Shari'a rulings. Every year, at an annual Board strategy session, the Board will formally reassess the Bank's objectives, strategies and plans.

One of the Board's most important responsibilities is identifying, evaluating and selecting candidates for the Board of Directors. The Board will seek members from diverse professional backgrounds who combine a broad spectrum of experience and expertise with a reputation for integrity. Directors should have had experience in positions with a high degree of responsibility, be leaders in the companies or institutions with which they are affiliated and be selected based upon the contributions they can make to the Board.

The Board may not necessarily carry out all these responsibilities but should ensure that these have been delegated to various board committees or executive management committees to act on their behalf and communicate periodic reports to the Board for their review.

Induction of New Directors

The Bank provides an orientation program for new Directors which includes presentations by senior management on the Bank's strategic plans, its significant financial, accounting and risk management issues, its compliance programs, its operations, its Code of Conduct, its management structure and executive officers and its internal and external auditors. A guideline for new board members were created under codified document called the "New Board Member Onboarding Guidelines". This document is put in place to ensure that new board members are able to fulfil their governance responsibilities and director duties, and most importantly adjust to the Bank as soon as possible.

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