Corporate Governance

Introduction

Vattanac Bank is firmly committed to observing and maintaining high standards of corporate governance in compliance with the principles and guidelines set out in the Prakas on Governance in Banks and Financial Institutions issued by the National Bank of Cambodia. The Bank believes that its corporate conduct and growth must be supported by clear policies, transparent processes, adequate systems and qualified management and staff.  Furthermore, Vattanac Bank is guided by the Prakas on Internal Audit in Banks and Financial Institutions and adheres to both its spirit and its substance while seeking to continually improve and excel.  The Bank focuses on strengthening its position in the banking sector as it safeguards customers’ interest and maximizes value and returns for the customers.

In that sense, a system of stringent internal checks and controls, a proper risk control and a permanent compliance control system with internal policies and guidelines, and especially with laws and regulations are in place. Furthermore, the international standard of Management Information System is deployed for controlling and supporting all the functions and activities of the bank effectively and efficiently.

Board Matters (The Board)

Vattanac Bank is led and managed by its Board of Directors. The Board works with Executive Management in order to achieve success for the Bank and the Executive Management is accountable to the Board. The Board leads and manages the Bank by setting out policies, providing strategic direction, specifying long-term goals and ensuring high standards of corporate governance. The Board also sees to it that the Executive Management   conducts the business affairs of the Bank with integrity and transparency, in compliance with laws and regulations and with the ultimate aim of enhancing value and achieving sustainable growth for the Bank.

The composition of the Board is as follows:

Oknha Sam Ang                          Chairman            Non-Executive Director

Madam Chhun Leang                  Member               Executive Director and President

Mr. Chan Kok Choy                     Member               Executive Director and General Manager

Ms. Sam Ang Kanika                   Member               Non–Executive Director

Mr. Sam Ang Vattanac                Member               Non-Executive Director

Madam Tal Nay Im                      Member               Non-Executive Director

Ms. Sam Ang Leakhena              Member               Non-Executive Director

Mr. Tang Yue Kwong                   Member               Independent Director

Mr. George Teo Choa Chee        Member               Independent Director

Board Committees

1. Audit Committee

The Audit Committee is chaired by an independent director. One member is an independent director and the other four are non-executive directors.  The Head of Internal Audit Department serves as the secretary for the Committee.

The Audit Committee is composed of the following:

    Mr. Tang Yue Kwong                   Chairman            Independent Director

    Mr. George Teo Choa Chee        Member               Independent Director

    Madam Tal Nay Im                      Member               Non-Executive Director          

    Mr. Sam Ang Vattanac                Member               Non-Executive Director

    Ms. Sam Ang Kanika                   Member               Non-Executive Director

    Ms. Sam Ang Leakhena              Member               Non-Executive Director

 

Vattanac Bank’s Audit Committee members have the attributes and qualification that enable them to perform their functions effectively. They have the necessary expertise in accounting and auditing that make them efficient.  The Audit Committee carries out its duties within the framework of good governance principles and practices established by the Board of Directors.

The Committee has full access to, and the cooperation of the Management, as well as full discretion to invite any director or executive officer to provide information and/or documents as the committee may require.

The Audit Committee monitors the integrity of the financial statements, and also reviews the quarterly and full-year financial statements of the Bank to ensure compliance with the guidelines issued by the National Bank of Cambodia and Cambodian Accounting Standards. The Audit Committee also reviews internal financial controls and recommends the annual financial results to the Board for approval.

Additionally, the Audit Committee monitors and reviews the effectiveness of the Bank’s internal audit function by reviewing audit plans of the internal auditor and significant audit findings, and providing solutions and recommendations.  The Audit Committee meets with the internal auditor without the presence of the Executive Management four times a year.  When necessary, and to clarify specific issues, the committee may invite any member of Executive Management in its meetings.

 

2. Risk Management and Compliance Committee

The Risk Management and Compliance Committee is chaired by an independent director. One member is an independent director and the other four are non-executive directors. The Head of Risk Management and Compliance Department serves as the Secretary for the Committee.

The Risk Management and Compliance Committee is composed of the following:

    Mr. George Teo Choa Chee        Chairman            Independent Director

    Mr. Tang Yue Kwong                   Member               Independent Director

    Madam Tal Nay Im                      Member               Non-Executive Director

    Mr. Sam Ang Vattanac                Member               Non-Executive Director

    Ms. Sam Ang Kanika                   Member               Non-Executive Director

    Ms. Sam Ang Leakhena              Member               Non-Executive Director

 

The Risk Management and Compliance Committee was established to assist the Board in monitoring key risks which may affect the Bank’s business operations including credit risk, market risk, liquidity risk and operational risk. The Committee also assists the Board to monitor the non-compliance risks of the Bank and to ensure that the Bank always operates its business in compliance with all relevant laws and regulations, including regulations on Anti-Money Laundering and Combating the Financing of Terrorism. 


3. New Activities and Products Committee (NAP)

The NAP Committee is chaired by an independent director. One member is an independent director, 4 are non-executive directors and one member is an executive director. The Head of Banking Operations Department serves as the Secretary for the Committee.

The NAP Committee is composed of the following:

    Mr. George Teo Choa Chee        Chairman            Independent Director

    Mr. Tang Yue Kwong                   Member               Independent Director     

    Madam Tal Nay Im                      Member               Non-Executive Director

    Mr. Sam Ang Vattanac                Member               Non-Executive Director

    Mr. Chan Kok Choy                     Member               Executive Director and General Manager

    Ms. Sam Ang Kanika                   Member               Non-Executive Director

    Ms. Sam Ang Leakhena              Member               Non-Executive Director

 

The New Activities and Products Committee was established to assist the Board in the thorough review and evaluation of any new transaction, new service, and new equity participation. The committee also reviews  policies, procedures and operational processes as well as risk control measures related to new products and activities prior to public launch.

Executive Committee

The Executive Committee was created by the Board to oversee the general management of the Bank and its business. The Executive Committee is composed of the following members:

    Madam Chhun Leang                  Chairperson        Executive Director and President

    Mr. Chan Kok Choy                      Member             Executive Director and General Manager

    Madam Tal Nay Im                      Member              Non-Executive Director

    Mr. Kang Sopheak                       Member              Deputy General Manager

    Mr. Tom Piseth                            Member               Head, Banking Operations

 

The Executive Committee is exclusively responsible for managing the Bank by taking into account the interests of the shareholders, its employees and other stakeholders, with the objective of sustainable creation of value.  Its main responsibilities are to develop the Bank’s strategy and annual budget, prepare, review and coordinate with the Board and ensure implementation. The Executive Committee provides appropriate risk management and risk control, and ensures compliance with all provisions of laws and regulations and the Bank’s internal policies through setting up manuals, procedures and guidelines.

The Committee is also responsible for the day-to-day operations of the Bank and promotes proper delegation of duties, authority and independent decision-making.

 

The Executive Committee regularly provides the Board with updates on the development of laws and regulations or changes in regulatory requirements and financial reporting standards which are relevant to, or may affect the Bank’s business.

 

Committees Under the Executive Committee

To ensure the effective operations of the Bank, the Board established six Management Committees:  Credit, Assets and Liabilities, Human Resource, Information Technology, Operational Risk Management and Customer Service.  The management committees are tasked to assist the Executive Committee in the day-to-day running of the Bank and to maintain the highest levels of clients’ satisfaction in the Bank’s services.

 

1. Credit Committee

The Credit Committee was established to assist the Executive Committee with the Bank’s credit operations. This committee is composed of the following:

    Madam Chhun Leang                  Chairperson         Executive Director and President

    Mr. Chan Kok Choy                     Member               Executive Director and General Manager

    Mr. Kang Sopheak                       Member               Deputy General Manager

    Mr. Tom Piseth                            Member               Head, Banking Operations

    Ms. Ros Dara                               Member               Head, Credit Operations

    Ms. Eng Sokphalla                       Member               Acting Head, Finance and Treasury

 

The Credit Committee is responsible for reviewing and implementing policies and procedures of credit facilities as determined by the Board and in compliance with the NBC’s guidelines and regulations. These duties and roles include credit identification, assessment, measurement, review and recovery of loans, and management of the Bank’s credit risk.

 

The Credit Committee provides oversight on the administration and effectiveness of the Bank’s Credit Policy, and reviews the strategies to develop and achieve the credit and lending goals of the Bank.  The committee then makes appropriate recommendations to the Board through the Executive Committee.

 

2. Assets and Liabilities Committee

The Assets and Liabilities Committee (ALCO) was established to assist the Executive Committee in managing the assets and liabilities of the Bank. The committee is composed of the following:

    Mr. Kang Sopheak                       Chairperson         Deputy General Manager

    Mr. Chan Kok Choy                     Member               Executive Director and General Manager

    Madam Tal Nay Im                      Member               Non-Executive Director

    Mr. Tom Piseth                            Member               Head, Banking Operations

    Ms. Ros Dara                               Member               Head, Credit Operations

    Ms. Eng Sokphalla                       Member               Acting Head, Finance and Treasury

 

The Committee’s main responsibility is to maximize the Bank’s profitability, efficiency and effectiveness. Its activities include managing, reviewing and monitoring risks related to the Bank’s day-to-day business and operations such as liquidity levels, interest rates, exchange rates and market development. 

 

The Committee has also the responsibility to ensure that the Bank is always in compliance with all the NBC’s prudential ratio requirements, such as liquidity, solvency, and net worth.

In terms of liquidity management, the Committee prepares the contingency plan by identifying the source of liquidity that the bank can immediately access. The main sources for the Bank funds are the shareholders and the Bank’s financial institution partners. In this regard, the Bank is in the process of working with other banks to set up a plan for mutual assistance in terms of liquidity. The Committee focuses on the security and management of treasury as it endeavors to develop relationship with local and international banks. The Committee monitors closely the terms and conditions and the pricing quoted by potential partners prior to making the final selection.

 

3. Human Resource Committee

The Human Resource Committee was established to assist the Executive Committee in managing the human resources of the Bank. This committee is composed of the following:

    Madam Chhun Leang                  Chairperson         Executive Director and President

    Mr. Chan Kok Choy                     Member               Executive Director and General Manager

    Madam Tal Nay Im                      Member               Non-Executive Director

    Mr. Kang Sopheak                       Member               Deputy General Manager

    Mr. Yin Phallyn                            Member               Head, Human Resource and Training

 

The main responsibility of the Human Resource Committee is to prepare policies on remunerations in a transparent manner for the Bank’s staff to be submitted to the Executive Committee for approval. The Human Resource Committee reviews and recommends for endorsement by Executive Committee, salary changes and performance bonuses for staff at all levels.

 

The Human Resource Committee recommends to the Executive Management on the recruitment, hiring, nominations, promotions and staff retention initiatives that are in compliance with Human Resource Management Policies.  The Committee leads in making training and development plans, including providing for Code of Conduct and professional skills training for existing staff and newly-recruited staff to ensure that they can efficiently serve the Bank with appropriate corporate behavior. The Committee can seek advice from external consultants and set competitive compensation and  incentive  policies that would attract, retain, and motivate competent staff.

 

4. IT Committee

The IT Committee was established to assist the Executive Committee in managing the Bank’s information system. The committee is composed of the following:

    Mr. Khun Piseth                           Chairperson         Head, Information Technology

    Mr. Chan Kok Choy                     Member               Executive Director and General Manager

    Madam Tal Nay Im                      Member               Non-Executive Director

    Mr. Kang Sopheak                       Member               Deputy General Manager

    Mr. Tom Piseth                            Member               Head, Banking Operations

    Ms. Ros Dara                               Member               Head, Credit Operations

 

The IT Committee is responsible for the development and management of the Bank’s information system and to monitor and control risks to ensure the effectiveness and security of the information management system.

 

5. Operational Risk Management Committee

The Operational Risk Management Committee was established to assist the Executive Committee in monitoring and managing the Bank’s operational risks. The Committee is composed of the following:

     Mr. Tom Piseth                            Chairperson         Head, Banking Operations

    Mr. Chan Kok Choy                     Member              Executive Director and General Manager

    Madam Tal Nay Im                      Member               Non-Executive Director

    Mr. Kang Sopheak                       Member               Deputy General Manager

    Mr. Khun Piseth                           Member               Head, Information Technology

    Ms. Vann Theany                         Member               Head, Trade Finance and Financial Institutions

    Ms. Eng Sokphalla                       Member               Head, Finance and Treasury

 

The Operational Risk Management Committee is responsible for monitoring and assessing the Bank’s operational risks and reports to the Executive Committee. The Committee has formulated strategies to manage the Bank’s operational risks by developing management systems and procedures to ensure the effective dealing with any direct or indirect risks to the Bank’s operations as well as any irregularities or mistakes that may occur in operating systems and internal procedures.


6. Customer Service Committee

The Customer Service Committee, established in the 4th quarter of 2014, assists  the Executive Committee in managing customer service in the Bank. The committee is composed of the following:

    Mr. Chan Kok Choy                    Chairperson         Executive Director/General Manager

    Mr. Uch Sameth                           Member               Representative of Banking Operations Department

    Mr. Kheng Polin                           Member               Representative of Human Resource and Training Department

    Mr. Frederick Almeida                 Member               Representative of Public Affairs Department

    Mr. Kong Kosal                            Member               Representative of Business Development Department

    Ms. Cynthia Maria Reimer          Member               Consultant

    Ms. Kang Sokkhim                      Secretary            Head, Secretariat Department

 

At every branch of Vattanac Bank, a sub-committee of Customer Service was formed  to assist the Committee in fulfilling its duties efficiently.  The sub-committee collects information from the branch level and reports customer care issues to the Committee.   


The Customer Service Committee aims to promote excellence in delivery of service to Vattanac Bank’s customers. The Committee’s main responsibilities are to regularly monitor, assess, enhance and improve the quality of the customer service. The Committee provides remedies and support in problem solving. In addition, the committee sets procedures and guidelines and regularly trains the Bank’s customer service providers enabling them to have sufficient professional skills for serving customers and motivating them to aspire for excellence. 

 

Risk Management

Vattanac Bank takes proactive and prudent measures to manage and control risks due to changes in the business environment, such as credit risks, liquidity risks, market risks and operational risks that could greatly affect the business operations of the Bank.

1. Credit Risk Management

The Bank consistently maintains its good loans quality and successfully manages any possible credit risks. The Bank credit risks including settlement risk, collateral risk, concentration risk, credit risk assessment, counter-party risk and non-compliance risk are dealt with according to NBC’s laws and regulations. The Bank also conducts periodic and regular reviews of its existing loans focusing on collateral, capacity for repayment, conditions and conduct of loan account. The Credit Committee plays a vital and primary role in reviewing and monitoring credit risks and recommending necessary actions to eliminate or mitigate the risk exposures, and ultimately to ensure the quality of the Bank’s  assets.

 

2. Liquidity Risk Management

The Bank’s maturity gap is actively and regularly monitored to ensure that the liquidity ratio is maintained at more than 50% at all times as required by regulation in order to prevent and avoid any non-compliance risks, and any liquidity issue. The Management considers long term liquidity contingency plans to ensure that the Bank has sufficient liquidity to meet the need at any circumstance. To further strengthen the Bank’s liquidity control, the Board sets the alert limits for certain ratios including liquidity ratio. In 2014, the Bank liquidity ratio was at 101.20%, which is significantly higher than the 50% limit set by NBC.


3. Market Risk Management

The market risks including interest rate risks and foreign exchange risks are thoroughly monitored and managed to avoid risks arising from any adverse events in the market. 

Risk Management’s functions consist of identifying potential market risks and using risk management tools for analysis, including Value at Risk and Stress Testing.

 

a. Interest Rate Risks

To manage the interest rate risk, the Bank uses the interest rate gap analysis to monitor the market trends and cost of funds,  and to analyze the changes of interest rates of the assets and liabilities.

 

b. Foreign Currency Exchange Risks

The Bank manages and maintains its foreign exchange policy in accordance with its assets and liabilities management policy and in compliance with the National Bank of Cambodia’s guidelines.

 

4. Operational Risk Management

The Bank uses Risk and Control Self-Assessment as a key tool to monitor new risks and changes as well as Key Risk Indicators to measure the effectiveness of its controls.  Management is required to report any incident that occurs within their respective areas of responsibilities and propose remedial actions to be taken if the number of incidents exceeds the tolerance limit set. 

 

All committees, under the Executive Committee, play significant roles in reviewing and managing the operational risks to improve procedures and internal control structures, especially to identify risks related to IT, operations and plans achievement.

 

POLICIES

 

Internal Control

The Bank commits to consistently comply with the Prakas on Internal Control in Banks and Financial Institutions of the NBC and continues to strengthen its internal control mechanisms.  

 

The Board oversees the performance of the internal control system, with the assistance of the Audit Committee, to ensure security, accountability and transparency to all stakeholders in accordance with the Bank’s corporate mission and objectives.

 

Internal Audit Policy

The Internal Audit Policy identifies the purpose, authority, and responsibility of the internal audit function. It plays the main role of overall internal control of the Bank and provides guidance for an independent audit function that complies with regulatory requirements and best practices.

 

The objective of internal audit policy is to set up guidelines to assist the Board of Directors and all members of management in the effective discharge of their responsibilities by clearly defining the duties of all parties involved in internal audit process by providing analyses, assessments, recommendations and pertinent comments for remedies concerning the activities reviewed.

The mission of the internal audit function is to ensure that:

•   Bank Policy and related procedures and guidelines are always in compliance with laws, regulations, and best practices;

•   Adequate policies, procedures and guidelines including internal controls are put in place to mitigate risks;

•   There are measures for permanent monitoring and control to make sure that those policies, procedures and guidelines are observed at all time.


Risk Management Policy

Risk Management Policy is a part of the Corporate Governance Policy of Vattanac Bank. According to this policy, the Bank’s risk management philosophy is that all risks faced must be identified, measured, monitored and managed within a risk management framework and that returns must be commensurate with the risks taken.

 

The Policy is formulated, revised and administered by the Risk Management and Compliance Committee as authorized by the Board of Directors, with the view of ensuring that the Bank’s risks are effectively managed to achieve the long-term goals of the Bank.

 

Compliance Policy

The Compliance Policy is a part of the Corporate Governance Policy of Vattanac Bank. The adoption of the Compliance Policy is the Bank’s commitment to abide by all relevant laws, regulations and standards in order to mitigate and eliminate the risk of violations of law, regulations and ethical behavior.

 

The policy is intended to present how the bank defines compliance and compliance function’s roles and responsibilities for the management of non-compliance risk. 

 

Anti-Money Laundering and Combating Financing of Terrorism (AML/CFT) Policy

To ensure the full compliance of Vattanac Bank and to enhance the implementation of the Laws and Regulations related to AML/CFT, the Bank’s Board of Directors reviewed and adopted the policy on AML/CFT.

 

The AML/CFT policy seeks to prevent Vattanac Bank from being used, intentionally or unintentionally, by criminal elements for money laundering or terrorist financing activities. The policy also aims at ensuring that the entire Bank’s domestic and international financial transactions are not in any way used in money laundering or in financing of terrorism.  More importantly, this policy protects the Bank from the regulatory sanctions and safeguards the Bank’s good reputation.

 

To support these objectives, the Bank takes a proactive approach to monitor and review the compliance program and control mechanisms such as customer acceptance policies, suspicious transaction reporting system and detection mechanism. 

 

Each of the eligible staff is required to attend the AML/CFT refresher training once a year and pass the post-training test. This training requirement is one of the compliance strategies to strengthen staff’s AML/CFT education and awareness that is a key deterrent to any attempt to improperly use the Bank’s services and products. 

 

Whistle Blowing Policy

As part of the Bank’s corporate governance, the Whistle Blowing Policy with its Whistle Blowing Procedure and Guidelines, was established and implemented to make the Bank fully and consistently compliant with NBC’s Prakas on Internal Controls in Banking and Financial Institution. 

 

The policy encourages the Bank’s management and staff, customers, suppliers and other external parties to disclose or report any concern or misconduct committed by the Bank’s staff. The disclosure in good faith and whistle blower protection and confidentiality are the principles included in the policy.

 

Information Technology Policy

The Information Technology Policy sets the standard for performance and properly articulates the bank’s desired behavior and innovative Information Technology services in order to maintain financial

soundness, business continuity and mitigation of risk. It helps to deliver effectiveness, reliability, scalability and security through efficient use of Information Technology system.

 

The Information Technology Policy incorporates IT principles with end-to-end business processes and ensures better coverage and cooperation across the bank, reduces duplication of controls across different teams, and provides a consistent approach to address business requirements.

 

Code of Ethics

The Bank’s Code of Ethics requires all Vattanac Bank employees, including its Directors, Management and staff to possess high integrity, honesty, accountability and morality.  The Code provides guidelines for Vattanac Bank’s employees to:

    •    Avoid conflict of interest.

    •    Avoid misuse of position.

    •    Prevent misuse of information received through the Bank’s operations either for personal gain  or for any purposes other than the fulfillment of his or her tasks for the Bank.

    •    Ensure completeness and accuracy of relevant records.

    •    Respect the privacy of customers and ensure the confidentiality of their transactions

    •    Provide fair and equitable treatment to all customers and others who have a relationship with the Bank.

 

Confidentiality Policy

Observing confidentiality of business relations and transactions between the Bank and customers is essential in upholding the Bank’s reputation.  All employees are required to ensure confidentiality of customers’ information and transactions including the following:

    •    No staff or Director shall, during or after termination of his/her employment with Vattanac

         Bank, divulge or make use of any information, copyrighted materials, correspondence, accounts or dealings of the Bank or its customers for  his/her personal benefit.

    •    No business and financial information about any customer shall be used or disclosed to third parties without prior written consent of the customer, or in accordance with the arrangements for the exchange of information between banks about credit risks, or when disclosure is required

         by law.