NATIONAL BANK OF ABU DHABI PJSC
RISK MANAGEMENT COMMITTEE CHARTER
Risk Management Committee Charter .docx
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NBAD GROUP BOARD RISK MANAGEMENT COMMITTEE
CHARTER
1. Purpose
The Risk Management Committee ( henceforth, the RMC or the Committee) would directly
report to the Board and is responsible for assisting the Board in fulfilling its oversight
responsibilities as they relate to identification and management of risks; adherence to Risk
Management Policies; and compliance with risk-related regulatory requirements.
The RMC also reviews and reports its conclusions on Group’s risk appetite, ERM framework
and impact of regulatory guidelines to the Board. In carrying out these responsibilities, the
Committee will, either directly or through one or more sub-committees, perform the duties
set out in this charter.
2. Membership and organization and operating procedures
2.1.
The Board will appoint the RMC Chairman and members from among its members
for a period of three years. The Committee will comprise not less than five members,
at least three of whom must be present to have a quorum. Chairman or, in his
absence, the Deputy Chairman vote is mandatory and enjoys veto power and
casting vote in case of a tie.
2.2.
GCCO or an appointed RMD staff shall act as Secretary of the RMC. Minutes shall
be kept of the proceedings and the resolutions of the Committee. The minutes will
be signed by all the members present, and the draft minutes shall be circulated
within two working days. The minutes will be approved in the next meeting.
3. Meetings and operating procedures
3.1.
The Committee will meet as frequently as it deems necessary but not less than twelve
times in each financial year. Meetings may be called by the Chairman of the Board,
the Chairman of the Committee, or any two members of the Committee.
3.2.
Notice of the time and place of each meeting of the Committee will be given to each
member not less than 48 hours before the time when the meeting is to be held. A
quorum of the Committee will be a majority of its members and the Chairman or Dy.
Chairman in attendance.
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3.3.
The Secretary of the RMC shall prepare an agenda consistent with this charter in
advance of each meeting in consultation with the Chairman, RMC members, CE, and
GCRO.
3.4.
The RMC may request any employee of the Group or external consultants to attend a
meeting of the RMC or to make presentations. The CE, GCRO, Head of Business and
other senior representatives from RMD will usually attend the meetings.
3.5.
Decisions will be made by the RMC at periodic meetings. However, any urgent
decision (allowing for one to two business days for the decision) required in the
interim, driven by business exigencies, will be circulated by management via email,
providing a brief executive summary of the proposal application, which will clearly
indicate the time and date by when a decision is required. In such cases the quorum
requirement and usual voting guidelines will apply. If, however, any member’s
explicit decision / vote is not received by the deadline, then such member’s vote will
be construed as a positive vote. In any case, the vote of the Chairman and / or
Deputy Chairman would be mandatory.
3.6.
In situations of extreme urgency (where same day decision is required) and where
the RMC members cannot be contacted within the time frame demanded by
business, the Chairman will be contacted for his decision on a best efforts basis. A
decision so received, would constitute an approval or, as the case may be, a decline,
which will be binding and ratified at the following RMC meeting.
3.7.
Situations of urgency requiring the RMC’s approval but which entail amendment to
terms etc. can be accommodated within the authorities extended to management,
where ratification may be sought exceptionally from the Chairman/RMC at a
subsequent stage.
4. Authorities of the Committee
4.1.
The Committee shall have the authority on matters within the scope of
responsibilities outlined in this charter, save any breaches of applicable regulatory
parameters, for which relevant regulatory ratification is necessary.
4.2.
The Committee shall have direct access to, and receive regular reports from,
management, including the GCRO, and shall be provided by the Group with any
information it requests relating to its responsibilities.
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5. Responsibilities of the Committee
Without limiting the generality of the Committee’s objective, the Committee shall have the
following non-executive responsibilities, powers, and discretions:
5.1.
To advise the Board on risk appetite and tolerance. In preparing this advice to the
Board, the Committee shall satisfy itself that the risk appetite is aligned to the
Group’s strategy and takes into account the current and prospective macroeconomic
and financial environment. The Committee shall approve the methodology,
measures, targets, and tolerances associated with the risk appetite, along with stress
test results, if any.
5.2.
To advise the Board on risk aspects of business strategy. In preparing this advice to
the Board, the Committee shall evaluate risk aspects of strategies with respect to
industry segments, countries, product portfolio, concentration, liquidity, interest
rates, foreign exchange rates and models used internally, to ensure they are within
the overall Group’s risk tolerance.
5.3.
To annually review and approve all trading and investment risk limits and ensure
adherence of the same to Group’s risk appetite.
5.4.
To annually review and approve all limits related to liquidity, funding, and interest
rate risk management in the banking group and also approve methodologies of
funds transfer pricing and valuation.
5.5.
To evaluate and advise the Board on the risks associated with proposed strategic
acquisitions or disposals or other specific requests made by the Board.
5.6.
To advise the Board on adequacy of the Group’s capital and its allocation to business
units. It will also approve the capital management policy for the Group.
5.7.
To review comprehensive reporting on Group Enterprise Risk Management and
performance measured against approved risk appetite. This will include reports with
respect to credit, investments, market, liquidity, operational risks, business
continuity, and regulatory compliance (Refer to Annexure-I for the calendar of
returns, which defines the standard reports with periodicity).
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5.8.
To advise the Board and/or Compensation and Nomination Committee on alignment
of remuneration with risk taken by the Group.
5.9.
To evaluate and satisfy itself that the provisions – both general and specific – are
commensurate to the credit quality of lending and investments portfolios.
5.10.
To approve the charters of respective Management Risk Committees which define
their scope, authorities and memberships.
5.11.
To ratify or review the proposals and referrals from Management Risk Committees
as required by their respective charters.
5.12.
To approve, ratify, or review – as the Committee considers appropriate – any
transaction or other proposal that exceeds limits detailed in the risk authorities
granted to the management (refer to Annexure- II). In cases where it exceeds
regulatory approvals, the Bank will seek specific approvals from CBUAE.
5.13.
To approve proposed transactions involving a material amount of risk, though
within delegated limits of respective Management Risk Committees (Group Risk
Committee and Group ALCO), when requested to do so by the GCRO, and monitor
material exception to Risk Management Policies.
5.14.
While discharging responsibilities outlined in ‎5.12 and ‎5.13, the Committee
member(s) – whose vote(s) could give rise to a conflict of interest – shall abstain from
exercising voting rights. The conflict of interest shall arise if the proposal or
transaction relates to a counterparty related to the Committee member(s). In other
cases, the determination of conflict of interest will be made by the Committee on a
case-by-case basis.
5.15.
To review and approve Group’s major Risk Management Policies. The GCRO will
have the discretion, based on his assessment, regarding which Risk Management
Policies need Committee’s review and approval. LCPM of international branches can
be approved by GCRO.
5.16.
To review and endorse the contents of Pillar III disclosure – published as part of
Group’s annual report and annual ICAAP report submitted to the Central Bank.
5.17.
To review and satisfy itself with compliance by the Group with applicable laws,
regulations and regulatory requirements in jurisdictions of Group’s operations.
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5.18.
To review the effectiveness of the Group’s Enterprise risk management framework,
specifically:
i. Satisfy itself that there are adequate procedures for monitoring in a timely and
accurate manner, large exposures or risk types whose relevance may become of
critical importance;
ii. Satisfy itself that there are adequate procedures in place for requiring
compliance with Risk Management Policies;
iii. Gives due consideration to any material findings from regulatory reviews and
interactions with regulators in relation to risk governance and management;
iv. Satisfy itself that the risk management function has necessary talents, expertise
and resources of appropriate standing within the Group, and is free from
constraint by management or other restrictions; and
v. Seek assurance from the Audit Committee that internal control processes for risk
management are satisfactory for the strategy determined by the Board.
5.19.
To make recommendations to the Board on the appointment, termination, promotion
and remuneration of the Group Chief Risk Officer. To effectively discharge its
functions the Bank’s Risk Management Division and the Chief Risk officer report
shall report to the committee and assist in carrying out these functions.
5.20.
The Committee shall periodically review its own performance and assess the
adequacy of this charter. The Committee may recommend amendments to this
charter at any time and submit amendments for approval to the Board.
6. Definitions
6.1.
“Group” means National Bank of Abu Dhabi and as the context requires,
subsidiaries of the bank.
6.2.
“Group CE” means Group Chief Executive.
6.3.
“Board” means Board of Directors of National Bank of Abu Dhabi.
6.4.
“GCRO” means Group Chief Risk Officer.
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6.5.
“GCCO” means Group Chief Credit Officer.
6.6.
“Management Risk Committees” means
6.6.1.
Group Risk Committee (GRC)
6.6.2.
Group Asset and Liability Management Committee (GALCO)
6.7.
“RMD” means Risk Management Division.
6.8.
“Risk Management Policies” means corporate policies recommended by the
Group’s management to Identify, assess, control, report, and manage all material
risks.
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Annexure I
Calendar of Reports to be submitted to Risk Management Committee
Report name
#
Periodicity
Accountable Unit
Q1
Q2
Q3
Q4


Committee charters
Annual
Group Risk + Group
Treasury

Annual
Group Strategy

3
5-year Group and Division Business Plan (Review)
Group Risk Appetite Statement/ Credit
Underwriting standards
Concentration limits / Reports / FTP
Annual
Group Risk

4
Industry Limit
Annual
Group Risk
5
Country Limit
Annual
(Country-wise)
Group Risk
6
FTP Methodology + Behaviour analytics
Annual
Group Treasury
7
Delegation of Powers limits
Annual
Group Risk
1
RMC, GRC and G- ALCO
Risk Appetite and Strategy
2




8
Trading and investment limit
Annual
Group Risk

9
Liquidity and funding limit
Annual
Group Treasury

Single Obligor Limit/ Large exposure report
Annual
Group Risk
Annual
Group Risk
Annual
Group Risk
13
Enterprise Wide Risk Management framework
Internal Capital Adequacy Assessment (ICAAP)/
Stress testing
Pillar III Disclosures
Annual
Group Risk

14
Risk Annual Report
Annual
Group Risk

10


Enterprise Wide Risk Management/ ICAAP
11
12
Risk Management Committee Charter .docx


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#
Report name
Periodicity
Accountable Unit
Q1
Q2
Q3
Q4
Risk Monitoring Reports
15
Risk Dashboard
Quarterly
Group Risk/ Group Treasury




16
AMG Funds performance review
Quarterly
AMG




17
Legal and Compliance Risk Report
Quarterly
Group Legal and Compliance




Adhoc reports/ Approvals
18
Report of Unsatisfactory audit
As needed
Group Internal Audit
19
Risk based compensation
As needed
Group Risk
20
Group Policies
As needed
Group Risk
21
Report on Strategic acquisitions/ disposal/
international expansion
As needed
Group Risk
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Appendix II
Risk Authorities Levels granted to GRC:
1- Head Office Authority level 1 which will comprise of the following joint signatories:
 Group Chief Executive Officer
 Group Chief Risk Officer
The Head Office Authority level 1 is detailed below:
For Non-Financial Institutions :
(AED Million)
Review
New Business
Authority Levels
Risk Ratings
AAA
AA
A
BBB
BB
B+
B/B-
C(*)
1
2
3
4
5
6
7
8
Remedial
Accounts(*)
9, 10 & 11
Unlimited with Chairman/Vice-Chairman’s vote mandatory. All cases of Legal
Lending Breach, to be advised to full Board post fact.
RMC
HO - Level 1
750
600
375
225
135
90
60
30
30
For Financial Institutions/Sovereigns
Authority Levels
Risk Ratings
AAA
AA
A
BBB
BB
B+
B/B-
C(*)
Remedial Accounts(*)
1
2
3
4
5
6
7
8
9, 10 & 11
Unlimited with Chairman/Vice-Chairman’s vote mandatory. All cases of Legal
Lending Breach, to be advised to full Board post fact.
RMC
HO – Level 1
(*)
(AED Million)
Review
New Business
900
900
750
450
270
180
120
30
30
Authority for normal review: AED 30M
Authority for initiating any action/legal action: AED 30M
Authority for write off (including exposure previously provided for): AED 5M
2- Head Office Authority level 2 which will comprise of the following joint signatories:
 Group Chief Risk Officer
 Group Chief Credit Officer
The Head Office Authority level 2 is detailed below:
RMC Charter
For Non-Financial Institutions
Authority Levels
HO - Level 2
(AED Million)
Review
New Business
Risk Ratings
AAA
AA
A
BBB
BB
B+
B/B-
C(*)
1
2
3
4
5
6
7
8
Remedial
Accounts(*)
9, 10 & 11
550
450
300
175
100
70
45
25
30
For Financial Institutions/Sovereigns
Authority Levels
HO – Level 2
(*)
(AED Million)
Review
New Business
Risk Ratings
AAA
AA
A
BBB
BB
B+
B/B-
C(*)
Remedial Accounts(*)
1
2
3
4
5
6
7
8
9, 10 & 11
675
675
550
350
200
150
90
25
30
Authority for normal review: AED 30M
Authority for initiating any action/legal action: AED 25M
Authority for write off (including exposure previously provided for): AED 3.5M
3- Commercial Banking Authority level 1 which will comprise of the following joint signatories:
 Group Chief Credit Officer
 Head of Risk – Gulf Commercial
 Senior Managing Director – Retail and Commercial Gulf
 Managing Director – Commercial Banking
The Commercial Banking Authority level 1 is detailed below:
For Non-Financial Institutions
Authority Levels
CB – Level 1
(*)
(AED Million)
Review
New Business
Risk Ratings
AAA
AA
A
BBB
BB
B+
B/B-
C(*)
1
2
3
4
5
6
7
8
Remedial
Accounts(*)
9, 10 & 11
280
225
150
85
50
35
25
2.5
2.5
Identified Vulnerable portfolio accounts will be referred to HO Authority levels as applicable.
Authority for normal review: AED 2.5M
Authority for initiating any action/legal action: AED 2.5M
Authority for write off (including exposure previously provided for): AED 200K
RMC Charter
4- Global Wealth Authority level 1 which will comprise of the following joint signatories:
 Group Chief Credit Officer
 Head of Risk – Global Wealth
 Senior Managing Director – Global Wealth
 Managing Director – Global Wealth
The Global Wealth Authority level 1 is detailed below:
For Non-Financial Institutions
New Business
Authority Levels
Risk Ratings
1
2
3
4
5
6
7
8
Remedial
Accounts(*)
9, 10 & 11
280
225
150
85
50
35
25
2.5
2.5
AAA
GW – Level 1
(*)
(AED Million)
Review
AA
A
BBB
BB
B+
B/B-
C(*)
Identified Vulnerable portfolio accounts will be referred to HO Authority levels as applicable.
Authority for normal review: AED 2.5M
Authority for initiating any action/legal action: AED 2.5M
Authority for write off (including exposure previously provided for): AED 200K
5- Product Programs for Commercial / Elite and Retail Banking will continue to be approved at the
HO level.
6- For ADNIF, existing authorities will remain unchanged pending further review.
Approved by the Board Corporate Governance and Nominations Committee on 1 st July 2015
RMC Charter