Proper corporate governance
TransBank is implementing the principles of proper governance in all levels of operations.
Respecting the rights and legitimacy of participants in banking governance, the Bank's aim of proper governance is to make sure the bank's efficiency through improving bank assets, creating jobs, maintaining financial stability and profitability.
The bank's corporate governance management systems prescribe a development of bank transparency, and sustainable operations with guidance and required control structure. Our management system needs to be implemented in a way consistent with the interests of the various stakeholders, including shareholders, investors, executives and staff members, and other stakeholders. In doing so, it will enable the Bank to improve the performance of the bank and to secure the required resources and to use resources effectively and efficiently.
In recent years, corporate governance has been increasingly focused on the international community. The main reason for this attraction is that large professional investors or institutional investors in the market are requiring more in demand for proper corporate governance. Therefore, it is imperative to start open, more transparent policies through the growth strategy. We will be working for it.
If there was a conflict of interest in the bank's Board or the executive management of the Bank, the executive management and shareholders will to be able to handle the situation and prevent a conflict of interest to make sure the bank's normal operations and goals are not affected.Therefore, the board should be capable of overseeing the executive management, as well as the executive management team, which is operated under the strategy approved by the board, but does not involve any members of the Board for daily business, providing the potential to avoid conflicts of interest.
Structure of TransBank’s transparent operations initiative
Committees of the Board of Directors and Executive Management
The Board will continue to have the 4 committees approved in previous structure. Each committee’s agenda, meeting interval has been outlined below as approved by the new structure.
The committees of the Board of Directors will provide Executive Management will proper guidance and direction for the bank’s operations. The following table outlines the membership requirements of the Board of Directors committees.
Risk management at TransBank aims to set the potential economic, financial and other losses which the Bank may endure at the minimum possible level by identifying, assessing, managing and monitoring of all types of risks the Bank can face and create an effective risk management system and structure that is free of conflict of interest. This is essential to achieve the Bank`s business goals and objectives and also create and adopt a risk management culture and risk based governance in the bank and among its all employees.
The Bank, in the context of risk management, classifies and manages its risks into Credit Risk, Operational and Information Systems Risk, Liquidity and Market Risk, and Compliance Risk.
With the objective of managing risk, the Bank conducts risk management in the following ways:
Risk Management Committee under the Boards of Directors
The Risk Management Committee has the objective of supporting the Bank to manage its risks by their types and levels. The Committee, in order to ensure that the Bank`s risk management is adequate and effective, routinely reviews the operations and reports of the Risk Management Committee, which is under the Chief Executive Officer and assesses, advises, and reports on the Bank`s risk management system and structure, top risks the Bank already faced and/or might face and measures the Bank already took or will take to the Boards of Directors.
The Risk Management Committee supports and monitors the Bank to operate within manageable risk levels and hence, protect the rights of its clients, deposit owners, employees, and shareholders under any economic situations.
Risk Management Committee under the Chief Executive Officer
The executive Risk Management Committee ensures the Bank operates within the risk management policies and risk levels approved by the Risk Management Committee which is under the Boards of Directors and reports the respective results to the Risk Management Committee, under the Boards of Directors.
In addition, the executive Risk Management Committee is responsible to identify the top risks the Bank might face and design, approve, implement measures towards reducing the highest risks. The Risk Management Committee also prepares and approves policies and techniques and implement them at every level of the Bank`s operations in order to assess, reduce and avoid, if possible, all types of risks the Bank might face.
Department of Market risk management
Market risk is the possibility to incur loss of income and assets resulting from the change of market interest rate, foreign currency movement and prices adverse impacts on the “on” and “off” balance sheet positions owned by the bank. Department of Market risk management is reviewing and managing the market risk through the below-mentioned risks.
1. Liquidity risk
2. Foreign currency risk
3. Interest rate risk
Market risk management department shall be aimed at creating a balanced structure with the highest net interest income through, reviewing and managing liquidity, foreign currency rate and interest rate risk. Market risk brief report, information shall be presented to the Asset-liability committee from Market risk department and related comments, decisions shall be followed in the risk management.