Ahli Bank

Jordan Ahli Bank
An assessment of Corporate Governance

Submitted to: Dr. Heba Ajlouni
Group: Alaa Zureikat, Dania Khirfan, Eman Abukheit, Khaled AlSharif,

Mohammad Aref, Razan Hijjawi, Rasha Tomaira
Corporate Governance of Banks

The banking sector is unique among sectors of the economy because it plays a central role in contributing to the financial stability of and the provision of financial resources to the economy. This sector includes major global banks that are systemically important banks (SIBs), the failure of one or more of which could trigger a global financial crisis. In addition, banks have a unique operating model. (Source: Basel Committee of Banking Supervision, Consultative Document, External Audits of Banks March 2013). The complexity of the banking business increases the asymmetry of information and diminishes stakeholders capacity to monitor bank managers decisions. Banks are a key element in the payment system and play a major role in the functioning of economic systems. They are also highly leveraged firms, due mainly to the deposits taken from customers. For all these reasons, banks are subject to more intense regulation than other firms, as they are responsible for safeguarding depositors rights, guaranteeing the stability of the payment system, and reducing systemic risk (Corporate Governance in Banking: The Role of the Board of Directors by De Andres, P & Vallelado, E, 2008)

What is different about Banks?
Banks have numerous stakeholders The complexity of the business that can shift quickly.
Source: (Mehran et al, 2011)
Following the financial crisis in 2008 that initiated the global economic slowdown, the Central Bank of Jordan cut its key interest rates three times to help boost economic activity. The prudent regulations set in place by the Central Bank of Jordan have enabled the sector to withstand the repercussions of the global financial crisis and economic slowdown. This is not to say that the sector escaped them unscathed, but rather that the banks were resilient in both their growth and profitability. (Source: JordInvest Banking Sector Report, 2012)

From a banking industry perspective, corporate governance involves the allocation of authority and responsibilities, i.e. the manner in which the business and affairs of a bank are governed by its board and senior management, including how they: set the banks strategy and objectives; determine the banks risk tolerance/appetite; operate the banks business on a day-to-day basis; protect the interests of depositors, meet shareholder obligations, and take into account the interests of other recognized stakeholders; and align corporate activities and behavior with the expectation that the bank will operate in a safe and sound manner, with integrity and in compliance with applicable laws and regulations.
Source: Basel Committee of Banking Supervision, Consultative Document, External Audits of Banks March 2013
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Background
Jordan Ahli Bank (previously Jordan National Bank) is a leading Jordanian institution, with a steeped national history and heritage. Established in 1955, Jordan Ahli Bank was the first national bank to be established in East Jordan and the sixth public shareholding company to be established in the Kingdom.
Source: Jordan Ahli Bank Corporate Responsibility Report for the year 2012
Bank Strategy & Vision
Stock Price
Board of Directors
Overview
According to the Basel Committee there are significant differences in the legislative and regulatory frameworks across countries as regards the functions of the board of directors and senior management. Some countries use a two-tier structure, where the supervisory function of the board of directors is performed by a separate entity known as a supervisory board, which has no executive functions. Other countries, by contrast, use a one-tier structure in which the board has a broader role. In Jordanian Banks, a one-tier structure is adopted.
Source: Basel Committee on Banking Supervision, Enhancing Corporate Governance for Banking Organisations, 2006
Number of Board Members

Jordan Ahli Bank consists of 13 Board Members presented in the following Slides:
Source: Jordan Ahli Bank Annual Report, 2012
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Who Classifies as an Independent Director?

In accordance with the Jordanian Central Banks Corporate Governance Code, 2007 section 2-d-iii An independent' Director (whether natural person or representing legal entity) is one whose directorship constitutes his only connection to the Bank, and whose judgment is therefore unlikely to be influenced by external considerations. Minimum standards for an independent' Director include: (1) one who has not been employed by the Bank for the preceding three years; (2) is not a relative (up to the second degree) of an administrator of the bank; (3) is not receiving payment or compensation from the Bank (other than as a Director); (4) is not a director or owner of a company with which the Bank does business (other than business relationships made in the ordinary course of business of the Bank and on substantially the same terms as those prevailing at the time for comparable transactions with nonaffiliated parties); (5) is not, nor in the past three years has been, affiliated with or employed by a present or former auditor of the Bank; and (6) is neither a shareholder with effective interest in the capital of the Bank nor affiliated with one
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Why Independent Directors?

Definitions of what constitutes independence for directors vary across different legal systems, and are often reflected in exchange listing requirements and supervisory standards. The key characteristic of independence is the ability to exercise sound judgment after fair consideration of all relevant information and views without undue influence from management or inappropriate outside interests. The extent to which supervisors establish stringent tests of either independence or non-independence for bank directors may depend in part on the extent to which there is a party or parties who are in a special position to influence the bank. Qualified independent directors can bring new perspectives from other businesses that may improve the strategic direction given to management, such as insight into local conditions, and can also be significant sources of management expertise.
Source: Basel Committee on Banking Supervision, Enhancing Corporate Governance for Banking Organisations, 2006 12
Board Members & their Qualifications

H.E Dr. Rajai Muasher
Position: Chairman of the Board of Directors - Executive Representative for Al Raja for Investments Year of Birth: 1944 Nationality: Jordanian Education: PhD Business Administration / Marketing, USA MBA, USA BSc, Chemistry, American University of Beirut Experience: Deputy Prime Minister; Former Minister of State; Former Minister of Industry and Trade; Minister of Supply - multiple cycles; Member of the Senate - multiple cycles; Chairman and member of various companies Year of Appointment: 1997
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H.E Mr. Nadim Yousef Muasher
Position: Deputy Chairman Part time Year of Birth: 1950 Nationality: Jordanian Education:
MSc Civil Engineering USA; BA Architecture
Experience:
Former member of the Senate; Chairman to the following companies: Arab International Hotels Co. (Marriott); El Zay Ready Wear ManufacturingCo.; Jordan Worsted Mills Co.; Ad Dawliya for Hotels andMalls Co. (Sheraton); Business Tourism Co.
Year of Appointment: 1997

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Dr. Henry Azzam
Position: Member Representative for Bayblos Bank Non-Executive Year of Birth: 1949 Nationality: Jordanian Education:
PhD Economics; MA Statistics and Finance
Experience:
Chairman and CEO, Deutsche Bank MENA; CEO, Amwal Invest / Jordan 2005-2007; Managing Director, Middle East Capital Group in Amman and Beirut 1998-2001; Assistant General Manager, National Commercial Bank in Saudi Arabia 1990-1998
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H.E Mr. Marwan Awad
Position: Member - Executive Representative for Jordan Worsted Mills Co. Year of Birth: 1951 Nationality: Jordanian Education:
Master of Economics, Vanderbilt University, USA; Higher Diploma in Economic Development, Vanderbilt University, USA; BA Business Administration, University of Jordan Experience:
Current CEO / General Manager of Jordan Ahli Bank;
Head of Association of Banks in Jordan multiple cycles; Former Minister of Finance; Former General Secretary,
Ministry of Industry and Trade;

Former General Manager, Industrial Development Bank; Former General Manager, Qatar Islamic Bank; Former General Manager of Middle East Investment Bank; Central Bank of Jordan several positions; Author of several books and publications dealing with foreign exchange, investment, finance, and economic studies; Board Member of several companies Year of Appointment: 2009
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H.E Mr. Wasef Azar
Position: Member Representative, Jordan Investor Centre Year of Birth: 1936 Nationality: Jordanian Education:
Master of Economics and Development Management, USA; Bachelor of Law (LLB), Damascus
Experience:
Member of the House of Senate; Former Minister of Industry and Trade;
Board Member of various companies; many years experience in both the public and private sectors, and in various fields;
Former Minister of Industry and Trade; Manager of several establishments and companies
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Mr. Emad Yousef Muasher
Position: Member Representative for Muasher Investment and trading Co Non Executive Year of Birth: 1957 Nationality: Jordanian Education:
MA International Business Administration, USA; BA Economics
Experience:
Deputy Chairman and Board Member of various companies, including Muasher Co., part of Muasher Group
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Mr. Rafiq Saleh Muasher
Position: Member Representative for Rajai Muasher & Brother Co Non-executive Year of Birth: 1949 Nationality: Jordanian Education:
MSc Construction Engineering; MSc Engineering, Project Management, USA
Experience:
Ranco Co. for Contracting and Trade (19761980); Rajai Muasher & Brothers Co. (19801985); Al Ahliyya Financial Investments (19851988); National Securities Co. (1988 to date)
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Mr. Mohmmad Al Abdullat
Position: Member Representative , The social Security corporation (Investment unit) Year of Birth: 1946 Nationality: Jordanian
Education:
BA Commerce Cairo University
Experience:
Executive Director, Nuqul Group; Board Member/ Treasurer, Chamber of Industry, Amman; Board Member, Arab Union Council for Paper Industry; Chairman of the Board, Pearl Sanitary Paper Converting Co. PLC; Advisor to the Office of the Prime Minister; Deputy Chairman, Civil Service Consumer Cooperation; Board Member in various companies

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Mr Mahmoud Zuhdi Malhas
Position: Member Independent Year of Birth: 1935 Nationality: Jordanian Education:
BA Economics, American University of Beirut
Experience:
Prominent businessman and owner of Al Mahmoudiah Trading Co., operating in general trade and trademarks representation since 1994; Chairman and Board Member to several banks and companies
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Mr Alaadin Sami
Position: Member Representative for ZI & MIE Co Year of Birth: 1953 Nationality: Egyptian Education:
MA Financial Management; BA Accounting
Experience:
Deputy Chairman of Al Zahid Group, S.A.; Chairman of Arab- Sudanese Truck Co.; Board Member of Arab Truck and Vehicle Saudi Co.; Board Member of Laguna Tourism Development Co., Egypt

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Mr Karim Tawfik Kawar
Position: Member Independent Year of Birth: 1966 Nationality: Jordanian Education: BA Financial Management and Computer Science, Boston College Experience: Former Jordanian Ambassador to the USA; Former Managers Committee Member at: Ideal Group, Vision Investment, Batelco Jordan and National Equipment and Technical Services; Former Economic Advisory Board Member; Current Chairman of the Board, Kawar Group; Board Member, JWICO; Head of Managers Committee at: Iris Guard, Nathealth, Kawar Power Co., King Abdullah II Development Fund Board of Trustees, Jordan River Foundation Board of Trustees; Founder and President of the Management Committee for the Information Technology Companies Society; President of Jordan Computer Society, as well as various other initiatives, societies, and groups Year of Appointment: 2008
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H.E Dr. Abdel Elah Al Khatib
Position: Member Independent Year of Birth: 1953 Nationality: Jordanian Education:
MA International Media, Master of International Economics and Development BA Political Science
Experience:
Member of the House of Senate; Several-time Former Minister of Foreign Affairs; Chairman of Lafarge Jordan Cement Co.; Occupied several diplomatic posts in the Ministry of Foreign Affairs; President of the Royal Society for the Conservation of Nature; Member in Board of Trustees of King Hussein Foundation; Member in Board of Trustees of Hussein Cancer Center; Member in Board of Trustees of American Center of Oriental Research; Former Board Member, Central Bank of Jordan

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Conclusion and Recommendations

In our opinion the bank is currently enjoying the maximum number of Board members complying to the Companys Law which is 13. Almost all Board members are prominent figures in society, have had previous governmental and ministerial posts, and have sufficient qualifications and experience.
High concentration of Muasher family in the bank in the board of directors which indicates that family may act as the shadow director.
Source: Our Analysis

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Shadow Director
A shadow director is a person in accordance with whose directions or instructions the directors of a company are accustomed to act Under this definition, it is possible that a director, or the whole board, of a holding company, and the holding company itself, could be treated as a shadow director of a subsidiary A founder or significant shareholder who wishes to escape the disclosure requirements of a directorship might still be counted as a 'shadow' director and held responsible for actions as if he or she were a formal director
Source: http://www.brefigroup.co.uk/directors/what-is-a-shadow-director.html
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Family Businesses
Family members in business tend to demonstrate a greater sense of loyalty to each other and to the business. They also tend to be more committed to the success of the business and are more passionate about what the business stands for.
Family business owners have the opportunity to teach and pass along their business and personal values to the next generation of family managers/owners. Family members take pride in upholding these family values and build them into their day-to-day work and personal activities. The work culture is often a reflection of these family values. Family businesses often rely on the family as a source of capital for funding business activities, which has often been cited as a significant competitive advantage, especially when times are tough and funding is tight.
Succession As well as providing career opportunities, family businesses also favour passing the business along to the next generation of family members. The opportunity to be an owner of the family business or of any business for that matter can be both motivating and rewarding. Family businesses tend to be less driven by short-term financial results and are prepared to sacrifice shortterm gains for the achievement of longer-term goals, which allows them to align the deployment of resources with their strategic objectives. This long-term approach to investing is often referred to as patient capital.
Source: KPMG LLP, The Competitive Advantage of a Family Business (2011)
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Ownership for Board members & their Families

Name
H.E Dr. Rajai Muasher Mrs.Huda Muasher H.E Nadim Muasher Mrs. Rania Dallal H.E Mr. Wasef Azar Mrs. Abla Muasher Mr. Imad Muasher Ms.Nadine Halasa Mr. Tareq Imad Muasher Co. H.E Mr Marwan Awad The Social Security Corporation Mr.Mohmmad Zuhdi Malhas Mr.Karim Tawfik Kawar Source: Annual report 2012
Ownership Percentage
1.59% 0.02% 3.64% 0.02% 0.06% 0.08% 3.65% 0.05% 0.05% 0.01% 2.37% 1.12% 0.07%
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Corporate Representation
Series 1
12
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Axis Title
8 6 4 2
0
Al Raja' for investment Series 1 1.59 Byblos Bank 10.38
Jordan Worsted Miles 6.12
Jordan Investor Centre Co 5.67
Muasher Rajai Investment&T Muasher&Bro rading Co ther 0.26 0.01
Arabia S.A.L Holding co 1.45
ZI&IME CO(Saudi Arabia) 0.71
Source: Annual report 2012
Central Bank Corporate Governance Code
Compliance Status of Ahli Bank CG Manual
The Pillars of the Code : 1) Commitment to Corporate Governance i) The Bank has compiled this Code, which has been approved by the Banks Board and is published. An upto-date version of the Code is available to the public on request and on the Banks website. Comply The Bank included a Corporate Governance Manual as part of its Annual Report.
Up to date version is available on their website and on ASE
iii)The Bank on an annual basis publicly reports its compliance with the Code, where necessary detailing how each provision of the Code has been implemented and, where relevant, where and why the Banks executive management has adopted procedures that are different from those recommended by the Code.
The bank already discloses their practices within their annual reports and have a corporate governance manual as per ASE and CBJ requirements, however we did not find detailing on how they comply or not comply with each provision of the code. This is not evident from the published reports of the bank
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2)The Functions of the Board of Directors: a )General principles i) The Board of Directors has overall responsibility for the operations and the financial soundness of the Bank and ensures that the interests of shareholders, depositors, creditors, employees, and other stakeholders, including the Central Bank of Jordan (CBJ), are met. The Board ensures that the Bank is managed prudently and within the framework of laws and regulations and the Bank's own policies.
Compliance Status of Ahli Bank
Stated in section 1/1 Comply The Bank has presented its strategic objectives in the annual report. Banks history and accomplishments Corporate Responsibility Report,2012 to ensure fairness for the rights of all stakeholders
ii) The Bank affirms that the obligations of each Director are owed to the Bank as a whole, and not to any particular shareholder.
stated in section 1/1 point #2 We did not find sufficient data to show any hidden motives of board members
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Compliance Status of Ahli Bank CG Code
2) The Functions of the Board of Directors: a ) General principles

iii) The Board sets the Bank's strategic goals, as well as overseeing the executive management of the Bank. The day-to-day operation of the Bank is the responsibility of executive management, but the Board as a whole ensures and certifies that internal control systems are effective and that the Bank's activities comply with strategy, policies and procedures approved by the Board or as required by law or regulation. Stated section 1/1 points # 3&4 Comply
The bank has a risk management department who are responsible for all the reporting on risk, and they send reports to the BOD as well as to the executives on monthly basis, internal audit departments, moreover there are specialized executive committees (will be elaborate later in more details) Source: Internal source from Ahli Bank Also, they constantly update their banking systems to in order to keep up with the continuously changing developments of the banking industry (Source: Chairmans letter to Shareholders, Annual Report, 2012)
As a critical part of these internal controls, the Board ensures that all dimensions of the Bank's risk are managed properly.
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2)The Functions of the Board of Directors: b) The Chairman and the General Manager
i) The position of the Chairman of the Board is separated from that of General Manager. In addition, there is no family relationship up to the 3rd degree between the Chairman and the General Manager. The division of responsibilities between the chairman and the general manager has been set out in writing , is subject to review and revision from time to time as necessary, and is approved by the Board.
Stated in section 1/2 points #1 & 2 Comply (but we havent seen the manual) Statement of functions for Chairman and General manager are available at the bank Source: Internal Source at Ahli Bnak A written manual is endorsed and reviewed by the BoD when necessary (source: Annual Report, 2012)
ii) If the chairman is an executive , then the Bank will consider appointing an independent member of the Board as a Deputy Chairman to act as an independent resource and conduit for shareholders. The bank recognizes thats international best practice to have a non-executive chairman, & will keep this matter under review.
Stated in section 1/2, point #3
Not Comply Bank has appointed Nadim Muasher as Deputy Chairman (Source: Annual Report 2012) However Nadim Muasher was the chairman before Rajai took place, and is not independent director
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2)The Functions of the Board of Directors: b) The Chairman and the General Manager
The Status of the chairman (whether executive or nonexecutive) is publically disclosed
Stated in section 1/2point #3
Comply
The Annual Report states that H.E Rajai Muasher is an executive director
2) The Functions on the Board of Directors: C) The Role of the Chairman of the Board i) The chairman promotes a constructive relationship between the Board & Banks Executive Management, & between the executive Directors and the non-executive Directors Stated in section 1/3 point #1 Annual report\corporate governance manual We do not have sufficient data to prove it
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2) The Functions of the Board of Directors: C) The Role of the Chairman of the Board
iii) The Chairman ensures that both Directors and the Banks shareholders receive adequate and timely information.
Stated in section 1/3 point#3 Comply The bank discloses their practices in General Assembly meetings & annual report , also semi annual and quarterly report are published on ASE website for shareholders to be up to date with financial performance (Source: ase website)
Iv) The chairman ensures high standards of Corporate Governance by the Bank
Stated in Section 1/3 point#4 Comply They have a section Banks commitment to Corporate Governance Requirements in their annual reports
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Central Bank Corporate Governance Code, 2007
2) The Functions of the Board of Directors: d) Composition of the Board
i) The Bank intends that the composition of the Board is Stated in section 1/4 points# 1&2
determined in order to obtain the optimal mix of skills and experience. Accordingly , there should be a mix of executive Directors (i.e. Directors who also occupy an operational management position in the Bank) and nonexecutive Directors (i.e. Directors who do not have an operational management position in the Bank). To establish a substantial weight of non-executive opinion on the Board, the majority of Directors shall be nonexecutive. Some of these non-executive Directors may also be described as independent Directors. Comply
10 out of 13 are non-executives, and out of these non-executives there are 3 independent directors only. (Source: Annual Report, 2012)
Board members representing companies are not classified as independent directors (Source: Interview with Ahli Bank / Head of Corporate Responsibility Unit) Stated in section 1/4 point #3 Comply, they exceeded the number of independency required.
ii) To foster an independent element within the Board, the Bank's policy is that the Board should have at least three independent, non-executive, Directors.
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2) Functions of the Board of Directors: e) Board practices

i) The Bank's Board meetings take place at least six times a year. In order to ensure that a full range of topics is considered, it is the practice of the Bank's executive management to schedule a specific topic to be highlighted at each meeting. Comply The Board held nine meetings during 2012 (Source: Annual Report, 2012)
iii) The Bank provides adequate information to Directors sufficiently in advance of meetings to enable them to reach informed decisions.
Stated in section 1/5 point # 7 Comply We do not have sufficient data to prove it
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Board practices iv) A permanent written record of Board discussions and Directors' votes is kept by the Board Secretary .
Stated section 1/5 point # 8 Comply Mr. Hani Farraj is announced as the Secretary of the Board in the Annual Report. Also, evident from general assembly meeting minutes, Mr. Hani Farraj is also the minute taker
vi) The categories of transactions that require Board approval (including loans larger than a set amount and transactions with related parties) have been clearly defined in writing.
Stated section 1/5 point # 3 Comply Potential Risk remain that the bank did not take collateral to any loan for a related parties. Related party transactions for BoD families are disclosed in Annual report
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Source: ASE website
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Board practices
vii) It is a key responsibility of Directors to ensure they be kept informed of developments within the Bank, and in the banking industry as a whole, both local and international.
Accordingly, the Bank provides Directors with appropriate briefings regarding the Bank throughout their tenure, and upon the Director's request.
Stated section 1/5 point # 2

Comply Also, the bank produces marketing reports regularly (published on their website for the banking industry, also the annual report contains a section dedicated for Performance of the Jordanian Economy Stated section 1/5 point # 5
viii) Individual Directors have independent access to executive management, and in particular the Committees of the Board have access to executive management. x) The Bank has drawn up an organization chart, showing lines of reporting and authority, and including board and executive management committees. The portion of the chart showing the more senior levels is made public.
Comply
Yes, this is evident from the organizational structure. Stated section 1/5 point # 4
Comply Yes, chart & lines of reporting are presented in the annual reports
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Source: Annual Report, 2012
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Board activities: appointment and succession i) The Board's policy is to appoint a General Manager with integrity, technical competence, and experience in banking.
Stated section 1/6 point # 1 Comply Marwan Awad has good educational qualification , he has also a very good experience record , as he worked in Central Bank of Jordan Several positions
ii) The Board is required to approve the appointment of some senior executives such as the Chief Financial Officer and the head of internal audit, and to ensure that they have the requisite skills.
Stated in section 1/6 point#2 Comply
iii) The Board has approved executive management succession plans for senior executives of the Bank, which set out the required qualifications and requirements of the positions.
Stated section 1/6 point # 3 Comply
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Board Committees
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Introduction
According to the Basel Committee on Banking Supervision Principles for enhancing corporate governance Board committees are established to increase efficiency and allow deeper focus in specific areas The number and nature of committees depends on many factors, including: Size of the bank; Size of the banks board; The nature of the business areas of the bank; and The banks risk profile.
Basel Committee on Banking Supervision Principles for enhancing corporate governance, October 2010
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Audit Committee
Corporate Governance Committee
Board Committees
Nomination & Remuneration Committee
Executive Committee
Risk Management Committee
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Assessment of Ahli Bank Board Committees

Central Bank Corporate Governance Code Ahli Bank Status
Board Committees / General Principles
i) For greater efficiency Board Committees have been set up with formally delegated objectives, authorities, responsibilities and tenure, in the form of board committee charters or terms of reference. The Board Committees regularly report to the full Board and do not substitute for the Board and its responsibilities.
Partially Comply
Not all board committees have formally written charters, only the audit committee has it; however the bank is in the process of developing charters for other committees (Source: Interview with Ahli Bank) Although this is Stated - Section 2/1 of the Corporate Governance Manual of Ahli Bank (Annual Report, 2012, p. 155)
Each committee should have a charter or other instrument that sets out its mandate, scope & working procedures (Source: Basel Committee on Banking Supervision)
ii) Membership of Board Committees, together with summaries of their responsibilities and duties, are disclosed in the Banks Annual Report. Comply Committee duties are stated in Annual Report, 2012 (p.146-148)
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Assessment of Ahli Bank Board Committees

iii) The Board may decide to combine the functions of several Committees if appropriate or if administratively more convenient.
Comply Nomination and remuneration are merged in one committee (Annual Report, 2012 p. 147)
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H.E Dr. Rajai Muasher (Chairman of BoD)
H.E Mr Wasef Azar / Rep Jordan Investor Center Co
H.E Mr. Mohd Abdallat / Rep SSC
H.E Mr. Nadim Muasher / Deputy Chairman
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According to the Basel Committee on Baking Supervision, principles for enhancing Corporate Governance A Corporate Governance Committee has become increasingly common among banks
The Bank has formed a Corporate Governance Committee of the Board. Comprising the Chairman of the board & two of the non-executive directors to direct the preparation, updating and implementation of the code.
Comply Ahli Bank has formed a Corporate Governance Committee (Source: Annual Report, 2012 p.146) Wasef Azar and Mohammad Abdallat are nonexecutive directors
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The Corporate Governance Committees (which was mainly established and active in 2008) duties are as follows: Supervise the development of the Banks Corporate Governance Code and oversee its implementation.
Ensure that effective follow-up mechanisms are in place for the Codes implementation across all managerial levels.
The Committee shall also supervise all updates to the manual, in accordance with the directives of the Central Bank of Jordan and with the approval of the Board.
Source: Jordan Ahli Bank Annual Report, 2012
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Audit Committee
H.E Mr. Wasef Azar Committee Head / Rep. Jordan Investor Center
Mr. Karim Kawar Member (Independent)
H.E Mr. Mohd Abdallat Member / Rep. Social Security Corporation

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Audit Committee
i) In accordance with the Banking Law the Comply. Bank has an Audit Committee comprising three non executive Directors. Membership The audit committee members are mentioned in of the Audit Committee is disclosed in the the annual report, 2012 p. 146, they are all nonAnnual Report.
executive directors
(also in line with the Baking Law of 2000 / Article (32))

ii) At least two members of the Audit Partially Comply. Committee should have relevant financial management qualifications and/ or expertise All audit committee members are non-executive and at least two members of the Audit but only one member is independent (Mr. Karim Committee are independent Directors.
Kawar). The rest are representatives of companies During the interview with insider at the Bank / Head of CR unit, we were told that BoD members whore company representatives are not considered independent directors.
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Audit Committee Members Qualifications

Audit Committee Member Name
H.E Mr. Wasef Azar Committee Head / Rep. Jordan Investor Center Co. (Independent)
Degree & Experience

MA Economics and Development Management, USA; Bachelor of Law (LLB), Damascus Member of the House of Senate; Former Minister of Industry and Trade; Board Member of various companies; many years experience in both the public and private sectors, and in various fields; Former Minister of Industry and Trade; and Manager of several establishments and companies BA Financial Management and Computer Science, Boston College, USA Former Jordanian Ambassador to the USA; Former Managers Committee Member at: Ideal Group, Vision Investment, Batelco Jordan and National Equipment and Technical Services; Former Economic Advisory Board Member; Current Chairman of the Board, Kawar Group; Board Member, JWICO; Head of Managers Committee at: Iris Guard, Nathealth, Kawar Power Co., King Abdullah II Development Fund Board of Trustees, Jordan River Foundation Board of Trustees; Founder and President of the Management Committee for the Information Technology Companies Society; President of Jordan Computer Society, as well as various other initiatives, societies, and groups BA Commerce, Cairo University Executive Director, Nuqul Group; Board Member/ Treasurer, Chamber of Industry, Amman; Board Member, Arab Union Council for Paper Industry; Chairman of the Board, Pearl Sanitary Paper Converting Co. PLC; Advisor to the Office of the Prime Minister; Deputy Chairman, Civil Service Consumer Cooperation; Board Member in various companies
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H.E Mr. Karim Kawar Member (Independent)
H.E Mr. Mohammad AlAbdallat Member/Rep of Social Security Corporation (Independent)
Audit Committee
iii) The Audit Committee has all the duties and responsibilities required by the Banking Law and other relevant laws and regulations, including the duties to review: 1. the scope, results and adequacy of the Banks internal and external audits, 2. the accounting judgments that are intrinsic to the financial statements; and 3. the Banks internal controls. iv) The Audit Committee recommends to the Board the appointment or the removal, the remuneration, and other contractual terms of the external auditors, in addition to assessing the objectivity of the external auditors, including the consideration of any other non- audit work performed by the external auditors. Comply The internal audit reports to the audit committee (Source: org chart in Annual Report, 2012). Also this is mentioned in Ahli Banks corporate governance code, section 2/2 p.155 of Annual Report, 2012)
Ahli Bank Status
Comply. Mentioned under the committee duties that: The Committee shall submit recommendations to the Board regarding the appointment, termination, remuneration and any other relevant contractual issues related to the external auditor (Source: Annual Report, 2012 p. 147), and mentioned in Ahli Bank Corporate Governance Code p.155 of Annual Report.
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Audit Committee
V) The Audit Committee has, by a specific provision in the written charter of its functions and responsibilities, the ability to obtain any information from executive management, and the ability to call any executive or Director to attend its meetings.
Ahli Bank Status

Comply. The Committee shall have the authority to access any information from Executive Management and to call on any executive staff or Board Member to attend its meetings (Annual Report, 2012 p. 147) they do invite executives to the meeting such as head of internal audit (source: Insider from Ahli Bank / Investor Relations officer) We have not seen their charter, but they mentioned in their Annual Report 2011: S. Also during the interview with insider, we were told audit committee is the only committee that currently has a written charter.
vi) The Audit Committee meets each of the Banks external auditors, its internal auditors and its compliance officers, without executive management being present, at least once a year.
Comply The audit committee meets Deloitte & Touche + internal auditors & compliance officers once a year without executive management, usually this is done prior to the General Assembly Meeting (source: Insider from Ahli Bank / Investor Relations officer) Also stated in Ahli Banks Corporate Governance Code section 2/2 p.155.
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Nominations & Remuneration Committee
H.E Wasef Azar (Committee Head) / Rep. Jordan Investor Center Co.
H.E Mr. Rafiq Muasher / Rep. Rajai Muasher & Brothers Co.
Mr. Alaadin Sami / Rep. ZI & IME Co.
Mr. Mahmoud Malhas (Independent)
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Nominations & Remuneration Committee

According to the Annual Report, the committee duties are:
Shall put forward names of nominated board members for consideration taking nominees abilities & qualifications into consideration. Determines whether a nominee qualifies as an independent member as defined by the Central Bank of Jordan Assess boards effectiveness Supplying the BoD with information and briefs providing background information on various important banking issues. Recommend the extent of remuneration including bonuses, monthly salaries and other benefits). Devising remuneration policy that ensures bonuses/salaries to attract and retain qualified staff.

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The Nominations & Remuneration Committee

i) The Nominations and Remuneration Committee comprises a minimum of three non-executive Directors, the majority of which (including the Committee chairman) are independent.
Ahli Bank Status

Not Comply Although this is Stated in Annual Report, 2012 p.147, and in Ahli Banks Corporate Governance Code section 2/3 p. 155. All are non-executive, however only one member is independent (Mr. Mahmoud Malhas).
According to our interview with insider at Ahli Bank with head of CR unit, we were told that board members who are representatives of companies on the board are not considered independent.
ii) The Nominations and Remuneration Committee nominates all Board appointments, duly considering candidates abilities and qualifications and, for renominations, their attendance and the quality and extent of their participation in Board meetings. In accordance with the Companies Law, the tenure of the Board of Directors expires every four years from the date of election, and each Director may re-submit itself for election at the Annual General Assembly Partially Comply. Committee does not nominate them, most of have joined in 1997 (Muasher Family Members, Karim Kawar in 2008) or nominated by the companies they are representing. However their attendance and quality of meetings are all recorded and taken into account (Source: Insider interview at Ahli Bank / head of CR unit). Tenure expires ever 4 years, and BoD members are reselected. (please refer to circular in next slide).
58
Source: http://www.ase.com.jo/en/disclosures?category=all&symbol=AHLI
59

Central Bank Corporate Governance Code iii) The Nominations and Remuneration Committee makes the determination of whether a Director is independent considering the minimum standards for independence set out in this Code. Comply Yes, status of independency for the BoD is disclosed in Annual Report for each board member. Stated in section 2/3 point#3 of Ahli Banks Corporate Governance Code, p.156 iv) The Nominations and Remuneration Committee has implemented a formal method of assessing the effectiveness of the Board. Not Comply There is no written assessment criteria for board members, however their meetings and attendance is recorded as per the requirements of the companys law (source: Interview with Insider Ahli Bank / Head of CR unit) Although it is Stated in section 2/3 point #4 (Annual Report, 2012, Ahli Bank corporate governance code) Compliance Status of Ahli Bank
Performance criteria are objective and include comparison with other similar banks and financial institutions, as well as safety and soundness criteria and regulatory compliance.
60

Central Bank Corporate Governance Code Compliance Status of Ahli Bank V) responsible for providing background Comply briefing material for Directors as requested, as well as ensuring that they are kept up to date The finance department prepares relevant banking on relevant banking topics. topics (source: Interview with insider at ahli bank/Risk management & compliance manager) The Bank encourages Directors to attend Also, the bank has recommended a certification for seminars and events that allow them meet board members, which was obtained by 2 board local and international organizations, entities members (source: Interview with training & and companies. development manager) Stated in Ahli Bank Corporate Governance Code section 2/3 p.156 in Annual Report.
vi) recommends to the Board the remuneration Comply (including monthly salary and other benefits) of each Director and the General Manager. They recommend the remuneration of each director and CEO, in addition to review remuneration of other The Nominations and Remuneration Committee executives. (source: Insider from Ahli Bank / interview with also reviews the remuneration (including head of CR unit) salaries) of other executive management. Also Stated in section 2/3 point#6 (Source Annual Report, 2012 / Ahli Bank Corporate Governance Manual) Also compliant with Article (62) of Companys Law
61

Central Bank Corporate Governance Code Compliance Status of Ahli Bank
vii) The Nominations and Remuneration Committee ensures Stated in section 2/3 point #5 (p. 156 of that the bank has a remuneration policy, which is sufficient to Annual Report, 2012 / Ahli Bank Corporate attract and retain qualified individuals, and is in line with the Governance Code) Banks peers in the market. But do not have sufficient information to prove this.
viii) A summary of the Banks remuneration policy is disclosed in the Annual Report. In particular, the remuneration of individual Directors and the highest-paid non-Director executives is disclosed, including salary and benefits in kind.
Comply after Jordan Securities Commission asked them to disclose it for two years in a row (2011 & 2012) (source: ASE Website) / please refer to circulars in next slides.
62
63
64
H.E Mr. Nadim Muasher Committee Head
H.E Mr Wasef Azar / Rep. Jordan Investor Center
H.E Mr. Mohd Abdallat / Rep. SSC
M.R Hani Fraij / Rep. Arabia / Lebanon S.A.L
65
Risk Management
According to the Annual Report, the committee duties are summarized below:
Review all risks to which the Bank is exposed. Review the Banks risk management policies and strategies before they are endorsed by the Board. The Committee shall stay abreast of the rapid developments and many complexities that have the potential to impact the Banks risk management process; the Committee shall submit regular reports on these developments to the Board.
66

Central Bank Corporate Governance Code Status of Ahli Bank i) The review of risk management is handled by a Comply (composed of directors but no executives) Risk Management Committee. This Committee is comprised of Directors and may also include executive management. ii) The Board on a regular basis reviews and Comply approves the risk management strategies and policies of the Bank. The risk management committee reviews the risk mngt departments strategies and policies (Source: Executive management is responsible for Interview with Risk & Compliance manager) implementing the strategies that have been approved by the Board, and for developing the Stated in section 2/4 (Source: Annual Report, 2012 / policies and procedures for managing the various Ahli Bank Corporate Governance Manual) types of risk.
67

Central Bank Corporate Governance Code iii) The structure and development of a coherent and comprehensive risk management department within the Bank has been proposed by executive management, reviewed by the Risk Management Committee, and approved by the Board. Status of Ahli Bank Comply Stated in section 2/4 (Annual Report, 2012 / Ahli Bank Corporate Governance Code) The bank has a risk management department. The executive management shall uphold the responsibility to carry out the strategies and to develop policies & procedures to manage a variety types of risk (Source: Annual Report, 2012) Risk management department reports to the CEO according to organization structure. (annual report, 2012 p.163) iv) The Bank considers that the rapid development and increasing complexity of risk management requires that the Risk Management Committee keep fully informed of the developments in the Banks risk management functions. Comply The risk management committee reviews all reports from risk management department, and discusses them with the BoD (Source: Insider from Ahli Bank / Interview with Risk & Compliance manager) Regarding the committee conducting regular reports to the board (we do not have sufficient information on this)
68
Accordingly, the Committee makes regular reports to the full Board.
Executive Committee
H.E. Dr. Rajai Muasher - Committee Head
H.E. Mr. Nadim Muasher - Deputy Committee Head

H.E. Mr. Rafiq Muasher - Member / Representative, Rajai Muasher & Brothers Co. H.E. Mr. Wasef Azar - Member/ Representative, Jordan Investor Centre Co. H.E. CEO/General Manager Member H.E. Mr. Karim Kawar Member
H.E. Mr. Emad Muasher - Member/ Representative, Muasher Investment and Trading Co.
69
Executive committee
Jordan Ahli Bank also has an Executive Committee with the following duties:
Reviewing Credit facilities which exceed senior credit committees authority & review any requests any committee members express reservations about. Writing off outstanding (and other types of) interest, in addition to overdue interest payments on discounted promissory notes, outstanding due guaranteed withdrawals, unpaid withdrawals, & withdrawals from special reserves, as well as any amount in excess of the authority of the CEO & the Chairman. This must occur upon the recommendation of the Credit Committee & the CEO.
Source: Annual Report, 2012 p. 148
70
Committee Meetings
Committee Corporate Governance Audit Nomination & Remuneration Committee
1
Risk Management
Executive
No. of Meetings in 2011
No. of Meetings in 2012
Source: Annual Reports 2011 & 2012
71
Conclusion
72
Recommendations
73
Executive Management
74
Shareholders
75
Shareholders
No.
Name
1 2 3
Byblos Bank Abraaj Capital Jordan Worsted Mills Co. Jordan Centre Co. Total Investor
Total Ownership Total Ownership shares percentage shares percentage 2012 2011 15,571,022 10.38% 15,571,022 10.38% 13,989,648 9,180,152 9.32% 6.12% 13,989,648 8,873,603 9.32% 5.92%
8,499,747
5.67%
8,218,636
5.48%
47,240,569
31.49% 46,652,909
31.10%
76
Shareholders
Commitment towards shareholders: Under the bank Code Of conduct the following must be met 1. Reinforce shareholder confidence in the bank through persevering efforts to strengthen the bank and its capability, and increase its profits by transforming the bank to a banking establishment that adheres to international standards and seeks to compete on local, regional, and international levels. 2. Commitment to seek, follow-up on, and develop all potential business opportunities, and make the most of them in order to achieve the highest profitability possible. 3. Commitment to institutional loyalty to the bank and to safeguarding its confidential matters. 4. The immediate disclosure of all substantial and material matters that pertain to shareholders and their rights.
77
Adequacy of implementing best practices in treatment of shareholders

Central bank corporate governance code
The Bank takes active steps to encourage shareholders, in particular minority shareholders, to participate in the Annual General Assembly, and also to vote either in person
Ahli Bank Corporate governance code
Results
Comments and recommendation
Shareholder Relationships
Complied and this is clear by All reports must be sent in an encourage shareholders, particularly all general assembly meetings earlier stages to the minority shareholders, to attend disclosure published at the ASE.jo the annual meeting of the General shareholders so they can read Assembly and vote either in person or, in the event of their it carfully as general assembly meeting is not just a meeting Complied and this is clear by Picture for the disclodure in all general assembly meetings the ase web disclosure 13-5disclosure published at the 2013 ASE.jo The Bank will take steps to
or in their absence by proxy. absence, by proxy. The Banks policy is that the The chairmen of the Audit chairmen of all Board Committee, the Nominations and Committees should be present Remunerations Committees and any at the Annual General other offshoot committees of the Assembly, and are invited to Board shall attend the annual address relevant questions from shareholders meeting of the General Assembly. Representatives from the Representatives of the external auditors shall attend the annual external auditors are present at meeting of the General Assembly the Annual General Assembly to in order to answer any questions answer questions about the attendees may have regarding the audit and their auditors report auditing process and audit report.
Complied and this is clear by Picture for the disclosure in all general assembly meetings the ase web disclosure 13-5disclosure published at the 2013 ASE.jo
78
Adequacy of implementing best practices in treatment of shareholders

The Bank policy is that there will
Results
Shareholder Relationships
Separate voting shall be taken into consideration on every issue raised be voting on each separate issue during the General that is raised at the Annual 159 General Assembly. Assemblys annual meeting. As required by the Companies In accordance with the Companies Law, Directors submit themselves for election or reelection at the Annual General Assembly on a regular basis, and the appointment of the Banks external auditors is elected at the Annual General Assembly Notes, minutes, and a report of the proceedings of the Annual General Assembly, including the results of voting, and the questions from shareholders and executive managements responses, are prepared and after the Annual General Assembly Complied and this is clear by Picture for the disclosure in all general assembly meetings the ase web disclosure 30-4disclosure published at the 2013 ASE.jo
Partially Complied and this is 1) its clear that the code of clear by all general assembly Law, Board members shall be elected central bank is taking into meetings disclosure or re-elected during the (published at the ASE.jo)but considration the best practices annual meeting of the General BOD election is not annually of companies law Assembly. Voting on the external done its for four years , the 2) Picture for the disclosure in external auditor is been auditor shall also be carried out the ase web disclosure 30-4elected annually during the same meeting 2013 Following the conclusion of the Complied and this is clear by Picture for the disclosure in General Assemblys annual meeting, all general assembly meetings the ase web disclosure 13-5disclosure published at the 2013 a report shall be prepared and ASE.jo provided to shareholders. The report must contain the comments made during the meeting and the meetings outcomes, including and the responses provided by Executive Management.
made available to shareholders voting results, shareholder inquiries
79
Disclosure for General assembly meeting on 30 / 4 / 2013
80
Disclosure for General assembly meeting on13/ 5 / 2013
81
Conclusion and recommendations
Ahli bank procedure is complied with the best practice required by the central bank of jordan . Shareholders must be given more time with the documents before arranging the general assembly meeting
82
Internal & External Audit
83
Auditing controls
Based on the regulations of the Central Bank of Jordan and the Jordanian Securities Commission and under the supervision of the Board of Directors various offshoot committees which includes both corporate governance committee and Audit committee , the Banks Executive Management continued to monitor the full implementation of the Banks adopted Corporate Governance Code. The Bank exhibited its strong commitment to the regulations set out in the Code and those specified by the government; its monitoring of adherence to both is ongoing, ensuring the Banks total compliance. (Annual report 2012) A clear proof of the bank interest in adopting the regulations and procedures is creating the Method and Procedure Documentation Department ;A large number of the Banks adopted customer procedures and regulations were documented and modified based on the latest global models and ISO standards and have been circulated among all Bank employees to ensure the endurance of the Banks secure and risk-free environment. The Department finalized and approved a large number of work procedures and manuals related to banking services and other departments within the Bank, while adopting new procedures within the branches in Palestine. (Annual report 2012)
84
Auditing controls
According to the Code of conduct of AHLI bank Commitment towards application of all laws, bylaws, and rules required in countries where the bank operates does include : 1. Commitment to the true disclosure of information required by regulatory authorities expressly, clearly,efficiently, and respectfully. 2. Commitment to safeguard professional relationships with officials in regulatory authorities and seek to gain their confidence in the bank, and its commitment to all stipulated rules. 3. Unconditional commitment to cooperate with regulatory authorities on professional grounds and assist members of the Board of Directors in the superior performance of their commitments in this regard.
85
Internal Auditing
Three levels of auditing : There are three levels of internal auditing , the first is on directors level , the second is on executive management level and the third is on employees level (supportive one): 1. Audit Committee 2. Internal Audit Group 3. Inspection and Internal Control Department
86
Internal Audit Group

Banks internal auditing under the central bank laws is a must . Thus Ahli bank follows strict procedures and regulations to do so. The Internal audit departement - which reports to the audit committee- ensures compliance with the laws, regulations and procedures in the country under the CEO but not the CEO himself as he must be audited by the BOD.(Annual report 2012, and Corporate governance for al Ahli Bank) Throughout the year of 2012, the Group implemented its operational plan, which was based on the established strategic plan approved by the Internal Audit Group of the Board of Directors. This was carried out in light of ongoing reviews of the audit plan and performance assessment results related to the Banks different branches, departments and groups.(Annual report 2012)
87
Internal Audit Group

The Group gave its utmost attention to the implementation of regulatory authorities instructions and directives. Also, the Group completed its mission to further develop the skills of its staff members and employees, enrolling them in training courses in accordance to the development plan, and qualifying them to attain professional certifications in the field of internal auditing.(Annual report 2012) The Group began implementing the final stage of the TeamMate project. In addition, the Group, in coordination with the Human Resources Group Training and Development Department began holding training courses for Bank employees focused on combating money laundry and terrorism financing. The training courses were hosted by auditors who specialize in the aforementioned fields. (Annual report 2012)
88
Inspection and Internal Control Department

In 2012, Inspection and Internal Control processes were improved in all Bank departments and groups. The work of the Analysis and Research Department came into effect, as did the implementation of planned programs and follow-up audits of the Banks employees. (Annual report 2012) The Department has worked to improve and develop the branches monthly audit reports and their corresponding auditing assessment to better suit each branch according to its volume of work. (Annual report 2012)
89
Comparison
Central bank corporate governance code Ahli Bank Corporate governance Results code Code Of Conduct, planning and bank procedures
Partially complied , according to CB its the board responsibility to monitor performance throught management but in ahli corporate code the responsibility is on the management complied monitoring performance, 21 , we recommend to adjust the

complied with banking law article
The Board is required to approve the The Board shall endorse the devised strategy and plans of action, strategy, and the business plans, and then ensure that Executive and the Board ensures that Management monitors the results performance against plan is achieved accordingly, taking reviewed and that corrective action corrective measures where necessary. The is taken as needed. The Banks preparation of the budget shall be budgeting process is part of the considered part of the short-term planning and short-term planning and performance performance measurement. evaluation process. The Board ensures that the Bank The Board must ensure that the Bank operates with the utmost integrity. To maintains a high degree of integrity achieve this, the Bank will provide a guide to its policies as well in its operations. Formal policies, as a Code of Ethics, which includes the Banks definition including a Code of Conduct, and of a conflict of interest. The Charter also includes the definition of transactions definitions and controls on conflicts undertaken by Bank employees for their own personal of interest and insider dealing, have benefit, which are based upon insider information received been established and are required through the access granted to them by the Bank. These policies and the Code of to be assented to by all employees Ethics apply to all Bank employees and Board members. and Directors, and these have been Board members must approve said documents, as well as their published. dissemination to the public.
code to sharing responsibilities of
we recommend to assure that the code of conduct and other internal by law have no conflict in defining control and it must be announced to all employees
90
Comparison
Rules and procedures for related party transactions between the Bank and its employees or Directors or their companies, or other related parties, including lending and share trading transactions must be clear. bank loans extended to Directors and their companies are made at market rates and not on preferential terms and the Directors involved in any such transaction do not participate in discussions, nor vote, on it. Related party transactions are subject to individual approval by those Directors of the Bank who are unrelated to the transaction, and they are disclosed in the Annual Report. The Banks internal controls ensure that all related party transactions are handled in accordance with this policy.
Ahli Bank Corporate governance Results code Code Of Conduct, planning and bank procedures
Rules and regulations governing operations with related parties, whether between the Bank and its employees, members of its Board or their companies, or related parties, including those involved in mutual lending or trading transactions with the Bank. These rules must include provisions ensuring that Board members and their companies are granted a level of credit in accordance with prevailing market rates; they shall not receive any preferential treatment or participate in any meeting in which their personal transactions or dealings are discussed or come to a vote. Furthermore, Board members personal Bank transactions shall be disclosed in the Banks Annual Report. Bank departments concerned with control systems and internal inspections must ensure that all stakeholder procedures are conducted according to this policy. complied
This is one of the responsibilities of Method and Procedure Documentation Department
They tried to make a preferntial treatment to the 30th largest investors once by issuing shares only to them but the ASE refused that and insist that it must be Complied but. published to all shareholders. This gives a bad indecatores of how the management is dealing with its shareholders. Complied with Article 21,e in banking law
91
Comparison
Clear controls preventing Directors or employees benefiting from the use of insider information have
Clear audit systems in place prohibiting the Board and Bank employees from exploiting insider information for their own personal Complied but.

for the usual empolyees the information systems are controlled but for the executive management audit comitte should be responsble to make the use of these informations by management used ethically , Complied with Article 21,e in banking law
benefit The Bank must possess written policies that cover all of its banking activities, covering all significant bank which must be activities. Such policies are circulated to employees of all regularly reviewed to ensure that administrative levels. These policies must be regularly revised to they conform to any changes in laws include any amendments or changes to and regulations, the economic rules, regulations, economic conditions environment and other and any other Bankrelated circumstances affecting the Bank issues. The Bank as part of its lending and N/A credit approval process assesses the quality of corporate governance in its corporate borrowers, especially public shareholding companies, and includes the strength or weakness of their corporate governance practice in the borrowers risk assessment, and where appropriate the Bank rewards those borrowers who exhibit good governance practices.
been put in place. The Bank has written policies
complied
this is one of the responsibilities of Audit deparetment at all levels + Procedure Documentation Department
NA
its not regulated by the bank , this
gives a bad indecation of how well
the corporate governance code is
been implemented in jordan in
92
general
Comparison
The Banks structure of internal
The Banks Inspection and Internal Control systems organizational structure

For the external auditor its clear in their independent report that this is done . For the internal control the upper levels of the audit departement is responsible and on a continuous bases is doing so , a proof of this is the declaration of improvement on the annual report published annually By the new regulations of central bank of jordan , the financial statements are been audited by several internal and external parties according to the Central bank request the framework is clear but according to the Ahli bank governance code this must be clearly written in the annual report which is not the case according to the Central bank request the framework is clear but according to the Ahli bank governance code this must be clearly written in the annual report which is not the case
controls is reviewed at least once a shall be reviewed by the year by internal and external internal auditor and external auditor at least once per year. The annual report should include a passage describing Executive Managements responsibility to establish complied and maintain an Inspection and Internal Control system on the Banks financial reporting. The annual report should include a passage outlining the basis upon which Executive Management assesses the management to evaluate the effectiveness of internal control executive managements assessment effectiveness of the Complied but. complied
auditors. statement of executive managements responsibility for establishing and maintaining adequate internal control over financial reporting for the Bank a statement identifying the framework used by executive
Inspection and Internal Control system. Executive Managements assessment of the effectiveness of the Inspection and of the effectiveness of internal Internal Control control as of the date of the Complied but. system as is, on the date that appears on financial statements included in the financial statements included in the Annual Report Banks Annual Report.
93
Comparison
Central bank corporate governance code Ahli Bank Corporate governance Results code Code Of Conduct, planning and bank procedures Comments and recommendation
disclosure of any material The disclosure of any material weaknesses in the internal controls weaknesses in the Inspection and (a material weakness is a Internal Control systems (a material significant deficiency or weakness is defined as any clear point of combination of significant weakness or group of weaknesses that Complied but. deficiencies that result in the could potentially possibility that a material result in the inability to prevent the misstatement will not be prevented creation or detection of a false, or detected) significant financial statement). a statement that the Banks external The External Auditors report, in which auditor has issued an attestation he/she expresses his/her opinion on the Executive report on executive managements Complied Managements assessment of the assessment of the effectiveness of effectiveness of the Inspection and internal controls. Internal Control system. The Bank has set up arrangements The Bank shall establish procedures that allow staff to submit immediate, whereby staff can confidentially confidential reports raise concerns about possible in the case of concerns regarding irregularities, and that allow for potential irregularities. These procedures Complied but. shall allow for an such concerns to be independently independent investigation and follow-up investigated and followed up. Such of these concerns. The Audit Committee arrangements are overseen and shall oversee the monitored by the Audit Committee implementation of these procedures.
External auditor mentioned all weeknesses or diffecincies in independent Audit report, but the management does not mention it in the annual report
the external audit report explain deeply all issues related to the internal control and also the risks of not implementing new regulations by IFRS as an example a weakness in both Codes , its not clear who will see this possible irregularities and how the staff will be protected in case of the presence of the fraud, another weekness in the Bank Code is because they use the word Potential not possible , which minimize the importance of the whisle blowing technique
94
Comparison
The Banks policy is that the Internal Audit function of the Bank should be adequately resourced, trained, remunerated, and be provided full access to Bank records and staff members, and given sufficient standing and authority within the Bank to adequately carry out its task. The functions, powers and responsibilities of Internal Audit are documented within the Internal Audit Charter which is approved by the Board and published within the Bank. The Internal Audit function reports primarily to the Chairman of the Audit Committee To promote independence, internal audit staff do not also have operational responsibilities. Internal audit is responsible for proposing the structure and scope of the audit schedule, and any potential conflicts of interest are to be reported to the Audit Committee.
Ahli Bank Corporate governance code Internal audit

The Bank shall provide the Internal Audit Group with a sufficient cadre of qualified human resources who will be trained and compensated appropriately. The Internal Audit Group has the right to obtain any information and to contact any employee within the Bank, and is also granted the authority necessary to perform the duties assigned to it in the required manner. The Internal Audit Group shall submit its reports to the chairman of the Audit Complied Committee. Internal auditing employees may not be assigned any executive responsibilities. The Internal Audit Group is responsible for proposing the structure and scope of an internal audit, and must also inform the Audit Committee of the presence of any potential conflicts of interest. Conflict Complied
Results
According to banking law , CB has must do inspection for the internal environment whenever it wants articles 70 and 71
Its clear by the organizational structure According to Ahli bank its not a necessity to hold just the Audit duties. The question is how could you audit a department which you are responsible for in the first place ? The Code of the bank must be adjusted . however in reality its according to the Central bank code
95
Comparison
Central bank corporate governance code Ahli Bank Corporate governance code Internal audit Results Comments and recommendation
The Internal Audit reports may be The Internal Audit Group shall perform its discussed with the departments and duties and prepare its report in full with operational units being reviewed, no external but the Internal Audit function is Complied but. interference. The Group has the right to allowed to operate and make a full discuss its report with the departments and honest report without outside
No informatin available to make sure that this is the case
influence or interference that were audited. The primary responsibility of the Internal Audit function, conducting risk focussed audits, is at least the review of: (1) the Banks financial reporting (ensuring that significant financial, managerial, and operating information are accurate, reliable , and timely). (2) compliance with internal policies, international standards, procedures, and applicable laws and regulations; The Banks financial reporting operations (ensuring the accuracy, reliability and timeliness of key information regarding financial, executive and procedural issues). Compliance with the Banks internal policies and standards, as well as international procedures, laws and related regulations. Complied but. one case was detected by the ASE that some informations was not declared by the management financial reporting. another thing to be added is that the bank is requered to submit the financial statement on a quarterly basis. Weakness, Due to the variance of the international laws , this must be specified .
Complied but.
96
Conclusion and recommendation
Its obvious that the bank is following the governance code of conduct of Central bank but giving more focus on the area where the banking law had clear regulations .CB must follow and check all points in the corporate governance code published by it more strictly which is not the case at this time(its still clear that the corporate governance code is a second degree regulations (Own analysis )
97
External Auditors
The external auditors for Ahli bank is Deloitte & Touch (M. E.), on an annually basis and according to the Central bank laws, Deloitte do an independent Auditors report. In this report the auditors should clearly show the adequacy of the financial statements , procedures and commitment to laws of al Ahli Bank. They become responsible about their report once its stamped and announced . they have to conduct their audit in accordance with International Standards on Auditing. Those standards require that they comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement. The procedures selected MUST depend on the their judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. (Central bank governance code , Audit report 2012)
98
External Auditors
The Audit report must also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.(Central bank governance code , Audit report 2012)
On their Audit report the statement of In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Jordan Ahli Bank as of December 31, 2012, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards. Make them share the responsibility of how adequate the financial statements are, with the board of directors and the executive management .this must be clearly mentioned in the audit report under the Central bank corporate governance law for banking in Jordan. (Central bank governance code , Audit report 2012) According to the financial statement submitted by Ahli Bank and the audit report for the year ended 31. Dec. 2012 , the compliance was 100 % met.
99
External Auditors
The Auditing procedures starts with assuring that AHLI bank is following the standards issued by the International Accounting Standards Board (IASB), the prevailing rules of the countries where the Bank operates and the instructions of the Central Bank of Jordan
100
Comparison
The Bank requires the regular rotation of the external audit between auditing firms. Should this no longer be practical, then the Bank will at a minimum require the regular rotation of the principal partner in charge of the external audit. The external auditors report is submitted to the Audit Committee as well as the Annual General Assembly. The external auditors meet the Audit Committee, without executive management present, at least once per year.
Ahli Bank Corporate governance code External audit

The position of external auditor shall be rotated regularly among audit firms. If this policy becomes difficult to apply in practice, the Bank shall request the regular rotation of the principal partner responsible for the external audit of the Bank. The external auditor shall provide the Audit Committee with a copy of his/her report. The external auditor shall meet with the Audit Committee in the absence of Executive Management at least once per year.
Results

its very important to rotate at least of principal partner and this must be monitored by Central bank , in the banking law they must prepare a list of external auditors and to choose one but nothing was mentioned about if the rotation is a must Strict regulations are mentioned in
Complied but.
Complied
the banking law article 61
101
Its clear that the external auditors (Deloitte & Touch) is doing a clear job , their independent reports had covered all items related to the bank in very good and responsible way .but a question to be answered is (if Deloitte & Touch is the external auditors for Ahli bank, Arab bank, Jordan Kuwait bank and central bank ) who will control them and who will guarantee that no information will be used by individuals of Deloitte & Touch to serve their own interest (own analysis )
102
Risk Management & Compliance
103
Risk Management and compliance

There are three level of risk management , the first one is the risk committee at directors level , the second one is the risk management of executive management and the third on which is at operational level is the risk management and compliance department Risk management committee Risk management at executive level Risk management and compliance group
104
Risk management at executive level
The main responsibilities of this department are to direct the risk management and compliance department toward the right procedures of identifying and managing risks and monitoring the mitigations in another hand .
105
Risk management and compliance group

The Banks risk management conducts its activities (identification, measurement, management, monitoring and controlling) through applying the best international practices in connection with risk management, administrative organization and risk management tools in accordance with the size of the Bank, its activities and types of risks it is exposed to. (Independent Audit Report 2012) The Risk Management Group carried out a number of steps during 2012 contributing to the strengthening of the Banks risk management processes and procedures in a manner consistent with the directives set by the Central Bank of Jordan as follows:
The Group prepared a study on the impact of Basel III curricula applications and requirements, which were recently issued by the Basel Committee on financial supervision.(Annual report 2012) In line with the Central Bank of Jordan directives and taking into consideration the changing economic circumstances, amendments were made to the Banks investment policy, while a model for calculating Value at Risk VAR was further developed for analytical purposes. .(Annual report 2012) The Group performed a comprehensive review of work procedures related to the Compliance and the Anti-Money Laundry policies in the Palestine branches. .(Annual report 2012)
106
Customers risk classifications were reviewed from a compliance perspective based on a theoretical framework and methodology, in preparation for an electronic application once the system becomes operational. .(Annual report 2012) A guide detailing work procedures and policies related to the currently used Moody s risk classification system was prepared. .(Annual report 2012)
Work procedures regarding credit management and documentation were further developed and upgraded at the Cyprus branch. .(Annual report 2012)
107
Risk types
A: Credit Risk Bank Credit risk management policy includes the following: Specifying credit ceilings and concentrations The credit policy includes specific and clear ratios for the maximum credit that can be granted to a customer. Moreover, there are different credit ceilings for each administrative level. Determining the risk mitigation methods through
Collaterals and their convertibility to cash and coverage of the credit granted. Preapproval of the credit facilities committee on the extension of credit. Credit approval authority varies from one management level to another based on the customers portfolio size, maturity and customers risk degree.
Mitigating the assets and liabilities concentration risk Studying, monitoring and following up on credit
108
Risk types
B: Market Risk
Interest rate Risk : Interest rate risk results from the potential change in interest rates and, consequently, the potential impact on the fair value of the financial instruments. The Bank is exposed to the risk of interest rates due to a mismatch or a gap in the amounts of assets and liabilities according to the various time limits or review of interest rates in a certain period. (Independent Audit Report 2012) Currencies Risk The currencies positions are monitored daily to ensure that they are within the determined limits. (Independent Audit Report 2012)
Foreign Currency Risks Within its approved investment policy, the Banks Board of Directors sets up limits for the positions of all currencies at the Bank. These positions are monitored daily through the Treasury and Investment Department and are submitted to the executive management to ensure that the maintenance of the currencies positions are within the approved limits. Moreover, the Bank follows the hedging policy to mitigate the risks of foreign currencies by using financial derivatives. (Independent Audit Report 2012)
109
Risk types
Risks of Changes in Share Prices This represents the risk resulting from the decline in the fair value of the investment portfolio of the shares due to the changes in the value of the shares indicators and the change in the value of shares individually (Independent Audit Report 2012)
Share Price Risk The Board of Directors adopts a specific policy in diversifying investments of the shares based on geographic and sectorial distribution at predetermined percentages that are monitored daily.
Interest Re-pricing Gap The Bank adopts the policy of matching the amounts and maturities of assets and liabilities to narrow gaps through dividing assets and liabilities into several categories with different durations or interest rate review maturities, whichever are nearer.
110
Risk types
C: Liquidity Risks:
Liquidity risk represents the Banks inability to make available the necessary funding to fulfill its obligations on their maturities. To protect the Bank against these risks, the management diversifies funding sources, manages assets and liabilities, matches their maturities and maintains an adequate balance of cash and cash equivalents and marketable securities.
111
Comparison
Central bank corporate governance code Ahli Bank Corporate governance code Risk Management Results Comments and recommendation
The responsibilities of the Banks risk management department include: Analyzing all risks, whether they be credit risks, market risks, liquidity risks or operational risks. including credit risk, market risk, Developing methodologies for the measurement and control of each type of liquidity risk and operational risk; risk. (2) the development of Developing methodologies for the methodologies for the measurement measurement and control of each type of and control of each risk; (3) recommending limits to Risk management committee, and the approval, reporting and recording of exceptions to policy; (4) the provision of information on risk metrics and on the Banks risk profile to Senior management and to the Board (the Board reviews the risk statistics of the Bank, both qualitative and quantitative, at each regular Board meeting); risk. Providing recommendations to the Risk Management Committee on appropriate risk limits and approvals, while submitting reports and documenting exceptions to risk management policies Providing the Board and senior Executive Management with information on the Banks risk measurement and its risk profile. (The Board shall, at every meeting, regularly review the Banks quality and quantity of risk statistics). Complied reviewed by the external audit the structure of Ahli bank by creating 3 levels of risk management is reflecting the request of the C.B. No informatin available to make (1) the analysis of all risks Complied its done by the group and then
Complied
reviewed by the external audit its done by the group and then
Complied
sure that this is the case
112
Comparison
Central bank corporate governance code Ahli Bank Corporate governance code Risk Management Results Comments and recommendation
The responsibilities of the Banks risk management department include: (5) the provision of risk information Providing information on the Banks risks for use in the Banks public to be disclosed or published for the statements and reporting. public The functions of the risk The Banks other committees, such as the Credit Committee, Assets and Liabilities management department are Management assisted by a network of properly Committee/Treasury and the Operational constituted, authorised, and Risk Committee will assist the Risk documented committees such as Management Group in credit committees, assets and the performance of its duties, according liabilities/treasury committees, and to the authority granted to each operational risk committees. committee The structure, operation, and The Banks Annual Report will include ongoing development of the Banks information on the Risk Management risk management department and functions are discussed and Group regarding its explained in the Banks public structure, nature of operations and its documents, primarily in the Annual Report. latest developments. Complied Available in the annual report (independent audit report ) the structure of Ahli bank by creating 3 levels of risk management is reflecting the
Complied
Complied
request of the C.B. Based on the annual report (
Independent audit report )
113
Comparison
The Banks policy is that it has an independent compliance function which is adequately resourced, trained and remunerated, in accordance with the Central Banks instructions in this regard The compliance function establishes effective mechanisms to ensure that the Bank complies with all applicable laws and regulations, and any non-statutory guidelines and codes. The functions, powers and responsibilities of the compliance function are documented and published within the Bank The compliance function is responsible for developing the compliance policy of the Bank and ensuring its implementation throughout the Bank. The Board is responsible for approving the compliance policy and overseeing its implementation.
Results

According to the structure Risk and complince are in the same departement as they are very correlated The responsibility is shared by
Compliance
An independent Compliance Department shall be established in accordance with the relevant Central Bank of Jordan directives. The Compliance Department will prepare an effective methodology to ensure that the Bank is in compliance with all valid laws and legislation, as well as any other relevant directives. The Bank will document the duties, authorities and responsibilities of the Compliance Department, and then circulate said document within the Bank The Board will adopt and monitor the compliance policy. The Compliance Department will be responsible for its preparation, development and application at the Bank. Complied but .
Complied
both compliance departement and
Method and Procedure
Complied
Documentation Department Internal audit is also responsible to ensure the implementation of the compliance policies complied with the banking law article 26
114
Comparison
Central bank corporate governance code Ahli Bank Corporate governance code Results Comments and recommendation
No informatin available to make
Compliance
The compliance function reports on The Compliance Department shall report operational compliance within the on the outcome of its operations and its monitoring of Bank to the Chairman or a compliance to the Board or its offshoot committee of the Board, copying the committee. A copy will be sent to General Manager on each report, in Executive Management, in accordance with the Central Banks accordance with the relevant directives of instructions in this regard the Central Bank of Jordan. Complied
sure that this is the case
115

The bank is giving this part a huge importance because its affect directly the presence of the bank , the structure of the bank is helping a lot in managing all levels of risks.
116
A clear evidence of the importance of Audit, risk and compliance is clear in the efforts of HR department courses
117
Disclosure
118
Bank Disclosure Mechanism

Ahli Bank committees to Amman Stock Exchange disclosures policy and regulations to regulate disclosures information and follow up on the implementation of the policy in accordance with the requirements of the regulatory authorities. Ahli Bank provides shareholders and investors with accurate, clear and timely disclosure information in accordance with the requirements of the supervisory authorities, in a manner that would enable them to take their decisions accurately. This includes disclosures related to: 1: Periodic reports:
A: Preliminary reports: Ahli Bank should publish its preliminary information after finishing the auditor its preliminary revision and within 45 days form the end of the fiscal year and provide ASE with the reports, the reports should include: Gross profits. EBIT. Income taxes. Minority interest in earnings Net profits. Comparison with the last year. Brief Bank achievements.
119

B: Annual reports: BOD should deliver the annual report within no more than 3 months to ASE from the end of the fiscal year and it should include the below: Chairmans Letter
BOD reports which includes: Description for Bank activities and its geographic presence, the capital employed and number of employees. Description of subsidiaries and their activities. Description of the BOD members and top executives. List of large shareholders and their owned shares. Competitive position in the industry and market share. Dependency level on customers/suppliers if it poses 10% or more of sales/purchases in relative the past year. Banks hierarchy, employees number and their qualifications and their training programs. Banks achievements supports by evidences. Financial effects resulted from operations that are not related directly to the Banks core business.
120

The net profit/net loss and distributed dividends of the last 5 years. Next year strategic plan along with any important expansions. External auditing firms name and paid fees and any other fees paid for the external auditor and why. Outstanding shares owned by BOD or top executives or their relatives or companies that have authority of them relative to the last year. Compensations paid for BOD or top executives which includes salaries, bonuses and travel expenses inside or outside the kingdom. Risk management report. Social corporate responsibility report. Charity initiatives.
121

Audited financial statements compared to the last year statements that includes: Balance sheet. Net profits/loss. Cash flows. Changes in equity rights. External auditors report. BODs pledge that there is no major concerns that may threaten the sustainability of the Bank. BODs pledge of its responsibility of the provided information in the financial statements and its guarantee of the proper monitoring tools.
122

C:Semiannual reports: Ahli Bank should provide semiannual reports within one month period of the end of the fiscal period and comparison with the last period which includes: Balance sheet. Net profits/loss. Cash flows. Changes in equity rights. Internal auditing report claiming that all information had been revised according to the accredited accounting principles. Description of the achievements for the current period and comparison with the already planned achievements.
123

D: Quarterly reports:
Ahli Bank should provide quarterly reports within one month period of the end of the fiscal period and comparison with the last period which includes: Balance sheet. Net profits/loss. Cash flows. Changes in equity rights. Internal auditing report claiming that all information had been revised according to the accredited accounting principles.
124

2. Ahli Bank should inform ASE without any delay and issue a public statement about any changes of the below within one week: Any new designation or resignation in the BOD or top management. Any changes in the issued bonds, stocks and issued loans. Banks assets, short term/long term liabilities, capitalization, credits rating and equity changes. Deals agreed on or cancelled and their effect on Banks profitability. Disasters that have effect on Banks profitability. Sudden losses and their effect on Banks profitability.
125

Important BOD decisions that may affect shares prices which include:
Issue new shares. Changes in capital investment or changes in Bank purposes. Mergers or acquisitions. Dividends. Liquidation.
BOD decisions. Call for irregular BOD meeting. New BOD formation or current BOD members/top executive resignation. Quitting the business. Legal claims.
126
As it appears from ASE website, Ahli Bank is committed to all of the aforementioned terms and conditions but Ahli Banks website contains only limited quantity of the published reports. The Board accepts responsibility for the Banks financial statements and the contents of the Annual Report, for their accuracy, and for their completeness. In Comparison with another bank in terms of disclosures mechanism, they are all complied with ASE terms as they are susceptible to be punished if not, and ASE site list all companies that didnt send their disclosure in a timely fashion manner. Regular meetings between senior executives of the Bank and investors and shareholders Reports are not available in both Arabic and English, its either or Management Discussion and Analysis (MD&A) disclosure that allows investors to understand current and future operating results and the financial condition of the Bank, including the possible impacts of known trends and events and uncertainties.
127

Jordan Securities Commission Requirements as in the annual report Description of Banks Main Activities Location of Branches Capital Investment Volume Brief introduction of the members of the Jordan Ahli Bank Board of Directors Brief introduction to the members of the Jordan Ahli Bank Senior Executive Management Major Shareholders, owning 5% or more of Jordan Ahli Banks Capital Competition and Ranking: The Jordan Ahli Bank ranks fourth in terms of capital and net credit facilities, and fifth in terms of shareholders equity; it is currently ranked third regarding total assets and deposits. The Bank operates in Jordan, Lebanon, Palestine, and Cyprus, and enjoys an excellent market share in each of the aforementioned locations. There are no specific suppliers or primary clients, internally or externally, which form 10% of the Banks purchases or revenues Neither Jordan Ahli Bank nor any of its products enjoy any government protection or privilege pursuant to laws, regulations or any other means
128
Comparison
Report Type
- Gross profits. - EBIT. - Income taxes. - Minority interest in earnings - Net profits. - Comparison with the last year. - Brief Bank achievements - Bank activities and its geographic presence - Description of subsidiaries and their activities. - BOD members and top executives - Large shareholders and their owned shares - Competitive position and market share - Dependency level - Banks hierarchy, employees number and there qualification - Banks achievements - Financial effects resulted from operations that are not related directly to the Banks core business - The net profit/net loss and distributed dividends for the last 5 years - Next year strategic plan - External auditing firms name and paid fees - Outstanding shares owned by BOD or top executives or their relatives - Compensations paid for BOD or top executives - Risk management report. - CSR report - Risk management report. - Audited financial statements compared to last year - External auditors report - BODs pledge - BODs pledge of its responsibility of the provided information
Required Information
Comply or Not
Preliminary reports
Yes
Annual reports
Yes
129
Comparison
Report Type Required Information
- Balance sheet - Net profits/loss - Cash flows - Changes in equity rights - Internal auditing report - Description of the achievements for the current period - Balance sheet - Net profits/loss - Cash flows - Changes in equity rights - Internal auditing report - Any new designation or resignation in the BOD or top management. - Any changes in the issued bonds, stocks and issued loans - Banks assets, short term/long term liabilities, capitalization, credits rating and equity changes - Deals agreed on or cancelled and their effect on Banks profitability. - Disasters that have effect on Banks profitability - Sudden losses and their effect on Banks profitability - Important BOD decisions that may affect shares prices - BOD decisions - Call for irregular BOD meeting - New BOD formation or current BOD members/top executive resignation. - Quitting the business - Legal claims
Comply or Not
Semiannual reports
Yes
Quarterly reports
Yes
Changes
Yes
130
Banks Subsidiary Companies
131

The accompanying consolidated financial statements include the financial statements of the Banks branches in Jordan and abroad and the following subsidiary companies under its control. Moreover, control is achieved when the Bank has the ability to control the financial and operating policies of the subsidiary companies to obtain benefits from their activities. Additionally, transactions, balances, revenues, and expenses between the Bank and its subsidiaries are eliminated. Transactions in transit are shown under other assets or other liabilities in the consolidated statement of financial position.
132

The Banks subsidiary companies are as follows:
Subsidiary Name
A- Ahli International Bank
Location
Lebanon
Capital
14,015,390 Ahli owns 97.89%
Activities
Financial Services
Assets Liabilitie Revenu Expens s es es

514,319,068 472,844,361 12,130,299 9,568,028
Zarqa National College Company
Jordan
800,000 whole- owned
Education Grant loans to limited income individuals Brokerage
1,163,374
110,376
561,341
461,018
Ahli Micro Finance Company
Jordan
3,500,000 whole- owned
8,018,716
2,374,757
2,481,397
1,977,121
Ahli Financial Brokerage Company
Jordan
17,138,850
3,903,428
745,364
4,157,760
Ahli Financial Leasing Company
Jordan
Leasing
26,732,217
13,465,016
2,259,786
868,555
133

- The financial statements of the subsidiary companies are prepared for the same financial year using the same accounting policies adopted by the Bank. If the accounting policies adopted by the companies are different from those used by the Bank, the necessary adjustments to the financial statements of the subsidiary companies are made to comply with the accounting policies followed by the Bank.
- The results of the subsidiaries are incorporated into the consolidated statement of income from the effective date of acquisition, which is the date on which actual control over the subsidiaries is assumed by the Bank. Moreover, the operating results of the disposed subsidiaries are incorporated
134
Corporate Culture
135
Corporate Social Responsibility
136

Ahli Bank

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Jordan Ahli Bank

An assessment of Corporate Governance

Group: Alaa Zureikat, Dania Khirfan, Eman Abukheit, Khaled AlSharif,

Corporate Governance of Banks

Corporate Governance of Banks

Source: (Mehran et al, 2011)

Corporate Governance of Banks

Bank Strategy & Vision

Number of Board Members

Source: Jordan Ahli Bank Annual Report, 2012

Who Classifies as an Independent Director?

Why Independent Directors?

Board Members & their Qualifications

Board Members & their Qualifications

Year of Appointment: 1997

Board Members & their Qualifications

Year of Appointment: 2012

Board Members & their Qualifications

Ministry of Industry and Trade;

Board Members & their Qualifications

Year of Appointment: 1997

Board Members & their Qualifications

Year of Appointment: 1997

Board Members & their Qualifications

Year of Appointment: 1997

Board Members & their Qualifications

Year of Appointment: 2010

Board Members & their Qualifications

Year of Appointment: 1997

Board Members & their Qualifications

Year of Appointment: 1997

Board Members & their Qualifications

Board Members & their Qualifications

Year of Appointment: 2009

Conclusion and Recommendations

Source: Our Analysis

Source: KPMG LLP, The Competitive Advantage of a Family Business (2011)

Ownership for Board members & their Families

Jordan Worsted Miles 6.12

Jordan Investor Centre Co 5.67

Muasher Rajai Investment&T Muasher&Bro rading Co ther 0.26 0.01

Arabia S.A.L Holding co 1.45

ZI&IME CO(Saudi Arabia) 0.71

Source: Annual report 2012

Central Bank Corporate Governance Code

Compliance Status of Ahli Bank CG Manual

Up to date version is available on their website and on ASE

Central Bank Corporate Governance Code

Compliance Status of Ahli Bank

Central Bank Corporate Governance Code

Compliance Status of Ahli Bank CG Code

2) The Functions of the Board of Directors: a ) General principles

Central Bank Corporate Governance Code

Compliance Status of Ahli Bank CG Manual

Stated in section 1/2, point #3

Central Bank Corporate Governance Code

Compliance Status of Ahli Bank CG Code

The Status of the chairman (whether executive or nonexecutive) is publically disclosed

Stated in section 1/2point #3

Central Bank Corporate Governance Code

Compliance Status of Ahli Bank CG Manual

Central Bank Corporate Governance Code, 2007

Compliance Status of Ahli Bank CG Code

2) The Functions of the Board of Directors: d) Composition of the Board