Palestine Monetary Authority

Palestine Monetary Authority

Instructions No. (2012/11)

To all banks operating in Palestine Date: Tuesday, 27 November 2012

Subject: Instructions on Appointment, Transfer, Disciplinary Procedures, and Resignation

Based on the provisions of Law No. (9) of 2010 concerning Banks, and based on the Palestine Monetary Authority Law No. (2) of 1997, the following instructions govern the appointment of bank officials:

1. Definitions
2. General Provisions
3. Appointments
4. Appointment of Officials
5. Transfer of Officials
6. Disciplinary Procedures and Resignation
7. Engagement of Consultants
8. Final Provisions

The provisions of these instructions shall apply from the date of their issuance, and Instructions No. (2011/9) and any prior instructions to the extent they conflict with these instructions are hereby repealed.

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Dr. Mahdi Abed Director of Supervision and Inspection Palestine Monetary Authority

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Ramallah - Al Bireh P.O. Box 452 - Tel.: 02-2409920 - Fax: 02-2409922 Gaza - P.O. Box 4026 - Tel.: 08-2825713 - Fax: 08-2844487 E-mail: info@pma.ps www.pma.ps

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(1/1) Definitions

Senior Officials:

This includes:

1. General Manager / Regional Manager and their deputies and assistants.
2. Chief Executive Officer and their deputy, if any, for each of the following activities: Risk Management, Compliance Monitoring, Internal Audit, Credit Granting to Institutions and Individuals, Collection and Credit Follow-up, Credit Supervision, Treasury and Investment Management, Operations Management, and the Finance Department.
3. Area Managers.
4. The first and second in command of any branch or their equivalent, regardless of title (excluding managers of offices subordinate to a branch).
5. The first technical official (Operations Manager) of any branch or their equivalent, regardless of title.
6. The Shariah Supervisor in Islamic banks.

Consultants:

Any natural or legal person contracted by the bank to perform specific tasks and provide advice in specific areas, including but not limited to:

1. Legal Consultant.
2. Tax Consultant.
3. Financial and Investment Consultant.

Transfer of Officials:

Transferring an official to another position that differs from their current position in terms of experience or specialization requirements.

Promotion of Officials:

An official's transition to a higher administrative level than their current one to assume broader responsibilities within the same field and specialization, achieved by modifying their job title.

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(2/1) General Provisions

1. The bank's management bears full responsibility for appointing officials and employees, and for verifying their competence and skills in performing tasks. Management is also responsible for establishing and transparently and fairly applying a performance evaluation system that reflects the official's or employee's ability to complete tasks and fulfill responsibilities based on the job description.

2. The bank must prepare a general policy for recruitment, appointment, and promotion ensuring selection based on competence and professionalism, as well as an employee affairs system covering work controls, standards, appointment, transfer, assignment, disciplinary procedures, penalties, termination, and resignation. These policy and system must comply with prevailing laws and be approved by the Board of Directors or their authorized representative in writing.

3. The bank shall not appoint or contract with any official or consultant as mentioned above prior to obtaining prior written approval from the Palestine Monetary Authority.

4. The following conditions must be met prior to applying to the Palestine Monetary Authority for approval to appoint a key official from those listed above:

   a. A vacant position must exist on the organizational structure approved by the Board of Directors or their authorized representative.

   b. The applicant must meet the following conditions:

   • Possess sufficient academic qualifications and practical experience, with a minimum educational attainment of a Bachelor's degree as determined by the Authority.

   • Possess competence commensurate with the nature of the proposed position.

   • Not have caused the collapse or serious financial loss of a banking institution, specialized lending institution, or any other institution where they served as a key official or board member.

   • Not have been declared bankrupt or unable to pay debts, rendering them delinquent.

   • Not have been convicted by a final court judgment of crimes such as theft, fraud, embezzlement, forgery, defamation, bribery, credit mismanagement, or any crime involving moral turpitude, breach of trust, or public morals, or any money laundering crime, unless their reputation has been restored.

   • Be capable of residing permanently in Palestine.

5. The Authority may, in specific cases and upon the bank's request, waive the minimum educational qualification requirement if the candidate possesses sufficient practical experience and competence.

6. If a key position becomes vacant, the bank may assign any official to fill it for a period not exceeding two months, renewable for another two months, provided the Authority is notified within one week of the assignment. During this assignment period, the bank must select an official to fill the position and request the Authority's approval for their appointment.

7. The bank shall not promote any employee or official or modify their job title to fill an administrative position that requires Authority approval.

8. The bank shall not nominate any official who has reached the legal retirement age for any position unless it is specified that their engagement will be on an annual contract basis.

9. The bank is prohibited from informing any candidate of the reasons for reviewing their appointment approval request prior to the Authority's final response, and is prohibited from requesting them to follow up with the Authority to expedite the appointment approval.

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(3/1) Appointments

All banks must adhere to the following when appointing employees other than senior officials:

1. The appointment process must be transparent, based on professional standards, and grounded in deep knowledge of the specialization and competence.

2. Exercise due professional care to verify the following when appointing employees:

   a. Employees possess the competence and banking/professional experience commensurate with the requirements of the position to be filled.

   b. The employee's professional and ethical conduct in their previous employment is investigated.

   c. Academic certificates are duly authenticated.

   d. A certified copy of experience certificates is requested, including the current addresses of the issuing institutions. A copy may be accepted provided the original is viewed and duly authenticated by the bank.

   e. Copies of training course certificates are requested.

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(4/1) Appointment of Officials

Banks must adhere to the following when appointing a senior official:

1. Submit an application to the Authority prior to contracting with the official, seeking prior written approval, specifying the job title of the position to be filled.

2. The application must be accompanied by the following:

   a. A copy of the approved organizational structure indicating the proposed position.

   b. The CV of the proposed official, including:

   • A summary of their personal and professional background, whether they reside in Palestine, and a copy of their national ID.
   • A summary of their last held position, the duration, and their current employer.
   • A chronological list of positions and roles held throughout their career, indicating the institutions they worked for and the duration in each role.
   • The name of their direct supervisor for each role held in the last five years.
   • Names, phone numbers, and job titles of two referees.

   c. Copies of the proposed official's academic certificates, duly authenticated by competent authorities.

   d. Copies of practical experience certificates.

   e. The approved job description for the proposed position.

   f. The criteria and standards for evaluation or the mechanism adopted in selecting the proposed official.

   g. Approval from the Audit and Review Committee, if the request concerns the appointment of an official for the Internal Audit or Compliance Monitoring department.

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(5/1) Transfer of Officials

1. The bank may transfer any official to another position inside or outside the bank (including at a bank subsidiary), provided the Authority is notified within one week of the transfer date.
2. The bank shall not transfer an official to another position other than those listed in Section (1/6/1) Paragraph (3) due to a violation, in which case the bank must apply the punitive procedures stipulated for that case.
3. Branch managers, their deputies, and assistants are not required to obtain prior approval from the Authority for transfers between branches, provided it is implemented as part of a succession plan and the Authority is notified.

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(6/1) Disciplinary Procedures and Resignation

(1/6/1) Disciplinary Procedures

1. The bank must, under penalty of accountability, immediately notify the Authority of any disciplinary measures taken against any official or employee, specifying the following:

   a. The nature of the violation committed.

   b. The previous and current job positions.

   c. The investigation record with the official or employee.

   d. The investigation results and the decision reached.

   e. The disciplinary procedures stipulated in the bank's employee affairs system and those actually applied to the employee.

2. The bank must immediately notify the Authority of any felony, misdemeanor, or breach committed by an official or employee that violates prevailing legislation or the bank's internal systems, and which leads the bank to decide to terminate their services or request their resignation, provided this is documented by a court decision or official investigation records.

3. The bank must immediately notify the Authority of disciplinary measures taken against any bank employee if they relate to the following:

   a. Credit mismanagement.

   b. Breach of trust.

   c. Sexual harassment.

   d. Violation of laws, regulations, or bylaws warranting a warning or more severe measures.

4. It is required that any official transferred to another position must have experience and qualifications commensurate with the requirements of the new position.

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Ramallah - Al Bireh P.O. Box 452 - Tel.: 02-2409920 - Fax: 02-2409922 Gaza - P.O. Box 4026 - Tel.: 08-2825713 - Fax: 08-2844487 E-mail: info@pma.ps www.pma.ps