Regulatory Alerts2014-10-21
Internal control instructions
Report on the following topics: 1. An analysis of credit risk concentration within the banking group and its impact on capital allocation for lending to corporates and mutual funds. 2. A report to the Board on potential losses attributable to individual large exposure items across all business lines, by type of counterparty and by geography. 3. Regular stress-testing exercise under adverse but plausible scenarios to assess the adequacy of the existing capital buffers. 4. Report on the results of sensitivity tests for credit risk concentration. 5. A report detailing the overall risk contribution of individual large exposures across all business lines. In addition, the Bank should submit a comprehensive annual financial and non-financial report (in Arabic as well as in English) containing but not limited to the following: 1. An analysis of credit risk concentration within the banking group and its impact on capital allocation for lending to corporates and mutual funds. 2. A regular stress-testing exercise under adverse but plausible scenarios, assessing the adequacy of existing capital buffers. 3. Results from sensitivity tests conducted on individual large exposures across all business lines. 4. A report detailing overall risk contribution from each of the aforementioned individual large exposure items across all business lines. 5. The Bank's annual financial and non-financial report should also include, but not limited to: a) Analyzing key performance indicators including Net Income, Return on Equity (ROE), and Efficiency Ratio, in addition to other important financial performance indicators. b) A comprehensive overview of the Bank's various operational functions including its main business activities such as retail banking services, corporate and institutional banking services, treasury activities, trade financing services, and any other services that it offers to its customers and clients. c) Detailing the Bank's various financial products and services offered by its different operational business units, along with their key features, terms and conditions of their use. d) A comprehensive overview of the Bank's overall strategic plans for the current fiscal year and its future projections and plans. e) The overall annual financial and non-financial report should also contain a section that discusses the Bank's overall performance against its set strategic objectives, targets, and goals. f) Detailing the Bank's overall risk management framework, including but not limited to: - i. Analyzing and assessing the Bank's overall credit risk concentration profile, and its impact on the allocation of capital for lending purposes within the banking group. - ii. Regularly conducting adverse but plausible stress-testing exercises, aimed at assessing the adequacy of the existing capital buffers. - iii. Performing regular sensitivity tests, targeted at identifying potential credit risk concentration issues that may arise in the future. g) Detailing the overall structure, organization, and governance mechanisms that are currently in place within the Bank. h) Discussing the overall adequacy of the Bank's existing capital buffers, by type of counterparty and geography. i) Lastly, the annual financial and non-financial report should also contain a section discussing the overall impact of the Bank's various business lines, on its overall financial performance, as well as on its strategic objectives, targets, and goals.