Cairo, September 19, 2024

Dear Chairman of the Board of Directors,

Greetings,

In light of the Central Bank's keenness to select distinguished banking cadres with high expertise and competence to hold the positions of key officials, namely the Chairmen and members of the Boards of Directors of banks and Executive Managers, which positively reflects on the efficiency of the banking sector's performance and thereby preserves its stability and integrity. Furthermore, to ensure the availability of the required eligibility and technical competence standards, which primarily include credibility, integrity, and good reputation, as well as experience, qualifications, and competence, and also financial soundness, taking into account independence and avoiding conflicts of interest, on the basis of which candidates for key positions in banks are selected to be approved by the Central Bank after fulfilling the necessary procedures for their appointment.

Therefore, the Board of Directors of the Central Bank, in its meeting held on September 17, 2024, decided to issue the attached instructions regarding the "Eligibility Requirements and Technical Competence for Key Bank Officials".

Please be kind enough to alert regarding full compliance with the attached instructions.

Yours faithfully,

Hassan Abdalla

Eligibility Requirements and Technical Competence for Key Bank Officials

Contents
Definitions
Introduction
Scope of Application
General Provisions
First: Key Positions
Second: Eligibility and Competence Criteria for Key Officials
Third: Nomination Procedures for Key Officials
Fourth: Required Forms and Declarations
Fifth: Handover Requirements
Sixth: Approval Issued by the Central Bank of Egypt

1 In the application of the provisions of these instructions, the following words and phrases are intended to have the meaning indicated next to each of them:

• Eligibility and Technical Competence Requirements: The technical standards that must be met by key officials for the Central Bank to approve their appointment.

• Key Officials: Chairmen and members of the Boards of Directors of banks and Executive Managers responsible for executive sectors, supporting sectors, and oversight sectors.

• Key Positions: Positions for which candidates must obtain prior approval from the Central Bank before assuming these positions in banks, which include the supervisory level, the executive level, and the oversight level.

• Senior Management Officials: Chairmen of each of the executive sectors, supporting sectors, and oversight sectors in banks.

• Executive Sectors: Large Corporate Financing Sector - Small and Medium Enterprises Sector - Retail Banking Sector - Investment Sector - Financial Institutions Sector - Treasury and Trading Sector.

• Supporting Sectors: Financial Sector - Information Systems and Technology Sector - Security Sector - Legal Sector - Central Operations Sector - Human Resources Sector.

• Oversight Sectors: These are internal control functions represented by the Risk Sector - Internal Audit Sector - Compliance Sector.

• Banking Code of Conduct: A document that outlines proper dealing rules, ethical principles, and values, including senior management, which all employees must adhere to at various functional levels in the bank and executive members of the Board of Directors.

• Non-Executive Chairman: A non-executive board member selected by the board members to assume the responsibility of the bank's Board of Directors Chairman.

• Non-Executive Board Member: A board member who is not dedicated to managing the bank and does not receive a monthly salary or annual salary from the bank, nor does he receive paid consultations from the bank.

• Independent Non-Executive Board Member: A non-executive board member who meets the conditions of independence and internal control of banks (as stated in the governance instructions).

• Executive Board Member: A board member dedicated to performing specific executive tasks on a daily basis and receives a monthly salary and bonus for them.

• Chief Executive Officer or Managing Director: An executive board member who oversees the management of the bank's business and activities in exchange for a monthly or annual salary and bonus, under the supervision of the Board of Directors.

• Manager Responsible for the Foreign Bank Branch: The official who assumes the tasks and responsibility of managing all business and activities of the foreign bank branch.

• Company Secretary: A person of competence with sufficient knowledge and understanding of banking business, entrusted with the responsibility of the company secretary, who assumes the tasks of preparing board meetings and the topics to be discussed in the session (agenda), following up on the implementation and archiving of board decisions, as well as preparing and signing meeting minutes and sending a copy to board members for approval.

2 In implementation of the provisions stipulated by the Central Bank of Egypt and Banking Authority Law No. 194 of 2020, which stipulates the necessity of obtaining prior approval from the Central Bank before appointing any candidate to hold one of the key positions in banks; after verifying their eligibility and competence for the position they are nominated for, these instructions were prepared to include the bases and standards on which candidates for key leadership positions in banks are selected, as well as the procedures followed for their appointment.

Scope of Application

These instructions apply to all banks registered with the Central Bank, and representative offices of foreign banks in the Arab Republic of Egypt, as well as branches and representative offices of Egyptian banks abroad, in accordance with the laws, regulations, and supervisory instructions applicable.

General Provisions

1. Banks must apply for prior approval from the Central Bank for nomination to hold one of their key positions and verify the candidate's eligibility and competence for the position before starting to perform the tasks and responsibilities of this position.

2. Each bank must have a mechanism that includes the necessary procedures for selecting and appointing key officials, which must be reviewed periodically and updated if necessary.

3. The Board of Directors is responsible for evaluating the eligibility and competence of candidates for key positions in the bank.

4. Ensure that there is no suspicion of conflict of interest when appointing a person nominated for any key position in the bank.

5. The bank's organizational structure must be presented to the Board of Directors for approval, to allow the Board to determine the number required for the size of the bank and the extent of senior management officials according to the complexity of its activities, taking into account the expertise and skills required for the existing key positions. The Central Bank must also be informed of the structure, indicating its holders and those that are vacant, as well as in case of any modification to it.

6. Banks must verify the eligibility and competence of their current key officials. In case there are any indications of the ineligibility or incompetence of one of the current key officials; the bank must notify the Central Bank in writing within three working days at the latest from the date of discovery and verification of the matter.

7. Key officials must disclose to the appropriate administrative level any matter that may affect their eligibility and competence to hold their key positions in the bank.

8. Report any violations or illegal practices committed by one of the key officials and provide protection for whistleblowers in accordance with the bank's internal policies, while maintaining the confidentiality of this information.

9. The Central Bank may remove a key official from the bank if they fail to prove their eligibility to continue in their position or in case of any change in any of the eligibility and technical competence criteria specific to them.

First: Key Positions:

4 Key officials hold the key positions shown below at both the supervisory, executive, and oversight levels. Holders of these positions must obtain the Central Bank's approval before their appointment. Banks must notify the Central Bank in writing when the holder assumes the tasks and responsibilities of these positions, and upon accepting the resignation, termination of employment, or dismissal for any reason within three working days. It is also necessary to disclose the reasons for the approval of the resignation or dismissal of the heads of the Risk, Internal Audit, and Compliance sectors as stated in the governance and internal control instructions for banks.

1. Supervisory Level

It consists of the following positions:

Chairman of the Board of Directors (Non-Executive) / Board of Directors Member (Non-Executive) / Board of Directors Member (Independent Non-Executive).

2. Executive Level

It consists of the following positions:

Chief Executive Officer or Managing Director / Board of Directors Member (Executive) / Company Secretary / Executive representatives of Egyptian banks in the membership of the Boards of Directors of banks abroad, whether in joint-stock subsidiaries or sister banks / Manager responsible for the foreign bank branch in Egypt / Manager responsible for the Egyptian bank's representative office abroad / Manager responsible for the branch of an Egyptian bank abroad / Manager responsible for the representative office of a foreign bank in the Arab Republic of Egypt / Heads of supporting sectors / Heads of executive sectors.

3. Oversight Level

It consists of the following positions:

Head of Risk Sector / Head of Internal Audit Sector / Head of Compliance Sector / Head of Information Security Sector.

5 These criteria represent the minimum conditions and basic requirements that must be met by candidates for key positions in the bank, to ensure they possess sufficient credibility, integrity, competence, compliance, and necessary experience according to their current positions or the positions they are nominated for, which qualify them to perform the tasks and responsibilities entrusted to them. These criteria consist of the following:

1. Credibility, Integrity, and Good Reputation

It is required that the candidate possesses credibility, integrity, and good reputation; by verifying the following as a minimum:

1-1. No final judgment has been issued against him for a felony or a misdemeanor involving honor or trust.

2-1. He has not previously been dismissed or removed from work in one of the positions or struck off from one of the professional syndicates by a final disciplinary decision or judgment.

3-1. It has not been established that he engaged in fraudulent practices or actions compromising honor or trust.

2. Experience, Qualifications, and Competence

The candidate is evaluated according to the following indicators, by way of example and not exclusively:

1-2. The candidate's competence and availability of sufficient specialized and practical experience that qualifies him for this position.

2-2. The candidate's ability to perform the tasks of the key position nominated for and to fulfill the duties and obligations associated with this position to the fullest extent.

3-2. Obtaining the necessary qualifications from academic certificates in addition to training programs, specialized certificates, and others in various related fields.

4-2. The candidate's knowledge of the banking market and his understanding of the requirements of his position and the associated risks, and his ability to make sound decisions at the right time.

5-2. Availability of leadership skills, effective communication, and the ability to solve problems and manage unexpected crises.

3. Financial Status

The candidate's financial status is evaluated by ensuring he is not exposed to any of the following:

1-3. Inability to fulfill his financial obligations or defaulting on them in a way that may affect the soundness of the candidate's financial status, by way of example and not exclusively: being classified as a non-regular client.

2-3. Declaration of insolvency or bankruptcy.

3-3. If he is a party to any settlement with creditors or similar procedures that are still ongoing and/or have not been settled within a reasonable time period.

4. Independence and Avoidance of Conflicts of Interest

The candidate must possess the necessary independence to perform the tasks and duties assigned to the key position nominated for, and must not have personal interests or job commitments or any other circumstances that may lead to a conflict of interest or may affect in any way his ability to perform the tasks of this position independently. This criterion is evaluated according to the information contained in the Statement of Affairs form completed by the candidate and any other sources. The candidate must not have a kinship relationship up to the third degree with one of the key officials in the bank, which may affect the neutrality of decisions taken by him after assuming the tasks of his position. The bank must also notify the Central Bank of any situation involving a suspicion of conflict of interest with the candidate.

Third: Nomination Procedures for Key Officials:

1. Nomination Procedures for Board of Directors Members:

1-1. Each bank must inform the Central Bank of the names of the candidates for membership in the Board of Directors and its chairmanship, accompanied by the Statement of Affairs and declarations, at least 60 days before the General Assembly meeting.

2-1. The Governance and Nominations Committee presents the nominations for membership in the bank's Board of Directors to the Board of Directors for approval, then the list of nominations is sent to the Central Bank to obtain its prior approval before being presented to the General Assembly at its first meeting for endorsement, except for banks whose shares are fully owned by the State, whose Board of Directors members are appointed by a decision of the Prime Minister after the Governor's approval.

3-1. The Central Bank must be informed by a letter attached with the following: 1-3-1. A detailed resume of the candidate, and a nomination letter in case of representing legal entities. 2-3-1. Approval of the bank's Board of Directors for the nomination. 3-3-1. The Statement of Affairs and necessary documents.

4-1. The Central Bank may invite the nominated Board of Directors member for a personal interview. If approved after fulfilling all nomination procedures, the approval is sent to the concerned bank. In case of non-approval, the decision must be reasoned.

5-1. The bank must submit the complete documents of the candidates for membership in the Board of Directors to the Central Bank, which in turn endorses the candidates.

6-1. The "Request to Modify Registration Data" form must be submitted for this purpose to obtain approval for each member of the bank's Board of Directors from the Central Bank, ensuring that the Board of Directors and the General Assembly of the bank are informed of this appointment.

2. Nomination Procedures for Senior Management Officials:

1-2. Regarding executive and supporting positions, the Human Resources Sector, in coordination with the bank's Chief Executive Officer, nominates them, and these nominations are presented to the Board of Directors for approval.

2-2. Regarding oversight positions, the Human Resources Sector presents the candidates for these positions to the relevant board committees for approval. The Audit Committee approves the Head of the Internal Audit Sector and the Head of the Compliance Sector, while the Risk Committee approves the Head of the Risk Sector. These nominations are then presented to the Board of Directors for approval.

3-2. Regarding executive and non-executive representatives of Egyptian banks in the membership of the Boards of Directors of banks abroad, whether in joint-stock subsidiaries or sister banks, as well as executive managers of Egyptian bank branches abroad, they must obtain prior approval from the Central Bank and then obtain approval from the competent supervisory authority abroad before assuming their positions.

4-2. The Central Bank must be informed by a letter from the bank attached with the following: 1-4-2. A detailed resume of the candidate and a detailed experience certificate. 2-4-2. Approval of the Board of Directors for the selection of the candidate. 3-4-2. A recent organizational structure. 4-4-2. Necessary documents.

5-2. A personal interview is conducted at the Central Bank. If approved after fulfilling all nomination procedures, the approval is sent to the concerned bank. In case of non-approval, the decision must be reasoned.

6-2. The bank must submit the complete documents of the candidates for one of the senior management positions to the Central Bank, which in turn endorses the candidates. If 60 days pass from the date of submitting the complete request with all required documents and procedures are not completed, the Central Bank issues a preliminary approval until the procedures are completed, unless it sees an obstacle to doing so.

7-2. The "Request to Modify Registration Data" form must be submitted to obtain the Central Bank's approval in case one of the cadres from within the bank is nominated for one of the vacant senior management positions who have a sufficient degree of experience, knowledge, and awareness.

8-2. In case the bank appoints the candidate as an acting manager, his complete documents must be submitted to the Central Bank until the procedures for his permanent appointment are completed and the Central Bank's approval is obtained. The bank must submit the nomination request to the Central Bank within a period not exceeding three months from the date the position became vacant. This period may be extended for another period or two periods at the maximum, provided that the Central Bank approves.

7 The candidate must complete the following forms according to the position nominated for: Statement of Affairs, Delegation of Authority Table, Tasks and Responsibilities Statement, Skills Gap Analysis, Training and Development Plan, and the required Declaration, along with a detailed experience certificate for the position nominated for.

1. All information and documents related to the application must be submitted to the Central Bank.

2. The submitting bank must conduct a thorough inquiry and verify the information provided by the candidate. Both are responsible for completing the information and confirming its accuracy before submitting it to the Central Bank.

3. If the submitting bank or the candidate becomes aware - after submitting the completed forms - of any material information related to the application that may affect the accuracy and completeness of any of them, this information must be submitted to the Central Bank within a period not exceeding three working days from the date the bank or candidate became aware of it.

4. The Central Bank has the right to request any additional information from the submitting bank after receiving the application and before granting approval.

5. If it is proven that any of the submitted data or documents are false, the candidate is excluded immediately, and disciplinary measures are taken against him and against the bank if it is proven that he was aware of it and did not notify the Central Bank.

7. Tasks and Responsibilities Statement:

1-7. Each key official in the bank must have a statement that accurately and concisely documents the specific tasks, responsibilities, and duties of the holders of key positions, which must be clear and not complex.

2-7. Banks must ensure that this statement is continuously updated and notify the Central Bank of any proposed material changes. The Central Bank of Egypt has the right to reject any of these changes if they are not compatible with the tasks and responsibilities of the key position concerned.

3-7. The nomination request for each key official must be accompanied by this statement, signed by the concerned bank and the candidate, and the aforementioned statement must be compatible with the forms and declarations mentioned above.

8. References:

1-8. The bank must obtain a reference for new candidates for key positions when submitting the application.

2-8. The bank must provide such a reference to key officials when requested by another bank. The reference must essentially match the experience certificate submitted with the approval requests. All required information about the previous six years of the candidate's history before the date of submitting the application must be disclosed.

3-8. The bank must ensure the validity of the academic and professional certificates submitted by the candidate.

4-8. In case the candidate is unable to obtain this reference, he may sign a declaration to the Central Bank regarding the accuracy of the data contained in the submitted forms and documents.

1. The experience certificate may be submitted within one month from the date of the Central Bank's approval issued regarding it.

Fifth: Handover Requirements

1. Each bank must prepare a succession plan to identify and develop employees' capabilities and skills with the aim of giving them the opportunity to hold key leadership positions when available. This plan is reviewed by the Governance and Nominations Committee and presented to the Board of Directors.

2. The bank must ensure that all information is made available to new key officials when they start performing the tasks of their new positions, or in case of a change in the position or responsibilities of one of the current key officials, taking all necessary measures to enable them to perform their work easily, accurately, and clearly.

3. It must be ensured that there are organized procedures for handover in case a key official stops performing a specific function and another key official assumes this function. The key official leaving the position must prepare a comprehensive set of handover memos for the new key official, including any pending or ongoing topics, so that the new key official is aware of them and can perform his job effectively and efficiently.

Sixth: Approval Issued by the Central Bank of Egypt

1. The Central Bank may issue its approval temporarily for a specified period or accompanied by specific conditions for some candidates applying for one of the key positions, provided that they complete the necessary training courses. The approval may also be conditional on the relevant sectors of the Central Bank following up on the candidate's performance for a specified period, and if those conditions are not met within the mentioned period, the approval is considered void.

2. The Central Bank may cancel its approval, modify it, or change it to temporary approval until re-evaluation during the time periods determined by the Central Bank, based on the information and data provided by the various sectors of the bank.

3. The Central Bank may issue a reasoned decision rejecting the appointment of the key official. The bank may resubmit the request if it is able to remedy the reasons for rejection.