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that the risk policies and strategies
are effectively managed;
Provide an independent and
objective oversight and review the
information presented by
management also taking into
account reports by management and
the Group Audit Committee to the
board on financial, business and
strategic risk issues;
Adopt the principles of governance
and codes of best practice;
Liaise with the board with respect to
the preparation of the committee’s
report to shareholders as required;
Review the decisions of the divisional
management Credit and ALCO
committees. Credit and ALCO
decisions taken at the divisional
management level will be reported
to the Group Risk Committee on a
quarterly basis or more frequently
should the need arise;
Determine the maximum mandate
levels for the various Credit and
ALCO decisions.
Meetings
As this committee was only constituted
in May 2003, only one meeting has been
held. The charter of the committee
makes provision for meetings to be held
every quarter.
Feedback to the ABIL board of
directors
The chairman of the committee reports
back to the quarterly board meetings by
submitting written and/or oral reports.
Management committees
Credit committees
Due to the specialised nature of the
various businesses within the group,
credit risk is managed by the specific
business units and monitored and
reviewed by the Group Risk Committee.
Membership of the business unit credit
committees comprises management of
the specific business units only.
The credit committees are, inter alia,
responsible for monitoring the
implementation of the policy, adherence
to credit limits, avoidance of excessive
employer, industry and sector exposure,
policies regarding the approval of
employers for payroll deduction
purposes and adequacy of provisions for
the inherent risk of losses in the loan
book and specifically where recovery is
considered doubtful.
(Members of the Group Risk Committee
are invited to attend meetings of the
various credit committees.)
Asset and Liability Committee
(“ALCO”)
African Bank does not deal in foreign
exchange and does not take any market
risk. The primary risks, which are
managed by this committee and
monitored and reviewed by the Group
Risk Committee, are liquidity risk, interest
rate risk and solvency risk.
Advanced systems are used to perform
traditional gap analysis to determine
the impact on net interest income by
simulating various interest rate scenarios
based on different asset growth
assumptions and various interest rate
forecasts. These scenarios are also
stress tested.
The ability of African Bank to meet its
obligations in respect of loan payouts,
maturing deposits and funding the needs
of the operations of the subsidiaries is
fundamental to the sustainability of its
business. African Bank places a high
premium on the management and
monitoring of monthly updates of cash
flow forecasts, maintenance of an
adequate pool of marketable securities,
avoidance of depositor concentration,
maintenance of liquidity contingency
plans and maintaining a minimum level
of overnight surplus cash.
Members of the ALCO Committee are
executive members of management.
(Members of the Group Risk Committee
are invited to attend meetings of the
ALCO Committee.)
Communication
ABIL subscribes to the principle of
transparent, timeous, balanced, relevant
and understandable communication,
focused on substance not form, with all
relevant parties.
Communication covers both financial
and non-financial aspects of the business
to assist in creating an informed
stakeholder population. Detailed reports
of the various aspects influencing the
business, both directly and indirectly,
are communicated to stakeholders.
ABIL undertakes this responsibility
to ensure that stakeholders are
comprehensively informed on a
regular basis.
Code of ethics
The code of ethics for the ABIL Group
commits it to the highest standard of
integrity, behaviour and ethics in dealing
with all its stakeholders. Staff at all levels
drew up a code of ethics, which reflect
the group’s diversity and unique culture.
Staff are expected to observe their
ethical obligation in such a way as to
carry on business through fair
commercial competitive practices.
Code of Banking Practice
As a member of the Banking Council of
South Africa, African Bank is committed
to maintaining the standards of fairness
set out in the Code of Banking Practice.
Micro Finance Regulatory
Council (“MFRC”)
African Bank, Credit Indemnity and MGC
are members of the MFRC, which, inter
alia, allows them to write loans under the
Exemption Notice to the Usury Act,
1968. Being a member requires that their
lending practices be audited by the
external auditors of African Bank to
ensure that they adhere to the rules of
the MFRC.
African Bank is committed to a
continuous process of liaising with the
MFRC to benefit from its guidance in the
implementation of its requirements as
amended from time to time.
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African Bank Investments Limited