Banken for en verden i endring The bank for a ... - BNP Paribas

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Banken for en verden i endring The bank for a ... - BNP Paribas

• report of the Chairman / corporate governance at BNp paribas

INTERNAL CONTROL ANd RISk

mANAGEmENT COmmITTEE

Composition and work

The Internal Control and Risk Management

Committee was set up in 1994 to handle

the specific needs of banking operations. In

2006, its members were François Grappotte

(Chairman), Jean-Marie Gianno, Jean-François

Lepetit and Loyola de Palacio (Ms. de Palacio

passed away on 13 December 2006). Threequarters

of its members were independent

directors under the criteria set out in the AFEP-

MEDEF document of 2003. No members of

the Bank’s Executive Management have sat

on the Committee since 1997.

• In 2006, the Committee met four times and

the rate of attendance was 88% (one member

having missed two meetings). It examined the

following issues.

Internal control, compliance and

relations with regulatory authorities

The Committee was informed concerning the

internal control system implemented following

the setting up of the Compliance function

and the establishment of the distinction, now

enshrined in legislation, between Periodic

Control and Permanent Control.

• It was provided with draft reports for the

year ended 31 December 2005 from the

Permanent Control and Periodic Control functions

as well as with the first report from the

Group Compliance function.

• It received the report on periodic controls

carried out by the General Inspection unit in

first-half 2006.

• It was informed of developments in relations

with the regulatory authorities of the

United States and the United Kingdom, and

reviewed the Group’s exchanges of correspondence

with the French banking regulator

(Commission Bancaire).

• It was notified of the new process and updated

procedures implemented by the Group specifically

to manage relations with regulatory

authorities.

• It received a progress report from the

Compliance function on operations of Group

entities in jurisdictions which regulatory authorities

consider to be “lacking in transparency”.

Credit risks and market risks

• As it does periodically, based on reports

from the Group Risk Management function,

the Committee examined the Bank’s credit

portfolio, reviewing its key features and development

trends, as well as the breakdown by

industry and geographical area of commitments,

in addition to their compliance with

capital-adequacy requirements.

• It was notified of the findings of Risk Policy

Committees convened regularly by Executive

Management to review specific risks, such as

real estate financing, commitments in emerging

countries, commodity financing, leveraged

buyouts or securitisation.

• At regular intervals, the Committee received

reports from Executive Management on financial

market operations and market risks. It was

informed of the methodology and outcomes

of stress tests, as well as of the methodology

used for calculating the Value at Risk of operations.

It received a report from Group Risk

Management on credit derivatives operations

and financing of hedge funds.

Interviews

• Without any member of Executive Management

being present, the Committee interviewed the

Head of the Bank’s General Inspection unit, in

charge of Periodic Controls, and the Head of

Group Risk Management. It also interviewed

the Head of the Compliance function.

163

CORPORATE GOvERNANCE

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