Untitled - Banco Mercantil

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Mercantil Banco Universal's governance structure is comprised by the Shareholders’ Meeting, followed by the Board of Directors, with its Audit, Risk and Compensation Committees, the Executive Committee, the President and Executive President, the Internal Auditor and the Compliance Officer. Board of Directors The Board of Directors must act efficiently and in the interests of its shareholders, creditors, customers, employees and the community in general. It is responsible for defining corporate strategies, determining business policies and setting and controlling the strategic direction of the institution. The Board supervises management of the Organization’s different business and support areas. It also evaluates results by comparing them against previously approved plans and strategies, performance in previous years and the general banking environment. The majority of the Directors on the Board are independent of the Bank’s Administration, in keeping with best corporate governance practices. This further demonstrates their commitment to meet international management standards. The Directors are highly qualified and well-versed in business and finance which guarantees their performance. The Board of Directors is made up of 9 directors and 18 alternate directors. It appoints one of its officers as President and another as Executive President. The Board meets once a month and whenever else the President deems necessary. With a view to ensuring better transparency and control over management procedures, since 1981 the bank’s Bylaws have provided for the creation of the Compensation and Audit Committees whose functions are governed thereby. At an Extraordinary General Shareholders’ Meeting held in January 2006, the shareholders approved a proposal presented by the Board of Directors to amend a provision in the Bylaws granting the Risk Committee legal status, which had been approved at a Board meeting on May 31, 2001. These Committees are comprised mainly of Directors who are Independent from the Bank’s Administration. Additionally, as a result of its tradition to adhere to best Corporate Governance practices, the Audit Committee approved the Bylaws governing this area. This document describes the purpose of the Committee and its functions and responsibilities in detail and states that its members must evaluate compliance therewith each year. It also requires that the majority of its members must be independent from the bank’s administration, adding that at least one of them must have considerable accountancy or financial management experience. To ensure better transparency and control over management procedures, the Bank’s By-Laws have provided for the creation of the Compensation and Audit Committees whose functions are governed thereby. An Ordinary Shareholders’ Meeting held in March 2006 passed a proposal submitted by the Board of Directors to amend the stipulation in the Bylaws that had been approved at a Board meeting on May 31, 2001 to give the Risk Committee legal status. These Committees are comprised mainly of Directors who are independent from the bank’s Administration. A n n u a l R e p o r t 2 0 0 7 72
Board of Directors Compensation Committee Members Gustavo J. Vollmer H. (Coordinator) Alfredo Travieso P. Víctor Sierra Gonzalo Mendoza Germán Sánchez Myles Luis Esteban Palacios W. Luis Alfredo Sanabria U. Gustavo Marturet (Ex oficio) Nerio Rosales Rengifo (Ex oficio) Members Luis A. Romero M. (Coordinator) Jonathan Coles W. This Committee is responsible for setting the organization’s remuneration and benefits policy, approving the remuneration of the President and senior management and notifying the Board of Directors thereof.In 2007 the Compensation Committee met eleven times and dealt with the following topics: review of the remuneration and bonus payments of the President, Executive President and members of the Executive Committee; review of the succession policy; scope and eligibility of the company’s executive short-term incentive program; follow-up of phases IV and V of the employee stock purchase plan; report on special staff financing programs; setting annual performance-based salary increase policy for employees of local and overseas subsidiaries; consider the Mercantil retirement pension plan; recommendation on setting fees for advice on legal, fiscal and migration matters, make recommendation on the setting of the fees of the Directors on the Boards and Committees of Mercantil; review impact of minimum wage increase; scope of labor stability; report on calendar of union elections; report on the 2007 organizational environment results; General Special and Sole Stock Purchase Plan for employees in Venezuela on the occasion of the 80th anniversary of the company’s foundation; consider increasing the nominal value of Mercantil shares in the individual trust funds related to the Long-Term Incentive Plan and on participants in the general stock purchase plan; impact of the ruling by the Supreme Court of Justice on the Corporate Income Tax Act; scope of the Working Conditions and Environment Act; review staff turnover and presentation of Mercantil’s new strategic branding plan. Board of Directors Audit Committee Eduardo Mier y Terán Federico Vollmer Francisco Monaldi Gustavo Machado C. Oscar Machado K. Claudio Dolman Gustavo Marturet (Ex oficio) Nerio Rosales Rengifo (Ex oficio) Members Gustavo J. Vollmer A.(Coordinator) Roberto Vainrub Miguel Ángel Capriles L. Luis A. Marturet Gustavo Galdo Rafael T. Hernández A. Guillermo Sosa S. Carlos Hellmund B. Gustavo Marturet (Ex oficio) Nerio Rosales Rengifo (Ex oficio) Responsible for reviewing accounting and management policies, the opinions and reports of the internal and external auditors, establishing Reserves, reviewing the Financial Statements and their Notes and formulating recommendations to the Board on matters incumbent upon it. It also approves the engagement and remuneration of external auditors. In 2007, the Audit Committee met eight times and dealt with the following topics: review of the financial statements of the Bank, the internal auditing and anti-money laundering activities, remuneration of the external auditors; consideration and setting of loan portfolio and other portfolio provisions; consideration of internal control aspects, consideration of contributions to FOGADE and SUDEBAN, and review of the financial statements presented according to US GAAP as of December 31, 2006. Board of Directors Risk Committee This Committee approves Mercantil’s risk profile, policies and limits and optimizes the use of capital to support the approved risk profile. In 2007 the Risk Committee met four times and dealt with the following topics: establishment of portfolio provisions, approval of changes to the Credit Risk Policy Manual; discussion of reports on operational risk events; discussion of reports on loan portfolio reviews of different segments; follow-up of compliance with compulsory loan portfolios; discussion of progress reports on global risk management; discussion of special evaluation report on operational risk with trust funds; setting the policy on the liquidity of assets under management and government deposits; discussion of the credit methodology for construction; approval of the trust fund policy manual; consideration of the report on monetary conversion; review of the questionnaire on global risk produced by the Superintendency of Banks and Other Financial Institutions (SUDEBAN); definition of risk profile and comparison between the new and the current model to determine expected losses; establishment of the policy for reviewing contributions to the Compulsory Savings Fund for Housing (FAOV); review of the risk mitigation plan for trust funds; follow-up of the data security project, and review of credits that exceed the internal limits. M e r c a n t i l B a n c o U n i v e r s a l 73
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Banco Universal CONTENTS Financial
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Earnings Consolidated (In millons,
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Notice of Ordinary General Sharehol
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* All figures stated in US$ are con
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To assert the value of the Mercanti
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The Capital and Financial account d
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Fondonorma approved the ISO 90001:2
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Working Environment For the third y
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Statutory Auditors’ Report To the
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Financial Statements (Pursuant to t
Page 23 and 24: GOLDSCHMIDT, Gertrud (GEGO) Esfera
Page 25 and 26: Economic Climate Summary of Economi
Page 27 and 28: Management Discussion and Analysis
Page 29 and 30: Gross Loan Classified by Status (In
Page 31 and 32: Other Income, net Other Income, net
Page 33 and 34: GOLDSCHMIDT, Gertrud (GEGO) Chorro
Page 35 and 36: Loan Portfolio Management Report by
Page 37 and 38: The volume of foreign exchange auth
Page 39 and 40: Corporate and Invesment Banking Loa
Page 41 and 42: Corporate Finance and Capital Marke
Page 43 and 44: Excess over reserve requirement + C
Page 45 and 46: Service Quality and Operating Effic
Page 47 and 48: Operational excellence in the Merca
Page 49 and 50: Considerable headway has been achie
Page 51 and 52: GOLDSCHMIDT, Gertrud (GEGO) Sin tí
Page 53 and 54: Human Resources Human Resources con
Page 55 and 56: GOLDSCHMIDT, Gertrud (GEGO) Tejedur
Page 57 and 58: Risk Management Good risk managemen
Page 59 and 60: For 2007, credit risk exposures by
Page 61 and 62: Market Risk Market risk appears in
Page 63 and 64: Loss-risk distribution by category
Page 65 and 66: Mercantil Banco Universal National
Page 67 and 68: Mercantil’s Social Contributions
Page 69 and 70: Quality of Life and Environment Don
Page 71 and 72: Prevention and Control of Money Lau
Page 73: Corporate Governance Mercantil Banc
Page 77 and 78: Internal Auditor In accordance with
Page 79 and 80: Awards and Acknowledgements M e r c
Page 81 and 82: Jonathan Coles Assistant Professor
Page 83 and 84: Federico Vollmer Acedo Vice Preside
Page 85 and 86: Agency and Branch CORAL GABLES AGEN
Page 87: GEGO Hamburg, 1912 - Caracas, 1994
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Untitled - Banco Mercantil

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