Corporate governance is key to any company’s strategy and operations. Good corporate governance can greatly benefit a business, help to improve its performance, attract business – including investment, loan and deposit business for ADCB – as well as significantly increasing the market’s trust in the business. The perception of good corporate governance by investors can underpin the development and long term stability of local markets, and help to attract foreign investors to companies in the UAE.
As global markets recover from the financial crisis, gaining market trust is more important now than ever.
Investors look for transparency, responsibility, accountability and fairness – it is these four key areas that ADCB has indentified as its core principles of corporate governance. In today’s environment, banks continue to be the bedrock to a healthy functioning financial system, and this remains particularly poignant in the UAE.
This means that strong corporate governance remains crucial for the entire sector, not only to meet best practices from a regulatory standpoint, but also to develop and improve market trust in ADCB, and in the sector as a whole.
The bank’s commitment to good corporate governance is the result of several important initiatives:
– In 2007, ADCB hired IFC, a division of the World Bank, which helped the bank to develop a three year ‘road map’ to meet the highest standards of corporate governance. This road map was based on the requirements of ESCA’s Corporate Governance Code, the requirements of ADX, draft guidelines from the Central Bank and global best practices and principles such as the UK’s Combined Code.
– The commitment of the board of directors, CEO and senior management to embrace and implement best practices within the bank.
– The creation of a Board Secretariat Department, headed by the bank’s General Counsel, a member of the UK law society, and staffed by internationally-qualified and experienced corporate secretaries.
The bank’s initiatives have been recognised by the following achievements:
– In 2009 Hawkamah awarded ADCB ‘Best bank in UAE’ at its Union of Arab Banks Corporate Governance Awards.
– In 2009 ADCB was the first bank in GCC to meet the stringent disclosure and transparency requirements to sell bonds to US investors (144A programme).
– In 2009 ADCB rated ‘top bank in GCC’ according to a survey on liquidity, volatility and transparency by TNI / Hawkamah.
– In 2010 and 2011 World Finance awarded ADCB ‘Best corporate governance of any company in UAE’, placing ADCB amongst many well known global blue chip companies.
– ADCB has been featured by World Bank as a case study for its corporate governance achievements.
To reach its achievements, steps taken by ADCB include: the reorganisation of the board and board committees, the reorganisation of management committees, an extension of the bank’s disclosures in its annual report, a focus on more regular and transparent market disclosures, regular board evaluations, a focus on board skills and training and amendments to the bank’s articles of association. In 2009, 2010 and 2011 the board made enhanced disclosures to its 2008, 2009 and 2010 annual reports, and provided these enhanced disclosures to shareholders at the AGM.
A key challenge faced by all companies is finding the correct balance between the board and management – the board’s role is to guide and set strategy, and set clear and appropriate delegated authorities. It is vital to avoid any tendencies to ‘micro-manage’ whilst maintaining appropriate oversight. ADCB has implemented a corporate governance framework, which is monitored by the board, board committees and management, to ensure the appropriate division of responsibilities and roles. At the local level, in the GCC in particular, a key challenge involves locating independent directors with strong professional experience. The bank recognised the need and value of independent objective expertise and has identified a suitable strategy – in 2011, Lord Davies of Abersoch was appointed as an adviser to the board. With over 25 years experience in banking and financial services, he is regarded as one of the finest banking experts of his generation, and ADCB is proud to welcome him to the bank.
As we look towards recovery across the industry, ADCB understands the importance and continues to work towards instilling confidence in it customers and investors. In-line with the principles of corporate governance, the bank has continued its high-level transparency towards provisioning. We strongly believe that this approach and the bank’s general commitment to governance will continue to enhance market trust and confidence in ADCB, at a time when customers and investors look for reassurance and security in a recovering market.