Corporate governance

Unibank focuses on ensuring effective transparently structured corporate governance aiming at implementing best practices. The Banks’ corporate governance policy is designed to ensure the independence of the Board, its ability to effectively supervise the management activity and to have good relations with shareholders.

Both the Board and Executive Board are supported by Committees which makes recommendations on matters delegated to them, in particular in relation to internal control, risk, financial reporting, and remuneration matters. This enables the management to spend a greater proportion of its time on strategic, forward looking agenda items. The Corporate Governance Guidelines are adopted by the Board. The compliance with the provisions of the Guidelines is closely controlled by Internal Audit Unit as well as the committees under the Board and Executive Board within their authorities. For better implementation of Corporate Governance the Bank has structured a precise organizational chart oriented at ensuring transparent accountability on all the levels of management.

• Risk Management
  
  Overview

  Risk management is one of the most important part of Unibank’s management. Risk management in Unibank specifies a complex system of interrelated activities which is directed to prevent and minimize potential losses of Bank. The main goal of Risk management of Unibank is to enable the Bank to maintain the aggregate value of risks at the level of risks set by the strategic plan of the Bank and to maximize its return on capital.

  Principles of Risk Management

  Risk Management of Unibank is based on the documents of Committee on Banking Supervision of the Bank for international Settlements (Basel Committee on Banking Supervision), Generally Accepted Risk Principles (GARP), on laws and normative acts of RA and CB of RA, based on principle of breaking-even and directed to maintenance of the optimal relations between banking profitability and the level of risks. Risk is managed through a process of ongoing identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Bank’s continuing profitability and each individual within the Bank is accountable for the risk exposures relating to his responsibilities.

  The ultimate goal of the Bank in relation to the Risk Management is preservation of Bank’s capital and assets on the high level by minimizing risks.

  The aim of Risk management of Unibank is to enable the Bank to maintenance the aggregate value of risks at the level of risks set by the strategic plan of the Bank and to maximize its return on capital.

  To identify  and manage risks of the Bank is part of duties of the Bank’s staff, and the Risk Management Directorate is responsible for implementation of risk procedures and control over risk management principles, policy and the Bank’s risk limits.

  The Bank fosters a culture that increases the level of Risk Management related knowledge across the bank, in particular relevant seminars are organized.

• Framework
  
  

  Board of Bank
  The Board is responsible for monitoring the overall risk management, approval of strategy and risk management principles.

  Executive Board
  The Executive board of the Bank is responsible for investment and control over the risk management procedures.

  Risk Management Directorate
  The Risk Management Directorate is responsible for implementation of risk procedures and control over risk management principles, policy and the Bank’s risk limits, as well as providing risk valuation and collection of overall information within the financial system.

  Financial Directorate
  The Financial Directorate of the Bank is responsible for management of assets and liabilities of the Bank. It is also primarily responsible for the funding and liquidity risks of the Bank.

  Internal audit
  Risk management processes throughout the Bank are audited annually by the internal audit that examines both the integrity of the procedures and the Bank’s compliance with the procedures. Internal Audit discusses the results of all assessments with management, and reports its findings and recommendations to the Audit and Risk Committee.

  The Board is responsible for monitoring the overall risk management, approval of strategy and risk management principles. The Board adopts risk management policies, corporate standards within the conceptual framework of which Management is charged to develop relevant procedures.

• Principles of communication of Risk Management Policies
  
  

  Monthly and quarterly reports to Executive Board and Board of Bank make sure the Senior Management that the policies are embedded to the culture of the Bank.
  The Risk Management Directorate is responsible for implementation of risk procedures and control over risk management principles, policy and the Bank’s risk limits, as well as providing risk valuation and collection of overall information within the financial system.

  Risk taking limits and Risk management
  Risk management directorate submits ALCO and/or Executive Board analysis-based proposals on risk limits, afterwards they are submitted to the Board’s approval.

  If any exceptional cases occur the staff of Risk Management Directorate reports to ALCO or to Executive Board, and then it is reported to the Board of Bank for making further decisions.

• The internal Audit Unit
  
  

  Internal Audit is an independent unit. Its competence include conducting check-ups, control, evaluation and submitting reports about the activity of management and staff of the Bank, aimed at achievement of goals set by the shareholders and management. By means of IA the Bank makes progress by systematic and consecutive method of assessment and increasing the efficiency of risk management.

  Internal Audit on monthly basis submits the Bank’s management  reports about its activity and audit results, indicating revealed risks in all the spheres and suggesting effective mechanisms of their management. Once a year Internal Audit conducts check of internal control system about which relevant report is made comprising the opinion of IA about the current internal control system.

  IA Unit is independent and executes its tasks on principle of objectivity. The Head of IA is subordinate to the Board  and has free access to all the levels of the top management of the Bank. IA has an independent status in relation to the subdivisions it checks and the managers of the subdivisions have no right to influence the volume or content of check-ups. IA submits timely reports about revealed problems.  

  Guided by the document stipulating the minimum requirements on internal control confirmed by the CBA, Internal Audit minimum once a year estimates the degree of compliance of internal control to the fixed requirements. Any revealed discrepancy is submitted to the governing bodies of the Bank who make relevant decisions on liquidation of disconformities, in consequence the internal control system is improved.

  Internal Audit conducts periodical check-ups in the subdivisions performing risk management and current control. The results are fixed in reports which include the approach and opinion of IA about current risk management system and efficiency of control mechanisms.

  IA conducts periodical check-ups in the subdivisions of the Bank’s Central Office which mainly implement Bank’s general governance, relevant reports are made and submitted to the Bank’s top management. Such reports include problems in corporate governance, recommendation of IA concerning their settlement.

  The structure of Internal Audit complies with the international standards, it includes director, senior audit manager, audit managers, IT manager and auditors. Audit managers are responsible for specific spheres which jointly with auditors conduct check-ups.

• Anti-Money Laundering (AML)
  
  

  Structure

  • The Bank is subject to and complies with the AML regulations of the RA  authorities, namely basic circular of 2008 of the Central Bank of RA.
  • The Bank has therefore committed to full compliance with all AML laws and regulations.
  • The Bank does not have AML Committee. It has Risk and Audit Committee.

  Money Laundering Reporting Officers (MLRO)

  The  AML/CFT division  consists of two employees`Head of AML/CFT and leading specialist.

  What is the structure of The Money Laundering Reporting Unit?

  • Risk Management Directorate
    • Head of AML/CFT
  • AML/CFT
    • Leading Specialist

  Sales/Floor managers are responsible but not reporting as the branches MLRO.

  Policies and Procedures

  The Bank has adopted internal policies, procedures and controls to ensure that it complies with the AML obligations in existing legislations and regulations.These procedures are subject to annual review or amended when necessary.

  Customer due diligence/Know Your Customer Policy:

  What is the customer due diligence/know your customer policy in the Bank?

  Compliance is conducted by the AML/CFT responsible officer on all newly opened accounts.

  All incoming, outgoing payments and all finance activities are scrutinized by AML/CFT responsible officer.

  Exception reports are generated for the daily controls, enabling a satisfactory level of monitoring over the various types of transactions.

  If AML/CFT responsible officer finds out any suspicious transaction, it is documented and reported to the CB of RA. The AML/CFT responsible officer conducts annual training all of the Bank`s staff. For new employees AML/ CFT responsible officer organize trainings during first three months, for the other employees as needed or if there are changes in AML Polices and Procedures. The Bank`s internal and external auditors conduct programs of audits and compliance testing of The Bank`s policies and operational procedures to AML. The Bank is subject to regular compliance visits from the local regulators in order to assess the level of monitoring and abidance to the regulations.