蒻鰤鷺蛛≒楊轟 - Deutsche Bank · 2017-05-30 · KPMG (Chartered Accountants) 32A, Sir Mohamed Macan Markar Mawatha, P. O. Box 186, Colombo 00300, Sri Lanka. REPORT OF FACTUAL

TO THE MANAGEMENT OF DEUTSCHE BANK AG _ COLOMBO BRANCH

We have performed the procedures agreed with you and enumerated in an annexure to this report, withrespect to the corporate governance direction issued by the Central Bank of Sri Lanka (CBSL). Ourengagement was undertaken in accordance with the principles set out in Sri Lanka Standards on RelatedService 4750 (SLSRS 4750) applicable to agreed-upon procedures engagements. The procedures wereperformed solely to assist you to meet the compliance requirement of the corporate governance directiveonly at Branch level and did not cover the items which have been identified as "Not applicable" at Branchlevel by you, and referred to Head Office documentation.

We report our findings in the Annexure, along with the relevant agreed procedures as per SLSRS 4750.

Because the above procedures do not constitute an audit or review made in accordance with Sri LankaAuditing Standards, we do not express any assurance on the compliance with the directives of corporategovernance issued by CBSL. Had we performed additional procedures or had we performed an audit orreview of the financial statements in accordance with Sri Lanka Auditing Standards, other matters mighthave come to our attention that would have been reported to you. Our report is solely for the purpose set

forth in the first paragraph of this report and foryour information and may be submitted to CBSL, and isnot to be used for any other purpose or to be distributed to any other parties.

This report relates only to the items specified above and does not extend to any financial statements ofDeutsche Bank AG - Colombo Branch, taken as a whole or to the procedures carried out at Head Officelevel.

ACCOUNTANTSColombo

23'd May 2017

KPMG(Chartered Accountants)32A, Sir Mohamed Macan Markar Mawatha,P. O. Box 186,Colombo 00300, Sri Lanka.

REPORT OF FACTUAL FINDINGS

KPMG. a Sd Lankan partnechip and a member firmof the KFMG network of independent member fimsaffiliated with KPMG tnternational Cooperative("KPMG lnternational'), a Swiss entity.

Tel : +94‐ 115426426Fax : +94‐ 112445872

+94-112446058+94‐ 112541249

1nternet i ―

kpmg com/!k

蒻鰤鷺蛛 ≒楊轟g…P"nd“ lS‐ 譜諸躍F乱捨Ч臨カキ3卍

neyataw,Hsc∞nmだ。ne ACA

勘 b

DEUTSCⅡ E BANK AG― COLOMBO BRANCH

Anncxure to thc rcport on thc factual flnding for thc ycar cndcd 31St Deccmber 2016

Note:Thc below mentioned numbcring is uscd to coincide with the l'section 3"ofthe Banking Act Direction No ll of 2007 issued by the

entral Bank ofSri Lanka, the section l& 2 are not icable for this documenFindinss

3(1)

3(1)(1)

The Responsibilities of the boardProcedures to be carried out to ensure thc board have strengthcned

the safety and soundness of the bank

) Check the board approval of the bank's strategic objectives and corporate

values.

Check whether the bank has communicated the bank's strategic objectives

and corporate values throughout the bank;

The responsibility ofthe Board and procedures

adopted by the Bank are not applicable at

Branch level.

Strategic planning is performed at head office

and regional level.

These are communicated to the entities and

controls are in place to ensure compliance via

) Check the board approval ofthe overall business strategy ofthe bank.

Check that the overall business strategy includes the overall risk policy

risk management procedures and mechanisms and they are documented.

Check that the overall business strategy contains measurable goals, for at

least the next three years:

) Check that the appropriate systems to manage the risks identified by the

board are prudent and are properly implemented;

thc Executive Committee (EXCO) /Operations Committee (OPCO) and Assets

Check that the board has approved and implemented a policy ol

communication with all stakeholders, including depositors, creditors,

share-holders and borrowers;

and Liabilijcs Commitcc(ALCO)

Check that the board has reviewed the adequacy and the integrity of the

bank's internal control systems and management information systems;

0 Check that the board has identified and designated key management

personnel, as defined in the Sri Lanka Accounting Standards, who are in a

position to:

signifi cantly infl uence policy;

direct activities; and

exercise control over business activities, operations and risk management;

Check that the board has exercised appropriate oversight ofthe affairs o1

the bank by key management personnel, that is consistent with board

policy;

Check that the board has defined the areas of authority and ke1

responsibilities for the board directors themselves and for the ke1

management personnel;

0

り

(五 )

(m)

Check that the board has periodically assessed the effectiveness of the

board directors' own governance practices, including:

the selection, nomination and election of directors and key management

personnel;

the management of conflicts of interests; and

the determination of weaknesses and implementation of changes where

necessary.

) Check that the board has a succession plan for key management

personnel,

) Check that the board has scheduled rcgular nteetings with the key

management personnel to revicw policies, establish communication lincs

and monitor progress towards corporate objectives;

り Check that the board has taken measures and processes in place tc

understand the regulatory environment and that the bank nlaintains a

relationship with regulators;

'fhis requirement is met locally through the

Branch Executive Commitlee.

m) Check that the board has a process in placc for hiring and oversight o1

external auditors.

N/A for Colombo branch as auditors are

appointed by the head office globally.

3(1)(ii) Check that the board has appointed the chairman and the ChielExeculive

Officcr (CEO)

Check that the functions and responsibilities ofthe chairman and thc CEO

are in line with Direction 3(5) of these Directions.

N/A for Colombo Branch. Accordingly no

testing has been carried out by us.

Page 1

Findings

3(r )(iii) Check that the board has met regularly and held board nleetings at least

twelve times a year at approximately monthly intervals.



3(1)(iV) Check that the board has a procedure in place to enable all directors tc

include matters and proposals in the agenda for regular board meetings

where such matters and proposals relate to the promotion of business anc

the management ofrisks ofthe bank.

N/A for Colombo Branch. Accordingly nc


3(1)(v) Check that the board has given notice ofat least 7 days for a regular boarc

meeting to provide all directors an opportunity to attend. And for all othel

board meetings. noticc has been given.



3(1)(vi) Check that the board has taken required action on directors wlro have not

attended at least two thirds of the meetings in the period of 12 months

immediately preceding or has not attended the immediately preceding

three consecutive nreetings held. Participation at the directors'meetings

through an alternate director, however, to be acceptable as attendance.

N/A for Colombo Branch. Accordingly n<


3(1)(vii) 3heck that the board has appointed a company secretary who satisfies the

provisions of Section 43 of the Banking Act No. 30 of 1988, and whose

primary responsibilities shall be to handle the secretariat services to the

board and shareholder mcetings and carry out other functions specified in

lhe statutes and other regulations.


testing has been canied out by us.

3(1)(viii) Check the process to enable all directors to have access to advice and

;ervices of the company secretary.



3(1)(iX) Check that the company secretary maintains the minutes of board

meetings and there is a process for the directors to inspect such mitrutcs.



3(1)(x)

(a)

(b)

k)

(d)

ω

　

θ

ehecklhat the minutes ofa board meeting contain or refer to the

following:a summary of data and information used by the board in its deliberations

the matters considered by the board

the fact-finding discussions and the issues of contention or dissent which

may illustrate whether the board was carrying out its duties with due care

and prudence;

the matters which indicate compliance with the board's strategies and

policies and adherence to relevant laws and regulations;

the understanding of the risks to which the bank is exposed and an

overview ofthe risk management measures adopted; and

the decisions and board resolutions.

N/A for Colombo Branch. Accordinglytesting has been carried out by us.

3(1)(xi) Check that there are procedures agreed by the board to enable directors,

upon reasonable request, to scek independent professional advice in

appropriate circumstances, at the bank's expense.



3(lXxii) Check that there is a procedure to determine, report, resolve and to take

appropriate action relating to directors avoid conflicts of interests, or the

appearance of confl icts of interest.

Check that a director has abstained from voting on any board resolution in

relation to which he/she or any of his/her close relation or a concern in

which a director has substantial interest, is interested

Check that has he/she been counted in the quorum for the relevant agenda

item at the board meeting

\l/A for Colombo Branch. Accordinglylesting has bcen carried out by us.

3(l )(xiii) Check that the board has a formal schedule olmatters specifically reserved

to it for decision to identify the direction and control ofthe bank is firm11

under its authority.



Page 2

Findings

3(l )(xiv) Check that the board has forthwith infornred the Director of Bank

Supervision of the situation of the bank prior to taking arry decision or

action, ifit considers that the procedures to identify when the bank is, or is

likely to be, unable to meet its obligations or is about to become insolvent

or is about to suspend payments due to depositors and other crcditors.

In the context of Colombo Branch this

requirement will be fulfilled though the local

Executive Committee in association with

Global & Regional Management.

No such situation has arisen during the year.

3(1)(xV) Check that the board has the bank capitalized at levels as rcquired by the

Monetary board.

The Branch is fully compliant with the capital

adequacy requirements of the Monetary Board

as at reporting date. In the context ofColombcBranch this will be the responsibility of the

local EXCO & ALCO.

3(l)(xvi) Check that the board publishes, in the bank's Annual Report, an annual

corporate governance report setting out the compliance with Direction 3 ofthese Directions.

NiA for Colombo Branch. Accordingly nt


3(r)(xvii) Check that the board adopts a scheme of self-assessment to be undertaken

bv each director annuallv. and maintains records ofsuch assessments.



l-he Board's Composition

3(2)(1) Check that the board comprise of not less than 7 and not more than 13

directors.

N/A for Colombo Branch. Accordingly n<


3(2Xii) IA)

B)

Check that the total period of service of a director other than a directot

who holds the position ofCEO, does not exceed nine years.



In the event of any director serving more than 9 years, check that the

transitional provisions have been applied with.

3(2)(iii) Check that the number of executive directors, including the CEO does not

exceed one-third ofthe number ofdirectors ofthe board.

N/A for Colombo Branclr. Accordingly nc


3(2)(iv) Check that the board has at least three independent non-executive

directors or one third ofthe total number ofdirectors, whichever is higher

Check ifnon-executive directors can be considered independent ifhe/she:


) Holds a direct and indirect shareholdings of more than I per cent of the

bank;

Currently has or had during the period of two years immediately preceding

his/her appointment as director, any business transactions with the bank as

described in Direction 3(7) hereof, exceeding l0 per cent ofthe regulatory

capital ofthe bank.

has been employed by the bank during the two year period immediatellpreceding the appointment as director.

has had a close relation; who is a director, CEO, a nrember of ke1

management personnel, a material shareholder of the bank or another

bank. (For this purpose, a "close relation" means the spouse orufi nancially dcpcndent child)

represents a specific stakcholder ofthe bank

Page 3

「indings

0 is an employee or a director or a material shareholder in a company or

business organization:

which currently has a transaction with the bank as defined in Direction3(7) of these Directions, exceeding I 0 per cent of the regulatory capital ofthe bank, orin which any of the other directors of the bank are employed or are

directors or are material shareholders; or

in which any of the other directors of the bank have a transaction as

defined in Direction 3(7) of these Directions, exceeding l0 per cent ofregulatory capital in the bank.


testing has becn carried out by us.

3(2)(v) In the event an alternate director was appointed to represent an

independent director, Check the person so appointed meet the criteria that

applies to the independent director

N/A fbr Colombo Branch. Accordingly no


3(2)(vi) Check that the bank has a process for appointing independent directors. N/A for Colombo Branch. Accordingly nc


3(2)(vii) Check that the stipulated quorum ofthe bank includes more than 507o ofthe directors and out of this quorum more than 50% should include non-

executive directors.

N/A for Colonrbo Branch. Accordingly nc

lesting has been carried out by us.

](2)(viii) Check that the bank discloses (he composition of the board, by categoryofdirectors, including the names of the chairman, executive directors, non-

executive directors and independent non-executive directors in the annual

corporate governance report.

N/A for Colonrbo Branch. Accordingly nc

lesting has bcen carried out by us.

](2)(ix)Check the procedure for the appointment of ncw dircctors to the board.

\/A for Colombo Branch. Accordingly nc

:esting has bccn carried out by us.

Check that all directors appointed to fill a casual vacancy be subject to

election by shareholders at the first general meeting after theirappointnlent.

),1/A for Colonrbo Branch. Accordingly nc

iesting has bccn carried out by us.

](2)(xi) Check ifa director resigns or is removed from office, the board:

announce the director's resignation or removal and the reasons for such

removal or resignation including but not limited to information relating to

the relevant director's disagreement with the bank, ifany; and

issue a statement confirming whether or not there are any matters that

need to be brought to the attention ofshareholders.

\/A for Colombo Branch. Accordingly:esting has been carried out by us.

](2)(xii)Sheck ifthere is a process to identify whether a director or an employee o

a bank is appointed, elected or norninated as a dircctor ofanother bank

\/A for Colonrbo Branch. Accordingly nc

:esting has been carried out by us.

riteria to assess the Fitness and Propricty of Dircctors

〕(3)(1)

(A)

Check that the age of a person who serves as director does not exceed 70

years.

Check that the transitional provisions have been conrplied with.

\/A for Colombo Branch. Accordingly nc

:esting has bcen carried out by us.

l(3)(ii) Check if a person holds office as a director of more than 20

;ompanies/entities/institutions inclusive of subsidiaries or associate

companies ofthe bank.

\/A for Colonrbo Branch. Accordingly nc

:esting has been carried out by us.

Page 4

l.'indinssManagemcnt functions drlcq{tcd by the l}oard

3(4)(1) Check that the delegation arrangcnrcnls havc been approved by the board N/A lbr Colombo Bra,rch Accordingly nolesting has bee[ carried out by us.

l(Jxii) Check that the board has takcn responsibility for the malters in 3 (l) (i)even in the inslances such actions are delegaled.

N/A lbr Colombo Branch Accordingly Do

tcsting has been carried out by us.

Check that the board review the delegation processes in place on a

periodic basis to ensurc that they remain relevanl 1() the needs ofthe bank.


lesling has been carricd oul by us.

'l hc Chairman and Chirf Ercrrtivc (Xfircr

3(5)(1) Check thal the roles of chairman and CEO is separate and not performed

by the same individualN/A for Colombo Branch. Accordingly nolesling has been carricd oul by us.

Check that the chairman is a non-execulive director.

In the case where thc chairnran is not an independcnt director, check that

the board designate an independenl direclor as the senior director withsuitably documented terms of referencc.

Check that lhe designalion ofthc scnior dircclor be disclosed in the bank'sAnnual Report.



J(sxiiD Chcck that thc board has a process to identilf and disclose in its corporate

govcmance report, which shall be a part of iis Annual Repon, any

relationship lincluding financial, business, family or other

material/relevant relationshipG)1, if any, between thc chairman and the

CEo and board members and the nature of any relalionships includin8

among members ofthe board.


tesling has been carried out by us.

(a)

(b)

(c)

Check that the board has a selfcvaluation process where the chairmanlprovides leadership to the board;

ensurcs that thc board works eflectively and discharges its responsibilities;and

ensures that all key and approprialc issucs are discussed by the board in alimely manncr.

N/A lirr Coldnbo Branch. Accordingly no

tcsling has bccn carricd out by us.

Chcck that a formal agenda is circulated by thc company secrelary

approved by the chairman.



Chcck that the chairman ensures, through limcly submission that all

directors arc properly briefed on issucs arising at board meetings.

N/A for Colombo Branch. Accordingly nolcsling has bcen carried out by us.

l(s)(Yii) Check that the board has a self evalualion process that encourages all

directors to make a full and active contribution 1o the board's affairs and

the chairman taking the lead to act in thc besl inlcrcst ofthe bank.

N/A lbr Colombo Branch. Accordingly no

tesling has bee[ carried out by us.

3(s)(viii) Chcck lhat thc board has a sclf cvaluation process thal assesscs thc

contributioD ol Don-executivc dircclors



3(s)(ix) Chcck thal lhe chalman cngagcs in aclivilics involving dircct supcrvision

ofkcy nranagement personnel or any olhcr cxeculive dulics whalsoever.

N/ for (lolombo llranch. Accordingly notesting has been carried oul by us.

Page 5

Findinss

3(5)(x) Check that there is a process to maintain effective communication with

shareholders and that the views of shareholders are communicated to the

board.



Check that the CEO functions as the apex executive-in-charge ofthe day

to-day management ofthe bank's operations and business.

In DB Colombo Branch, Chief CountryOfficer is the apex executive in charge.

Board Appointed Committees

3(6)(1) Check that the bank has established at least four board committees as set

out in Directions 3(6)(ii),3(6)(iii), 3(6)(iv) and 3(6)(v) ofthese Directions.



Check that each board committee report is addressed directly to the board

Check that the board presents in its annual report, a report on each

committee on its duties, roles and performance.

Audit Committee:

Check that the chairnran of the committee is an independent non'

executive director and possesses qualifications and related experience.


Check that all members of the committee are non-executive directors.

c)

(i i)

(iii)

(iv)

Check that the committee has made recommendations on matters in

connection with:

the appointment ofthe external auditor for audit services to be provided

compliance with the relevant statutes;

the implementation of the Central Bank guidelines issued to auditors fi

time to time;

the application ofthe relevant accounting standards; and

the service period, audit fee and any resignation or dismissal .of thc

auditor; provided that the engagement of the Audit pa(ner shall not

exceed five years, and that the particular Audit partner is not rc-engaged

for the audit before the expiry of three years from the date of the

completion of the previous term.

) Check that the committee has obtained representations from the external

auditor's on their independence, and that the audit is carried out in

accordance with SLAuS.

) Check that the committee has implemented a policy on the engagement of

an external auditor to provide non-audit services in accordance with

relevant statutes, regulations, requirements and guidel ines.

0

i)

Check that the committee has discussed and finalized, the nature and

scope ofthe audit including the following:

an assessment of the bank's compliance with the relevant Directions in

relation to corporate governance and the management's internal controls

over financial reporting;

the preparation offinancial statements for external purposes in accordance

with relevant accounting principles and reporting obligations; and

the co-ordination between firms where more than one audit firm is

involved.

Page 6

Iirdirrgs

,!t)

り

Ｏ

ｍ

ｌｖ　　

ｖ＞

Check thal thc con'lmitlee has a process to review the financial

information of thc bank. in order to monitor thc integrity of the financial

statements of the bank, ils annual rcpon, accounls and quarterly reports

prepared for disclosure. and a process in place 1() receive from the CFO the

following;

major judgmental areast

any changes in a(counlrng nohcies and placticcs.

the going concern assumptioni and

the compliance with relevant accounting standards and othcr lcgal

requirements, and;in respect ofthe annuat financial statements the si8nillcant adjuslments

arising from the audit.

N/A for Colonrbo llranch Accordingl-Y no

tcsling has bccn larricd out by us.

h) Check thal the committee has nret lhe external audilors relating 1{) any

issue in the absence of the executive manage enl with relalion to the

audil.

1) Check that thc commitlce has rcviewcd the external auditor's nlanagemenl

lcller and Ihe managcnrerrl'< rc\porrr( lhcrcto

Al DB Colombo Branch. the Executive

Commillee oversights on external auditor's

managemenl leltcr.

1)

|

II

III

]V

VI

Check lhal lhc commrrlcc shall lake lhc following slep! srlh Icgard lo lhel

inremal audil lunclron of lhc bank: I

I

Rcriew the adequac) oflhe scone. [unclron< and rc<ources oflhe internal

audit depa(menl. and salrsly ilself lhat the denanmenl has Lhe nece'sary

aulhorilr to cam out rls \ ork:

Rev,cx lhe rnternal audit program and resulls of lhe inlcmal audil t'Ioccss

and, where nccessary, en<urc lhal anpropriale aclions arc laken on lhe

recommendalions of the internal audit depa(ment;

Review any appraisal or assessment of the performance of thc head and

senior staffmembers oflhe internal audit departmenl;

Recommend any appointment or terminalion of the head. senior staff

mcmbcrs and outsourced service providen to the internal audit function;

Chcck that the committee is appraised of resignatiors of senior slaff

membcr\ ol the internal audrl dcpanmertl rncluding lhc chief rrllemal

audilor and any oulsourced \ervice provrders. and ln pro\ide an

opponunily lo the resigning senlor slalf ntcmbers and utltsollrced selvlcc

providers to submil rcasorrs tor resrgntnE,

lCheck that lhe inlemal audil lunctlon i\ independcnl ol lhe aclivilies il

l"rait.

N/A for Colombo Branch. Accordingly

testing has been carricd out by us.

k) Check the minutes to determine whether the committee has considered

maior findings of intcrnal investigations and managemcnl's responses

lhereto.

N/A for Colombo Branch Accordingly no

lcsling has been carricd oul by us.

l) (hcck $'hclhcr thc commitlcc has had al lcast two ncclings wilh thc

exlernal audilors \\ilhoul thc cxccolivc dircct)rs bcing prcscnt

Page 7

Iiindings

)

＞

　

０

０

ｖ＞

Check the terms of rcference ofihe conlmittec to cnsure that there is;

explicit authority to investigate into any matter wilhin its terms of

lhc resources which il needs to do so:

full access to information; and

authorily lo obtain cxtcrnal professional advice and to invi(e outsiders

with relevant experience to attend, ifnecessary.

N/A tbr Colombo Branch. Accordinglylesting has becn carried out by us.

n) Check that thc comnrillcc has met. al lcast lour times and Dlainlained

nlinutcs.

o.) Check that thc board has disclosed in the annual repon,

details ofthe activities ofthe audit comnritteei

the nunrber ofaudit committee meetings held in the year; and

dclails ofattendance ofeach individual dircclor at such mectings

p) Chcck tha( thc secrelary ol lhc comnriltee is thc conrpany sccrclary or lhc

head oIthe intco]al audil lirnctioD.

q)

Check that lhe "whistle blower" policy covcrs the process ofdealing with;

The improprieties in financial reporlin8, internal conlrol or other matters.

In relation to (i) the commitlee shall ensure that proper arrangements are

in place for lhe fair and independent inv€stigation ofsuch matters, and

Appropriate follow-up action.

Does the following rules apply in relation to lhe Human Resources and

Remuneration Committee:

lhe Itegional (lonmillcc based in Singaporc

covers Colombo Ilranch.

) Check that lhc comnrittee has implemented a policy to detenninc the

renuneration (salarics, allowanccs and other financial payments) rclaline

to dircctors, CliO and key management personncl ofthe bank by review oJ

thc "Tcrn'N ofreference" and minutes.

N/A for Colonrbo Branch. Accordingly no

tesling has been carried out by us.

Check that the goals and targets for the directors. CEO and the key

management pcfsonnel are documenled.

() Check lhat the commitlee has considered evaluations of the pcrformance

of the CEO alld key managemeDt personnel against the set targets and

goals periodically and determine thc basis for revising rcmuneration,

benefits and other payments of performancc-based incentives.

Check that the "lerms of reference" provides thal lhe CEO is not presenl

at meetings of the committee, when matters relaling to the CEO are being

discussed by reviewing lhe minutes.

Page I

Iindi'rgs3(6)(iv) I)oes the following rules apply in relation to the Nomination Comnitlce:

Check thal the committee has implementcd a procedurc to selec/appoiDt

ncw dircctors, CEO and key managenrenl personnel

Chiel C'ountry Officcr (CCO) is selected by

Rcgional CIIO. Staffs for key posilions are

sclected/ appointed by CCO and Regional

Senior Management.

b) Check that the committee has considcrcd and recommended (or not

r€commended) the reelection of crrrent directors,



) Check that the committee has set the criteria such as qualificalions,

experience and key attributes rcquired for eligibilily to be considered for

appointment or promotion to the pos( of CLO. and the key managemcnt

personnel, by review of_iob descriptions.

ljor Colombo Branch, performed by Regional

Senior Managemcnt and CCO.

Chcck that the conlnritlec has obtaincd froN thc directors, CEO and key

managemenl pcrsonnel 54 signed declarations lhat $ey arc fit and propcr

persons to hold office as spccificd in thc crilcria given in DirectioD l(l)and as set out in the Stat!(es.

Ijor Colombo Branch, performed by CCO &Head olHR.

C) Check that the committee has considercd a formal succession plan for the

retiring directors and kcy nranagement personncl.

For DB Colombo, succession arrang€ments are

idenlified for key positions.

Check that the Commiltee shall be chaircd by an Indcpcndent Dircclor and

preferably be constiluled with a majorily of Independent Direclors. Thc

CEO may be present at meetirgs by invitation

N/A lor Colonlbo Branch. Accordingly no

tcsling has bccn carried out by us.

3(6)(v) Does the following rules apply in relatio[ to the Integratcd Risk

Managcment Commiltce (IRMC):

) l he committec shall consisl of at least three non_executive directors, CEO

and key management persoDnel supervisirlS broad risk categorics- i e ,

credit. markct, Iiquidity, operational and slratcgrc risks and work within

thc framework of the authority and responsibility assigned to lhe

commiltee.

や:。推aF∬胤y7膳t:北∫Welギ

に刊

b) Chcck that the conrmittee has a proccss 10 assess all risks, i.c.. credit.

market, liquidily, opcrational and strategic risks to thc bank on a monlhly

basis through appropriate risk indicalors and management inforlnation. In

lhe case of subsidiary companies and associate companies. risk

management shall be done. bolh on a bank basis and group basis.

● Check that the conrmittcc has revicwcd specit'ic quantitativc and

qualitativc risk limits fbr all managemcnl level commiltccs such as thc

credit committee and thc asset-liability oommiltees, and rcpon any risk

indicators periodically.

Check that thc commiltcc h6s rcviewed and considered all risk indicators

which have gone beyond the specified quantilalive and qualitative risk

limits.

(C) Chcck how nrany linres thc colDmittcc has n)ct al lcasl quartcrly

(0 Chcck that the committec has reviewed and adopled a formal docunrcntcd

disciplinary aclion procedure with reSard l(J ofllccrs responsible for failure

to idcnlify specific risks.

L-heck that thc conlnriltce subnlits a risk assessment rcporl withiD a wcek

ol cach meeting lo lhc board seeking thc board's views, concurrcncc

and/or specifi c dircclions.

Check lhat the comnrittce has establish a conrpliance function to assess

thc bank's compliancc with laws, rcgulalions. regulatory Buidclincs.inlcrnal conlrols aDd approvcd policies on all areas ol business opcralions

and thal thcrc is a dedicated coDlpliancc omcer selected from kcy

nranagcmcnl personncl to carry out thc conrpliancc frlnction and report to

lhe committee periodically.

DB Colombo Branch s Compliance functioncomes undcr thc purview of the regional Hub.'lhis function is responsible lbr related

compliancc of this direclivc whcre applicable.(From March 2012, dedicated compliance

oflicer has been appointed in DB Colombo)

Page 9

Findings

Ilelated l'arty'l'ransactions

3(7)(1)

ａ

ｂ

Ｑ

ｄ

　

ａ

ｎ

　

　

ｇ

Check that there is a established and documented process by the board to

avoid any conflicts of interest that may arise from any transaction of the

bank with any person, and particularly with the following categories oIpersons who shall be considered as "related parties" for the purposes oIthis Direction:

Any ofthe bank's subsidiary companiesi

Any ofthe bank's associate companiesl

Any ofthe directors ofthe bank;

Any ofthe bank's key management personnel;

A close relation of any of the bank's directors or key managementpersonnel;

A shareholder owning a material interest in the bank;

A concem in which any ofthe bank's directors or a close relation ofany ofthe bank's directors or any of its material shareholders has a substantialinterest.

Transactions with the group cntities are

identified as related party transactions. Refer

3(8xii) (f) to disclosures on the transactionswith Branch's Key Management personnel.

3(7)(ii) Check that there is a process to identifu and report the following types oftransactions been identified as transactions with related parties that is

covered by this Direction.

Transactions with the group entities arr

identilied as related party transactions. Refer

3(8Xii) (1) to disclosures on the transactions

with Branch's Key Management personnel.

, Ihe grant of any type of accommodation, as defined in the Monetary

board's Directions on maximum amount of accommodation.

) Ihe creation of any liabilities of the bank in the form of deposits,

bonowings and investments.

) Ihe provision of any services of a financial or non-financial naturtprovided to the bank or received from the bank.

) fhe creation or nraintenance of reporting lines and inforntation flowtbetween the bank and any related parties which may lead to the sharing ot

potentially proprietary, confidential or otherwise sensitive information thar

may give benefits to such related pa(ies-

Page 10

I. indingsl)oes the board have a process to ensure thal the bank does not engage in

transactions with related parties as defined in Dircclion 3(7)(i) abovc. ir a

manner that would grant such parties "more favorablc trcalmcnl" than llralaccorded to other constituents oflhc bank carrying on the sanle business.

'I ransaclions with the group entities are

idenlified as rclatcd party lransactions. Refer

3(8xii) (0 to disolosures on thc lransactions

with llranch's Key Management pcrsonnel.

1

II

Granling of "total net acconrmodation" to related parties. excccding a

prudent percentage of thc bank's regulatory capital, as determined by thc

board. F-or purposes ofthis sub-dircction:

"Accommodation" shall mean accommodalion as defined in the Banking

Act Directions, No.7 o1 2007 on Maximum Amount ofAccommodalion.

The "tolal net accommodation" shall bc computed by deducting fronr lhe

tolal accommodation, the cash collaleral and investments made by such

related parties in the bank's share capital and dcbl instruments with a

maturity of 5 years or more.

Transaclions wilh the group entities are

identified as rclaled party transactions. Refer

3(8)(ii) (0 to disclosures on the transactionswith Branch's Kcy Managenrcnl personnel.

b) Charging of a lower rate of interest than thc bank's best lending ralc or

paying more than the bank's deposil rate for a comparable transaction with

an unrelated comparable counlcrparty.

r) Providing of preferential treatment, suoh as favorable terms, covering

trade losses and/or waiving fees/commissions, thal extend beyond the

lerms granted in thc normal course of business undertaken with unrclatcd

parties;

d) Providing services to or receiving services from a rclaled-party without an

evaluation procedure;

c) Maintaining reporting lines and infornration flows that may lcad 1(r sharing

potenlially proprictary. confi dential or othcr'wise sensitive irfonnaliolrwith related parties, exccpt as required for the perfornrancc of legilimalc

duties and functions.

3(7)(iv) Chcck thal thc bank has a process for granting accommodalion to any olits dircclors and key managemenl personncl, and that. such

accommodation is sanclioned at a mceling of its board of directors, \|lthnot lcss than two-thirds of the numbcr ofdirectors other lhan thc dircclor

concerned, voting in Iavor of such accommodation and thal thrs

accommodation be securcd by such securily as may from limc to lime be

dclcrmined by the Monetary board as well

N/A for Colonlbo Branch. Accordingly no

lesting has beeD carried out by us.

Page 11

l indings

3(7)(■ ) ) Check that thc bank has a process. wherc any accommodation has bcen

granted by a bank to a person or a close relation of a person or to any

concenr in which the person has a substan(ial inleresl. and such person is

subsequently appointed as a direclor of the bank. thal sleps have been

taken by the bank to obtain the necessary scourity as may bc approved for

that purpose by the Monetary board, withiD one year fro lhe date of

appointnrcnt ofthe person as a director.

N/A for Colonrbo llranch Accordinglylesting has been carricd oul by us.

b) Check where such security is not provided by the period as provided in

Direction 3(7)(v)(a) above, has lhe bank laken steps to recover any

amount due on account of any accommodalion, together wilh interest, il

any, within the period specified al the time ofthe grant ofaccommodation

or at lhe expiry of a period of eighleen monlhs from the date ol

appointmenl ofsuch dircctor, whichever is earlicr.

N/A for Colombo Branch. Accordinglytesting has bccn carried out by us.

) Chcck that there is a process to idenlify any direolor who fails 1o comply

with the abovc sub dircclions be deemed to have vacated the office 01

director and has the bank disclosc such facl to lhe public.


tesling has been carricd oul by us.

d) Check the proccss in placc to ensure clause 3(7xv)(c) does not apply to

any dircclor who at the lime of the grant of the accommodation was an

employee ofthe bank and the accommodation was granted under a scheme

applicable to all employees ofsuch bank

N/A for Grolrlbo Ilranch. Accordingly no

lcsline has hcen carricd out bv us

l(7Xvi) Check that there is a process in place to idenlify when thc bank Srants any

accommodation or "more favorable treatment" relating to the waiver of

fees and/or commissions to any employee or a close relation of such

employee or to any concem in which the employee or close relation has a

substantial interest other than on the basis of a scheme applicable to the

employecs ofsuch bank or when securcd by securily as may be approved

by the Monetary board in respecl of accommodalion granted as per

Direction 3 (7) (v) above.

I)B Colorrrbo llranch h,rs coDrpilcd.

J(7Xvii) Check that there is a prooess to obtain prior approval fron the Monetary

board for any accomnrodation granted by a bank under Dircction 3(7)(v)

and l(?)(vi) above, nor any part of such accommodation, nor any inlcrest

due thereon beeD renritted wilhout the prior approval of the Monetary

board and any remission withoul such approval is void and has no effect.

DB Colonrbo llranch has compilcd.

l)isrlosurcs

3(8)(1) Check that the board has disclosed:

Annual audited financial statemenls prepared and published in accordance

wrth the formats prcscribed by th€ supervisory and regulatory authorities

and applicab,e accounting slandards, and that such statements publish€d

in the newspapers in an abridged form, in Sinhala, Tamil and Ijnglish.

Quanerly financial stalements are prepared and published in the

newspapers in an abridgcd form, in Sinhala, Tamil and llnglish.

The financial stalements for the year ended

3lst December 2016 are in conformity with

Sri l-anka accounting standards &requirements of Banking Acl.

Confirnration in annual accounts ( per

LKAS/SLIRS ) signed off by CCO/ financc

and also supplemented by additional

certification by CCO/ Hcad ofFinance.

'Ihe Annual audited financial stalcmcnts have

been published as per prcscribed format in the

Sinhala, Tanril and Lnglish news papers ol3l st March 2017.

Page 12

Findings

Check that the board has made the following minimunl disclosures in the

Annual Report:

The statement to the effect that the annual audited financial statements

have been prepared in line with applicable accounting standards and

regulatory requirements, inclusive of specific disclosures.

A statement is includcd rn the notes to thc

financial statements.

The report by the board on the bank's internal control mechanism that

confirms that the financial reporting system has becn designed to provide

reasonable assurance regarding the reliability of financial repo(ing, and

that the preparation of financial statements for external purposes has been

done in accordance with relevant accounting principles and regulatory

requirements

The branch will submit a certification issued

by thc lJead of the Office supervising Sri

Lanka Operations to CBSL.

c) lheck that the board has obtained the external auditor's report on th(

:ffectiveness of the internal control mechanism referred to in Directior

l(8)(ii)(b) above.

The branch is in the process of obtaining an

assurance report from the extemal auditors on

the effectiveness of the intemal control

mechanism.

) Details of directors, including names, qualifications, age, experience

fulfilling the requirements of the guideline fitness and propriety,

transactions with the bank and the total of fees/rcmuneration paid by the



) Total net accommodation as defined in 3(7)(iii) granted to each category

of related parties. The net accommodation granted to each category of

related parties shall also be disclosed as a percentage of the bank's

regulatory capital.



The aggregate values of remuneration paid by the bank to its key

management personnel and the aggregate values of the transactions of the

bank with its key management personnel, set out by broad categories such

as rentuneration paid, accommodation granted and deposits or investments

made in the bank.

Aggregate value of remuneration to Key

Management personnel of DB Colombo

Branch in 2016 : LKR 380,285,140/-

Aggregatc value of transaction with Key

Management Personnel of DB Colombo

Branch in 2016:

Loans : LKR 42,537,5841-

Deposits (C/A) : Nil

Check that the board has obtained the external auditor's report on the

compliance with Corporate Governance Directions.

The branch has initiated the process ofobtaining a factual findings report from the

external auditors on the compliance withCorporate Govemment Dircctions.

A report setting out, details of the compliance with prudential

requirements, regulations, laws and internal controls and measures taken

to rectifo any material non-conrpliances

The branch will submit a report signed by

Head of the Office supervising Sri Lanka

operations to CBSt- addressing the issues

relating to status of thc conrpliance with the

prudential requirements, regulations, laws and

controls.

i) A statement of the regulatory and supervisory concerns on lapscs in the

bank's risk management, or non-compliance with these Directions that

have been pointed out by the Director ofBank Supervision, ifso directed

by the Monetary board to be disclosed to the public, together with the

measures taken by the bank to address such conccrns

fhe branch will submit a report signed by

Head of the Office supervising Sri l.anka

rperations to CBSL.

Page 13

Documents

蒻 鰤鷺蛛≒楊轟 - Deutsche Bank · 2017-05-30 · KPMG (Chartered Accountants) 32A, Sir Mohamed Macan Markar Mawatha, P. O. Box 186, Colombo 00300, Sri Lanka. REPORT OF FACTUAL

蒻鰤鷺蛛≒楊轟 - Deutsche Bank · 2017-05-30 · KPMG (Chartered Accountants) 32A, Sir Mohamed Macan Markar Mawatha, P. O. Box 186, Colombo 00300, Sri Lanka. REPORT OF FACTUAL