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Corporate governance – Structure

Board of Governors

Board of Directors

President

Board Committees

Audit Committee

Budget and Administrative Affairs Committee

Financial and Operational Policies Committee

Management committees

EBRD codes of conduct

Compliance

Reporting

Operational risk

External auditors

Compensation policy

Administrative Tribunal

 

The EBRD has a Board of Governors, a Board of Directors, a President, Vice Presidents, officers and staff. Read the governing constituent document, the Agreement Establishing the Bank (“the Agreement”).

Board of Governors 

All the powers of the Bank are vested in the Board of Governors, which represents the Bank's 63 shareholders. With the exception of certain reserved powers, the Board of Governors has delegated the exercise of its powers to the Board of Directors, while retaining overall authority.

Board of Directors

The Board of Directors comprises 23 Directors and is chaired by the President. Each Director represents one or more shareholders. Subject to the Board of Governors’ overall authority, the Board of Directors is responsible for the direction of the Bank’s general operations and policies. It exercises the powers expressly assigned to it by the Agreement and those powers delegated to it by the Board of Governors.

The President

The President is elected by the Board of Governors. He is the legal representative and chief of staff of the Bank. Under the direction of the Board of Directors, the President conducts the day-to-day business of the Bank.

Vice Presidents

The Vice Presidents are appointed by the Board of Directors on the recommendation of the President and typically have fixed-term contracts of four years. In the absence or incapacity of the President, a Vice-President shall exercise the authority and perform the functions of the President.

Board Committees

The Board of Directors has established three Board Committees to assist with its work:

The Audit Committee assists the Board of Directors in fulfilling its responsibilities in relation to the following:

  • the integrity of the Bank's financial statements and its accounting, financial reporting and disclosure policies and practices
  • the soundness of the Bank's systems of internal controls that management has established regarding finance and accounting matters and their effective implementation
  • the status, the ability to perform duties independently and the performance of the Bank's compliance, internal audit, evaluation and risk management functions
  • the independence, qualifications and performance of the Bank's external auditor
  • any other responsibilities that the Board may assign to the Committee from time to time.

The Budget and Administrative Affairs Committee assists the Board of Directors in fulfilling its responsibilities in relation to the following:

  • the budgetary, staff and administrative resources of the Bank
  • efficiency, cost control and budgetary prudence
  • overseeing the EBRD Shareholder Special Fund, the use of donor funding and relations with the donor community
  • the Bank’s Human Resources policies
  • specific responsibilities in relation to Governors, the President, Vice Presidents and Directors of the Bank
  • policies relating to governance and ethics
  • the Bank’s administrative arrangements
  • other responsibilities within its remit.

The Financial and Operations Policies Committee assists the Board of Directors in fulfilling its responsibilities in relation to the following:

  • the Bank's financial policies
  • the Bank’s Treasury operations, liquidity policy and borrowing programme
  • the Bank’s operational policies
  • the Bank’s strategic portfolio management within the framework of the Medium Term Strategy
  • transparency and accountability of the Bank’s operations within the framework of the Public Information Policy and the Independent Recourse Mechanism (soon to be replaced with the Project Complaint Mechanism)
  • other responsibilities within its remit.

The detailed terms of reference of the Board Committees are available on this  web site. 

Management Committees

The President chairs the Bank’s Executive Committee, which also includes the Vice Presidents and other members of the Bank’s senior management.

Listed below are other management committees that assist the President in the overall management of the Bank.

Management committees Chair Purpose of the Committee Meeting frequency
Executive Committee President The custodian of all key aspects of the strategy, performance and financial soundness of the Bank. Fortnightly
Strategy and Policy Committee Vice President, Policy The custodian of transition strategy and policy work: country, sector and thematic strategies and related policies, policy products and policy-related research. Fortnightly
Risk Committee Vice President, Risk, and Chief Risk Officer Oversees Bank wide risks including credit and operational risk with associated follow up actions.  Fortnightly
Operations Committee First Vice President, Banking Considers all banking transactions at various stages (concept, structure and final reviews) before submission by the President for consideration by the Board of Directors. Weekly
Equity Committee First Vice President, Banking

Maintains oversight of listed and unlisted equity investments.

Reviews and identifies suitable listed exit opportunities and makes recommendations on such exits to the Operations Committee.

Quarterly

Procurement Complaints Committee

 

Deputy General Counsel

Considers complaints and disputes arising from tendering and contracts for goods, works and consultant services (including those funded by Technical Cooperation funds or the Bank’s budget) subject to the Procurement Policies and Rules or the Corporate Procurement Policy, as the case may be.

Reviews procurement and related matters referred to it by the Executive Committee.

As required
Information Technology Governance Committee Vice President, Human Resources and Corporate Services

Ensures that the Bank’s IT strategy and business plan support the Bank’s business strategy.

Establishes the framework for measuring business benefits and oversees the realisation of benefits arising from IT projects.

At least six times per year

Crisis Management Team

 

Vice President, Finance

Prepares coordinated response to all critical internal and external issues arising in connection with events that affect the normal operations of the Bank.

Ensures that the crisis management plan and business recovery plan are in place and are tested on a regular basis.

At least three times per year
Enforcement Committee Deputy General Counsel Conducts proceedings in accordance with the Bank’s Enforcement Policy and Procedures, concerning allegations of fraud, corruption, collusion or coercion in the context of projects financed by the Bank. As required

The Administrative Tribunal

The Administrative Tribunal (EBRDAT) forms part of the grievance system, which has been implemented to resolve employment issues and disputes. It comprises a panel of five judges, highly experienced lawyers from outside the EBRD. The President of the EBRDAT is appointed by and from among the panel. For each appeal, the President of the EBRDAT selects three members from the panel to serve for that appeal.

EBRD Codes of Conduct

The Codes of Conduct for Officials of the Board of Directors and for Bank Personnel and Experts, approved in May 2006, articulate the values, duties and obligations, as well as the ethical standards, that the Bank expects of its Board officials and staff.

The Bank has established robust compliance enforcement mechanisms and detailed procedures for investigating allegations of suspected misconduct. The Codes of Conduct also affirm the Bank’s commitment to protect whistleblowers.

Compliance

The EBRD has an independent Office of the Chief Compliance Officer (OCCO), which is headed by a Chief Compliance Officer (CCO) reporting directly to the President, and annually, or as necessary, to the Audit Committee.

The OCCO’s mandate is to promote good governance and ensure the highest standards of integrity are applied throughout all of the activities of the Bank in accordance with international best practice. The responsibilities of the OCCO include dealing with issues of integrity due diligence, confidentiality, conflicts of interest, corporate governance, accountability, ethics, anti-money laundering, counter-terrorist financing (EBRD support for Basel Institute on Governance Seminar 2009 (118KB - PDF)) and the prevention of fraudulent and corrupt practices. The OCCO is responsible for investigating allegations of fraud, corruption and misconduct. It also trains and advises, as necessary, Bank staff members who are appointed as directors to the Boards of companies in which the Bank holds an equity interest. Financial and integrity due diligence are integrated into the Bank's normal approval of new business and the monitoring of its existing transactions. The Bank publishes the OCCO’s anti-corruption report (284KB - PDF) on this web site.

Moreover, the OCCO has the specific responsibility for administering the Bank’s accountability mechanism, the Project Complaint Mechanism. This assesses and reviews complaints about Bank-financed projects and provides, where warranted, a determination as to whether in approving a particular project the Bank acted in compliance with its relevant policies.

The OCCO can be dismissed by the President only in accordance with guidance given by the Board of Directors in an executive session.

Reporting

The EBRD’s corporate governance structure is supported by appropriate financial and management reporting. The Bank has a functioning mechanism to be able to certify in the Financial Report 2009 as to the effectiveness of internal controls over external financial reporting, using the Committee of Sponsoring Organisations of the Treadway Commission internal control framework. This annual certification statement is signed by the President and Vice President, Finance and is subject to a review and an attestation by the Bank’s external auditors.

In addition, the Bank has a comprehensive system of reporting to its Board of Directors and its committees. This includes reporting on the activities of the Evaluation Department and the Internal Audit Department to the Audit Committee.

Operational risk 

The Bank defines operational risk as all aspects of risk-related exposure other than those falling within the scope of credit, market and liquidity risk. This includes the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events and reputational risk.

 Examples include:

  • errors or failures in transaction support systems and inadequate disaster recovery planning, including errors in the mathematical formulae of pricing or hedging models, or in the computation of the fair value of transactions
  • external events
  • damage to the Bank’s name and reputation, either directly by adverse comments or indirectly
  • errors or omissions in the processing and settlement of transactions, whether in the areas of execution, booking or settlement or due to inadequate legal documentation
  • errors in the reporting of financial results or failures in controls, such as unidentified limit excesses or unauthorised trading/trading outside policies
  • dependency on a limited number of key personnel, inadequate or insufficient staff training or skill levels.

The Bank has a low tolerance for material losses arising from operational risk exposures. Where material operational risks are identified (that is, those that may lead to material loss if not mitigated), appropriate mitigation and control measures are put in place after a careful weighing of the risk/return trade-off.

Maintaining the Bank's reputation is of paramount importance and reputational risk has therefore been included in the Bank's definition of operational risk. The Bank will always take all reasonable and practical steps to safeguard its reputation.

Within the Bank, there are policies and procedures in place covering all significant aspects of operational risk. These include first and foremost the Bank's high standards of business ethics and its established system of internal controls, checks and balances and segregation of duties. These are supplemented with:

  • the Bank’s Codes of Conduct
  • disaster recovery/contingency planning
  • the Public Information Policy
  • client and project integrity due diligence procedures, including anti-money-laundering measures
  • procedures for reporting and investigating suspected staff misconduct, including fraud
  • the information security framework
  • procurement and purchasing policies, including the detection of corrupt practices in procurement.

Responsibility for developing the operational risk framework and for monitoring its implementation resides within the Risk Management Vice Presidency.

Risk Management is responsible for the overall framework and structure to support line managers who control and manage operational risk as part of their day-to-day activities. Risk Management drafts proposals for discussion and review by the Operational Risk Management Group (ORMG), which implements the operational risk management policies and techniques throughout the Bank. The ORMG is chaired by the Vice President, Risk Management and its membership comprises senior managers across the Bank who have been identified as potentially facing the most operational risk within their day-to-day activities. The ORMG's task is to develop and coordinate the Bank’s approach to managing operational risk, and to ensure that it is widely implemented across all areas of the Bank.

The Bank’s current operational risk framework includes an agreed definition (see above); the categorisation of different loss type events to capture the Bank’s exposure to operational risk; a group of key risk indicators to measure such risks; the identification of specific operational risks through an annual self-assessment exercise; internal loss data collection; and use of external loss data. Departments within the EBRD identify their operational risk exposures and evaluate the mitigating controls that help to reduce the inherent or pre-control risk.

Each risk (both inherent and post-control) is assessed for its impact, according to a defined value scale and the likelihood of occurrence, based on a frequency by time range. Departments also report operational risk incident losses or near misses above €5,000 . 

The intention of collecting such data is primarily to improve the control environment by taking into account the cost of control strengthening and perceived potential future losses.

The Bank is a member of GOLD, the external loss database where members “pool” operational risk incident information over a monetary threshold. This provides the Bank with access to a depth of information wider than its own experience and supplements analysis undertaken on internal incidents reported. GOLD is run as an unincorporated not-for-profit consortium of financial services institutions.

External auditors

The external auditors are appointed by the Board of Directors, on the recommendation of the President, for a four-year term. No firm of auditors can serve for more than two consecutive four-year terms.

As at 2014, the Bank’s auditor is Deloitte LLP. The external auditors perform an annual audit to enable them to express an opinion on whether the financial statements fairly present the financial position and the profit of the Bank in accordance with International Financial Reporting Standards.

In addition, the external auditors review and offer their opinion on management’s assertion as to the effectiveness of internal controls over financial reporting. This opinion is given as a separate report to the audit opinion. At the conclusion of their annual audit, the external auditors prepare a management letter for the Board of Governors, setting out the external auditors' views and management's responses on the effectiveness and efficiency of internal controls and other matters. This letter is reviewed in detail and discussed with the Audit Committee. The performance and independence of the external auditors is subject to review on an annual basis by the Audit Committee.

There are key provisions in the Bank’s policies regarding the independence of the external auditors. The external auditors are prohibited from providing non-audit related services unless such service is judged to be in the interest of the Bank and if it is approved by the Audit Committee. However, the external auditors can provide technical cooperation consultancy services relating to client projects; such incidents are reported periodically to the Audit Committee.

Compensation policy

The Bank has designed a market-oriented staff compensation policy, within the constraints of the Bank's status as a multilateral institution, to meet the following objectives:

  • to be competitive in order to attract and retain high-calibre employees
  • to take account of differing levels of responsibility
  • to support a climate of constant staff development
  • to be sufficiently flexible to respond rapidly to the market
  • to motivate and encourage excellent performance.

To help meet these objectives, the Bank's shareholders have agreed that the Bank should use market comparators to evaluate its staff compensation and that salary and performance-based compensation awards should be driven by performance. Market comparators for the Bank are primarily private sector financial institutions in each of its locations plus other IFIs.

The performance-based compensation awards are structured to recognise individual and team contributions to the Bank’s overall performance. These payments represent a limited proportion of the overall total compensation and benefits package provided to staff. 


Last updated 17 October 2014