This section summarizes how CEB applies the principles of the Banking Code and where we deviate from them. A full report on implementation of the Banking Code can be found here. Please find below a summary of our application of Banking Code principles in 2021. The overview follows the chapter sequence of the Banking Code.
Sound and ethical operation
The bank’s strategy for the period to 2025 is set out in its Strategy Document, which has been approved by the Supervisory Board. The bank’s strategy is based on and reflects its vision, mission, core values, and strategic objectives and is embedded in the daily business of the different departments of the bank. The document outlines the defined business strategy and the set of key objectives appropriate for the current landscape for the period until 2025. The strategy includes both financial and non-financial measures and defines the implementation process and timeline. The Strategy Document includes a profile of the bank and its environment; vision, ambitions, and corporate strategy; retail and wholesale/corporate strategy; HR; sustainability; and IT.
CEB is mindful that responsible business practices with strong ESG initiatives can benefit the company, society, and the environment, resulting in long-term value creation and future resiliency. Therefore, social and environmental responsibility is an integral part of CEB’s business strategy, corporate decision-making processes, and day-to-day activities. We believe it is essential that CEB’s business activities are conducted in an ethical matter and prioritize the observation of basic ethical norms. To effectively manage ESG risks and integrate sustainability requirements and objectives into its business strategy, CEB hired a sustainability officer in Q4 2021 and reorganized its Sustainability Committee, chaired by the CEO, to include project teams for the most material sustainability topics, such as climate change. Based on this new sustainability-focused governance structure, all relevant policies and procedures will be updated accordingly in the upcoming period. By doing so, we aim to effectively manage ESG risks, capitalize on related opportunities, and contribute to positive change in the environmental and social practices of our customers as well as key stakeholders. Reference is also made to the chapter on non-financial reporting on pages 18-44 of the bank’s annual report.
In setting its strategy, CEB has carefully considered its role in society. This stems from the bank’s mission (to provide financial services that create value for its customers), its core values (dynamism, diversity, and expertise) and its internal base values (customer focus, integrity, professionalism, and transparency).
In order to ensure a proper governance structure, CEB has instituted several committees in addition to the Supervisory Board and the Managing Board, such as the ExCo, Asset and Liability Committee, IT Steering Committee, Credit Committees, and Risk and Compliance Committees, which all meet regularly. In addition, the bank holds weekly management meetings and regular general managers’ meetings. These committees and meetings support the Managing Board in its daily management of the bank. The Supervisory Board monitors the proper functioning of the bank’s governance structure through its quarterly meetings and the meetings of its subcommittees, such as the Corporate Governance and Nomination Committee.
An introduction program for new board members has been developed to enable them to be a role model for the bank’s employees. As a part of this program, the members are trained in the bank’s core values, main policies (e.g. code of conduct) and culture. The current Supervisory and Managing Board members have regular awareness sessions during the board meetings and also trainings on this topic are organized. In connection with the annual evaluation of the members of the Managing Board, the way in which they fulfil their exemplary role is assessed. The fulfilment of the exemplary role by the Supervisory Board is reviewed in connection with their annual self-evaluation/suitability matrix and the external assessment.
Standards on integrity, morals, and leadership are included in the bank’s base values, different internal policies and guidelines and in the charters of the Supervisory Board and the Managing Board. Furthermore, these standards are communicated through the company’s intranet, internal training (/e-learning), staff mailings, and events. The monitoring of the due application of these standards is embedded in the daily practice of the bank’s divisions and departments. In addition, monitoring is conducted by the HR and Compliance Divisions, the Managing Board, the Supervisory Board and its subcommittees (including the Compliance Oversight Committee), and the Internal Audit Division (IAD). To further embed the core values in the bank’s culture, a senior management-training program was organized in 2017, following which new core values were developed and rolled out across the organization during 2018 and 2019. For the bank’s other actions and activities undertaken in the area of company culture, see Chapter C Dutch Corporate Governance Code, page 59 of the bank’s annual report.
The Supervisory Board and Managing Board ensure that proper checks and balances are in place. Within the bank, the Division Director – Compliance is a member of the management team and has a direct reporting line to a Managing Board member and the chairperson of the Compliance Oversight Committee of the Supervisory Board.
CEB acknowledges that a solid IT infrastructure is vital for the functioning of the bank. Its system architecture is composed of industry-proven technologies and payment systems supporting automated workflows. Transactions are secured with the latest encryption standards, while at the same time software vulnerabilities are continuously monitored, investigated, and mitigated. This all enables CEB to process transactions and customer orders of customers quickly, safely and accurately. The use of technologies that are widely adopted within the financial industry and the service-oriented basis of the application structure enables CEB to adapt quickly to the changing demands of its customers. The IT Steering Committee and the Supervisory Board oversee, discuss, and decide on IT-related matters. In 2022, the bank established an IT Strategy Committee, and within the Supervisory Board, IT management, IT strategy and information security are recurring agenda items. At the consolidated level, attention has recently been turned to modernization and standardization of infrastructure components (including shifting to cloud-ready infrastructure and increased remote working), collaboration capabilities, technologies, and mobile device management.
Within CEB, a healthy culture and responsible behavior is promoted through different means. Upon employment the bank’s employees participate in an introduction program during which they are trained on the bank’s core values, its main policies/regulations (including the code of conduct and the staff handbook) and the bank’s culture. The new employees will also attend a Bankers’ Oath session and take the Oath/Affirmation. For all employees CEB organizes regular thematic awareness trainings and during the quarterly staff events the (desired) culture within the bank is highlighted/discussed. The core values of dynamism, diversity, and expertise, which were rolled out across CEB during 2018 and 2019, serve to promote a healthy culture within the bank. For the bank’s other actions and activities related to company culture, see Chapter C Dutch Corporate Governance Code, page 59 of the bank’s annual report.
Another way to promote a healthy culture is CEB’s remuneration policy. Please refer to Section F of the Corporate Governance chapter included in the bank’s annual report.
The guidelines of the Social Charter are covered by CEB’s base and core values and its strategy. They are thus embedded in the bank’s culture.
Since the beginning of January 2013, CEB’s Supervisory Board has consisted of six members (due to a vacancy within the Supervisory Board, the current number is five, but the aim is to return to six within the first half of 2022)(with effect from Mid-May 2022 there are again six members). Taking into account the bank’s size and nature and the composition of the Supervisory Board, this number is deemed sufficient for the board to perform its tasks properly. The members of the Supervisory Board are all able to make sufficient time available for their duties and exhibit effort and commitment, and each member is physically present at all board and subcommittee meetings, barring exceptional circumstances. The number of independent members and dependent members is currently three vs. two, respectively (with effect from Mid-May 2022 this is four vs two).
All members of the Supervisory Board have a banking, investment, or legal background, and many of them are still active in related businesses on a day-to-day basis. Thus, they are duly aware of a bank’s social role and the interests of its various stakeholders. The Supervisory Board is supported by four committees: Audit and Risk, Corporate Governance and Nomination, HR and Remuneration and Compliance Oversight.
Each committee is composed as follows:
Audit and Risk
Willem Frederik (Wilfred) Nagel (chair), Seha Ismen Ozgur,
Hector de Beaufort (chair), Ayşecan Özyeğin Oktay, [vacancy]
HR and Remuneration
Ayşecan Özyeğin Oktay (chair), Hector de Beaufort, Seha Ismen Ozgur
Korkmaz Ilkorur (chair), Willem Frederik (Wilfred) Nagel, Seha Ismen Ozgur
 Temporary member until April 30, 2022. With effect from Mid-May 2022 Mr. Ali Fuat Erbil joined the Supervisory Board and he also became a member of the Audit and Risk Committee and the Corporate Governance and Nomination Committee.
The members of the Audit and Risk Committee meet the specific competence and experience requirements as set out in the Banking Code.
CEB has a continuing education program in place aimed at maintaining the expertise of Supervisory Board members at the required level and, when necessary, expanding it. As part of this program in 2021, training sessions were organized on customer tax integrity, the future of work, corporate communications, climate risk, and country risk. All members of the Supervisory Board participated in the continuing education program and attended the required number of training sessions. Training for 2022 is currently being organized.
The Supervisory Board performed an annual self-evaluation for 2021. In addition, the Supervisory Board was examined by an external assessor, a process that will next take place in 2024. The self-evaluations and the external assessment focus on topics such as cooperation amongst board members, the culture within the Supervisory Board, its internal and external functioning, and cooperation with the Managing Board. The assessment of the effectiveness of the education program is part of the annual self-evaluation of the Supervisory Board.
In terms of compensation, each Supervisory Board member receives an appropriate and fixed amount of compensation, taking into account the amount of time that is spent on the Supervisory Board tasks. The compensation does not depend on the results of the bank.
Following the departure of Mr. Murat Basbay from CEB’s Managing Board with effect from January 1, 2022, the Managing Board consists of three members. All members have gained thorough expertise and knowledge of banking, of our company, and of the locations in the various countries where the bank is active.
In order to ensure and enhance the due balancing of the interests of CEB’s stakeholders, several subcommittees and weekly management meetings have been formed, such as the Asset and Liability Committee, IT Steering Committee, Risk Committee, and Compliance Management Committee. These committees meet either weekly or monthly.
Without detriment to the collective responsibility of the Managing Board as a whole, the CRO, Mr. Yalniz, is responsible for financial and non-financial risk matters, as well as compliance, corporate credits (second line) and FI credits (second line) within the bank. He is also tasked with preparing the decision-making related to risk management. The CRO does not bear any individual responsibility for commercial areas and operates independently from them. CEB’s risk management also includes a focus on the impact that systematic risk might have on the bank’s risk profile.
The CEO ensures that a continuing education program is in place to maintain the expertise of the members of the Managing Board at the required level and, if necessary, expand it. All members of the Managing Board participate in the continuing education program and have attended the required number of training sessions. The training for 2022 is currently being organized.
Risk management plays a central role in CEB’s managerial decision-making process and is strongly supported by both the Managing Board and Supervisory Board. The Supervisory Board oversees the risk policy pursued by the Managing Board via its Audit and Risk Committee, which reviews and discusses the bank’s risk profile, capital management, and funding policies, as well as country risks, credit risks, market risks, and operational risks in view of the pre-defined risk appetite. The CRO and Risk Management Division are the main sponsors of the bank’s consolidated-level risk appetite, Internal Capital Adequacy Assessment Process (ICAAP), Internal Liquidity Adequacy Assessment Process (ILAAP), Recovery Plan, and other internal guidance documents. CEB’s risk appetite statement is discussed, reviewed, and approved annually in the relevant Supervisory Board meeting, and any material interim changes to the risk appetite are also subject to the approval of the Supervisory Board. More information on CEB’s risk management can be found in note 37 of the bank’s consolidated financial statements.
The internal audit function provides an assessment of the internal control system’s effectiveness. It represents an independent and objective assurance and consulting function as a third line of defense. Through the application of a risk-based methodology, the IAD evaluates and examines whether proper measures are taken to ensure control within the organization and its activities.
CEB’s Head of Internal Audit has a direct reporting line to the chairperson of the Audit and Risk Committee (and administratively reports to the CEO).
Exchange of information between the IAD, Audit and Risk Committee, and external auditor inter alia takes place through meetings of the Audit and Risk Committee, during which e.g. the risk analysis, audit plan, and findings are presented and discussed. Outside these meetings, the IAD, members of the Audit and Risk Committee, and the external auditor have regular contact to share information and consult on specific topics.
CEB safeguards the independence of the external auditor by monitoring and overseeing the external auditor’s activities. The Audit and Risk Committee reviews the reports, audit fees, and independence statements of the external auditor twice per year. KPMG Accountants N.V. has been appointed as external auditor for the financial year 2021 succeeding Ernst & Young Accounts N.V. Regular meetings between the audit firms and CEB’s management ensured a smooth transition process. At least once a year, a tripartite meeting is organized between representatives of DNB, CEB’s external auditor, and the IAD, in which the risk analysis, findings, and each other’s audit plans are discussed. The last tripartite meeting was held in December 2021.
CEB’s Group Remuneration Policy complies with national and international regulations, such as the Banking Code, DNB’s regulation on sound remuneration, the Financial Supervision Act, and the relevant provisions in the Capital Requirements Directive (CRD) V. The total income of a member of the Managing Board is, at the time it is set, below the median for comparable positions within and outside the financial industry. Any variable remuneration paid to Managing Board members is set in accordance with the applicable national and international regulations. For a summary of the remuneration policy in CEB, see Section F of the Corporate Governance chapter included in the bank’s annual report.