Manama, June 12, 2012: Islamic International Rating Agency (IIRA) has upgraded the corporate governance rating of Banque Islamique Du Senegal to CGR 4 from CGR 3, which denotes 'Moderately low level of Corporate Governance processes and practices overall'. 'Weaknesses have been identified in a number of governance related areas'.
Corporate governance ratings are based on an evaluation of key governance areas of the rated institution, which include regulatory compliance; board oversight; management profile; self-regulation; financial transparency and relationship with stakeholders.
The assigned rating takes into account improvement in corporate governance practices since IIRA's last review and pertaining to areas including management profile, policies and procedures and transparency. Compensation scales have been aligned with market rates, thereby attracting talent from the local industry. The team has been strengthened and comprises experienced professionals. Policies and procedures have been laid out to cover all important areas of operations. A website has since been launched which gives important information regarding the bank. The reflection of up scaled managerial capabilities and renewed focus on enhancing the bank's performance is evident in the significant financial progress registered over the last two years.
The rating committee's main concerns are the absence of a Shariah supervisory layer within the bank's management and independent Shariah oversight through a Shariah Supervisory Board/Shariah Advisor. While the regulatory framework does not require a Shariah infrastructure to be in place, the bank's identity as an Islamic Bank warrants best practices to be instituted in this area. While board supervision has improved, concrete steps need to be taken to improve risk oversight. Moreover, risk management function at the management's level needs to be strengthened with greater delegation of power and a more holistic view of the bank's overall risk. This is rendered increasingly important in the context of the bank's current growth trends and ensuring the sustainability of recent performance posted by the bank. Board composition also needs to be enhanced by increasing board size and level of independence in the board. Efforts in this regard are underway.
On the self-regulation front, developments are ongoing with the bank implementing a core banking application. Timely implementation of the same is expected to improve the overall control environment of the bank.
Sabeen Saleem, CFA
Acting Chief Executive Officer
© Press Release 2012
