creating a strategy for success...feb 07, 2020 · mr. al shamsi, a national of the united arab...

2019 ANNUAL REPORT

| CREATING A STRATEGY FOR SUCCESS |

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FIRST ENERGY BANK • 2019 ANNUAL REPORT 1

CONTENTS Vision & Mission 01

About First Energy Bank 03

Board of Directors 04

Shari’a Supervisory Board 08

Chairman’s Letter to Shareholders 10

Management Team 12

Financial Highlights 16

Business Activities 18

Corporate Governance 21

Financial Statements 37

Risk and Capital Management 85

Remuneration Disclosures 113

VISION:

To become one of the leading and most relevant Islamic Banks in the MENA region and internationally.

MISSION:

To create and capture value from diversified sectors with high professional standards and a commitment to delivering adequate returns to shareholders.

2 FIRST ENERGY BANK • 2019 ANNUAL REPORT


ABOUT FIRST ENERGY BANK

First Energy Bank B.S.C.(c) (“FEB” or the “Bank”) is licensed as Islamic Wholesale

bank by the Central Bank of Bahrain (CBB) and headquartered in Manama, Kingdom

of Bahrain. FEB operates in accordance with Islamic Shari’a principles as a financial

partner in project development, joint ventures, mergers and acquisitions and the

purchase of assets and asset portfolios.

The Bank established a wholly-owned subsidiary, FEB Capital Ltd, in Dubai

International Finance Centre (DIFC) to offer Advisory and Consultancy services. It

also served to optimize the bank’s geographical footprint. FEB has also successfully

launched its real estate infrastructure and development platform, FEB AQAR, to

manage and capture opportunities within the real estate sectors. This will greatly

enhance the Bank’s Shari’a compliant activities and capacities.

The Bank was established in June 2008, with an authorized share capital of

US$2 billion, and a paid up capital of US$1 billion. On 6th December, 2018, the

shareholders approved Capital Re-Organization whereby the Bank’s paid up capital

was reduced from US$ 1 billion to US$ 600 million. The Bank’s shareholders include

a range of organizations from the Kingdom of Bahrain, the United Arab Emirates,

Libya, the Kingdom of Saudi Arabia, and other countries in the region.

The Bank due to a paradigm shift in the overall opportunities available in the Global

oil and gas sector, which was the core operating sector of the Bank, has changed

its strategic focus and intends to remain robust, pro-active and opportunistic in

the market by sourcing potential opportunities in healthcare and defensive sectors,

both regionally and globally. The Bank believes that such sectors have huge demand

and massive opportunities available to capitalize and generate adequate returns for

the shareholders.

On the Bank’s existing lines of business private equity, treasury, real estate,

investment banking, capital markets/asset management and Islamic financial debt

structured products, the Bank has added Advisory to enhance its revenue streams.

The Bank’s subsidiary, based in Dubai, has resources and core competencies to

provide such services to various client across the above mentioned sectors. With

the above lines of business, the Bank offers unique and specialized opportunities

to its shareholders and investors to capitalize on available market opportunities.


Khaleefa Butti Bin Omair Chairman

Matar M. Al Blooshi Board Member

Dr. Faisel Ahmed GergabVice Chairman

Mohammed Salem Al Shamsi Board Member

Dr. Ali Mahmoud Hassen Board Member

Ammar Ali Mohamed JaberBoard Member

Abdulla Ahmed Al SuwaidiBoard Member

Mayssoun HabraBoard Member

Dr. Saif AbugulalBoard Member

Adel Abdulaziz Al JabrBoard Member

Abdulla Abdulkarim ShowaiterBoard Member

| BOARD OF DIRECTORS |


MR. KHALEEFA BUTTI BIN OMAIR Chairman (untill March 2020)

Mr. Khaleefa Butti Bin Omair, is the founder and Chairman of

KBBO Group, a leading investment group with a diverse portfolio

of interests operating in the UAE and spanning across the MENA,

European, and US regions. The Group’s investment portfolio and

operational verticals include leading companies in the field of

healthcare, education, retail, financial services and technology,

amongst others.

Mr. Khaleefa Butti Bin Omair, is a recognised UAE business leader

with over 18 years of experience in entrepreneurship and financial

investments. He began his career at the Abu Dhabi National

Oil Company (ADNOC), where he gained extensive experience

in the field of finance. In 2006, as the co-founder of Brokerage

House Securities LLC, he was appointed Chairman and CEO. He

later went on to found One Financial Markets, an FCA-regulated

brokerage firm in the United Kingdom that offers global presence

with local expertise through its wholly owned and affiliate offices

throughout the Middle East, Europe, South America and Central

and South-East Asia.

Spending his early school years in the UK, he went on to complete

his studies in the US, earning a degree in Finance from Suffolk

University, Boston.

DR. FAISEL AHMED GERGABVice Chairman (untill March 2020)

Dr. Faisel Gergab was appointed as the Chairman of the board of the

Libya Post, Telecommunications & Information Holding Company

(LPTIC) in March 2013. Dr. Gergab had the overall responsibility for

managing the ICT sector in Libya. LPTIC’s portfolio includes the two

mobile operators (Libayan & Al Madar), four fixed line operators

(Hatif Libya, Al Jeel, Libya International Telecoms Company and

Libya Telecoms & Technology Company), the real estate operator

(Al Bouniya) and the Libyan Post Company.

Dr. Gergab has around 22 years work experience, he began his

career in 1997 as a research fellow at the University of Surrey

where he received his PhD in Asset Integrity.

Dr. Gergab was an Oil & Gas Executive with many years of

experience in upstream, midstream and downstream projects.

Graduated from Oxford University with a BSc in Civil Engineering.

He later obtained an MSc and PhD in managing asset integrity

from the University of Surrey, UK where he is Chartered member

of the Institute of Civil Engineers and PMI Certified Senior Project

Manager. He has also published several publications on durability

of offshore and onshore facilities.

Dr. Gergab started his career in London as the Head of the Oil and

Gas division in an international engineering consultant and later

joined Shell where he held Senior Project Management positions

for flagship capital offshore and onshore projects in Europe, Middle

East and Africa.

Dr. Faisel Gergab was appointed by the National Transitional

Council’s Executive Office as the Program Manager for the

Libya Stabilization Team (LST), a role he held from March to

November 2011.

MATAR M. AL BLOOSHIBoard Member

Mr. Matar Mohamed Al Blooshi has over 24 years of experience

in the financial and fund management industries. Beginning his

career in 1992 with the Central Bank of the United Arab Emirates

as a Dealer in the Treasury department, he joined Abu Dhabi

Investment Company as a Portfolio Manager in 1995. In 1998,

he joined First Gulf Bank as the Head of Treasury & Investment,

moving to National Bank of Abu Dhabi in 2001 as Head of Foreign

Exchange and Commodities. In February 2005, Mr. Matar Al

Blooshi became the Head of Domestic Capital Market Group and

the General Manager of Abu Dhabi Financial Services (a subsidiary

of National Bank of Abu Dhabi) and was given the title of Senior

Manager, Asset Management Group in October 2006.

Mr. Matar Al Blooshi is Chief Investment Officer at Das Holding

LLC, a member of the Board of Directors of Al Salam Bank-Bahrain,

Etisalat Misr and Chairman of Maalem Holdings in Bahrain.

Mr. Matar Al Blooshi holds a BA in Banking & Financial Management

from University of Arkansas, US.


Board of Directors (continued)

DR. ALI MAHMOUD HASSEN MOHAMMEDBoard Member

Dr. Ali has over 18 years of experience in financial and business administration. He started his career in October 2002 with Aljufra University as a member of teaching staff in Faculty of Economics. In January 2012, Dr. Ali became the Dean of Faculty of Business Administration in University of Sirt. In 2012 he joined The Libyan Academy as a Head of the Doctoral program. At the end of the same year, he became the CEO of the Libyan company for finance and leasing, a subsidiary of the Economic and Social Development Fund. In 2013 he held many important posts such as Board Member of the Libyan Investment Authority and the Libyan Academy.

Dr. Ali holds a Bachelor of Business Administration from University of Tripoli, Libya (1998), Master of Financial Planning from Planning Institute of Higher Studies, Tripoli, Libya (2002), and PhD in Financial Management from The Arab Academy for Financial Sciences, Amman Jordan (2009).

MOHAMMED SALEM AL SHAMSIBoard Member (untill March 2020)

Mr. Al Shamsi, a national of the United Arab Emirates, with over 21 years of experience in Leadership & Management.

Mr. Al Shamsi joined Al Ain Distribution Company (AADC) in 1999 after obtaining his BSc.in Management from United States. Prior to moving to AADC, he had previously worked as a procurement officer in Abu Dhabi National Oil Company (ADNOC) and held several positions, as follows: Chief of the Procurement Division, Customer Service Department Manager, Director of Customer Service Directorate, Deputy General Director and General Director.

Outside AADC, he is a Board Chairman of Arabian Power Company (PJSC) and a Board member of the First Energy Bank.

Currently Mr. Al Shamsi is the Consultant of AADC since January 2016.

AMMAR ALI MOHAMED JABERBoard Member (untill March 2020)

Mr. Ammar Ali, a national of the United Arab Emirates, with over 13 years experience. Mr. Ammar has been a key member of the Global Markets and Treasury Department at Emirates NDB since he joined in 2007. He has intensive experience across all areas of Global Markets and Treasury, having played an essential role on the Foreign Exchange, Interest Rate Derivatives, Principal Investments, Global Funding, and Assets and Liability Management Desks.

Mr. Ammar is currently the Head of Treasury and Markets at Emirates Islamic Bank from December 2016 till present. Since November 2018, Ammar has been named as the Head of Emirates Islamic Financial Brokerage company.

Besides his existing Board seat in FEB, Ammar is a Board member in Al Mehrab Real Estate K.S.C.

Mr. Ammar is a graduate of Dubai Mem’s College, and completed his MBA from the Canadian University, graduating with highest distinction of Summa cum laude. He is also holder of International Treasury Management Certificate from the New York Institute of Finance.

ABDULLA ABDULKARIM SHOWAITERBoard Member (untill March 2020)

Mr. Abdullah Showaiter is a Bahrani Banker with more than 42 years of banking experience. He held several leadership positions in a number of prestigious banking institutions (Emirates Islamic Bank, Dubai Islamic Bank, First Gulf Bank, Bank of Bahrain and Kuwait). Mr. Showaiter is currently a Board Member in numerous financial institutions and companies such as Khaleeji Commercial Bank, Arab Drilling Workover Company-Libya (ADWOC), Bukhater Investment Company and consultant to Ajman Bank.

ADEL ABDULAZIZ AL JABRBoard Member

Mr. Adel Al Jabr holds a Master’s degree in Business Administration from the University of Leicester – UK. He graduated as an Electrical Engineer from the King Fahd University of Petroleum and Minerals -KSA in 1990. After graduating, Mr. Al Jabr worked for Saudi Aramco, in which he progressed through various departments over 18 years until he reached the position of Financial Planning Director of the Information Technology department.

Mr. Al Jabr is currently a member of the Board of Directors of Al Jabr Holding Company, a group of Saudi local & MENA region leading companies in the automobile field (Kia), real estate, food and beverages, household appliances and laundries. He is also the General Manager of Al Jabr General Contracting Company, a leading company in the field of electronic and mechanical business in KSA. Mr. Al Jabr is also the General Manager of Golden Chip, a leading company in the field of smart cards and plastic cards industry in Saudi Arabia and the MENA region. Mr. Al Jabr has more than 29 years of work experience.

ABDULLA AHMED AL SUWAIDIBoard Member

Mr. Al Suwaidi, a national of the United Arab Emirates, with over 18 years’ experience in Economics, Energy & Social Affairs. He started his career in February 2002 with Zakum Development Company (ZADCO) as Contracts & Procurements Engineer in the


commercial department. In November 2004 he joined Mubadala Development Company, Abu Dhabi as Assets Management Analyst in the Corporate & Finance Affairs.

Currently Mr. Al Al Suwaidi is the Director of Economic and Energy Affairs in the Executive Affairs Authority in Abu Dhabi.

Mr. Al Suwaidi holds a Certified Valuation Analyst (CVA), IACVA, 2007 & Bachelor of Sciences, International Economics from Suffolk University, Boston, MA, USA (2001) and a Master of Strategic and Security Studies from The National Defense College, Abu Dhabi, UAE (2016-2017).

MAYSSOUN HABRABoard Member (untill March 2020)

Mrs. Mayssoun Habra is the Founding Partner and Chief Executive Officer of Y Asset Management LLP, a multi-family office and a consultancy business based in London, that was setup in 2016 to provide wealth management services to UHNWIs, mainly from the Middle East.

With more than 21 years of work experience, Mrs. Mayssoun is a Chartered Fellow of the Institute for Securities & Investment (CISI) and has served in executive roles in large banking groups, most recently at Societe Generale Private Banking Hambros in the United Kingdom including Director, Group Head of Middle East, and has built a successful business that earned her a great reputation in the financial industry.

Mrs. Mayssoun received the Outstanding Young Private Banker award by Private Banker International in 2014 in recognition of her client centricity, well informed advice and quality service.

Prior to joining Societe Generale Private Banking Hambros in 2008, Mrs. Mayssoun Habra worked and held senior executive positions at National Bank of Dubai and Emirates NBD Bank in London from 1999 to 2008.

Mrs. Mayssoun Habra is a philanthropist and works actively with several international programs and charities for the advancement of education and quality of life improvement. Mayssoun is also a Board member, a Director and an Investment Advisor to prominent and well known international businesses in the UAE, UK, USA and Morocco.

A long-time advocate for women empowerment, Mrs. Mayssoun sits on the advisory Board of London Arabia, an organisation that promotes and rewards the exceptional work of women from all over the Arab world. She was awarded Arab Women of The Year in an annual ceremony in London.

DR. SAIF ABUGULALBoard Member

An accomplished leader in integrating European businesses into the emerging Middle East market, Dr. Saif Abugulal, Ph.D., has driven client revenue and profitability in the oil and gas sector for over 13 years. A Certified Project Manager with a doctorate degree in Government and International Affairs – focused specifically on the Middle East – Dr. Abugulal specializes in launching, expanding, and growing European businesses in the Middle East, with expertise in high-level business development, project management, supply chain management, logistics, and procurement. In the highly relationship-driven Middle East business culture, Dr. Abugulal leverages a vast Middle East social-business network with deep, respected family roots and a network of global business relationships.

Dr. Abugulal’s early career began at the University of Newcastle Upon-Tyne in the UK, where he delivered lectures and tutored students on Oil and Security, Middle East Politics, as well as Market and International Relations. He then transitioned to a consulting role with Laureate Education, Inc., aiding clients in over 95 countries in business development solutions.

In 2005, Dr. Abugulal was hired at Saudi Aramco Overseas Company BV, which owns, operates, and develops all energy resources based in Saudi Arabia. He progressed quickly through project management and leadership roles, driving efficient management of oil and gas projects, logistics, supply chain, expediting and procurement. He drove record 95% on-time delivery (OTD) and on-time Technical & Inventory refinery shutdowns (T&Is).

In 2014, Dr. Abugulal joined Stahl-Electromach as the General Manager for Saudi Arabia, where he spearheaded the company expansion into the new Saudi Arabia market and established the Stahl-Electromach brand as a new Saudi entity.

Dr. Abugulal also established, manages, and continues to grow Key2MiddleEast Ltd., a consulting business that connects European companies with opportunities to expand their efforts in the Middle East.

Dr. Abugulal also currently serves as General Manager for the Middle East for GIS International, a leading global procurement service provider for multinational, multisite companies.

Dr. Abugulal completed his Ph.D. at the University of Durham in the UK. He has a Master’s degree in Middle Eastern Studies from the University of Durham and a Bachelor’s degree in International Relations from Webster University in the U.S.

Dr. Abugulal completed an English Language Certificate from the University of East Anglia in the UK and an English Language Diploma from the British Academy of English.


His Eminence Shaikh Dr. Nedham Yaqoobi - Chairman

Shaikh Dr. Nedham Mohamed Saleh Abdulrahman Yaqoobi is a well-known Shari’a Scholar and is recognized internationally. He is a member of the Shari’a Council of the Accounting and Auditing Organization for Islamic Financial Institution (AAOIFI) as well as a member of the Central Shari’a Supervisory Board of the Central Bank of Bahrain. He has contributed significantly to the creation of many AAOIFI Shari’a Standards and participated in numerous of Islamic finance and banking conferences around the world.

Shaikh Dr. Yaqoobi is on the Shari’a Supervisory Board of many regional and international Islamic financial institutions / Takaful companies (with the capacity of chairman or member) such as Bahrain Islamic Bank, Ithmaar Bank, Khaleeji Commercial Bank, GFH Financial Group B.S.C., Abu Dhabi Islamic Bank amongst many others.

Shaikh Dr. Yaqoobi has a BA in Economics & Comparative Religions from McGill University-Canada and is also a PhD holder. He has authored several books and delivered numerous lectures on Islamic Finance.

His Eminence is one of the pioneers in Islamic banking and he is a well-known Shari’a scholar in all fields of Islamic Banking and Fiqh Al Mu’amalat. In 2007, the King of Bahrain, His Majesty King Hamad Bin Isa Al Khalifa, awarded Sheikh Yaqoobi the Order of Merit in recognition of his services in Bahrain and abroad. Shaikh Dr. Yaqoobi has also received the Euromoney’s award for Innovation in Shari’a Supervision, as well as the Malaysian Islamic Banking award.

His Eminence Shaikh Dr. Mohamed Elgari - Member

Shaikh Dr. Mohamed Ali Bin Ibrahim Elgari is a former Professor of Islamic Economics at King Abdulaziz University, Jeddah, Saudi Arabia and Former Director of the Center for Research in Islamic Economics, at the same university.

Shaikh Dr. Elgari is Chairman and member of numerous Shari’a Supervisory Boards of Islamic banks and Takaful companies worldwide. He is also an Expert at the Islamic Jurisprudence Academy of the OIC and the Islamic Jurisprudence Academy of the Islamic World League. And he is a member of the Board of Trustees and member of the Shari’a Council of the Accounting and Auditing Organization for Islamic Financial Institution (AAOIFI) and the Shari’a Council of the International Shariah Research Academy for Islamic Finance (ISRA), as well as a member of the Central Shari’a Supervisory Board of the Central Bank of Bahrain.

Shaikh Dr. Elgari has participated in various conferences and seminars, both locally and overseas. Extensive research in the field of Islamic economics and finance has led to a number of his works being published in recognized journals and presented at relevant conferences.

Shaikh Dr. Elgari holds a PhD in Economics from University of California, and he is an author of several books and research papers on Islamic Economics and Islamic Banking. Shaikh Dr. Elgari is the recipient of the Islamic Development Bank prize in Islamic Banking and Finance, KLIFF Islamic Finance Award for Most Outstanding Contribution to Islamic Finance (Individual) and Euromoney’s Award for Outstanding Contribution to Islamic Finance.

His Eminence Shaikh Dr. Osama Bahar - Member

Shaikh Dr. Osama Mohamed Saad Bahar is a prominent, highly-respected Shari’a scholar from the Kingdom of Bahrain.

Shaikh Dr. Bahar is currently a Shari’a Supervisory Board member at First Energy Bank, following earlier senior positions at Islamic banks in Bahrain, including Head of Shari’a Compliance at Al Salam Bank, Shamil Bank (currently Ithmaar Bank) and Shari’a Compliance Officer at ABC Islamic Bank.

Shaikh Dr. Bahar is also a member of the Shari’a Supervisory Board of Al Salam Bank, Ithmaar Bank, Alizz Islamic Bank, Family Bank, International Investment Bank and Solidarity Bahrain amongst others. Additionally, he is the Shari’a Advisor of Bahrain Bourse and Global Banking Corporation.

Shaikh Dr. Bahar was awarded his Masters Degree from Al Imam Al Ouzai University in Lebanon and his Bachelors degree in Islamic Shari’a from Emir Abdelkader University of Islamic Sciences in Algeria, he is also a PhD holder.

| SHARI’A SUPERVISORY BOARD |


First Energy Bank is guided by a Shari’a Supervisory Board consisting of three distinguished scholars. They review the Bank’s activities to ensure that all products and investment transactions comply fully with the rules and principles of Islamic Shari’a.


Dear Shareholders,

Board of Directors Report for the Year Ended 31 December 2019

In the name of Allah, the beneficent, the merciful, prayers and peace upon the last apostle and messenger, our prophet Mohammed and his companions.

On behalf of the Board of Directors, it is my privilege to present to you the annual report of First Energy Bank B.S.C. (“FEB” or “Bank”) for the year ended 31 December 2019.

The Bank in-spite of various global challenges and intensified market volatility managed to maintain positive performance as measured by its financial results. Looking at the year, the focus has been on diversifying the Bank’s capital into profitable ventures to generate sustainable income and create long-term value for our stakeholders.

During 2019, the Bank strengthened its institutional capability, in order to support the realisation of Bank’s revised strategy and continued business growth. This involved strategic alignment of people, products, processes and systems across the organisation. Building a solid and sustainable financial institution remains a key strategic objective of the Bank. The Board and the management team remains fully committed to generate sustainable returns for shareholders over the upcoming periods.

The Bank reported a net profit of US$ 16.5 million for the year ended 31 December 2019 compared to a net profit of US$ 12.2 million for the year 2018. Additionally, the Bank as part of conservative measures also took provisions on few of its investments amounting to US$ 3 million during 2019. The Bank’s strategic focus remains on diversifying its investment portfolio into profit generating sectors which have created sustainable income for the Bank, strengthened its financial position and has achieved the growth objectives.

FEB’s balance sheet also remained robust and strong. The Bank’s Basel III Total capital adequacy ratio at the end of the year was 60.2% and Tier 1 ratio was 59.7%. Liquidity of the Bank remained strong and Bank reported positive and healthy Liquidity Coverage Ratio of 224%, as of the year ended 31 December 2019.

We believe that with our revised strategy of diversification and investments across new sectors, the revenue streams can be further enhanced. For the upcoming year, the Bank will look to grow in these sectors, to achieve targets of growth and profitability.

Lastly, I would like to express my sincere appreciation for the solid confidence and support of our shareholders, the continued encouragement and cooperation of our counterparties, and the ongoing advice and guidance of the regulatory and supervisory bodies in the various jurisdictions where FEB operates, especially the Central Bank of Bahrain. I also take this opportunity to pay special tribute to the commitment and professionalism of our management and staff.

Yours truly,

Khaleefa Butti Bin OmairChairman of the Board of Directors

| CHAIRMAN’S LETTER TO SHAREHOLDERS |


| MANAGEMENT TEAM |

MOHAMED SHUKRI GHANEM Chief Executive Officer

Mr. Mohamed Ghanem brings over 20 years of extensive experience in the fields of Investment Banking. He contributes to the business development as well as the origination of investment and advisory business.

In addition to his role as Chief Executive Officer of First Energy Bank he is Vice Chairman of Alizz Islamic Bank and Chairman of the Executive Management Committee of FEB.

Prior to joining First Energy Bank, Mr. Ghanem worked at Arab Banking Corporation (BSC) (“ABC”) and GED Handles G.m.b.H., Vienna. Mr. Ghanem was a Board Member of Al Salam Bank-Bahrain and Chairman of MENAdrill Investment Company.

Mr. Ghanem holds a Bachelor of Arts in Business from Webster University (School of Business and Technology) in Vienna as well as an MBA from Glamorgan University.


ANDY HARIMAN - Chief Investment Officer (Resigned effective February 2020)

Mr. Andy Hariman joined First Energy Bank as Chief Investment Officer in 2016, following careers in both Oil & Gas upstream and in

investment banking, where he brings a particular focus on investments and the energy sector throughout North America, Europe, Middle

East, Africa and Asia.

Mr. Hariman is a member of FEB’s Executive Management Committee, Information Technology & Security Steering Committee (ITSSC)

and the Asset and Liability Committee (ALCO).

Prior to his appointment at FEB, Mr. Hariman was Co-founder and Managing Director of Carlingford, a London based natural resources

merchant banking firm managing debt, equity and M&A transactions for private and public oil & gas companies, completing over $2

billion worth of transactions during his tenure. Mr. Hariman previously served as Executive Director at Nomura International in London

in their Fixed Income division, covering natural resources clients throughout the EMEA region. Prior to his career in investment banking,

Mr. Hariman worked for one of Canada’s largest Independent Oil & Gas companies, Nexen Inc. (now CNOOC) for twelve years in various

senior executive management roles based in North America, as well as being Nexen’s Head of Risk Management in Europe and its

Finance Director in the Middle East.

Mr. Hariman is a Canadian and British citizen. He holds the CFA charter and earned his International MBA from the Kellogg School of

Management, Northwestern University and his Bachelor of Commerce from the University of Alberta, Canada.

MOHAMED ABDULSALAM ALANSARI - Managing Director - Treasury, Capital Markets & Financial Institutions

Over 22 years as a financial professional experienced in International, Islamic and Investment Banking, covering Treasury and Capital

Markets with a strong network of banking associations.

Prior to his Treasurer & Senior Management role at FEB, Mr. Mohamed was Executive Director of Investment Placement covering the

MENA and Asia regions for Financial Institutions, High Net-worth Individuals and Sovereign Wealth Funds. During his brief tenor with

Arcapita, Mohamed established strong relationships across the region and secured medium to long-term facilities. Mohamed started

his career at Arab Banking Corporation where he was Proprietary Investment Portfolio Manager, handling the Bank’s USD5.5Billion

proprietary Book of MBSs, global Equities, Fixed Income, FRNs, Sukuk, CDOs, CLNs, SIVs, structured products and Emerging Markets

Portfolios. He further established strong relationships with clients from North Africa with total funds under management in excess of

USD4.3Billion covering bonds and equities.

Mr. Mohamed brings to FEB an extensive finance and investment banking experience especially in Capital Markets, Islamic Finance and

a strong global and regional banking network. As Head of Treasury, Capital Markets and Financial Institutions at FEB, he is responsible

for all banking relationships, management of the overall cash-flow and liquidity of the Bank as well as establishing guidelines for risk

taking and balance sheet funding in addressing the business growth. Mohamed is Board member of FEB Capital and a member of FEB’s

Executive Management Committee (EMC), the Staff Savings Committee (SSC), Information Technology & Security Steering Committee

(ITSSC) and is the Chairman of the Asset and Liability Committee (ALCO).

Mohamed holds an MBA and BBA from University of Houston in Texas, USA.


FAWAZ A. AL JOWDER - Chief Operating Officer

Prior to joining FEB, Mr. Fawaz was the Managing Director of Takamul Capital B.S.C in Bahrain. Prior to Takamul, he was the Chief Executive Officer of Abu Dhabi Investment House (ADIH) and previously contributed in the establishment of Kuwait Finance House-Bahrain under different departments. He joined FEB in 2014 and is primarily responsible for the Operation, Strategy of the bank and business line: day to day over-all operations, business development and Investors relations including the Bank’s shareholders. Beside his role as COO, he’s also the Managing Director of FEB AQAR the real estate arm of First Energy Bank.

Mr. Fawaz has over 18 years of experience in the retail banking, investment banking, investment placement, private equity (multisector) and real estate property development. He represented companies on several boards as the Chairman and board member of various multi - million dollar companies including real estate development, private equity, healthcare, pharmaceutical and energy companies.

Mr. Fawaz holds a Bachelor of Science in Business Administration from The Citadel, Military College of South Carolina, USA and a diploma from the University of Bahrain.

MUZAFFAR HUSSAIN NAVEED ALLANA - Chief Financial Officer

Mr. Allana has over 15 years of experience in the banking industry, mainly in the fields of audit and financial controls.

His responsibilities include contributing to the Bank’s strategy planning, leading and directing the budget process, maintaining appropriate financial and accounting framework and establishing effective system of cost management and related internal controls.

Prior to joining FEB, Mr. Allana worked with EY & KPMG, ‘Big Four’ global auditing firms, in Assurance and Advisory departments and also worked with Central Bank of Bahrain “CBB” in the Islamic Supervision Directorate.

He is a member of the Institute of Chartered Accountants in England and Wales – ICAEW, UK, a fellow member of the Association of Chartered Certified Accountants – ACCA, UK and a member of the Chartered Institute of Internal Auditors – CIIA, UK. He also holds a Bachelor’s degree from Oxford Brookes University, UK.

FULYA PLAS - Head of Risk Management

Ms. Plas brings to First Energy Bank over 20 years of financial risk management experience in investment banking. Prior to joining First Energy Bank she was Head of Risk Management at Seera Investment Bank where she established and developed the risk management function. She worked in Ryada Capital in Kuwait and Industrial Development Bank of Turkey where she was responsible for market risk and had a leading role in Basel II implementation committee. Ms. Plas studied Mathematics in Istanbul Technical University and holds an MSc in Insurance and Risk Management degree from Cass Business School, London. She was GARP regional director for Bahrain between 2007 and 2017. She is a certified FRM holder.

MOHANNED MOHAMMED ALANSARI - Corporate Secretary & MLRO

Mr. Alansari has over 34 years of professional experience with 20 years in the Banking sector in the fields of Compliance, Corporate Governance, Anti Money-Laundering and Corporate Banking. Graduated from the University of Bahrain with a concentration in Management and worked in various sectors, including the hospitality industry and aviation. In 2008 Mr. Alansari joined First Energy Bank as Deputy MLRO and currently he is the Corporate Secretary and MLRO.

NAFEESA ISMAIL - Head of LegalMs. Nafeesa Ismail brings a wealth of legal knowledge to First Energy Bank, with over 15 years of experience across various legal fields, ranging from Banking and Finance, Corporate and Investment Banking, Structured Trade and Commodity Finance, Structured Finance, Islamic Finance and Mergers and Acquisitions.

Ms. Nafeesa started her legal career at one of the leading law firms in South Africa, Webber Wentzel - associated with Linklaters, before joining one of the largest multinational banks in Africa - Standard Bank, where she was appointed to grow the Corporate and Investment Banking Division for Africa. At Standard Bank, Nafeesa held a senior management role overseeing legal transactions across 16 different jurisdictions in Africa, London and Dubai and was involved with managing complex, cross-border transactions.

Prior to joining First Energy Bank, Ms. Nafeesa held a senior legal manager position with BNP Paribas, based in their Bahrain office. At BNP Paribas,

Management Team (continued)


Nafeesa had overall responsibility for the BNP Paribas South African operations, as well as key involvement with their London and Middle-East operations, spanning across Saudi Arabia, United Arab Emirates, Kuwait, Bahrain and Qatar.

Ms. Nafeesa holds a Bachelors degree in Law (LLB) and is admitted as a qualified Attorney and Notary Public in the High Court of South Africa.

HANA AHMED AL MURRAN - Head of Compliance Ms. Hana brings to First Energy Bank over 17 years of regulatory, banking and finance experience. Prior to joining First Energy Bank, she was the Head of Compliance and AML at Ithmaar Bank where she established and developed the compliance function. Hana worked for over 12 years at the Central Bank of Bahrain (CBB) and the latest position occupied was the Head of Islamic Retail Banking Supervision where she was responsible for supervising Islamic Banks licensees. During her employment with the CBB, Hana was a member in several committees of the Islamic Financial Services Board (IFSB), an international standard-setting organization for the Islamic financial sector. She also chaired the AML and Compliance Committee of Bahrain Associate of Banks during the period between 2017 and 2018.

Ms. Hana holds a Master of Business Administration (MBA) from the University of Strathclyde Business School, United Kingdom. She also holds a BSc in Banking and Finance from the University of Bahrain. Hana is a Certified Anti-Money Laundering Specialist (CAMS), awarded by the Association of Certified Anti-Money Laundering Specialist (ACAMS).

EBRAHIM ALI - Head Human ResourcesMr. Ebrahim Ali is the head of Human Resources (HR). He is responsible for managing employment strategies, recruitment, development and retention in addition to career progression and performance management. Prior to his appointment with FEB in 2008, Mr. Ali was working with Ministry of Foreign Affairs where he served in Bahrain Embassies in various geographic locations as person in charge of Finance and Administration Department.

Mr. Ali holds Masters Degree from University of Westminster in UK.

SH. MOHAMMED ABDULAZIZ BEHZAD - Head of Shari’a Coordination and Implementation & SSB SecretaryShaikh Mohammed Abdulaziz Behzad has over 10 years of experience in the field of Islamic Banking and Finance in various financial specializations including Investment Banking, Retail / Commercial Banking and Microfinance. A key part of his experience is establishing the internal Shari’a function department in several Islamic financial institutions and acting as the main channel of communication between the bank’s management and their Shari’a Supervisory Board.

Shaikh Mohammed Abdulaziz Behzad is currently Head of Shari’a Coordination and Implementation as well as Secretary of the Shari’a Supervisory Board at First Energy Bank. Shaikh Behzad’s previous experience includes being a Shari’a Reviewer, Shari’a Auditor and Secretary of the Shari’a Supervisory Boards at Khaleej Commercial Bank, Capinnova Investment Bank and Family Bank.

Shaikh Behzad holds a Master of Business Administration (MBA) in Islamic Banking and Finance from Bangor University UK, Bachelor’s Degree in Judicature and Islamic Studies from Umm Al-Qura University KSA as well as Advanced Diploma in Islamic Commercial Jurisprudence (ADICJ) from BIBF. Additionally, Shaikh Behzad is a Certified Shari’a Adviser and Auditor (CSAA) awarded by AAOIFI, a Certified Risk Based Auditor (CRBA) from IABFM and has successfully completed the Accredited Arbitrator in Commercial Arbitration program from the GCC Commercial Arbitration Centre (GCCCAC).


In 2019, FEB reported consolidated net profit of USD 16.5 million, as compared to USD 12 million in 2018. Additionally, the Bank as part

of conservative measures also took provisions on few of its investments amounting to US$ 3 million during 2019. Total assets increased by

USD 37 million to USD 863 million in 2019 from USD 826 million in 2018. The Bank continued to be highly liquid with liquid assets ratio of

44% as of reporting date. The Bank’s capital base remains very strong with capital adequacy ratio standing at 60% as at 31 December 2019.

Amounts in USD 000’s

2019 2018 2017 2016 2015

Gross income 44,690 40,441 48,191 14,588 6,925

Operating expenses (26,475) (28,451) (19,497) (17,560) (24,061)

Impairment reversal / (allowance) - net (1,715) 2,921 - (91,298) (358,121)

Net income / (loss) 16,500 12,299 20,143 (94,270) (375,257)

Total assets 862,592 825,766 926,937 1,072,506 1,050,338

Total equity 597,175 586,820 700,001 675,506 773,026

EPS (basic) in US cents 2.8 2.1 2.0 -9.5 -37.5

Return on average assets 2.0% 1.4% 2.0% -8.9% -31.1%

Return on average equity 2.8% 1.9% 2.9% -13.0% -39.7%

Net income margin 36.9% 30.4% 41.8% -646.2% -5419.1%

Total expenses to gross income ratio 63.1% 63.1% 40.5% 746.2% 5519.1%

| FINANCIAL HIGHLIGHTS |


We believe that with our revised strategy of diversification and investments across new sectors,

revenue streams will be further enhanced.


First Energy Bank’s (FEB) business model is built around 6 core business lines: Private Equity, Structured / Islamic Financing, Investment Banking,

Capital Markets / Asset Management,Treasury and Real Estate.

PRIVATE EQUITYFEB activities include direct investments in private equity opportunities with a focus on defensive sectors, which includes healthcare and consumer

sectors. The investment strategy is based on two pillars:

• Identify and invest in regional entities and assets whereby FEB has a strong presence. FEB adds value through various activities including increased

capitalization, financial and operational restructuring, and effective market expansion utilizing the Bank’s extensive network and expertise in

these fields.

• Partner / co-invest with strong management and operational teams who have the ability to accelerate the growth and value of each investment.

FEB capitalizes on its effective network and banking capabilities to maximize the value of each investment, supporting both continued business

expansion and financial capacity.

STRUCTURED / ISLAMIC FINANCINGFEB’s Islamic finance team focuses on the origination, underwriting, and structuring of financing opportunities. Deriving from its fixed income

experience in this field from regional and global banking sectors, the team also focuses on providing “ring fenced” Shari’a compliant project and

structured finance to selected strategic transactions where risks are mitigated by these structures and returns are optimized.

INVESTMENT BANKINGFEB utilizes its strength in identifying and developing investment and transaction opportunities drawing on all its available resources, aligning itself

with strategic partners across various industries. FEB’s unique strength in this field comes from its strong and diversified shareholder base combined

with the management team’s experience in various industries, helping to support capital raising and Mergers and Acquisitions (M&A) transactions.

FEB’s ability to underwrite transactions across the capital structure further enhances our full investment banking activities.

CAPITAL MARKETS / ASSET MANAGEMENTThe Islamic capital market has been growing rapidly in the last decade through the increasing Shari’a compliant Sukuk, structured products and

hedging instruments mainly by sovereigns, quasi-sovereigns, internationals, supra-nationals and corporate institutions. Investors’ demand for Shari’a

compliant investment products has been increasing in recent years. FEB’s strategy is to provide innovative, diversified and well-managed products

that suit its clients’ needs and meets their return requirements. FEB’s Capital Markets and Asset Management teams are committed to develop

and execute long-term strategic and tactical plans to meet portfolio return objectives and continuously innovate and evaluate investing, yield

enhancement and financing solutions.

TREASURYThe Islamic banking treasury sector has become increasingly competitive and sophisticated over the years, with demand being fueled by clients and

investors expecting Islamic products, services and hedging tools comparable to the innovations provided by conventional banks. As such, FEB has laid

a solid foundation to cater for the fast growing demand of Islamic innovations offering a wide range of Shari’a compliant products managed by a

team of dedicated personnel to build a stable platform to cater for FEB’s clients and mandated business requirements.

REAL ESTATEFEB caters to market needs related to the real estate activities from its subsidiary FEB AQAR, managed and operated by professionals with strong real

estate, project management and development experience. The Bank focuses on selected real estate investments with greater demand and ability to

generate adequate returns for the shareholders.

| BUSINESS ACTIVITIES |


A perspective of the Bank’s new headquarters premises within the proposed mixed use

building in Bahrain Financial Harbour through our wholly owned subsidiary FEB Aqar S.P.C.


CORPORATE GOVERNANCE


Corporate governance is the combination of processes and structures implemented by the Board in order to inform, direct, manage and monitor

the activities of the organisation toward the achievement of its objectives. FEB’s governance and management structure is illustrated below:

Board of Directors

Board Investment Committee

Chief Executive OfficerInternal AuditCompliance &

Anti MoneyLaundering

MLRO

DMLRO

Structured Finance

Private EquityCorporate Finance

Financial Institutions

Capital Market

Treasury

Operations

Internal Controls

Legal

IT Security

Chief Investment Officer

Advisory Services

** Governed by by FEB Tower Committee* Governed by FEB Capital Board of Directors

Shari’a Supervisory Board Board Audit & Risk CommitteeNomination, Remuneration &

Governance Committee

Risk Management

Board Secretary

Internal Shari’a AuditShari’a Coordination& Implementation

Treasury & Capital Market Chief Operating Officer Chief Financial Officer Human Resources ** FEB Aqar

* FEB Capital Direct Investment & Investment Management

Investment Management

Investment Administration & Reporting

Syndication / PlacementAsset Management & Funds sourcing

Information Technology

Finance andAdministration

CorporateCommunication

Project Manager

| CORPORATE GOVERNANCE |


BOARD OF DIRECTORSFEB’s governance structure comprises the Board of Directors (the Board) and it’s Sub-committees.

As of 31 December 2019, the Board of Directors of FEB comprise of the following Directors (their term started on March 2017 and will expire on March 2020):

No. Name Type of

Membership

ExecutiveNon-ExecutiveIndependent

Board Investment Committee

Nomination,Remuneration & Governance

Committee

Board Audit & Risk Committee

1 Mr. Khaleefa Butti Bin Omair Chairman Independent

2 Dr. Faisel Ahmed Gergab Vice Chairman Independent

3 Mr. Matar Mohamed Murad Al Blooshi Member Executive

4 Dr. Ali Mahmoud Hassen Member Executive

5 Mr. Mohamed Salim Omair Al Shamsi Member Non-Executive

6 Mr. Ammar Ali Mohamed Jaber Member Executive

7 Mr. Abdulla A. Karim Showaiter Member Independent

8 Mr. Adel A. Aziz Al Jabr Member Independent

9 Mr. Abdulla Ahmed Sultan Al Suwaidi Member Independent

10 Mrs. Mayssoun Habra Member Non-Executive

11 Dr. Saif Abugulal 1 Member Independent

1- Dr. Saif Abugulal appointed, approved by CBB as a Board member on 13th January 2019

BOARD COMMITTEESThere are three Board Sub-committees:

1. Board Investment Committee (BIC).

2. Nomination, Remuneration and Governance Committee (NRGC); and

3. Board Audit & Risk Committee (BARC).

All sub-committees are required to report their activities to the Board on a regular basis. The Committees responsibilities and names of their respective members are as below:

1- Board Investment Committee (BIC)

Members Type of Membership Summary terms of reference, role and responsibilities:

Mr. Khaleefa Butti Bin Omair Chairman

The Board Investment Committee assists the Board in formulating the Bank’s investment policy and making investment transaction decisions. The BIC reports its activities to the Board of Directors on a quarterly basis.

Mr. Matar Mohamed Murad Al Blooshi Member

Dr. Ali Mahmoud Hassen Member

Mr. Mohamed Salim Omair Al Shamsi Member

Mr. Ammar Mohamed Ali Jaber Member


2- Nomination, Remuneration and Governance Committee (NRGC)


Mr. Abdulla A. Karim Showaiter Chairman The Nomination, Remuneration and Governance Committee, mindful of best practice in the field, assists the Board in formulating and reviewing the Bank’s policies and rules including the administrative policy and governance requirements related to nomination, remuneration and governance aspects. The committee is also responsible for the nomination, remuneration, and governance compensation of the Board and Executive Management and regularly reviews the Bank’s succession plan.

Mr. Adel A. Aziz Al Jabr Member

Mrs. Mayssoun Habra Member

• Sh. Dr. Osama Bahar appointed in this committee as SSB member on 4th December 2019.

3- Board Audit & Risk Committee (BARC)


Dr. Faisel Ahmed Gergab Chairman The Committee assists the Board in fulfilling its oversight responsibilities by reviewing the financial information, the effectiveness of internal control structure, the compliance with legal, regulatory, anti-money laundering and Shari’a Supervisory Board requirements and setting the overall risk appetite parameters and limits. It oversees the performance of the Bank’s internal and external audit function. The Committee provides recommendations to the Board in relation to the risk strategies, appetite and policies necessary for a robust, integrated risk management framework. This process extends to reviewing the adequacy of all the Bank’s policies and procedures prior to approval by the Board. It also ensures that appropriate business continuity plans are developed and maintained.

Mr. Abdulla Ahmed Sultan Al Suwaidi Member

Dr. Saif Abugulal 1 Member

1- Mr. Saif Abugulal appointed in this committee on 5th February, 2019.

Board and Sub-Committees Meetings as of 31 December 2019 and member’s attendance for each (Table 1):

Board of Directors* Date of Meetings

No. Name Type of Membership26/2/2019Morocco

20/6/2019Bahrain

19/9/2019Bahrain

4/12/2019Bahrain

Percentage of Attendance

1 Mr. Khaleefa Butti Bin Omair Chairman ✓ ✓ ✓ ✓ 100%

2 Dr. Faisel Ahmed Gergab Vice Chairman ✓ ✓ ✓ ✓ 100%

3 Mr. Matar Mohamed Murad Al Blooshi Member ✓ ✓ ✓ ✓ 100%

4 Dr. Ali Mahmoud Hassen Member X ✓ ✓ ✓ 75%

5 Mr. Mohamed Salim Omair Al Shamsi Member ✓ ✓ ✓ ✓ 100%

6 Mr. Ammar Ali Mohamed Jaber Member ✓ ✓ ✓ ✓ 100%

7 Mr. Abdulla A. Karim Showaiter Member ✓ ✓ ✓ ✓ 100%

8 Mr. Adel A. Aziz Al Jabr Member ✓ ✓ ✓ ✓ 100%

9 Mr. Abdulla Ahmed Sultan Al Yousif Al Suwaidi Member ✓ ✓ ✓ ✓ 100%

10 Mrs. Mayssoun Habra Member ✓ ✓ ✓ ✓ 100%

11 Dr. Saif Abugulal 1 Member ✓ ✓ ✓ ✓ 100%

1- Mr. Saif Abugulal appointed, approved by CBB on 13th January, 2019.

Corporate Governance (continued)


Board Investment Committee (BIC)* Date of Meetings

No. NameType of

Membership26/2/2019Morocco

20/6/2019Bahrain

19/9/2019Bahrain

4/12/2019Bahrain


1 Mr. Khaleefa Butti Bin Omair Chairman ✓ ✓ ✓ ✓ 100%

2 Mr. Matar Mohamed Murad Al Blooshi Member ✓ ✓ ✓ ✓ 100%

3 Dr. Ali Mahmoud Hassen Member X ✓ ✓ ✓ 75%

4 Mr. Mohamed Salim Omair Al Shamsi Member ✓ ✓ ✓ ✓ 100%

5 Mr. Ammar Al Mohamed Jaber Member ✓ ✓ ✓ ✓ 100%

Nomination, Remuneration & Governance Committee (NRGC)*

Date of Meetings

No. NameType of

Membership5/2/2019Bahrain

25/4/2019Bahrain

4/9/2019Bahrain

26/11/2019Bahrain

11/12/2019Bahrain


1 Mr. Abdulla A. Karim Showaiter Chairman ✓ ✓ ✓ ✓ ✓ 100%

2 Mr. Adel A. Aziz Al Jabr Member ✓ ✓ ✓ ✓ ✓ 100%

3 Mrs. Mayssoun Habra Member ✓ ✓ ✓ ✓ ✓ 100%

4 Sh. Dr. Osama BaharSSB

MemberX X X X ✓ 100%

Sh. Dr. Osama Bahar appointed in this committee representing SSB on 4th December 2019.

Board Audit and Risk Committee (BARC)* Date of Meetings

No. Name

Type of Membership

14/2/2019FEB-Capital

Dubai

25/4/2019Bahrain

11/9/2019FEB-Capital

Dubai

26/11/2019Bahrain


1 Dr. Faisel Ahmed Gergab Chairman ✓ ✓ ✓ ✓ 100%

2 Mr. Abdulla Ahmed Sultan Al Yousif Al Suwaidi Member ✓ ✓ ✓ ✓ 100%

3 Dr. Saif Abugulal 1 Member ✓ ✓ ✓ ✓ 100%

1- Dr. Saif Abugulal appointed in this committee on 5th February, 2019.

*The meetings of the Board of Directors and the Board committees are held whenever the need arises, but under the regulations, the BOD should meet at least four times during a single fiscal year.


SHARI’A COMPLIANCE

The Bank has a dedicated Shari’a department acting as the primary contact of communication between the Bank and its Shari’a Supervisory Board (SSB). The

responsibilities of the Shari’a department include the following:

· Ensuring programmes are in place for all approved products, with detailed procedures signed off by relevant departments.

· Ensuring there are Fatwas supporting all approved products and that the concerned departments adhere to them.

· Ensuring that the Bank complies with applicable AAOIFI standards, the SSB’s and other applicable Shari’a guidelines and the Bank’s Shari’a compliance

manuals.

· Conducting periodic Shari’a audits, discussing the audit findings with management and issuing Internal Shari’a Audit reports.

· Reporting to the CEO and SSB on the results of the Shari’a audits and the status of implementation of the recommendations made by the Shari’a

department.

· Assisting relationship managers and relevant departments in interpreting Shari’a guidelines.

· Collating inquiries and questions from Bank departments and submitting them to the SSB.

· Arranging and minuting SSB meetings.

· Monitoring the process of distributing Zakah and their dues as well as the donation amounts to be spent on philanthropy.

· The Bank has evaluated and assessed the impact of the charity on the relevant causes / communities and there are no findings to report.

MANAGEMENT COMMITTEES

The Bank has established Five Management Committees to support the Board committees in carrying out their duties and to ensure appropriate controls and

processes are in place. They are the Executive Management Committee (EMC), Management Risk Committee (MRC), Human Resources Committee (HRC),

Asset and Liability Committee (ALCO) and Information Technology & Security Steering Committee (ITSSC). The terms of reference of each committee are

derived from the respective responsibilities. Management committees meet monthly, if required, and report to the CEO.

1- Executive Management Committee (EMC)

The Executive Management Committee (EMC) focuses on the execution of the strategic business plan approved by the Board and provides

recommendations to the CEO on such matters. Within the overall approved guidelines laid down by the terms of reference of the committee. The

responsibilities of the EMC include the following:

· Regularly review the environment in which the Bank operates and reflect changes therein in the Bank’s future development.

· Oversee the day-to-day decision making so that the Bank can be effectively managed.

· Harness and enhance the team spirit between departments to improve coordination.

· Troubleshoot and address issues of concern.

· Continuously monitor and review activities of all departments with the objective of efficient resource utilization.

· Review the Bank’s business strategy and annual operating plans (revenue and cost) and monitors progress towards their achievement, taking

appropriate corrective action as necessary.

· Ensure continuity of management so that the day to day running of the Bank is unaffected by the absence of any one / all Committee members.

· Avoid concentrations of decision making power in the Bank by installing an appropriate delegation of authorities for operational decisions.

· Promote consistence and cohesiveness in the Bank’s relationships with all its stakeholders.

· Track industry trends and developments.

2- Management Risk Committee (MRC)

The principal role of the MRC is to assist in the development, installation, and ongoing maintenance of an integrated enterprise risk management

framework within the Bank. The principal duties & responsibilities of the MRC include the following:

· Formulate and recommend Risk Strategy to the Board for their approval

· Develop and recommend Risk Policies to the Board for their approval



· Review and approve all types of counterparty exposures, including, but not limited to credit transactions, investments, Islamic financings, Sukuks, placements etc.

· Exercises the powers specifically delegated to it with care and diligence.

· Review all assumptions of risk howsoever originated, (credit counterparty, investment, operational, treasury) and approve/reject or recommend

the proposal to the relevant approving authorities depending on the approval authority level.

· Define and set risk parameters and benchmarks that are consistent with the Bank’s strategic business objectives and risk profile;

· Proactively review the Bank’s risk profile and ensure it is within the risk parameters approved by the Board;

· Review the Bank’s provisioning requirement and capital adequacy and allocate capital to businesses as required.

3- Asset and Liability Committee (ALCO)

The principal role of ALCO is to manage the liquidity, market and profit rate risk components of the asset and liability of the Bank, through the

development and initiation of appropriate strategies within the Board and regulatory guidelines. The principal responsibilities of the ALCO include

the following:

· Propose the necessary policies and procedures to manage liquidity and market risk.

· Review and monitor the balance sheet (and off-balance sheet positions) of the Bank (including the impact of its subsidiaries) such that the

Board’s liquidity and market risk policies are implemented.

· Ensure that lines of authority and accountability within the liquidity and market risk management process are clearly delineated.

· Oversee controls to manage the Bank’s market risk.

· Propose strategies to the Board in respect of proprietary investments and the use of derivatives.

· Ensure that on a day-to-day basis the Bank complies with applicable laws and regulations.

4- Human Resources Committee (HRC)

The principal role of the HRC is to assists in reviewing the Bank’s organizational structure, performance management system & human resources

policies and recommend necessary changes to the CEO by performing the following tasks:

· Ensuring the Bank has an effective organizational structure and appropriately staffed at all times to achieve the business plan approved by the

Board.

· Monitor competitive human resources and compensation policies and practices and recommending changes as appropriate.

· Ensuring appropriate processes are in place for the selection, evaluation, compensation, and succession of staff and senior management.

· Evaluating and recommending compensation for the staff.

· Evaluating other related initiatives as may be necessary or desirable to enhance performance.

· Perform such other tasks as delegated by the NRGC from time to time.

5- Information Technology & Security Steering Committee (ITSSC)

The principal role of ITSSC is to formulate and implement the IT, IT Security and Business Continuity strategy in alignment with the goals of the

respective business unites and the overall bank strategy. The main responsibilities of ITSSC include the following:

· Protect and safeguard the Bank’s information.

· Maintain confidentiality, integrity and availability of information asset.

· Protect the critical business processes from the effects of major failure of information systems or disasters.

· Maintain IT related risk exposure to acceptable levels.


FEB shareholders List (Table 2) as of 31 December 2019

No. Names NationalityNo. ofShares

Nominal Value (USD)

Percentage of Capital

1 Tasameem Real Estate Co. LLC UAE 131,102,300 131,102,300 21.85 %

2 Libyan Investment Authority (Government of Libya) Libya 97,500,000 97,500,000 16.25 %

3 Abu Dhabi Water and Electricity Authority (Government of Abu Dhabi) UAE 90,000,000 90,000,000 15.00 %

4 Emirates Islamic Bank PSJC UAE 60,000,000 60,000,000 10.00 %

5 Mohamed Bin Hussain Ali Al Amoudi Saudi Arabia 30,000,000 30,000,000 5.00 %

6 Al Jabr Holding Company Saudi Arabia 30,000,000 30,000,000 5.00 %

7 Ithmaar Development Co. Ltd Cayman Island 25,200,000 25,200,000 4.20 %

8 Ibdar Bank B.S.C. Closed Bahrain 23,641,114 23,641,114 3.94 %

9 Dubai Investment PJSC UAE 21,000,000 21,000,000 3.50 %

10 Omar Ibn Abdullah Ibn Hassan Bahassan Saudi Arabia 12,000,000 12,000,000 2.00 %

11 Awqaf and Minors Affairs Foundations (Dubai Government) UAE 12,000,000 12,000,000 2.00 %

12 Al Taif Investment L.L.C. UAE 9,000,000 9,000,000 1.50 %

13 Taqa Investment Company Ltd Cayman Island 7,572,827 7,572,827 1.26 %

14General Pension and Social Security Authority(Government of the United Arab Emirates)

UAE 7,500,000 7,500,000 1.25 %

15 RAK Properties PJSC UAE 7,500,000 7,500,000 1.25 %

16 First Energy Bank B.S.C. Closed (Treasury Shares) Bahrain 6,000,000 6,000,000 1.00 %

17 Bahrain Islamic Bank B.S.C. Bahrain 6,000,000 6,000,000 1.00 %

18 Sultan Group Investment L.L.C. UAE 6,000,000 6,000,000 1.00 %

19 Sharjah Islamic Bank UAE 6,000,000 6,000,000 1.00 %

20 Alansari Holding Company Saudi Arabia 4,002,000 4,002,000 0.67 %

21 Nahar Investment Co. W.L.L. Bahrain 3,181,758 3,181,758 0.53 %

22 Sheikh Mohammed Bin Faisal Bin Thani Al Thani Qatar 3,000,000 3,000,000 0.50 %

23 Solidarity Group Holding B.S.C. (C) Bahrain 1,800,000 1,800,000 0.30 %

Total 600,000,000 600,000,000 100 %



CORPORATE GOVERNANCE AND TRANSPARENCY DISCLOSURES:

a) Board Structure & Basic Organizational Chart:

I. Board Structure - Refer to (Table 1) Page 23-25.

II. Basic Organizational Chart - Refer to Chart Page 22.

III. Independent Board members

Following are the independent Directors in Board of FEB:

1- Mr. Khaleefa Butti Bin Omair

2- Dr. Faisel Ahmed Gergab

3- Mr. Abdulla Abdulkarim Showaiter

4- Mr. Adel A. Aziz Al Jabr

5- Mr. Abdulla Ahmed Sultan Al Yousif Al Suwaidi

6- Dr. Saif Abugulal

b) Bios of Board Members and Team Management:

Refer to the Board Bio’s Page 5-7 and to the Management Team Bio’s Page 12-15.

c) Information on the managerial structure:I. Committees - Refer to Page 26-27.

II. Segregation of duties -The Bank maintains an effective governance structure with clear reporting lines to ensure independency and proper segregation of duties. Also, all critical positions (approved persons) are approved by the CBB as required.

- All executive management members report to either CEO or appropriate Board Committee. As for the Shari’a related functions or the Shari’a Supervisory Board.

III. Responsibilities and Reporting lines -The executive management members are responsible for the day-today management of the Bank’s operations. The functions are classified into business, control and support units with proper segregations of duties to avoid any possible conflicts of interests. This structure is governed by an independent Internal Audit, Risk Management, Compliance and Anti-Money Laundering functions, as well as a Sharia Coordinator and Implementation and Internal Sharia Audit functions. The responsibilities of each of the executive management members are as defined in their job descriptions.

All executive management members report to the CEO, except for the control and Shari’a related functions. Internal Audit, Risk Management, Compliance and Anti-Money Laundering functions report functionally to the Board Audit & Risk Committee and administratively to the CEO. The Sharia Coordinator & Implementation and the Internal Sharia Audit departments report functionally to the Sharia Supervisory Board, and administratively to the CEO.

d) Performance-linked Incentive Structure: As per the bank’s remuneration policy approved by the CBB.

e) Nature and extent of transactions with related parties: Covered under Note 23 of the consolidated financial statements.

f) Approval process for related party transactions:

Approval process for related party transaction is exactly the same as the approval process for unrelated party transactions as they are treated on arm’s length basis and there is no exceptional treatment or process for approving such transactions. Refer to Note (o) below. However, as per the requirements of Article 189 of the Bahraini Commercial Companies Law (BCCL), all related party transactions are approved by Board members, before being presented to the shareholders for approval. The Board members who have any conflict of interest with subject transaction abstain themselves from voting on it. The external auditors also issue their report in this respect. The following were the material transactions as of 31st December, 2019:

• USD 10 million, which constitute financing to Sama Jordan which is related to a Director; and

• Financing facilities provided to the senior management, as per Bank’s approved policy, with a total amount of USD 96 thousand only.

The related party transactions are disclosed in note 23 of the financial statements for the year ended 31st December, 2019.

The disclosure made on related party transactions, in the annual report for 2018, includes an entity financed by the Bank which may have a different

ownership stake, from a director, as previously reported to the Bank.


g) Changes in the structures from prior periods:

- Board of Directors:

Was in 2018 As of 31 December 2019

Mr. Khaleefa Butti Omair Mr. Khaleefa Butti Omair

Dr. Faisel Ahmed Gergab Dr. Faisel Ahmed Gergab

Mr. Matar Mohamed Murad Al Blooshi Mr. Matar Mohamed Murad Al Blooshi

Dr. Ali Mahmoud Hassen Dr. Ali Mahmoud Hassen

Mr. Mohamed Salim Omair Al Shamsi Mr. Mohamed Salim Omair Al Shamsi

Mr. Ammar Ali Mohamed Jaber Mr. Ammar Ali Mohamed Jaber

Mr. Abdulla Abdulkarim Showaiter Mr. Abdulla Abdulkarim Showaiter

Mr. Adel A. Aziz Al Jabr Mr. Adel A. Aziz Al Jabr

Mr. Abdulla Ahmed Sultan Al Yousif Al Suwaidi Mr. Abdulla Ahmed Sultan Al Yousif Al Suwaidi

Mrs. Mayssoun Habra 1 Mrs. Mayssoun Habra

Mr. Khalid Jassim Bin Kalban 2 Dr. Saif Abugulal 1

1- Mrs. Mayssoun Habra appointed on 4th November, 2018. 1- Dr. Saif Abugulal appointed on 13th January 2019.

2- Mr. Khalid Jassim Bin Kalban resigned on 8th May, 2018.

Board’s Committees:

- Board Investment Committee (BIC):


Mr. Khaleefa Butti Omair Mr. Khaleefa Butti Omair

Mr. Matar Mohamed Murad Al Blooshi Mr. Matar Mohamed Murad Al Blooshi

Dr. Ali Mahmoud Hassen Dr. Ali Mahmoud Hassen

Mr. Mohamed Salim Omair Al Shamsi Mr. Mohamed Salim Omair Al Shamsi

Mr. Ammar Ali Mohamed Jaber 1 Mr. Ammar Ali Mohamed Jaber

1- Mr. Ammar Jaber shifted to this committee effective 6th December, 2018.

- Nomination, Remuneration & Governance Committee (NRGC):


Dr. Faisel Ahmed Gergab 1 Mr. Abdulla A. Karim Showaiter

Mr. Abdulla A. Karim Showaiter 2 Mr. Adel A. Aziz Al Jabr

Mr. Adel A. Aziz Al Jabr Mrs. Mayssoun Habra

Mrs. Mayssoun Habra 3 Sh. Dr. Osama Bahar

1- Dr. Faisel Gergab relocated to BARC on 6th December, 2018. * Sh. Dr. Osama Bahar appointed in this committee representing SSB on 4th Dec 2019.

2- Mr. Showaiter appointed in BARC on 6th December, 2018 beside his role in NRGC.

3- Mrs. Mayssoun Habra appointed in this committee on 6th December, 2018.



- Board Audit and Risk Committee (BARC):


Dr. Faisel Ahmed Gergab 1 Dr. Faisel Ahmed Gergab

Mr. Abdulla Ahmed Sultan Al Yousif Al Suwaidi Mr. Abdulla Ahmed Sultan Al Yousif Al Suwaidi

Mr. Abdulla A. Karim Showaiter 2 Dr. Saif Abugulal 1

Mr. Ammar Ali Mohamed Jaber 3 Mr. Abdulla A. Karim Showaiter 2

Mr. Khalid Jassim Bin Kalban 4

1- Dr. Faisel Gergab appointed in this committee on 6th December, 2018. 1- Dr. Saif Abugulal appointed in this committee on 5th February, 2019.

2- Mr. Showaiter appointed in BARC on 6th December, 2018 beside his role in NRGC. 2- Mr. Abdulla Showaiter unassigned from this committee on 5th February, 2019.

3- Mr. Ammar Jaber relocated to BIC on 6th December, 2018

4- Mr. Khalid Kalban resigned on 8th May, 2018.

Senior Management:


Name Designation Effective from Name Designation Effective from

Sh. Dr. Osama Bahar Head of Shari’a Compliance & AdvisoryJanuary2009 Mohammed Behzad

Head of Shari’a Coordination & Implementation April 2019

Mohammed Behzad Acting Head of Internal Shari’a Audit May 2019

h) Communications strategy:The Bank has a public disclosure policy approved by the Board of Directors. The Bank communicates with its customers and stakeholders in a timely manner through various channels. Information on developments, financial results, new products or any updates of existing products are placed on the Bank’s website www.1stenergybank.com and/or published in the media. The annual report includes all the notes for the current financial year and a minimum of five preceding financial years are provided on the Bank’s website. Product details are also disseminated to customers and other interested parties through prospectuses, brochures and/or periodic investment updates.

i) Distribution of ownership of shares by nationality:Refer to FEB shareholders list (Table 2) Page 28.

j) Directors’ and senior managers’ trading of the Bank’s shares during the year, on an individual basis: There was no such trading.

k) Distribution of ownership of shares by Directors and senior managers, on an individual basis:Directors and senior managers do not own any shares in the Bank.

l) Distribution of ownership of shares by size of shareholder: Refer to FEB Shareholders List (Table 2) Page 28.

m) Ownership of shares by government: The following government entities hold shares in the Bank:

- Libyan Investment Authority Government of Libya 16.25 %- Abu Dhabi Water & Electricity Authority Government of Abu Dhabi 15.00 %- Awqaf and Miners Affairs Foundation Government of Dubai 2.00 %- General Pension & Social Security Authority Government of UAE 1.25 %


n) The Board’s functions: - The Board aims to perpetuate a successful business and optimizing long term financial returns.- The Board is responsible for establishing the Bank’s policies and strategy and for regularly monitoring the effectiveness of executive management in

carrying out those policies and strategies.- The Bank has a formalized “Directors Handbook” which is reviewed and approved by the Board members annually. The same includes all matters reserved

for the Board and its sub-committees.

o) The types of material transactions that require Board approval: The Board has delegated certain approval authorities to the Management Risk Committee (MRC) and Board Investment Committee (BIC). These approval authorities are risk sensitive i.e. the higher the risk, the lower the approval authority amount. For the (MRC) the maximum approval amounts range from US$10MM to US$25MM, and for the (BIC) the maximum approval amounts range from US$30MM to US$70MM depending on the internal rating of the transactions and the investments. Any amount exceeding the BIC approval authority limit has to be approved by the Board.

p) Number and names of independent Board members: Refer to Note (a) - (III) Page 29.

q) Board terms and start date for each term for each Director: Started March 2017 – ends March 2020.

r) What the Board does to induct, educate and orient new Directors:The Board arranges induction sessions to new Directors to educate them about their responsibilities, the business of the Bank, the regulator’s rules and regulations and introducing them to management as well. Further, appointment letters are issued by the Board to all new Directors which clearly state the rights, duties, responsibilities and expectations from new Directors. New Directors are given copies of the Directors Handbook as well for further information on the responsibilities of the Board and its committees.

s) Election system of Directors and any termination arrangements: Directors are elected by the Shareholders General Meeting in accordance with the Bank’s Memorandum & Articles and the Commercial Companies Law.

t) Meeting dates (number of meetings during the year):Refer to the Board and Sub-Committees Meetings (Table 1) Page 24/25.

u) Attendance of Directors at each meeting:

Refer to the Board and Sub-Committees Meetings (Table 1) Page 24/25.

v) The Board’s code of ethical business conducts, and how the Board monitors compliance:The Directors have adopted a written code of conduct as included in the Director’s Handbook, which is approved by the Board. All Board members adheres to the following code of conduct:The Directors have adopted a written code of conduct as included in the Director’s Handbook, which is approved by the Board. All Board members adheres to the following code of conduct:1.1 To act with honesty, integrity and in good faith, with due diligence and care, with a view to the best interest of the Bank and its shareholders and other stakeholders. 1.2 To act only within the scope of their responsibilities and not participate in the day-to-day management of the Bank. 1.3 To have a proper understanding of, and competence to deal with the affairs and products of the Bank and devote sufficient time to their responsibilities. 1.4 To safeguard the confidentiality of Board discussions and deliberations.1.5 Not to make improper use of information gained through the position as a Director or take improper advantage of the position of Director.1.6 To make informed decisions with sufficient detailed knowledge of the Bank’s business and performance.1.7 To independently assess and question the policies, processes and procedures of the Bank, with the intent to identify and initiate management action on issues requiring improvement. 1.8 Not to agree to the Bank incurring an obligation unless he/she believes at the time, on reasonable grounds, that the Bank will be able to perform the obligations when it is required to do so.1.9 Not to agree to the business of the Bank being carried out or cause or allow the business to be carried out, in a manner likely to harm the Bank’s creditors.1.10 To deal fairly and show respect to all of the Bank’s employees and customers.



1.11 Not enter into competition with the Bank.1.12 Not demand or accept a substantial gift from the Bank for himself/herself or his/her associates.1.13 Not misuse the Bank’s assets. 1.14 Not take advantage of business opportunities to which the Bank is entitled for himself/herself or his/her associates.1.15 Disclose to the Board any potential conflicts of interest.1.16 Excuse themselves from any discussions or decision-making that involves a subject in which they are incapable of providing objective advice or which involves a real or potential conflict of interest.

The Directors’ observance of the code of conduct will be regularly reviewed by the Board Audit & Risk Committee.

w) Assessment of Board of Directors & Committees:The Board, its Committees and individual Directors are annually assessed by the Board with respect to their effectiveness and contribution.

x) Assessment of Independent Board members:The Independent Board members have been evaluated for their two consecutive terms and the assessment was satisfactory.

y) Minimum number of Board committee meetings per year, the actual number of Board meetings, attendance of committees’ members and the work of committees and any significant issues arising during the period:

- Refer to the Board and Sub-Committees Meetings (Table1) Page 24/25.

z) Review of internal control processes and procedures: The Board of Directors’ responsibilities are to:

- Review and evaluate the effectiveness of and/or weaknesses in the Bank’s internal controls, the overall control environment, accounting and financial controls.

- Ensure that the Bank’s operations, individually and collectively are measured, monitored and controlled by appropriate effective and prudent risk management systems that are commensurate with the scope of the Bank’s activities.

- Receive and discuss reports from management on an annual /periodic basis relating to compliance at the Bank (including anti-money laundering and regulatory compliance).

In fulfilling its responsibilities, the Board has established appropriate number of sub-committees with members having sufficient experience to enable them performing their functions effectively. The Board receive, review and discuss periodic reports from the management, internal / external auditors which assess effectiveness of the Bank’s internal control framework.

aa) Directors responsibility with regard to the preparation of financial statements:

The Board of Directors, through its Board Audit & Risk Committee periodic meetings, has the following responsibilities in respect of the financial statements:

- Review and discuss with the Bank’s management and external auditors the overall financial statements and assess any possible improprieties in financial reporting or other matters.

- Assess whether the Bank has followed appropriate accounting policies and made appropriate estimates and judgments, taking into account the views of the external auditors.

- Receive a written statement from the Bank’s CEO and the Head of Financial Control that the Bank’s interim and annual financial statements present a true and fair view, in all material respects, of the Bank’s financial condition and results of operations in accordance with applicable accounting standards.

bb) Website and Communication with Shareholders:Refer to the Communications Strategy Note (h) Page 31.

cc) Investor / consumer awareness programs for information on new products and services:Periodic progress reports are sent by the Investment Department to the respective Investors.

dd) Mediation and advice bureaus for investors and customers set up by the Bank, including clearly written procedures for logging of complaints:

FEB has appointed a Customer Complaints Officer who is acting as per the approved Customer Complaints Manual. His contact details are available on the website of the Bank.


ee) Social functions and charitable contributions of the Bank: Refer to note 29 of the consolidated financial statements.

ff) Governance arrangements, systems and controls employed by the Bank to ensure Shari’a compliance:Refer to Shari’a Section Page 26.

gg) Non-Shari’a-compliant earnings and expenditure and the manner in which they are disposed of:The non-Shari’a-complaint earnings and expenditure converted, by a decision of the Shari’a Supervisory Board of the Bank to a charity account.

hh) The annual Zakah contributions of the Bank, where relevant: Zakah is the responsibility of individual shareholders. However, it is paid by the Bank on behalf of the shareholders based on retained earnings and other reserve balances at the end of the year with the payment of Zakah on share capital being the responsibility of the Bank’s shareholders. For details of contributions, please refer to the statement of sources and uses of Zakah and Charity fund as well as note 24 within the consolidated financial statements.

ii) Aggregate remuneration paid to the Board of Directors and Shari’a Supervisory Board:

During the year remuneration was paid to the Shari’a Supervisory Board members amounted to USD 80,000 [2018: USD 80,000] whereas no

remuneration was paid to the Board of Directors.

jj) Remuneration policy of the Bank for Board members and senior management:Remuneration of senior management as well as for all staff is reviewed by the Nomination, Remuneration & Governance Committee and approved by the Board in line with CBB new remuneration requirements. With regards to Board members, AGM of the shareholder’s review and approve remuneration for Board members, if any.

kk) Aggregate remuneration paid to senior management. Details are as per note 23 of the consolidated financial statements.

OTHER DISCLOSURES:

a) Names of shareholders owning 5% or more:Refer to FEB Shareholders List (Table 2) Page 28.

The Bank is not aware that any shareholders owning 5% or more act in concert or of any voting, shareholders’ or other agreements among them.

b) Directorships held by the Directors on other Boards:Refer to The Board Bio’s Page 4.

c) Director’s trading of the Bank’s shares during the year:There was no such trading

d) Audit fees charged by the external auditor: The audit fees charged and non-audit services provided by external auditors have been made available to the shareholders as part and when requested.

Further details will be made available to the Bank’s shareholders as per their specific request provided that these disclosures would not negatively impact

the Bank’s interest and its competition in the market.

e) Non-audit services provided by external auditors: Refer (d) above.

f) Reasons for any switching of auditor and reappointing of auditor: Auditors were reappointed by the AGM for the new financial year.

g) Conflict of interest:The Directors Handbook issued to all Directors on joining the Board contains a detailed section on conflicts of interest describing the steps the Board takes



to ensure Directors exercise independent judgment in considering transactions and agreements in respect of which a Director or executive officer has a

material interest. The Handbook stresses that:

• The Board and its members must act with honesty, integrity and in good faith, with due diligence and care, with a view to the best interest of the

Bank and its shareholders and other stakeholders.

• Each Director must consider himself as representing all shareholders and must act accordingly.

• Directors must act ethically at all times and in accordance with the Code of Conduct and the Conflict of Interest policy.

• If an actual or potential conflict of interest arises in respect of a Director, the Director must promptly disclose such conflict to the Board.

• Each Director must make every practicable effort to arrange his personal and business affairs to avoid a conflict of interest with the Bank.

• A Director must absent himself from any discussion or decision-making that involves a subject where he is incapable of providing objective advice, or

which involves a subject, transaction or proposed transaction where there is a potential conflict of interest.

• The Secretary shall ascertain, at the beginning of each Board committee meeting, the existence of any conflicts of interest and minute them

accordingly.

• No conflict of interest was reported during 2019.

h) Employment of relatives of approved persons: The Bank has Human Resource policy duly approved by the Board which also includes matters related to employment of relatives of approved persons

and/or Shari’a Supervisory Board (“SBB”) members.

Spouses and other relatives up to the 3rd degree of FEB employees will not be permitted to work within the Bank. Exceptions to this policy may be made

only by the CEO.

i) Fines Please refer to Risk and Capital Management disclosure, “Regulatory Compliance”.

j) (HC) Module As per the requirements of the High-Level Controls (HC) Module of the CBB Rulebook, the Bank must comply with the Guidelines or explain its non-

compliance in the Annual Report. During 2019, the Bank has taken the required actions to address the identified gaps.


FINANCIAL STATEMENTS


20th February 2020

26th Jamadah II 1441 AH

SHARI’A SUPERVISORY BOARD REPORT TO THE SHAREHOLDERS

On the Activities of First Energy Bank B.S.C. (c) For the Financial Year End

creating a strategy for success...feb 07, 2020 · mr. al shamsi, a national of the united arab...

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