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Measures to Enhance Corporate Governance
Hyakugo Bank understands the importance of strengthening corporate governance in order to quickly respond to change and exercise true competitiveness in a drastically changing operating environment.
In these conditions, Hyakugo Bank has established the Board of Directors and Management Committee to improve efficiency, accelerate decision making and enhance management transparency. In April 2004, we also established the Compliance Division, which reports directly to the board of directors. Besides functioning as a business auditing office, it has strengthened internal checks and legal compliance measures.
In addition, we have strengthened corporate governance by appointing an outside auditor, establishing committees including the Risk Management Committee and Compliance Committee, and enhancing investor relations activities.
Fundamental Risk Management Policies and Administrative Systems
The number of risks to which banks are directly exposed has increased steadily, which has heightened the importance of managing each type of risk. Hyakugo Bank has established its Risk Management Policy as the basis for integrated risk management and administration. The Risk Management Committee meets once a month to gauge and respond appropriately to each type of risk in order to maintain management soundness. In addition, the Audit Division is independent from business divisions, and conducts audits of business operations and examines the appropriateness and effectiveness of management within each of the Bank’s divisions.
[1] Credit Risk Management
Hyakugo Bank has always clearly separated its sales promotion and credit investigation functions to carry out rigorous assessment and control of credit risk. Moreover, the Bank has established a credit policy that controls the concentration of credit in any single company or corporate group. It also supports the Bank’s efforts to understand borrower conditions according to parameters including industry and region, and diversify its credit portfolio. In addition, Hyakugo Bank has implemented a 12-point internal credit rating system to assess borrower creditworthiness and quantify credit risk.
[2] Market Risk and Liquidity Risk Management
The influence of changes in interest rates, foreign currency exchange rates, stock prices and other market movements on bank earnings has increased steadily. Consequently, Hyakugo Bank has strengthened its asset and liability management (ALM) capabilities with the objective of securing stable earnings. Specifically, the ALM Committee meets monthly to analyze the composition of assets such as loans and securities and liabilities such as deposits. The Bank also has policies for using swaps and other techniques to hedge risk based on interest rate projections.
[3] Administrative and Systems Risk
While promoting rigorous and systematic administration, Hyakugo Bank has enhanced training and administrative guidance within the Bank to increase control and guidance capabilities.
Hyakugo Bank has prepared for natural disasters and problems with hardware, software, and information and communication systems by establishing a thorough back-up system. The Bank has also moved forward with emergency preparedness through measures such as strengthening building safety. Based on the Security Policy covering all information assets, the Bank has established the Information Management Committee as another means of appropriately managing and preserving information assets.
Compliance Measures
Compliance is one of management’s highest priorities at Hyakugo Bank. In addition to issuing a business guidebook that states fundamental guidelines for compliance within the Bank, we have created a Compliance Committee chaired by the president, and established a Compliance Division to conduct unified supervision and promotion of compliance. Moreover, compliance officers are assigned to all headquarter departments, regional headquarters and branches, and we formulate a compliance program every year as a concrete action plan to proactively prevent legal infractions and check the status of compliance. |
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