CORPORATE GOVERNANCE SYSTEM

 Effective corporate governance practices are essential to achieving and maintaining public trust and confidence in the banking system. Poor corporate governance may contribute to bank failures, which can pose significant public costs and consequences due to the potential impact on any applicable deposit insurance systems as well as can lead the markets to lose confidence in the institution and at the end liquidity crisis. In addition to their responsibilities for the Shareholders and Management.

A corporate governance is a set of relationships between a company's management its board and its Shareholder. Good corporate governance should provide proper incentives for the board and the management to pursue objectives that are in the interest of the bank and its shareholders.

A good corporate governance must:

- Have a clear organizational structure with well-defined, transparent and consistent lines of responsibility.

- Have effective processes to identify, manage, monitor and report the risks to which they are  or could be exposed.

- Have adequate internal control mechanisms, including correct administrative and accounting procedures.

- Carry out policies and practices of remuneration that are consistent with a correct and effective risk management and promote it.

The functions of the Board of Directors and General Management with regard to setting policies, implementing policies and monitoring  compliance are key elements in the control functions of the bank and effective oversight of the business and affairs of the bank.

Aresbank, S.A. has a corporate governance system in place, duly approved by the relevant governing bodies, which guarantees the sound and prudent management of the entity and which includes a proper distribution of functions within the organisation and the prevention of conflicts of interest. That system is contained in the following documents:

1) Aresbank’s By-laws (Articles of Association), last modified in October 2015 by the General Assembly.

2) Aresbank’s Regulation of the Board of Directors, last modified in October 2017 by the Board of Directors.

3) Aresbank’s Structure and Organization Manual, last modified in May 2021 by the Board of Directors.

4) Internal Audit Charter, approved by the Audit, Risk & Compliance Committee in November 2017 and last modified in December 2020. 

5) Credit Approval Procedure last modified on June 2016 by the Board of Directors

6)  Remuneration and Dividend’s Pay Out, last modified on December 2017 by the Board of Directors.

7) Code of Conduct, last modified in June 2020 by the Board of Directors.

8) Procedure for the Assessment of the Suitability of the Administration Body and the Holders of Key Positions, last modified on January 2018 by the Board of Directors.

9) Regulation for Customer Protection approved in August 2015  by the Board of Directors.

    

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EVALUATION OF THE EFFECTIVENESS OF THE CORPORATE GOVERNANCE SYSTEM OF THE BANK

 The Board of Directors of Aresbank proceeds to evaluate the quality and effectiveness of the corporate governance system of the company, its own development and the development of its Committees, as well as the performance of the duties by the Chairman, the Directors as well as the General Management of the bank.

There is evidence that good governance practices and the control system as a whole were strengthened lately. 

In compliance with the provisions of Law 10/2014 of 26 June on the Regulation, Supervision and Solvency of Credit Institutions several measures were implemented by the high Management of the company, among which can be highlighted the establishment of a joint Nominations and Remunerations Committee, the approval of the Salary Policy of the bank or the adaptation of the internal operational rules of the bank like the By-Laws and Regulations of the Board to the Law.

Thus, we can say that we have adopted the principles of good governance in our management model and we have articulated in creating value for the company.

In addition, new measures concerning the adaptation of the By-Laws of the bank to the Spanish Companies Act aimed at further strengthening the corporate governance of the company.