Basic Policy
Aozora Bank’s corporate governance principle is to establish an effective and transparent management framework. The management team is committed to maintaining the highest standards of compliance in every area in which we operate, and we continually identify and assess all potential risks and their likelihood of occurrence, carefully evaluating the impact on our business. Our systems are designed to provide optimal transparency, maintain a rigorous internal control framework and effectively manage the balance between risk and return.
In addition, we have been focusing on the establishment of a management system that is suitable for the shift to a domestic lending-focused business model that has sustainable profitability.
Organization and Structure
Separation of Management and Business Execution
In order to improve efficiency and transparency through the separation of management and business execution, the Board of Directors comprises mainly outside directors. The Board of Directors determines basic operational policy and management strategies and focuses on supervising the execution of daily business.With authority delegated by the Board of Directors, Executive Officers, including Representative Directors, form the Management Committee, which is dedicated to the execution of daily business. The Management Committee is the highest decision-making body for the execution of daily business, and comprises members from amongst the Executive Officers who are approved and appointed by the Board of Directors. This structure improves the speed of decision making, while at the same time the Executive Officers’ Meeting, comprising all of the Executive Officers, is held in order to share information.Various sub-committees are also established to improve efficiency in daily business execution.
Checks and Balances
Corporate Auditors monitor the business execution of the directors from the viewpoint of legality. Board-level committees, such as the Nomination and Remuneration Committee, the Special Audit Committee and the Audit and Compliance Committee, mainly comprise outside directors and are entrusted by the Board of Directors to perform supplementary supervision of and maintain checks and balances on the Representative Directors and the Executive Officers.
In addition, the Board of Directors maintains a system of checks and balances on the Executive Officers through the Internal Audit Division, which reports to them directly.
Internal Control Systems
On an annual basis, the Legal & Compliance Division, the Financial Reporting Control Division and others review the Basic Policy for Internal Control Systems. The Audit and Compliance Committee then examines it from a number of different perspectives, before deliberation and approval by the Board of Directors. In line with the internal management policy approved by the Board of Directors, the Aozora Bank Group operates with a strict and thorough approach to internal management.
In addition, the Financial Reporting Control Division and other divisions work toward enhancing internal control over financial reporting (J-SOX) through an entity-level assessment.
(As of July 1, 2011)
| Name of committee | Chaired by | Members | Frequency | Purpose |
|---|---|---|---|---|
| Board of Directors | Chairman or President | Directors, Corporate Auditors | Quarterly as a rule plus as needed | Decision-making regarding management strategies and supervision of business operations |
| Board of Corporate Auditors | Standing Corporate Auditor | Corporate Auditors | Monthly | Reporting, discussion and approval of important matters related to audits |
| Special Audit Committee | Outside Director | Directors (except from parent companies)Corporate Auditors | As needed | Audit transactions with parent company groups to avoid the Bank becoming a captive bank | Nomination and Remuneration Committee | Outside Director | Outside Directors | As needed | Recommend to the Board of Directors on appointment of Directors and Important Employees, and determine HR-related matters |
| Audit & Compliance Committee | Outside Director | Outside Directors | Quarterly as a rule plus as needed | Overseeing and review of internal audit, external audit, compliance, credit examination, risk management and financial reporting |
| Management Committee | Chairman, President or Deputy President | Management Committee Members (Note) | Weekly | Decision making regarding business operations |
| Asset and Liability Committee | CFO | President, Deputy Presidents, Executive Officers in charge | Monthly | Decision making regarding assets and liability management |
| Integrated Risk Policy Committee | CRO | President, Deputy Presidents, Executive Officers in charge | As needed | Approval of risk management policies, monitoring risk management system |
| Credit Committee(Credit transactions)<Institutional Credit Committee> | CCRO | President, Deputy Presidents, Executive Officers in charge | Weekly | Approval of credit transactions |
| Credit Committee(Credit transactions)<Retail Business Banking Credit Committee> | GM of Credit Division III | President, Deputy President, Executive Officers in charge | Weekly | Approval of credit transactions (Mainly SMEs) |
| Credit Committee(Finance facilitation) | Director in charge of Facilitation of Financing | Deputy Presidents, Executive Officers in charge | Monthly | Establishment of proper management system for finance facilitation to the Bank’s customers, in particular to SMEs, etc., defined by the “Act of Facilitation of Financing for SMEs”, and to improve operations supervision and guidance |
| Investment Committee | President | President, Deputy Presidents, Executive Officers in charge | Weekly | Approval of individual investment issues; establishing appropriate investment policies; accurate understanding of the Bank’s entire investment risk profile and building and maintaining a secure and profitable portfolio |
| New Business/Product Committee | Deputy President | President, Deputy Presidents, Executive Officers in charge | As needed | Assessment and approval of new products and new business from a compliance and risk perspective, as well as effective use of management resources |
| IT Committee | CTO | President, Deputy Presidents, Executive Officers in charge | Monthly | Approval and monitoring of IT projects and business infrastructure projects that enable business plans and strategies that are approved by Management Committee |
| Customer Protection Committee | Head of Compliance & Governance | Deputy Presidents, Executive Officers, General Manager in charge, In-house Lawyer | Monthly | Authorize and review the status of customer protection regarding customer explanation, customer support, customer information, outsourcing and conflict of interest |
(As of July 1, 2011)
(Note) The Board of Directors appoints Management Committee Members from among Representative Directors and Executive Officers.
