Chapter I Disclosure of Information

Transcription

1 Chapter I Disclosure of Information 1. Organisation charts referring to the division of responsibilities within the scope of the corporate decision process The management and auditing structure adopted by Banco Comercial Português consists of a Board of Directors and of a Board of Auditors, without delegation of powers on a Executive Board. However, in the scope of the corporate decision process, there are several corporate bodies, specific committees and corporate units that, being either elected at the General Meeting of Shareholders or appointed by the Board of Directors, help the latter performing its functions, allowing Banco Comercial Português to keep a flexible organisational structure, with few hierarchic levels, and to clearly segregate between Business Areas (which evaluate, contract and manage transactions) and Operations Areas (which check, process and control them). In this connection, a special word is due to ServiBanca Empresa de Prestação de Serviços,ACE, an incorporated joint venture set up in It is the main structure providing for the integration, optimisation and rationalisation of the Group s information technology, operative, administrative and procurement resources. ServiBanca has a number of organic units whose mission is the management of resources and the provision of services, particularly to the commercial platforms, or that carry on their activity within the scope of support to the corporate management of the Group companies. ServiBanca is managed by a Board of Directors elected by its General Meeting at the proposal of Banco Comercial Português. At this time it comprises nine directors, of whom eight, including the Chairman and the Deputy chairman, are directors of Banco Comercial Português. 109

2 Organigrama General Meeting of Shareholders Remunerations and Welfare Customer Ombusman (*) Board of Directors Internal Control s Commercial Structure Compliance Office Risk Office Corporate Governance Steering Social Relations Training and Career Development Assets and Liabilities (ALCO) Retail Companies Specialised Credit Private Banking Asset Management Bancassurance Contact Centre Financial Investments Technologies and Means Audit and Security Risk Money-Laundering Prevention ICO International Core Operations Steering IAO International Affinity Operation Steering (*) The Client Ombudsman is fully independent 110

3 Board of Auditors Senior Board Audit Board Central Services Subsidiaries General Corporate Office Audit Division Internacional Division Securities Division Credit Risk Division Credit Recovery Division Corporate Centre Operations Division Legal Division Specialised Credit Contracting Division Investor Relations Division Banco de investimento imobiliário Millennium bcp investimento ActivoBank7 Interbanco Millenniumbcp Fortis BIM/SIM/BIM Leasing/BIM Investimento Banco Comercial de Macau/Companhia de Seguros de Macau Bank Millennium Banque Privée BCP (Suisse) Banque BCP Communication and Institutional Relations Division Administrative and Premises Division Purchases Division Real Estate Divestment Unit Training and Professional Development Division Human Resources Division Security Division IT bcpbank NovaBank / BankEuropa 111

4 2. The Company s specific Boards and s This section deals with the Senior Board, Audit Board, Customer Ombudsman, Compliance Officer, Risk Officer and the various committees set up as approved by the Board of Directors as part of the efforts made in recent years with a view to the pursuit of best corporate governance practices. Neither the Senior Board nor the Audit Board, which must be mentioned in this report for their characteristics and specific duties, are listed among the corporate boards called for by law, neither they are appointed by the Board of Directors; they are bodies instituted by the articles of association of Banco Comercial Português The Senior Board comprises solely Shareholders of the Bank numbering no less than 12, elected by the General Meeting. Its composition is as follows: Chairman: António Manuel Ferreira da Costa Gonçalves Deputy Chairmen: João Alberto Pinto Basto Pedro Maria Calaínho Teixeira Duarte Vasco Maria Guimarães José de Mello Gijsbert J. Swalef Members: Ângelo Ludgero da Silva Marques António Augusto Serra Campos Dias da Cunha Dimitrios Contominas E. Alexandre Soares dos Santos Francisco de La Fuente Sánchez Giovanni Boccolini Henrique Jaime Welsh Herculano José Fernandes Hipólito Mendes Pires Jaime de Sousa Lima Jassim Mohamed Al-Bahar João Manuel de Quevedo Pereira Coutinho Jorge Augusto Caetano Silva José de Mello José Alfredo Parreira Holtreman Roquette José Manuel Pita Goes Ferreira Josep Oliu Creus José de Sousa Cunhal Melero Sendim Keith Satchell Manuel Roseta Fino Mário da Graça Machungo Vasco Luís S. Quevedo Pessanha O Presidente da Mesa da Assembleia Geral (due to his functions) O Presidente do Conselho Fiscal (due to his functions) O Presidente do Conselho de Administração (due to his functions) 112

5 It is charged specially with monitoring corporate life and with providing a prior opinion on the more relevant aspects of the business of the Bank and of the Group, particularly with regard to: general management policy; plan of activities; annual budgets and investment plans; co-option of directors; requests to convene General Meetings and proposals for reports to be submitted to them; annual management report and accounts; major extensions or reductions of the Company s business and major changes to its organisation; changes of the registered office; share capital increases; and Company split, incorporation and transformation projects. It is also charged with appointing two members of the Audit Board. During 2004, the Senior Board met on 4 occasions in the scope of its normal duty of monitoring corporate life and on 1 occasion due to an extraordinary convening from the Board of Directors, in order to express its opinion on the restructuring of the Group s insurance area The Audit Board is chaired by the chairman of the Board of Auditors or, in his absence, by a person appointed by the Senior Board, and includes a further two members of adequate profile and experience appointed by the Senior Board from among its members. Currently, the Audit Board is chaired by the Chairman of the Board of Auditors, Mr. Ricardo Bayão Horta. Mr. José Roquette and Mr.Vasco de Mello are its members. The Audit Board is charged in particular, and without prejudice to the duties proper to the Board of Auditors, with: the permanent monitoring of the activity of the Company s external auditors and the issue of an opinion on their appointment, exoneration and relations with the Company; evaluating and monitoring internal procedures relating to the reception and processing of complaints and doubts concerning accounting matters; and proposing to the Board of Directors the adoption of such measures or corrections as it may deem fit. The Audit Board meets every three months, with the presence of the members of the Board of Directors responsible for accounting and Audit. During 2004, subjects analysed by the Audit Board included the following: presentation of quarterly earnings; control of risks and monitoring prudential indicators; monitoring the activity of external auditors; monitoring the activity of internal audit; and changes to accounting policies The mission of the Customer Ombudsman is to promote in their relations with the Group the defence of the interests of those Customers that contact it, recommending the adoption or alteration of practices or procedures to prevent or repair cases of conflict or other cases that do not provide Customers with proper protection of their interests. Impartial, quick, confidential and free-of-charge service are the main guidelines for the Customer Ombudsman activity. During the year now ended, the Customer Ombudsman monitored 748 simple complaints that came through ServiBanca s Contact Centre, the unit charged with the primary handling of complaints. The Client Ombudsman acts as a second instance to Customer s complaints. Under this role, the Client Ombudsman analysed 44 appeals and elaborated 7 recommendations, of which 5 obtained approval from the Board of Directors. 113

6 Monthly Activity (first complaints + appeals) Customer Ombudsman's data became available at millenniumbcp's internet portal Mar. Apr. May. Jul. Jun. Aug. Sep. Oct. Nov. Dec. Mr. Eduardo Consiglieri Pedroso, a person of recognised competence and considerable experience in banking business, held this function during At this time he has no employment tie with Banco Comercial Português or with any company or institution controlled by it The duties of the Compliance Officer are: to ensure that management bodies, functional structures and all Employees of the Banco Comercial Português Group comply with legislation, rules and regulations (both internal and external) applicable to the activity of the Bank and of its associated companies; to support the management of the Business, Product and Customer areas and units insofar as their applicability and conformity with applicable legislation and regulations are concerned; and to support and to promote training activities and programmes in this domain. During 2004, the activity of the Compliance Officer was directed not only to the Bank and its subsidiaries in Portugal, but also to branches and subsidiaries abroad. Representatives of the Compliance Officer were recruited or are being recruited, and their activities will be directed specifically to each business area in Portugal. Outside of Portugal, Compliance Officers were also recruited or are being recruited for the main subsidiaries and branches abroad. During 2004, Mr. Leandro Delgado, general manager of the Bank, held the position of Compliance Officer The duties of the Risk Officer are to support the Board of Directors in the development and implementation of risk-management procedures in the various aspects and jurisdictions. During 2004, the Risk Officer focused his activity on the creation of an efficient infrastructure for managing and controlling risks, reconciling requirements typical to this approach with the ones arising from the implementation of International Accounting Standards and from the new Basel Agreement, intended at an organisational centralisation and at integration of the wide ranging branches of risk management. A set of initiatives was developed within this framework, aimed at making available a new structure of information, embracing all operations, at the acquisition of a new analytical system for calculating risks, that will allow reusing methods and tools for different purposes, and at adapting internal regulations. The definition and implementation of a model for calculating imparity according to IAS 39, to be used by all the Group s entities, and the modelisation of the Bank s operational processes in order to allow operational risk to be calculated and the monitoring of the internal control system to be improved, were other of the main projects developed during the year. 114

7 A routine for monitoring the various credit granting and credit quality evaluation systems was implemented, ensuring the permanent adequacy of models used. Operations abroad were monitored with a view to widening the best practices already used in the Portuguese operations to these subsidiaries. In parallel, the Risk Officer supported the activities of the Risk and of the Assets and Liabilities (ALCO) s. During 2004, Mr. Miguel Pessanha, general manager of the Bank, held this position The s detailed below are appointed by the Board of Directors, to which they report. They were instituted to ensure the adoption of best corporate governance, operational performance and control practices.they all include directors and members of the Bank s senior management The purpose of the Corporate Governance Steering is to supervise Group compliance with legal, regulatory and statutory provisions concerning the governance of the Company and to discuss and approve measures designed to introduce or alter the principles observed and the procedures adopted by the Group in its governance. It comprises five members of the Board of Directors, including the chairman and a deputy chairman, the Company secretary and two members of the Bank s senior management The purpose of the Social Relations is to develop the Group s relations with its social partners, namely unions and worker committees, appraising and discussing the terms of these relations. It comprises a deputy chairman of the Board of Directors, the Company secretary and three members of the Bank s senior management. During 2004, this committee met once a month with the Workers and negotiated Collective Labour Agreements with the sector s unions, resulting in their revision. New Collective Labour Agreements became effective from January 1, This was also responsible for the approval of 69 proposals for the social support of workers, active and retired The purpose of the Training and Career Development is to monitor and to propose measures in respect of the training and career development of the Group Employees. It comprises all members of the Board of Directors, the Company secretary and two members of the Bank s senior management.taking into account its specific characteristics, the heads of those organic units and Group companies whose Employees are covered by decisions to be taken at each meeting have a seat on this committee The purpose of the Assets and Liabilities (ALCO) is the tactical management of the market and liquidity risks of the Bank and of the Group, which it controls. It comprises four members of the Board of Directors, including one deputy chairman, a consultant of the Board, five members of the Bank s senior management and six managers, four of whom belonging to subsidiaries headquartered abroad The purpose of the Financial Investments is the appraisal and approval of investment in and sale of financial assets. It comprises four members of the Board of Directors, including a deputy chairman, and three members of the Bank s senior management The purpose of the Technologies and Means is to analyse and approve investments, contracts and divestments in respect of the overall management of technological resources, including information technologies and telecommunications put at the disposal of the Group s companies and Employees. It comprises six members of the Board of Directors, including a deputy chairman, and three members of the Bank s senior management. 115

8 The purpose of the Audit and Security is to look after the Group s physical and systems security. It comprises six members of the Board of Directors, including both deputy chairmen, three members of the Bank s senior management and one manager The purpose of the Risk is to monitor the general level of risk assumed by the Group, ensuring its compliance with approved goals and strategies. It is headed by the chairman of the Board of Directors and comprises the remaining members of the Board of Directors, the Risk Officer and four managers responsible for Bank s Divisions involved in the process of risk management. The Risk is entrusted with promoting a continuous improvement to risk evaluation and management processes, ensuring its permanent adequacy to the nature of the Group s activity, in line with both the Institution s strategic goals and the best practices in this area The purpose of the Money-Laundering Prevention is to prevent use of the Group to launder money, ensuring compliance with legal and regulatory rules in force in this matter. It comprises one member of the Board of Directors, the Compliance Officer, ten members of the Bank s senior management and one manager The role of the ICO International Core Operations Steering is to monitor the evolution of the Group s subsidiaries in Poland and in Greece. It comprises eight members, of which seven are members of the Board of Directors of Banco Comercial Português, of Bank Millennium and of NovaBank, and one is a member of the Bank s senior management The role of IAO International Affinity Operations Steering is to monitor the evolution of the Group s subsidiaries in Canada, United States, France, Luxembourg, Macao (China) and Mozambique. It comprises eight members, of which seven are members of the Board of Directors of Banco Comercial Português or of those subsidiaries, and one is a member of the Bank s senior management. 3. Risks Control in the Company s Business The risks control system implemented by the Bank, of which the Risk Office and the Risk, referred above, are particularly relevant, is analysed in detail in the Report of Directors, the current Report being an attachment to it. Refer to the "Risk Management" section included in the Report of Directors for detailed information on this matter. 4. The BCP share, share price evolution and dividend policy The Banco Comercial Português shares appreciated 6.8% in Taking into account the gross dividends distributed during the year, the total return provided by BCP shares amounted to 11.8%. During the same period, the gain returned by the BEBANKS European banks index ("Bloomberg Europe Banks and Financial Services Index"), excluding dividends, amounted to 10.9%. The evolution of the Bank s share price during the year was generally in step with that of the international markets, with the minimum price of 1.66 euros being set right at the beginning of the year followed by a significant appreciation that led to the year s maximum of 2.19 euros in March. During the second and third quarters the share price fell during a considerable period, in line with the markets as a whole, having fallen to a new low of 1.68 euros on August 3 following 116

9 the placement in "accelerated book building" of about 3% of the Bank s share capital held by a qualified Shareholder.This transaction was carried out within the scope of the agreement to sell the insurance businesses announced in July. The following table summarises the performance of BCP shares in BCP share price performance in 2004 Source: Bloomberg Share price at 31 Dec euros Share price at 31 Dec euros Average share price 1.87 euros Low 1.66 euros 12 Jan. 04 High 2.19 euros 9 Mar. 04 Share price performance from 31 Dec. 03 to 31 Dec % Market capitalisation at 31 Dec. 04 Ordinary shares 6.1 billion euros Mandatorily convertible securities 0.7 billion euros Total 6.8 billion euros The following table details the main events related with BCP that occurred in 2004 and the performance of the share price that followed. Price Price Event Date change change next next day 5 days 2003 earnings announcement 20 Jan % +3.6% Dividend payment in respect of 2003 (gross dividend per share 0.06 euros) 13 Apr % -2.4% 1st quarter 2004 earnings announcement 20 Apr % -6.3% 2nd quarter 2004 earnings announcement and announcement of the agreement for the sale of Seguros e Pensões and of the accelerated book building placement of 3% of the Bank s share capital 19 Jul % -1.7% 3rd quarter 2004 earnings announcement and announcement of an interim dividend payment 19 Oct % -1.1% Interim dividend payment 08 Nov % -0.5% The performance of the Banco Comercial Português shares, the analysis of their liquidity, the description of the dividend policy adopted and the identification of relevant facts that took place in 2004 are subject to a more exhaustive analysis in a section of the Report of Directors, the current Report being an attachment to it. Refer to the "BCP Shares on the Stock Market" section included in the Report of Directors for detailed information on this matter. 117

10 5. Share Subscription Rights for the Staff of the Banco Comercial Português Group Within the scope of its policy designed to increasingly bind the Employees of the Bank and of the Group to its share capital as a means of increasing the Institution s capability and efficacy policy approved by the Bank s General Meeting, two Share Subscription Rights Programmes are currently in effect for the staff of the Group. During 2004 the rights programme granted in 2001 was extinguished, no rights having been exercised Characterisation of the rights programme granted in Beneficiaries Employees meeting one of the following conditions: bonus in respect of 2001 equal to or greater than EUR 15,000; participation in the Banco Comercial Português share subscription rights programme offered to the Group Employees in Benefit granted Beneficiaries will be entitled, as from March 2005 and on the occasion of the share capital increase(s) to be undertaken expressly for the purpose, to subscribe to Banco Comercial Português shares at a price of 3.86 euros (a discount of 2% on the average closing prices of the 5 market sessions next before January 8, 2002 the date of the Board of Directors meeting that fixed the price of the exercise of this right in keeping with the deliberation of the General Meeting that approved the present programme, held on March 26, 2001) Number of shares required for the exercise of the rights As at January 1, 2004, the number of the Group Employees entitled to this share subscription programme was 1,048 and the number of shares required to cover the exercise of these rights was 10,913,652. As at December 31, 2004, the number of the Group Employees entitled to this share subscription programme was 1,012 and the number of shares required to cover the full exercise of this right was 10,451, Characterisation of the rights programme granted in Beneficiaries Group Employees meeting one of the following conditions: bonus in respect of 2002 equal to or greater than EUR 15,000; or participation in the Banco Comercial Português share subscription rights programme offered to Group Employees during Benefit granted Beneficiaries will be entitled, as from March 2006 and on the occasion of the share capital increase(s) to be undertaken expressly for the purpose, to subscribe to Banco 118

11 Comercial Português shares at a price of 1.26 euros (a discount of 2% on the average closing prices of the 5 market sessions next before April 21, 2003 the date of the Board of Directors meeting that fixed the price of the exercise of this right in keeping with the deliberation of the General Meeting that approved the present programme, held on March 26, 2001) Number of shares required for the exercise of the rights As at January 1, 2004 the number of the Group Employees entitled to this share subscription programme was 1,224 and the number of shares required to cover the full exercise of these rights was 26,269,755. As at December 31, 2004, the number of the Group Employees entitled to this share subscription programme was 1,195 and the number of shares required to cover the exercise of this right was 25,697, Characteristics common to all the foregoing programmes With the exception of cases of retirement, disability or death, the rights lapse when the Employee severs his/her tie with the Group or is suspended from duties for disciplinary reasons. The rights also lapse if the Employee comes to be excluded from future bonus for reasons to do with his/her professional performance. There are no clauses preventing the disposal of shares required under these programmes. 6. Deals and transactions carried out on the one hand by the Company and, on the other, by corporate boards, holders of qualified holdings or companies in a controlling or group relationship not undertaken under market conditions customary for similar operations or that are not part of the Bank s day-to-day business No deals or transactions were carried out under these circumstances. 7. Investors Relations Division The commitment to ensuring a complete, rigorous and efficient relationship with domestic and foreign investors, with the supervisory entities and with the market in general has been a constant feature since the inception of Banco Comercial Português. The main function of the Investors Relations Division (DRI) is to provide the market with full information regarding events, relevant facts, quarterly results and news related with the Bank and Group s activity and, in parallel, to reply to questions or requests for clarification made by investors or by the public in general regarding the financial information and information of a public nature connected with the Group s business. Within the scope of its advisory services given to the Bank s Board, the DRI regularly and assiduously monitors the daily performance of the BCP shares and other securities listed on the Euronext Lisbon price, turnover and liquidity as well as the indices of the sector and of the market in general. In this connection, the DRI sponsors frequent, regular programmes with insti- 119

12 tutional investors and domestic and foreign financial analysts and aids the Board in these direct contacts investors day and road shows within the framework of a policy of an increasing proximity to the investor community. The DRI participated in the main investor conferences on the financial sector and has organised a high number of road shows, covering the main financial centres, both in Europe (Lisbon, London, Paris, Frankfurt, Amsterdam, Milan) and in the USA (New York and Boston), and more than 140 one-on-one meetings. The realisation of the Investors Day of Banco Comercial Português for the second year is also worth-noting. It was attended by more than 50 institutional investors and financial analysts, and presented the main initiatives to develop the Bank s business, to increase profitability and to increase the strategic focus. The Investors Relations Division can be contacted by: Telephone: Fax: investors@millenniumbcp.pt Representative for Market Relations: Miguel Magalhães Duarte, General Manager The Company s internet site: The Investors page on the site provides a Calendar of Events, kept up to date at all times, containing information on the more important events, both past and future, in respect of the Bank and of the Group, as well as financial information, including annual reports for the last five years, and information on the performance of BCP share price and on the composition of the Board of Directors.The Bank s articles of association, its organisational model and a list of its main Shareholders are also available on the site. 8. Remunerations The Remunerations and Welfare comprises Shareholders elected by the General Meeting on February 24, Its present members are: Chairman: António Manuel Ferreira da Costa Gonçalves Members: João Alberto Ferreira Pinto Basto Pedro Maria Calaínho Teixeira Duarte No member of the Remunerations and Welfare is a member of the Board of Directors or a spouse, relative or ascendant or descendant in the third degree of any such member. 9. Annual Remuneration Paid to the Auditors During 2003, Banco Comercial Português and/or those corporate persons that are in a controlling or group relation with it bore fees charged by KPMG (Portugal and abroad), 120

13 its auditor, and by any natural or corporate persons belonging to the same network in the sum of 6,842,000 euros, broken down by the various types of service provided as follows: Fees Euros % Audit services 3,584,000 52% Audit related services 1,461,000 21% Tax consultancy services 582,000 9% Other non-audit services 1,215,000 18% 6,842, % In order to safeguard the independence of the auditor and taking into account best national and international practices and standards, particularly the Sarbanes-Oxley Act, the Bank and KPMG approved the set of rules described hereunder: KPMG and those companies or corporate persons belonging to the same network may not provide the Bank or the Group with any services that are considered prohibited under paragraph 201 of the Sarbanes-Oxley Act; The hiring of other non-prohibited services by any of the Bank s organic units or subsidiaries requires the prior approval of the Bank s Audit Board. Such approval has been specifically granted for a predefined number of services for a renewable period of 12 months. Specific approval by the Audit Board is required for other services. Additionally, KPMG has implemented on its Intranet, at international level, a system known as "Sentinel", which subjects the provision of services by any KPMG office to listed companies to authorisation by the Global Lead Partner responsible for the client.this procedure means that the KPMG partner to whom the request for service is made must apply for prior authorisation to the Global Lead Partner.The request must contain the grounds for the work in question, particularly those factors allowing an evaluation of compliance with the applicable Risk Management rules, and consequently of the independence of KPMG. The Global Lead Partner is also responsible for verifying that the offers presented through the Sentinel system are covered by the rules on pre-approval of services, and, when necessary and in conjunction with the Audit Board, takes the necessary steps with a view to ensuring strict compliance with the applicable rules of independence. All the foregoing procedures are also subject to conformity tests within the scope of the Quality Control carried out each year by KPMG. 121