The governance framework at Al Rajhi Bank comprises the General Assembly, the Board of Directors, the Shariah Board, as well as five board committees and a group of executive management committees of the first and second levels. This governance structure relies on a set of key pillars that ensure clarity and sound governance. These pillars are the Bank’s values, design of the organisational structure, policies and procedures, the delegation of authority matrix, and effective communication between various internal and external stakeholders.
Policies related to the Corporate Governance Manual
The Bank applies the Principles of Governance for Banks Operating in Saudi Arabia issued by the Saudi Central Bank as well as the Corporate Governance Regulations issued by the Capital Market Authority. The Bank has developed its Corporate Manual and the charters that regulate the Board Committees and management committees. These documents are subject to periodic review by the Board and its committees.
The Bank adopts a comprehensive set of policies and procedures that strengthen the Bank’s governance framework in line with the Board of Directors approved Delegation of Authorities (DOA) matrix to adequately reflect internal practices. At the forefront of these policies is the Related Party Transactions and Conflict of Interest Policy to better achieve transparency and integrity, while remaining compliant with the regulatory requirements under the Companies Law, the CMA Governance Regulations, and the principles and guidelines issued by SAMA.
The Bank also relies on written disclosure policies and regulations that enable shareholders and stakeholders to have access to all material information and developments without discrimination and in a timely manner. This includes information required to be disclosed according to the instructions of Saudi Central Bank and under the regulations of Capital Market Authority (CMA).
The Bank pays adequate attention to the training and qualification of members of the Board of Directors and the executive management. The Bank has prepared an introductory guide to assist the new Board members and provide them with necessary information on the Bank’s strategy, financial and operational aspects, and their obligations and duties.
The Bank also applies procedures for settling customer and shareholder complaints. These procedures are monitored by Saudi Central Bank and Capital Market Authority. The Bank has also implemented a social responsibility policy aiming at enhancing the Bank’s social role.
Corporate Governance Regulations issued by Capital Market Authority
The Bank has given due cognisance to the Corporate Governance Regulations currently in effect, as issued by the Capital Market Authority in the Kingdom of Saudi Arabia. The following is a report on the Bank’s corporate governance practices and the extent of its compliance with Capital Market Authority’s regulations.
Implementation and non-implementation of Corporate Governance Regulations Provisions
The Bank applies all provisions of Corporate Governance Regulations issued by the CMA, except the following guiding provisions:
| Article/Clause Number | Article/Clause | Reasons for not applying |
| Article 41 Clause “E” | The Board shall carry out the necessary arrangements to obtain an assessment of its performance from a competent third party every three years. (Guiding paragraph) | The evaluation is done internally on an annual basis. |
| Article 54 Clause “B” | The Chairman of the Audit Committee shall be an independent member. (Guiding paragraph) | The Chairman of Audit and Compliance Committee at the Bank is a non-executive board member who is selected due to his qualifications suitable for the position. |
| Article 87 | The Ordinary General Assembly, based on the Board recommendation, shall establish a policy that guarantees a balance between its objectives and those of the society for purposes of developing the social and economic conditions of the society. (Guiding article) | ARB has a social responsibility Policy approved by the Board of Directors. |
Board Structure
The Bank is managed by a Board of Directors consisting of eleven members, elected by the ordinary general assembly every three years. Members whose term has expired may be re-elected each time according to the Bank’s regulations.
Names of the companies inside and outside the Kingdom in which a Board member is a manager or a member of their current or previous Board
| Member name | Names of companies where the Board member is a member of its current Boards or one of its directors | Inside/outside the Kingdom | Legal entity | Names of companies where the Board member is a member of its previous Boards or one of its directors | Inside/ outside the Kingdom | Legal entity |
| Abdullah bin Sulaiman Al Rajhi
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Inside the Kingdom |
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Inside the Kingdom |
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| Ibrahim Bin Mohammed Al Rumaih
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Inside the Kingdom |
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Inside the Kingdom |
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| Abdulaziz bin Khalid Al Ghufaily
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Inside the Kingdom |
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Inside the Kingdom |
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| Badr bin Mohammed Al Rajhi
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Inside the Kingdom |
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Inside the Kingdom |
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| Khalid bin Abdulrahman Al Gwaiz
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Inside the Kingdom |
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Inside the Kingdom |
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| Alaa bin Shakib Al Jabri
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Inside the Kingdom |
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Inside the Kingdom Inside and outside the kingdom Inside the Kingdom Inside the Kingdom |
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| Ibrahim bin Fahad Al Ghofaily
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Inside the Kingdom |
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Inside the Kingdom |
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| Stefano Paolo Bertamini
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Outside the Kingdom |
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Inside the Kingdom Outside the Kingdom Outside the Kingdom |
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| Hamza bin Othman Khoshaim
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Inside the Kingdom |
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Inside the Kingdom |
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| Raeed bin Abdullah Al-Tamimi
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Inside the Kingdom |
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Inside the Kingdom |
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| Abdulatif bin Ali Al Seif
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Inside the Kingdom |
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Inside the Kingdom |
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Composition of the Board and classification of its members, as Executive members, Non-Executive members, or Independent members
| Member name | Membership rating (Executive/Non-Executive/Independent) |
| Abdullah bin Sulaiman Al Rajhi | Non-Executive |
| Ibrahim Bin Mohammed Al Rumaih | Independent |
| Abdulaziz bin Khaled Al Ghufaily | Non-Executive |
| Badr bin Mohammed Al Rajhi | Non-Executive |
| Khalid bin Abdulrahman Al Gwaiz | Non-Executive |
| Alaa bin Shakib Al Jabri | Independent |
| Ibrahim bin Fahad Al Ghofaily | Independent |
| Stefano Paolo Bertamini | Non-Executive |
| Hamza bin Othman Khoshaim | Non-Executive |
| Raeed bin Abdullah Al Tamimi | Non-Executive |
| Abdulatif bin Ali Al Seif | Non-Executive |
Committees of the Board of Directors
The functions and responsibilities of the Committees are identified based on internal charters and regulatory requirements. The membership term is set at three years, ending with the expiration of the term of the Board. The Board of Directors has the power to appoint, reappoint, or terminate the membership of any member of the Committees. The Committees submit their recommendations and minutes of their meetings to the Board of Directors.
The following is a brief description of the Bank’s Committees and their work.
A - Executive Committee:
The main purpose of the Executive Committee (ExCom) is to assume responsibility for the business operations of Al-Rajhi Bank and to make quick decisions regarding urgent issues and matters related to the Bank’s business. The Executive Committee shall be responsible for reviewing, following up, and approving the basic financial, non-financial, commercial, investment, and operational decisions related to the Bank within the limits of the powers determined by the Bank’s Board of Directors.
The Committee held six meetings during the year 2021 as follows:
| Member name | ||||||
| Meeting | Date | Abdullah bin Sulaiman Al Rajhi Chairman |
Ibrahim Bin Mohammed Al Rumaih Member |
Abdulaziz bin Khalid Al Ghufaily Member |
Hamza bin Othman Khushaim Member |
Abdulatif bin Ali Al Seif Member |
| 1. | 21 February 2021 |  |
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| 2. | 29 March 2021 | |
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| 3. | 27 June 2021 | |
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| 4. | 28 October 2021 | |
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| 5. | 8 December 2021 | |
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| 6. | 15 December 2021 | |
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B - The Nominations and Compensations Committee
The main purpose of the Nominations and Compensations Committee is to make recommendations on the nomination of Board members, Committee members, Senior Executives, and candidates to positions subject to non-objection of SAMA. The Committee shall prepare a description of the competencies and qualifications required for Board of Director’s membership, evaluate the effectiveness and efficiency of the Board and Senior Management performance, and ensure that the Bank remains compliant with the internal incentive schemes, and the rules of incentive practices issued by the Saudi Central Bank, the principles and criteria for compensation, in a manner that best achieves the interests of depositors, shareholders, and the Bank’s strategic objectives. The Committee held three meetings during the year 2021 as follows:
| Member name | |||||
| Meeting | Date | Ibrahim Bin Mohammed Al Rumaih Chairman |
Member |
Raeed bin Abdullah Al Tamimi Member |
Abdulaziz bin Khaled Al Ghufaily Member |
| 1. | 24 January 2021 | |
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| 2. | 28 March 2021 | |
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| 3. | 2 December 2021 | |
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C - Governance Committee
The main purpose of the Governance Committee is to support and maintain the highest standards in corporate governance, on behalf of the Board of Directors, to ensure that sound governance practices are followed in all activities carried out by the Bank. The Committee does so by conducting an annual review of the general governance framework and related mechanisms. In addition, the Committee monitors cases of conflict of interest ensuring the continuous updating of the register of conflicts of interest, reviewing requests for exemption from the governance requirements of the Bank, and coordinating with the Bank’s subsidiaries to support good and consistent corporate governance standards for all activities of the Al Rajhi Bank Group. The Committee also focuses on increasing awareness of the importance of governance and its activities within the Bank among all employees, shareholders, and external stakeholders, conducting an annual evaluation of the performance of the Board of Directors, members of the Board, all Board Committees and Management Committees. It is also responsible for reviewing and updating the policies related to the Board of Directors and its members, the Bank’s governance, and the conflict of interests, in addition to following up on the implementation of the Governance Manual, its annexes, and the Bank’s delegation of Authority Matrix. The Committee held four meetings during the year 2021 as follows:
| Member name | ||||
| Meeting | Date | Ibrahim Bin Mohammed Al Rumaih Chairman |
Ibrahim Fahad Al Ghofaily Member |
Raeed bin Abdullah Al Tamimi Member |
| 1. | 18 February 2021 | |
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| 2. | 29 April 2021 | |
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| 3. | 12 September 2021 | |
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| 4. | 8 December 2021 | |
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D - Audit and Compliance Committee
The main purpose of the Audit and Compliance Committee is to supervise the financial reporting process, oversee the internal and external auditors, submit recommendations to the Board of Directors and shareholders to approve, appoint and determine the remuneration or dismissal of the external auditors. The Committee also reviews and approves the scope of the audit operations and their implementation, receives key audit reports, assesses and follows up the Bank’s policy in combating financial fraud, and reviews the objectives and observations of the Shariah audit. Moreover, the Committee ensures that the senior management takes all necessary corrective measures in a timely manner to address any weaknesses in controls or non-compliance with policies, laws, and regulations, or any other problems identified by the auditors. The Audit and Compliance Committee held six meetings during the year 2021 as follows:
| Member name | ||||||
| Meeting | Date | Abdulatif bin Ali Al Seif Chairman |
Raeed bin Abdullah Al Tamimi Member |
Abdullah bin Ali Al Muneef Member |
Farraj bin Mansour Abuthnein Member |
Walid bin Abdullah Tamairik Member |
| 1. | 31 January 2021 | Their membership started on 29 March 2021 |
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| 2. | 18 April 2021 | |
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| 3. | 10 June 2021 | |
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| 4. | 29 July 2021 | |
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| 5. | 21 October 2021 | |
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| 6. | 21 November 2021 | |
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Audit and Compliance Committee members (other than Board of Directors members)
| No. | Name | Committee memberships | Current positions | Previous positions | Qualifications | Experience |
| 1. | Abdullah bin Ali Al Muneef | Audit and Compliance Committee |
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Held many academic, leading, and advisory positions in financial and management fields |
| 2. | Farraj bin Mansour Abuthnain | Audit and Compliance Committee |
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Held many leading positions in the Saudi Industrial Development Fund and the National Industrialization (Tasnee) |
| 3. | Walid bin Abdullah Tamairak | Audit and Compliance Committee |
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Has more than 25 years of experience in accounting, auditing, and economics |
E- Risk Management Committee
The primary purpose of the Board Risk Management Committee is to advise the Board of Directors regarding risk tolerance and risk strategy and to oversee the Management’s implementation of this strategy. This includes the management of capital and liquidity strategies, credit and market risk management, operational risk, compliance risk, reputational risk, and any other potential risks that the Bank may face. The Committee held six meetings during the year 2021 as follows:
| Member name | ||||
| Meeting | Date | Alaa bin Shakib Al Jabri Chairman |
Khalid bin Abdulrahman Al Gwaiz Member |
Hamza bin Othman Khushaim Member |
| 1. | 18 February 2021 | |
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| 2. | 6 June 2021 | |
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| 3. | 24 June 2021 | |
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| 4. | 24 August 2021 | |
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| 5. | 31 October 2021 | |
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| 6. | 14 December 2021 | |
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Procedures of the Board of Directors to inform its members of shareholders’ suggestions and comments on the Bank and its performance
The Bank documents shareholders’ suggestions provided through the General Assembly and notifies the Chairman of the Board of any other suggestions related to the Bank to be presented at the next Board meeting. There is also an e-mail address dedicated to the comments and suggestions of the shareholders, which is published on the official website of the Bank and on Tadawul website so that the Board can review the suggestions and comments of the shareholders.
The methods adopted by the Board of Directors in evaluating its performance and that of its committees and members
The Bank’s Governance Committee evaluates the performance of the Board, its Committees, and members through specific surveys at three levels. Evaluation is based on the Board of Directors terms of reference specified in the Bank’s Governance Manual, evaluation of Board’s Committees and the Audit and Compliance Committee is based on their approved work regulations and the self-evaluation of the Board and Committees member. The Governance Committee then prepares the annual evaluation report and submits it to the Board of Directors for approval. Then, the Nominations and Remunerations Committee is provided with a copy of the final report.
Remunerations of Board Members, Board Committee Members, and Executive Management
(A) Summary of the most important provisions of the remuneration policy for members of the Board, its Committees and the Executive Management:
1 - Board of Directors remunerations and compensations:
The members of the Bank’s Board of Directors shall receive a fixed annual remuneration amounting to SAR 400,000 on an annual basis for their membership on the Bank’s Board of Directors and their participation in its business.
- A member of the Board of Directors receives SAR 5,000 for attending each of the Board’s sessions, whether the attendance is physical or through any of the remote communication features.
- The Bank pays all actual expenses incurred by a member of the Board for attending the Board meetings, including travel and accommodation expenses.
2 - Remunerations and compensations for the Board Members for their Membership in Board Committees:
- The Bank’s Board members shall not receive additional remuneration for their participation in the Board sub-committees as the annual remuneration includes additional bonuses in the event that the member participates in any Board Committees.
- A Board member receives an attendance fee of SAR 5,000 for attending each Committee meeting, whether the attendance is physical or through any of the remote communication features.
- The Bank pays all actual expenses incurred by a Board member for attending Committee meetings, including travel and accommodation expenses.
3 - Remunerations and compensations for Audit and Compliance Committee Members:
- Each member of the Audit and Compliance Committee receives, either from within or outside the Board, a fixed annual remuneration for his or her participation in the Committee’s work, estimated at SAR 150,000 annually. Annual remuneration for Audit and Compliance Committee members from inside the Board is not calculated as part of the annual remunerations and compensations granted to the Board member.
- A member of the Audit and Compliance Committee receives SAR 5,000 for attending each of the Committee meetings, whether he or she attends physically or through remote electronic channels.
- The Bank pays all actual expenses incurred by the Committee member in order to attend the Committee’s meetings, including travel and accommodation expenses.
4 - Granting Shares:
- The Bank shall not grant shares as remuneration to any Board member, Board Committee member, or Audit and Compliance Committee member.
5 - Allocation and payment mechanisms for remunerations and compensations:
- Compensations and remunerations due to Board members and non-Board members are calculated on an annual basis, with the recommendation of the Nominations and Remunerations Committee and approval of the Board of Directors. Amounts are then presented to the General Assembly for approval at its next meeting.
- Remunerations can vary to reflect the Board Member’s experience, competencies, tasks, independence, and the number of attended meetings among other considerations.
- Attendance fees are paid annually to beneficiaries based on their attendance sheets for Board, Board Committees, and Audit and Compliance Committee meetings.
- Payments are done through Bank transfers, cheques, or any other methods, and members are informed of details through relevant departments.
- Remunerations and compensations paid to a Board member shall not exceed SAR 500,000 annually, payment of any additional due amounts will be stopped, except for the members of the Audit and Compliance Committee from within the Board. Total amounts paid to Board members should not exceed 5% of total net profits.
6 - Remunerations and compensations of Senior Executives:
The role of the Board of Directors includes, but is not limited to the following:
The Board of Directors is responsible for approving the overall design and oversight of all aspects of the remuneration system and shall not delegate this responsibility to the executive management.
- Although there is a Board Nomination and Remuneration Committee, the Board of Directors has ultimate responsibility for promoting effective governance and sound remuneration practices.
- The Board of Directors shall review and approve the Remuneration Policy and any of its subsequent updates, on the recommendation of the Nomination and Compensation Committee, taking into account, inter-alia, the Rules on Compensation Practices approved in May 2010 and any future updates or revisions issued by the Saudi Central Bank.
- The Board of Directors shall review and approve the recommendations of the Nomination and Compensation Committee regarding the level of remuneration of the Senior Executives. The Senior Executives for this purpose will include senior managers and all those executives whose appointments are subject to no objection by the Saudi Central Bank or other regulators.
- The Board of Directors shall ensure that the Management has put in place elaborate systems and procedures and an effective oversight mechanism to ensure compliance with the Saudi Central Bank Rules on Compensation Practices and the Financial Stability Board Principles and Standards.
7 - Structure of remuneration and compensation granted to Senior Executives:
- Remunerations structures are designed for the various levels of employees in a manner that enhances the effectiveness of risk management and achieves remunerations and compensations objectives in accordance with the highest standards of remunerations practices.
- Forms of remunerations vary according to the position and role of the employee and may include cash payments, shares, and other forms of rewards and compensations.
- The proportion of fixed and variable remuneration components for different business sectors is determined based on the nature and level of the employee’s responsibilities, the field of business, and the general philosophy of the remunerations policy of the Bank. The Bank ensures that the total variable remuneration does not limit its ability to strengthen the capital base.
- The remunerations structure for employees working in control functions such as risk management, compliance, internal audit, etc., is designed with the aim of ensuring the objectivity and independence of these functions. In this regard, performance management and the determination of rewards and compensations for these employees are not assigned to any person who works or has any relationship with the business sector that these employees monitor or supervise.
- When determining bonus allocations, the overall performance of the Bank is taken into consideration, while its distribution to employees is based on the performance of the employees in addition to the performance of the business unit or department in which they operate. There is no guaranteed minimum bonus or similar payment, other than an employee’s salary, that is not based on performance.
- As part of the remuneration policy, the Bank may postpone a reasonable percentage of the performance bonus for a period of no less than three (3) years. The deferred bonus percentage and the maturity period are determined based on the nature of the business, its risks, and the activities carried out by the employee.
- Where the remunerations policy provides for the payment of part of the remuneration and compensation in the form of shares, criteria must be set to determine the value of the share allocation. Moreover, the allocation of shares should be subject to an appropriate shares retention policy.
- Joining bonuses are not permitted unless clearly aligned with long-term value creation and prudent risk-taking payments should be related to the performance achieved over time and designed in a way that does not reward failure. Joining bonuses should be at least linked to successful completion of the probation period and where possible, they should be deferred according to terms similar to the deferred bonuses foregone from the previous company.
- The Bank should demand from their employees that they commit themselves not to use personal hedging strategies or remunerations and liability-related insurance to undermine the risk alignment effects embedded in their remuneration and compensation arrangements.
- The Bank confirms that there are no major deviations between granted remunerations and applicable remunerations policy.
B - Remunerations and compensations paid to Board members, Board Committees, and Audit & Compliance Committee in 2021:
| Board meetings | BACC meetings | ExCom meetings | NCC meetings | Governance Committee meetings |
BRMC meetings | Annual Bonus | Total | Total paid to the member as per the Policy |
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| No. | Name | No. | SAR | No. | SAR | No. | SAR | No. | SAR | No. | SAR | No. | SAR | SAR | SAR | SAR |
| 1. | Abdullah bin Sulaiman Al Rajhi | 7 | 35,000 | – | – | 6 | 30,000 | – | – | – | – | – | – | 400,000 | 465,000 | 465,000 |
| 2. | Ibrahim Bin Mohammad Al Rumaih | 7 | 35,000 | – | – | 6 | 30,000 | 3 | 15,000 | 4 | 20,000 | – | – | 400,000 | 500,000 | 500,000 |
| 3. | Abdulaziz bin Khalid Al Ghufaily | 7 | 35,000 | – | – | 6 | 30,000 | 3 | 15,000 | – | – | – | – | 400,000 | 480,000 | 480,000 |
| 4. | Khaled bin Abdulrahman Al Gwaiz | 7 | 35,000 | – | – | – | – | 3 | 15,000 | – | – | 6 | 30,000 | 400,000 | 480,000 | 480,000 |
| 5. | Badr bin Mohammed Al Rajhi | 7 | 35,000 | – | – | – | – | – | – | – | – | – | – | 400,000 | 435,000 | 435,000 |
| 6. | Alaa bin Shakib Al Jabri | 6 | 30,000 | – | – | – | – | – | – | – | – | 6 | 30,000 | 400,000 | 460,000 | 460,000 |
| 7. | Ibrahim bin Fahad Al Ghofaily | 7 | 35,000 | – | – | – | – | – | – | 4 | 20,000 | – | – | 400,000 | 455,000 | 455,000 |
| 8. | Raeed bin Abdullah Al-Tamimi | 7 | 35,000 | 5 | 25,000 | – | – | 3 | 15,000 | 4 | 20,000 | – | – | 514,247 | 609,247 | 609,247 |
| 9. | Hamza bin Othman Khushaim | 7 | 35,000 | – | – | 5 | 25,000 | – | – | – | – | 6 | 30,000 | 400,000 | 490,000 | 490,000 |
| 10. | Abdulatif bin Ali Al Saif | 6 | 30,000 | 5 | 25,000 | 6 | 30,000 | – | – | – | – | – | – | 514,247 | 599,247 | 599,247 |
| 11. | Stefano Paolo Bertamini | 7 | 35,000 | – | – | – | – | – | – | – | – | – | – | 400,000 | 435,000 | 435,000 |
| 12. | Abdullah bin Ali Al Manif | - | - | 6 | 30,000 | – | – | – | – | – | – | – | – | 150,000 | 180,000 | 180,000 |
| 13. | Waleed bin Abdullah Tamairak | - | - | 6 | 30,000 | – | – | – | – | – | – | – | – | 150,000 | 180,000 | 180,000 |
| 14. | Faraj bin Mansour Abu Thnain | - | - | 6 | 30,000 | – | – | – | – | – | – | – | – | 150,000 | 180,000 | 180,000 |
| Total | 75 | 375,000 | 28 | 140,000 | 29 | 145,000 | 12 | 60,000 | 12 | 60,000 | 18 | 90,000 | 5,078,494 | 5,948,494 | 5,948,494 | |
C - Remunerations and compensations paid to five Senior Executives who received the highest remuneration from the Bank, including the CEO and CFO, in 2021
| Description | 2021 | 2020 |
| Salaries and Compensations | 9,105,819 | 9,060,000 |
| Allowances | 5,068,466 | 4,835,984 |
| Periodic and annual rewards | 25,257,500 | 18,037,500 |
| Any other in-kind compensations | 1,968,485 | 2,592,819 |
| Total | 41,400,270 | 34,526,303 |
Employee benefits and plans
The Bank offers its employees a number of benefits and bonuses during or at the end of the service period, according to the Saudi Labor Law and Bank Policies. The provision for employees’ end-of-service benefits is calculated using the entitlement assessment form in accordance with the Saudi Labor Law and local regulatory requirements. The provision for the end-of-service benefits amounted to SAR 1,198 Mn.
The Bank also grants deferred shares to its senior employees and to valuable human assets that the Bank needs to retain. This ensures the Bank’s long-term relationship with those employees. Granting of shares is subject to the approval of the Board of Directors upon the recommendation of the Nominations and Remunerations Committee.
Any penalty, sanction, precautionary measure, or precautionary restriction imposed on the Bank by the Authority or any supervisory, regulatory, or judicial authority
There are no fines imposed by the Capital Market Authority.
Fines imposed by Saudi Central Bank
| Violation | Fiscal Year 2021 | Fiscal Year 2020 | ||
| Number of resolutions |
Total amount of fines in Saudi Riyal |
Number of resolutions |
Total amount of fines in Saudi Riyal |
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| Violating the supervisory instructions of the Saudi Central Bank | 27 | 15,903,000 | 36 | 5,819,000 |
| Violating the instructions of Saudi Central Bank related to customer protection | 7 | 4,436,800 | 8 | 7,171,110 |
| Violating the instructions of Saudi Central Bank related to due diligence | 1 | 2,165,000 | 4 | 273,000 |
| Violating the instructions of Saudi Central Bank related to the level of performance of ATMs and POS machines | – | – | – | – |
| Violating the instructions of Saudi Central Bank related to due diligence in combating money laundering and terrorist financing | 5 | 795,000 | 1 | 250,000 |
Fines imposed by the Ministry of Municipal and Rural Affairs:
| Total amount of fines in Saudi Riyal |
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| Violation | Fiscal Year 2021 |
Fiscal Year 2020 |
| Increase of building area percentage for ATMs, lack of setbacks, visible advertising posters on branches facades and ATMs, and non-existence of licenses for some bank’s locations | 924,300 | 2,156,600 |
Outcomes of the annual review of internal control procedures at the Bank, in addition to the Audit and Compliance Committee’s opinion on the adequacy of the Bank’s internal control system
The Bank’s Executive Management is responsible for designing an appropriate internal control system with the Board of Directors’ direct supervision. The system has been designed to directly mitigate risks that could impair the realisation of the Bank’s strategic and operational objectives. The Bank’s Executive Management has adopted a comprehensive internal control system aligned with SAMA’s regulatory requirements. The following are some of the key components of the Bank’s internal control system:
- The Bank has completed and approved the continuous development of the governance framework through which appropriate control tools are prepared and updated at the Bank level and the roles and responsibilities of the various levels are clarified, including the Board of Directors, the Board committees, and other administrative committees.
- Monitoring the Bank’s business in general and making important decisions through committees formed to ensure that the Bank’s business is running properly in order to protect the quality of the Bank’s assets.
- The audit department monitors the adequacy of the Bank’s supervisory procedures and adheres to them, and prepares a presentation clarifying the focus and development aspects.
- The Internal Control Committee (ICC) formed at the Bank shall follow up on the observations and operations of control departments such as internal auditing, compliance, risks, account differences, and other departments, and review the level of progress in addressing those observations and developing solutions to any obstacles that the Bank’s departments may face in this regard.
- The Bank has a set of policies and procedures that govern its various activities. The Bank also reviews these policies and procedures periodically to verify their adequacy, efficiency, and suitability for the Bank’s activities.
- Most of the operations of the Bank are executed through automated systems, which help in reducing manual errors and chances of fraud.
- The Bank has specialised departments for evaluating and monitoring internal control systems, including internal audit, compliance management, fraud control, and various risk departments.
- Existence of an effective Audit and Compliance Committee supervising internal and external auditors’ activities in order to support and promote their independence. This Committee receives regular and periodic reports on audits carried out on different functions within the Bank.
- The comments and reports of the Sharia group are conveyed to the Audit Committee to enhance its independence.
- Follow up on important transactions, fraud cases, legal cases, tax and Zakat cases, disclosures, and any matters requested by the Board of Directors from the Audit and Compliance Committee.
- Regular reviews on the efficiency and adequacy of the internal control system are carried out by Internal Audit based on an annual plan approved by the Audit and Compliance Committee, in addition to regular reviews of some aspects of internal control by the External Auditors as well as the audit carried out by the Saudi Central Bank.
Annual review of internal control procedures
During 2021, Al Rajhi Bank made every effort to ensure the adequacy and effectiveness of the internal control system, in line with the requirements issued by the Saudi Central Bank. In addition, the activities implemented during the year 2021, which included a review of the efficiency of the internal control system through internal audit, compliance, and risks have contributed to providing reasonable assurances of the adequacy of the applied internal controls, in addition to confirming systems and procedures necessary to identify and evaluate the high risks that the Bank may face, the method of dealing with them, as well as the safety of their application. No fundamental weaknesses affecting the adequacy of the internal control system were detected. Accordingly, and based on the results of the internal control system evaluation work, Al Rajhi Bank has an adequate internal control system that works appropriately and is monitored and strengthened on an ongoing basis, bearing in mind that any internal control system, regardless of the level of its design and effectiveness, cannot provide absolute assurances.
General Assembly
The Bank always adheres to the regulatory requirements in all matters relating to Ordinary and Extraordinary General Assemblies. The Bank is also obliged to provide sufficient information to enable shareholders to make their decisions.
Historical information of General Assembly meetings during the fiscal year:
| Attendance record | ||
| No. | Name | The 32nd Ordinary AGM |
| 1. | Abdullah bin Sulaiman Al Rajhi | |
| 2. | Ibrahim Bin Mohammad Al Rumaih | |
| 3. | Alaa bin Shakib Al Jabri | |
| 4. | Khalid bin Abdulrahman Al Gwaiz | |
| 5. | Stefano Paolo Bertamini | |
| 6. | Badr bin Mohammed Al Rajhi | |
| 7. | Abdulatif bin Ali Al Seif | |
| 8. | Hamza bin Othman Khoshaim | |
| 9. | Abdulaziz bin Khaled Al Ghufaily | |
| 10. | Raeed bin Abdullah Al-Tamimi | |
| 11. | Ibrahim bin Fahad Al Ghofaily | |
Bank’s significant plans, decisions, and future expectations
Al Rajhi Bank continued its leadership in the Retail Banking market, and the Bank intends to enhance its leadership in this sector by increasing the financing portfolio in general and real estate financing in particular. The Bank also intends to strengthen its position in the SMEs sector, while continuing to invest in the latest technologies to ensure the provision of the best banking services and products to customers, in addition to expanding the customer base.
A description of the Bank’s dividend policy
- The net annual profits of the Bank, which is determined after deducting all public expenditures and other costs and creating the necessary reserves to face doubtful debts, investment losses, and emergency obligations that the Board of Directors deems necessary in accordance with the provisions of the Banking Control Law and the directives of the Saudi Central Bank, shall be distributed as follows:
- The sums required to pay the Zakat prescribed for the shareholders are calculated and the Bank pays these amounts to the competent authorities.
- At least 25% of the remainder of the net profits after deducting Zakat shall be carried over to the statutory reserve until the aforementioned reserve becomes at least equal to the paid-up capital.
- An amount not less than 5% of the paid-up capital, after deducting the statutory reserve and Zakat, is allocated from the remainder of the profits for distribution to the shareholders in accordance with the Board of Directors’ proposal and the General Assembly’s decision. If the remaining percentage of the profits owed to the shareholders is not sufficient to pay this percentage, then Shareholders may not claim to pay it in the following year or years, and the General Assembly may not decide to distribute a percentage of the profits exceeding what was proposed by the Board of Directors.
- The balance shall be used after allocating the sums mentioned in paragraphs (A), (B), and (C), as proposed by the Board of Directors and decided by the general assembly.
- Subject to the provisions of paragraph (A) and the relevant regulations and after obtaining no objection from the Saudi Central Bank, the Company may distribute interim profits on a semi-annual or quarterly basis.
A description of any interest of the Bank’s board members, Senior Executives and their spouses and minor children in the Bank’s securities or any of its subsidiary companies
A - Major Shareholders:
| No. | Holder of interest, contractual papers and subscription rights | Number of shares at the beginning of the year 2021 |
Number of shares at the end of the year 2021 |
Net change |
Change % ownership |
% |
| 1. | General Organisation for Social Insurance | 146,623,115 | 240,454,785 | 93,831,670 | 64.00 | 9.62 |
B - Members of the Board of Directors:
| No. | Holder of interest, contractual papers, and subscription rights | Number of shares at the beginning of the year 2021 |
Number of shares at the end of the year 2021 |
Net change |
Change % |
| 1. | Abdullah bin Sulaiman Al Rajhi | 54,186,896 | 54,518,389 | 331,493 | 0.61 |
| 2. | Ibrahim Bin Mohammed Al Rumaih | 20,924 | 17,089 | (3,835) | -18.33 |
| 3. | Abdulaziz bin Khalid Al Ghufaily | 32,307 | 32,307 | – | – |
| 4. | Badr bin Mohammed Al Rajhi | 265,004 | 2,041,390 | 1,776,386 | 670.32 |
| 5. | Khaled bin Abdulrahman Al Gwaiz | – | – | – | – |
| 6. | Alaa bin Shakib Al Jabri | 4,000 | – | (4,000) | -100 |
| 7. | Ibrahim bin Fahad Al Ghofaily | 742,742 | 742,742 | – | – |
| 8. | Raeed bin Abdullah Al Tamimi | 1,538 | – | (1,538) | -100 |
| 9. | Abdulatif bin Ali Al Seif | 1,000 | 1,000 | – | – |
| 10. | Hamza bin Othman Khoshaim | – | – | – | – |
| 11. | Stefano Paolo Bertamini | – | – | – | – |
C - Senior Executives:
| No. | Holder of interest, contractual papers, and subscription rights | Number of shares at the beginning of the year 2021 |
Number of shares at the end of the year 2021 |
Net change |
Change % |
| 1. | Saleh Abdullah Al Lheidan | 40,004 | 44,991 | 4,987 | 12.47 |
| 2. | Abdulrahman Abdullah Al Fadda | 30,352 | 49,691 | 19,339 | 63.72 |
| 3. | Abdulaziz Saad Al Rusais | 20,000 | 500 | (19,500) | -97.50 |
| 4. | Ahmed Saleh Al Sudais | – | 3,000 | 3,000 | 100.00 |
| 5. | Meshaal Mustafa Al Fadl | 2,870 | – | (2,870) | -100.00 |
| 6. | Majed Saleh Al Rajhi | 76,025 | 88,864 | 12,839 | 16.89 |
Board meetings
| Number of meetings (7) | ||||||||
| No. | Member name | First meeting 21 Feb. 2021 |
Second meeting 29 Mar. 2021 |
Third meeting 27 Jun 2021 |
Fourth meeting 28 Oct. 2021 |
Fifth meeting 8 Dec. 2021 |
Sixth meeting 15 Dec. 2021 |
Seventh meeting 16 Dec. 2021 |
| 1. | Abdullah bin Sulaiman Al Rajhi | |
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| 2. | Ibrahim Bin Mohammed Al Rumaih | |
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| 3. | Alaa bin Shakib Al Jabri | |
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| 4. | Abdulaziz bin Khalid Al Ghufaily | |
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| 5. | Badr bin Mohammed Al Rajhi | |
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| 6. | Khalid bin Abdulrahman Al Gwaiz | |
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| 7. | Ibrahim bin Fahad Al Ghofaily | |
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| 8. | Hamza bin Othman Khoshaim | |
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| 9. | Raeed bin Abdullah Al-Tamimi | |
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| 10. | Abdulatif bin Ali Al Seif | |
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| 11. | Stefano Paolo Bertamini | |
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Bank requests for shareholder register
| No. | Request date | Request reasons |
| 1. | 03 January 2021 | Company actions |
| 2. | 03 January 2021 | Company actions |
| 3. | 03 February 2021 | Company actions |
| 4. | 03 March 2021 | Company actions |
| 5. | 28 March 2021 | General Assembly |
| 6. | 30 March 2021 | Profits file |
| 7. | 04 May 2021 | Company actions |
| 8. | 01 June 2021 | Company actions |
| 9. | 05 July 2021 | Company actions |
| 10. | 06 July 2021 | Profits file |
| 11. | 02 August 2021 | Company actions |
| 12. | 31 August 2021 | Company actions |
| 13. | 03 October 2021 | Company actions |
| 14. | 28 October 2021 | Company actions |
| 15. | 30 November 2021 | Company actions |
Related party transactions
During its normal business cycle, the Bank made transactions with related parties, and those transactions subject to the controls stipulated by the Kingdom’s legislative entities. The Bank has disclosed related party transactions in Note 30 of its final Financial Statements for the year 2021. The following is a summary of the nature and balances of those transactions for the year ended on 31 December 2021 (all amounts are in thousands of Saudi Riyals):
| Type of transaction | Balances resulting from the transaction |
| Loans and advance payments | 12,299,607 |
| Potential obligations | 4,664,225 |
| Current accounts | 376,377 |
| Contributions payable | 116,038 |
| Receivable against claims | 332,173 |
| Bank’s balances | 253,332 |
| Income from finance and other income | 40,275 |
| Speculation (Mudaraba) fees | 85,394 |
| Employees’ salaries and benefits (air tickets) | 1,061 |
| Building rentals and expenses | 2,119 |
| Contribution – policies written | 709,180 |
| Claims incurred and notified during the period | 661,300 |
| Claims paid | 498,565 |
| Board members remunerations | 5,948 |
| Short-term benefits | 104,038 |
| End of service provision | 3,679 |
The following is the information related to the business and contracts in which the Bank was a party and in which there was an interest for a member of the Board of Directors, a Senior Executive, or any person related to their professions during the year 2021:
1 - Commercial contracts and service contracts (Figures are in Saudi Riyal)
| No. | Related Party | Party with direct/indirect interest |
Position in ARB |
Type of relation with the relevant party |
Relation type | Period | Conditions | Transactions amount for the year 2021 |
| 1. | Fursan Travel & Tourism Co. | Abdullah bin Sulaiman Al Rajhi | Board member | Owned by Board member | Travel & tourism services contract | Pricing contract for a period of one year automatically renewed for a similar period | Standard conditions without preferences | 942,428 |
| 2. | Berain Company | Badr bin Mohammed Al Rajhi | Board member | Chairman of the Board | Mineral water supply services | Pricing contract for a period of one year automatically renewed for a similar period | Standard conditions without preferences | 316,497 |
2 - Rental contracts (Figures are in Saudi Riyal)
| No. | Related Party | Party with direct/indirect interest |
Position in ARB |
Type of relation with the relevant party |
Relation type | Period | Conditions | Transactions amount for the year 2021 |
| 1. | Mohammed Abdulaziz Al-Rajhi and Sons Investment Company | Badr bin Mohammed Al Rajhi | Board member | Board Member in the Company | Lease contract for the Southern Regional Administration building | Seven years – automatically renewable for similar period | Lease contract | 282,373 |
| 2. | Mohammed Abdulaziz Al-Rajhi and Sons Investment Company | Badr bin Mohammed Al Rajhi | Board member | Board member in the Company | Lease contract for a direct sales office in Abha | Seven years – automatically renewable for a similar period | Lease contract | 46,000 |
| 3. | Mohammed Abdulaziz Al-Rajhi and Sons Investment Company | Badr bin Mohammed Al Rajhi | Board member | Board member in the Company | Lease contract for ATM location | Five years – automatically renewable for a similar period | Lease contract | 40,250 |
| 4. | Abdullah Al Othaim Investment Co. | Abdulatif bin Ali Al Seif | Board member | Board member in the Company | Lease contract for ATM location | Four years – automatically renewable for a similar period | Lease contract | 46,000 |
| 5. | Abdullah Al Othaim Investment Co. | Abdulatif bin Ali Al Seif | Board member | Board member in the Company | Lease contract for ATM location | One year – automatically renewable for a similar period | Lease contract | 63,250 |
| 6. | Abdullah Al Othaim Investment Co. | Abdulatif bin Ali Al Seif | Board member | Board Member in the Company | Lease contract for ATM location | Five years – automatically renewable for a similar period | Lease contract | 51,750 |
| 7. | Abdullah Al Othaim Investment Co. | Abdulatif bin Ali Al Seif | Board member | Board member in the Company | Lease contract for ATM location | Ten years | Lease contract | 41,400 |
| 8. | Abdullah Al Othaim Investment Co. | Abdulatif bin Ali Al Seif | Board member | Board Member in the Company | Lease contract for ATM location | Five years – automatically renewable for a similar period | Lease contract | 34,500 |
| 9. | Abdullah Al Othaim Investment Co. | Abdulatif bin Ali Al Seif | Board member | Board Member in the Company | Lease contract of Silah branch | Five years – automatically renewable for a similar period | Lease contract | 230,000 |
| 10. | Abdullah Al Othaim Investment Co. | Abdulatif bin Ali Al Seif | Board member | Board Member in the Company | Lease contract of Silah branch | Five years – automatically renewable for a similar period | Lease contract | 351,672 |
| 11. | Abdullah Al Othaim Investment Co. | Abdulatif bin Ali Al Seif | Board member | Board Member in the Company | Lease contract of Silah branch | Five years – automatically renewable for a similar period | Lease contract | 195,500 |
3 - Insurance contracts
Statutory payments
Regular payments due by the Bank during the year consist of Zakat owed by shareholders, taxes, sums paid to the General Organisation for Social Insurance, costs of issuing visas, passports, etc.
The following table shows details of the statutory payments made during the year:
| Description | 2021 | Brief description | Reasons | Reasons | |
| Paid | (Not paid) | ||||
| Zakat | 2,086,251,442 | – | Paid | – | |
| Taxes | 82,959,524 | – | Paid | – | |
| VAT | 232,796,403 | – | Paid | – | |
| General Organisation for Social Insurance | 277,579,032 | – | Paid | – | |
| Visa and passport costs | 309,450 | – | Paid | – | |
| Ministry of labour fees | 1,917,804 | – | Paid | – | |
The basis for preparing the Bank’s Consolidated Financial Statements
The Bank prepares the Consolidated Financial Statements in accordance with the accounting standards for financial institutions issued by the Saudi Central Bank and the international standards for financial reporting. The Bank also prepares its Consolidated Financial Statements to comply with the requirements of the Banking Control Law, the Companies Law in the Kingdom of Saudi Arabia, and the Bank’s Articles of Association.
Basel 3
The Bank publishes its quantitative and qualitative disclosure data on an annual basis. These disclosures are available in the Annual Basel Report and are available on the Bank’s website (www.alrajhibank.com.sa).
Auditors
During the Ordinary General Assembly of the shareholders, Messrs. Ernst & Young and KPMG Al Fozan & Partners were appointed as auditors for the Bank’s accounts for the fiscal year 2021. The next General Assembly, God willing, will appoint external auditors for the fiscal year 2022, based on the recommendation of the Audit and Compliance Committee in this regard.
The Board did not recommend replacing the external auditors before the end of the contract period.
Board of Directors’ Acknowledgments
According to the available information, Auditor’s report, and current market data, the Board of Directors acknowledges the following:
- Accounting records have been prepared properly.
- The Internal control system has been based on proper fundamentals and executed effectively.
- There is no doubt about the Bank’s ability to continue its business.
Conclusion
The Board of Directors expresses its pleasure and pride in the positive results achieved by the Bank during the year 2021. On this occasion, the Board would like to convey its appreciation to the Custodian of the Two Holy Mosques, HRH the Crown Prince, and our wise Government.
The Bank also extends its sincere thanks to the Ministry of Finance, the Ministry of Commerce, the Saudi Central Bank, and the Financial Market Authority for their consistent cooperation and continuous support in developing the financial sector, which had a great impact and role in supporting the growth of the national economy.
The Board also seizes this opportunity to express its thanks and appreciation to the shareholders, the Bank’s valued customers and its correspondents for their support, confidence and cooperation, which has had a positive impact in the Bank’s progress and prosperity. The Board also conveys its sincere thanks and appreciation to all employees of the Bank for their sincere efforts and dedication. In addition, the Bank extends its appreciation to Sharia Board members for their loyal efforts and effective contributions to the Bank’s business.