Bank Seeks Waiver for Proposed Administrator Amidst Criticisms

Background

The Bank of East Timor (BCTL) has submitted a proposal to appoint a new administrator, despite several criteria not being met. The proposed administrator lacks experience in the banking sector and has been involved in a transaction that violates the Banking Law.

Criteria Not Met

According to Section 19 of the Banking Law, each bank must have an Audit Committee composed of three members appointed by the General Meeting of Shareholders for a two-year mandate. However, the proposed administrator does not meet this criteria as they have no experience in accounting or finance.

• The proposed administrator lacks experience in accounting or finance.
• The transaction violates the Banking Law and raises concerns about their ability to uphold financial reporting standards.

Waiver Request

The bank is seeking a waiver of the criteria not being met, citing exceptional circumstances that justify the appointment of the proposed administrator. However, this decision has raised eyebrows among industry experts, who argue that the bank’s regulatory body should prioritize the integrity and stability of the financial system over any individual’s qualifications or experience.

Additional Concerns

In addition to the Audit Committee, banks in East Timor are also required to establish a Risk Management Committee composed of three members of the Governing Board. This committee is responsible for establishing and monitoring procedures for credit appraisal, asset and liability management, and reporting directly to the Governing Board on these matters.

• The proposed administrator’s lack of experience in risk management and internal controls has raised concerns about their ability to effectively manage the bank’s risks and ensure compliance with regulatory requirements.
• The appointment of an independent external auditor is a positive step towards enhancing transparency and accountability within the bank.

Conclusion

The appointment of the proposed administrator will be closely watched by industry experts and regulators, who will be scrutinizing every aspect of the decision to ensure that it meets the highest standards of integrity and governance. Despite criticisms, BCTL remains committed to appointing the proposed administrator, citing their unique skills and expertise. The bank is expected to provide additional information and evidence to support its proposal, which will be reviewed by the regulatory body before a final decision is made.