Report of the Board of Supervisory Directors

Meetings of the Board of Supervisory Directors

During the four ordinary meetings that took place on a quarterly basis, the Board of Supervisory Directors was provided with regular updates from the Management Board on the bank’s results, risk situation and current business development. It was presented with relevant risk and performance reports as well as the interim financial statements and discussed these at length.

The Board of Supervisory Directors was supported in its duties by five committees, with four members of the Board of Supervisory Directors – in differing combinations – belonging to each committee. In accordance with their respective areas of responsibility, these committees examined upcoming issues in depth and reported accordingly to the Board of Supervisory Directors.

The Executive Committee is primarily responsible for personnel matters in relation to the Management Board and for the bank’s management policies. It monitored compliance with the Management Board’s Rules of Procedure and advised the Board of Supervisory Directors regarding the annual evaluation of the structure, size, composition and performance of the Management Board and the Board of Supervisory Directors. The committee met three times during the reporting year.

The Remuneration Control Committee dealt in particular with the remuneration strategy and the process for identifying risk takers. It also supported the Board of Supervisory Directors with monitoring duties to ensure that systems of remuneration for the various groups (Management Board, employees, Head of the Risk Controlling function, Head of the Compliance function and risk takers) were appropriate. It examined the suitability of the remuneration system for members of the Management Board and the compatibility of this system with the corporate strategy geared towards the company’s sustainable development, and made a recommendation in this regard to the Board of Supervisory Directors. Furthermore, it assessed the impact of these remuneration systems on the company’s risk, capital and liquidity situation, as required by the German Remuneration Ordinance for Institutions (Institutsvergütungsverordnung – IVV). The committee was able to consult with KfW IPEX-Bank’s Remuneration Officer at all times when performing its supervisory duties. Five committee meetings took place during 2018.

The Risk Committee is responsible for advising the Board of Supervisory Directors on the current risk situation, future risk tolerance and the risk strategy, and helps it to monitor implementation of this strategy. During its meetings, risk reports and risk-specific developments in selected portfolios were discussed in detail. The committee monitored implementation of the risk culture and examined whether the incentives set within the remuneration system take sufficient account of the company’s risk, capital and liquidity structure. It ensured that the strategies are commensurate with the company’s specified risk appetite. The committee met four times during 2018.

The Audit Committee deals in particular with accounting matters and monitors the accounting process. Pursuant to another of its core responsibilities, it closely monitored the performance of the audits by the auditor and the swift resolution of any deficiencies identified by the auditor. It recommended that the Board of Supervisory Directors approve the annual financial statements as of 31 December 2017 and the 2017 management report. The Audit Committee also received detailed reports on the resolution status of audit findings regarding the departments 'IT' and 'Internal Auditing', both outsourced to KfW, as well as on regulatory audits performed during the current financial year. Further areas covered by the committee included monitoring the effectiveness of the risk management system, in particular the internal control system (ICS) and the Internal Auditing department. It held five meetings during 2018.

The Loan Committee is responsible for loan-related issues. During 2018, it took final decisions on a total of 35 loans at the appropriate authorisation level. There was one instance where a member of the committee abstained from voting due to a conflict of interest. Given the normal market situation, this committee convenes on a monthly basis. It met 12 times during 2018.

Within the framework of their respective areas of responsibility, these committees addressed relevant issues in detail and, where appropriate, made recommendations to the Board of Supervisory Directors. The work of the committees was reported regularly and in detail in subsequent meetings of the Board of Supervisory Directors. The recommendations made by the committees during the reporting year were confirmed by the Board of Supervisory Directors without exception.