Board of Directors Diversity and Suitability Policy

Board of Directors Diversity and Suitability Policy

1. Introduction

1.1  T. Garanti Bankası A.Ş., (hereinafter referred to as “Garanti BBVA” or the “Bank”) which mainly engages in financial services over its branches and affiliates, is also the main partner of an international financial group, BBVA Group, which operates in the financial services industry with its branches and affiliates within and outside of Turkey.

1.2  The development of this Policy has taken into account the recommendations included of the Corporate Governance Communique of the Capital Markets Board of Turkey, as well as relevant best practices and recommendations at a local and international level.

2. Purpose and scope of application

2.1. Purpose

This Policy defines and establishes certain principles and main objectives concerning the composition of the corporate bodies including diversity. Policy will be attended to ensure that the corporate bodies properly exercise their functions and to guarantee their effective functioning which are designed to set out the principles and criteria governing the adequate composition, suitability and diversity of the members of the Garanti BBVA Board of Directors. All the foregoing in the Bank's best corporate interest.

2.2. Scope of application

The Policy will apply to the Bank's executive directors and to candidates for the Garanti BBVA Board of Directors.

At all events, this Policy and its implementing internal regulations will be applied in accordance with applicable local or sectoral legal and administrative regulations. Any of their provisions that, if applicable, constitute a violation of said regulations must be adapted.

3. General principles

3.1  Garanti BBVA carries out its activities based on the principles of:

• Integrity
• Prudence in risk management
• Transparency

3.2 As one of the key elements of Garanti BBVA's corporate governance system, drawn up by the Board of Directors to ensure the proper management and supervision of the Bank, the Policy is based on the following principles:

• Sound decision-making process by Garanti BBVA's corporate bodies.
• Compliance with regulations applicable at any given time.

4. Policy provisions/guidelines

4.1.  The guiding principle in this Policy is to ensure adequate structure, suitability and diversity in the Board of Directors.

4.2. To ensure the adequate composition of the Board of Directors at all times and to comply with the general objectives and principles set out in this Policy, the Board, periodically analyses its structure, size and composition, as well as the composition of the various committees that assist the Board in the performance of its functions and that constitute an essential part of Garanti BBVA's corporate governance system. 

4.3. Diversity in the composition of the Board of Directors

The Garanti BBVA Board of Directors will promote diversity in the composition of the Bank's corporate bodies by encouraging the inclusion of people with different profiles, knowledge, training, experience and qualities. 

To ensure that the corporate bodies have an adequate and balanced composition, the renewal and selection processes will encourage diversity of their members, based on the needs of the Bank at all times.

In particular, they will strive to ensure that the Board of Directors has a balanced representation of men and women. To this end, a target has been set for the representation of the lesser-represented gender, namely to endeavour that female directors represent at least 25% of the Board of Directors by the end of the 2025 financial year and beyond.

In any case, Corporate Governance Committee may take into consideration criteria such as, gender, racial or ethnic origin, nationality, country of origin, cultural background, professional experience, knowledge, disability or age, thus being able to achieve an adequate balance aimed at ensuring that the corporate bodies properly exercise their functions and to guarantee their effective functioning.

4.4. Director Training Programmes

Risk Management trainings will be provided regularly (twice a year) to non-executive Board members, which will ensure that non-executive Board members are informed about the latest risk management practices and are equipped to assess various forms of risk. Risk management training content planned for these members will be revised and improved regularly and continuously by following best practices and regulations.

4.5. Availability and dedication of Board members

Garanti BBVA board members must have the availability and dedication required at any time

to carry out the duties of a Board member. Attendance of the Board meetings is an essential

part of this availability and dedication, therefore, although the meeting quorum for the Board

of Directors Meetings is “at least seven members” in the Garanti BBVA Articles of Association,

it is advised that the quorum is a minimum of 75% of attendance rate in all Garanti

BBVA board meetings and decisions taking place within one financial year.

4.6. In order to ensure the effectiveness of the Board of Directors, Garanti BBVA Non-Executive Board Members will be able to serve on the board of directors of a maximum of 4 publicly traded companies, excluding Garanti BBVA Group (Garanti BBVA and its subsidiaries).

5. Governance and monitoring model

5.1  This Policy was approved by Board of Directors on 12.01.2023 following an analysis undertaken by the Corporate Governance Committee of the Company, and will remain in effect unless the Board of Directors decides to change it, revoke it or approve a replacement.

The Corporate Governance Committee will supervise the Policy’s implementation, periodically review the Policy and submit any updates or changes it deems necessary or appropriate to the Board of Directors for consideration at any given time.

This English version is a translation of the original in Turkish for information purposes only.

In the event of discrepancy, the Turkish original will prevail.

5.2. The Policy has been prepared and coordinated by the Sustainability Unit.

5.3. The Corporate Governance Committee is responsible for the execution of this policy on a local basis. As such, they will be charged with submitting the Policy for approval, publishing it and promoting awareness of it on the part of persons subject to it, and, where appropriate, extending it to the applicable subsidiaries within Garanti BBVA.

5.4. For their part, those responsible for the areas affected by the Policy will provide, in their respective areas of responsibility and where appropriate, sufficient means, systems and organisation to facilitate compliance with the same.

5.5. The degree of compliance with this Policy and the development thereof will be monitored in accordance with the Internal Control Model. The various control functions of Garanti BBVA will cooperate actively and regularly in monitoring the application of this Policy, in accordance with the powers vested in them.

5.6. The Board of Directors, as the highest supervisory body in the Company, will, directly or through the Garanti BBVA Board Committee, monitor the implementation of the Policy on the basis of periodic or ad-hoc reports from the responsible parties in the Sustainability Unit, the Internal Audit area and, where applicable, the respective control functions existing within BBVA.

5.7  At least once a year, or in response to any events requiring changes to this Policy, the Sustainability Unit will proceed to review the Policy and submit any updates or amendments deemed necessary or desirable at any given time to the Corporate Bodies of Garanti BBVA.

5.8. The consequences of any failure to comply with the provisions of this Policy or other Internal Regulations implementing the same will be evaluated.

Glossary

BBVA, the Company or the Bank: Banco Bilbao Vizcaya Argentaria, S.A., as the parent company of the BBVA Group.

BBVA Group: An international financial group comprised of BBVA, as the parent company, and other legally distinct companies and branches, principally dedicated to the performance of banking activities and other activities directly or indirectly related thereto.

Subject Entity: BBVA and all companies that form part of the BBVA Group for purposes of prudential consolidation and with respect to which the Bank exercises control over management, which are within the scope of application of this Policy.

Corporate Bodies: For purposes of this Policy, BBVA's Board of Directors and its Committees.

Extension to subsidiaries: A set of mechanisms for approving and applying a Group-wide General Policy, Standard or Procedure to a subsidiary. There are two such mechanisms: Accession and transposition.

Subsidiaries: All companies that make up the BBVA Group with respect to which the Bank exercises control over management.

Head of Area: The persons heading the following areas: Corporate & Investment Banking, Country Monitoring, Client Solutions, Finance, Global Risk Management, Engineering & Organization, Talent & Culture, Data, Strategy & M&A, Communications & Responsible Business, Legal, General Secretariat, Regulation & Internal Control and Internal Audit.

Head of Local Area: Applies to persons carrying out Head of Area-equivalent roles at the level of the Group's subsidiaries. Where there is no role at the local subsidiary level that is equivalent to that of a global Head of Area, the Country Manager or CEO of the subsidiary may act and assume the responsibilities assigned to the Head of Local Area in this Standard or designate any person it deems appropriate for such purpose.

General Management and Control Framework: As set out in the Internal Regulation Framework, the Corporate Bodies have provided the Group with a set of general policies and basic guidelines relating to management and control which chiefly include key prospective strategic decisions (such as the Strategic Plan, Risk Appetite Framework, Budget, Capital Plan and Liquidity and Financing Plan) comprising the General Management and Control Framework.

General Policies: In accordance with the terms of the Internal Regulation Framework, the General Policies are designed to establish the general principles, objectives and main management and control guidelines to be followed by the BBVA Group in its various areas of action and, in addition to forming part of the General Management and Control Framework, may define or implement specific aspects of the same.

Internal Regulation: In accordance with the terms of the Internal Regulation Framework, Internal Regulation is understood to mean all mandatory, non-temporary provisions that establish a framework for action applicable to the people, areas and businesses that make up the BBVA Group and that are approved internally, whether for purposes of implementing the General Management and Control Framework, meeting regulatory or supervisory requirements or regulating the organisation and operation of a particular area of activity.

Transposition: Subsidiary extension mechanism that consists of adopting a Group-wide General Policy, Standard or Procedure through the inclusion of particular provisions required by the subsidiary, ensuring that they are aligned with the corresponding Internal