Corporate Governance in the ETDB:
The ETDB has a sound corporate governance structure managed through well-defined responsibilities distributed to the Board of Governors,
the Board of Directors, the Audit and Management Committees. All powers of the ETDB are vested in the Board of Governors, which consists
of one governor appointed by each member state.
The President is the legal representative and the Chief Executive Officer. The President is appointed by the Board of Governors and also
serves as the Chairman of the Board of Directors. The President and the two Vice Presidents constitute the Management Committee.
The ETDB is fully committed to abide by the standard global corporate governance principles and models. The Articles of Agreement establishing
the ETDB defines the necessary and appropriate levels of responsibility in terms of accountability and a system of checks and balances for its
activities. In this respect, it is strictly forbidden for the Bank to have any association with an entity or individual considered to be engaged
in the money laundering, fraud, corruption or criminal activities.
The ETDB’s Corporate Governance Policy, Codes of Conduct and Staff Regulations also strictly enforce all measures to prevent fraud and corruption
in its operations. In other words, the ETDB, as a policy, does not work with any institution or an individual who is involved in any illegal or
The Audit Committee has the oversight responsibility over the operations of the ETDB as well as enhancing the accountability environment for creating
adequate controls. The Public Information Policy also acknowledges that the public has a right to know about the financial activities of the ETDB in
line with the principles of transparency and accountability.
Principles of the ETDB Financing:
Being a multilateral development bank, the ETDB focuses on financing development programmes and projects at reasonable costs with favourable repayment
conditions. Overall, the ETDB takes lending decisions solely on the merits of projects, programmes and transactions proposed by clients. It also tailors
its lending activities in line with the best opportunities available in the capital markets by considering the development objectives of the member countries.
The ETDB undertakes its activities within the framework of its Operation Cycle Policy and relevant principles. Accordingly, all operations must be technically,
economically, financially, legally, and environmentally sound. In line with the Bank’s mandate, its operation is guided by the following basic principles:
• Efficiency and flexibility
• Consistency with sound banking principles and prudent banking practices
• Transparency, accountability and effective corporate governance
The ETDB is strictly committed to the provisions that restrict or prohibit the usage, proliferation and generation of goods and services that pose a threat
to the health and safety of humans and also the environment in general. To this end, the ETDB follows its Negative List of Products Policy which defines the
restricted goods and services.
Risk Management :
This function deals with credit and market risks. The ETDB provides loans to private and state owned entities. In the countries of operations, the ETDB pays
due regard to the quality, commitment and experience of the management and owners of the final beneficiaries in its exposure to both sovereign and
Project Finance Loans :
All project loans (sovereign and non-sovereign risk) provided by the Bank are fully assessed by the Bank in terms of risk/return, repayment prospects and the
capacities of guarantors of the borrowers. The timely repayment capacity is the key risk factor for co-financiers who do not have the ETDB’s relationship with
the borrowing member country.
Corporate Loans :
The ETDB ensures that its funds are used to create value for the economies of member countries. Certain products typical for commercial banks (balance sheet
restructuring loans, and revolving general purpose credit lines) are not provided by the ETDB to its clients.
Operations involving guarantees are appraised, processed and supervised by the ETDB in the same manner as those involving direct credit extensions and are
subject to the same limits and requirements.
Equity investment :
Equity investments reflect the value of the investee company and thus often involve a currency risk for the Bank. Foreign exchange risk from equity
investments is monitored and, when hedging instruments are available at a reasonable cost, is minimized.
Liquidity, Currency and interest rate risks :
Market risk management, particularly those of liquidity, currency and interest rate, is also followed. Although the ETDB is quite liquid, as per the policies
in place, liquidity is closely monitored by relative departments and the Asset Liability Committee of the Bank. As a development bank denominated in SDR,
currency risk management is a necessity for the Bank to tackle it by applying suitable derivatives. Interest rate risk is automatically managed by matching
the related items on the both sides of the balance sheet, which are of similar tenor and currency.
Prominent Criteria to Work with the ETDB :
The ETDB conducts a preliminary evaluation (eligibility review) of all applications and proposals in order to ensure consistency with its mandate and other
Initially the following basic information (most of which are preferred to be provided in a well-developed business plan) is required:
• Description and objectives of the proposed operation/transaction
• General information about the applicant
• Applicant’s financial records
• Costs of the operation/transaction
• Financing requirements
If a proposed operation or transaction passes the eligibility review, the applicants are requested to provide further information which is deemed necessary
in conducting a comprehensive assessment before deciding on the proposals.