1
CONTENTS
LETTER FROM CEO ...................................................................................................................2
1. ABOUT THIS REPORT .........................................................................................................3
2. DSK BANK ..........................................................................................................................5
3. SUSTAINABILITY AND CHALLENGES FOR DSK BANK .......................................................7
4. PRINCIPLES AND PRACTICES DETERMINING THE OPERATION OF THE BANK................10
5. ECONOMIC PERFORMANCE..............................................................................................14
5.1
Economic role of DSK Bank ..................................................................................14
5.2
Products and services .............................................................................................14
6. OUR CLIENTS....................................................................................................................19
7. THE EFFECTS OF THE ECONOMIC CRISIS ON THE OPERATIONS OF DSK BANK............23
7.1
Communication and trustworthy information assurance ...................................23
7.2
Change in the operational structure .....................................................................24
7.3
Alteration in the product portfolio ........................................................................24
7.4
Our colleagues .........................................................................................................25
8. OUR EMPLOYEES ..............................................................................................................26
9. SOCIAL PARTICIPATION ...................................................................................................34
10.
SECONDARY STAKEHOLDERS.......................................................................................38
10.1 Suppliers ..................................................................................................................38
10.2 Competitors .............................................................................................................38
10.3 Government agencies ..............................................................................................39
10.4 Media ........................................................................................................................40
11.
ENVIRONMENTAL PERFORMANCE ...............................................................................41
12.
OBJECTIVES FOR THE FUTURE.....................................................................................46
13.
CORPORATE GOVERNANCE .........................................................................................48
14.
GRI INDEX ....................................................................................................................52
3 million
clients in Bulgaria
379
branches, 90% of Bulgarian
cities are reached
1st place
in Accountability Rating
Bulgaria 2008 within the
financial sector
60
branches were reconstructed
in 2008
17 300 BGN
awarded for pensioners as
prize of the bank lottery
5-6
films supported annually by
DSK Bank
20 tons
of paper collected sorted
3939
employees
More than 300
tickets purchased for
employees to attend theatre
performances
180 520 BGN
donated to employees for
medical treatment and culture
2
LETTER FROM CEO
Dear Reader,
Corporations face more challenges in the field of corporate social responsibility (CSR)
than ever before. The global finance crisis has forced directors to axe expenses in order
to be able to maintain business operations, and in many cases, CSR falls victim to these
cuts. On the other hand, this is an opportunity to prove to sceptics that CSR is far
beyond donations and sponsorships; in fact, it should be a new management approach.
It is no secret that these are tough times for all members of the economy and the private
sector, and for the banking industry throughout the world. The crisis proves that longterm success may not be reached without the highest standards of corporate
governance, control and strong background of values; I do believe that DSK Bank
operates in such a manner.
Bulgarian companies are at the beginning of the reporting process of CSR and I am
personally pleased that DSK Banks is among the first. Our own persuasion, past, market
share, and the owner’s commitment to sustainability have all driven us to publish this
report.
At DSK Bank, we are proud of those principles, which form the base of our business.
I suggest that every stotinka spent on CSR programs related to the core business pays
off; lower energy consumption, less use of paper, higher rate of loyalty within employees
are just examples how we can do better while taking shareholders’ and local society’s
interest into account.
Let me state that this report is the first visible step of the structured CSR activity within
DSK Bank. We have also composed and agreed on the CSR strategy and we are
committed to proceed through it. I am certain that the strategic focused CSR activity will
help DSK Bank to remain the leader in trust amidst the users of banking and financial
services in Bulgaria.
Any questions or comments are welcomed and help us fulfilling our mission to enhance
business and create value for all stakeholders and be number one in sustainability in
Bulgaria.
Violina Marinova
Chairwoman of the Management Board and Chief Executive Officer
3
ABOUT THIS REPORT
1.
The first corporate social responsibility report of DSK Bank EAD aims to present the
economic, social and environmental performance of the organization. This report is the
first strategic step towards a structural social responsibility activity and good corporate
citizenship. In parallel with the report we have also prepared a sustainability strategy and
a program plan for 2009 determining the direction of development. All the corporate
social responsibility activities of DSK Bank are in line with the activities and aims of our
parent company’s, OTP Bank Plc’s.
We plan to publish a CSR report on an annual basis, simultaneously with the Annual
Report. The corporate social responsibility report is in accordance with the GRI (Global
Reporting Initiative) G3 guidelines, the world’s most widely used sustainability reporting
framework, ensuring credibility.
In the course of defining the report’s content:
-
we assessed the main economic, social and environmental impacts of the
organization, focusing on our core activities. In order to present our performance in
its wider, sustainability context, we have applied the principles of materiality and
completeness.
-
we strived to determine the primary users of the report, and the impacts of our
operation, which is considered the most material by our stakeholders. Our
assessment was based on:
o
size of the stakeholder group;
o
extent to which they are affected;
o
capacity of stakeholders to represent their own interests – we also take into
consideration the rightful interests of groups with weaker lobbying powers;
o
nature of the impact itself – direct or indirect, positive or negative, reversible,
irreversible or recoverable, permanent or temporary.
-
the first CSR report of DSK Bank focuses on 2008 – ensuring timeliness – but to
demonstrate our commitment we have presented some exemplary practices
beyond the scope of the reporting period.
-
principles and performance indicator protocols of GRI Guidelines determine the
way and depth of presenting the information and providing credibility.
-
methodology of preparing the report and the newly introduced CSR data gathering
tool ensure data reliability. GRI Guidelines served as a basis for data measurement
techniques and calculations, methodologies applied are explained at the location of
the specific data.
-
for the sake of balance we present the challenges for the future and the directions
of improvement beside our achievements. Objective evaluation and comparability
are supported by numeric data.
-
we intend the report to be read by as many of our stakeholders as possible, thus
contributing to the development of a CSR culture. One of the main challenges of
reporting was the clarity and comprehensibility, ensuring at the same time
4
professionally sound terminology and complying stakeholders different requirement
for information.
The CSR report could primarily be of interest to:
-
employees,
-
owner(s),
-
clients,
-
organizations that receive support,
-
the media,
-
competitors,
-
NGOs and the general public,
-
state and regulatory bodies and
-
suppliers.
We have structured the report to ensure maximum comprehensibility, along the lines of
the logical and coherent relationships between the various elements; thus the
importance of the individual issues is primarily reflected in the depth of exploration.
We have defined the boundary of the report as extending to DSK Bank. The report
does not cover the subsidiaries as material information is not available to present their
performance.
We will not have our report assured this year; however we are going to consider
external assurance later on.
Determining the report application level according to GRI G3 guidelines
1.1; 2.1-2.10;
3.1-3.8; 3.103.12; 4.14.4;4.14-4.15
Management
Approach
Disclosures
Not required
Performance
Indicators
Report on a
minimum of 10
indicators,
including at least
one from each of:
social, economic
and environment.
B
B+
All criteria
For each
Indicator
Category
Report on a
minimum of 20
indicators, at
least one from
each of:
economic,
environment,
human rights,
labour society,
product
responsibility
A
A+
All criteria
For each
Indicator
Category
Each core G3
and Sector
Supplement
indicator
Report Externally Assured
Profile
Disclosures
C+
Report Externally Assured
C
Report Externally Assured
Application level /
criteria
5
2.
DSK BANK
Who are we?
DSK Bank EAD – established in 1951 as the State Savings Bank – was transformed
from a retail bank to joint-stock company. Since October 2003 OTP Group has owned
100% of DSK Bank’s share capital.
DSK Bank provides full-scale financial services as a universal commercial bank. The
Bank’s portfolio primarily consists of traditional banking services and products, offered
through traditional and electronic channels. DSK Bank is one of the leading financial
institutions in Bulgaria, first in retail banking and strengthening its position in corporate
banking as well. The clients’ confidence in the Bank’s long-standing traditions combined
with innovation and flexibility have helped in achieving excellent results.
With largest branch network in the country, DSK Bank reaches 85% of the population of
Bulgaria. The Bank is present in all 9 regions of the country with 379 branches, in almost
90% of the Bulgarian cities, providing work for nearly 4000 employees.
DSK Bank is the best bank, Violina Marinova is the Banker of the year in
Bulgaria
The British „Finance Central Europe” magazine awarded DSK Bank „The Best Bank
in Bulgaria 2008” and Ms. Violina Marinova, CEO of DSK Bank „Banker of the Year in
Bulgaria 2008” for the third year in a row. The two prizes awarded are yet another
recognition not only of the Bank’s efficiency and its ability to set and maintain banking
standards, but also of the personal contribution of its head, Violina Marinova to the
successful development of the institution.
6
DSK Bank offers various services through its subsidiaries and associated companies.
POK DSK-Rodina offers pension insurance, DSK Tours provides complex tourist
services, DSK Trans Security proposes services for secure transportation. Other
affiliates are DSK Leasing, DSK Asset Management and DSK Bul-Project. The latter has
an important role in the utilization of the European funds by providing consultancy
services for companies and municipalities.
What are our aims?
We aim to preserve the leading position in retail banking by providing complete, efficient
and distinctive financial services for our clients, who are always at the centre of our
activities. Our employees’ loyalty and expertise combined with our clients’ trust can help
us maintain our position in the market.
We are committed to work with the highest standards in our business and to perform in
compliance with the laws of the Republic of Bulgaria, and the regulations and rules of
banking. We focus on maximizing our shareholders value in a socially responsible
manner. As responsible employers we are socially committed to our employees’ needs,
providing adequate working conditions and opportunities for training and career growth.
More detailed information regarding our values and mission is available on our website.
Success at Accountability Rating Bulgaria
DSK Bank was rated in first place within the financial sector in the Accountability
Rating Bulgaria 2008. Our Bank received 26 points, thus achieving third place of the
overall rating.
In the Accountability Rating Bulgaria 2008, the 45 largest companies were rated
according to international methodology. The Rating is a tool for measuring the extent
to which companies have built responsible practices into their business.
7
3.
SUSTAINABILITY AND CHALLENGES FOR DSK BANK
Corporate social responsibility has evolved rapidly since the 1990s, after a series of
high-profile scandals. Operating in a responsible manner serves the long-term interests
of corporations by raising the legitimacy and trust of stakeholders and reducing risks.
Corporate social responsibility is not a supplementary tool of the core activity, but a way
of corporate governance.
Among the various definitions of CSR one of the most concise and most commonly
approved can be found in the European Council’s Green Paper of 2001: “Corporate
social responsibility is a concept whereby companies integrate social and environmental
concerns in their business operations and in their interaction with their stakeholders on a
voluntary basis.”
Economic sustainability points beyond the profitability of the organization and also takes
into account the organization’s impact on local, national and global economies; it raises
the question: how the organization contributes to the sustainability of the economic
system at a higher level.
The threefold approach to social responsibility – economic, social and environmental –
reflects the components of the concept of sustainability.
According to another approach, there are four areas a responsible company should
focus on. Economic responsibility is about profitability and effective operation, which can
only be accomplished within the constraints of the legal framework and which is
represented by legal compliance. Philanthropic responsibility focuses on charitable
giving, while ethical responsibility implies the conduct of activities and practices expected
by the society.
A responsible company is required to integrate into its operations the interests and
values of all its main stakeholders, such as shareholders, consumers, employees and
suppliers, and in a broader sense the government, competitors, local organizations,
natural environment and future generations.
DSK Bank and corporate social responsibility
DSK Bank forms an integral part of its own environment: the operations of the company
affect the economy, society and the natural environment. This impact is the direct and
indirect result of the Bank’s main activities, arising from the financial services provided
on the one hand, and from its physical operations on the other. The organization is also
affected by the external circumstances and tendencies. The company’s impacts on
sustainable development are meant to be considered with the tendencies and risks of
sustainability together.
DSK Bank, as a prominent financial institution of Bulgaria, takes an active part in solving
the challenges the society has to face. According to our code of conduct and our longterm interests the Bank’s challenges and opportunities from the sustainability’s point are
the following:
8
-
ensuring an accountable and transparent operation and a responsible provision of
financial services with respect to our customers’, business partners’ and
shareholders’ interests;
-
providing comprehensive, high-quality services to our customers while informing
them correctly on the possibilities and risks of our products;
-
providing equal opportunities to all our stakeholders – including our customers,
potential customers and employees;
-
retaining a highly-qualified, loyal employee base by ensuring them appropriate
working conditions, personalized career-planning and incentive packages;
-
anticipating the dangers and crimes threatening the financial institutions (fight
against money laundering and financing terrorism);
-
developing financial literacy;
-
promoting the efforts of local communities and society by gaining a deeper
understanding of vulnerable social groups and by supporting initiatives and events;
-
minimizing the direct and indirect environmental impact of our activities.
SHAREHOLDERS
EMPLOYEES
The Bank has a significant impact on the life of its
employees; as an employer we strongly affect the life
and security of thousands of people and their
families. We have a decisive influence on the work
and life balance of our colleagues.
The creation of a career plan suiting each of our
employee’s personal ambitions and skills, allowance
package reflecting their performance and adequate
working environment is the common interest of our
Bank and our employees. Strengthening the loyalty
of our employees is a crucial challenge for our
company.
In the current economical situation retaining our
stability and preserving the workplaces is considered
an important responsibility of ours.
Our employees are the key agents of the Bank’s
success, their competences and their ability of
innovation are the premises of our effective
operation.
Regarding awareness raising we practice a mutual
impact with our employees. We aim to develop
commitment to environmental and social issues
among our colleagues. At the same time we are
open to put into practice any initiative coming from
our co-workers concerning the improvement of our
company.
SUPPLIERS
The effective functioning of our Bank requires the
involvement of external organizations, by which we
indirectly contribute to the development of our
economy and the creation of jobs. The impact made
on each of the suppliers depends on its size and the
range of its subcontractors. We commit ourselves to
certain values through our suppliers.
It is one of our challenges to co-operate with
suppliers who are in line with the Bank’s values and
ethical business conduct while offering adequate
services. Moreover we aim to attain correct
cooperation without taking advantage of our possible
superiority.
The expectations towards our suppliers on the one
hand helps the Bank’s sustainable development and
on the other hand fosters the propagate responsible
and sustainable business behaviour through the
whole chain of creating values in the economy. We
are trying to be a role model by showing commitment
to correct business practices.
The conditions of our operations are determined by
A részvényesek, a társaság tulajdonosaiként, a
the owners of our corporation and our shareholders.
működés feltételeit teremtik meg. A Bankcsoport
In consequence one of the most important goals of
egyik legfontosabb célja ezért szükségszerűen a
our Bank is the value creation for our shareholders.
részvényesi értékteremtés.
The expectations of the owners determine the
functioning of our Bank.
One of the most important challenges for our
corporation is to fulfil the expectations of our
shareholders while operating sustainably.
Fulfilling
A
részvényesi
the interests
érdekek
of our
kiszolgálása
shareholders
biztosítja
secures
a
stabilitást.
our
stability.Az
Their
elvárások
expectations
gyakran
are often
egybe
aligned
esnekwith
a
felelős,
the
criterias
fenntartható
of responsible
működésand kritériumaival:
sustainable
transzparensAmong
operation.
működés
these is the
és transparency
vállalatirányítás,
in our
jogszabályi and
operations
előírásoknak
in our corporate
valógovernance
megfelelés.
or the
A
társadalmi according
functioning
felelősségvállalás
to the és
legala requirements.
jelentéstétel
Corporate
social elvárás.
responsibility and reporting are
szintén fokozódó
growing expectations as well.
DSK BANK
CIVIL SOCIETY
The relationship between the Bank and certain
groups of the society (e.g. local government, the
state, regulating authorities, non-profit organizations)
can be seen at different levels. Society expects the
Bank to fulfil the minimum legal requirements and
possibly to realize further achievements as taking
part in maintaining the institutes of the society (for
example by paying taxes) or supporting noble
causes.
The goals of certain groups of the society and their
representatives vary, and areoften contrary. Fulfilling
the legal requirements is obvious for us. The
decision of realizing further practices depends on the
requirements of our stakeholders.
We intend to develop a cooperative partner relation
with the state authorities and the local governments
with the aim of creating an effective regulating
environment serving the interests of the society.
We reveal together with the representatives of the
society the problems we can help to tackle. We
acknowledge the role of civil society organizations in
our society; hence we support their efforts according
to our possibilities. For the sake of transparency and
efficiency we offer our support by a determined
direction.
9
CLIENTS
The biggest challenge of our bank is the appropriate
and responsible service of our client’s needs. It
includes informing the clients in an adequate way by
unfolding their real possibilities and needs and the
risk managementCfor
of our creditors
LIthe
ENprotection
TS
and depositors. All our activities are determined by
the code of conduct for businesses. Another
challenge for us is to contribute only to those goals
which fulfil the social and environmental
requirements.
The most important role of the Bank is to play an
intermediary role among the different actors of
society, thus helping the development of the
economy and society as well.
By offering loans, the Bank gives the opportunity to
its customers to raise their living standards and for
the companies and local governments to reach
economic development and more successful
achievements of their tasks.
The secure allocation of savings according to
individual needs is a tool of augmenting one’s assets
and realizing one’s self-care. Moreover it can not be
neglected that the Bank takes active part in the
effective realization of the money transactions
between the citizens, the economic, state and nonprofit sector.
The biggest challenge of our bank is the appropriate
and responsible service of our client’s needs. This
includes informing the clients in an adequate manner
by unfolding their real possibilities and needs as well
as the risk management for the protection of our
creditors and depositors. All our activities are
determined by the code of conduct for businesses.
Another challenge for us is to contribute only to those
goals which fulfil the social and environmental
requirements.
Our professional knowledge helps us give orientation
to our customers in choosing the appropriate
products. This means developing a range of products
which fulfil the needs of our clients. Moreover it gives
us the opportunity to offer services which strengthen
the environmental consciousness and responsible
behaviour of our clients. There are several
possibilities to create a simple way of connection
between our customers and the good cause.
IMPACT
CHALLENGES
OPPORTUNITIES
10
PRINCIPLES AND PRACTICES DETERMINING THE OPERATION OF THE
BANK
4.
Responsibility and long-term sustainability require fair and ethical business conduct. The
organization’s values, conduct and operation are regulated by the following documents,
which apply to every organizational unit and which were determined in accordance with
international, and OTP Group standards:
-
Code of Ethics;
-
Organizational and Operational Regulations;
-
Group Management Regulations;
-
Collective Bargaining Agreement.
Code of Ethics
Our activity is performed by sticking to specific ethical values. DSK Bank applies the
unified ethical guidelines and system of Code of Ethics drawn up by the OTP Bank Plc.,
complemented with the Code of Conduct, containing internal regulations. The Code of
Ethics covers and regulates – among others – the topics of conflicts of interests, antimoney laundering, terrorist financing, confidentiality, unauthorized and unethical use of
insider and internal information and corporate governance. DSK Bank declares to
condemn and refrain from all forms of negative discrimination and harassment.
Anti-Money Laundering and Anti-Terrorist Financing
DSK Bank complies with the 40 anti-money laundering recommendations and 9
special recommendations on terrorist financing developed by FATF (Financial Action
Task Force); all the rules and regulations of Bulgaria.
The Bank espouses, and sets out the manner in which an ethics process may be
initiated. The Bank reviews all reported ethical misconduct in the framework of a process
set out in the Code of Ethics and notifies those concerned of the result of the process. In
2008 there were no ethics processes. The Ethical Declaration is available on our
website.
The Code of Conduct – regulating the ethical behaviour of the employees – is obligatory
for all of our employees. Our employees were provided training on the Code of Ethics
and Code of Conduct and it is part of the introductory training of the new entrants; the
Code of Conduct is available on the Intranet.
Aiming to spread the ethical business conduct, our suppliers will be expected to comply
with the Ethical Declaration.
Compliance
The task of the independent Compliance Department is to monitor the legal environment
of the Bank’s operation and to help the Bank adapt to it. Our objective is to ensure that
the compliance function operates in a way that provides effective support for responsible
corporate governance, and to ensure the continued independence of the organizational
11
unit. The interests of our clients and other stakeholders require us to give a broad
understanding for the meaning of compliance with the aim of maintaining the good
reputation of DSK Bank.
One of the main challenges is the consistent management of information flows within the
organization; we are expected to find appropriate solutions to manage the incoming
information and to provide information according to the expectations and requirements of
the different functions and stakeholders.
The tasks and operation of the compliance department is regulated by the unified
Compliance Constitution of OTP Group.
Protecting our depositor and responsible lending
The bank, playing the intermediary role among the different actors of society, is
responsible for those depositing their funds (depositors) and towards the outsourcing
(lending) as well.
The bank is considered to be responsible towards those offering their funds in case it
secures the repayment of their money. The security of the depositors requires that
the bank exercise a strict and coherent review in the process of lending. The
institution should offer credit only in the case of adequate collateral and appropriate
solvency and willingness to do so.
The conservative policy is true for the borrower and this additionally protects the
client from getting overdebted which can even lead to personal tragedies and
bankruptcy of companies. Responsibility does not end at the disbursement of the
loan, but continues during the whole period of the repayment when following up the
debtor’s solvency.
Principles of responsible credit*:
-
Responsible and affordable credit for all – without discrimination.
-
Credit relations are transparent and easy to understand – comparability with
competitors, adequate time for reflection, access to independent advice is
provided.
-
Lending is at all times cautious, responsible and fair – the credit is productive
for the borrower, weakness, need or naivety of borrowers is not allowed to be
exploited.
-
Adaptation of credit conditions is preferred to credit cancellation and
destruction.
-
Protective legislation has to be effective.
-
Overindebtedness is a public concern.
-
Borrowers are provided with the adequate means to defend their rights and are
free to voice their concerns.
* The introduction of principles was conducted according to the “Rules of Responsible Credit” created by
the European Coalition for Responsible Credit. Our Bank agrees and complies with the principles.
Though we are not a member of the Coalition as only non-profit organizations are allowed to be part of it.
12
Security
One of the most determining characteristics of the bank is security.
It is considered essential both for DSK Bank and the OTP Group to maintain security
and manage risks; hence we are aiming to apply internationally leading practices.
Issues regarding security are handled in a complex manner by DSK Bank. The
traditional personal- and property protection and the defence of the information
technology are widened to other dimensions of security. Handling the security risks of
the activities of credit banks and commercial institutions; handling the HR risks, secretand data protection, defending business interests; preventing, impeding and retracing or
contributing in retracing crimes and illegal behaviours menacing the Bank; providing
appropriate security training for the employees; complex realization of security checks.
The detailed regulatory system together with the high level security by the absolute
adherence of the controls requires continuous attention and immediate reaction.
In the internal operations of the Bank the security and the risk management work in
strong cooperation. The establishment of the secure operation of the Bank is set by
unified principles and rules in the OTP Group. We set equally high requirements towards
our security suppliers.
Our security operations, working in an effective organizational framework, are
continuously facing challenges. In order to impede abuses, we are aiming to use new
prevention methods. Our company exercises zero tolerance towards abuses.
In the coming year we intend to involve our clients in security issues, by drawing their
attention for possible risks they face in certain cases, and providing them with
recommendations to avoid risks.
Corrupted ATMs in DSK Bank network, 2008
ATMs with skimming device
0
Successful robberies
10
Unsuccessful robberies
16
ATM vandalism
8
Risk management
DSK Bank considers risk management as its social duty, far beyond its economic
interest. The method of the risk management is strictly regulated, unified in the whole
Group.
The Bank established an independent risk management organization and operates risk
management committees. Credits and Limits Council, Credit Committee, Assets and
Liabilities Committee are in charge of assessing, guaranteeing and monitoring the
optimum balance of risk.
DSK Bank is Basel II compliant. In order to comply with the stipulation of the Basel II
Contract we set up an independent department on operational risk in 2008.
We require our customers to be transparent in their financial management and business
operations, we do not accept loan applications for purposes which: constitute breaches
of the law or criminal acts or contravene environmental protection regulations. Forbidden
areas of business are illicit arms trade, illicit gambling, narcotics trade, other illegal
activities (money laundering, black-marketeering, etc.) Customers whose activities can
13
be presumed to breach general moral standards or social values are also not eligible to
receive loans.
DSK Bank pursues a sound credit policy. We use a centralized risk assessment process.
In order to evaluate the solvency and paying willingness of our clients we use a
statistical based, automated scoring and rating system. The experiences on our clients’
repayment prove the correctness of our methodology.
14
ECONOMIC PERFORMANCE
5.
5.1
Economic role of DSK Bank
The introduction of the economic performance makes it possible to present the
contribution of our Bank to the sustainability of the economic systems at local and
national levels. The display of our performance differs from the financial approach of the
Annual Report and emphasizes the money flow among the stakeholders.
Direct economic value generated and distributed at DSK Bank, 2008
(based on the non-consolidated, IFRS profit and loss statement, million BGN)
Generated direct economic value
=1
I.
Revenues
Net interest income + non-interest
1.
income (with net fees, adjusted)
= 2+3+4+5
II. Economic value distributed
2. Operating costs + payment to providers of Operating costs – Personnel expenses –
capital
Depreciation – Taxes reducing the
corporate tax base
Personnel expenses
3. Employee wages and benefits
4.
5.
III.
Payments to government (gross taxes)
Community investment (voluntary)
Economic value retained
Total tax-payment liability
Charitable giving
= 1-(2+3+4+5)
551,2
551,2
199,7
91,6
67,7
40,3
0,1
351,6
DSK Bank fulfils its tax payment obligations as required by law. The amount of paid
taxes – highly influenced among others by the revenues and profit – is significant for
society. DSK Bank is a considerable tax payer at a local and national level as well.
Our constant goal is to avoid damaging the interests of our clients’ while complying with
the statutory regulations. We aim to reduce the number of prosecutions resulting in
exoneration of our Bank and the amount of penalties by preliminary reconciliations with
the concerned bodies and by raising our prudence. Nevertheless we acknowledge the
legitimate complaints and sentences fulfilling the imposed sanctions.
At the end of 2008, 95 court proceedings were ongoing against DSK Bank, the total
value of these claims was 1 351 541 BGN.
5.2
Products and services
What makes a banking service or product responsible? What are the tasks of the bank in
economic processes? Who and in what proportion should undertake the risk? To which
extent can self-regulating and differing from the competitors be expected?
During the development of our products we often have to face these and several other
questions. However, it is much easier to raise a question than to answer it. We have to
fulfil the different needs of our owners, our depositors and loaners. Successful operation
demands different requirements than regulatory institutions do. The constant challenge
15
of our corporation and our employees is to create a balance to harmonize among all the
interests.
-
Stability is one of the core values why our clients choose DSK Bank. In order to
maintain stability we implement sound risk management policy.
-
The development and sale of all of our products is done according to responsible
and sustainable principles: we apply the rules of the Code of Ethics; we pay
constant attention to the development and frames of the social and economic
environment.
-
We constantly deliver our services in a responsible manner. Beyond that some of
our products are designed to fulfil the financial needs of a certain group in society.
We strive to fulfil the variety of the needs of our clients by widening the spectrum of our
services. Our products, packages of services and offers inspire:
-
the development of the financial literacy and knowledge of our individual and
corporate clients (creating access to the bank services for youth; packages for
savings; securing the possibilities of self-care);
-
a raising of environmental awareness (renovation loans helping energy efficiency,
financing projects aiming at the use of renewable energies);
-
the utilization of state and European Union funds.
Individual banking products
DSK Bank pays special attention to the generation of the future, the youth and to elderly
people. We are committed to enhance their financial knowledge, awareness and culture.
Our products promote savings for the future:
-
Children’s Deposit offers a flexible but at the same time sound saving construction.
Children’s Deposit provides more favourable financial conditions than the indefinite
deposits.
-
DSK FUTURE Children Saving Account serves long-term accumulation of funds,
the use of funds starts when the beneficiary becomes eighteen and lasts until
he/she becomes twenty-five.
DSK Bank provides the only youth card in Bulgaria. Three different packages are offered
for the youth according to their age. Bank cards and own bank accounts contribute to the
development of financial culture and to the responsible management of finances for
youth.
-
DSK Start is intended for children between 7 and 14 years: parents or guardians
are entitled to control the spending of the children as they are the account holders;
-
DSK Teen is offered for teenagers between 14 and 18 years: teenagers are
provided with more responsibility, they are able to perform real bank operations on
their accounts;
-
DSK Max is issued to you young people between 18 and 24 years and provides all
the functions of a standard payment account and bank card at a considerably lower
price.
16
In 2008 we granted student loans in 64 cases, the current portfolio was 244 917 BGN by
the end of the year.
The introduction of DSK ISIC card required a joint effort from DSK Bank and ISTC1. DSK
ISIC card is a 3-in-1 card combination: it is a debit card, an ISIC student identification
card and a student discount card for Bulgarian railways.
DSK Bank is one of the few financial institutions providing services for pensioners. Our
program was launched two years ago when we set the goal of enhancing the use of
financial services for pensioners. Elderly people were provided information on the
advantages of bank cards on several channels. DSK Bank offers special discount, debit
cards free of charge for pensioners and at the beginning of 2008 we introduced a bank
lottery. Every week a prize of BGN 100 is drawn, and once a month the prize reaches
BGN 1000. All pensioners holding a DSK Bank card are participants of the lottery on
condition that a transaction has been made on the card account during the respective
period. We awarded a total of 17 300 BGN in 2008 as prize of the lottery. We are proud
of the successful campaign resulting in higher awareness, and more frequent use of
bank cards and ATMs by the elderly.
Virtual Visa Card – security above all
DSK Bank offers a unique bank card for paying online. Virtual Visa is not a real card,
hence ensuring maximum security. Using DSK Direct, our clients are able to transfer
the necessary amount to buy the desired goods and services on the internet, while
the rest of the money remains under protection in the payment account.
DSK-Rodina offers voluntary and mandatory pension insurance as a supplement to the
state pension to secure income for older age. Pension funds are responsible possibilities
for self-care. An important advantage of voluntary pension insurance is the possibility of
withdrawing money at any time even before the insurance claim (old age, disability,
death) has occurred. DSK-Rodina enjoys a 9% market share within the insured persons
of the pension security market.
Corporate banking products
DSK Bank strives to satisfy their customers’ needs in the corporate sector as well. We
offer special packages and loans primarily for micro enterprises and for SME’s (e.g. for
dentists and doctors special loans are available). As for big companies tailor-made
services are provided and we have the possibility to determine the conditions in
accordance with the clients’ and corporation’s interests.
Most of our preferential products and packages are related to EU or national programs
targeting the development of corporations, agriculture and in many cases promoting
energy efficiency. We strive to exploit the cooperation possibilities with international and
national institutions. The European Union and the Government grant funds for innovative
goals and long-term return projects.
1
The international Student Travel Confederation issues the International Student Identity Card (ISIC), the
only internationally accepted student ID card. With access to a global network ISIC provides 41,000
possibilies for discounts and benefits in 106 countries worldwide.
17
Different types of investment loans are available:
-
for pre-project
EUROSTART);
activities
and
preparation
for
tender
participation
(DSK
-
for expenditures of project realization, approved for financing by the European and
the Government budget (DSK EUROBRIDGE, DSK EUROFINAL);
-
for co-financing of expenditure payments, related to the execution of a project
approved according to a program of the European Union (DSK EUROPROJECT);
The EBRD (European Bank for Reconstruction and Development) agreement – signed in
2004 – provided a facility line of 40 million BGN for project financing. The agreement
covered projects improving energy efficiency, construction of equipment and investment
projects for use of renewable energy resources (e.g. waterpower stations and wind
energy generators). Subsidized organizations were granted a determined proportion of
the loan after the appropriate implementation of the project. Funds of the facility line
were used by 2008 but further negotiations are proceeding.
In the framework of the EIB (European Investment Bank) agreement municipal projects
were also supported.
DSK Bank is in close cooperation with the Bulgarian Development Bank. For SME’s a
fund is available for guaranteeing loans, and in the beginning of 2009 another
agreement is to be signed for a facility line of 20 million BGN. The 10-year project is
meant to finance technical innovation and pre-export of Bulgarian companies.
Breakdown of Corporate Loans by Sector
Trade
Real estate operations
18%
Building and construction
1%
26%
1%
Food and beverages
Services
1%
Tourism, accommodation and catering
2%
Agriculture
2%
2%
Energy production
3%
Manufacturing machines, transport, other services
5%
14%
Culture, sports and entertainment and related
Health and social activities
6%
Other services
7%
12%
Computer-related activities
All other less than 1% (R&D; post&communication;
transport; tourism; w aste management; education etc.)
DSK Bank is the significant partner of municipalities by serving the financial needs of
almost one third of the local governments. In 2008 we financed about 10 projects of
municipalities by succeeding in the public procurement process. Most of the projects
18
target the development of the infrastructure; one of the most important goals is the
construction of the water pipeline systems.
With the aim of facilitating the process of European fund’s resources absorption, DSK
Bank established DSK Bul-Project Ltd. The company offers highly qualified consultants
to the applicants for operative programs financing from preliminary research and
preparation of the project proposal right through to its final phase, including the entire
management of the activities approved in the project.
19
OUR CLIENTS
6.
The honoured trust of almost 3 million of our clients is one of the most important values
for us. DSK Bank is considered to be a safe and credible financial institute. It is our
responsibility to preserve our clients’ trust and confidence by the following means:
-
Prior to offering and selling a banking product or a service, we explore the real
aims of our clients. We have to ascertain that our client is thoroughly informed
about their financial possibilities, that they are aware of the advantages and risks of
the service and willing and also able to undertake these risks and obligations.
Fulfilling this need requires extreme care and well organized background
operations, since the honesty and openness of our clients depend highly on the
first contact with our Bank and our offers.
-
Our responsibility lasts even after the purchase of the product. Our aim is that our
client relations are marked by ethical business conduct, reliable conditions and a
partner relation with the client at all times.
We aim for constant and innovative development in order to provide responsible services
and meeting our clients’ needs. We measure the success of our initiatives with extensive
satisfaction surveys.
The clientele of our Bank come from all walks of life; hence we aim to offer personal
advices to satisfy the expectations of all our clients. We consider it a priority to provide
information which can be easily understood by all, including the exact explanation of the
risks. Providing information in an easy to understand way, including a precise
explanation of the risks is considered to be of great priority at DSK Bank.
The development of the conditions of our services
We prioritize quality over quantity in our sales.
The role of our employees working in the call-center and customer care areas is crucial.
Besides the professional expertise of our co-workers, we lay emphasis on the
development of their communication skills with the aim of providing clear, relevant and
professional information to our clients as well as to establish their real needs.
The use of intranet and e-learning has significantly increased the possibilities of
trainings. With the help of these tools we are enabled to inform our colleagues
immediately on new possibilities.
We are continuously developing our incentive system designed for our employees in
order to provide services to our clients according to their real needs.
20
MiFID
The European Union directive of "Markets in Financial Instruments" (MiFID) aims to
establish a common set of conditions and an order of processes in the field of
investments among the member states, which help to defend the interests of the
investors and the service of the clients’ needs. The MiFID is concerned with the
investment service providers and the clients.
The new law in effect as of 1st February 2008 ensures:
-
detailed communication regarding the financial tools of the service providers
and the offered services and products
-
provides transparency regarding the operations of the investor companies and
the implementation of the transactions, alleviating the orientation of the clients
in the cobwebs;
-
Furthermore the service providers have to proceed according to the needs of
our clients fulfilling their assignments with the best possible conditions
MiFID at DSK Bank
Our company has always tried to attend to the clients’ needs by providing services
with the best conditions, the directive of the MiFID assists in the thorough realization
of this. With the aim of fulfilling the regulations in mind we have introduced the
following changes:
-
According to the regulations of the law we have adopted new categories in
qualifying our clients, which determine the depth of the information we give our
clients.
-
Prior to starting the portfolio management of our clients, we find out their risk
undertaking ability, financial knowledge and situation as well as their investment
goals.
-
We have elaborated an Implementation Policy, which contains the normative
rules to be used while dealing with our customers in order to fulfill their
assignments in the best possible way.
Our goal is to be extended to all of the services of the Bank, and make use of the
so-called Aptitude and Adequacy test with this overperforming the regulations.
Our Call Center plays an emerging role in serving and informing clients. Promoting our
call center and its availability on many different channels has resulted in increasing
popularity. Apart from immediate actions our Call Center is prepared to answer and
provide detailed information on all possible questions from our clients around the clock.
The Call Center offers an appropriate channel for informing clients and to enhance
financial literacy. According to our experiences our clients are willing to call the Call
Center and ask for a wide range of information.
In order to make our Call Center as client friendly as possible we record and analyze all
the incoming calls, the results of evaluation serve as a basis of improvement. The Call
Center is available in 24 hours a day, 7 days a week and it is charged at the price of a
city call.
21
Our clients’ feedback gives us reason to be proud of the Call Center.
The Call Center is of great importance for our colleagues as well by providing up-to-date
information on our products and services.
In addition to all the modern tools of communications personal contact plays a
determining role for our clients. With its 379 branches DSK Bank owns 14% of the
banking branch network in Bulgaria. DSK is available all over the country and we have
an ever growing branch network. Placing emphasis on equal opportunities we make our
branches accessible for disabled people. Branch reconstruction serves as a frame for
creating barrier-free environment. Renewal of our branch network is constant, 60
branches were reconstructed in 2008, and we intend to refurbish 40 in the coming year.
To improve comfort we are planning to offer free mineral water in bank branches in the
summer period.
To ease our clients’ choice at the customer orientation automatic machine one of our
staff – in most cases the security guard – is ready to give assistance in our bigger
braches.
In order to measure the quality of our services we conduct mystery shopping on a
regular basis. While pretending to be potential clients mystery shoppers examine and
evaluate a wide range of factors keeping their eyes open for everything:
-
from the appearance of the branch – e.g. if the customer orientation system is clear
enough; if the branch is tidy; if the leaflets and brochures are appropriately
available;
-
to the customer service – e.g. clarity and accuracy of information provided,
exploration of customer needs and situation; management of clients.
The management is provided with the results of the mystery shopping on a regional
breakdown. From time to time we managed to improve and conclusions of the report
define the way of future development. One of the most important challenges we face –
and strive to solve – is to reduce customer’s waiting time.
Besides analyzing the quality of our services we conduct mystery shopping at our
competitors. In 2008 DSK Bank achieved outstanding results among Bulgarian banks
and among OTP Group affiliates as well. Among the OTP Group members we performed
best together with the OTP Bank, Hungary; and we have gained a 6% advantage
compared to our competitors in fierce competition.
We constantly monitor our corporate clients’ satisfaction. The personal and closer
relationship allows a deeper and more detailed exploration.
In order to become more familiar with our clients’ expectation and opinion we are
planning to introduce a customer satisfaction survey in 2009.
Although we are succeeding in achieving a low proportion of customers’ complaints
compared to our competitors, we place great emphasis on managing and reducing
customers’ complaints. We use a centralized system for managing customers’
complaints providing professional and quick solutions. We continuously work on the
development of our customer complaints management. The satisfaction of our
employees is a crucial part of our strategy.
22
Customer contacts and handling complaints, 2008
Number of customer contacts
(complaints, requests, inquires, suggestions)
Number of customer contacts regarding bank card
transactions (complaints, requests, inquires, suggestions)
Reimbursed amount on justified complaints (BGN)
Reimbursed amount for handling non-identified card
transactions (BGN)
1301
3129
15 584
51 115
Enhancing financial literacy
The ever developing financial products are becoming more and more complex and the
complication of the money markets keep growing. Despite this we are convinced that we
provide thorough information on our products and product groups, and fully
understanding them requires the often missing financial literacy.
DSK Bank promotes the development of the financial literacy of its clients and the wider
public. One of the main pillars of this has to be the financial education of the people.
The responsibility of the educational institutions in providing the basic financial
knowledge and culture is crucial. At the same time we can take part in providing a
solution with the use of our programs.
Our initiatives mainly focus on students and children and we work in close cooperation
with the Association of Bulgarian Banks. As a result of this joint effort a dictionary has
been prepared on the financial expressions. This dictionary is available on the
Association’s website.
Our educational program targets secondary schools: every year the colleagues of DSK
visit different schools all over the country and while introducing the youth cards they
explain the responsible financial management and provide essential information on
financial mechanisms. In cooperation with the secondary schools the best performing
students are granted a debit card as an reward for their academic results.
From 2009 on we are planning to widen the channels and tools for improving financial
literacy. We intend to make the explanation of financial expressions and main features of
types of products available on our website and in our branches available.
Several of our charity activities target the development of financial knowledge by
supporting students or schools. Further information on the projects can be found at the
Social Participation Chapter.
World Savings Day
DSK Bank has been engaged in the World Savings Day for many years.
-
In 2008 we organized a joint campaign with an NGO: children collected stotinka
for charity purposes, for medical operators for children clinics. The commitment
and willingness to help of the children was exemplary all over the country, they
were proud of counting the stotinka at the DSK branches where they were
supposed to take the money. (The campaign was organized on International
Children’s Day as well.)
-
World Savings Day is traditionally the occasion for awarding the outstanding
efforts and performances at the OTP Group. The prize was set up in 1984 by
the OTP Bank in memory of András Fáy – the father of the savings movement
in Hungary and the founder of OTP Bank’s historic predecessor. From year to
year our colleagues are also awarded, in 2008 Ms. Detelina Nikolova, Chief
Regional Manager received the award in recognition of her successful work in
the North and Northwestern Region of Bulgaria.
23
THE EFFECTS OF THE ECONOMIC CRISIS ON THE OPERATIONS OF DSK
BANK
7.
The financial and economic crisis – resulting from the crisis on the money markets –
deteriorated during the fall of 2008, and thus seriously affected the operations of the
OTP Group and DSK Bank as well. The strict risk management of the OTP Group gives
a stable background for maintaining the financial balance and the liquidity. At the same
time the crisis required, and continuously requires immediate reactions in many fields.
With the aim of maintaining our stability we:
-
have changed our product portfolio;
-
have applied stricter measures regarding our risk management;
-
now provide a wider, more active communication towards our clients and investors;
-
have reduced our investment costs to a minimum;
-
aim to protect our depositors and
-
aim to help our debtors and to prevent them from insolvency, credit defaults and
bankruptcy.
Beyond our clients and investors, we are highly responsible to our employees.
Preservation of jobs has become one of the most important factors for our colleagues to
secure their livelihood.
7.1
Communication and trustworthy information assurance
Leaders of DSK Bank are important and highly recognized actors in our society, in
several cases possessing the role of opinion shapers. Violina Marinova, the CEO and
chairperson of DSK Bank gives regular interviews to different media groups on various
financial issues and questions related to DSK Bank. Ms. Marinova has informed the
Bulgarian society on various channels regarding the financial crisis and the possibilities
open to our clients who found themselves in a difficult situation. We publish statements
of our opinion regarding important economical and financial plans, and we provide press
releases widely covered by the media.
Our clients are personally informed through our Call Center and the customer service
employees of our branches. In order to provide accurate and reliable information we
constantly inform and train our staff on the overall situation of the Bank and the possible
solutions for our clients in trouble. We prepare them to answer and attend our clients’
questions and needs efficiently. We have organized two seminars for our corporate
clients sharing with them our plans and expectations in business development for the
year 2009. We set a high value on establishing a dialogue with our partners and are
open to their feedback as well. Confirming the success of our efforts there was no mass
withdrawal of the deposits, in October 2008 our Bank was rated with the highest
confidence in client service. We maintained the safeguarding image of our Bank which
helps us to keep our main asset, the trust of our clients.
24
7.2
Change in the operational structure
Although it was not necessary to make changes in our structure and in the principles of
our operations as a result of the crisis; the altering market and economical conditions
have made it essential to revise our operating system.
The principles of the amendment of our operations aiming to maintain our stability:
-
decreasing the risks:
-
security;
-
quick reaction;
-
accurate situation analysis;
-
reduction of expenditure.
Sudden and unexpected changes require the management to make frequent decisions
and to adopt a stricter control of the processes. Our decisions have become more
centralized and the personal responsibility of our leaders has become stronger, due to
our aim of making faster and even wiser decisions, placing high importance on our
security.
Increased precautions during the planning processes mean drafting various scenarios,
as well as making the internal control by frequent revisions stricter.
In the current situation maintaining our stability and security is more essential over the
growth of the Bank; hence the importance of the functions, supporting the core business,
playing a more significant role. The emphasis of the following areas has risen in
particular: risk management, compliance, controlling and security. Thanks to these
changes several risks and dangers have become more foreseeable and avoidable.
Therefore we are convinced that the development of the functions mentioned above, has
added long-term value, and will continue to do so even after the passing of the crisis.
It is obvious that in the unfavourable economic environment we aim to reduce the
operational costs. We are managing this by postponing all investments – real estate,
equipment, IT tools and software – which would add to the standards of our operations
and working environment, but currently are indispensible.
7.3
Alteration in the product portfolio
Our product portfolio and sales activity is determined by our goal of aiming to increase
the deposits and savings.
Deposits
As a result of the scarce funds, we have to rely mainly on deposits, both in the field of
product development and in sales.
The unforeseen situations require us to widen the range of our low-risk products while
focusing on the different needs of our individual, corporate and local governmental
clients.
25
Protecting our debtors
The economic crisis renders it more difficult for our individual and corporate clients to
pay back their debts. We consider it as a high priority to offer our clients – overstepping
the legal requirements – personal negotiations, in order to support them to overcome the
payment difficulties. A wide range of possibilities are available such as restructuring the
loan, extension of the repayment period, temporarily suspending the redemption of the
debt or to change to foreign currency loans. We treat our clients individually by offering
tailor-made solutions to suit their exact needs. We strive to use all the possible channels
to make our clients pay attention to the solutions.
Unfortunately, according to our experience, our clients turn to our Bank only as a last
resort, when the arrears are already high. We actively encourage our clients to contact
us before accumulating their arrears, in order to find a solution convenient for all.
Loan products
Due to the increased risks, our Bank, as well as the depositors’ and the loaners’ interests
require us to apply stricter conditions for providing loans and for credit assessment. With
regards to the maintenance of the economic processes and the development, it is
essential to continue offering loans. Hence we constantly offer credit to all of our client
groups, except the areas with exceptionally high risks.
In the current economic situation funding has become even more difficult, thus the state
and European Union refinanced credits are of a higher significance. These credits
stimulate economic processes as they expand resources. DSK Bank aims to find and
draw in refinanced funds and to join state and European Union programs.
7.4
Our colleagues
The economic crisis has had a serious impact on our employees as well. During work,
frequent changes and insecurity have caused an increase in burdens. The role of our
colleagues, working in customer care, is crucial, as they secure information and
communicate with our clients. However, providing always up-to-date information needs
constant preparation. The increased need of information, the more frequent questions on
the overall situation of the Bank and the economy all require broad knowledge. We
ensure the background information needed for client communications in time, and we
focus on the development of our employees’ competencies as well. We are aware that
our colleagues are working under more stressful conditions and we aim to reduce the
workload. The co-workers of our head offices are constantly working to find solutions to
be used for the changing economic and financial situation.
As a consequence of the crisis we have decided to postpone our traditional events such
as Christmas Party and DSK Bank Cup, the tennis tournament. We are convinced that
common events are an essential part of our work, thus we are committed to organize the
aforementioned events in 2009.
One of the most affected sectors hit by the economic crisis is the financial sector
specifically the banks; fortunately by the end of 2008 we were not forced to make any
redundancies. A future cutback of the headcount may become necessary due to the
decline of the market possibilities and the loss of demand. DSK Bank will continue to do
everything possible in order to secure its employees’ jobs.
26
8.
OUR EMPLOYEES
Our employees play a crucial role in the realization of our strategy, in achieving our
goals. One part of our HR policy is to express our appreciation of our colleagues and
their work.
DSK Bank, due to its extensive branch network, plays an important role as an employer
in the country. Besides strengthening the commitment of our co-workers and striving for
the enforcement of their skills and ability for innovation, we also have a responsibility
towards them. Our duty is to secure the stability of their workplaces, to provide healthy
working conditions, to maintain the work-life balance and to assure equal opportunities.
The size of our Bank requires the standardization of the HR processes as we have to
ensure a transparent operating structure. The opportunities – supposed to raise the
performance and commitment to our Bank – have to be available for all of our
colleagues. The means of possibilities include, among others: communication channels,
representation of interests, career management, etc.
Workforce headcount data
Employee headcount data
per person, 31st December 2008
Full-time employees
Part-time employees
Total headcount
Number of employees with a fixedterm employment contract
3 826
113
3 939
3 402
Effective capacity management is an essential factor contributing to the Group’s
successful operation. Headcount is optimally matched with the human resource
requirements specified for the individual work processes.
Most of the staff are employed on a full-time basis. From the standpoint of labour law
and our benefits policy all the employees receive equal treatment, in accordance with
the statutory provisions.
27
Total headcount by region
31st December 2008
6%
8%
Sofia
Pleven Region
6%
Veliko Tarnovo Region
Varna Region
47%
7%
Burgas Region
Stara Zagora Region
10%
Plovdiv Region
Blagoevgrad Region
8%
8%
In the regional distribution of employees Sofia is notably dominant among the regions,
with almost half of the employees working in the capital. The proportion of the other
regions is quite evenly balanced.
Breakdown of employees per category according to gender
31st December 2008
2 500
1 999
2 000
1 500
1 000
Middle
manager
Male
Male
59
Female
75
Female
Female
54
Male
Male
76
Female
Female
Senior
manager
Male
3
47
Female
3
58
Male
291
500
0
674
600
Line manager While collar Administrative Blue collar
(not
manager)
The distribution by gender shows a predominance of women; the ratio of women within
the total workforce is 70%. Women are equally represented at management level as
well.
28
Percentage of employees by age group
31st December 2008
11%
5%
<25 yrs
26%
25-35 yrs
35-45 yrs
45-55 yrs
32%
>55 yrs
26%
The breakdown of employees by age reveals a broad distribution, with the average age
of the workforce being 41.
Although DSK Bank does not have a comprehensive policy and practice of giving
preference to local inhabitants when hiring people, the employees of the Bank are
predominantly locals. At the establishment of the new Head Office, new positions were
firstly offered to DSK employees as part of their career development, hence these
people transferred to Sofia from other parts of the country.
The history of DSK Bank dates back to the 1950’s thus we have a long-standing
relationship with our employees. Establishment and penetration of new banks in Bulgaria
resulted in some of DSK employees leaving the Bank. The most important factors of our
human resource practices are proven to be satisfying for our employees as many of the
former employees are rejoining DSK Bank.
The fluctuation tendencies are between 12 – 15%, the turnover in 2008 was 14.8%. The
level of turnover has decreased in the second half of the year. Our long-term objective is
to further decrease and stabilize turnover by strengthening our colleagues’ satisfaction
and loyalty. Our ability to retain our colleagues is influenced by a number of factors, and
the majority of our HR management activities are geared, either directly or indirectly,
towards ensuring the retention of employees.
We should concentrate on the branch network, as the turnover is significantly higher
than that of the head office’s. Employee turnover is greatly influenced by job
opportunities of the region, and this is also reflected in the demographic profiles of
outgoing employees. In Sofia and Plovdiv the turnover is significantly higher than in the
regions, the age group under 25 is proven to show the least loyalty among the
employees. Turnover of men was 15%, whereas the female was 17%.
29
Turnover of employees by region
compared to the headcount of the region, 31st December 2008
20%
15%
18%
17%
16%
13%
12%
11%
9%
10%
12%
5%
So
f ia
R
eg
io
Pl
n
ev
Ve
e
n
l ik
R
o
eg
Ta
io
rn
n
ov
o
Re
gi
on
Va
rn
a
R
eg
Bu
io
n
rg
a
St
s
R
ar
eg
a
Za
io
n
go
ra
R
eg
Pl
io
ov
n
d
iv
Bl
ag
Re
oe
gi
on
vg
ra
d
R
eg
io
n
0%
Percentage of employee turnover by age group
compared to the headcount of the age group
31st December 2008
30%
25%
24%
21%
20%
15%
15%
11%
9%
10%
5%
0%
<25 yrs
25-35 yrs
35-45 yrs
45-55 yrs
>55 yrs
Training and education
One of our main goals is to continuously develop the professional knowledge and
personal skills of our employees. Training is closely linked to everyday work, new
products and services, changing conditions need continuous education and information.
Currently we are proceeding with the introduction of the e-learning system, providing a
faster, more easily available and flexible way of education. E-learning creates the
possibility of mass training on the spot, suiting the time schedule of employees. In 2008
we conducted a mass education program jointly with a consultancy company. The
trainings aimed to develop the skills and competencies, and middle management was
provided leadership training. As a consequence of the economic crisis we have been
forced to cut back training costs on the short run.
We provide topic related trainings on special issues concerning all or most of the
employees. The introduction of the Code of Conduct (2006) and Code of Ethics (2007)
were followed by an education program, in which all DSK Bank staff participated.
30
A great emphasis is placed on the training of new entries. The introductory training
consists of three modules:
-
general information on DSK Bank and on working conditions including the
organizational structure, governance bodies, legal compliance, historical aspects,
standards of behaviour, internal communication, performance evaluation;
-
banking products and services training;
-
software and IT knowledge training.
In 2009 we are planning to launch the talent management program. The purpose of the
system is to provide talented and motivated employees with clearly defined opportunities
for professional advancement and promotion within the Bank. The talent-nurturing
scheme aims to enhance professional and interpersonal skills of the participants. The
program is going to be based on the one used by OTP Bank, and the first step will be
the selection and retention of talented staff.
Average hours of training per employee by employee
category, 2008
68
66
64
62
60
5
10
Employees
Management
58
56
54
52
61
56
50
hours
In-house
External
The ratio of in-house training to training provided by external companies is roughly half and half.
Training expenditure per employee amounts to an average of 242 BGN, with 24% spent
on in-house and 76% on external trainings.
DSK Bank provides internships to young expertise, trainees are provided with relevant
professional experience, and after fulfilling the program they may become a probable
candidate for the open positions.
Programs for skills management, lifelong learning and career
changes
Availability
In-house training courses
yes
Financial support for external training or education
yes
Provision of study leave, with guaranteed retention of position
no
Pre-retirement planning for those approaching retirement age
no
Further training for those who would like to continue working for longer
yes
Severance packages
no
Job search help for dismissed employees
no
Assistance with the transition to life without work
(e.g. training, counselling)
no
31
Performance evaluation
Assessment and evaluation of personnel performance is an essential part of our human
resource management. We use both qualitative and quantitative indicators to measure
performance annually or twice a year. Qualitative evaluation and feedback is a part of
the manager’s job with all of the employees, and 72% of our staff receives an official
performance assessment and appraisal of their work.
Benefits policy
Our benefits policy is required to fulfil twofold aim: to provide a fair remuneration and to
motivate our employees to perform even better, to reward loyalty to the Bank and to
reflect the level of responsibility associated with their jobs.
DSK Bank is the most effective bank not only among the OTP Group, but among all
banks in Bulgaria regarding HR costs compared to economic results.
Salaries are determined in accordance with uniform principles, while the assessment of
performance and the related incentives are also regulated. Performance is measured on
the basis of business and financial indicators. Remuneration consists of three parts:
salary, bonuses – determined by the performance, and a social package – provided to
all employees equally. The social package is voted locally and contains additional
pension fund contributions, and other social support. Benefits in excess of salary make
25% of compensation.
The average earnings are more than double the national average earnings but lower
than that of the financial sector. The yearly increase rate of real earnings at DSK Bank
indicates our objective: to increase benefits and achieve the average for the whole
financial sector.
Employee Benefits 2008
BGN per person per month
1400
1200
1 230
1 184
1 060
1000
800
600
500
400
200
0
Net average earnings Net average earnings Net average earnings Total compensation
at the organisation
w ithin the financial
in the national
package, including
sector
economy
salary and benefits in
kind
32
Real earnings at DSK Bank and national economy, 2008
Change in real earnings at DSK Bank (compared to 2007)
Change in real earnings in the financial sector (compared to 2007)
Change in real earnings in the national economy (compared to 2007)
17%
15%
20%
To express our appreciation and acknowledgement our best performing colleagues are
rewarded on Bankers Day and World Savings Day. The awarding procedure is always
connected to a special event participated in by most of the employees and a celebration
of the common success of DSK Bank together.
Employee advocacy and deliverance
Providing appropriate advocacy to our employees and their involvement into all the
relevant decisions is taken for granted at DSK Bank. The Bank’s management conducts
negotiations and consultations with the Trade Union and the Workers’ Council prior to
making decisions or taking steps that affect larger groups of employees, in accordance
with the statutory regulations. DSK Bank cooperates with the trade union on a
continuous basis, and makes the necessary information and infrastructure available for
advocacy activities. Collective Bargaining Agreement applies to all employees
independent their trade union membership.
Employees are welcomed to provide suggestions and ideas to the management.
Working groups are managed by the responsible organizational units; recommendations
of the network on the everyday work are received by a dedicated mail box. Proposals
are reviewed on a monthly basis, and suggestions are provided for the management.
For the sake of exploring our colleagues’ opinion we conduct employee satisfaction
surveys. According to the results of the last survey – which took place in 2007 – work
safety and working environment; training and development opportunities; and internal
communication are the fields where DSK Bank’s performance is the best. In the coming
years we have to focus on compensation packages and maintaining work-life balance in
order to enhance the staff’s engagement.
Internal communication
A well organized and appropriate internal communication is one of the main factors of
efficient and successful operation. Electronic channels are becoming more and more
important. Intranet is one of the most important resources regarding professional and
organizational information, but the role of personal meetings cannot be stressed enough.
The most commonly used channels for providing news of general interest are Intranet
and the internal newspaper of DSK Bank published in every three months. We are
convinced that employees’ commitment is highly influenced by the atmosphere and
cohesion, and for this reason we inform our staff on a wide range of topics; interviews
with the best performing employees, donations, branch openings, events of the Bank are
only a few to mention here. We have also given a summary of CSR in our internal
newspaper.
Health
Healthy and safety working conditions are provided according to statutory legislation.
Most of our employees participate in a regular annual medical check-up. Expenditure of
33
the medical check-up has a determining role in our donation costs. Employees working
under special risk conditions are covered by life insurance. DSK Tours provides
discounts for our employees when buying its services.
We are convinced that prevention should be preferred to treatment, thus we are planning
to promote healthy life by supporting recreation and sports of our employees.
34
SOCIAL PARTICIPATION
9.
Being a determining company of Bulgaria we are committed to take an active part in the
realization of programs serving the needs and interests of the whole society beyond the
frame of our financial services. According to the Bulgarian Donors’ Forum DSK Bank is
one of the biggest donors among the Bulgarian financial institutes.
It is easy to stand up for a good cause. But it is challenging to subsidize effectively. How
can the funds be used in the most effective way? How can we be sure that the target set
will be realized with our help? What type of support should we use among all the various
ones available?
DSK Bank supports a wide range of initiatives and programs in order to express its
engagement towards the community the Bank is operating in and the solutions of social
challenges.
-
Youth and children, the future generation and our employees are at the very centre
of our charity activities. We consider familiarity and love of the arts and music to be
of great importance besides education.
-
We pay continuous attention to the health conditions of our colleagues and we
support their participation in cultural events.
-
We are willing to help local communities according to their current needs.
Though the decision-making process fully concerns the CEO of DSK Bank, regional
officers have the opportunity to recommend local initiatives worth supporting. As we are
not in a position to help everyone we do not support individuals in order to avoid being
discriminatory.
We are committed to ensure the best use of the given funds, thus we expect our
beneficiaries to comply with the strict regulations on the expenditures, and demand
detailed feedback on the results and impact of the programs.
For further improvement of our supporting activities we aim to reconstruct our donation
policy and to determine the principles and fields of charity more exactly.
Many of our beneficiaries are granted long-term backing (i.e. 2-3 years), but we also
support single events and initiatives. Chiefly we provide our subsidies with a donation
and the majority of financial contributions are in-kind donations.
In-kind contribution of DSK Bank is related to IT equipment:
-
We provide hospitals, schools and different public institutions with used computers.
-
In 2008 we updated six PC sets for the Union of Bulgarian Journalists (UBJ) in
order to equip a computer room in the union.
From 2009 on we are placing more emphasis on in-kind donations by increasing the
diversity of support and by quantifying the financial amount of giving. We prefer to exploit
possibilities that are connected to our core business and currently used communication
channels.
We aim to get our colleagues more involved in charitable activities in the future. We are
planning several programs serving to improve their commitment and participation; one of
our objectives is to encourage the employees’ initiatives by establishing a channel for
35
their ideas. Our focus will be set on joint efforts: DSK Bank will actively contribute to the
colleagues’ donations. We intend to make our staff more acquainted with DSK Bank’s
social participation.
Amount of Donation and Sponsorship at the DSK Bank, 2008
Sponsorship
Donations
0
20000
40000
60000
80000
100000
120000
140000
Education and related initiatives
Arts and culture
Medical care
Public institutions and related initiatives
160000 BGN
Employees (medical care and arts)
Education
We are committed to support the education at all possible levels from primary schools to
universities; from buying textbooks up to providing scholarships. In 2008 we donated for
the following causes:
-
textbooks to a public school;
-
publishing a folklore encyclopaedia for children;
-
publishing a book on economics;
-
publishing collected works with scientific researches at the University of National
and World Economy in Sofia , to be later presented at an international conference;
-
the Bulgarian University Students’ Union to organize and hold an European
University Students’ Conference;
-
the development of a concept for a specialized economic Internet gateway;
-
an international children’s chess tournament “The Elephant’s Cup”. DSK Bank
provides traditionally – for the third consecutive year– debit cards for the winners in
the different age groups.
DSK Bank is an active member in the two significant foundations – the Buruv Foundation
and the Dr. Gavriiski Foundation – in Bulgaria supporting the development of financial
knowledge by providing scholarships to talented young people. DSK Bank is committed
to employing young experts granted support by the Foundations.
36
The Foundation “Atanas Burov”
The foundation is the first non-profit organization with ideal aims, working in the field of
banking, finance and industry since 1992. The foundation:
- annually provides scholarships to students,
-
organizes the only countryside Summer Schools focusing on modern banking and
corporate governance;
-
initiates competitions on important topics of financial development;
-
implements a joint initiative called "Investment Academy” to disseminate the
opportunities for investment in the country;
-
supports the participation of young experts in different educational programs.
Art and music
We are convinced that art and music are essential parts of life and represent a high
value. We are committed to contribute to the establishment of plays and performances
and we consider wide notoriety with the same importance. In most cases we support
cultural institutions that do not receive state subsidies. In 2008 we provided contributions
to:
-
The National Opera and Ballet for the “We Go to the Opera” program. The aim of
the sponsorship program was to introduce the youngest generation to the world of
music by attending opera and ballet performances specially adapted for children.
-
Purchasing of tickets for DSK Bank employees to attend a Drama performance and
a Christmas concert at the National Palace of Culture.
-
Pernik Municipal Drama Theatre for staging Ray Cooney’s comedy “Two Marriages
and One Adultery”.
-
The State Musical Theatre (Operetta) to install a stage-manager system.
-
The State Touring Theatre, Sofia for performing the Bulgarian comedy “The
Underground” in Cyprus, Nicosia.
-
We regularly co-operate with the Cultural Institute of the Hungarian Embassy and
in 2008 we supported the so-called “Hungarian Wave” program, a series of cultural
events; where modern and classical Hungarian arts were introduced and presented
including an art exhibition of Victor Vasarely.
-
The “Nicothea” Producers Company for staging “America! America!” in Sofia.
-
The Bulgarian Christian Union in order for them to become acquainted with
Christian culture and relics in Istanbul.
Medical care
Our donations focus on the staff of DSK Bank. The long-term approach towards our
employees requires us to act in a responsible way regarding health. For the sake of
preventing illnesses and early treatment we provide our employees a regular medical
check-up on a yearly basis.
37
Some charity programs target children’s health. In 2008 we donated to the “Sveta
Marina” hospital, the clinic for children’s oncohaematology; and provided the
infrastructure and delivery for the campaign aiming at collecting stotinka. (The campaign
was mentioned earlier is this report.)
Bulgarian Christmas
DSK Bank is a traditional donor in the Bulgarian Christmas charity campaign; besides
participating in the charity concert we support the organization of the concert.
The main objective of the campaign is to provide proper education or medical treatment
to orphans or children living in poor families who cannot afford this.
Public institutions
We are convinced that as being an integral part of the local communities we are
supposed to help them to reach their goals. DSK Bank happily contributes to local needs
and objectives. In 2008 we supported:
-
the municipality of Momchilgrad for maintenance of small gardens and green areas
around schools and kindergartens;
-
the municipality of Karnobat for the town’s local holiday;
-
the National Fire Brigade and Protection of the Civil Population.
-
We sponsored the National Association of the Municipal Officers in Bulgaria to hold
an international conference in Sofia on “The European City – City Planning and
Architecture, Security and Finances”.
38
10.
SECONDARY STAKEHOLDERS
10.1 Suppliers
While conducting business a wide range of suppliers support DSK Bank. In order to
boost efficiency and leverage economies of scale we make an effort to centralize
procurements wherever possible. In several cases – like with IT equipment –
centralization is implemented on the OTP Group level.
The selection of suppliers takes place through a tendering process, and bidders – on
condition that they comply with the technical competence – are chosen based on the
price and payment condition of their bid, and security for the provision of proper services
is also of great emphasis. The provision for proper services takes into account
environmental, security and ergonomic aspects as well. We demand that all our
suppliers comply with the legislative provisions. We conduct a deep examination into the
potential suppliers analyzing among others fields that help us to assess responsibility
and reliability of the prospective supplier, e.g. reputation, financial standing, ISO
qualifications. Endeavouring to ensure equal opportunity is taken for granted in the
course of selecting our suppliers.
Although the size and market weight of DSK Bank potentially gives it the power to dictate
terms to its suppliers, in all cases we strive to forge fair, long-term business partnerships
based on two-way communication. The Bank clearly states its expectations towards its
suppliers, and does everything in its power to fulfil its own commitments, and in the
event of any problems attempts to reach a mutually agreeable solution.
Our position enables us to shape the attitudes of our suppliers by setting a good
example, and we intend to make more effective use of this opportunity in the future. We
aim to ensure that our suppliers comply with our Code of Ethics, and from 2009 our
contracts will contain clauses to this effect.
10.2 Competitors
DSK Bank faces ever fiercer competition, thus the success of the Bank’s business
operations, and the achievement of its market objectives, presupposes a knowledge and
analysis of competitors’ activities, a pro-active approach and an ability to respond
effectively to the actions of competing market operators. The Bank primarily uses indirect
means to obtain information regarding its competitors’ operations.
We strive for a fair and proper relationship with our competitors. We are convinced that
in many fields banks are not rivals and supportive cooperation can best serve the
interest of clients and other stakeholders. Experience exchange and common search for
solutions can provide an additional value for all participants. We are committed to launch
joint initiatives with our competitors targeting a more simple and unified communication
towards clients.
A direct relationship with participants in the banking sector is inevitable through interest
representation and industry associations. DSK Bank is an active member of the
Association of Banks in Bulgaria, and represented in many of the Association’s
39
committees. We are proud that the CEO of DSK Bank, Ms. Violina Marinova is the
Chairperson of the Association.
10.3 Government agencies
DSK Bank endeavours to comply with all the legal provisions. Compliance requires the
maintenance of contacts with the competent supervisory bodies.
In many respects our cooperation with government agencies goes beyond the simple
fulfilment of our statutory obligations. The cooperation with the government agencies
indicates the high reputation of DSK Bank: our opinion is often requested on a
prospective new regulation or a change. DSK Bank uses its expertise to inspire national
legislation.
DSK Bank is hardly ever – five or six times on an annual basis – placed under
surveillance or supervision from the side of supervision bodies and committees for
protection of interests (e.g. Consumer Protection Agency, Committee for Personal Data
Protection). Additionally the majority of cases were closed in favour of DSK Bank.
Many former employees of DSK Bank occupy high positions in governmental or
professional bodies, or have been elected as mayors.
Membership in associations
In order to effectively maintain its market presence and to assert its interests, DSK
Bank joins industry associations that complement its objectives and interests, and
share its values. Membership, for the Bank, involves playing an active role in the
operation of these organizations. DSK Bank is the member of:
-
The Association of Banks in Bulgaria;
-
The Bulgarian Stock Exchange;
-
Bulgarian Chamber of Commerce;
-
The Central Depository; Bulgarian Dealers’ Association;
-
The Atanas Bourov Foundation;
-
The Prof. Dr. Veleslav Gavriiski Foundation;
-
The World Savings Banks Institute;
-
The European Savings Banks Group;
-
MasterCard;
-
Visa Europe;
-
S.W.I.F.T.;
-
The Association for Control and Audit of Information Systems (in USA);
-
Confederation of Employers and Industrialists in Bulgaria;
-
Bulgarian - Hungarian Chamber of Commerce.
40
10.4 Media
As DSK Bank aims to be an open company, we regard it as imperative to continuously
provide our customers, investors and the general public with comprehensive information
regarding our business results, development, products and services. Our strategy in
media communication has always been to maintain the reputation of the Bank and to
strengthen the bond of trust, but the current financial crisis has made this even more
relevant.
An important means of providing this information is regular, pro-active, credible and
consistent media communication. Attention is always paid to activities of DSK Bank. We
keep in touch with the representatives of the media on a daily basis and we also monitor
the media constantly. One of the most important channels for reaching the general
public is to publish press releases virtually on a weekly basis. The interviews of the CEO
of DSK Bank are another significant means of providing information. Interviews are
always welcomed by Violina Marinova. Topics that need special expertise – e.g. IT – are
discussed with the competent employees of the Bank. DSK Bank has a strict policy on
interviewing; the interviewee on behalf of the Bank is to be authorized by the CEO.
Special and significant events are followed by press conferences.
DSK Bank enjoys a close relationship with the local media as well; regional offices are
always willing to satisfy the information needs of the public.
As financial institutions are often objects of criticism we are proud that DSK Bank has not
been criticized in principles for more than a year.
41
11. ENVIRONMENTAL PERFORMANCE
What is the most important environmental impact of a financial company? To what extent
should environmental protection play a role in the corporate social responsibility of the
Bank? Our internal and external stakeholders are right to raise these questions.
The Bank’s commitment to environmental protection is clearly demonstrated in the
corporate social responsibility report as well.
The environmental impact of DSK Bank is as diverse as the social and economic effects
of its operation. Our effect on the environment is obviously of another character than the
impact of industrial companies. Thus we need to consider different aspects when
evaluating our performance and setting the direction of our development.
We identified three main areas while defining the environmental impact of DSK Bank:
-
Resulting from its intermediary role in the economy, DSK Bank contributes and
provides the possibility of investments and activities which may affect the
environment in a positive or negative way;
-
The maintenance of buildings and facilities of the wide branch network of the Bank
as well as the necessary business trips have an inherent impact on the
environment;
-
The Bank is entitled to raise environmental awareness; the Bank’s economic
multiplying effect can be exercised in the field of the environment as well due to the
3 million clients and four thousand employees.
The environmental impact of financial services
Risk management and careful allocation of funds play a determining role in financial
services regarding prevention of environmental burdening operations beyond the legal
regulations. In addition our products may be specifically designed to finance
environmentally friendly investments as well as indirectly enhancing the spread of
environmentally sound practices. Detailed information can be found in the following
chapters: Principles and Practices Determining the Operation of the Bank, Banking
Products and Services.
Environmental impacts deriving from the operations of the Bank
The main effects on the environment resulting from the Bank’s operations stem from the
maintenance of the Head Office and branches, and also the business trips.
Real estate
DSK Bank’s operations have become more centralized since joining the OTP Group,
hence there has been an increase in the staff working at the head offices in Sofia. For
the sake of rationalization of real estate management and in order to make the
operations more efficient we are closing up the rented head office buildings and moving
42
into newly built offices. New and DSK owned buildings provide more space for
environmentally friendly solutions.
In compliance with the national law on energy efficiency two buildings of DSK Bank are
certified as energy efficient properties; the Kaloyan building is certified as a Class A, and
the Moskovska as a Class B building. Previous to the certification of the Kaloyan building
it was reconstructed by applying energy and water saving solutions. The almost one
hundred year-old historical building of the Moskovska head office is energy efficient in
many aspects by nature. Thick brick walls absorb the heat in wintertime while at the
same time keep the temperature low in the summer period. We pay high attention to
reasonable use of resources and the temperature of our buildings is adjusted to the
weather conditions and to the working hours.
While processing the constant renovation of our head offices and branches we use the
same standards assuring high efficiency. By the end of 2008 almost two-thirds of our
premises had been reconstructed and applied the same water saving taps, toilet flushes,
energy saving light bulbs etc.
A new head office of DSK Bank is currently under construction and planned to be
completed in 2010. The new building provides the possibility to set new goals and to
exceed current standards: we intend to use cutting-edge installation, which includes an
automatic building management system as well. We are investigating whether the
conditions are appropriate to involve renewable energy resources.
In 2009 we are planning to receive the energy efficiency classification for another of our
head offices, the Batenberg building.
Materials used
As a consequence of the office environment, the furniture and the equipment of the
branches and the IT facilities are the most frequently used materials. Paper, ink and
toner cartridges are the most significant materials we use.
Data of DSK Bank’s materials usage, 2008
Number of branch offices
Number of branches renovated in 2008
Quantity of paper procured directly (t)
Weight of ink and toner cartridges used (t)
Weight of CDs and DVDs used (kg)
379
60
105
12
85
Procurement is centralized, thus the criteria of selection can be unified and easily
monitored. Maintenance and waste management of the IT equipment is also more
efficient in this way. In the course of selecting the products and service providers we
concentrate on the durable condition and aftercare as well, besides cost and quality
criteria. The new equipment is more environmentally friendly concerning its energy
consumption as well as its materials. At the same time we intend to find the optimum
balance in the frequency of change.
The technical prerequisites for the usage of environmentally friendly materials are not
always adequate. Although we have been forwarding our empty toner and ink cartridges
for refill for several years, we cannot use refilled toners as their quality does not meet our
requirements. We have the same problems regarding recycled paper for office use,
besides the issue of significantly higher costs as well. Nevertheless we are searching for
the possibilities of widening the use of recycled paper.
43
Energy and water consumption
Efficiency requires continuous monitoring on resource utilization, focusing on the
determining users. Environmentally friendly solutions and low energy consumption play
an important role during the reconstruction of buildings and branches, and the
establishment of the new head office.
For further improvement of the energy management of DSK Bank four of our colleagues
will be attending an energy efficiency seminar.
The most significant energy consumption results from our electricity usage – deriving
mainly from IT devices – and central heating – seeing as the most commonly used
heating at DSK Bank is central heating. In the new head office we are planning to use
electric heating to secure a higher reliability of supply. We foster our colleagues towards
environmentally conscious behaviour by logging off the computer upon leaving, or being
responsible in the use of water and electricity.
The Bank’s water consumption is not excessive; the water is mainly supplied from the
main public water system and is discharged into the public sewage system. One of our
premises at the sea side possesses its own water resource.
Consumption data is summarized centrally, hence we are not able to disclose exact
information on the consumption. We undergo a continuous improvement in the
estimation method as well as include more criteria in the measurement.
Waste management
Our waste management system is undergoing continuous development.
We prevent producing waste by only making a rational change in office furniture,
facilities and IT equipment, reducing the amount of our printouts, and in 2009 we are
planning to introduce electronic invoices as well.
Recycling and reuse has been realized in terms of selected waste collection.
A significant part of waste paper is derived from our archives. Disposal of confidential
information is strictly regulated thus we collect archives selected all around the country,
shred the paper and reuse it again. In 2008 we collected 20 tons of paper sorted. Toners
and ink cartridges have been delivered for recycling since the middle of 2008. Used
computers, printers and copy machines are offered either as donations to non-profit
organizations or institutes or for employees at a reasonable price. In 2009 we are
planning to conclude an agreement for the reuse of the metal parts of the computers in
2009 but we also intend to retain the previously mentioned system.
We strive to extend sorted waste collection in the coming years with the focus on
household waste (paper, PET bottles etc.).
Company vehicles, business trips
The motor vehicle fleet of DSK Bank requires continuous maintenance. DSK Bank uses
leased cars, the period of change depending on the driven kilometres but generally
vehicles are changed every three years. In the selection of vehicles the primary
considerations are quality and price in this field as well. Other important criteria are
44
security, consumption and the expected time of the reliable usage. Our new vehicles
fulfil high level environmental requirements. As a result our motor vehicle fleet is
gradually becoming more and more environmentally friendly. Our leaders enjoy a degree
of freedom when selecting their vehicles.
In order to reduce the number of business flights, we have extended the use of video
conferences. The last few years’ experience shows that regional operation requires
close personal contact, thus we do not foresee a considerable drop in the number of
trips.
To give a complete list we are required to report on the courier services we
subcontracted, however our Bank rarely makes use of these possibilities.
Bicycle usage among our employees depends on personal commitment. Some of our
branches provide bicycle parks; however showers, which could further enable our
colleagues to travel by bicycle, are rarely available.
Business travels at DSK Bank, 2008
Number of vehicles
Trips by air
110 vehicles
91 return journeys
Raising awareness
-
With the aim of raising the environmental awareness of our clients, we promote the
use of electronic channels.
o
Among other possibilities, our clients can access their bank statements online.
o
For clients requiring printed bank statements we intend to make use of empty
space by placing CSR messages on it.
-
We plan to use recycled paper for marketing purposes, for our publications, leaflets
and brochures.
-
We would like to enhance the responsible attitude of our employees with our
programs, a few of which will be realized in 2009:
o
We plan to provide CSR training, which will contain several ideas and
recommendations on the practical adaptation of environmentally conscious
behaviour.
o
We are going to introduce a printing policy, promoting the reduction of paper
and toner usage.
o
We aim to launch a pilot project for promoting a “green office” by decreasing
energy consumption, and having selective waste collection etc.
-
Environmentally conscious operations can only be realized with the involvement
and active participation of our employees, thus we feel it is essential that our
colleagues consider us as partners and supporters in the realization of their
initiatives e.g. to promote carpooling among employees, colleagues sharing cars
will be rewarded.
-
We strive to transmit environmental friendliness towards our partners as well while
reducing our own emission by “green event management”. We are going to choose
environmentally friendly locations, catering and materials, as well as CO2
neutralization.
45
-
We are open to new ideas and suggestions from all of our stakeholders regarding
the strengthening of environmental awareness. Our email address
csr@dskbank.bg is live; moreover we are planning to establish boxes for ideas in
our branch offices.
Promoting energy efficiency
DSK Bank jointly with three other Bulgarian banks created a TV commercial to promote
energy efficiency in 2006. The animated advertisement explained the meaning of
energy efficiency and provided recommendations on how to implement it in every day
life.
46
12. OBJECTIVES FOR THE FUTURE
We have summarized our objectives and commitments for the future in the interests of
responsible and sustainable operations.
DIRECTIONS OF OUR FUTURE DEVELOPMENT
Strengthening the principles of CSR in our organization and among our suppliers
We are going to consider auditing the report by external assurance from 2009 onwards.
We aim to ensure that our suppliers comply with our Code of Ethics, and from 2009 our contracts
will contain clauses to this effect.
Security and risk management
In the coming year we intend to involve our clients in security issues, by drawing their attention to
possible risks they may face in certain cases, and providing them with recommendations on how
to avoid these risks.
Customer service
In order to become more familiar with our clients’ expectations and opinions we are planning to
introduce a customer satisfaction survey in 2009.
We intend to refurbish 40 branches in the coming year.
We are committed to launch joint initiatives with our competitors with more simple and unified
form of communication towards clients.
We are planning to offer free mineral water in bank branches in the summer period in order to
improve the comfort of our clients.
One of the most important challenges we face – and strive to solve – is to reduce customer
waiting times.
Development of financial literacy
From 2009 on we are planning to widen the channels and tools for improving financial literacy.
We intend to make the explanation of financial expressions, and main features of types of
products, available on our website and in our branches.
Products and services
Further negotiations for future funding of the facility line are in process.
For SME’s a fund is available for guaranteeing loans, and at the beginning of 2009 another
agreement is to be signed for a facility line of 20 million BGN. The ten-year project is meant to
finance technical innovation and the pre-export of Bulgarian companies.
DSK Bank is aiming to find and draw in refinanced funds and to join state and European Union
programs.
Employees
Currently we are proceeding with the introduction of the e-learning system.
In 2009 we are planning to launch the talent management program.
We are convinced that common events like the company Christmas Party and DSK Bank Cup
are essential parts of our work, thus we are committed to continue organizing them in 2009.
We are planning to promote healthy lifestyle by supporting recreation and sports for our
employees, giving a preference to prevention over treatment.
Social participation
We are aiming to reconstruct our donation policy and to determine the principles and fields of
charity more exactly.
We aim to get our colleagues more involved in charity work in the future. We are planning
several programs serving to improve their commitment and participation; one of our objectives is
to encourage the employees’ initiatives by establishing a channel for their ideas. Our focus will
be set on joint efforts: DSK Bank will actively contribute to the colleagues’ donations. We intend
to make our staff more acquainted on DSK Bank’s social participation.
47
From 2009 on we are placing a higher emphasis on in-kind donations with an increase in the
diversity of support and by quantifying the financial amount of donations. We prefer to use
possibilities that are already connected to our core business and currently used communication
channels rather than new ones.
Environmental protection
In 2009 we are planning to receive the energy efficiency classification for one of our head offices,
the Batenberg building.
We continuously improve the method of our emission estimation as well as extending the
measured activities.
We are investigating whether the conditions are appropriate to utilize renewable energy
resources.
We are planning to conclude an agreement for the reuse of the metal parts of the computers in
2009.
We are intending an extension of sorted waste collection in the coming years with the focus on
household waste (paper, PET bottles etc.). We strive to make selective collection of used paper
complete.
We are going to prepare and implement a printing policy, promoting the reduction of paper and
toner use.
For clients requiring bank statements on paper we make use of the empty space by placing CSR
messages on it.
We are planning to use recycled paper for marketing purposes for our publications, leaflets and
brochures.
We aim to launch pilot project for promoting a “green office” by decreasing energy consumption,
offering selective waste collection etc.
In order to enhance the energy management of DSK Bank four of our colleagues will take part in
energy efficiency training.
We are planning to provide CSR training.
We promote carpooling among employees, with rewards for colleagues sharing cars.
We strive to transmit environmental friendliness towards our partners, while reducing our own
emission by “green event management”. We are going to choose environmentally friendly
locations, catering and materials, as well as CO2 neutralization.
48
13. CORPORATE GOVERNANCE
Governance structure of OTP Group
The OTP Group consists of the OTP Bank and its subsidiaries with which it has a close –
controlling or shareholding – relationship. The OTP Group operates in accordance with
the governance model best suited to the Group’s special characteristics, under a
country-responsibility central functional matrix system. The aim of the model is that the
organization is governed in conformity with a set of unified principles, but with
consideration paid to local factors, thereby optimizing business results at the group level.
We differentiate between three types of governance:
-
Business governance describes the management of retail banking and sales, and
corporate banking operations.
-
Functional governance is applied by the central management and controlling
functions, and the group level operation of the service areas.
-
Owner governance is the exercising of ownership rights and obligations between
the parent company and its subsidiaries, realized in a different way at each
respective subsidiary.
Governance structure at DSK Bank
The different organizational units, their functional obligations and the collective
governance bodies and their functions are set according to governance rules.
DSK Bank has a two-tier system of management. The Bank is ruled by a Supervisory
Board consisting of three members elected by the General Meeting. The Supervisory
Board supervises the activities of the Bank and elects the six-member Management
Board, Chief Executive Officer, and Executive Directors to the members of the
Management Board. The Management Board is the governing and representative body
of DSK Bank. The Bank is represented jointly by two of the Executive Directors and
Procurators.
DSK Bank Supervisory Board
Dr. Sándor Csányi (56)
László Wolf (49)
Dr. Frigyes Hárshegyi (63)
Chairman of the
Supervisory Board and
Chief Executive Officer of
OTP Bank
Deputy Chairman of the
Supervisory Board and
Deputy Chief Executive
Officer of OTP Bank
Member of the
Supervisory Board
DSK Bank Management Board
Violina Marinova (55)
Miroslav Vichev (44)
Diana Miteva (44)
Chairperson of the
Management Board and
Chief Executive Officer
Member of the Management
Board and Executive
Director, IT and Operations
Member of the Management
Board and Executive Director,
Retail Banking
49
Nikolay Borisov (41)
Dorothea Nikolova (38)
Lyubomir Zhelyazkov (40)
Member of the
Management Board and
Executive Director,
Corporate Banking
Member of the
Management
Board and Executive
Director, Finance and
Planning
Member of the Management
Board and Executive Director,
Credit Risk Management
Performance management of the higher bodies
Requirements for the qualifications of the members of Higher Bodies are suitable
experience, expertise and education level. Senior Executive Managers have to be
certified by the Bulgarian National Bank. Positions for members of the committees are
appointed as positions in the Bank.
The objectives of performance assessment are determined based on financial targets.
There is no assessment system or regulation for defining criteria of performance. The
final assessment of the Bank is most visible by the financial indicators and awards
granted for the Bank.
Compensation of higher body members is directly linked to the company’s performance.
Permanent committees
Permanent committees are the Bank’s decision-preparation, decision-making and
negotiating forums. The participants of all the bodies mentioned below are members of
the management, and seeing as membership is linked to the positions no mandate is
defined for the committees.
Audit Committee
According to the Independent Financial Audit Law, all of the banks should have an Audit
Committee, to observe the independence of the internal financial audit. All three
members of the Audit Committee are independent and are not employees of the Bank.
Credit Committee
The mission of the Credit Committee is to monitor, assess, classify and set aside
provisions for the Bank’s risk exposures. This body is entitled to make the operative
decisions in relation to the application of the different regulations and the policies for
classification of exposures in compliance with the basic rules adopted by the
management board of the Bank. It is also responsible for covering the so-called
problematic loans.
Credits and Limits Council
The mission of this body is to guarantee the optimum balance of risk and reward
according to Bank strategy within the lending activities to larger corporate clients. In the
case of equal votes, the Head of the Credit Risk Management Division shall cast the
deciding vote.
50
Assets and Liabilities Committee
The main responsibility of this body is to manage the Bank’s assets and liabilities
structure so as to maximize the risk-adjusted return to stakeholders in the long run.
Investment Committee
The mission of the Committee is to manage the Bank’s investment program and large
expenses for maximum return on investments. This body determines the priorities of
capital investment projects and includes them in the annual investment program.
Ethical Committee
The mission of this body is the investigation and management of suspected ethical
offences. Any detected suspected ethical offence can be reported directly to the
Committee according to the Code of Ethics.
Corporate structure
Each organizational unit has a role to play in implementing corporate responsibility at
DSK Bank in order to ensure that sustainability is achieved primarily, in respect of the
company’s core activities. The following is a list of the organizational units that have the
most direct impact on social responsibility:
- Chief Executive Officer
- Communications and Coordination Department
- Compliance Department
- Human Resources and Legal Department
- Security
- Retail Banking Division, including Marketing and Sales Department
- Corporate Banking Division, including Project and Structured Finances Department
and Sales and Products Management Department
- Finances and Planning Division, including Planning and Controlling Department,
and the Bank and Market Risk Department
- Credit and Operational Risk Management Division
- IT and Operations Division
51
Secretary of the
Supervisory Board
Internal Control and
Audit
Management Board
Chief Executive
Officer
Communications
and Coordination
Retail Banking
Marketing and Sales
Compliance
Corporate Banking
Human Resources
and Legal
Finances and
Planning
Project & Structured
Finances
Planning and
Controlling
Sales and Product
Management
Bank and Market
Risk
Credit and
Operational Risk
Management
Security
IT and Operations
52
14. GRI INDEX
No.
Description of indicator
Page
of
indicator
Strategy and analysis
1.1
Statement from the most senior decision maker of the 2
organization on the relevance of sustainability to the organization
and its strategy
1.2
Description of key impacts, risks, and opportunities
7-9;4647
Organizational Profile
2.1
Name of the organization
56
2.2
Primary brands, products, and/or services
5-6;1418;2425;
2.3
Operational structure of the organization, including the main 50-51
divisions
2.4
Location of organization’s headquarters
56
2.5
Number of countries where the organization operates
5
2.6
Nature of ownership and legal form
56
2.7
Markets served (including geographic breakdown, sectors served, 5-6;15and types of customers)
18
2.8
Scale of the reporting organization
5-6
2.9
Significant changes during the reporting period
52
2.10 Awards received in the reporting period
Report parameters
3.1
Reporting period for information provided
3.2
Date of most recent previous report
3.3
Reporting cycle
3.4
Contact point for questions regarding the report or its contents
3.5
Process for defining report content
3.6
Boundary of the report
3.7
State any specific limitations on the scope or boundary of the
report
5-6; 34
3.8
4
3.9
3.10
3.11
3.12
Basis for reporting on joint ventures, subsidiaries, leased facilities,
outsourced operations, and other entities that can significantly
affect comparability from period to period and/or between
organizations
Data measurement techniques and the bases of calculations,
including assumptions and techniques underlying estimations
applied to the compilation of the Indicators and other information
in the report
Explanation of the effect of any re-statements of information
provided in earlier reports, and the reasons for such re-statement
Significant changes from previous reporting periods in the scope,
boundary, or measurement methods applied in the report
Table identifying the location of the Standard Disclosures in the
report
3
52
3
56
3-4
4
4;52
Comments
Annual Report provides
more information.
Annual Report provides
more information
regarding changes.
No previous report
We have determined
DSK Bank as scope of
the report, while
mentioning the
subsidiaries as well.
3-4
At the location of the
specific report as well.
52
No previous report
52
No previous report
52-56
Use of the table means
providing information
as well.
53
3.13
Policy and current practice with regard to seeking external
assurance for the report
Governance, Commitment and Engagement
4.1
Governance structure of the organization
4.2
Indicate whether the Chair of the highest governance body is also
an executive officer
4.3
For organizations that have a unitary board structure, state the
number of members of the highest governance body that are
independent and/or non-executive members
4.4
Mechanisms for shareholders and employees to provide
recommendations or direction to the highest governance body
4.5
Link between compensation for members of the highest
governance body, senior managers, and executives and the
organization’s performance
4.6
Processes in place for the highest governance body to ensure
conflicts of interest are avoided.
4
4.7
49
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15
4.16
4.17
Process for determining the qualifications and expertise of the
members of the highest governance body for guiding the
organization’s strategy on economic, environmental, and social
topics
Internally developed statements of mission or values, codes of
conduct, and principles relevant to economic, environmental, and
social performance and the status of their implementation
Procedures of the highest governance body for overseeing the
organization’s identification and management of economic,
environmental, and social performance, including relevant risks
and opportunities, and adherence to or compliance with
internationally agreed standards, codes of conduct, and principles
Processes for evaluating the highest governance body’s own
performance,
particularly
with
respect
to
economic,
environmental, and social performance
Explanation of whether and how the precautionary approach or
principle is addressed by the organization
Externally developed economic, environmental, and social
charters, principles, or other initiatives which the organization
subscribes to or endorses
Memberships to associations (such as industrial associations)
and/or national/international advocacy organizations
List of stakeholder groups engaged by the organization
Basis for identification and selection of stakeholders with whom to
engage
Approaches to stakeholder engagement, including frequency of
engagement by type and by stakeholder group
48-50
48
53
Not relevant.
32; 48
49
53
The employees of the
Bank have to declare
their awareness of the
incompatibility
regulation of the Bank.
10
49-50
49
12-13;
53
53
39
4
3
19-22;
23;25;
32; 34;
38-40
Key topics and concerns that have been raised through 19-22;
stakeholder engagement, and how the organization has 23;25;
responded to those key topics and concerns, including through its 32; 34;
reporting
38-40
Precaution in core
operations.
No such charters or
principles.
54
Economic Performance Indicators
Management approach:
Economic performance can be measured in different ways; as each stakeholder group has different
expectations towards the Bank. We are convinced that besides the financial results, other aspects of the
performance have to prevail as well. Our contribution to the economic development is obvious due to our role
as financial mediator. We are traditionally committed to secure the access to the state funded products as
well as to serve the needs of the vulnerable social/economic groups or organizations advocating a group of
the society.
Besides providing services we contribute to the sustainability of the economic system by cooperating with
suppliers as well as by employing workforce. We exercise equal rights and ethical business conduct while
dealing with the above-mentioned groups.
We consider it our responsibility to be active in social issues and to help community goals. We continuously
develop our support of social activities in order to be more effective supporters of local communities.
We take for granted the fulfilment of our state duties (paying taxes).
Economic Performance
EC1 Direct economic value generated and distributed
EC4 Significant financial assistance received from government
14
54
No financial assistance
received
Market Presence
EC7 Procedures for local hiring and proportion of senior management 28; 48hired from the local community at locations of significant 49
operations
Environmental performance indicators – these indicators are mainly created specifically to the characteristics
of producing companies, hence in the case of DSK Bank some of the definitions, requirements are not always
fitting.
Management approach:
DSK Bank recognizes environmental values and the priority of protection of the environment. The report
shows the actual results of the Bank regarding environmental performance which is explained in the
respective chapter. DSK Bank, as a company working in the financial sector, interprets the environment in a
wide sense, looking for those areas in its services, operations and raising awareness, where the biggest
impact can be made.
Materials
EN1 Materials used by weight or volume
42
EN2 Percentage of materials used that are recycled input materials
42
EN28 Monetary value of significant fines and total number of monetary 54
None
sanctions for non-compliance with environmental laws and
regulations
Labour practices and decent work indicators
Management approach:
Highly qualified and committed employees are indispensible in order to achieve the Bank’s goals. Our Human
Resources management works beyond the regulations of fair employment. We consider equal opportunities,
fair employment conditions and safety as granted. In order to retain our employees we lay a higher emphasis
on their education.
Employment
LA1
Total workforce by employment type, employment contract, and 26-27
region
LA2
Total number and rate of employee turnover by age group, 28-29
gender, and region
LA3
Benefits provided to full-time employees that are not provided to 26
temporary or part-time employees, by major operations
Labour/Management relations
LA4
Percentage of employees covered by collective bargaining 32
agreements
55
Occupational health and safety
LA10 Average hours of training per year per employee by employee
category
Training and Education
LA11 Programs for skills management and lifelong learning that support
the continued employability of employees and assist them in
managing career endings
LA12 Percentage of employees receiving regular performance and
career development reviews
Diversity and equal opportunity
LA13 Composition of governance bodies and breakdown of employees
per category according to gender, age group, minority
membership, and other indicators of diversity
LA14 Ratio of basic salary of men to women by employee category
30
30
31
48-49
55
There is no difference.
The salary of the
employees under
Collective Bargaining
Agreement is set
according to the
Collective Bargaining
Agreement.
The remuneration of
overtime is carried out
according to the
regulations of the law.
Human Rights Performance Indicators
Management approach:
DSK Bank fulfils the requirements of respecting the human rights of its stakeholders to the maximum extent.
Being a Central-Eastern European company, child and forced labour does not occur as a problem. There are
adequate regulations and practices in terms of assuring freedom of association, concluding and practicing
collective agreements. Our acquisitions and investments do not require human rights inspection due to the
regional practices. We require our partners to operate according to the regulations.
We continuously work on the development of our customer complaints management. The satisfaction of our
employees is a crucial part of our strategy.
The possible ethical complaints are treated according to the Code of Ethics, although in recent years we have
had no need to convoke the Ethical Committee.
Non-discrimination
HR4 Total number of incidents of discrimination and actions taken.
HR6
55
Operations identified as having significant risk for incidents of 55
child labour, and measures taken to contribute to the elimination
of child labour
HR7 Operations identified as having significant risk for incidents of 55
forced or compulsory labour, and measures to contribute to the
elimination
of forced or compulsory labour
Society Performance Indicators
There was no such
case.
The Bank does not use
forced labour or child
labour.
Management approach:
Our company is committed to compliance towards legal regulations, and the voluntary obligations regarding
responsible operation. To follow the changes of the legal environment and to support implementation of these
the independent Compliance and Legal Department play a prominent role. Their guidance and control covers
all the units of the company.
Our company recognized its role on society and we are striving to strengthen the positive effects. We gain the
information regarding our impact on the local community by receiving feedback from our stakeholders.
Our company is absolutely politics and party neutral.
56
Corruption
SO2 Percentage and total number of business units analyzed for risks 56
related to corruption
SO4 Actions taken in response to incidents of corruption.
56
No such analyses were
conducted
No corruption related
legal procedures was
known,
and
no
investigation was taken
place by the Ethical
Committee in 2008
Product Responsibility Performance Indicators
Management approach
During the overall process of the development, sales of our products and the delivery of our services we
proceed with maximum adherence to the Code of Ethics as well as to our legal and voluntary obligations.
Product and service labelling
PR5 Practices related to customer satisfaction, including results of
surveys measuring customer satisfaction.
Customer Privacy
PR8 Total number of substantiated complaints regarding breaches of
customer privacy and losses of customer data.
Sector supplement indicators – social performance
FS5
Interactions with clients/investees/business partners regarding
environmental and social risks and opportunities.
FS15
Policies for the fair design and sale of financial products and
services.
21
56
No such complaint was
substantiated.
38; 4445
14-15
Head office address:
DSK Bank Plc: 19, Moskovska Str., 1036 Sofia
We look forward to receiving your feedback!
For the sake of sustainable development of DSK Bank we need your opinions. Thank
you in advance for taking the time to give us your feedback!
csr@dskbank.bg
57
Publisher: DSK Bank Plc.
Personable editor: ….
Chief Editor: ….
Collaborator in the preparation of this publication: Personar Communications Consulting
Ltd.; RTG Corporate Responsibility Consulting Ltd.
Photography: ….
Graphic Design: ….
Production: …..