REQUEST FOR EXPRESSION OF INTEREST
“REVIEW OF THE FINANCIAL AND RISK POLICIES OF THE BANK”
AFRICAN DEVELOPMENT BANK
Avenue Joseph Anoma, 01 B.P. 1387, Abidjan, CÔTE d’IVOIRE
Financial Risk Management Department (FIFM1)
E-mail : J.DJOFACK@AFDB.ORG; S.ABANKWA@AFDB.ORG
Telephone : (+225) 20 26 12 71/ (+225) 20 26 46 69
- The African Development Bank (AfDB) hereby invites consulting firms to indicate their interest in the following Assignment : Review of the Financial and Risk Policies of the Bank ;
- The services to be provided under the Assignment include :
- To review the Bank’s financial and risk management policies, particularly, Asset and Liability management (ALM) policies and practices ;
- To review the Income Model of the Bank ;
- To review the Bank’s Capital Adequacy framework ;
- To benchmark the relevance of the financial and risk policies with peer Multilateral Development Banks (MDBs) and other relevant institutions, and with the regulatory environment ;
- To assess the adequacy and relevance of the Bank’s internal financial ratios and limits, and determine how they compare with rating agencies and international regulators such as BASEL.
The key activities are as follows :
Review the Bank’s financial and risk management policies, particularly, ALM policies and practices :
- Review the relevance and make recommendations of the following policies ;
- Interest rate risk management (strategy, hedging, benchmark, metrics, etc.) ;
- Currency risk management (strategy, hedging, benchmark, metrics, etc.) ;
- Liquidity risk management (strategy, hedging, benchmark, metrics, etc.) ;
- Counterparty credit risk management (strategy, hedging, benchmark, metrics, etc.) ;
- Determine other relevant policies that are missing from the ALM guidelines.
Review the Bank’s Income Model :
- Review the Income Model of the Bank and provide recommendations on internal ratios to achieve and improve the following ;
- The Bank’s financial sustainability ;
- The Bank’s income generation performance ;
- The Bank’s capital adequacy and efficiency, etc ;
- Determine other relevant inputs to improve the Bank’s Income Model.
Review the Bank’s Capital Adequacy Framework :
- Review the Bank’s capital adequacy framework and make recommendations to strengthen the policy where appropriate ;
- Review the existing financial and risk policies of Staff Retirement Plan (SRP) and Medical Benefits Plan (MBP) and propose any relevant recommendations or method to compute the required economic capital to cover the risks associated with the pension and medical plans. The study should cover the potential impact on capital adequacy ;
- The review should be conducted in the context of LIBOR transition and include an assessment and recommendations related to the impact of LIBOR transition on the Bank’s financial and risk policies.
Benchmark the Bank’s financial and risk policies :
- Benchmark the Bank’s financial and risk policies with peer MDBs, rating agencies and international regulators such as BASEL, and make relevant recommendations to strengthen them ;
- Benchmark the Bank’s financial and risk policies with other relevant applicable institutions, and make relevant recommendations to strengthen them.
Review the adequacy and relevance of the Bank’s internal financial ratios and limits :
- Review the Bank’s internal financial ratios and limits and how they compare with rating agencies and international regulators such as BASEL ;
- Make recommendations to the internal financial ratios and limits to strengthen them when appropriate.
- More details about the scope of services required under the assignment are shown in Annex 1 ;
- The Financial Risk Management Division (FIFM1) invites eligible firms to indicate their interest in providing the above services. Interested consulting firms or individual firms shall provide information on their qualifications and experience demonstrating their ability to provide the services (documentation, references for similar services, experience in comparable assignments, availability of qualified staff, etc.) ;
- The eligibility criteria, the establishment of a short list and the selection procedure shall be in conformity with the Bank’s Rules and Procedure for the Use of
Corporate Consultants. Please, note that interest expressed by a Consulting Firm does not imply any obligation on the part of the Bank to include it in the shortlist.
- The estimated duration of services is four (4) months starting from March 2020, and representatives of the Consulting Firm will be based in Abidjan, Cote d’Ivoire, for the duration of the consulting period. Interested Consulting Firms may obtain further information at the address below during office hours: 09:00 to 17 : 00 hours, Abidjan Local Time ;
- Expressions of interest must be sent by email at the address below before Friday, 14 February 2020, 17:00 hours, Abidjan Local Time and mention “Expression of Interest for the Review of Financial and Risk Policies of the Bank”.
For the attention of : Financial Review Recruitment Team
African Development Bank
Financial Risk Management Department (FIFM1)
Avenue Joseph Anoma, 01 B.P. 1387,
Abidjan, CÔTE d’IVOIRE
Tel : (+225) 20 26 12 71 / (+225) 20 26 46 69
Email : J.DJOFACK@AFDB.ORG; S.ABANKWA@AFDB.ORG
ANNEX 1
Terms of Reference
REVIEW OF THE FINANCIAL AND RISK POLICIES OF THE BANK
- BACKGROUND :
1.1 The African Development Bank (ADB) is a regional multilateral development finance institution established in 1963 with a mandate to further the economic development and social progress of African Countries, individually and collectively. It has 54 regional member countries and 26 non-regional shareholders from Asia, Europe and the Americas. It cooperates with a large network of international development partners.
1.2 The stated Vision of the ADB is to be the leading development finance institution in Africa, dedicated to assisting African Regional Member Countries in their poverty reduction efforts. Client Focus, Quality, Teamwork and Best Practices are the four corporate values essential to the realization of the Vision.
1.3 Over the past years, the Bank has positioned itself as the first lender to the African continent and true development partner for Regional Member Countries.
1.4 The 7th General Capital Increase (GCI-VII) was approved by the Bank’s Board of Governors in October 2019, more than doubling the Bank’s capital base to about $208 billion. The Bank is revising its Financial Sustainability Framework to ensure that the approved GCI resources last over the agreed GCI implementation horizon, and to establish a high level of operating efficiency through an effective administrative cost-control mechanism, while ensuring that the Bank’s AAA credit rating is not endangered.
1.5 The financial policies and the financial sustainability framework drive the strategic management of the Bank’s resources and development related activities. Management and the Board of Directors regularly make decisions relating to lending volumes, mix of lending instruments, trade-offs between sovereign and non-sovereign operations, loan pricing, net income distributions and review of the Bank’s capitalization level. Such decisions have the ultimate goal of maximizing the Bank’s development impact in a financially sustainable manner, and are informed, amongst others, by its strategic operational priorities, identified lending opportunities (pipeline of operations) regional member countries’ financing needs, the Bank’s financial position and rating agencies assessment.
1.6 The financial sustainability model therefore integrates into a coherent framework, all the decision elements and underlying financial assumptions that have a bearing on the Bank’s sustainability of capital resources and operating efficiency.
1.7 The major building blocks of the financial sustainability framework includes the Asset and Liability Management policies, internal financial ratio limits and capital adequacy framework of the Bank. The review of these policies and practices will therefore facilitate the development of a robust Financial Sustainability Framework.
- SCOPE OF THE SERVICES
2.1 Review the relevance and make recommendations of the following policies :
- Interest rate risk management (strategy, hedging, benchmark, metrics, etc.) ;
- Currency risk management (strategy, hedging, benchmark, metrics, etc.) ;
- Liquidity risk management (strategy, hedging, benchmark, metrics, etc.) ;
- Counterparty credit risk management (strategy, hedging, benchmark, metrics, etc.).
2.2 Review the Income Model of the Bank and provide recommendations on internal ratios for the Bank’s financial sustainability, Bank’s income generation performance, capital adequacy, efficiency, etc.
2.3 Review the Bank’s Capital Adequacy framework and recommend strengthening where appropriate.
- Review the existing financial and risk policies of SRP/MBP and propose any relevant recommendations or method to compute the required economic capital to cover the risks associated with the pension and medical plans. The study should cover the potential impact on capital adequacy ;
- The review should be conducted in the context of LIBOR transition and include an assessment and recommendations related to the impact of LIBOR transition on the Bank’s financial and risk policies.
2.4 Review the relevance of the Bank’s internal financial ratios and limits and how they compare with rating agencies and international regulators such as BASEL.
2.5 Benchmark the above policies with peer Multilateral Development Banks (MDBs) and other applicable institutions, and make relevant recommendations to strengthen them.
- DELIVERABLES :
In the course of its engagement, the Consulting Firm should develop, deliver and implement the following :
- Recommendations of the scope of services ;
- Road map and action plans to develop and implement recommendations ;
- Clearly documented missing policies and internal ratios ;
- Final report highlighting recommendations about the way forward.
- EXPERIENCE OF THE FIRM :
4.1 The firm should have proven experience in the review, development and implementation of financial and risk policies. Knowledge of the African Development Bank and its operations would be an advantage ;
4.2 The composition of the team working on the assignment is of critical importance and should include ad minima :
- A committed team with personal experience working in Africa with both public and private sectors ;
- A team fully proficient in English and French.
- DURATION :
The duration for the Assignment will be four (4) months and planned to start from March 2020.
- LOCATION :
The work will be carried out remotely and/or onsite, with participants based in Abidjan and several other African capitals.
- REPORTING REQUIREMENTS AND TIME SCHEDULE FOR DELIVERABLES :
The Consulting Firm will report to the Financial Risk Management Division Manager (FIFM1). The following reporting standards will be adhered to :
- An initial report detailing the methodology and timeline to undertake the Assignment, followed by periodic progress reports detailing advancement versus initial objectives, as well as issues encountered which require remedial action by the Bank for deadlines to be adhered to ;
- The initial report is expected five (5) calendar days after the kick-off of the consulting assignment; progress reports are expected every two weeks; all such reports will be submitted in PDF by email ;
- Final reports shall be sent to the Financial Management Division Manager (FIFM1) via email.