24/08/2021

To our stakeholders:

I am pleased to confirm that Banka Kombetare Tregtare reaffirms its support of the Ten Principles of the United Nations Global Compact in the areas of Human Rights, Labour, Environment and Anti-Corruption.

In this annual Communication on Progress, we describe our actions to continually improve the integration of the Global Compact and its principles into our business strategy, culture and daily operations. We also commit to share this information with our stakeholders using our primary channels of communication.

Sincerely yours,

Seyhan Pencablıgil
Chief Executive Officer and Board Member

Banka Kombetare Tregtare (BKT) is keen to respect and protect the Human Rights, since this issue is a crucial priority of our corporate responsibility. BKT has developed a wide range of existing policies relevant to its human rights impact as an employer and provider of financial services to customers, as well to all other stakeholders.

From a workforce perspective, BKT has developed longstanding policies on human rights-relevant issues including employment policy, health and safety, equality and diversity, equal pay, non-discrimination, and many others.

The BKT’s Human Resources Policy, procedures, and performance are documented and communicated to all employees, each of them involving human rights as a key element. Many of them are available also through the bank website as Codes of Business Conducts, publications, annual reports, etc. in Albanian and English languages.

Below, we will be specified some statements from policies and commitments regarding this sensitive issue.

Human Resources Policy & Procedures

Equal Employment Opportunity Statement. Employment decisions are made based on merit, qualifications and abilities. BKT does not make decisions in its employment practices based on age, race, gender, religion, marital status, family obligations, pregnancy, political preferences, nationality, social and economic status.
Chapter IX- Employee Code of Conduct. The Bank is committed to treat all employees with respect and that includes a presumption of discharging their duties and responsibilities by means of professional conduct.

Code of Business Ethics
3.3 Responsibilities towards employees and workplace
The Bank aims to enable a safe and healthy work environment, and to introduce honest and fair approaching for employees. In this context, in order to create and maintain fair and safe work environment, it is not allowed to make differences between employees within the institution due to: physical disabilities, age, religion, sect, belief, political opinion, gender, color, race, language and similar reasons. Persons under equal conditions are given equal opportunities. Payment and upgrade parameters are based on performance and productivity. In all processes of human resources (hiring, promotion, transfer, change of position/department, payment, training, social rights, etc.) are followed fair policies far from differentiations., etc.

Code of Business Ethics and Compliance Regulations (as part of Calik Holding group)

2.2. Responsibilities to Employees
Transparent, non-privileged and fair policies shall be followed in all human resources processes (recruitments, promotions, transfers, task-division changes, remunerations, trainings, social rights, etc.).
2.6. Human Social Responsibility. The Company and its employees shall attach importance to protecting human rights and the environment.
5.1.2. Objectivity and Fairness. No discrimination over religion, language, race, gender, political opinion, financial and social status, etc. is allowed to be made within the Company or among employees, suppliers, customers and stakeholders. All Company employees shall act fairly and equally in their relations with suppliers, customers and stakeholders, and avoid biased behavior. It is essential to avoid practices specific to persons or institutions and follow equal, standard practices for everyone, etc.

Çalik Holding Codes of Business Ethics & implementation fundamentals Regulation

5.1.2. Impartiality and Justice.
No discrimination is made between employees, suppliers, customers and other stakeholders because of religion, language, race, gender, political views, social and financial status, etc. within Holding / Company. All Holding/Company employee treat suppliers, customers and other stakeholders fairly and equally and avoid any prejudiced acts. It is essential to avoid practices which are special for person or legal entity and short-term and provide equal and standard practices to all.

Each Bank Department makes sure to implement on their procedures that no discrimination is done to women, gender equality and indigenous people in granting loans, cards, accounts etc. We give products to females with same terms and conditions as to males and there is no difference in treating the cases depending on gender, race etc.

Moreover, we don’t finance individuals who are involved in illegal activities, gambling and other similar activities.

The Bank uses the below procedures to implement, address and respond to Human Rights violations.

o Trainings for all the Bank staff are offered periodically as in-house or online trainings: Human Resources Trainings, Operational Risk Management and Compliance Trainings,
o Policies supporting Human Rights: Human Resources Policy & Procedures, Code of Business Ethics, Code of Business Ethics and Compliance Regulations, Çalik Holding Codes of Business Ethics & implementation fundamentals regulation, etc.
o Mechanisms used for reporting Human rights violations/complaints, etc.:

1. Direct report in the address ethicline@bkt.com.al;
2. Whistle-Blowing mechanism, takes different reporting in cases of abuses/violations of human rights and informs CEO & Board of Directors, obligatory to inform external respective institution.
3. BKT has a procedure for treating any customer claim depending on their typology.
3. BKT offers different channels of communication for reporting lines:
1. Contact Center
1.1 Contact Center phone number
1.2 Email (info@bkt.com.al or callcenter@bkt.com.al)
1.3 Webpage claim form
1.4 Internet Banking
1.5 Facebook claim form
2. BKT Smart
3. Through any bank staff (by reporting the claim directly to the staff and the staff reports it to the claim unit)
4. Direct Mail
5. Social Media
6. Central Bank of Albania is also another communication channel

in order to put written reporting for different issues and Human rights as well. Periodically there are made reports for the above mechanisms and actions are taken also in cases of violations, etc. The respective reports periodically are prepared to address/solve the raised issues.

During all the trainings sessions with BKT staff we communicate and emphasize the Human Rights in granting loans and we raise the awareness in respecting all the humans and to avoid all type of discriminations.

Banka Kombetare Tregtare is the only bank in Albania that offers banking services to prisoners (disadvantageous group for financial inclusion) as well. Prisoners have the opportunity to open bank accounts, have a card and make purchases with POS cards installed in prison shops since cash is not allowed in prisons.

The Bank implements special procedures to enable the provision of banking services to people with disabilities. In order to facilitate the provision of banking procedures for individuals with disabilities, each branch has a ramp.

To support customer to do banking transaction from whenever and wherever they are we have the Interactive Voice Response (IVR) system and Telephone Banking 7 days a week and 24h.

The Bank has set up the right structure to address any issues related on human rights violations as mentioned in Policies below as well as evaluates reporting from external Audit, suggestion boxes, ethic line & whistle blowing:

Human Resources Policy & Procedures
Equal Employment Opportunity Statement
Any employee with questions or concerns about any type of discrimination in the workplace is encouraged to bring these to the attention of his immediate supervisor and/or Human Resources Committee. Employees with concerns about their immediate supervisor or in cases when it is considered that the immediate supervisor does not evaluate the concern should bring these concerns to the attention of Human Resources Committee. BKT practices a corporate value of tolerance in the workplace. Employees can raise concerns and make reports without fear of reprisal. Any employee found to be engaging in any type of unlawful discrimination would be an issue to address in Disciplinary & Ethics Committee, proceeding with the right action.

a.Grievance Resolution. It is the policy of our bank that all employees have the right to express their complaints. BKT recognizes the meaningful value and importance of full discussion in resolving misunderstandings and preserving good relations between management and our employees. Accordingly, the following procedure has been designed to ensure that complaints receive full consideration. Should a condition exist that an employee feels is unsatisfactory, it is important that he brings it to the attention of the appropriate person in the proper manner. Normally that person is the employee's immediate supervisor. If the supervisor is the source of the complaint, such as unlawful harassment and/or inappropriate treatment, the employee can contact the Human Resources Manager.

The Bank didn’t have any legal case, fine or any other event related to Human Rights violations.

External Audit Reports never had reporting for Human Rights violations at work.

In ethic line, whistle blowing, and other communication channels, no any complaint reporting for Human Rights violations.

There are no incidents or claims from the customers in the area of Human Rights reported for any bank department or product.
Based on our internal reports results that 50% of the borrowers for retail loans are females.

Banka Kombetare Tregtare (BKT) as part of the United Nations Global Compact implements 10 Basic Principles of this organization and beyond. BKT works in fully compliance with the Global Compact Labour principles and the requirements of ILO Core Conventions, Albanian Labor Code for employee’s rights, security, health and safety, benefits, performance-based merits/ pay policy and compensation, career development, etc. avoiding every kind of discrimination, et. All of these concerns as well as these are included in the Bank’s internal policies and procedures, published to be known by every employee at bank.

Human Resources Policy & Procedures
a. Equal Employment Opportunity Statement. Employment decisions are made based on merit, qualifications and abilities. BKT does not make decisions in its employment practices based on age, race, gender, religion, marital status, family obligations, pregnancy, political preferences, nationality, social and economic status. Any employee with questions or concerns about any type of discrimination in the workplace is encouraged to bring these to the attention of his immediate supervisor and/or Human Resources Committee.
b. Employee payroll and benefits.
Payday: Salaries are paid on the last calendar day of every month.
Performance-related bonuses: • Bonuses related to performance are variable quarterly and annually. The best performer branches are eligible for Quarterly Branch

Team Bonus.
• The branch employees are entitled to Quarterly Individual Target bonus, referring to the personal business achievements.
• Bonuses can be given to the staff for outstanding performance in case of business campaigns, special projects or innovations, which brings a very positive impact to business activity.
• The staff in managerial levels is entitled to benefit from Investment Plan Policy, in compliance with the yearly performance, (See detailed reference in "Investment Plan Policy related to Annual Performance”). Grants/Loans: Personnel Committee may grant up to 3 months’ salaries, as financial aid in cases of unique and / or specific needs of an employee. The employees of BKT also benefit personnel loans with preferential conditions in compliance with their bank experience. Severance Pay: For involuntary terminations not effected due to disciplinary reasons, the Labor Code governs the payments.

Vacation Salary: The employees are eligible to benefit the vacation salary, after the first year of work. Financial Benefits for Special Events and Circumstances:
• In case of marriage, the employee benefits a standard financial reward presenting the official marriage certificate to HR Department.
• In case of death of spouse, child or parent, the bank helps the employee with a financial aid, when they lived together or are recorded in the same familiar certificate (employee presents the certificate in HRD).
• In case of childbirth the employee is eligible to benefit the deposit “My child”, presenting the documents as per “My child Deposit” Memo.

d. Rights of the Employee.
The employees are eligible to obtain from a wide range of benefits in addition to their salary. A number of programs prescribed by law, such as social insurance and unemployment, cover all employees. Benefit eligibility is based on employee job title and length of service.

1. Employment Security:
• As long as the employee’s job position is necessary and he meets the requirements of the position, his working relations with the bank shall continue.
• The employee will not be deprived of the rights known to him by the legislation in the Republic of Albania, based on which the relevant policy in BKT is established. • In case the employment contract is unilaterally terminated, the Bank and the employee are obliged to implement the dispositions of the Labour Code and of the employment agreement within the parties.

2. Safety/security in the workplace:
• BKT will take all the measures to make evident and secure the employees related to the risk presented by the job position making possible the benefit of all the rights foreseen by the legislation.
• An employee who is accidentally hurt in the Bank, benefits covering of all the expenses on hospitalization and health rehabilitation.
• In case of loss of employee’s life, the Bank covers all the expenses on the funeral and grants/accords the family an economic aid according to the definitions of the
Labour Code.
3. Benefit from health insurance and social securities:
• The employee of the Bank has the right to benefit from the system of health and social insurance according to the dispositions of the legislation in effect.
• The employee enjoys the right to be provided by the Bank with the relevant document that certifies the status of the beneficiary from the system of health and social insurance.
• Except the obligatory state health insurance, the Bank provides for the employees the private Health and Accident Insurance. All the employees during employment period in the Bank are eligible to be included and to benefit from the schema of Health and Accident Insurance, based on the limits of table of benefits, based on the bilateral contract.

4. Acquaintance with work legislation:
• The employee of the Bank has the right to be acquainted with the work legislation, its changes, as well as with all the internal acts and regulations of the Bank that deals with working relations.

In BKT there is developed a policy which governs the code of conduct that involves business ethics’ issues and conflict of interest. In this policy it is predicted zero tolerance toward the bribe, predicting the dismissal of staff as well. In this regard, every employee of the Bank should comply with this policy at transaction, process and organization level.

75% of the bank workforce are females employees and the average age is 34 years old.

BKT takes the following steps to implement Labour policies.
• Human Resources Department conducts trainings for all the staff related with labor rights.
• Human Resources Policy & Procedures supports and there are clearly stated the Labour principles.
• Code of Business Ethics. 3.3 Responsibilities towards employees and workplace.

The Bank aims to enable a safe and healthy work environment, and to introduce honest and fair approaching for employees. In this context, in order to create and maintain fair and safe work environment, it is not allowed to make differences between employees within the institution due to: physical disabilities, age, religion, sect, belief, political opinion, gender, colour, race, language and similar reasons. Persons under equal conditions are given equal opportunities. Payment and upgrade parameters are based on performance and productivity. Performance and payment management processes shall be explained in detail in the related procedures. In all processes of human resources (hiring, promotion, transfer, change of position/department, payment, training, social rights, etc.) are followed fair policies far from differentiations. Violation of employees` immunity in any workplace through any form of physical violence, sexual harassment or philological violence is in contradiction with law and codes of ethics. Planned and systematic actions aiming the cause for resignation, fall of performance, loss of work satisfaction of the targeted person in a way that shall be evaluated according to psychological provocation, shall not be tolerated. In all locations where the BKT performs activities, health and safety of each employee are regarded as the priority. Healthy and safe physical working environment and conditions at the workplaces has been provided to all employees.

There is no employment discrimination at bank Department/Branch related to the existing and new staff.

o Periodic Reports on Management Demographics by diversity factors (e.g. gender, age, education, career development, recruitment and staff turnover, etc.) are analyzed, taking the right actions for further improvement.
o The Bank didn’t have any legal case, fine or any other event related to labour rights violations.
o Internal and External Audit Reports never had any report on labour rights violations.
o Human Resources Department ensures that Human Resources Policy & Procedures and Code of Business Ethics are applied accordingly for labour rights of all Banks employees.

BKT is sensitive on environmental challenges and works in accordance with protection and promotion of greater environmental responsibility, as it is stated in the below Policy.

CODE OF BUSINESS ETHICS
3.9 Responsibilities toward environment.
The Bank is sensitive in financing of or participation in any transactions or projects which put the environment at risk of lasting effect. For example, destruction of the rainforest, pollution of the environment and waters, etc., is not in accordance with the business policy of Bank.
In every decision, employees concerned must bear in mind the potential risk of damage to the reputation of Bank which may be caused by transactions or projects that could have adverse effects on the environment. Care should be taken to ensure that any enterprise receiving financing will use the funds in compliance with the local and international environmental protection provisions.

Regarding the environment issues, in lending Departments are set policies that don’t grand loans to individuals/business whose income is generated from enterprises that produce or trade arms, explosives, radioactive or other dangerous materials for the environment and to individuals whose income is generated from enterprises that produce or trade goods, which would cause serious environmental damage.

From the Project & Structured Finance Department point of view and Bank Policy require that BKT shall finance environmentally sound projects that contribute primarily to the economic development of Republic of Albania. Also, for every Business Financing the Bank adopts Environmental Procedures. The general aim of adopting Environmental Procedures is to focus upon Environmental issues associated with lending and investments and thus increases the opportunities for environmentally acceptable or sustainable economic development and minimizes exposure to environmental/financial risk. The term “Environmental Due Diligence” (EDD) is often used to denote this.

Mortgage and Consumer Finance Department manage e loan product named Green Loan. This loan facility is an Energy Efficiency loan and beneficiaries are only individuals that wants to use the loan for the improvement of their living premises, improvements that will lead to Energy savings and CO2 emission reduction.

As part of the Loan Agreements that we sign with the customer, as the case may be, Environmental Covenants might be in place. Also, in case there are substantial changes related to the project including any environmental issue faced during Construction or Operation related to the Environment as long as the Loan is active, the customer should immediately notify the Bank.

Development of Digital Channels usage is another field that we care a lot. By transferring the branch transactions towards digital ones we have reduced a lot paper works of branches.

We care also for the Energy Efficiency. New Bank Head Quarter will have soon Solar Control and Energy Saving (we are under implementation of this project).

The glass facade will be treated with a filter for thermal insulation, which reduces heating costs during the winter, as well as protects from heat during the summer period. The films will reduce the coefficient of accumulation of solar heat, thus reducing the amount of excess heat even when the glass used is with thermal insulation treatment. Air conditioning during the summer and heating during the winter pose a huge cost to both businesses and families. The measures taken fulfill the below criterias:

- Compliant with European Standard EN410 and EN673
- Products that will be used Certified are certified as Safety & Healthy products
- Have ISO quality certificate and production guarantee;
- Must block not less than 95% of UV rays;
- Reflection of sunlight;
- Thermal and solar insulation throughout the year;
- Creating privacy for visibility from outside - inside;
- Do not obstruct the view from the inside - outside
- Minimization of CO2 gas emissions.

Mortgage and Consumer Finance Department and Structure Finance Department evaluates the cases for Green Loan, assuring that the customers fulfill the projects financed under this loan with purpose of environment protection and Energy Efficiency.

During the loan disbursement, BKT may need to monitor, on a continuous basis, compliance with environmental covenants contained with the loan agreement.

More than 50% of Bank transactions are done online on digital channels.

The investment cost for the Solar Control and Energy Saving insures and gives as outcome:
- Optimal working conditions
- Reduction of internal temperature + 99.% blockage of UV rays
- Reduces heating and cooling costs
- Increase productivity with less fatigue for the staff
- Thermal insulation and solar protection throughout the year
- Environmental protection by reducing energy use and reducing costs
- Increase employee productivity
- Eye protection
- Is planned for a period of 5 years

BKT works in alignment with internal Policies & Procedures as well as with Çalık Group Holding Policies & Procedures regarding the forms of corruption. Below some sample statements by Documents that deal with corruption issues are published and accessible for all bank employees.

Human Resources Policy & Procedures
3. Gifts and honors: Employees shall not solicit and shall refuse gifts from any source external to the Bank in connection with their service with the Bank. Such gifts may be accepted only if refusal to accept would offend or embarrass the donor and in such case they will become property of the Bank.
• Employees may not solicit or accept decorations or similar honors from any source external to the Bank for services rendered on behalf of the Bank. The employee may accept such honors for services not connected with the performance of his functions in the Bank.
BKT Code of Business Ethics

3.7 Responsibilities towards AML and other illegal business practices.
BKT supports the national/international drive against the illegal business practices such as money laundering, terrorism financing, bribery, corruption, or fraud and applies extremely strict precautionary and defensive measures.

Codes of Business Ethics & Implementation Fundamentals Regulation (Çalık Holding)
2.6. Human Social Responsibility. The Company and its employees shall attach importance to protecting human rights and the environment; education and charity works and elimination of crime and corruption.

5.1.14. Anti-Corruption. Çalık Holding A.Ş. and Group Companies are against bribery and all kinds of corruption. All employees and third parties acting on behalf of Çalık Holding A.Ş. and Group Companies are obliged to comply with anti-corruption rules and the legislation of the country of activity.

5.1.4.2. Accepting and giving gifts. The employees shall not accept any gift, gain, contribution, entertainment, special discount or commission that may affect their impartiality, decisions and behaviors for their personal interests. As any non-cash offers such as free leisure, discount check and gift check from customers and suppliers are also be deemed gifts and interests, they shall not be accepted in principle. However, where return of any gift offers coming from customers and suppliers may be perceived as impoliteness, they may be accepted as gifts, provided that they are in compliance with customs of trade and traditions and their approximate values do not exceed 150 Euros or its equivalent amount in any other currency. Also, the amount of any accepted gift exceeds 50 Euros or its equivalent, the related Head of Department shall be informed immediately. In detection of any mentioned amounts, the total amounts of all gifts directly or indirectly accepted from any person in a calendar year shall be taken into account.

5.1.5. Compliance with Legal Regulations, Codes of Ethics and Good Faith & Holding / Company Discipline, and Avoidance of Misconduct, Fraud & Corruption. Employees shall not use the opportunities given to them because of their duties for their individual purposes; and act contrary to the codes of ethics, good faith, legal regulations and Holding/Company discipline. The employee shall take utmost care not to misuse the resources of the Holding/Company and protect the reputation and prestige of the Holding/Company.

Deriving of any employee an improper personal profit by using or acquiring of the resources and assets of the entity s/he works willingly and disagreeably shall be assessed as infraction and corruption.

In analyzing and evaluating any loan file we take care for corruption. No corruption or bribery is tolerated.

The Bank uses the below actions to implement and to address anti-corruption risks.

o Policies supporting anti-corruption: Human Resources Policy & Procedures, Code of Business Ethics, Code of Business Ethics and Compliance Regulations, Çalik Holding codes of business ethics & implementation fundamentals regulation,

o Trainings for all the Bank staff are offered periodically as in-house/online from Human Resources Department.

o Mechanisms used for anti-corruption cases:

1. Direct report in the internal address ethicline@bkt.com.al; Whistle-Blowing mechanism,
2. BKT offers different channels of communication for reporting anti – corruption cases:

1. Contact Center
1.1 Contact Center phone number
1.2 Email (info@bkt.com.al or callcenter@bkt.com.al)
1.3 Webpage claim form
1.4 Internet Banking
1.5 Facebook claim form
2. BKT Smart
3. Through any bank staff (by reporting the claim directly to the staff and the staff reports it to the claim unit)
4. Direct Mail
5. Social Media
6. Central Bank of Albania is also another communication channel

in order to put written reporting for different issues and anti-corruption as well. Periodically there are made reports for the above mechanisms.

It is created also a whistleblowing unit which is assigned the task of examining the administrative investigation of whistleblowing and examination of the request for the protection of the whistle-blower, under the provisions of the law. The purpose of this law is; a) Prevention and clamping down on corruption in public and private sector; b) Protection of individuals who whistle-blow dubious corruption conduct or practices at their work stations; c) Encouraging whistleblowing of dubious corruption conduct or practice.

Within Internal Audit Group there are in place some fraud-oriented scenarios which serve to detect fraud.

In case a fraud (including also bribery and corruption) is detected during different audit engagements or signal is received through various channels, Internal Audit Group do evaluate/examine/investigate the case, and produce an Examination/Investigation report when appropriate, which is shared with respective Bank Management. Meanwhile, functionally Internal Audit Group reports to Audit Committee and BoD.

Besides, there is a responsible person which examines the administrative investigation of whistleblowing and examination of the request for the protection of the whistle-blower about corruption and forms of corruptions such as bribe.

In the course of relevant general audit engagements or examinations/investigations, Internal Audit Group evaluates the adequacy and effectiveness of internal control system over environment, human rights, labour etc. In addition, the Internal Audit Group evaluates the compliance with regulatory framework, as well as, the appropriateness of reporting relating to the issues with regard to corruption, bribe, fraud, environment, human rights, labour, etc. As per Albania Central Bank regulatory requirements, Internal Audit Group should include in its scope every unit, activity within the Bank based on the regulatory defined audit cycle. Likewise, Internal Audit Group conducts its responsibilities based on International Internal Auditing Standards, being in line with the regulatory framework requirements of Albania Central Bank.

During all the trainings sessions with BKT staff we communicate and emphasize that we don’t tolerate any type of corruption and bribery.

BKT monitors and evaluates anti-corruption issues as following:

In cases of corruption /bribery there are taken different measures depending on the importance of the case.

In Human Resources Policy & Procedures specifically in chapter X. Disciplinary Procedure measures are as following: Written warning, Demotion, Dismissal specified the case for each measure.

The Disciplinary &Ethics Committee determines the disciplinary measures to be taken against the breaches of the laws and Bank’s internal regulatory framework by the employees.

In Code of Business Ethics in Chapter VII. Disciplinary Sanction. The Bank will not tolerate the violation of the Code of Business Ethics. Any breach of it, will be subject of appropriate disciplinary measure by Disciplinary and Ethics Committee.

The Bank didn’t have any legal case, fine or any other event related to corruption/bribery.

External Audit Reports never had any corruption/bribery case.

There are no incidents or claims from the customers in the area of corruption, including extortion and bribery reported for any Bank Department.

JCR Eurasia Rating, during periodic review reaffirmed for the 12th time in a row Banka Kombëtare Tregtare (BKT) with score 89.69 ‘AAA (Alb)’ and also with a stable outlook in Long Term National Rankings. The grade assigned to BKT signifies a Distinctive Level of Compliance with the principles of the Albanian’s Corporate Governance Code and its Notch degree to the level a/Excellent. Here you can check the Full Report: https://www.bkt.com.al/news/jcr-eurasia-rating-reaffirms-bkt-as-aaa-alb .