42. COMMITMENTS AND CONTINGENCIES (CONTINUED) (b) Contingent liabilities Perbadanan Harta Intelek Malaysia (“MyIPO” or “Plaintiff”) vide a Writ and Statement of Claim dated 18 October 2021, filed a claim against BIMB Investment Management Berhad (“BIMB Invest” or “First Defendant”), a wholly owned subsidiary of the Bank and Ahmad Azwan Bin Aboo Mansor (“Second Defendant”) The Plaintiff has filed a statement of claim that the Defendants are liable for loss and damage caused by fraudulent misrepresentation, negligence, and breach of statutory duty in respect of placement of monies amounting to RM85.5 million with the First Defendant upon representation made by Second Defendant. BIMB Invest had on 8 December 2021 filed a Defense and subsequently, the Reply to Defense by the Plaintiff was filed on 5 January 2022. The Court has fixed the next Case Management on 12 September 2022 with the directions, as follows; •• The Plaintiff is to file and serve its Affidavit in Reply on or before 29 July 2022; •• First Defendant is to file and serve its Affidavit in Reply on or before 12 August 2022; •• Both Parties are to file respective written submission simultaneously on or before 23 August 2022; and •• Both Parties are to file respective written submission in Reply simultaneously on or before 30 August 2022. Hearing of Enclosure 32 and Case Management for Writ was fixed on 12 September 2022 with full trial fixed on the 27th, 28th and 29th of May 2024. The potential liability of BIMB Invest if there was an adverse decision related to the claim is estimated to be approximately RM59.8 million. The possible obligation towards BIMB Invest to settle the litigation claim is subject to decision by the court and as the case is still preliminary, the settlement to the litigation claim may not be probable at this juncture and therefore no provision is recognised in the financial statements. 45. CAPITAL ADEQUACY Total capital and capital adequacy ratios of the Group and the Bank have been computed based on Bank Negara Malaysia (“BNM”)’s Capital Adequacy Framework for Islamic Banks (Capital Components) issued on 9 December 2020 and Capital Adequacy Framework for Islamic Banks (Risk-Weighted Assets) issued on 3 May 2019. The Group and the Bank is required to meet minimum Common Equity Tier I (“CET I”), Tier I and Total Capital adequacy ratios of 4.5%, 6.0% and 8.0% respectively. To ensure that banks build up adequate capital buffer outside period of stress, a Capital Conservation Buffer (“CCB”) of 2.5% above the minimum capital adequacy was introduced by BNM. The CCB is maintained in the form of CET I Capital above the minimum CET I Capital, Tier I Capital and Total Capital adequacy at 2.5% starting 1 January 2019 onwards. Therefore, the minimum regulatory capital adequacy ratios requirement for CET I capital ratio, Tier I capital ratio and Total Capital ratio are 7.0%, 8.5% and 10.5% respectively starting year 2019 onwards. The Group and the Bank have adopted the Standardised Approach for Credit Risk and Market Risk and the Basic Indicator Approach for Operational Risk. Notes to the financial statements for the financial year ended 31 December 2022 Integrated Report 2022 376
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