Corporate Governance for Banks in Southeast Europe: Policy - IFC

A3. Training 20
Finding board talent is hard enough in countries with
long traditions of professional board governance. The
task is even harder in SEE, where the local banking
sector has been in a stage of rapid development and
where opportunities to learn from experience have
been limited. Training is the principal solution to this
dearth of knowledge. Most SEE board members need
additional training to become fully effective.
Training can be divided into two broad categories: 1) induction training; and 2) ongoing training. Induction
training is the most commonly provided learning opportunity for board members. It is, in fact, less a training
exercise than an introduction to the bank. It usually includes visits to bank sites, briefings from bank executives,
and the provision of information manuals and other documentation. Induction training helps board members
get up to speed quickly. In all likelihood, induction training will not help board members fill gaps in their
qualifications but it is essential for getting an understanding of the key players and structure of the bank.
More specific ongoing training opportunities are typically needed to respond to the needs of banks.
For example, training in risk management, finance, accounting, and other topics may provide important
bank-specific skills, and more technical knowledge of corporate governance practices and the roles and
responsibilities of board members would also be useful. In the area of governance, board members need
to develop a better understanding of why conflicts of interest are bad, and they need to learn how to be
more assertive, more independent, and more articulate. Although such basic knowledge and skills may be
widely available in developed financial markets, they tend to be less prevalent in markets in earlier stages of
development (see Chart 1).
Chart 1: Requirements for and Monitoring of Training and Induction in SEE
The Need for Education and Training
“We would like to recommend to the
banks and the regulators training
courses for executives and non-executive
directors, because this was a crisis
of knowledge and competence.”
Bistra Boeva, Bulgaria
Do supervisory authorities require and/or monitor the induction and training of new directors?
NO
YES
0 10% 20% 30% 40% 50% 60% 70% 80%
Source: Data from EBRD, Corporate Governance Assessment of Banks (2010–2011). Question asked to regulators in the region.
How to provide the needed training is a major challenge. Institutes of directors can provide training in
areas that are of importance to the region, such as risk management, internal control, and internal audit,
and they can play an important role in creating a pool of competent board members, as can academia,
20 2010 BIS Principles, Section III.A, p. 10.
Corporate Governance for Banks in Southeast Europe Policy Brief 15