Corporate Governance for Banks in Southeast Europe: Policy - IFC

Contents
I. Introduction...........................................................................................................................................5
II. Overview of bank corporate governance in SEE................................................................................7
III. Sound corporate governance principles............................................................................................ 11
A. Board practices................................................................................................................................ 11
A1. Responsibilities of the board....................................................................................................... 12
A2. Qualifications............................................................................................................................ 14
A3. Training..................................................................................................................................... 15
A4. Composition.............................................................................................................................. 16
A5. Role of the Chair.......................................................................................................................23
A6. Board committees..................................................................................................................... 24
A7. Group structures........................................................................................................................29
A8. Performance-improvement plans (evaluations)...........................................................................32
B. Risk management and internal controls............................................................................................34
B1. Risk management versus internal control....................................................................................34
B2. Chief risk officer or equivalent ...................................................................................................36
B3. Risk methodologies and activities...............................................................................................38
C. Compensation.................................................................................................................................40
D. Disclosure and transparency.............................................................................................................43
IV. The role of supervisors.......................................................................................................................50
A. Guidance by supervisors...................................................................................................................50
B. Monitoring......................................................................................................................................52
C. Remedial action...............................................................................................................................54
D. Home-host supervisory cooperation................................................................................................. 55
V. Promoting an environment that supports sound governance........................................................56
VI. Additional issues.................................................................................................................................57
A. State ownership of banks.................................................................................................................57
B. Monitoring of borrower governance................................................................................................57
VII. Annexes...............................................................................................................................................59
A. Southeast Europe Policy Brief Contributors.......................................................................................59
B. Important sources of guidance on bank governance.........................................................................63
C. Synopsis: BCBS Enhancing corporate governance for banking organizations (2006)..........................65
D. Synopsis: BCBS Principles for enhancing corporate governance banking organizations (2010)............66
E. Additional Information from EBRD SEE Bank Assessments................................................................68
E1. Board Structures in SEE...............................................................................................................68
E2. Ownership of SEE Banks.............................................................................................................70
E3. Supervisor oversight of remuneration practices........................................................................... 74