Corporate Governance for Banks in Southeast Europe: Policy - IFC

Recommendations:
Disclosure and transparency: Disclosure is an effective governance tool. At a minimum, banks need to
disclose their accounts, governance practices and structures, risks, and risk management practices to the
public on a regular and timely basis. This obligation should apply even if banks are unlisted, because there is
a public interest in the health of the financial sector. Banks should disclose not only in accordance with local
law, but also in accordance with best-practice standards.
Disclosure requirements are often wide ranging. Supervisors need to develop minimum disclosure
requirements. Important guidance on bank-specific disclosure is provided by the BCBS and others and should
be consulted in the development of a disclosure policy. 74
Web disclosure: Disclosed information should be provided to authorities and be easily accessible to the
public on the Web.
Corporate governance codes: In jurisdictions where corporate governance codes include a “comply or
explain” approach (such as Bulgaria, Croatia, FYR Macedonia, Montenegro, Romania, and Serbia), listed
banks should be required to publish corporate governance reports and compliance statements, with detailed
explanations when the recommendations of the code are not followed.
Differences on audited statements: Differences of opinion between board members and auditors on
the financial statements need to be resolved first by discussion. Discussions may be held first internally with
management, then externally via interviews with auditors, and eventually with professional audit bodies and
regulators. Compromise may be required on differences where compromise is possible. The way to encourage
change may be through small steps. But, under egregious circumstances, board members may need to resign
when other initiatives have failed.
74 BCBS, Enhancing Bank Transparency (1998); Compensation Principles and Standards Assessment Methodology (2010); and Pillar III Disclosure
Requirements for Remuneration (2010). See also UNCTAD, Guidance on Good Practice in Corporate Governance Disclosure (2006).
Corporate Governance for Banks in Southeast Europe Policy Brief 49