Corporate Governance and Access to Finance - ESBG

2.4. Accountability to stakeholdersA challenge of Corporate Governance of financial institutions, as mentionedabove, is to make them accountable not only to shareholders, but also todepositors, taxpayers, supervisors and other stakeholders. WSBI members,having their roots firmly based in their community, are in generalaccountable to different stakeholders. This is reflected in the diversity oftheir governing bodies, which contributes to ensure a balance betweenthe different interests of their stakeholders and between the different goalsof the institution. The Peruvian CMACs provide a very interesting examplein this regard: despite having only one shareholder (the municipality),the seven members of the Board are appointed by six differentconstituencies: (i) the majority and (ii) the minority representatives in themunicipality, (iii) the chamber of commerce, (iv) the association of smallbusinesses, (v) COFIDE, a public bank and (vi) the catholic church.This composition is, furthermore, protected by law. In the case of SpanishCajas, the general assembly composition varies depending on theirstatutes, but it typically includes appointees by depositors, municipalities,regional government, employees and the founding entity. In the case ofGerman Sparkassen, the composition of the Board of administrationdepends very much on the savings banks Law of the respective Land, butit is quite common that the board includes representatives appointed bythe major democratic body of the municipality or district (2/3) and thesaving bank’s staff (1/3).The proportion of women in the Board is often used as an indicator ofdiversity. In a sample of 23 WSBI members, the average of womenrepresentation in the Board is 24 percent, as compared to, for example,7 percent in EU25 commercial banks, according to Mateos de Cabo,Gimeno, and Nieto (2009). This shows not only that the Board of savingsbanks is more diverse, but also that the interests of minorities are betterrepresented in its composition and that the Board is closer to certaintypes of clients, according to the literature on microfinance institutions(see Annex 1), thus contributing to foster Access to Finance.Internal and external controls are essential ingredients of CorporateGovernance. Most WSBI members comply with standard good CorporateGovernance practices for financial institutions, as defined for instance bythe Basel Committee 8 .8 See BCBS (2010b) and Table 6.33