Corporate Governance and Access to Finance - ESBG

3.5. Good Corporate Governance practices in bankinginstitutionsWhat are the practical implications of the above discussion in theCorporate Governance of WSBI members, whatever their legal form?Corporate Governance of financial institutions concerns mainly: i) thecouncil or governing body, ii) the management, iii) the supervisory bodies(risk management, compliance with the applicable laws and regulations),(iv) auditing (external and internal) and v) transactions with parties relatedto the entity (see BCBS, 2006).The main reference for sound Corporate Governance practices of bankinginstitutions is the set of Principles defined by the Basel Committee onBanking Supervision, in 2006 and revised in October 2010.Table 6.Sound Corporate Governance Principles.BCBS (October 2010)A. BOARD PRACTICESPrinciple 1Principle 2Principle 3Principle 4Board’s overall responsibilitiesThe board has overall responsibility for the bank, including approvingand overseeing the implementation of the bank’s strategic objectives,risk strategy, Corporate Governance and corporate values. The board isalso responsible for providing oversight of senior management.Board QualificationsBoard members should be and remain qualified, including throughtraining, for their positions. They should have a clear understandingof their role in Corporate Governance and be able to exercise soundand objective judgment about the affairs of the bank.Board's own practices and structureThe board should define appropriate governance practices for its ownwork and have in place the means to ensure such practices arefollowed and periodically reviewed for ongoing improvement.Group StructuresIn a group structure, the board of the parent company has the overallresponsibility for adequate Corporate Governance across the groupand ensuring that there are governance policies and mechanismsappropriate to the structure, business and risks of the group andits entities.57