Corporate Governance for Banks in Southeast Europe: Policy - IFC

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E. Additional Information from EBRD SEE Bank AssessmentsE1. Board structures in SEEAlbaniaJoint stock companies in Albania have the option to choose either a one-tier or two-tier system. In the lattercase, management board members can be elected and dismissed by the general shareholders meeting or bythe supervisory board, as provided by the charter. The Law on Banks requires banks to be organized undera two-tier system, where the general shareholders’ meeting appoints both a supervisory board (“steeringcouncil”) and the members of the management board (“directorate”). The steering council is the bank’sdecision-making and supervisory body. At least one-third of its members must not be related to controllingshareholders or to the bank’s management board members. Members of the directorate can also sit on thesteering council, but they should not be in the majority.Bosnia and HerzegovinaCorporate governance and banking in Bosnia and Herzegovina is regulated at the entity level. In practice,two distinct corporate governance regimes exist and each entity has its own framework of primary andsecondary legislation and a Banking Agency. In both the Federation of Bosnia and Herzegovina and inthe Republika Srpska, the Law on Banks requires financial institutions to have a supervisory board and amanagement board. The latter is appointed by the general meeting of shareholders and is responsible for thesupervision of the business operations of a bank. The management board is appointed by the supervisoryboard and is responsible for the direct business operations of the bank. The supervisory board must appointan audit committee consisting of five members for a term of four years. Members may be reappointed. Auditcommittee members cannot be bank staff or members of the supervisory or management boards.BulgariaBulgarian joint stock companies, including public companies and banks, can opt for a one-tier systemor a two-tier system. In line with Article 41 of the 8th EU Company Law Directive, the Law on FinancialIndependent Audit requires public interest companies (including banks) to establish an audit committee. Inlisted companies and banks, one-third of board members must be independent.Detailed rules on independent board members are included in the National Code of Corporate Governance.Finally, the Law on Credit Institutions promulgated in July 2006 requires banks to regularly review theirorganizational structure and the procedure for defining and delegating powers and responsibilities of boardmembers.CroatiaIn Croatia, the Companies Act allows joint stock companies to choose between one-tier or two-tier boardsystems. According to the Credit Institutions Act, banks are required to establish a management board and asupervisory board. The Act requires the supervisory board to have at least one independent member. Thereare no specific requirements for board committees, although the Act expressly provides reporting duties byinternal audit to the audit committee. On the other hand, the Corporate Governance Code recommends thatboards in listed companies and banks establish nominations, remuneration, and audit committees with amajority of independent board members.FYR MacedoniaIn FYR Macedonia, banks are governed under a two-tier system, where the general shareholders meetingappoints the supervisory board, and the latter appoints and removes the members of the management68Policy BriefCorporate Governance for Banks in Southeast Europe
oard. The supervisory board is responsible for the oversight of the operations of the board of directors. Atleast one-fourth of a bank’s supervisory board members must be independent, pursuant to the definitionincluded in the Banking Law.MontenegroAccording to the Business Organisation Law of Montenegro, joint stock companies are organized undera one-tier system, where the general shareholders meeting appoints the board. The same structure canbe found in the Banking Law for banks. The board is responsible for the oversight of the bank’s businessactivities. Bank boards are required to have at least two independent board members.RomaniaIn Romania, credit institutions can be organized under a one-tier or a two-tier board structure. Accordingto Law No. 31/1990, the board or, as appropriate, the supervisory board can set up consultative boardcommittees formed by at least two board members. With a one-tier board, at least one member of thecommittee needs to be an independent nonexecutive director, and the audit and remuneration committeesare to be composed exclusively of nonexecutive directors. In companies with a two-tier board structure, atleast one member of each committee has to be an independent member of the supervisory board. Accordingto Regulation No. 18/2009, banks can set up a risk management committee.SerbiaIn Serbia, the Law on Banks requires banks to have a supervisory board and a management board. Thesupervisory board is responsible for the oversight of the bank’s activities. Board members are appointed andremoved by the shareholders meeting. At least one-third of supervisory board members must be independent(people not holding direct or indirect ownership in the bank or in the bank’s holding), and at least three ofits members must have experience in the field of finance. The management board is appointed and removedby the supervisory board. Banks are also required to establish an audit committee, a credit committee,and a committee for managing assets and liabilities. At least one member of the audit committee must beindependent.Corporate Governance for Banks in Southeast Europe Policy Brief 69
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II. Overview of bank corporate gove
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A1. Responsibilities of the board 1
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A2. Qualifications 19Bank boards sh
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Page 57 and 58: VI. Additional issuesA. State owner
Page 59 and 60: VII. AnnexesA. Southeast Europe Pol
Page 61 and 62: INTERNATIONAL EXPERTSPeter Dey, Cha
Page 63 and 64: B. Important sources of guidance on
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Page 67: Complex or opaque corporate structu
Page 71 and 72: Bulgaria19.1% Others16.3% Unicredit
Page 73 and 74: Romania19% BCR (Erste)13.1% BRD (So
Page 75: For information requests and genera
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Corporate Governance for Banks in Southeast Europe: Policy - IFC

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