Tapestry_EY_BGLN_Summit_View_The_future_of_global_banking-Dec14 (1)
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to understand the complexities <strong>of</strong> modern <strong>banking</strong>, which can be baffling to the<br />
uninitiated. A director said, “I try to imagine friends who have had very<br />
successful careers in industry trying to understand what is going on in our board<br />
conversations.” Unfortunately, “experienced bankers with untarnished<br />
reputations are in short supply.”<br />
Although there is a risk that directors with financial services experience will<br />
become “more equal than others,” as chairmen and key committee chairs in<br />
particular take on responsibility for delving deeper into the details, some<br />
participants are happy to entrust that responsibility to those with expertise.<br />
A director said, “I get some comfort knowing the chairman is full-time, engaged,<br />
knows the bank, and knows the market.”<br />
• Current executives. Given the time commitment required, getting current<br />
executives onto bank boards can be difficult. Some <strong>of</strong> those who have taken on<br />
the role say finding time to prepare for and attend formal board and committee<br />
meetings – totaling 12 – 15 times per year – is very challenging. However, many<br />
are used to balancing multiple priorities and making efficient use <strong>of</strong> time (they<br />
may, for example, use travel time to do their board reading, etc.). One said,<br />
“We are 24/7 people.” <strong>The</strong>ir current experience in other industries can be<br />
relevant to the job <strong>of</strong> a director: according to one director, “My pr<strong>of</strong>ession helps<br />
me understand the issues in <strong>banking</strong> that I am dealing with from a board<br />
perspective.” Typically, however, they have less available time than retired<br />
pr<strong>of</strong>essionals, and expectations for their contributions may be adjusted<br />
accordingly. Few would be able to serve as an audit or risk committee chair, for<br />
example.<br />
What is the time commitment needed?<br />
As expectations <strong>of</strong> boards have expanded, directors have increased the time they devote<br />
to the role. <strong>The</strong>re are limitations on how much time non-executive directors can<br />
devote to what is intended to be a part-time role, however. Given that the demands<br />
placed on the board are unlikely to abate, the implications for recruitment are important.<br />
While specifics vary with jurisdictions and institutions, the minimum time requirement<br />
for non-executive directors remains high across all large banks. Participants reported an<br />
absolute minimum <strong>of</strong> 25 – 30 days (which some regulators see as insufficient) and at the<br />
other end <strong>of</strong> the spectrum, more than 60 days a year – a commitment <strong>of</strong> at least 25% <strong>of</strong><br />
their time. Some participants, particularly non-executive board and committee chairs,<br />
said the time devoted to their roles was closer to 100 days or more a year. One director<br />
said simply, “I spend more time [at the bank] than anywhere else.” And one director<br />
cautioned, “It is an illusion to think that even at 100 days per year a non-executive can<br />
efficiently exercise control <strong>of</strong> the range <strong>of</strong> issues in a bank across thousands <strong>of</strong> people.”<br />
As a result, a director insisted, “How we spend our time is within our control.”<br />
Another said, “<strong>The</strong> chair <strong>of</strong> the board needs to manage how the time is spent and ensure<br />
there is sufficient time on the past, present, and <strong>future</strong>. <strong>The</strong> balance shifts, but you need<br />
to find a way to do it all.”<br />
“I spend more time<br />
[at the bank] than<br />
anywhere else.”<br />
– Director