EBA欧洲银行-Summary-of-survey-results_Workshop-on-Internal-Governance_3页_164kb

Summary of the Survey on the Implementation of CEBS Principles for Internal Governance

Core Content

This document presents a summary of a survey conducted by the CEBS Internal Governance Task Force in October 2009. The survey aimed to assess the implementation of the CEBS Guidelines on Internal Governance across EU private sector banks, with the goal of identifying areas needing further investigation and updating the guidelines accordingly. The survey collected responses from 27 supervisory authorities, providing insights into the effectiveness of internal governance practices and the regulatory framework.

Main Themes and Structure

The questionnaire was structured around four main themes, aligning with the CEBS Guidelines:

1. Corporate Structure and Organization
2. The Management Body
3. Internal Control Functions
4. Public Disclosure and Transparency

These themes were used to evaluate the current state of internal governance across institutions and supervisory practices.

Key Findings

1. Regulatory Framework

• The regulatory framework for internal governance is considered broadly complete.
• Most Member States have adopted the Guidelines and apply them to institutions on both solo and group levels.
• Proportionality is generally allowed, either through flexible norms or by setting specific thresholds.

2. Implementation of Guidelines

• The Guidelines are not seen as deficient or inadequately adopted.
• Weaknesses in implementation are often due to poor internal practices rather than the guidelines themselves.
• Many issues have been resolved through supervisory investigations or institutional initiatives.

3. Areas for Improvement

• Remuneration: The Guidelines could be more detailed, especially regarding remuneration policies.
• Supervisory Function: There is a need for more clarity on the quality and effectiveness of the supervisory function.
• Risk Management: Greater detail and examples in the guidelines could enhance clarity and consistency, particularly for internal control functions.

4. Supervisory Procedures

• Supervisory procedures are generally sufficient, though they vary between Member States.
• The establishment of supervisory colleges has already improved procedures.
• Further harmonization could help ensure more consistent application of the Guidelines.

5. Internal Governance Practices

• Sound internal governance practices significantly improved institutions' ability to manage the financial crisis.
• Key practices include:
  • Holistic risk management approaches.
  • Clear reporting lines to management and supervisory functions.
  • Effective communication and reporting from the audit function.
  • Appropriate strategy and risk appetite setting.

6. Corporate Structure and Organization Weaknesses

• Complexity in institutional structures is a major issue, often due to:
  • Multiple reporting lines (e.g., in matrix organizations).
  • Unclear assignment of responsibilities.
  • Too many layers in group structures.
• The "Know-your-structure" principle is not consistently followed, partly due to ineffective reporting mechanisms.

7. Organisational Imbalances

• Centralization and dominant business line management are seen as contributing factors to governance problems.
• Conflicts of interest between parent and subsidiary entities are frequently observed and poorly managed.

8. Management Body Oversight

• Inadequate oversight by the management body over senior management is the most significant weakness.
• Concerns include:
  • Quality of the management body (both executive and non-executive members).
  • Independence of non-executive members.
  • Weak challenge to management's proposals and practices.

9. Board Responsibilities

• Boards may not fully understand the complexity and risks of their operations, leading to passive or ineffective oversight.
• Contributing factors include:
  • Time constraints for non-executive directors.
  • Lack of engagement with the control environment.
  • Poor reporting from internal control functions to the board and management.

10. Internal Control Functions

• Concerns were raised about the integration of risk management frameworks within firms and groups.
• The effectiveness of risk management processes was found to be inconsistent.
• The chief risk officer's standing, independence, and expertise were questioned.

11. Transparency and Disclosure

• Transparency weaknesses are perceived as less critical, but two stand out:
  • Lack of detailed information on governance structures within the group.
  • Insufficient information on intra-group relations and how governance frameworks function in practice.

Conclusion

The survey highlights that while the regulatory framework for internal governance is largely complete, its effective implementation varies across institutions and supervisory bodies. Key areas for improvement include greater detail in the guidelines, harmonization of supervisory procedures, and better alignment of internal governance practices with the needs of the financial sector. Strengthening the independence and oversight of management bodies and enhancing transparency in group governance structures are also identified as critical steps for improving the resilience and effectiveness of EU private sector banks.