EBA欧洲银行-2010-08-31-28CEBS-response-to-EU-Commissions-green-paper-on-corporate-governance29_6页_109kb

CEBS Response to Green Paper on Corporate Governance in Financial Institutions and Remuneration Policies

Core Content

The Committee of European Banking Supervisors (CEBS) has responded to the European Commission's Green Paper (COM 2010_284/3) on corporate governance in financial institutions and remuneration policies. CEBS, composed of high-level representatives from banking supervisory authorities and central banks in the European Union, supports the Commission's initiative to enhance the corporate governance framework, which is essential for the stability of financial institutions and the broader financial system.

Main Views

CEBS emphasizes the following key points:

• Proportionality in Regulation: CEBS supports the principle of proportionality in regulation, arguing that any measures should be tailored to the size and complexity of the institution.
• Time Devotion of Directors: While the number of boards a director may sit on is not seen as a sufficient measure to ensure adequate time devotion, CEBS suggests that the focus should be on the actual time spent on supervisory functions.
• Enhanced Cooperation Between Auditors and Supervisors: CEBS advocates for improved cooperation between external auditors and supervisory authorities, suggesting that existing practices are already in place but could be formalized and standardized.
• Duty of Information: CEBS believes that while there is no direct need to increase the duty of information of auditors towards the board, further guidance would be beneficial, especially in clarifying reporting obligations.
• Extension of Auditor Control to Risk-Related Information: CEBS suggests that any extension of the external auditor's control to risk-related financial information should be carefully considered, with a clear definition of the scope and potential implications.

Key Information

CEBS Internal Governance Work

• CEBS is reviewing its internal governance guidelines based on findings from its internal governance survey.
• It plans to develop a comprehensive guidebook of internal governance principles, incorporating the High level principles on risk management and remuneration policies.
• A consultation paper on updated guidelines is expected to be published in the fourth quarter of 2010.

Supervisory Coordination

• CEBS has already published guidelines on supervisory coordination and developed a framework for joint risk assessments.
• It encourages member states to ensure that supervisory authorities have adequate resources, budget, and powers to perform effective supervision.

External Audit Issues

• CEBS is commenting on external audit issues, which are not within the scope of its internal governance work.
• It highlights the importance of clarifying the definition of "risk-related information" before considering extending the scope of external auditors' control.

Proposed Measures

• CEBS suggests that the European Commission should:
  • Analyze existing cooperation between auditors and supervisors and consider the need for a legal framework.
  • Explore the possibility of mandatory annual reporting by external auditors to supervisory authorities.
  • Consider the need to amend Article 53 of Directive 2006/48/EC to include a right to report to supervisory authorities.
  • Take inspiration from Basel Committee documents on auditor-supervisor relationships.

Detailed Comments on Selected Questions

Question 1.1: Limitation of the Number of Boards a Director May Sit On

• CEBS does not support a strict limit on the number of boards a director may sit on, as it may not ensure sufficient time devotion and could contradict the principle of proportionality.
• Instead, it suggests focusing on the actual time devoted to supervisory functions and allowing flexibility in cases where directors are part of the same financial group or institutional protection scheme.

Question 3.1: Deepening Cooperation Between External Auditors and Supervisory Authorities

• CEBS supports the idea of enhancing cooperation, as it can improve the effectiveness of banking supervision.
• It recommends:
  • Regular communication between auditors and supervisors, including trilateral meetings.
  • Standardized reporting requirements, such as copying supervisory authorities on management letters or preparing long-form reports.
  • Analysis of legal barriers to information sharing and consideration of legal amendments.

Question 3.2: Increasing Duty of Information of Auditors

• CEBS suggests that while there is no immediate need to increase the duty of information, further guidance is necessary to clarify what constitutes a reportable matter.
• It also proposes a mandatory annual reporting requirement for auditors to supervisory authorities, regardless of whether they have identified any serious issues.

Question 3.3: Extending External Auditors' Control to Risk-Related Financial Information

• CEBS believes that extending auditor control to risk-related financial information should be done with caution, ensuring that it does not lead to unintended liabilities or conflicts.
• It calls for a clear definition of the scope of "risk-related information" and an assessment of the potential costs and benefits of such an extension.

Conclusion

CEBS encourages the European Commission to consider its upcoming guidelines when evaluating the need for additional regulation in the areas of corporate governance and remuneration policies. It also emphasizes the importance of a proportionate and flexible approach to regulation, and the need for further discussion with the auditing profession to improve the effectiveness of supervision and governance in the financial sector.