Independent review of corporate governance of UK banking industry
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Issued 09 February 2009
Independent review of corporate governance of UK banking industry by Sir
The Chancellor of the Exchequer, the Secretary of State for Business,
Enterprise and Regulatory Reform and the Financial Services Secretary to the
Treasury today announced a review to recommend measures to improve the corporate
governance of UK banks, particularly with regard to risk management.
The review is being chaired by the former financial services regulator, Sir
It will examine board management of risk (including the effectiveness of risk
and audit committees), incentives to manage risk in bank remuneration policies,
the competences needed on bank boards, board practices and structures, and the
role played by institutional shareholders.
The review will give preliminary conclusions to commissioning Ministers in
the autumn and final recommendations by the end of the year.
The Chancellor of the Exchequer said:
“As part of our review of supervision of financial institutions it is clear
that corporate governance should have been far more effective in holding bank
executives to account. I have therefore asked Sir David to carry out a thorough
review and to make recommendations for improving what should be the first line
Business Secretary, Peter Mandelson said:
“The review is needed to ensure that we have competent, well-run and
transparent boards, which are engaged with their shareholders, and capable of
understanding and managing risk effectively. This will benefit savers,
borrowers, and staff, as well as the public.”
Financial Services Secretary, Paul Myners said:
“Boards are effective only when held to account by vigorous and alert owners
who devote the time and effort needed for engagement. This review is the first
step in generating renewed commitment from institutional shareholders.”
1. Sir David Walker is a Senior Advisor at Morgan Stanley International. He
is a former Executive Director Bank of England, former Chairman of the
Securities and Investments Board and a former Chairman of Morgan Stanley
International. In 2008, he chaired an independent industry working group which
drew up a voluntary code to improve levels of disclosure in the private equity
industry and its communication with stakeholders.
2. The terms of reference for the review are:
- To examine corporate governance in the UK banking industry and make
recommendations, including in the following areas:
- the effectiveness of risk management at board level, including the
incentives in remuneration policy to manage risk effectively;
- the balance of skills, experience and independence required on the boards
of UK banking institutions;
- the effectiveness of board practices and the performance of audit, risk,
remuneration and nomination committees;
- the role of institutional shareholders in engaging effectively with
companies and monitoring of boards; and
- whether the UK approach is consistent with international practice and how
national and international best practice can be promulgated;
3. The review will report jointly to the Chancellor of the Exchequer, the
Secretary of State for Business, Enterprise and Regulatory Reform and the
Financial Services Secretary to the Treasury with preliminary conclusions by the
autumn and final recommendations by the end of the year.
About the Author
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Article Published/Sorted/Amended on Scopulus 2009-02-10 11:31:27 in Business Articles