Enhancing Corporate Governance for Banking Organisations

Press release  | 
29 July 2005

The Basel Committee on Banking Supervision today issued for public comment revised guidance to help promote the adoption of sound corporate governance practices by banking organisations.

Entitled Enhancing Corporate Governance for Banking Organisations, it builds on guidance published by the Committee in 1999. Since the publication of the original paper, which drew from the Organisation for Economic Co-operation and Development's (OECD) principles of corporate governance, issues related to corporate governance have continued to attract considerable national and international attention. In light of these issues - some of which have involved banks - as well as revised OECD principles published in 2004, the Committee is bringing its guidance up to date.

Mr Jaime Caruana, Chairman of the Basel Committee and Governor of the Bank of Spain, said today, "Effective corporate governance is essential to maintaining public trust and confidence in the banking sector, and provides a crucial anchor for sound risk management practices."

In particular, the paper highlights the importance of:

  • Effective management of conflicts of interest;
  • The role of internal and external auditors and other control functions;
  • The role of boards of directors (with greater emphasis on the role of independent directors) and senior management;
  • Governing in a transparent manner;
  • The role of supervisors in promoting sound corporate governance.

In addition, it presents some considerations for corporate governance related to the activities of banking organisations that are conducted through structures that may lack transparency, or in jurisdictions that pose impediments to information flows.

Comments are invited by 31 October 2005 and should be addressed to:

  • Basel Committee on Banking Supervision
    Bank for International Settlements
    Centralbahnplatz 2
    CH-4002 Basel

Alternatively, comments may be sent via e-mail to "baselcommittee@bis.org". (Please use this e-mail address only for submitting comments and not for correspondence).