Margarita Delgado: Diverse and effective boards in a changing and competitive landscape

Speech by Ms Margarita Delgado, Deputy Governor of the Bank of Spain, at the Governance Workshop "Diverse and effective boards in a changing and competitive landscape", organised by the European Central Bank and the Florence School of Banking and Finance, Florence, 17 April 2023.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Thank you for inviting me to speak here today. I am very pleased and honoured to participate in this event.

The oversight role of the board of directors is one of the core elements of good corporate governance and a key area of supervisory focus. The Single Supervisory Mechanism (SSM) deals with heterogeneous structures and different management approaches, which has made it necessary to design an open supervisory framework.

Sound oversight is ultimately achieved by striking the right balance between challenge, involvement and independence.

First, by challenge I am referring to board members' ability to participate in discussions. In this regard, non-executive members should be able to improve the quality of the debate and have the opportunity, the capacity and the ability to question the decisions made by the executive members. In order to do so, they need to have reliable, timely information. Without it there can be no meaningful discussion or effective decision-making processes. But challenge is not at odds with the support that the board of directors needs to provide to senior management.

Diverse knowledge is a relevant issue in this context. This is not just a matter of gender, although there are still banks that do not have diversity policies or internal targets for gender diversity at board level. In fact, at end-2021 a third of the banks under our direct supervision did not meet their internal targets for gender representation at board level.