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Controllers in the Board Room 25/06/2009

Posted by Corneel Maes in Uncategorized.
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The worldwide crisis in the financial services industry is leading to quite creative proposals being tabled. The Belgian Banking Commission and National Bank claim they need to get a seat at certain Board Room meetings of the major banks, insurance companies and clearing house in Belgium. And they need to be able to say their say in the strategy of these institutions.
Admittedly, the financial crisis has in a very confrontational manner shown that banks all over the world had been playing with fire for too long. They got burned all right, but beyond themselves they also injured way too many people who trusted them, from their clients and employees all the way to their shareholders. Admittedly, this has to be prevented from happening again. We all need to learn from our mistakes, and so do bankers. But will more piles of regulation, crafted and redrafted by laywers and financial wizards, prove to do the trick? And how will genuine competition between financial institutions be guaranteed if the Banking Commission involves itself in all of their respective strategies? This one seems a bridge too far.
Banks urgently need to restore and even more so earn the confidence of their clients, their shareholders, their employees. Corporate Governance in the financial services industry will eventually move into a new dimension. With control systems and flashing lights that are sharp and sensitive, with early warning signals that pre-empt major risks much earlier.
But above all, Board Rooms and Executive Committees must ensure that they have the right profiles and skills on board. Independent directors and external controllers are great; what the financial services industry now needs most is experienced bankers in the driver’s seat, people who in their professional career have proven to be knowledgeable and ethical. No compromise there. That will eventually bring more credibility to the system than additional layers of control from the outside.
Maybe here’s a lesson to think about: Haven’t we all been good students in our younger lives, bahaving properly and disciplined when the teacher was around? But oh boy, as soon as the teacher turned his back – what a difference, what an excitement to cross the line. It’s part of human nature, full stop. Would you really think that adults, even bankers aren’t humans?



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