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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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Banking supervision needs to think out of the box 18/06/2009

Posted by Corneel Maes in Uncategorized.
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The Lamfalussy report and recommendations for the Belgian banking sector supervision are published. I guess that nobody will contradict that banking supervision needs to be strengthened, in order to provide more clearcut regulation and above all the necessary mechanics to increase transparency. More transparency is the only way for financial institutions to earn back credibility and trust from their clients. But transparency will also become the driver behind better informed Executive Committee and Board Room decisions. Let’s make sure that the banking industry learns from recent experience and acts upon the consequences. So, I find the report encouraging. When reading the recommendations I felt one disappointment though. The corrective measures proposed are said to have been formulated to be “politically credible”. I think it’s high time that regulators are allowed and have the courage to think out of the box and do what they think is the right thing. Politics are part of the game, for sure, but now is the time to make some really fundamental changes for the future. And isn’t it so that sometimes politically unpopular measures are the most effective ones? Challenging discussion. To be continued …

CSR – what’s in a name? 16/06/2009

Posted by Corneel Maes in Uncategorized.
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Any company – big or small – has a responsibility to its stakeholders, by virtue of participating in the socio-economic society in which it is doing business. Corporate Social Responsibility emerged in the late nineties from Boardroom vision and conviction that companies must give back to the community. CSR has since become a ‘must-have’ for the average company and organization. Unfortunately, the notion of CSR has been used and abused in such a multitude of instances that the essence of what it actually stands for has considerably diluted.
Historically, the main emphasis of CSR has been on social and environmental engagement. In today’s economic crisis shareholders, employees, customers, suppliers have more, different needs. Amid economic uncertainty they look for reliability,  for responsible companies that are viable and sustainable. But even more so, they expect company leadership to showcase that sense of responsibility, to evidence ethical behavior in running their business. Against the background of too many major disappointments (finance, automotive and others) stakeholders want to “put their money” with companies that do understand their concerns and are seen to pre-empt them.
That to me is the essence of what Corporate Responsibility today should stand for. Not a nicely phrased CSR statement, not a promise of good intentions but a genuine sense of trustworthiness. That is also what local and EU policy makers are increasingly scrutinizing for – and rightfully so!
Corporate Responsibility, in my view, spans the ground between three solid pillars: financial viability, ethics and sustainability – firmly held together with the glue of mission, vision and values and actually embedded in the DNA of a company and its leadership.