Bank Governance Program launched

Pakistan Institute of Corporate Governance (PICG) in cooperation with International Finance Corporation (IFC) and Hikmah Consulting (Pvt.) Limited launched the Bank Governance Program for Directors and Senior Management recently.
The program was inaugurated by the Governor of State Bank of Pakistan, Mr. Yaseen Anwar, at Marriott Hotel, Karachi.
According to a press release issued here on Tuesday, the Bank Governance Program was developed to assist local financial institutions in equipping themselves to deal with the significantly more complex dimensions of governance in banks and financial institutions that impact not only the immediate stakeholders but taxpayers and society at large. By developing a localized program with the technical assistance of Hikmah Consulting, PICG is introducing the Bank Governance Program as a regular offering to ensure that Board of Directors and Senior Management gain a clear understanding of the intricacies involved in governance of banks and financial institutions through a comprehensive and interactive workshop driven program.
Referring to the global financial crisis in his address, Mr. Yaseen Anwar said, “The recent unprecedented financial crisis which shattered almost all the major global financial markets appear to be, to a large extent, attributed to failures and weaknesses in corporate governance practices.” In stressing what good governance involved, Mr. Yaseen Anwar said, “The Boards are the key factor of the effective system of checks and balances for ensuring that neither large shareholders nor the management abuse their power and influence and that the decisions are taken in the Bank’s best interests as an entity unto itself.”
Mr. Yaseen Anwar added that “There is considerable importance attached to having adequate representation of non-executive and independent directors on the Board and a clear separation of the position of Board Chairman and Chief Executive Officer. However, recruitment of strong independent and non-executive directors is an important balancing mechanism. Directors should ensure individually and collectively that potential conflicts of interest are avoided or, at least, managed in ways that do not compromise the larger interests of the bank.”
In highlighting the challenges that lay ahead, Mr. Yaseen Anwar said, “The most pressing challenges being faced the Banking Sector arise mainly through adoption of Basel- III Accord and its consequential management of risks. Early adoption of Basle III Accord presents an unparalleled opportunity for the banks. Those that embrace the new standards will find themselves at an advantageous position in the International Markets.” He further added that “Like other developing economies, Pakistan’s corporate and financial sectors are also facing some corporate governance issues, particularly related to Concentrated or Complex Ownership Group Structures. Generally, either directly or through a complex network of subsidiaries and associated entities, the majority shareholders often exercise control over operations and Cash Flows, disproportionate to their equity stake in individual companies. Such ownership structures raise serious Corporate Governance questions like (i) Inequitable treatment of stakeholders; (ii) Dominance of controlling shareholder-directors over Board proceedings; (iii) Lack of independence of the Board from the management; and (iv) Channeling bank resources to the benefit of Group concerns. In order to address the aforesaid corporate governance issues, there is urgent need for implementation of ‘Consolidated Supervision Framework’, where both the Corporate and Bank Regulators, are working to minimize Risks of Regulatory Arbitrage.”
In his conclusion Mr. Yaseen Anwar commented that “I would also like to mention that no amount of regulatory intervention can fully institutionalize corporate governance unless and until the Boards and the Senior Management of banks appreciate the valuable addition of effective corporate governance to their productivity and competitiveness.”
Part one of the Program was well-received and appreciated by the attending Board Members and Senior Management from ABL, HBL, HBFCL, KASB Bank, Meezan Bank, NBP, NIB Bank, Silkbank, Sindh Bank, Soneri Bank and UBL. The session started with a brief introduction by Mr. Fuad Hashimi, President and CEO of PICG followed by an interactive case study conducted by Mr. Wasif M. Khan (FC College School of Management), and Ms. Amena Arif Buksh (Hikmah Consulting).
An Introduction to Corporate Governance was presented by Mr. Aziz Rajkotwala, ex-CEO Atlas Bank, followed by Building an Effective and Efficient Board by Mr. Zubyr Soomro, CEO and Founding Director of Hikmah Consulting (Pvt.) Limited, Developing and Delivering the Strategy by Mr. Wasif M. Khan and the Global Financial Crisis and Its Implications by Syed Salim Raza, ex-Governor of the State Bank of Pakistan.