Background

On 4 October 2010, the Basel Committee on Banking Supervision (“BCBS”) published a set of principles for enhancing corporate governance in banks (the “Principles”).1 The Principles are intended to provide targeted supervisory guidance. BCBS published initial guidance on corporate governance practices in 1999 and revised principles in 2006. BCBS launched a public consultation in March 2010,2 to address deficiencies which came to light since the financial crisis. The Principles should be considered in the context of the wider regulatory drive to strengthen corporate governance and restructure executive compensation practices for financial institutions.

Sound Corporate Governance Principles

BCBS’s guidance is designed both to reinforce basic governance principles and to identify good practices for implementing them.

Board Practices

Board’s overall responsibilities

Principle 1: The board has overall responsibility for the bank, including corporate governance and oversight of senior management. Responsibilities of the board include...