Proposed new guidelines from the European Banking Authority (EBA) are “incomplete” because they fail to tackle the role of boards in strategy and leadership, according to the European Confederation of Directors’ Associations (ecoDa).
The EBA, a body of the European Union, has been running a consultation on new guidelines for internal governance in banks, but ecoDa is concerned that they fail to recognise key elements of board responsibility.
Lutgart Van den Berghe, chair of ecoDa’s policy committee, said attention on the complete role of board of directors was necessary: “The EBA guidance on internal governance (naturally) focuses on the monitoring role of the board.
“However, the reference framework for judging governance quality and governance effectiveness of financial institutions is incomplete in as far as the fundamental role of the Board of Directors on strategy and leadership is insufficiently addressed.”
EcoDa also stressed the role of shareholders and board members in assessing the suitability of key function holders, and the difficulties faced by regulators.
“It is foremost the board (and the shareholders) that need(s) to assess the suitability of board members, before any nomination or re-nomination,” said Van den Berghe.
EcoDa also expressed concern about board assessment. “An annual assessment might not be always necessary and might well give rise to a more superficial formalistic approach, a kind of box-ticking,” added Van den Berghe.