Presentation on Corporate governance in Bank and Financial institution for Pakistan

1. Corporate Governance in Bank and
Financial Institution
Submitted By:
Shamraz Iqbal 16480
Muhammad Waleed Asghar 18373
Muhammad Ahmad Mustafa 24649
Hasnain Ali 26156
Submitted To:
Dr. Najam Sahar

2. Corporate Governance
“Corporate Governance is the system by which companies are directed and controlled”.
Research work in CG in financial sector
In 2000 “Issued by commonwealth working group on corporate governance in Financial Sector” by Mr.
Miach Cheserem
In 2005 The Financial Sector and Corporate Governance: the UK case by Chris Mallin
In 2007 Corporate Governance and performance of financial institutions in pakistan: A comparision
between conventional and Islamic Banks in Pakistan By Rehmans
In 2018 Corporate Governance of Banks and Financial Stability. Deniz Anginer
In 2018 The influence of corporate governance on bank risk during a financial crisis J. Augusto Felício,
Ricardo Rodrigues, Hugh Grove & Adam Grein

3. CG IN BANK AND FINANCIAL SECTOR
(a)Why do we require Corporate Governance in the Financial Sector?
(b) What does Good Governance Involve?
(c) What has been done so far in Pakistan?
(d) What are the Challenges Ahead?
(e) Who we can improve CG in bank and financial institution?

4. (a) Why do we require Corporate Governance in the Financial Sector?
• The risks in banking systems.
• The failure of a bank affects not only its own stakeholders,
• Private sector banks are motivated by profit maximization

5. (b) What does Good Governance Involve?
• The Board Members are qualified for their positions
• The Board must play a leadership role in approving the objectives, strategy and business plans
• The Board must also make sure that the Bank conducts its affairs with integrity and in accordance with high ethical standards.
• The Board should set and enforce clear lines of responsibility and accountability throughout the organization
• That risks are properly identified, monitored and controlled lies in the Boardroom.
• Internal and external audit arrangements
• Strong emphasis
 Board structure
 Senior management structure
 Basic organizational structure

6. (c) What has been done so far in Pakistan?
• The Responsibilities of the Board of Directors have been issued and enforced
• Fit and proper test for CEO, Board Members and key Executives
• Minimum Disclosure requirements quarterly and yearly.
• Family representation on the Boards should be limited
• SECP Code of Corporate Governance has been applied to bank
• An Institute of Corporate Governance has been established and the SBP is among its Founder Members.
• External audit firms are screened, categorized and rated for the purpose of auditing the financial institutions.

7. What are the Challenges Ahead?
•Induction and retention of highly skilled human resources
•E-banking and technology
•Credit, market and operational risks
•Market discipline
•Lower capital requirement

8. (d)Who we can improve CG in bank and financial institution?
• Self responsibility
• Transparent informative system and improve share holder rights
• Effective independent board members
• Adopt CSR programs
• Country laws
• Share holder rights
• Credit rating agencies
• Risk advisory firms
• Auditors
• Employees
• Depositors

9. What is OECD
The Organization for Economic Co-operation and Development (OECD) founded in 1961.
Basel Committee on Banking Supervision (BCBS)
The Committee's Secretariat is located at the Bank for International Settlements (BIS) in Basel, Switzerland
Established by the central bank governors of the Group of Ten countries in 1974.
In 2019, the BCBS has 45 members from 28 Jurisdictions.
Basel I
In 1988
Is primarily focused on credit risk
The minimum capital requirement was fixed 8% of risk-weighting assets (RWA).

10. Basel II
in June 2004
The minimum capital requirement was fixed 8% of risk-weighting assets (RWA).
“Three pillars"
(1) Minimum capital requirements (addressing risk)
(2) Supervisory review
(3) Market discipline
Basel III
In Nov 2010
1.Improving the banking sectors ability to absorb shocks arising from financial and economic
stress.
2.Improve risk management and governance.
3.Strengthen banks transparency and disclosures.