Pakistan Institute of Corporate Governance (PICG) in collaboration with International Finance Corporation (IFC) and Hikmah Consulting (Pvt) Limited launched 'Bank Governance Programme' for Directors and senior management recently. The programme was inaugurated by Governor State Bank of Pakistan Yaseen Anwar, at a local hotel.
The Programme has been 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 localised programme with the technical assistance of Hikmah Consulting, PICG is introducing the programme 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 programme.
Referring to the global financial crisis in his address, 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, he 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."
In highlighting the challenges that lay ahead, Anwar said: "The most pressing challenges being faced by the banking sector arise mainly through adoption of Basel-III Accord and its consequential management of risks. Early adoption of the 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 said 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) channelling 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 minimise Risks of Regulatory Arbitrage."
The SBP Governor further said that "I would also like to mention that no amount of regulatory intervention can fully institutionalise 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 Programme 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 Fuad Hashimi, President and CEO of PICG followed by an interactive case study conducted by Wasif M Khan (FC College School of Management), and Amena Arif Buksh (Hikmah Consulting).
An Introduction to Corporate Governance was presented by Aziz Rajkotwala, ex-CEO Atlas Bank, followed by Building an Effective and Efficient Board by Zubyr Soomro, CEO and Founding Director of Hikmah Consulting, Developing and Delivering the Strategy by Wasif M Khan and the Global Financial Crisis and its Implications by Syed Salim Raza, ex-Governor of the State Bank of Pakistan.-PR
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