The European Banking Authority (EBA) has published, on 27 September 2011, new guidelines regarding the internal governance of credit institutions. The EBA states that the guidelines are aimed at "enhancing and consolidating supervisory expectations and ...ultimately improving the sound implementation of internal governance arrangements" within the banking sector.
The guidelines repeal, replace and consolidate earlier EBA (and CEBS) guidelines in this area and include a number of new sections, for example on IT systems and business continuity management and regarding the responsibilities of the supervisory function and the transparency of the corporate structure. The guidelines deal with a wide range of governance issues such as the duties and responsibilities of the management body, conflicts of interest, appointment and qualifications of the management body, risk management, the audit and risk committees, the compliance function and many others. Their focus is limited to internal governance, and accordingly they do not deal with, for example, the roles of external auditors, shareholders or other external stakeholders. The guidelines apply to credit institutions and investment firms covered by Directives 2006/48/EC and 2006/49/EC.
The EBA has stated that it expects competent authorities to implement these guidelines and incorporate them into their supervisory procedures by 31 March 2012. Competent authorities are also expected to ensure that institutions effectively comply with the guidelines by this date.
The EBA came into being on 1 January 2011 and has taken over all the existing and ongoing tasks and responsibilities of the Committee of European Banking Supervisors (CEBS).
For a link to the guidelines, and to the press release issued by the EBA in relation to the guidelines, please click here: European Banking Authority's Guidelines on Internal Governance (September 2011).