13 May 2003
The Reserve Bank is happy about the “positive” report from an independent review on corporate governance of the five largest banking groups in the country – Absa, FirstRand Bank Holdings, Investec, Nedcor and Standard Bank.
Reserve Bank Deputy Governor Gill Marcus said the review, released in Pretoria on Tuesday, found that the corporate governance of the banking groups was “sound and that no serious breaches existed”.
“It’s a very positive report. It points out that our banking groups’ boards are healthy and have a level of independence required to fulfill their roles,” Marcus said.
The review was conducted by JK Myburgh and commissioned by the Registrar of Banks, Christo Wiese, last year. The review’s terms of reference were to broadly evaluate the standard of corporate governance applied by the banks, with the premise that corporate governance is an essential element of a healthy risk-management process crucial to the banking business.
In this regard, the review found the banks to be committed to adhering to and applying high standards of corporate governance.
“Acting on the advice of specialists on corporate governance, the banks on their own initiative from time to time review their corporate governance to ensure compliance with accepted governance principles,” the report said.
However, vigilance was still required to ensure continued compliance with standards of governance, which were constantly evolving in South Africa and internationally, Myburgh said.
Wiese said it was encouraging to note that risk-management processes in the relevant banks had become more quantitative, which reflected not only enhanced ability to process data, but also the application of improved techniques for the measurement and management of risk.
Myburgh’s report recommended, however, that banks should reduce the number of board members, as “smaller boards are more cohesive and work more effectively than large boards”.
He recommended that boards should consist of no more than 16 members instead of the current norm of 24 or 25 members.