Bank Governance Leadership Network

The Bank Governance Leadership Network is a group of non-executive directors from North American and European financial institutions brought together to share perspectives on proposals for strengthening corporate governance.  Their peer-to-peer discussions are informed by conversations with bank directors, executives, regulators, investors, and other key constituents.  Tapestry Networks has been leading this effort.  Ernst & Young has partnered with us on this initiative, as part of its deep, continuing commitment to board effectiveness and good governance.

Published ViewPoints, Briefing Notes and Updates capture the essence of the BGLN discussion and associated research.  We encourage you to share the reports with colleagues and those in your own network.  The more board members, senior management, advisers, and stakeholders who become engaged in this dialogue, the more value will be created for all.

Risk appetite, strategy, and regulatory reform (PDF) - June 16, 2010
This spring, Tapestry Networks and Ernst & Young convened meetings in New York and London for non-executive board members of leading North American and European banks, where attendees discussed top-of-mind challenges facing bank boards; for portions of the sessions they were joined by senior leaders from the New York Fed and the Financial Services Authority.  This Update highlights issues and perspectives raised in the two gatherings.  Discussion touched on the search for clarity on the roles and responsibilities of bank boards and a practical definition of risk appetite, as well as current approaches to improving risk governance in a shifting regulatory and industry landscape.

Remarks to the Financial Services Roundtable Spring Meeting
Tapestry Networks partners Mark Watson and Tom Woodard addressed over 150 members of the Financial Services Roundtable (FSR) at its Spring Meeting in New York on the subject of bank governance.  They shared insights drawn from work sponsored by Ernst & Young over the last eighteen months focused on bank directors and executives, regulators, and other key stakeholders interested in the future of bank governance. 

Risk governance in transition: the CRO perspective (PDF) - February 11, 2010
This Update draws on discussions we have had since the Financial Institution Directors Summit, in October 2009, with over 40 board members and executives, including a gathering of chief risk officers co-hosted by Ernst & Young and Tapestry in late January.   Key topics of interest included the evolving role of the board and its committees in risk governance, and the implications of the regulatory debates underway for risk management and risk oversight.

Financial Institution Directors Summit
On October 5 and 6, 2009, 18 board members from leading European and North American financial institutions met in New York to discuss the future of bank governance.  They largely agreed that failures of governance contributed to the severity of the financial crisis, and reaffirmed their conviction that effective governance can make a meaningful difference in corporate performance.  They acknowledge the heightened expectations placed on non-executive directors and are already rising to that challenge.  Participants discussed a number of key issues bank boards face, summarized in the following ViewPoints:

Restoring trust: lofty expectations for post-crisis boards (PDF) sets out the new demands placed on directors and boards, argues that restoring trust by building enduring institutions should be a board’s overarching goal, makes the case for a deeper and broader partnership between the board and management, and cautions that governance itself is at a turning point.

Risk governance in a new era (PDF) explores new approaches to understanding risk, determining risk appetite, setting the risk agenda, and balancing and integrating risk decisions with strategy and performance goals.

Banker compensation at a crossroads (PDF) discusses the challenges boards face in shaping new compensation policies that conform to the new regulatory requirements and take account of public and political pressures to rein in pay.

Building a high-impact, effective board (PDF) addresses the imperatives for directors to engage with and challenge management, get the right experiences into the boardroom, and gain access to internal and external information – all while respecting the line between management and the board.

To download the full report containing all four ViewPoints click here.

Shaping bank governance in a new era
Our initial research focused on the forces shaping the future of bank governance:

Enhanced oversight versus radical reform (PDF) - (June 2009) highlights that, even with more fundamental factors at work, bank boards get some blame for the financial crisis, and are facing higher expectations as a result.  Politicians, national and multinational regulatory bodies, industry groups, and investors have developed a host of governance reform proposals, the totality of which have the potential to significantly change the character and role of the board.

A revised compact with management and shareholders (PDF) - (August 2009) sets out a new model of board engagement being proposed by reform advocates; one in which non-executive directors contribute to their firm’s success by playing a more engaged, independent role in challenging management proposals, particularly on the firm’s strategy and risk appetite, based on their own expertise and external input.  The document highlights the challenges bank boards face in moving towards such a model, particularly the changing relationship with management and shareholders.