European Banking Authority Publishes Guidelines on Internal Governance

by Sabrina I. Pacifici on September 28, 2011

News release: “The European Banking Authority (EBA) has published today its Guidelines on Internal Governance aiming at enhancing and consolidating supervisory expectations and to ultimately improving the sound implementation of internal governance arrangements. Effective internal governance is fundamental if individual institutions and the banking system as a whole are to operate well. Article 22 of Directive 2006/48/EC requires that every credit institution shall have robust governance arrangements, which include a clear organisational structure with well defined, transparent and consistent lines of responsibility, effective processes to identify, manage, monitor and report the risks it is or might be exposed to, adequate internal control mechanisms, including sound administrative and accounting procedures, and remuneration policies and practices that are consistent with and promote sound and effective risk management. Furthermore, Article 73 (3) of the same Directive requires that Article 22 is also applied to parent undertakings and subsidiaries on a consolidated or sub-consolidated basis.”

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