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IFC, EBRD Support Policies to Strengthen Corporate Governance of Banks in Southeast Europe
London, UK, June 16, 2011—
IFC, a member of the World Bank Group, the IFC Global Corporate Governance Forum and the European Bank for Reconstruction and Development are helping banks and other financial institutions in Southeast Europe improve their corporate governance practices to enhance their performance and competitiveness.
At a high level policy meeting on corporate governance of banks in the region, hosted by the EBRD, institutional experts and regional participants reviewed and endorsed a Policy Brief on Corporate Governance for Banks in Southeast Europe. The brief included recommendations on how to improve board practices, disclosure, and risk management.
One key recommendation of the policy brief is targeted at bank group structures and stipulates that parent banks need to be aware of subsidiary bank governance practices and ensure that subsidiary banks adhere to appropriate governance practices from both parent and subsidiary jurisdictions. The policy brief also provides extensive recommendations on internal controls and the roles of supervisors.
The policy brief emanates from the reflections of the first meeting of the High Level Policy Group. That meeting was held in Belgrade in December 2009 to draw lessons from the financial crisis and discuss international best practice in bank governance. “The financial turmoil has revealed severe shortcomings in risk management practices both in companies and financial institutions in the region,” said EBRD Chief Counsel Michel Nussbaumer.
The participants faced a main challenge in understanding the different circumstances of local versus foreign markets, and subsequently making recommendations tailored to the specific circumstances and needs of Southeast Europe.
“Given the prevailing role of banking institutions as a source of finance in the region, it is of the utmost importance to improve the governance of banks,” said Philip Armstrong, Head of the IFC Global Corporate Governance Forum. “Moreover, banks are in a unique position to influence the corporate governance of their corporate borrowers. They can become role models for other companies in implementing high standards and best practices.”
More than 65 banking regulators and practitioners attended the meeting, including ones from Albania, Bosnia and Herzegovina, Bulgaria, Croatia, FYR Macedonia, Montenegro, Romania and Serbia.
The event received support from the Austrian Development Agency and the Luxembourg Ministry of Finance. The policy brief will be publicly released in July.
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in developing countries. We create opportunity for people to escape poverty and improve their lives. We do so by providing financing to help businesses employ more people and supply essential services, by mobilizing capital from others, and by delivering advisory services to ensure sustainable development. In a time of global economic uncertainty, our new investments climbed to a record $18 billion in fiscal 2010. For more information, visit
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The EBRD is an international financial institution, owned by 61 countries and two intergovernmental institutions, and supports projects in 29 countries from central Europe to central Asia. Investing primarily in private sector clients whose needs cannot be fully met by the market, the Bank promotes entrepreneurship and fosters transition towards open and democratic market economies. The EBRD is the largest single investor in the region, mobilizing significant foreign direct investment into its countries of operations. The Bank invests mainly in private enterprises, usually together with commercial partners. It provides project financing for the financial sector and the real economy, both new ventures and investments in existing companies. It also works with publicly-owned companies to support privatization, restructuring of state-owned firms and improvement of municipal services. For more information please visit
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