“Don’t let the
CEO set the board agenda”
Sir Brian Pitman calls for
clear delineations between the roles of the chief
executive officer and chairman at The Asian Banker
Summit 2004.
The number one priority for
a board should be to choose the “right chairman”
and the “right CEO,” Sir Brian Pitman,
former chairman of UK-based Lloyds TSB and senior
advisor to Morgan Stanley, said today in his keynote
address at The Asian Banker Summit 2004 in Hong
Kong.
Speaking before about 400 delegates
comprising senior bankers and financial service
practitioners, Sir Brian said that the roles of
the chairman and the chief executive should be
split asthey are different jobs.
The CEO, he explained, is responsible
for the definition and implementation of strategy,
and shareholders look to the chairman and independent
directors to safeguard their interests.
“Don’t let the chief
executive set the board agenda. The chairman has
to set the board agenda, and frequently on the
board agenda are things that the chief executive
doesn’t like having discussed,” Sir
Brian said.
Asian banks, like many other
companies in the region, are facing heavy pressure
from regulators and foreign investors to improve
their corporate governance, as the financial scandals
in the United States have encouraged activism
of shareholders of large publicly listed companies.
With the need to raise capital and fund expansion,
the banks are realising the importance of providing
more disclosure and changing board structures.
Dr. Placido Mapa Jr., vice-chairman
of the Philippines’ Metropolitan Bank &
Trust Co., emphasised that a one-size fits all
approach to best practices would not work in highly-divergent
Asia, which – though fast-integrating –
is still at different stages of development.
Also at The Asian Banker Summit
2004 today, sessions dealing with the three pillars
of sustainable growth – lending, payments
and risk management – began.
In the lending tract, the heads
of the largest asset management companies from
the region presented and discussed their experiences
in disposing of billions of dollars worth of non-performing
loans and other idle assets.
Dr. Syafruddin Temenggung, Indonesian
Bank Restructuring Agency (IBRA) chairman, asserted
that it would be better for regulators to set
the policy for banks to quickly sell their bad
assets rather than effect the actual transfer
of the assets to big institutions like IBRA as
banks can work more quickly and effectively.
The risk management tract featured
the regulator’s forum, which brought together
senior monetary authorities from Hong Kong, Singapore
and South Korea to discuss Basel II. A second
session in the afternoon covered anti-money laundering
initiatives in the region.
The payments track explored
the roles of the Automatic Clearing House (ACH)
and cheque truncation. Sayan Pariwat of the Bank
of Thailand explained the development of Thailand’s
ACH structure, as it expanded from Bangkok into
rural areas, with regularly increasing efficiency.
The later payment session on
cheque truncation developed into a lively debate
on the necessity for new processes to keep an
old payment technique alive through costly innovations.
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