复杂得难以管理？体制改革浪潮下的全球银行管治（英文版）.pdf

Too complex to manage? Global bank governance in a structurally reformed world“ My assessment of recent history is that there has not been a case of a major prudential or conduct failing in a firm which did not have among its root causes a failure of culture as manifested in governance, remuneration, risk management or tone from the top.” Andrew Bailey, Chief Executive of the UK FCA 1 1 See “Culture in financial servicesa regulators perspective”, May 2016, available online at bankofengland.co.uk/publications/Pages/speeches/2016/901.aspxPublished September 2017 Contents 1. Executive summary 2 2. Global bank governance in a structurally reformed world 3 3. Responding to new rules of the game 8 4. Conclusion 23 Contacts 251.1 An industry identity crisis Managing global banks is an inherently challenging task, and post-crisis it is more difficult than ever before. Many global banks are going through a restructuring of some kind, to change how they operate on a fundamental level, and in many cases to respond to specific regulatory requirements or political and economic shifts. Global universal banks, which have generally adopted a mixture of centralised and local business management and controls, have had to deal with new regulatory constraints on how they design and structure their governance. The result is an increase in cost and complexity of governance structures. Symptoms include reduced financial flexibility, a need for more independent non-executive directors (iNEDS), increasingly localised governance requirements, particularly for risk management, a call for greater board accountability, as well as a more intense focus on legal entity structures. Duplication has become an inescapable part of the cost of having a global franchise, and regulators want continuous assurance that banks are well run. Banking groups need to be able to play within these new rules of the game, which requires a focus on the structural, procedural and human capital solutions necessary to coordinate globally along multiple business lines and legal entities. Global banking groups should carry out top-down reviews of their internal governance in order to identify pressure points, unnecessary variations in practices between countries, and opportunities to optimise management time. At a minimum, group boards should know and understand the organisational structure of the group, and there should be clear responsibility for internal governance at both the level of a board committee and at an executive level. Governance arrangements should be robustly documented in a governance manual. Dual-hatting arrangements should be an area of focus, in terms of ensuring transparency, dealing with conflicts of interest, and placing the right people with the right internal standing in the right roles. Policy governance is also crucial. Groups should ensure that there is clarity as to who is responsible for ensuring group policies are embedded across the business, and that there is appropriate testing by the second and third lines of defence. The industry has come a long way, particularly in terms of thinking about and understanding legal entity structures. But there is more that global banking groups can do to deal with the pressures of steering complex organisations through difficult economic, political and regulatory times. This paper sets out the new reality for governing global banking groups, and makes recommendations for where they should focus their energies. Global banking groups need to be realistic about the pace of long-term change. In some cases groups may encounter substantive governance challenges which require a significant overhaul of the governance operating model. These will take time to address. In other cases the issues may be more familiar, and tackling them may be more a matter of bringing renewed focus and clarity to an existing programme. Regardless of the particular situation, what is essential is that global banking groups have a programme to meet heightened regulatory and supervisory expectations and that they implement it to reduce the risk of regulatory interventions that further constrain their business. 1. Executive summary “ Global universal banks, which have generally adopted a mixture of centralised and local business management and controls, have had to deal with new regulatory constraints on how they design and structure their governance.”The views expressed in this paper are informed by our own observations of market practices, as well as a series of interviews with Deloitte partners around the world, and external interviews with a number of global systemically important banks (G-SIBs). Quotes from some of these interviews are highlighted in this paper. 2 Too complex to manage? | Global bank governance in a structurally reformed world2.1 A difficult task made more difficult still Banks are highly interconnected in global economic activity and deeply integrated into the economies of the countries in which they operate. Global banking groups are large and complex, and following the financial crisis they are increasingly heavily regulated. Looking back, the banking sector and individual banks grew rapidly and significantly in the decades before the financial crisis. The globalisation of banking was driven by a series of mega-mergers which took place in the 1980s and 1990s, some of which were at the time among the largest corporate mergers ever seen. Some groups sought to become all things to all customers in all places global financial wholesalers and retailers. But managing these new global giants proved far from straightforward, especially with respect to risk and control frameworks; many struggled with post-merger integration. The financial crisis threw the complexities of these organisations into sharp relief, and drew attention to the economic dangers of leaving their growth unchecked their unique economic roles when compared to other large corporations impose a special mandate on them to be resilient in the face of economic stress. Moreover, while global banks are headquartered in individual countries, the nature and extent of their international networks of branches and subsidiaries mean that problems in one part of a group are almost invariably transmitted to others. Regulators took note; former Bank of England Governor Mervyn King summed up the change in thinking when he observed that banks had proven to be “international in life but national in death.” Bank failures exposed the shortcomings of taking the global view without at the same time having a clear understanding of what was happening at the sub- group or subsidiary level. In the midst of the crisis this was most obvious with respect to prudential issues; in the years since the crisis it has become evident that there are related issues in the conduct sphere. Organisational complexity still hampers many banking groups as they attempt to navigate very difficult economic waters in the midst of a challenging regulatory reform agenda. They have had to hunker down, shed non-core assets, and in several cases significantly retrench from their global presences. Many have had to overhaul their entire strategies, some more than once. Much post-crisis activity has so far been fire-fighting. In short, the business of running and governing a global bank an already challenging task is now more difficult than it has ever been. Box 1 on page 6 highlights the considerable variety found between global banking groups. 2. Global bank governance in a structurally reformed world “ Banks are complicated. You need big, resilient banks. You need banks that can do almost everything and be lots of things to lots of people on a global basis. Complexity in itself is not a vice. But an inability to articulate the structure and operations of a bank is.” 3 Too complex to manage? | Global bank governance in a structurally reformed worldGlobal banking is not business without borders A wide range of post-crisis regulatory reforms mean that banking groups cannot deploy whatever governance framework or legal entity structure suits their business they have home and host country regulation to contend with, complicating the picture. 1In general, post-crisis, regulators have looked for more “ring-fencing” (very broadly defined) of activities within legal entities, and stronger and more independent local legal entity governance or sub-group governance. Most global banking groups are as a consequence having to change the balance between global and local management and control. And even where businesses continue to be managed and directed globally, banks need to deal with the regulatory imperative for greater legal entity management involvement in the business strategy and risk framework, and more of a say over the global business lines which deploy the balance sheet for which sub-parts of the group may be responsible. See Box 2 on page 10 for a closer examination of post-crisis governance reforms. The increased regional and national regulatory focus on the branches and subsidiaries of global groups is most evident in the US Intermediate Holding Company (IHC) requirement, the EUs nascent Intermediate Parent Undertaking (IPU) proposal, the UKs stance on supervising branches and subsidiaries of overseas firms, and the European Central Banks (ECBs) evolving views on supervision of international groups in a post-Brexit environment. But these developments are not restricted to the US and Europe in Singapore, for instance, the Monetary Authority of Singapore (MAS) has been given the power to force subsidiarisation of foreign bank branches where these meet its criteria for being domestically systemically important, particularly with respect to retail deposit-taking. 2 These initiatives divide groups more clearly and deeply into sub-groups within single countries and regions, which local regulators then expect to be managed on a more independent and self-contained basis, cutting across global businesses and functions. Subsidiaries are not in general expected to operate entirely independently of the groups of which they are part. But their capacity to act independently if necessary is certainly being scrutinised. The most explicit statement to this effect can be found in the UK Prudential Regulation Authoritys (PRA) articulation of its expectations of subsidiary boards. 3Along similar lines, in the US the Office of the Comptroller of the Currency (OCC) noted in the context of its heightened standards that a high threshold is necessary to ensure the “sanctity” of bank charters within a parent companys legal entity structure. 4 But it is not all about fragmentation of group structures groups which have historically run with thin administrative layers at the apex of the structure are contending with the increased regulatory and supervisory expectations placed on them in terms of their accountability (see Box 3 on page 14 for more details). In response, a number of global banking groups are in the process of building up the global capabilities of their head offices, corporate centres and dedicated group service entities in order to exert more central control over how they operate. Global banking groups are caught between a rock (their home supervisors) and a hard place (their host supervisors): home authorities want group boards to satisfy them that they have full visibility over everything that is happening, to avoid repeats of historical episodes in which problems surfaced in overseas subsidiaries, while hosts want subsidiary boards to satisfy them that they have sufficient control to discharge their statutory duties and meet local supervisory expectations. 1 Banks face a range of constraints with respect to their governance beyond those imposed by financial regulators and supervisors, but for the purposes of this paper our focus is on statutory financial regulation and supervision. 2 See Singapores Banking (Amendment) Act 2016. 3 See PRA Supervisory Statement SS5/16, Corporate governance: Board responsibilities, March 2016, available online at bankofengland.co.uk/pra/Documents/publications/ss/2016/ss516.pdf 4 See OCC Guidelines Establishing Heightened Standards for Certain Large Insured National Banks, available online at occ.gov/news-issuances/news-releases/2014/nr-occ-2014-4a.pdf “ M a t r i x ma na g em en t has been going on for decades, compared to the more recent focus on making sure legal entity management is appropriate. Many banks find the tensions between the legal entity and how they manage business lines difficult to deal with. How can I set a global market strategy when I have to deal with all these different legal entities in the UK, US and Asia, and each one tells me something different which means I cant run my business the way I want to?” 4 Too complex to manage? | Global bank governance in a structurally reformed worldThe result is that banks are being pushed into the middle of the spectrum: those banks that were heavily devolved are now having to boost their centralised global capabilities, while those that were highly integrated across borders are finding those borders more substantive. In practice these combined pressures mean that global banking groups are having to contend with: Relentless regulatory change in all major jurisdictions, posing major strategic and operational questions, and challenging the capacity of senior executives to keep pace or address change in a joined-up way. Tougher application of prudential requirements to individual branches and legal entities, reducing flexibility over deployment of capital and liquidity around the group. Imposition of more localised risk management requirements, creating additional layers of management and decision-making, and challenging group-level control. A proliferation of localised board committees, dealing with issues such as risk and remuneration, as well as broader business decisions, including increased numbers of iNEDs on subsidiary boards, increasing administrative and compensation costs, and leading to additional challenge between group and subsidiary operations. Increased regulatory focus on intragroup relationships, shining light into internal arrangements previously considered low priority issues, potentially putting historical cross-border operating models at risk of disruption. Intensified supervisory scrutiny of booking models, with the UK PRAs interest in the topic being replicated in the US and increasingly by the ECB, with heightened expectations of subsidiary boards with respect to their expected level of authority and responsibility for what gets booked onto their balance sheets (see Box 5 on page 22 for more details). Growing interest in the individual accountability of the m