20/10/2009 06:52
The publication of the Central Bank’s directive on the internal governance of the banks sparked a period of activities in their Boards. The next day signaled the start of the internal activities in the banks, which must take an “independence test” in the next two months.
In the case of the big banks, the test will be taken by nineteen directors with the prospect that some of them will be found as non-independent and will be replaced or will be surrounded by other independent directors, reversing the existing balances in the Boards.
“The Board of the bank will examine the new data. Certainly, there will be a partial restructuring based on the directive”, a bank official told StockWatch.
Relation with major shareholders…
The CB directives are expected to bring reclassifications to all Boards that include in their independent directors members who are related to major shareholders. According to the directive, “in order for a director to be regarded as independent, he/she must not be a major shareholder and must not represent or be related to a Board member or major shareholder”.
In the case of Bank of Cyprus and Hellenic Bank, this provision affects the Board members that represent the interests of the Cyprus Church. As for Marfin, it will be examined whether the three independent Board members have any relation to Marfin Investment Group or Dubai.
…and relatives
The aforementioned criterion will not allow the Board members who are relatives with other Board members to be regarded as independent. To stress the relativity issue, the CB included one more parameter, which forbids the independent directors “to have relatives belonging to the higher executive management and/or being members of the bank’s BoD”.
The CB defines as relatives the parents, the husbands or wives, the children, the brothers/sisters and the husbands’/wives parents.
Business relations
The business relations of the 19 directors with the 3 banks will be examined thoroughly. According to the directive, if they have significant business relations, they will not be regarded as independent. This is expected to affect a small number of directors, who allegedly have accumulated loans of more than €0.5 million or who have more than 10% of their consolidated income from transactions with the bank.
Also, if they participate in Boards of associated companies, they will cease to be regarded as independent.
Ceiling of 9 years
The ceiling of 9 years in the terms of office will have its own gravity in the upcoming restructuring of the Boards. The CB believes that the presence of a director in a Board for more than 9 years compromises his/her independence. All those who served as Board members for 9 consecutive or not years cannot be regarded as independent.
Non-Executive Chairman and Vice Chairman
The provision for the non-executive chairman and vice-chairman will bring changes to at least one Board of Directors, that of Marfin. Although Marfin has non-executive vice-chairman, has Mr. Vgenopoulos as executive vice-chairman.
In the case of the big banks, the test will be taken by nineteen directors with the prospect that some of them will be found as non-independent and will be replaced or will be surrounded by other independent directors, reversing the existing balances in the Boards.
“The Board of the bank will examine the new data. Certainly, there will be a partial restructuring based on the directive”, a bank official told StockWatch.
Relation with major shareholders…
The CB directives are expected to bring reclassifications to all Boards that include in their independent directors members who are related to major shareholders. According to the directive, “in order for a director to be regarded as independent, he/she must not be a major shareholder and must not represent or be related to a Board member or major shareholder”.
In the case of Bank of Cyprus and Hellenic Bank, this provision affects the Board members that represent the interests of the Cyprus Church. As for Marfin, it will be examined whether the three independent Board members have any relation to Marfin Investment Group or Dubai. …and relatives
The aforementioned criterion will not allow the Board members who are relatives with other Board members to be regarded as independent. To stress the relativity issue, the CB included one more parameter, which forbids the independent directors “to have relatives belonging to the higher executive management and/or being members of the bank’s BoD”.
The CB defines as relatives the parents, the husbands or wives, the children, the brothers/sisters and the husbands’/wives parents.
Business relations
The business relations of the 19 directors with the 3 banks will be examined thoroughly. According to the directive, if they have significant business relations, they will not be regarded as independent. This is expected to affect a small number of directors, who allegedly have accumulated loans of more than €0.5 million or who have more than 10% of their consolidated income from transactions with the bank.
Also, if they participate in Boards of associated companies, they will cease to be regarded as independent.
Ceiling of 9 years
The ceiling of 9 years in the terms of office will have its own gravity in the upcoming restructuring of the Boards. The CB believes that the presence of a director in a Board for more than 9 years compromises his/her independence. All those who served as Board members for 9 consecutive or not years cannot be regarded as independent.
Non-Executive Chairman and Vice Chairman
The provision for the non-executive chairman and vice-chairman will bring changes to at least one Board of Directors, that of Marfin. Although Marfin has non-executive vice-chairman, has Mr. Vgenopoulos as executive vice-chairman.
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