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Global Corporate Governance Cases and Issues Overview

Explore corporate governance cases and issues from countries like Turkey, India, and the USA. Learn about organizations involved like OECD, IMF, and World Bank, and delve into specific banking failures, challenges, and improvements. Discover unique insights from each region's banking sector.

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Global Corporate Governance Cases and Issues Overview

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  1. Corporate GovernanceCases and IssuesElisabeth Jackson-MooreJune 20th 2006 Egyptian Banking Institute

  2. Outline • Organisations involved • Some cases and some issues from • - Turkey • - India • - USA

  3. Some Organisations Involved • OECD • IMF • World Bank • BIS • IIF • Governments and bank regulators around the World

  4. Turkey • Role of MoF and Central Bank • BDDK (BRSA) and SDIF established • Bank failures in the 1990s • Pamukbank • Imar Bank

  5. Turkey Bank Failures in Early 1990s • Impexbank • Takeover after Asil Nadir/ Polly Peck • Disagreements between shareholders • Fictitious accounts • Marbank • Takeover after tourism company problems • New owner lacked capital • Fictitious repos

  6. TurkeyPamukbank • Under special supervision for years • Finally, after establishment of BDDK and bank reforms, was taken over • Loans to related parties – collateralised by shares in YKB

  7. TurkeyImar Bank • Mainly took deposits in FX • Paid 1% or 2% over market rates • Appeared profitable, but very poor disclosure • Taken over by SDIF • Unrecorded deposits

  8. India • IIF report • Committee driven system • ICRA experience

  9. IndiaIIF – February 2006 • Positive report – above average compared to other emerging markets • Weaknesses in enforcement • Not the systems in place to monitor compliance • Not the penalties in place for failing to comply • Lack of shareholder activism • Need for pension reform to create class of institutional investors • Role of the press

  10. IndiaRecent Committees • CII Code on Corporate Governance (1998) • Birla Committee (1999) – National Code on Corporate Governance (Government) • Reddy Task Force (2000) – Corporate Excellence (DCA) • Joshi Committee (2002) – Amending Company Law (DCA) • Chandra Committee (2002) – Auditing and Governance (DCA) • Malegam Committee (2002) – Disclosure and Investor Protection (SEBI) • Murthy Committee (2002) – Corporate Governance (SEBI)

  11. IndiaInformation Asymmetries in Banking • Deposit insurance means that depositors don’t bother • Government ownership • Family ownership – may also control the media • Who determines what level of risk is appropriate?

  12. IndiaICRA Experience • Introduced corporate governance ratings in 2003 • 10 ratings assigned in 2004 and 2005 • Two banks – Bank of Baroda, Andhra Bank

  13. USA • CG took on important significance post-Enron, WorldCom, Tyco, etc. • Moody’s response – Enhanced Analysis Initiative • Over 400 companies with most debt now have a CG assessment

  14. Moody’s Opinion of Governance by Franchise

  15. USAGovernance Improvements in US banks • Strong regulation mitigates concerns • Relatively strong board or committee focus on key exposures • Compensation practices more creditor friendly • Succession planning + performance evaluations more formal

  16. USAGovernance Challenges for US Banks • Control failures still prevail • Board composition far from optimal • A potent board within a board could be a concern • Mergers create oversight challenges • Risk oversight a challenge, particularly in light of Basel II • Internal audits may have failed in some banks

  17. USABank Control Failures • Fifth Third • Riggs National • Bank of America • Citigroup • JPMorgan

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