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2022 | OriginalPaper | Buchkapitel

9. Overview of Stage 2 Bank-Specific Key Code and Advanced Handbook for Australian Banks

verfasst von : Francesco de Zwart

Erschienen in: The Key Code and Advanced Handbook for the Governance and Supervision of Banks in Australia

Verlag: Springer Nature Singapore

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Abstract

Chapter 9 of the Key Code and Advanced Handbook for Australian major banks contains an overview of the relational corporate governance approach and Model in Stage 2. Parts 1 and 2 contain an introduction to the bank-specific Stage 2 Key Code and Advanced Handbook chapters. Part 3 identifies the 1749 Stage 2 bank-specific relational corporate governance variables themselves and the 159 Key Groupings in which the variables are indexed and categorised for a ‘deep dive’ review of the governance and supervision of Australian major banks at the activity or function level. Part 4 discusses issues in executive compensation and accountability – incentives, equity and option compensation and the BEAR. In Part 5, we examine boards and committees, independence, expertise and bank and risk culture. Part 6 concludes the Stage 2 Key Code and Advanced Handbook with the governance and management of bank risk, risk appetite and risk culture.

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Vorheriges Kapitel Maximising the ‘Default Standard’ of Shareholder Value

Nächstes Kapitel Existing Stage 1 and New Stage 2 Bank-Specific Relational Corporate Governance Variables for Australian Banks

Francesco de Zwart, Enhancing Firm Sustainability Through Governance, The Relational Corporate Governance Approach, Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing, Corporations, Globalisation and the Law Series, July 2015, (‘Stage 1’).

For Stage 1, see also, Francesco de Zwart, “Enhancing firm sustainability through governance – Part 1: The challenge of corporate governance” (2018) 33(2) Aust Jnl of Corp Law 144 and Francesco de Zwart, “Enhancing firm sustainability through governance – Part 2: The framework of the relational corporate governance approach” (2019) 34(1) Aust Jnl of Corp Law 27.

See discussion in sect. 12.5 of Chap. 12 below.

Ibid.

Financial Stability Board, FSB Principles for Sound Compensation Practices, 2 April 2009 accessed 28 February 2019, available at http://www.fsb.org/wp-content/uploads/r_0904b.pdf (‘FSBP’).

Financial Stability Board, FSB Principles for Sound Compensation Practices Implementation Standards, 25 September 2009, accessed 28 February 2019, available at http://www.fsb.org/wp-content/uploads/r_090925c.pdf (‘FSBIS’).

NAB Self-Assessment on Governance, Accountability and Culture, November 2018, accessed 15 March 2019, available at https://www.nab.com.au/content/dam/nabrwd/documents/reports/corporate/nab-self-assessment-2018.pdf (‘NAB Self-Assessment 2018’).

Westpac Banking Corporation, Review Team, Governance, Accountability and Culture Self-Assessment, 28 November 2018, accessed 5 August 2019, available at https://www.westpac.com.au/content/dam/public/wbc/documents/pdf/aw/media/Westpac_Self-Assessment_Report_.pdf (‘Westpac Review Team 2018’).

Financial Stability Board, Supplementary Guidance to the FSB Principles and Standards on Sound Compensation Practices, The use of compensation tools to address misconduct risk, 9 March 2018, accessed 28 February 2019, available at http://www.fsb.org/wp-content/uploads/P090318-1.pdf (‘FSBSupp’).

Commonwealth of Australia, Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, Final Report, 4 February 2019, accessed 5 February 2019, available at https://static.treasury.gov.au/uploads/sites/1/2019/02/fsrc-volume1.pdf, Volume 1, (‘FSRC Final Report’).

Stephen Sedgwick AO, Retail Banking Remuneration Review Report, 19 April 2017, accessed 28 February 2019, available at https://www.betterbanking.net.au/wp-content/uploads/2018/01/FINAL_Rem-Review-Report.pdf (‘Sedgwick Review’).

Being PART IIAA – THE BANKING EXECUTIVE ACCOUNTABILITY REGIME, Banking Act 1959 (Cth), ss 37 – 37KC accessed 28 February 2019, available at http://classic.austlii.edu.au/au/legis/cth/consol_act/ba195972/index.html#s37g, (the ‘BEAR’). The Australian Treasury announced in a Proposals Paper of 22 January 2020 that it proposed to extend the BEAR to other APRA regulated entities in the insurance and superannuation industries with the introduction of the Financial Accountability Regime (FAR). See Australian Government, The Treasury, Proposal Paper, Implementing Royal Commission Recommendations 3.9, 4.12, 6.6, 6.7 and 6.8 Financial Accountability Regime, accessed 17 February 2020, available at https://treasury.gov.au/sites/default/files/2020-01/c2020-24974.pdf. See Attachment A – Summary of changes from the BEAR to the FAR, pp 11–13. The Government intends to introduce legislation by the end of 2020 to implement the FAR. See Proposal Paper, Next steps, p 3. Accountability Statements and Accountability Maps will remain obligations of the FAR. See Proposal Paper, Accountability maps and statements, p 7 and Attachment A, p 12.

Australian Prudential Regulation Authority, Revised Draft Prudential Standard CPS 511 Remuneration, November 2020, accessed 19 November 2020, available at: https://www.apra.gov.au/sites/default/files/%5Bdate%3Acustom%3AY%5D-%5Bdate%3Acustom%3Am%5D/Revised Draft Prudential Standard CPS 511 Remuneration – Clean – November 2020.pdf (“CPS 511”).

For earlier versions of CPS 511,see Australian Prudential Regulation Authority, Draft Prudential Standard CPS 511 Remuneration, Draft July 2019 available at https://www.apra.gov.au/sites/default/files/draft_prudential_standard_cps_511_remuneration_v2.pdf, (‘CPS 511’). See also:

Consultation on Remuneration Requirements for all APRA-regulated entities, accessed 22 September 2019, available at https://www.apra.gov.au/consultation-remuneration-requirements-all-apra-regulated-entities; and
Discussion paper: Strengthening prudential requirements for remuneration July 2019, accessed 22 September 2019, available at https://www.apra.gov.au/sites/default/files/discussion_paper_strengthening_prudential_requirements_for_remuneration_july_2019_v1.pdf.

Recent pronouncements from APRA in January 2020 state that this draft will be finalised in the first half of 2020 with an expected effective date of July 2021. See:

Australian Prudential Regulation Authority, Information Paper, APRA’s Policy Priorities, January 2020, accessed 17 February 2020, available at https://www.apra.gov.au/apras-policy-priorities, section 2.1.2 Remuneration and Attachment B: Timelines; and
Australian Prudential Regulation Authority, Information Paper, APRA’s Supervision Priorities, January 2020, accessed 17 February 2020, available at https://www.apra.gov.au/apras-supervision-priorities, section 2.3.3 Remuneration.

In addition to finalisation of APRA’s Draft Prudential Standard 511 Remuneration, APRA has announced that it intends to consult on revised versions of Prudential Standard CPS 510 Governance, Prudential Standard CPS 220 Risk Management and Prudential Standard 520 Fit and Proper in the second half of 2020 with expected effective dates of 2022. See the above Information Paper, APRA’s Policy Priorities, section 2.1.1 Governance and risk management, section 2.1.3 Accountability and Attachment B: Timelines.

See discussion in sections 7.3.2–7.3.2.1.2 of Stage 1, above n 1, pp 206–211.

Financial Stability Board, Guidance on Supervisory Interaction with Financial Institutions on Risk Culture, A Framework for Assessing Risk Culture of 7 April 2014, accessed 28 February 2019, available at http://www.fsb.org/wp-content/uploads/140407.pdf (‘FSBCult’).

Australian Prudential Regulation Authority, Prudential Standard CPS 220 Risk Management, July 2019, accessed 22 September 2019, available at https://www.apra.gov.au/sites/default/files/cps_220_risk_management_effective_from_1_july_2019.pdf (‘CPS 220’).

See discussion in section 9.1.2.1 of Stage 1, above n 1, pp 262–266.

Board – Director Skills ‘Mix’ – see discussion in section 7.3.1.2.1 of Stage 1, above n 1, pp 198–201.

Financial Stability Board, Principles for An Effective Risk Appetite Framework of 18 November 2013 accessed 28 February 2019, available at http://www.fsb.org/wp-content/uploads/r_131118.pdf (‘FSBRAF’).

Titel: Overview of Stage 2 Bank-Specific Key Code and Advanced Handbook for Australian Banks
verfasst von: Francesco de Zwart
Verlag: Springer Nature Singapore
Buch: The Key Code and Advanced Handbook for the Governance and Supervision of Banks in Australia
Print ISBN: 978-981-16-1709-6

Electronic ISBN: 978-981-16-1710-2

Copyright-Jahr: 2022
DOI: https://doi.org/10.1007/978-981-16-1710-2_9