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359.3404

insight

Why do INEDs of banks need further training?

(Translation)

Mina:

I heard the Chief Executive, Mr Norman Chan, led a delegation of Hong Kong bankers to Xi’an last week and it was quite a large delegation.

Ronnie:

It certainly was. There were two consecutive events in Xi’an – a two-day seminar for independent non-executive directors (INEDs) of banks in Hong Kong, followed by another seminar on the Belt and Road (B&R) Initiative for Hong Kong senior bankers. Over 40 industry representatives from Hong Kong participated in the events, in addition to senior officials, bankers and financial professionals from Shaanxi Province as well as support staff for the events.

Mina:

I know that Mr Shang Fulin, Chairman of the China Banking Regulatory Commission, flew from Beijing to Xi’an specifically for the two seminars. Someone in his position is always busy. I bet he only stayed for the opening ceremony, right?

Ronnie:

You’re wrong there. Besides delivering the keynote speech at the B&R seminar, Mr Shang also exchanged views with the INED “trainees” during the seminar. He gave detailed responses to all questions raised by the INEDs concerning the Mainland’s banking industry. Mr Shang, together with Mr Chan, also awarded certificates of attendance to the INED “trainees”.

Mina:

I don’t really understand why INEDs have to attend seminars like these. They are all financial professionals or prominent figures in the community. Is there anything more they need to learn?

Ronnie:

Since you are new here, I suppose you haven’t heard Mr Chan talking about “soft power”?

Mina (shaking her head)

No. But I can guess its general meaning. It is about human capital, right?

Ronnie:

You are partly right. But there’s a lot more to it. Competition among international financial centres nowadays is definitely not about physical infrastructure anymore. It’s more about “soft power”. Developing good corporate governance and risk management culture in banks is the key to success, and the HKMA is committed to enhancing banks’ strength in these two areas.

Mina:

This should be easy. As a banking regulator, the HKMA can always use its ample statutory powers to make appropriate rules for different aspects of banking operations. Corporate governance should then be improved in no time.

Ronnie:

Well, this headmaster’s approach is not in line with the spirit of “soft power”. Apart from regulation from “outside”, corporate governance and risk management should be developed from “inside”, with self-discipline and self-initiative. And, in this context, the boards of directors at banks play a leading part, with INEDs best-positioned to play oversight and monitoring roles.

Mina:

I see. So that’s probably why the HKMA often organises seminars and other activities to better equip and empower the INEDs to discharge their functions. But why did they go to Xi’an this time?

Ronnie:

The trip sought to deepen INEDs’ understanding of the major trends of the developments on the Mainland and the opportunities brought by the B&R Initiative.

Mina:

OK. Now that the Xi’an trip is over, are there any other initiatives for INEDs?

Ronnie:

Well, earlier the HKMA has conducted research and consultation on the role of INEDs and will soon issue related supervisory guidelines to banks. I heard that one of the new guidelines seeks to set a “minimum wage” for INEDs.

Mina:

How much will that be?

Ronnie:

I won’t tell you now.

Mina (subdued voice):

By the way, can I secretly ask one question: did Mr Chan have any off-itinerary activities at night in Xi’an?

Ronnie:

Of course, he did.

Mina:

Tell me…what was it...?

Ronnie:

He busied himself in the hotel lobby discussing with his colleagues specific arrangements about the seminars.

Mina:

Oh my God, you count this as an off-itinerary activity!

 

Written by Ronnie and Mina, the two specially-assigned ‘Observers’ who go around the HKMA office in IFC, Central, collecting interesting facts and sharing with you from time to time.

7 June 2016

Last revision date: 13 June 2016
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