LONDON - An independent review of risk and corporate governance in the UK banking industry has been announced by the Chancellor of the Exchequer, the secretary of state for business, enterprise and regulatory reform, and the financial services secretary to the Treasury.
The review will recommend measures to improve the corporate governance of UK banks, and particularly their risk management, and is to be chaired by former Bank of England executive and chairman of the UK Securities and Investment Board Sir David Walker.
"As part of our review of supervision of financial institutions, it is clear that corporate governance should have been far more effective in holding bank executives to account," said Chancellor of the Exchequer Alastair Darling. "I have therefore asked Sir David to carry out a thorough review and to make recommendations for improving what should be the first line of defence."
The review will analyse board management of risk, risk-based remuneration policy, the effectiveness of risk and audit committees, and the competence of bank boards, their practices and structures, and shareholder responsibility.
Business secretary Peter Mandelson said: "The review is needed to ensure that we have competent, well-run and transparent boards, which are engaged with their shareholders, and capable of understanding and managing risk effectively. This will benefit savers, borrowers, and staff, as well as the public."
Preliminary conclusions will be aired to commissioning MPs this autumn, with recommendations due before the end of the year.