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IFC and Central Bank of the United Arab Emirates Conduct First Conference on Bank Governance for the MENA Region


In Cairo:  
Sebastian Molineus
Program Manager, IFC Corporate Governance Program
Phone: +20-10-520 1432
E-mail: smolineus@ifc.org


Abu Dhabi, March 5, 2006— The Central Bank of the United Arab Emirates and the International Finance Corporation, the private sector arm of the World Bank, today organized a conference in support of bank corporate governance reforms in the MENA region.  Some 150 senior representatives from the banking sector, attended this event to discuss how best to move the corporate governance reform agenda forward.  Participants were from the UAE, other Gulf Cooperation Council countries, and the wider Middle East and North Africa region.
       

“This conference was organized in the context of recent trends and developments in corporate governance.  These developments are international—with the revision of key corporate governance guidelines and best practices by the OECD and the Basel Committee—and also regional—with the launch of reform initiatives across the Middle East and North Africa region,” said the Governor of the UAE’s Central Bank, H.E. Sultan Bin Nasser Al Suwaidi.  “The conference is a unique opportunity to address some of key bank governance issues in our country and the wider region, as well as develop a tailored approach to these issues moving forward.”

According to Azmat Taufique, Senior Regional Manager at IFC, “Banks are a critical component of any economy.  They are the sole means of financing for a great majority of enterprises in the region.  In addition, some banks are expected to make credit and liquidity available in difficult market conditions.  And yet banks carry inherent risks, as they take large amounts of risk-bearing obligations on their books, which can cause urgent and rapid crises. The collapse of a bank may destroy value for its public depositors and its shareholders, and a single collapse may send shock-waves across the entire financial sector and perhaps require a costly bail-out. It is thus critical that banks have strong corporate governance practices.”

With these challenges in mind, the conference gathered a selection of high-level decision-makers in the area of bank corporate governance—including central bank representatives, directors and managers of leading banks, the heads of banking associations and other key stakeholders—to provide guidance on how to develop and implement national reform agendas for good corporate governance in the banking sector.  Specifically, the conference served to:

  • Present the most recent international and national trends in bank corporate governance, including the Basel Committee’s new corporate governance guidelines, which are due to be issued just prior to the workshop;
  • Initiate a regional dialogue on corporate governance among the high-level participants, allowing them to share experiences and lessons learned; and
  • Develop a common approach on how to launch and implement bank corporate governance reforms at the regional, country, and corporate level.
What is corporate governance, and why is it so important?

Corporate governance refers to the structures and processes for the direction and control of corporations. Corporate governance specifies the distribution of rights and responsibilities among the main participants in a corporation—including shareholders, directors and managers—and spells out the rules and procedures for making decisions on corporate affairs.  A company committed to good corporate governance has well-defined shareholder rights, a solid control environment, high levels of transparency and disclosure, and an empowered board of directors.

Corporate governance is critical for banks and companies, as it improves access to capital, attracts premium valuations, offers financing on better terms and ultimately improves performance. It results in better leadership, oversight and strategic direction, efficient information flows and work processes, and better compliance, accountability and less conflict, all of which lead to better decision-making and affect the long-term prosperity of companies.

Investors care about corporate governance, as well-governed companies tend to outperform their peers, safeguard and provide for higher returns on investment, protect shareholder rights, and provide assurance that management acts in the best interest of the company and all shareholders. Governments also care about corporate governance, as it develops the public and private capital markets, reduces vulnerability to financial crises, and improves a country’s ability to mobilize, properly allocate, and monitor investments, all of which foster economic growth.

The Central Bank of the United Arabic Emirates formally commenced its functions in December 1980. Its objectives are to direct monetary, credit, and banking policy and to supervise its implementation in accordance with the government’s general policy and in ways that help support the national economy and the stability of the currency. For more information, visit http://www.cbuae.gov.ae.

The mission of IFC is to promote sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications. For more information, visit www.ifc.org.

The year 2006 marks a 50-year milestone in the evolution of the “emerging markets”, the mission for which the International Finance Corporation (IFC), the private sector arm of the World Bank Group, was created in 1956. The founding of IFC represented the first concerted step by the global community of nations to directly foster private sector investment and market creation in the developing nations of the world. Today IFC is the largest multilateral provider of financing in the developing world, and plays a leadership role in providing innovative market-based solutions for reducing poverty and addressing environmental and social challenges.
In Abu Dhabi:
Asrat Betru
Chief Examiner CB UAE
Phone: +971-50-4439-681
E-mail: axbbos@hotmail.com