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
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:
What is corporate governance,
and why is it so important?
- 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.
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
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.