Basel Core Principles for Effective Banking Supervision (2024) P14: Principle 14: corporate governance

The bank has robust corporate governance policies and processes proportionate to its risk profile and systemic importance, covering culture and values, strategic direction and oversight, group and organisational structure, the control environment, suitability assessment, board and senior management responsibilities and compensation. The board has a balance of skills, diversity and expertise, collectively qualified for the bank's size, complexity and risk profile, enough experienced independent directors, and members who are individually qualified and exercise the duties of care and loyalty; nomination and appointment processes are appropriate, the board regularly assesses itself, its committees and each member's ongoing suitability, membership is renewed, and audit, risk, compensation and other committees with experienced independent directors exist as warranted. The board approves and oversees strategy, risk appetite and related policies, sets and communicates culture and values (for example through a code of conduct with protected whistleblowing), conflict of interest policies and a strong control environment; sets fit and proper standards for senior management and heads of control functions, allocates authority and accountability, keeps succession plans and critically oversees management against its standards; oversees a compensation system whose incentives are aligned with prudent risk-taking, address misconduct and are non-discriminatory and consistent with long-term soundness; and with senior management understands the operational structure and its risks, including opaque structures such as special purpose vehicles. The bank notifies the supervisor or discloses publicly as soon as it learns of material, bona fide information that may negatively affect the fitness and propriety of a board member or senior manager.