Governance and Culture in Banks - Director of Credit Institutions, Ed Sibley

Speech by Director of Credit Institutions, Ed Sibley

Read full speech here

• Good governance a key priority for the Central Bank and the ECB as supervisors.
• Banks must be brutally honest with themselves when assessing internal culture to ensure they are operating in a safe, sound and sustainable way.
• Meaningfully addressing diversity at all levels could avoid the pitfalls of group think.

Director of Credit Institutions, Ed Sibley addressed the Institute of Banking today on the topic of governance and culture in banks. In his comments to a group of over 200 bankers, Mr Sibley began by noting that governance affects and drives all aspects of a bank’s strategy, operations, risk profile, culture and permeates all levels of its organisation. He said this makes it of paramount importance to regulators, as “governance failings heighten the risk of consumer detriment and the risks to the financial soundness of all institutions.”

He recognised that considerable progress has been made but that there were still too many issues being found, noting weaknesses in the governance of outsourcing and effectiveness of board challenge in particular.

Mr Sibley emphasised that culture drives the values and beliefs which govern how individuals perform, take decisions, assess risk, and, most importantly, do the right thing to ensure that banks operate in a safe and sound manner. He urged banks to critically evaluate their culture, how staff are incentivised to behave, and be brutally honest with themselves as to whether the culture they need is the culture they have.

Mr Sibley also highlighted that banks need to do more to meaningfully address diversity in the boardroom, at the executive level and the pipeline of talent needed to run the organisation in the long-term, and in doing so avoid the pitfalls of group think and experience the benefits that can be gained from greater diversity.

He concluded by saying that governance is likely to be the difference between the success and failure of the bank over the long term:

“While progress has been made, there is much more to be done to ensure that governance, culture and ultimately the behaviour of banks continues to improve and meet the requirements of stakeholders. It is clear to me that there is still a way to go before it can be said that banks operating in Ireland are among the best in these areas.”