CORPORATE GOVERNANCE IN THE EUROPEAN BANKING SECTOR: SOME REMARKS ON DIVERSITY

Abstract

This work discusses some of the critical aspects of bank corporate governance in the European Union. Enhancing sound corporate governance practices has become one of the major concerns in the supervisory authority’s agenda and one of the critical features to evaluate banks’ stability. The global rethinking about corporate governance rules has translated into a stronger focus on board diversity for EU banks. The existing literature and sound corporate governance practices support the view that different types of board members may bring different capabilities to their banks. Even if board diversity may add complexity to the functioning of the board, the advantages it brings are of utmost importance in the challenging environment banks are facing. This work highlights the fragmentation of the EU corporate governance rules as banks have to comply with 27 sets of different regulations and codes. This complexity should not be ignored, as member states’ specificities, legal systems, and a more general openness to diversity influence the effect reforms may have on banks’ performance and stability.