Cost and benefit analysis regarding the Internal Governance Guidelines

Background

1. The European Banking Authority (EBA) made a large scale review/update of all internal governance principles contained in various Committee of European Banking Supervisors (CEBS) guidelines. The focus was mainly on revamping the CEBS Internal Governance Guidelines, currently still included in the "CEBS Guidelines on the Application of the Supervisory Review Process under Pillar 2" (GL 03), as originally published in January 2006) and in the High Level Principles on Remuneration (published in April 2009) and on Risk Management (published in February 2010) and on transposing BCBS principles on corporate governance into EBA Guidelines on Internal Governance.

2. The European Commission has published a Green Paper on corporate governance in financial institutions. Regulatory proposals were published in July 2011.

Overview on the amendments made

3. All former CEBS guidelines specifically aiming at internal governance have been consolidated into the present Internal Governance Guidelines. The internal governance guidelines contained in the Guidelines on the Supervisory Review Process (GL03) have been reviewed and merged with the High Level Principles on Remuneration and on Risk Management. The Guidelines unify the concepts used, integrate the above mentioned High Level Principles into the context of internal governance and take into account weaknesses identified in the financial crisis and developments since the publication of the former CEBS Guidelines (e.g. the updated BCBS guidance on "Enhancing corporate governance for banking organisations").