1. Effective
corporate governance is critical to the proper functioning
of the banking sector and the economy as a whole. Banks perform a crucial
role in the economy by intermediating funds from savers and depositors to
activities that support enterprise and help drive economic growth. Banks'
safety and soundness are key to financial stability, and the manner in which
they conduct their business, therefore, is central to economic health.
Governance weaknesses at banks that play a significant role in the financial
system can result in the transmission of problems across the banking sector
and the economy as a whole.

2. The primary objective of
corporate governance should be safeguarding
stakeholders' interest in conformity with public interest on a sustainable
basis. Among stakeholders, particularly with respect to retail banks,
shareholders' interest would be secondary to depositors' interest.

3.
Corporate governance determines the allocation of authority and
responsibilities by which the business and affairs of a bank are carried out
by its board and senior management, including how they:

• set the bank's strategy and objectives;

• select and oversee personnel;

• operate the bank's business on a day-to-day basis;

• protect the interests of depositors, meet shareholder obligations, and
take into account the interests of other recognised stakeholders;