Skip to main content
Version date: 8 July 2015 - onwards

Principle 5: Governance of group structures

In a group structure, the board of the parent company has the overall responsibility for the group and for ensuring the establishment and operation of a clear governance framework appropriate to the structure, business and risks of the group and its entities [Banks that are part of a conglomerate should also take into account the Joint Forum's Principles for the supervision of financial conglomerates (September 2013, available at www.bis.org/publ/joint29.htm). For the purposes of the corporate governance principles herein, the terms "parent company" and "group" signify a financial group.]. The board and senior management should know and understand the bank group's organisational structure and the risks that it poses.

Parent company boards

95. In operating within a group structure, the board of the parent company should be aware of the material risks and issues that might affect both the bank as a whole and its subsidiaries. It should exercise adequate oversight over subsidiaries while respecting the independent legal and governance responsibilities that might apply to subsidiary boards.

96. In order to fulfil its responsibilities, the board of the parent company should:

establish a group structure (including the legal entity and business structure) and a corporate governance framework with clearly defined roles and responsibilities, including those at the parent company level and at the subsidiary level as may be appropriate based on the complexity and significance of the subsidiary;

Back to top