Banks will introduce Code of Conduct as of 1 January 2010
On 9 September the Board of the Netherlands Bankers'
Association ("NVB") adopted the Banks Code (the
"Code"). The Code is a form of self-regulation that will,
however, be enshrined in the law (according to the "apply or
explain" principle) as of 2010. The focal points of the
principles in this banking code are the reinforcement of governance
within banks, risk management, audit and remunerations policy
(read: bonus policy).
The Code is an elaboration of the advice given by the Advisory
Committee on the Future of Banks (the "Maas Committee"),
which had investigated the future of banking in the Netherlands
earlier this year. The Maas Committee was established after the
confidence in banks had evaporated due to the credit crisis. The
bonus culture in banks is widely regarded as one of the causes of
the current crisis.
Many principles set out in the Code relate to the way in which
the Supervisory Board and the Board of Directors perform their
roles in the banking sector, whereby special attention is given to
risk management.
Important subjects in the Code include the following:
- The Code contains a moral-ethical statement.
- The Code also contains principles of expertise and
permanent education (bankers' exam). Banks have to give an
active explanation of their policy on this point in their
annual reports. The duty of care for clients is an important
part of the requirements of expertise.
- Furthermore, the Code contains principles for a careful,
controlled and sustainable remuneration policy with attention
for non-financial performance criteria. For members of the
board, the rule is that their variable remuneration - or bonus
- cannot exceed 100% of their fixed income. The Code also
contains a clause that makes it possible to claim back any
variable remunerations that have wrongly been paid out.
The Code applies to all banks that have a banking license
granted under the Dutch Financial Supervision Act. There is no
distinction between activities in the Netherlands or in another
Member State and whether or not the activities are performed by a
branch office.
The Code will enter into force on 1 January 2010. Compliance with
the Code will be monitored by a Monitoring Committee still to be
established. The banking sector will be consulted in order to
determine in what way the Code will be enshrined in the law.
For further information about the Code, please go
to http://www.nvb.nl/.
If you have any questions and/or remarks as a result of the recent
(legal) developments in the credit crisis, you may contact one of
the following persons:
Bart-Adriaan de Ruijter
Tel: +31 20 5506 659
E-mail:
bart.de.ruijter@kvdl.nl
Bart de Man
Tel: +31 20 5506 841
E-mail:
bart.de.man@kvdl.nl
Marcel Willems
Tel: +31 20 5506 679
E-mail:
marcel.willems@kvdl.nl