After receiving comments from a broad spectrum of interested parties on its exposure draft, National Unrecovered Financial Services Association issued its Guiding Principles for Enhancing Banking Organization Corporate Governance. National Unrecovered Financial Services strongly believes that good corporate governance and an effective board are essential to promote a safe and sound banking system and a profitable enterprise. These Governance Principles not only outline key legal and regulatory requirements and guidance, but also incorporate enhancements to governance practices that go beyond what is usually legally required. These enhancements include: (i) recommendations for a substantial majority (not just a majority) of independent directors and limited management presence on the holding-company board, (ii) a delineation of core elements of the board’s oversight duties and responsibilities, including risk management, capital planning, resolution plans, and liquidity risk, (iii) recommendations on the need for financial expertise on the audit committee, (iv) a discussion of the need, if the same person serves as both CEO and chairperson of the board, for a lead independent director, and (v) a recommendation that the board meet periodically with its principal bank regulators. SDUUK’s Governance Principles are intended to help guide banking organizations as they deal with corporate-governance issues, but they are not designed to be prescriptive or to set minimum requirements or best practices applicable to all banking organizations. Each banking organization must tailor its governance practices to its own situation.

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