http://www.oecd.org/dataoecd/48/45/37180641.pdf this is the link of the pdf not responding.

Corporate governance Disclosure and transparency Transparency is essential to risk assessment Disclosure and transparency are the partners of good governance. They demonstrate the quality and reliability of information -- financial and non-financial-provided by management to lenders, shareholders, and the public. Why disclosure and transparency matter

Empirical evidence indicates that high standards of transparency and disclosure can have a material impact on the cost of capital. Reliable and timely information increases confidence among decision-makers within the organization and enables them to make good business decisions directly affecting growth and profitability. Information also affects decision makers outside the entity--shareholders, investors and lenders-- who must decide where and at what risk to place their money. The information a company provides should show decision-makers and outside interests whether and to what extent corporations meet legal requirements. Disclosure helps public understanding of a company's activities, policies and performance with regard to environmental and ethical standards, as well as its relationship with the communities where the company operates. Disclosure and transparency, as well as proper auditing, serve as a deterrent to fraud and corruption, allowing firms to compete on the basis of their best offerings and to differentiate themselves from firms who do not practice good governance. Research has demonstrated that disclosure and transparency also enhance stock market liquidity.

Essential features Disclosure should include material information - information whose omission or misstatement could influence the economic decisions taken by the users - on: Company objectives

Major share ownership and voting rights Members of the board and key executives Governance structure- in particular the division of authority between shareholders, management and board members

The company's financial and operating results (Audits should be conducted by an independent auditor in order to provide an objective assurance that the financial statements have been properly prepared and presented) Material issues affecting employees and other stakeholders Managerial compensation Related party transactions Forseeable risk factors

http://www.iccwbo.org/corporate-governance/id3081/index.html

KEY GOVERNANCE POLICIES AND PROCESSES Manual on Corporate Governance The Bank has adopted its own Manual of Corporate Governance, which integrates leading principles and practices on good corporate governance. In 2009, the Board approved the updated version of the Banks Manual on Corporate Governance, upon endorsement of the Corporate Governance Committee.

Policy on Conflict of Interest The Banks Directors, officers, and employees should not use their position to profit or gain some benefit or advantage for themselves and/or their related interests to the detriment of the Bank. They are mandated to immediately disclose any involvement in material conflict of interest and not to participate in the decision-making process relating to the transaction.

Related Party Transactions All related party transactions are entered into at arms length. These transactions are made and entered into substantially on the same terms and conditions as transactions with other individuals and businesses of comparable risks that go through the process set forth in the Banks Purchasing Guidelines. The Bank has also adopted the Procedural Guidelines for Monitoring Related Party Transactions, as approved by the Board of Directors.

Alternative Dispute Resolution System

The Bank continues to build harmonious relationship and achieve mutual respect with its stockholders and other parties to whom it may have obligations or with whom it may contract. In case of conflict or controversy between the parties, the Bank recognizes and adheres to the belief that the same may be settled through alternative dispute resolution than traditional and tedious court action. This preference to alternative dispute resolution is expressed in its revised Manual on Corporate Governance. back to top

Compliance Program The Bank adheres to external rules and regulations especially those issued by the BSP, SEC, PSE, Philippine Deposit Insurance Corporation (PDIC), Anti-Money Laundering Council (AMLC), and other regulatory agencies. The Compliance Unit, the Office of the Corporate Secretary, and the Banks various units, are responsible for ensuring compliance with regulatory enactments, statutes or circulars, and other requirements of these regulatory agencies. Among others, the Bank meets the requirements of the BSP on Capital Adequacy, Asset Quality, Management, Earnings, Liquidity and Sensitivity to Market Risk (CAMELS), and the Capital Adequacy Ratio (CAR). The Bank, as a listed company, conforms as well to the guidelines in securities dealings and other requirements of the Securities Regulation Code (SRC). The Bank has complied with the requirement of the SEC on one time submission of its Corporate Governance Self Rating Form as of July 31, 2003. The self-rating form is aimed at measuring the Banks compliance with its Manual of Corporate Governance Manual. On 29 January 2010, the Chief Compliance Officer issued and submitted to the SEC and the PSE a certification on the Banks compliance with its said Manual.

Continuous Disclosure and Transparency The Bank considers timely and fair disclosure of material information relating to the Banks operations as crucial for the protection of shareholders rights. The Bank is compliant with regulations on disclosure requirements. In

addition to its financial statements, the Bank also submits other periodic and various reports required under applicable laws and regulations. The Bank submits current reports to the SEC and the PSE, as necessary, to make full, fair, accurate and timely disclosures to the public on material facts or events that may reasonably be expected to affect investors decision in relation to the Banks securities. The Bank conducts annual stockholders meetings and adheres to the procedural requisites of the SEC in holding such meetings. Prior to stockholders meeting, the Bank submits Definitive Information Statement (SEC Form 20-IS) and proxy statements to the SEC before its dissemination to its stockholders. Included therein are written notices of stockholders meeting, which set the date, time, place of the event, matters to be transacted therein, as well as information for appointment and validation of proxies. The Definitive Information Statement is disseminated to all stockholders of the Bank at least two (2) weeks prior to the scheduled meeting. In employing proxy solicitations, the Bank abides by the provision of the Corporation Code as well as with the requirements set by the SEC as to form and procedures. back to top Audit System Directly reporting to the Boards Audit Committee, the Banks Internal Audit Division provides reasonable assurance to the Board, Senior Management, and its stockholders that the Banks risk management activities are effective. This involves providing assurance that Banks key organizational and procedural controls are effective, appropriate, and complied with. It also conducts special administrative investigations when required to do so pursuant to the Banks Code of Conduct. The Division has its own charter which directs performance of its functions. The Internal Auditor reports to the Audit Committee. The Bank engages the services of an independent external auditor, who examines the financial statements of the Bank in accordance with generally accepted auditing standards and expresses its opinion on the fairness of its presentation upon completion of such examination.

Securities Dealing The Bank upholds transparency and integrity in trading in its securities. It has adopted a Trading Guidelines and Blackout Policy that aims to apprise

and to ensure compliance by all members of the Board of Directors, officers, and employees (otherwise known as Covered Persons) of the Bank with their obligations under the SRC and other securities rules and regulations relating to the trading or dealing of the Banks securities. Covered Persons who have access to or are made aware of material non-public information are disallowed from trading or selling Bank issued securities for a pre-determined period as stipulated in the Banks Policy. back to top Anti-Money Laundering Efforts The Bank complies with the requirements of the Anti-Money Laundering Act. The Bank has its own programs and procedures to support antimoney laundering efforts of the BSP, AMLC, and other regulatory agencies of the government. The Bank adheres to its Board-approved Anti-Money Laundering Manual, which provides an easy access to laws and regulations pertinent to antimoney laundering, guidelines on know-your-customer (KYC) requirements, the Banks anti-money laundering training programs, and other relevant information. The Banks Anti-Money Laundering Committee evaluates, investigates and determines the eligibility of transactions reported as suspicious prior to submission to the AMLC. Ethical Standards The Banks philosophy for corporate governance extends beyond prescribed mandates and obligations. It believes good corporate governance demands not only compliance with rules but adherence with their spirit and principles. The Banks Code of Conduct outlines the expectations of and standards for employee behavior and ethical conduct, as well as the systems used to ensure compliance therewith. The Bank trusts that its ethical standards also influence effective operations and services to the general public. Guided by its Code of Conduct, the Bank has consistently conducted its business in accordance with its pledged values to its other stakeholders, thereby creating goodwill in the industry.

http://www.unionbankph.com/index.php?option=com_content&view=article&id=1903&Ite mid=749 IAS 30 DISCLOSURES IN FINANCIAL STATEMENTS OF BANKS AND SIMILAR FINANCIAL INSTITUTIONS

HISTORY OF IAS 30 April 1987 Exposure Draft E29 Disclosures in Financial Statements of Banks Exposure Draft E29 was modified and re-exposed as Exposure Draft E34 Disclosures in Financial Statements of Banks and Similar Financial Institutions IAS 30 Disclosures in Financial Statements of Banks and Similar Financial Institutions

July 1989

August 1990

1 January 1991 1994 December 1998 18 August 2005

Effective date of IAS 30 (1990)

IAS 30 was reformatted IAS 30 was amended by IAS 39 Financial Instruments: Recognition and Measurement, effective 1 January 2001 IAS 30 is superseded by IFRS 7 Financial Instruments: Disclosures effective 1 January 2007 RELATED INTERPRETATIONS

Issues Relating to This Standard that IFRIC Did Not Add to Its Agenda AMENDMENTS UNDER CONSIDERATION BY IASB

None SUMMARY OF IAS 30

Objective of IAS 30 The objective of IAS 30 is to prescribe appropriate presentation and disclosure standards for banks and similar financial institutions (hereafter called 'banks'), which supplement the requirements of other Standards. The intention is to provide users with appropriate information to assist them in evaluating the financial position and performance of banks, and to enable them to obtain a better understanding of the special characteristics of the operations of banks. Presentation and Disclosure A bank's income statement should group income and expenses by nature. [IAS 30.9] A bank's income statement or notes should report the following specific amounts: [IAS 30.10]

interest income interest expense dividend income fee and commission income

fee and commission expense net gains/losses from securities dealing net gains/losses from investment securities net gains/losses from foreign currency dealing other operating income loan losses general administrative expenses other operating expenses.

A bank's balance sheet should group assets and liabilities by nature and list them in liquidity sequence. [IAS 30.18] IAS 30.19 sets out the specific line items requiring disclosure. IAS 30.13 and IAS 30.23 include guidelines for the limited circumstances in which income and expense items or asset and liability items are offset. A bank must disclose the fair values of each class of its financial assets and financial liabilities as required by IAS 32 and IAS 39. [IAS 30.24] Disclosures are also required about:

specific contingencies and commitments (including off-balance sheet items) requiring disclosure [IAS 30.26] specified disclosures for the maturity of assets and liabilities [IAS 30.30] concentrations of assets, liabilities and off-balance sheet items [IAS 30.40] losses on loans and advances [IAS 30.43] general banking risks [IAS 30.50] assets pledged as security [IAS 30.53].

http://www.iasplus.com/standard/ias30.htm

THE IMPORTANCE OF CORPORATE GOVERNANCE OF BANKS AND CHARACTERISTICS OF ASIAN BANKS

11. Banks accept money largely in the form of deposits from the general public (i.e. depositors). The nature and size of deposits varies considerably, ranging from large-lot corporate deposits to a number of small deposits in which members of the general public who do not necessarily have enough knowledge of financial products entrust their everyday savings. Banks lend money that is in effect borrowed from these depositors, and the failure of banks could result in a monetary loss for the depositors with significant consequences for the economy. The interests of depositors should be protected, and for this reason, amongst others, the Task Force believes that corporate governance of banks, or the importance of the corporate governance of banks, differs from that of other companies and therefore needs special attention. The boards and management of banks have to pay more attention to the interests of
1

these non-shareholding stakeholders (i.e. depositors) compared to non-financial firms . Other reasons why the Task Force believes that corporate governance of banks differs and needs special attention include the following: Shortcomings in corporate governance of banks, if widespread, can destabilise the financial system and pose systemic risks to the real economy (White Paper #57). Banks determine which end-users receive financial resources and provide a means of payment. They also serve as a tool for the execution of monetary policy;

 Banks need to be perceived as both accountable to depositors and credible (i.e. they need to protect themselves against reputation risks) in order to manage the potential risk of a run on bank deposits. Banks are not free from the potential risk in which they suddenly become insolvent even if their assets are sound because of their high debt-

POLICY BRIEF ON CORPORATE GOVERNANCE OF BANKS IN ASIA OECD 2006

18 PART I.

equity ratio and the difference in maturity between liabilities (most deposits are available to depositors on demand) and assets (e.g. longer term loans). Moreover, the quality of banks main assets (loan portfolio) is often rather opaque to outsiders compared with those of non-financial firms; Banks and/or depositors frequently have access to government-sponsored safety nets such as deposit insurance schemes and the provision of liquidity by the central bank. These measures may reduce the incentives for the public (e.g. depositors) to monitor banks. They can change the behaviour of banks towards taking more risk (i.e. moral hazard), and, furthermore, banks can often escape the consequences of improper action for a prolonged period thanks to the safety nets. Poor corporate governance of banks in such circumstances may increase the probability of bank failure leading to high costs for taxpayers; and In addition to the usual institutional constraints that affect all firms, banks are subject to numerous prudential regulations. One can not discuss corporate governance of banks without considering the banking regulations with which banks have to comply. Securing (i) appropriate governance of supervisory institutions (regulatory governance), and (ii) efficient regulation, is extremely important to ensure sound corporate governance of banks in general. 12. Discussion about corporate governance of banks in Asia needs to take into account a number of factors specific, if not exclusively unique, to the region. For example: Reflecting the varying legal, economic and cultural backgrounds in Asia, corporate governance practices are similarly diverse (White Paper #33-34); While most Asian jurisdictions have substantially revamped their corporate governance laws, regulations and standards in recent years, challenges arise in their implementation and
2

enforcement . Reflecting the relatively short history of development in the region, many Asian jurisdictions do not sufficiently have in place the institutional infrastructure (e.g. sufficient resources, experience, focus, and know-how) necessary for effective enforcement. Policy makers should be aware that sound corporate governance of banks cannot be developed effectively without tackling the institutional constraints and weaknesses; and Asian banks play a dominant role in regional finance. Capital markets in many Asian economies are not yet as mature as in many market-oriented countries. The failure of corporate governance of

POLICY BRIEF ON CORPORATE GOVERNANCE OF BANKS IN ASIA OECD 2006

PART I - 19

banks in Asia has resulted in more serious economic consequences than in other regions (e.g. 1997 Asian crisis).

Notes

It is true that non-financial firms also have creditors (and even banks have creditors other than depositors), but the interests of depositors should be treated with specific careful attention by the boards and management compared to other creditors, because the depositors entrust their money in the form of deposits that can be withdrawn at short notice and they represent a major component of the balance sheet.

In this respect reference is made to the 2006 Stock-take Report by the Asian Roundtable on Corporate Governance (forthcoming).

Corporate Governance & Banks

In banking parlance, the Corporate Governance refers to conducting the affairs of a banking organisation in such a manner that gives a fair deal to all the stake holders i.e. shareholders, bank customers, regulatory authority, society at large, employees etc. Why corporate governance in Indian banks : The system of corporate governance is important for banks in India because, majority of the banks are in public sector, where they are not only competing with one another but with other players in the banking system as well as in financial services system including Financial Institutions, Mutual Funds and other intermediaries, in a new environment of liberalization and globalization. Further, with restrictive support available from the Govt. for further capitalization of banks, many banks may have to go for public issues, leading to transformation of ownership. Corporate Governance and day to day management: Corporate Governance is different from day to day management of a bank, which is the basic responsibility of the operating management i.e. team consisting of the Chief Executive & top management functionaries supported by the operating staff. Corporate governance on the other hand, is to create an environment to help the operating management to enhance the stake-holders' value. Scope of Corporate Governance : Corporate governance covers a variety of aspects such as protection of shareholders' rights, enhancing the shareholders' value, issues concerning the composition and role of the Board of directors, deciding the disclosure requirements, prescribing the accounting systems, putting in place effective monitoring mechanism etc. Present management structure of public sector banks in India : The present structure includes Board of Directors (having Govt., RBI and shareholders nominees), Management

Committee (having Govt. and RBI nominees), Audit Committee of the Board (having responsibility of ensuring the efficacy of the entire internal control and audit functions) and other advisory committees constituted by the Board. The Chairman is assisted by one whole time director and both of them are appointed by the Govt. Parameters to judge the standard of corporate governance : There are a number of parameters on the basis of which the level of corporate governance can be judged for a banking organisation. It includes the suggested model code for best practices, preferred internal system, recommended disclosure requirements including the level of transparency, role of Board of directors and committees, reporting system to the Board of directors, policies formulated by the Board and monitoring of performance. Important aspects of corporate governance :The following aspects require special mention while judging the standard of corporate governance in a banking institution: a: Constitution of the Board of directors : b: Transparency c: Policy formulation d: Internal controls e: Committees of the Board Developments concerning Corporate Governance in Indian banking : By fixing prudential standards, the regulators can improve the corporate governance and RBI has already taken a no. of steps during the recent years to enhance the usefulness of good corporate governance. However, there is lot, which the banks themselves have to do, since adherence to prudential norms is the minimum level of compliance and banks have to achieve higher standards for good governance. The success of corporate governance lies in minimising the regulatory norms and adoption of voluntary codes.

http://bankingindiaupdate.com/corporategovernance.htm