Symposium on Good Governance and Its Significance in Developing the Banking System Performance
Ramallah – 21 October 2012, The Palestine Institute for Banking and Financial Studies held in cooperation with the Palestine Monetary Authority (PMA) a symposium titled “Good Governance and Its Significance in Developing the Banking System Performance,” with the participation of banking figures including members of boards of directors, executive directors as well as academics and public figures. The symposium aimed to strengthen communication among heads and members of boards of directors and executive directors in banks and enhance their knowledge about good governance, reasons for its inception, its requirements and development. Since good governance is the best means to manage the institution and guarantee its sound development toward securing all the rights of stakeholders, the responsibility for its application rests on members of the board of directors.
Held in Movenpick Hotel in Ramallah, the symposium was inaugurated with a welcoming speech by Mr Basel Taha, Palestine Institute for Banking and Financial Studies Director. In his speech, Taha spoke about the best practices of good governance and its role in buttressing, stabilizing and maintaining the integrity of the banking system by way of commitment to the instructions and guidance provided by the PMA which are compatible with the best international standards. Taha also pointed to the significance of applying good governance in the banks for the purpose of achieving positive results such as increasing funding opportunities, reducing investment costs, and protecting the rights and interests of all relevant stakeholders including depositors, shareholders, staff and investors.
In his word, Head of Board of Directors of Palestine Institute for Banking and Financial Studies and PMA Governor Dr Jihad Al-Wazir expressed pride in the true partnership with the Banking System and the related periodical meetings that bring together the boards of directors and general and regional directors of banks operating in Palestine in order to exchange ideas and get acquainted with PMA trends. In addition, Al-Wazir gave a brief on the development of the Palestinian banking system and the huge steps taken by the PMA in carrying out its tasks and responsibilities. He alluded to the necessity of the ongoing application of the principles of good governance toward developing the performance of the banking system.
Al-Wazir said that good governance is an essential pillar in reducing the risks encountered by the banking system. He also highlighted the role of good governance in establishing a sound system that clarifies relations between the board of directors and other relevant stakeholders with a view to promoting optimum institutional management and enhancing transparency and disclosure. Al-Wazir added that the commitment of the banks to the principles of good governance, to the development of the legislative environment, and to the existing operational systems (credit information system, client classification system, bounced cheques system) have had a great impact upon enhancing the performance of banks operating in Palestine. Al-Wazir then spoke about the current international financial crisis and drew the attention of the audience to the significance of good governance in keeping banks operating in Palestine immune to the crisis.
Moreover, Al-Wazir stated that the PMA kept the banking system safe from political polarization and its negative effects. He maintained that the PMA was the only official institution that managed to operate in both parts of the country. The PMA has regulated the work of bank branches operating in the Gaza Strip and discharged its supervisory responsibility for protecting clients’ deposits. In addition, the PMA has always been keen to exercise the best international practices in combating corruption and money laundering, with testimonial proof to this from the IMF and World Bank. Al-Wazir concluded that the PMA has overseen the cash transfers of all banks operating in the Gaza Strip.
Mr Riyad Abu Shehadeh, Director of Inspection and Supervision Department at the PMA, gave a presentation on the principles of good governance in Palestinian banks. He demonstrated that the good governance manual in Palestine is consistent with the standards and principles issued by the Organization for Economic Cooperation and Development (OECD) and compatible with the principles issued by Basel Committee on Banking Supervision (BCBS). He stressed that the PMA has been keen on adopting the best international standards issued by the BCBS. He added that the PMA has issued instructions concerning the management of credit-, operational- and liquidity risks, financial stress, combating money laundering and other issues. Abu Shehadeh presented also the most frequently asked questions posed to members of boards of directors and the exemplary answers to them within the framework of the nine principles of good governance provided for in the Good Governance Manual. At the end of his presentation, Abu Shehadeh responded to the queries of participants. The symposium was part of a series of symposia and workshops organized by the Palestine Institute for Banking and Financial Studies in cooperation with the PMA with the view of disseminating and enhancing banking culture, and developing and protecting the banking system performance in Palestine.