Corporate governance

As well as a successful focus on clients and the market, a modern approach to corporate governance helps consolidate and build on the trust that clients, the general public, and the owner have in Cantonal Banks.

The Cantonal Banks’ success is due in part to their constant attention to governance issues. This helps them minimize the risk of financial or reputational mistakes and creates a positive setting for their successful onward development. It earns them respect and ensures that each institution is well established in its specific cantonal environment.

Corporate governance issues are particularly important for companies, such as Cantonal Banks, which are fully or partially under public sector ownership but which do business in accordance with the rules and practices of a free and competitive market. Their very particular nature puts them at the intersection between corporate and political governance. Finding the right conceptual balance between the canton as a politically oriented owner and the Cantonal Bank itself as a commercial enterprise, and then putting this concept into practice properly is a complex challenge. Equally importantly, the bank has to be organized so that its regulatory, management and auditing bodies can carry out their functions effectively and interact to provide the best possible support for successful management of the business.

Given these requirements, and especially given the particular nature of autonomous public sector institutions, various issues have to be addressed with regard to a canton’s relationship with its Cantonal Bank, and its expectations of the bank: Who in the cantonal administration performs the owner function? Who sits on the body that chooses the board of directors and the body that approves the annual report and accounts? Who should sit on the board of directors? Should the board reflect the political make-up of the canton, with each party represented proportionally? Should members of the cantonal parliament and/or the cantonal executive sit on the board? What bank-specific and other qualifications should board members have? How many members should there be? How should the board be organized?

There is no single correct answer to these and other relevant questions. Each canton and its Cantonal Bank have to implement the system that works best for them, while always bearing in mind the latest corporate governance requirements. By their very nature, cantonal banks are rooted in their local regions and as such are a positive, living example of Swiss federalism at work. It makes sense, therefore, for each to find the solution that is best for its canton.

The ASCB helps its member institutions do this by highlighting different aspects of corporate governance and discussing these in depth with members. The association sees itself as a forum and a hub for periodic discussion of these crucial matters. Meanwhile, responsibility for the actual implementation of the various aspects of corporate governance rests squarely with the individual Cantonal Banks and individual cantons.

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