State Bank of Pakistan Governor Ashraf Mehmood Wathra has said that better corporate governance is a cornerstone of its policy and is a crucial aspect that affects shareholders, depositors and other stakeholders. He was addressing an orientation session on the guidelines on remuneration practices. He said, “These guidelines should be treated as a basic benchmark and the industry can take additional measures by taking into consideration international best practices”.
The interactive orientation session on SBP’s ‘Revised Guidelines on Remuneration Practices’ was organised by the Pakistan Banks’ Association (PBA).
Earlier, Pakistan Banks’ Association Chairman Mohammad Aftab Manzoor in his welcome address said that PBA continues to be engaged with SBP on many banking related matters. He assured increasing and growing engagement with SBP in developing and inculcating the best and fair practices and standardisation of processes.
Addressing the audience, PBA CEO Tawfiq Hussain, said that the banks in the past used different models to reward the employees, but the 2008 global financial crisis compelled the regulators and global standards’ setting bodies to develop risk-based compensation guidelines. He said that SBP has also developed such guidelines which include a market perspective provided by PBA, and are quite comprehensive. He said there are, however, different readiness levels among the banks which is why PBA took the initiative to host this orientation session for all its members. He further said the objective is to bring all banks up to a baseline of understanding. PBA will continue to act as a bridge between the banks, and the SBP for the benefit of the banking industry’s stakeholders.
Partner AF Ferguson & Co (PwC) Faraz Anwer made a presentation on SBP remuneration guidelines. He discussed global shifts, practical actions and challenges in the local context and how regulations are expected to drive strategy, HR and risk sophistication. He elaborated on Material Risk Takers (MRTs) and Material Risk Controllers (MRCs), use of risk-adjusted performance measurement and the applicability across both local and international operations and banking groups.
Faraz also presented on remuneration composition, deferrals and, most importantly, criticality of the role of the board and senior management.
Faraz emphasised that the deadline for the design of the Remuneration Policy is December 2017, and for its implementation, the deadline is December 2018, with quarterly reports to be submitted to SBP. The first report of March 2017 will be due in April 2017.
Held at the State Bank of Pakistan’s Learning Resource Centre, the orientation session was attended by SBP senior management, board members of banks, presidents of banks, COOs, and other senior bank executives.
