Walker review outlines changes to banks

A new review of corporate governance has highlighted changes that needed to be made within banks and large financial institutions.

The Walker Review of Corporate Governance of UK banks recommends strengthening bank boards, making rigorous challenge in the boardroom a key ingredient in decisions on risk and measures.

Recommendations made in the review aim to encourage institutional shareholders to play a more active role as engaged owners of banks and other financial institutions, and improve management skills.

Sir David Walker said: "These proposals are designed to improve the professionalism and diligence of bank boards."

He added that it would be a small price to pay for better governance, if it meant that boards operate in a less collegial way than in the past.

Among the proposals are that board level risk committees should be chaired by a non-executive and that risk committees should have the power to scrutinise and if necessary block big transactions.

In response to the review, the British Bankers' Association chief executive Angela Knight said: "The Walker review is about strong governance: It is about ensuring leadership by boards and proper risk controls across the business in both banks and other financial institutions."

She added that the review was to address the responsibilities of the major investors to look at long-term strategies and not just short-term returns.