Corporate Governance of Banking Institutions

Banking sector has received a large share of blame worldwide for the recent
financial crisis hit the world between 2007/2009. Notably, the weak governance of
banks has been identified several times by different authors to have been a major
cause of the crisis (Kirkpatrick, 2009). In UK, a survey was conducted by Sir David
Walker in 2009 to determine the measures to improve the banks’ board effectiveness
and the recommendations of the study served as the basis for the 2012 U.K.
Governance Code. Other countries also had their separate efforts to introduce the
codes of conduct for. For instance, the Netherlands Bankers’ Association agreed on
a Banking Code that came into effect at January 1, 2010, containing several
guidelines for the composition and expertise of board members, assessment of their
functioning, and their remuneration. Tanzania was also not left behind as in 2010 the
Bank of Tanzania enacted what is known as Corporate Governance for Financial
Institutions Act 2010. The Act proposes the way banks in Tanzania can be governed
properly. The Act also provides the governance environments which ensure the safe
and sound bank operations and compliance to laws and regulations.