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BoN ushers in sweeping banking sector reforms, caps board tenure and age

The Bank of Namibia (BoN) has announced sweeping reforms aimed at strengthening the country’s banking sector.

Under the new regulations, the central bank has placed a cap on the number of boards an individual can serve on, years an individual can serve on boards to 10 years and an age limit of 70 years for independent Directors, including the Chairperson.

“In terms of the Determination, a prospective board member at a banking institution or controlling company may not serve on more than two boards at a time. Exceptions will be made for directors who are not in full-time employment or who serve on boards of a banking institution, the banking group, the controlling company or holding company and any subsidiary belonging to the same group which will be counted as one. Other exceptions include educational institutions and other similar bodies,” BoN’s Spokesperson Kazembire Zemburuka said on Thursday.

The reforms which came in effect last year December as part of revised Determination, ushers in new rules for Namibian banking institutions on how to attract and retain top-tier business executives and seasoned experts to provide the necessary oversight and help develop and guide the execution of business strategies.

Persons of Prominent Importance (PPI), previously known as Politically Exposed Persons according to the central bank, will now be subjected to a more rigorous and advanced due diligence on their wealth, business ownership, and other background checks to mitigate any conflicts of interest.

“The new Determination introduces best corporate governance practices, emphasising effective succession planning, skills development, and competencies for those tasked with the leadership of financial institutions,” he said.

“The Determination thus strives to, among other things, ensure that only individuals who are "fit and proper," as determined by the Bank of Namibia, as the regulator and supervisor of banking institutions, are assigned to positions of authority within the boards and management of banking institutions and controlling businesses.”

Commenting on the reforms, BoN Governor Johannes !Gawaxab said effective banking institution governance should not be taken lightly because it directly impacts financial and macroeconomic stability.

“Excessive risk-taking, unethical behaviour, fraud, and mismanagement are just a few examples of how bad practices have led to systemic bank failures worldwide.

“Therefore, the framework is significant because it embeds good corporate governance principles. It also makes it possible for banking institutions to attract the best talent Namibia has to offer and onboard astute leadership teams who will account for the affairs of commercial banks. Ultimately, with good governance, trust and confidence in the financial sector as a whole will be engendered." 

Namibia’s banking sector comprises nine authorised banking institutions, which are categorised as seven commercial banking institutions, a branch of a foreign banking institution, and a representative office.

According to the central bank’s Macroprudential Oversight Committee, Namibian banks have assets worth N$161.4 billion at the end of September 2022.

 

 

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Last modified on Thursday, 19 January 2023 18:17

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