The 2008 financial crisis had a profound impact on the regulation of financial institutions and their governance. Massive re-regulation occurred at the international, regional (EU), and national levels, touching upon all kinds of financial institutions, including banks, insurers, investment firms, asset managers, and financial market infrastructures. The autonomy of boards of directors in these institutions has been substantially constrained as a result of the new regulatory requirements, which cover their composition, organization, and functioning. Core managerial functions such as risk management, internal controls, and compliance have been reinforced both on supervisory grounds and in practice. Managerial incentives are now subject to extremely detailed provisions based on the belief that distorted incentives contributed to the crisis of many financial institutions, banks in particular. On the whole, corporate governance in financial institutions is regulated to an extent which was unthinkable before the crisis and would be difficult to accept in non-financial firms. Moreover, the governance of different types of financial institutions tends to be regulated in similar ways, but differences remain which need to be analysed so as to understand whether they are justified.
All this briefly explains the origins of this volume and its inclusion in a series dedicated to EU financial regulation. Indeed our focus will be on Europe, but important references will be made to US regulation and to the international principles, such as those stated by the Financial Stability Board and the Basel Committee. Moreover, our analyses will be mainly devoted to financial regulation, but corporate law will also be considered whenever necessary or useful, particularly with regard to the tensions existing between financial regulation and corporate law, and to the nature and extent of the duties of directors and managers of financial institutions. In addition, the ownership structures of banks will be analysed from a legal perspective, together with their impact on the behaviour and performance of the relevant institutions.
Non-legal issues will also be considered with special reference to the conduct of boards and managers of financial institutions either in good times or throughout a crisis. Culture will be analysed as an indispensable complement or substitute for regulation. An interdisciplinary perspective will be suggested for the study of compliance and other issues that are often examined from either a legalistic or abstract viewpoint. A reflection on the role of corporate culture is today emerging both in the law and economics literature and in the activities of supervisors. This volume (p. vi) intends to contribute to the understanding of corporate culture in financial institutions and their governance and supervision also through a series of case studies considering banking and financial failures in a number of EU countries at the time of the recent crisis.
The book was preceded by a meeting on 25 and 26 January 2018 of the International Working Group on Governance of Financial Institutions, established as a joint initiative of the Institute for Financial Law and the Van der Heijden Institute for Company Law within the Business & Law Research Centre of Radboud University Nijmegen, the Netherlands and the Genoa Centre for Law and Finance, University of Genoa, Italy. We thank the Business & Law Research Centre for its sponsorship. We also thank De Brauw Blackstone Westbroek in Amsterdam for hosting the meeting. We are grateful to the distinguished members of the Working Group for their dedication to the project and, in particular, for their contributions to this book as authors. We also thank the invitees to the meeting for providing the members of the Working Group with invaluable comments on their draft chapters.
Last but not least, we acknowledge our gratitude to the editorial team at Oxford University Press, who successfully brought a lengthy and complex project to completion.
The manuscript was completed on 1 July 2018. No account could be taken of developments since that date.