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LETTER from the Central Bank of the Russian Federation (2019) Relevant in 2018

II. Corporate governance in banks

7. The OECD document defines corporate governance as “the circle of relations between the management of a company, its board of directors, shareholders and other stakeholders<*>. In addition, corporate governance includes systems for determining the goals of the company and the means to achieve them, as well as the development of control mechanisms. Good corporate governance should provide the board of directors and management with appropriate incentives to achieve the goals in which the company and shareholders are interested. It should also encourage effective control, thereby encouraging the company to use its resources more efficiently."

<*>Stakeholders include employees, customers, suppliers, and the public. Due to the unique role of banks in national and regional economies and financial systems, supervisors and governments are also considered stakeholders.

8. Banks are an essential element of any economy. They provide financing for businesses, provide basic financial services to the general public, and provide access to payment systems. In addition, some banks are created to provide loans and maintain the liquidity of companies in difficult market conditions. The importance of banks for the economy of the country is underlined by the fact that banking is a regulated sector of the economy in almost all countries, as well as the fact that banks have access to systems of state guarantees.<*>. Therefore, the existence of an effective corporate governance structure in banks is a matter of extreme importance.

<*>This refers to the deposit insurance system, the use of budgetary funds to eliminate the consequences of banking crises, as well as other forms of direct and indirect use of budgetary funds to maintain the stability of banking systems and compensate bank creditors.

9. In the context of the banking sector, corporate governance includes the way in which the activities of an individual credit institution are managed by the board of directors and management, which affects such aspects of the work of banks as:

Setting corporate goals (including deriving economic benefits for owners);

Management of the current activities of the company;

Taking into account the interests of interested parties;

Ensuring compliance of corporate activities and corporate behavior of banks with the requirements of sound banking practice, current legislation and regulatory framework;

Protecting the interests of depositors (owners of deposits).

10. The Basel Committee has recently developed a number of papers on various topics that emphasize the importance of corporate governance. These include, in particular: "Principles for managing interest rate risk" (September 1997), "Basics of internal control systems in credit institutions" (September 1998), "Improving the transparency of banks" (September 1998) and " Credit Risk Management Principles" (an advisory document issued in July 1999). These writings point out that good corporate governance is based on strategy and methods, including elements such as:

Corporate values, codes of conduct and other standards of good conduct, and the systems used to enforce them;

A clearly defined strategy that allows you to evaluate the success of the entire enterprise as a whole and the contribution of an individual employee;

Clear distribution of responsibilities and powers in terms of decision-making, including a hierarchical decision-making structure, from individual employees to the board of directors;

Mechanisms for interaction and cooperation between members of the board of directors, management and auditors;

Rigid internal control system, including internal and external audit functions, risk management functions independent of business units, as well as other elements of the system of checks and balances;

Specific risk controls where a conflict of interest may be particularly significant, including business relationships with bank-affiliated borrowers; major shareholders; representatives of senior management or persons making important decisions in the company (for example, dealers);

Incentives of a financial and managerial nature in the form of monetary rewards, promotions and other forms of motivation that encourage senior management, line managers and employees to take appropriate action;

Availability of adequate internal and external information flows.

11. The existence of country differences in corporate governance structures reflects the fact that there are no universal answers to questions of a structural nature. In this regard, the unification of the legislative framework of various countries does not seem necessary. Thus, good corporate governance can be practiced regardless of the specific governance structure used by the lending institution. There are four main forms of control that must be incorporated into the organizational structure of any bank in order to ensure compliance with the relevant principles of checks and balances: 1) control by the board of directors or the supervisory board; 2) control by persons not involved in the day-to-day management of various types of bank activities; 3) direct control over various areas of the bank's activities; 4) existence of independent risk management and (internal) audit functions. In addition, it is important that the management team meet the criteria of "fitness and goodwill". The state ownership of the bank contains the potential danger of changing the strategy and objectives of the bank, as well as its internal management structure<*>. As a consequence, the general principles of good corporate governance are also important for public banks.

<*>This refers to the introduction of non-market moments into the strategy, goals and (or) actual activities of the bank, which may also affect the management structure.

Let's take a closer look at the features of corporate governance using the example of banks.

The interest of researchers in the problem of separation of ownership from control and corporate governance practices in banks began to develop in the late 1970s - early 1980s.

In September 1999, the Basel Committee on Banking Supervision published a special document "Improving Corporate Governance in Credit Institutions", which fixed the principles of corporate governance in relation to banks. The principles themselves were developed by the Organization for Economic Cooperation and Development. According to this document, corporate governance in banking organizations is the management of their activities, carried out by boards of directors and senior managers and determining the methods by which banks:

· establish the goals of their business, which include, among other things, the creation of value for bank owners;

Perform daily financial transactions

take into account in their work the positions of stakeholders (employees, customers, the public, regulators and the state);

· carry out corporate actions in accordance with the rules for ensuring the reliability of the banking business and the requirements of regulatory legal acts;

Protect the interests of depositors.

By creating an effective corporate governance system, banks are faced with the need to address many specific issues in addition to those that joint-stock companies operating in the real sector of the economy deal with.

First, the fundamental relationship between owners and managers in the banking business is much more complex than in industry or commerce. This is explained by the seriousness of the uneven distribution of information between various participants in market relations, due to strict regulation by supervisory authorities, the large share of state capital in the banking systems of many countries, and the institution of banking secrecy.

Secondly, to perform the function of financial intermediation, banks need a relatively low share of their own unused funds compared to non-financial companies.

The risk appetite of the banking business is exacerbated by the presence in most countries of mandatory deposit insurance (in the financial literature this is called moral hazard: it is related to the fact that efforts to mitigate the consequences of dangerous actions can increase the likelihood of such actions.

This uniqueness gives rise to a number of problems. One of them concerns the definition of an important fiduciary duty of members of the boards of directors (BD) - the duty of care. Thus, American specialists in corporate governance in banks, Jonathan Macy and Maureen O "Hara, believe that members of the board of directors of banks should equally take care of both the interests of shareholders and the interests of creditors, that is, bank directors should have this responsibility more broader than that of directors of non-financial companies.

Another problem is related to the fact that risk management is coming to the fore in the banking business: it is becoming an essential element of the internal control system in banks. As you know, the Basel Committee on Banking Supervision identifies 12 categories of banking risk: systemic, strategic, credit, country, market, interest rate, liquidity risk, currency, operational, legal, reputational, compliance risk. Inefficient risk management is manifested in their increased concentration per borrower, excessive lending to affiliates and related parties, short-sighted lending policy, insufficient control over the activities of key employees, etc. These phenomena occur in any countries, including highly developed ones: consider the banking crises in the US (mid-1980s) and Japan (1990s) as a result of poor lending policies, and the collapse of the British bank Barings (1995) due to the actions of a trader in securities the papers of Nick Leeson. They are also very characteristic of countries with developing and transitional economies. For example, in the second half of the 1990s in Mexico, 20% of bank loans were made to affiliates and related parties at rates more than four percentage points below market rates and were one-third more likely to default than the rest of the loans. During the same period, Indonesian banks provided "domestic lending" (loans to employees, managers, and directors) more than twice their equity capital. By the beginning of 2002, the volume of non-performing (“bad”) loans in China amounted to $343 billion, according to official estimates, and from $480 to $604 billion, according to unofficial estimates. The share of such loans in the country's gross domestic product reached 44–55 %, it is also very high in other Asian countries, for example, in Malaysia (36--48%) and Thailand (36--41%). Among developed countries, this indicator is highest in Japan (25--26%).

The complexity of the situation with risk management in banks in emerging markets is primarily due to the low level of corporate governance: serious conflicts of interest and their ineffective resolution within the framework of an underdeveloped law enforcement system, inadequate attitude of boards of directors to the problem of risk management within the internal control system (a superficial understanding of the essence of the issue and weak oversight of the work of managers who ensure the functioning of relevant services), deficiencies in information disclosure, the small number of national firms capable of conducting a qualified and independent external audit. In other words, effective banking risk management and sound corporate governance in banks are two sides of the same coin.

The close interrelation of these parties is also manifested in the influence of the quality of corporate governance in the bank on the risk assessment assigned to the bank by potential investors. From the point of view of the latter, inefficient corporate governance in a bank means an increase in its inherent credit, operational and reputational risks and therefore leads to a decrease in the value of its securities. What explains this?

When assessing the solvency of a company wishing to receive a loan, it is necessary to take into account not only the financial performance of the applicant, but also the level of its corporate governance. If a bank fails to ensure that proper principles are observed within its organization, it will not be able to correctly determine the likelihood that, due to a violation of these principles by the borrower, the loan issued to him will be inactive ("bad"). Consequently, credit risk increases. In order not to deal with companies that have become or are likely to become notorious, a bank should pay considerable attention to the state of corporate governance of its counterparties. Of course, such an attitude cannot be expected from a bank that does not consider it necessary to improve its own corporate governance system, so the investor raises the assessment of reputational risk.

The upcoming entry of our country into the World Trade Organization, which implies a gradual liberalization of foreign banks' access to the Russian financial services market, will inevitably lead to increased competition between domestic credit organizations and powerful international banks. According to Russian Finance Minister Alexei Kudrin, foreign banks will receive permission to open branches in Russia in seven to eight years. Thus, Russian banks need to radically improve the quality of the "two-sided coin" described above (risk management - corporate governance). Having achieved this, some of them will be able to withstand the competition and remain independent organizations, while others will receive the maximum price for their shares when selling their business to foreign buyers.

Increasing the level of corporate governance will allow banks to solve the problem of "bad" loans and strengthen the confidence of potential counterparties (depositors, borrowers, clients in foreign exchange and stock transactions). As a result, the distribution of credit resources among non-financial companies will become more rational, which will enable the country's economy to enter the trajectory of sustainable growth. All stakeholders will benefit from the establishment of a proper corporate governance system in the banking sector:

banks will increase the efficiency of their activities;

· the banking system as a whole will attract new depositors, borrowers, investors and other counterparties;

· shareholders of banks will gain confidence in providing protection and increasing profitability of their investments;

· the state will be able to rely on the support of the banking sector in its efforts to strengthen the competitiveness of the national economy and combat fraud and corruption;

· Society as a whole will benefit from the increase in social wealth.

Our attention is focused on three issues: the principles of effective corporate governance in banks, the responsibilities of key participants in corporate relations in the field of banking risk management, methods for assessing the level of corporate governance in client companies. (Annex 4)

In order to achieve maximum investment attractiveness, Sberbank must constantly strive to improve its own corporate policy. That is why the Corporate Governance Code of Sberbank of Russia was issued to help managers.

The purpose of the introduction of this Code is to form and introduce into the daily practice of the bank's activities the appropriate norms and traditions of corporate behavior of Russian business that meet internationally recognized standards based not only on unconditional compliance with legal requirements, but also on the application of ethical business conduct standards common to all members of the business community.

Following these standards is aimed not only at creating a positive image of the bank in the eyes of its shareholders, customers and employees, but also at controlling and reducing risks, maintaining a steady growth in the bank's financial performance and successfully implementing its statutory activities.

The provisions contained in this document have been developed on the basis of the Federal Law “On Joint Stock Companies”, the Charter of the Joint Stock Commercial Savings Bank of the Russian Federation (open joint stock company), the “Concepts for the Development of Sberbank of Russia”, the “OECD Corporate Governance Principles”, the “Code of Corporate Conduct” developed by the Federal Commission for the Securities Market, the "Code of Ethical Principles of Banking", approved by the XII Congress of the Association of Russian Banks.

The priority of the corporate behavior of Sberbank of Russia is respect for the rights and legitimate interests of its shareholders and clients, openness of information, as well as ensuring the efficient operation of the bank, maintaining its financial stability and profitability.

The basis of effective activity and investment attractiveness of the bank is the trust between all participants of corporate interaction. The principles of corporate conduct are aimed at creating trust in relationships arising in connection with the management of the bank.

The practice of corporate conduct of Sberbank of Russia is aimed at providing real opportunities for shareholders to exercise their rights related to participation in the company.

According to the Corporate Governance Code of Sberbank of Russia:

• · Shareholders are provided with reliable and efficient ways to record ownership of shares. Shareholders have the right, at their own discretion, to freely dispose of their shares, to perform any actions that do not contradict the law and do not violate the rights and legally protected interests of other persons, including alienate their shares into the ownership of other persons.
• · Shareholders have the right to participate in the management of the bank by making decisions on the most important issues of the bank's activities at the general meeting of shareholders. Holding a general meeting of shareholders provides the bank with the opportunity to annually inform shareholders about its activities, achievements and plans, to involve them in discussion and decision-making on the most important issues of the company's activities.
• · A shareholder may entrust another shareholder or a third party to represent his interests.
• · Shareholders have the right to participate in the company's profits. In this case, the payment of dividends is carried out within 30 days after the decision is made by the general meeting of shareholders.
• · The practice of corporate behavior of Sberbank of Russia is aimed at ensuring equal treatment of shareholders.
• · Shareholders have the right to regular and timely receipt of complete and reliable information about the bank in accordance with the legislation of the Russian Federation. This right is exercised by including in the annual report submitted to shareholders the necessary information that allows assessing the results of the company's activities for the year, as well as receiving information disclosed by the bank in accordance with the requirements of the law and banking regulations. For greater accessibility of such information and its wider dissemination, the bank will use, along with the usual channels of information, electronic systems (Internet).
• · Sberbank of Russia expects its shareholders to counter-disclose information about the real owners of shares or a group of affiliated persons who make decisions regarding the exercise of rights related to participation in the company.
• · Shareholders must not abuse the rights granted to them. Actions of shareholders carried out solely with the intent to cause harm to other shareholders or the bank are unacceptable.
• · Shareholders must independently consider and evaluate what costs and what benefits the exercise of their rights entails.

Sberbank of Russia is interested in seeing its strategic partners as shareholders, clients who consider equity participation as part of a long-term cooperation program.

The specificity of banking activity lies in the fact that not only the trust of shareholders in the bank's management, but also the trust of customers, investors and partner banks plays an important role in the process of its implementation. In this regard, an important point in the formation of the principles of Sberbank's corporate behavior is to take into account the need to maintain stable, trusting relationships with the bank's customers.

The Bank sees its clients among all population groups, enterprises of all forms of ownership in all sectors of the national economy, credit and other financial institutions, government institutions. The Bank protects the interests of each client, excludes discrimination on political, religious or national grounds.

The Bank adheres to the principle of neutrality in relation to financial and industrial groups, political parties and associations, carrying out its activities in the interests of customers and shareholders.

The Bank conscientiously and reasonably, with the utmost care, fulfills its obligations towards customers and strives to ensure the high quality of the services provided, respectfully, honestly and openly works with the client.

The Bank declares its commitment to and observes the principles of fair competition, active participation in combating the legalization (laundering) of proceeds from crime.

In its activities, the Bank tries to exclude the possibility of providing false and distorted information about its financial position, the activities of the organization, and also guarantees the confidentiality of information about its customers. This information can be used only for the purposes provided for by the current legislation and internal documents of the bank.

The Bank is constantly working to improve the quality of services provided. Timely and carefully considers emerging conflicts and difficulties, resolves claims and complaints from customers.

Disclosure Policy

The Bank tries to ensure the disclosure of information on all material issues of the bank's activities by complying with the requirements established by the legislation of the Russian Federation and regulatory legal acts, as well as by disclosing additional information in the framework of cooperation with rating agencies.

The most complete information is provided to the bank's shareholders during the preparation and holding of the annual meeting of shareholders. The composition of the information provided to shareholders is determined by the requirements of the legislation of the Russian Federation and regulatory legal acts, the provisions of the Bank's Charter and decisions of the Supervisory Board.

The information policy of the bank is aimed at the possibility of obtaining free and easy access to information about it. Channels for disseminating information are selected in such a way as to ensure free and reasonable cost access of interested parties to the information disclosed.

The management and authorized employees of the bank provide information during meetings with investors and shareholders of the company, press conferences, as well as by publishing information in the media, brochures and booklets.

Given the widespread use of electronic communication systems, information is disclosed on the bank's website on the Internet.

Disclosure of information about the bank is characterized by maintaining a reasonable balance between the openness of the society and ensuring the safety of its commercial interests, legislatively enshrined in the principles of banking secrecy.

Taking care of maintaining official, commercial, banking secrecy, the bank assumes an obligation not to disclose confidential information. The obligation to ensure the preservation of confidential information lies with all employees of the bank.

The Bank seeks to limit the possibility of a conflict of interest and the possibility of abuse of insider information.

The bank considers the development of personnel potential as one of the foundations of its long-term, sustainable development. Improving and strengthening the corporate culture in the bank is aimed at creating in each employee a sense of belonging to the fulfillment of the mission of the bank, the strategic tasks facing it.

Sberbank considers the development of human resources as the main condition for fulfilling these tasks. The intensification of the work of bank employees, the mass development of new products and technologies, the expansion of the powers and responsibilities of specialists and middle managers require setting new goals and priorities for the personnel management system. The main objective of Sberbank's personnel policy for the coming years will be to further improve the skills of Sberbank's personnel and create teams of professionals capable of meeting the challenges of the bank's strategic development. The Bank sees the increase in the efficiency of the system of selection, training and placement of personnel, the improvement of the personnel motivation system, and the development of corporate culture as priority areas of personnel policy. The existing system of selecting the most promising graduates of leading higher and secondary educational institutions, providing them with targeted scholarships from the Savings Bank of Russia is combined with the practice of attracting the most trained specialists with work experience in other financial institutions. It is practiced to hold open competitions for filling vacant managerial positions and certain categories of employees. The system of forming a reserve of managerial personnel, especially of the top management, planning the career growth of promising young specialists, and improving the qualifications of personnel is changing significantly. The system of rotation and horizontal movement of the management of the most qualified specialists is being developed. Sberbank creates conditions that allow each employee to realize their creative abilities, get the opportunity to improve their professional knowledge, understand the system for evaluating the results of their work and the prospect of promotion.

In order to retain promising personnel, Sberbank maintains the level of remuneration of the Bank's specialists in line with the level of remuneration in leading Russian banks and financial companies, and introduces systems of differentiated remuneration based on the final result of work. The development of the corporate culture at Sberbank is aimed at creating in each employee a sense of belonging to the Bank's achievement of high results, fostering a team spirit, creating a team of like-minded people aimed at achieving the set strategic goals.

The Bank pays constant attention to the issues of protecting the health of employees and the safety of their work.

When hiring, the possibility of discrimination on political, religious, national and other motives not related to professional qualities is excluded.

The management bodies of the Savings Bank are trying to unconditionally follow all the developed corporate governance standards, trying to improve them, and are confident that this increases the efficiency of the bank, maintains and strengthens its image and reputation, and contributes to the development of strong business relationships with customers, partners and shareholders.

Audit in the system of monitoring the quality of corporate governance in banks

Annotation: One of the conditions for increasing the attractiveness of banks is the information transparency of activities and the possibility of its high-quality monitoring. This paper considers audit as one of the ways to monitor the quality of corporate governance, assesses the state of domestic audit of the quality of corporate governance in banks and analyzes the prospects for its development.

Keywords: corporate governance, commercial bank, corporate environment, audit, monitoring

abstract: The information transparency and the possibility of qualitative monitoring are the conditions of higher appeal in banking. The audit of the corporate governance quality, the conditions of national corporate governance quality audit system and the prospects of their development are scoped in the article.

keywords: corporate governance, commercial bank, corporate environment, auditing, monitoring

Konyagina Maria Nikolaevna
Candidate of Economic Sciences, Associate Professor
St. Petersburg State University of Economics and Finance

Introduction

In a changing world against the backdrop of more frequent crisis phenomena, the creation of adaptive systems of corporate relations with the participation of banks becomes the key to the survival of credit institutions, the stability of the banking system and the successful development of the economy. At the same time, the processes of managing corporate relations in almost all Russian banks and their regulation, as well as the formation of conditions and infrastructure for their effective development, require improvement, and the experience gained in this area needs to be systematized and evaluated. One of the important elements of the banking infrastructure is the system for monitoring the processes taking place in the banking sector of the economy. A relatively new concept in this area was the assessment of the quality of corporate governance in Russian banks, the Bank of Russia became the main initiator of the introduction of banking into domestic practice. Thus, in 2005, a document was prepared "On modern approaches to the organization of corporate governance in credit institutions", and in 2007 - 2 letters "On the list of issues for credit institutions to assess the state of corporate governance" and "On curators of credit institutions", which are designed to intensify the process of independent improvement of corporate governance practices by commercial banks.

The reason for attention to the quality of corporate governance in banks is that credit institutions for many centuries, and especially in the modern world, have been an attractive platform for abuse. A potential source of the risk of abuse are managers, owners, as well as employees of financial intermediary companies. Thus, the main elements of the internal corporate environment of the bank are a possible source of risk of abuse in transactions with its highly liquid assets. And since commercial banks perform special tasks for the smooth functioning of the national and regional economy, it is necessary to create mechanisms for monitoring and controlling the quality of corporate governance, which can not only detect abuses and conflicts of interest, but also prevent them.

System for monitoring the quality of corporate governance in banks

Traditionally, we divide control into internal and external. Due to the fact that a credit institution is objectively interested in reducing the risk of abuse, usually its internal corporate control regulations and the already mentioned regulatory documents of the Bank of Russia provide for the minimum necessary procedures for managing such risk. Here we are talking about the Code of Corporate Conduct and other internal regulations that can be approved in banks implementing corporate governance. However, these control measures cannot be called sufficient, since they take into account the interests of only some elements of the internal and external corporate environment and do not allow foreseeing the possibility of developing a conflict of interest that adversely affects the results of the bank's activities. Firstly, information on assessing the quality of corporate governance is not public, which does not take into account the interests of partners, society in the broad sense of the word, and, in some cases, employees of a credit institution. Secondly, the results of these procedures are subjective, since the assessment of the quality of corporate governance is carried out by the bank independently, and information based on the results of the assessment is provided to the Bank of Russia only at the request of the regulator. Such corporate control cannot be called sufficient.

To build a full-fledged system for tracking the quality of corporate governance (Fig. 1), it is necessary to conduct an independent assessment of its quality in credit institutions. Moreover, specialists conducting such an assessment must have a special education, their activities must be subject to certification. In addition, such specialists must undergo periodic certification. The results of such an assessment, by analogy with the audit of financial statements, should be public, as they affect the public interest.

Figure 1. System of corporate governance quality control tools

The internal audit of corporate governance is a bank tool that helps to improve the efficiency of the bank's activities and its transparency. To help commercial banks, the Bank of Russia has developed a list of questions for credit institutions to assess the state of corporate governance. Thus, a commercial bank must independently assess the distribution of powers between governing bodies, the organization of the activities of the board of directors (supervisory board), approval of the strategy for the development of the activities of a credit institution and control over its implementation, coordination of banking risk management, relations with affiliated persons, coordination of disclosure of information about a credit institution, monitoring of the internal control system and some other issues.

Audit of corporate governance, as an external tool for its monitoring, is a comprehensive assessment of the existing corporate governance practices in the bank, aimed at identifying its strengths and weaknesses in accordance with the specific features of the bank. The latter are understood as the stage of the life cycle in the development of the bank, its strategy, the required degree of control by the main owners and the place of the bank in their investment interests, the need and forms of external financing of investments. Each of these factors has a direct impact on the bank's corporate governance model. At the same time, the bank must take into account the structure of its resource base, in particular capital, and accordingly find a balance of interests between financially interested parties.

Audit of corporate governance through the identification of weaknesses, errors and thanks to the professional judgment of external auditors helps the bank to improve the internal corporate environment and, as a result, form the optimal corporate governance structure for it, taking into account the above factors. It allows taking into account the specific features of the bank and the strategic alternatives that exist for it. Based on the prepared recommendations of a professional auditor of corporate governance, taking into account the level of their significance, a comprehensive plan can be formed to synthesize the optimal internal corporate environment.

It is important to note that an external audit of the quality of corporate governance is more common in countries that are characterized by a dualistic concept and a continental insider model of corporate governance with their inherent consideration of the interests of the owners of the organization and its employees, as well as an enlarged ownership structure. The conclusion about the external audit of the quality of corporate governance is focused on a narrow circle of users, rather than a circle of users, for example, corporate governance ratings, common in countries with a monistic concept and the Anglo-Saxon outsider model of corporate governance. If the corporate governance rating is aimed primarily at obtaining by the bank an external and independent published assessment of the quality of corporate governance, which can be used for comparison with similar banks and PR support, then corporate governance audit is a non-public tool that helps to improve the efficiency of its activities.

A striking example of practice in the insider model is the approach to assessing the quality of corporate governance provided by the German Corporate Governance Code. According to clauses 7.2.3 and 7.2.4, part 7 of the German Corporate Governance Code, corporate governance audit is not a separate procedure. However, the Supervisory Board must agree with the auditor that the latter informs him or makes a special note in the audit report, in which he indicates violations of the Code provisions noticed by him during the audit. In the future, the auditor takes part in meetings of the Supervisory Board dedicated to annual reporting and reports on the most important results of his audit. This is precisely the approach to testing the quality of corporate governance and presenting its results in countries with an insider model of corporate governance.

Methodological aspects of corporate governance quality audit

Modern Russian commercial banks today are characterized by an enlarged ownership structure. Therefore, most likely, the development of monitoring the quality of corporate governance is most organically carried out along the path of the insider model of corporate governance. The latter requires methodical study. So for a qualitative assessment in the framework of the audit of corporate governance, the following must be studied without fail:

1) the structure of the share capital and the degree of observance of the rights of shareholders;
2) the work of management and control bodies in the bank;
3) disclosure by the company of information about its activities and ensuring its reliability.

As part of the audit of corporate governance, a methodology should be implemented that contains the following steps:

Stage 1. Obtaining information about the initial state of corporate governance in the bank based on a special questionnaire, internal documents and public sources.

Stage 2. Interviews with the bank's management, major shareholders, portfolio investors (if any) in order to understand and clarify the bank's strategic opportunities, interests, goals and alternatives, their relationship with the corporate governance system.

Stage 3. Comprehensive analysis of all components of the corporate governance system in the bank.

Stage 4. Comparative analysis of corporate governance practices in the bank with practices in similar foreign and Russian banks.

An analytical report based on the results of a corporate governance audit may include the following elements:

• description of the economic and managerial meaning of the components of corporate governance practices for the bank;
• assessment of the conformity of the implemented practice with the best standards in this area;
• assessment of the significance of certain components of corporate governance in terms of the requirements of rating agencies;
• comparison with corporate governance practices in similar banks;
• recommendations for the preparation of a comprehensive plan for the gradual improvement of corporate governance practices.

In the process of conducting an audit of corporate governance, the content and sequence of a set of works to improve corporate governance in the bank is determined. The audit is carried out on the basis of its medium-term and long-term strategy, a combination of their various options, the interests of the main owners, legal requirements, financial infrastructure institutions (for example, listing requirements of stock exchanges, rating agencies), and the position of priority groups of investors. Since the position of the main owners should be decisive in developing the strategy of the bank, then, as a rule, it is the key one in formulating the goals of the audit and the tasks planned to be solved with its help.

Audit of corporate governance is a promising area that can help banks move to a new qualitative level of financial and economic relations and achieve the goals of the bank's corporate strategy. However, this direction is not without problems. So, for example, to implement this area of ​​monitoring and quality control of corporate governance, qualified specialists in this area are required. At the same time, the higher education system does not prepare them yet. The existing system of additional education in the country is also not yet ready to provide training for corporate governance auditors. All this testifies to the lack of formation of the domestic banking infrastructure and, as a result, the impossibility of forming a corporate governance system at the state level.
The processes of globalization and the gradual blurring of the boundaries between insider and outsider corporate governance models, when companies, including banks, include their shares in the listings of different countries are increasingly practiced, lead to a desire to unify corporate governance standards in countries and companies. In light of the growing awareness of the importance of good corporate governance, in 1999 the Organization for Economic Co-operation and Development (OECD) developed a set of standards and guidelines for corporate governance. Today, there is still no single model of good corporate governance. At the same time, work carried out in OECD member countries has revealed some common elements that formed the basis of the corporate governance principles revised in 2004:

I. Providing a basis for an effective corporate governance structure.
II. Observance of the rights of shareholders and the basic functions of the owners.
III. Equal treatment of shareholders.
IV. The role of stakeholders in corporate governance.
V. Information Disclosure and Transparency.
VI. Duties of the board of directors.

The OECD Corporate Governance Principles are highly influential. Even in developing countries, codes incorporate elements of British and American corporate governance practices, driven by the need to compete for foreign capital. The adoption of the basic principles of corporate governance is a positive trend in any society. However, caution is needed in accelerating the implantation of elements of the outsider model in countries with an insider corporate governance model, as well as in developing countries.

Many countries reproduce the British Combined Code. However, due to the emphasis on board independence, the latest version may not be suitable for emerging markets, where very often companies have only one main owner. In such countries, it is hardly appropriate to insist on the appointment of a senior independent director and compliance with the requirement to hold meetings of the board of directors without management staff. Corporate governance codes in emerging markets should aim at more fundamental principles, such as full and timely disclosure of information or assurances that shareholders who own a controlling stake do not harm minority shareholders. In some emerging markets, where awareness of corporate governance is low and society does not pay much attention to the activities of companies, the preference for regulating the quality of corporate governance should be given to legislation, rather than codes, which are not mandatory to comply with.

Conclusion

Today, the state of the domestic banking infrastructure is far from perfect. In particular, the corporate governance quality control system is just beginning to develop. As already noted, the creation of a suitable corporate infrastructure, in particular a system for monitoring the quality of corporate governance in banks, requires trained, qualified and certified specialists. The system of educational institutions that are ready to train, evaluate and recertify such specialists has not yet been created in Russia. The system of corporate governance quality control tools does not work effectively: ratings are not popular, and regulatory and internal control are carried out formally. The question arises: what are the reasons for this situation? The main answer to it is the lack of transparency in the activities of banks. The domestic banking system still functions contrary to the central principle of corporate governance of the OECD - "Disclosure and transparency". The main problem in this matter is the purpose of creating financial statements. In Russia, the main goal of preparing bank statements is to satisfy the requirements of the Bank of Russia, and not to reliably inform owners, investors, and creditors. This situation is fundamentally wrong, which has been repeatedly emphasized by specialists from the Bank of Russia and independent experts. The regulator is interested in transparent activities of banks and reliable reporting that objectively reflects the state of affairs in a credit institution. Financial statements should be focused on the investor, who is not always a professional economist. Therefore, the information presented in it should be understandable to a wide range of users.
The second problem that causes the current situation is the underestimation of the place of mutual corporate control in the development of corporate relations between the bank and stakeholders. The society does not understand how corporate governance quality control tools can be used, and banks do not see the current need for corporate governance quality control and reporting on it.

It should be noted that in subsection 8 "Coordination of disclosure of information about a credit institution" of the List of issues for credit institutions to assess corporate governance from the Letter of the Central Bank of Russia dated February 07, 2007 No. No. 11-T laid the foundation for the disclosure of information on the state of corporate governance. However, the vagueness of the positions of the joint stock legislation regarding the formation of the concept and model of corporate governance in Russia did not make it possible to outline a clear framework for the disclosure of such information. So, in accordance with paragraphs. 8.1 - 8.3 of this List, decisions on disclosure of information and the format of disclosure are determined by the administration of the bank. Clause 8.4 at the same time assumes the possibility of conducting an external audit of the quality of corporate governance. But there is still no clarity on who and how submits an analytical report on the quality of corporate governance in the bank.

However, such liberalism cannot be regarded as an unambiguously negative fact. Today, many banks have adopted their own codes of corporate conduct, which should form the basis for the formation of an institutional framework for corporate governance and approaches to information disclosure. Also important is the activation of the positions of domestic influential investors and attention to the opinion of international investors, which will help determine the course of development of corporate governance practices in Russia. After all, it was the opinion of influential institutional investors that formed the basis of corporate governance codes in developed countries, because investors directly influence the activities of corporations, clearly indicating what they expect from the companies in which they have invested.
As the stock market develops, the transparency of the activities of commercial banks increases, which are attributes of civilized market relations, and under the influence of globalization processes, the tools of public control will be determined by the degree of popularity among market entities. Monitoring the quality of corporate governance will become an integral part of the system of corporate relations, replacing regulatory supervision in the field of corporate governance in credit institutions.

www.ipocongress.ru/rus/guide/article/id/86/

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Note: No. state. reg. articles 0421100034/