The Financial Services sector has been under scrutiny and heavy public pressure in the past years, denouncing banks for a lack of management discipline and regulation implementation. But there is a key deciding element that can make the difference in a bank’s business model: The right definition of corporate governance. The board should be able to answer key questions to understand what “good” corporate governance actually means.

FINMA and corporate culture

The incorporation of a strong corporate culture, based on the right employee values, drives the urge to prevent any reputational damage, whilst securing a healthy and ethical business.

At FINMA (Eidgenössische Finanzmarktaufsicht), good corporate culture is defined by integrity, ethics and compliance. These core values should affect an entire company and go beyond mere intra-departmental application.

The FINMA 2016 Annual Report states that Switzerland, as the world’s leading private wealth management hub, must protect its financial system from misuse. Also FINMA Chief Executive Officer Mark Branson, has highlighted that “a culture in which bank employees feel personally committed to combatting money laundering” is essential (FINMA Annual Media conference 2016).

Key questions to consider for board members

When assessing their approach to corporate culture, boards should also consider the following key questions:

Leveraging management information

Management boards should look to leverage existing management information (MI) that provides insight into the organization’s culture. With the vast amount of information, the challenge is to effectively filter data for the board. Chairmen and CEOs increasingly demand explicit MI and whistleblowing within the organisation to promote an open culture where employee concerns are raised to higher instances.

A second key element in the MI system is to develop a self-learning organisation which develops an institutional memory through a post mortem of incidents and explanations of decision-making processes.

The ultimate focus areas for a board revolve around the evaluation of corporate culture:

• What is the ROI of your culture?
• How does your corporate culture impact your brand value?
• To which extent can reputational damage affect your brand value?

To build and maintain a healthy corporate culture, we recommend the board to be the driving force behind embedding core organizational values. Particularly relevant are employee risk awareness, correct information management and the nurturing of successful culture-developing activities. With corporate governance properly applied, companies will be better shielded against reputational meltdowns in the years to come.

To read more about this topic, please visit the Deloitte Evolving Board website. 

Alexandre Buga - Partner, Geneva

Alexandre is a certified expert auditor and an auditor approved by the Swiss Financial Market Supervisory Authority (FINMA) to carry out audits of financial institutions and securities brokers. He has worked with a wide range of clients, primarily active in the banking and financial sectors. He has more than 22 years of experience in auditing, consultancy and coordinating important mandates and has worked in France, Russia and Switzerland.

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Stephan Welti - Director, Zurich

Stephan is Head of the Regulatory, Compliance & Legal practice, focusing on the national and international financial services industry. Prior to joining Deloitte, he was Member of the Executive Committee and General Counsel of a leading Swiss Private Bank, following previous roles in that organisation. Before, Stephan has worked at a number of leading business law firms focusing on Banking, Finance and Capital Markets as well as Corporate Law / M&A.

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Sebastien Macaire - Senior Manager, Geneva

Sébastien is a Senior Manager within the Financial Services Audit practice at Deloitte in Switzerland. He has over ten years of experience in auditing and advising large-scale banks and financial intermediaries as well as family offices with a particular focus on financial and regulatory requirements, risk management, corporate governance and restructuration. As an active member of the Deloitte Swiss Centre for Corporate Governance, Sébastien also provides training, tools, coaching and evaluations to governing bodies. He is a Swiss Certified Public Accountant and an acting Master Theses’ juror at the Unimail University of Geneva.

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Chouaa Halabi – Manager, Geneva

Chouaa is a Manager within the Financial Services Audit practice at Deloitte in Switzerland. She has more than five years of experience working in the financial and regulatory audit field for banking clients. Chouaa is an expert on Swiss regulations, corporate governance, compliance issues, AML, risk management, and cross-border banking requirements. She is also a Swiss Certified Public Accountant and an active member of the Deloitte Swiss Centre for Corporate Governance.

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