Is banking any different from other industries?

I returned home recently from a week working with the Global Corporate Governance Forum (an arm of the International Finance Corporation, which in turn is a unit of the World Bank: see www.gcgf.org) in Indonesia, where we delivered a “Training of Trainers” (ToT) programme, aimed at teaching directors of banks to provide Corporate Governance training to others in their sector.

One of the first things that struck me was the calibre and influence of the 23 participants. Most were senior Indonesian bankers, with some from the Philippines and two from the Institute of Directors in Thailand. One introduced himself by telling us his family owned the bank where he was chief executive, another was a respected company director from the Philippines and a third a former director of the Central Bank of Indonesia. The overall awareness of global banking regulation and understanding of corporate governance principles and practice were also impressive.

While we were preparing, one of my fellow faculty members posed a question that made me stop and think: "Are the principles of corporate governance for banking any different from those in other industries?" This raised the further question of whether banks are fundamentally different from other types of business. I think that two aspects do make banks different:

• The first is that every business is connected in some way to at least one bank, and
• Second, unlike most industries, banks conduct a huge amount of business with each other as well as with the rest of the economy, so the failure of any major bank will likely weaken its competitors too.

As a result, if we assume the purpose of good corporate governance as being, in Sir Adrian Cadbury's words 'to align the interests of individuals, corporations and society', I'd argue that the principles of good corporate governance apply in banking as in any other sector - but that they're even more vital in banking. This is largely because of this interconnectedness and inter-dependence. Just think 2008-2009...

With this as a start point, I believe that our GCGF faculty was well motivated to make the ToT week a success. We were well supported with the new 'Governing Banks' Supplement to the usual GCGF corporate governance training manuals. This was the Supplement's first outing, so one of my tasks was to adapt some of the generic presentations to incorporate the banking-related material. While it required long hours and very early mornings of intensive preparation for each day (think ‘Just in Time’ delivery - in a services context!), it all came together. I greatly appreciated the quality of the background information in the Supplement, which meant I did not have to do much of my own research or sourcing of information.

Our teaching faculty consisted of a specialist in adult learning, Mary Jo Larson, who teaches at Columbia University; Sidharta Utama, an experienced director and respected expert in corporate governance in Indonesia, who teaches at Universitas Indonesia and who chairs the Board of Management for the Indonesian Institute of Company Directors; and me.

We were in good company; the participants were largely complimentary at the end of the week; and I for one learned a great deal from the faculty and the attendees!

The key task now is to build on the success and energy for this first programme - supporting the local efforts to spread the training in Indonesia, increasing the reach of the Indonesian Institute, and running further courses while the memories remain fresh. I look forward to all of that.