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Case Study

Avantage Reply provides strategic support on governance

FOCUS ON: Case studies,

The client is a major player in the Belgian banking sector offering a variety of services in private banking, asset management, investment banking and asset servicing. As one of the seven Belgian banks that fall under the direct supervision of the European Central Bank (ECB), the client’s goal is to comply with the regulatory expectations and maintain its reputation vis-à-vis its customers as well as the supervisors. However, as an independent group owned by private shareholders, the bank presented certain specificities in its functioning that did not correspond to the current regulatory environment, which in turn, lead to a negative assessment (annual SREP review) by the ECB. In this regard, Avantage Reply has been provided with the task of supporting the client in setting up and implementing an action plan to respond to the ECB’s concerns and worked in close collaboration with the management of the Bank to achieve the objectives.

CUSTOMERS GOALS

The client, whose latest regulatory assessment included a significant number of points of improvement, aimed at complying with the regulatory expectations arising from its SREP letter, as well as improving its reputation and its credibility with the supervisors. The clients’ objectives were twofold: avoid an increase of capital requirements due to a negative regulatory assessment and maintain its status and confidence of a leading private banker in the Belgian financial sector.

THE CHALLENGE

As one of the oldest Belgian independent banks owned by private stakeholders, the client presented certain specificities regarding its functioning, the composition and competencies of its management bodies that did not correspond to the current regulatory expectations. In particular, the Bank was criticized for the lack of ability of its non-executive Directors to effectively challenge the Bank’s strategy, the decisions made by the executive management and the effectiveness of its internal control functions.

APPROACH AND SOLUTION

As part of the solution, Avantage Reply assisted the client in setting up an action plan to respond to the regulatory concerns and improve the Bank’s reputation with its clients and the supervisors. The action plan was structured around two main objectives: improve the design and setup of the internal governance and strengthen the functioning of the Board of Directors and its Committees. As part of the exercise, Avantage Reply provided a thorough evaluation of the Bank’s Board effectiveness, conducted an assessment of non-executive Directors’ knowledge and skills and assisted the Bank in reviewing the composition and the structure of its Board and Committees. Other activities on the functioning of the Bank included:

  1. Helping the Bank to improve the flow of information between the management and supervisory bodies of the Bank through the definition of specific dashboards and KPIs for the Board and its Committees
  2. Assisting the bank in reconciling findings from both the internal controls and externally, including the regulatory findings and findings from the external auditor
  3. Additional activities to improve the functioning of the Bank, such as review of the agenda-setting process, Board diversity policy, succession planning, etc.

CUSTOMER DESCRIPTION

With over €60 billion of assets under management, the client is one of the leading Belgian banks providing activities in sectors including private banking, institutional asset management, investment banking and asset servicing. With its headquarters in Brussels, the Bank has a number of subsidiaries present in France, Luxembourg, Switzerland and Spain.

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