PBA holds session on SBP remuneration guidelines

KARACHI: Ashraf Mehmood Wathra, governor, State Bank of Pakistan (SBP), on Wednesday said better corporate governance was a cornerstone of the SBP’s policy and a crucial aspect that affected shareholders, depositors and other stakeholders.

He was addressing an orientation session ‘Revised Guidelines on Remuneration Practices’ organised by the Pakistan Banks’ Association (PBA).

“These guidelines should be treated as a basic benchmark and the industry can take additional measures by taking into consideration international best practices,” he added.

Earlier, Mohammad Aftab Manzoor, chairman, PBA, said that PBA continues to be engaged with SBP on many broad impact banking related matters. He assured of increasing engagement with SBP in developing and inculcating best and fair practices and standardisation of processes. 

Tawfiq Hussain, CEO, PBA, said banks in the past used different models to reward the employees, but the 2008 global financial crisis compelled the regulators and global standards setting bodies to develop risk-based compensation guidelines. 

He said SBP has also developed such guidelines, which include a market perspective provided by PBA. He said PBA was hosting this orientation session as there were different readiness levels among the banks.

He further said the objective was to bring all banks up to a baseline of understanding. “PBA will continue to act as a bridge between the banks and the SBP for the benefit of the banking industry stakeholders,” he added.

Faraz Anwer, Partner, AF Ferguson and Co (PwC), made a presentation on SBP Remuneration Guidelines.

He discussed global shifts, practical actions and challenges in local context and how regulations are expected to drive strategy, HR and risk sophistication.

He elaborated on Material Risk Takers (MRTs) and Material Risk Controllers (MRCs), use of risk adjusted performance measurement and the applicability across both local and international operations and banking groups. 

Anwer also presented on remuneration composition, deferrals and, most importantly, criticality of the role of board and senior management. “The deadline for the design of the Remuneration Policy is December 2017 and for its implementation it is December 2018, with quarterly reports to be submitted to SBP,” he said.