Swiss banks often rely on a board of directors with broad experience. But bigger isn't necessarily better.
A bank's board of directors is an important element of corporate governance, responsible for monitoring and managing the bank's business activities. That raises the question of the appropriate size of the top supervisory body which can get bogged down on an increasing number of fronts and whether members should commensurately be increased.
But it is not that simple. The optimum depends, among other things, on the bank's history, ownership structure, desired diversity, or working culture. Experts usually recommend seven to nine members to work efficiently and effectively and to properly staff the committees that are becoming more important.
Taking Advice Onboard
Swiss banks have generally adhered to this range over the years. In two-thirds of 73 banks surveyed, the board of directors consists of seven to nine members each, averaging 7.1 members, according to a recent study by the Lucerne University of Applied Sciences and Arts (HSLU).
The average falls in a range from four to 13 members, with the Zuercher Kantonalbank (ZKB), whose bank council is still strongly politically influenced, at the top end. Regionally active institutions such as Bank BSU and Bank Zimmerberg, whose boards of directors consist of four members, show that it is also possible to be leaner.
Slimming Down
According to the study's authors, the size of the board of directors does not necessarily correspond to the size of the bank. It should not be an excuse for a bank to surround itself with as many directors as it feels like simply because of its size. It is much more important how ideas are exchanged, what the culture of failure is, and what kind of mentalities prevail.
Supervisory bodies have decreased slightly over the last ten years. In 2021 average membership was 7.8 members, falling 7.1 last year, with the decline most pronounced at retail banks.
Career Ladder
The range of skills on the board is at least as important as size. Front-line sales experience is generally key for leaders to rise to the highest ranks of a company, as finews.com reported.
To be considered for board of membership, responsibility for a business unit's bottom line is a universal must-have. Men in particular bring this experience, while women score lower.
The gender imbalance on a board originates in the first rungs of the career ladder, continuing into CEO positions and also leading to a lack of female candidates for a seat on the board.
