The Corporate Governance in banks is one of the most important discussions overall
the world, being reinforced especially after the crises period. It is related with the
sensitive situation and the stage of developments of the local economy and moreover
with the impact of the crises that is still ongoing. As an answer, during late 2008 and
beginning 2009, it has been noticed a fast reaction and total focus from all banks on
building (if missing) and improving their structures of Corporate Governance. The
liquidity problems suddenly affecting the banking sector constrained Banks to enlarge
their activities /operations and forced them in better evaluating their investments.
The financial sector in the Balkan countries, especially the banking sector is having
gradual improvement on the last years (from 2000 onwards). An important
contribution on that has the strong reform undertaken by international institutions like
International Monetary Fund, WorlBank, EBRD and OEDC. The reforms imposed
have as objective the Balkan countries to catch up as soon as possible the European
Financial system by strengthening the financial supervision. It is noticeable that
Balkan countries, being less economically advanced have higher rate of convergence
than the developed countries (Catching up their Integration in the European Financial
System, Fabienne Bonetto, Srdjan Redzepagic, Anna Tykhonenko,
The importance of a strong financial sector in impacting the country’s economy
growth through both level of banking development and stock market liquidity (Levine
and Sara Zervos 1996, 1998) is quite evident even in the developing countries.
Moreover, Peter Rousseau and Watchel (2000) findings’ confirm the positive impact
of the stock market activity and the banking development. For this reason the
governments in the developing countries are insisting in increasing credits of banks
towards the private firms.
The Balkan countries, being in developing stage and experiencing for the last 15
years, an aggressive penetration of foreign banks in the markets (75% of
establishment of new banks, or purchase of local banks from international groups, in
the Balkan countries happened during the period 2000 – 2008) are still in process of
improving their local financial system and establishing corporate governance
Throughout the year 2008, the banking sector in the Balkan countries experienced
strong growth despite the financial crises spread overall the world. The main reasons
for that were the low level of integration at the international markets, low level of
exposure to the international institutions, as well as the strong capitalization of the
banks in the Balkans.
The regional economies and the banking structure are under frequent improvements
through the new legal and institutional reforms that are obligatory in the framework of
the European integration process. (F. Bonetto, S. Redzepagic, A. Tykhonenko, 2009)
The impact of the financial crises in Balkan, as for other countries of the CEE, is not
having the same negative level as for the rest of the world due to relative insulation;
however, the need of the local economy for further financings towards the private
companies in order to stimulate the country economic growth will somehow expose
these countries to possible difficulties.
The banking system in Bulgaria, Romania, Serbia and Albania has certain similarities
in terms of development stage, related with the economic growth rate as well. Greece
IS much more advanced in these terms having a totally established and steady
banking system for a long time. The banking system there is operating for more than
100 years instead of 15-20 years of development in the remaining countries.
Moreover, Greek banks are the most active ones in terms of expansion in the Balkan
countries (7 Greek banks have a considerable presence and market share in the 4
studied countries). One of the reasons for including Greece in the study is to examine
at what level the corporate governance of the Greek groups has been propagated in
the other 4 countries. It is to be mentioned that despite the long history of the banking
market, the terminology of corporate governance was introduced in Greece only on
the year 1999. (Principles of Corporate Governance, Standard report Greece,
This dissertation aims to analyze the corporate governance policy and related topics
in the major banks / international groups in 5 countries of the Balkan area (Greece,
Bulgaria, Romania, Albania and Serbia). The research involves 45 banks out of 122
operating in the region, composing 37%
The analysis, are based on researches and evaluations of banks’ organizational
structure, functions of the supervising bodies like Board of Directors and Audit
Committees, implementation of internal control policies, role of independent units (i.e.
risk, internal audit and compliance), role of local authorities (central banks, antimoney
laundering authorities), etc.
The target is to evaluate the importance of corporate governance in banks’
performance in the region (in terms of profitability, size and expansion, as well as
market positioning). In addition, it will be analyzed the impact that has the presence
of international groups in the region by improving or not the corporate governance of
The analysis will include even the role of the supervisory authorities and the impact of
regulatory framework in the respective countries in the formulation and
implementation of corporate governance.