Comprehensive Analysis of Corporate Governance at Standard Bank Group

This essay provides a comprehensive analysis of the corporate governance practices of Standard Bank Group. It begins with an introduction to corporate governance, highlighting its importance in controlling business processes and managing stakeholder interests. The essay then delves into the application of principal-agent theory within the bank, examining the roles of the board of directors and management. It details the bank's adherence to ethical codes, including the King Code, and how these codes guide the organization's values and conduct. The role and responsibilities of the board of directors are thoroughly discussed, including their functions, meeting procedures, and decision-making processes. The essay further explores the bank's code of ethics, its values, and the management's role in implementing and upholding these standards. The essay concludes by summarizing the key aspects of Standard Bank Group's corporate governance framework, emphasizing its commitment to ethical practices, stakeholder engagement, and effective management.

Running head: CORPORATE GOVERNANCE OF STANDARD BANK GROUP
Corporate Governance of Standard Bank Group
Name of the Student
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Introduction
Corporate governance is a set of rules and principles that the company formulates in
order to control their business processes and business environment. The rules and
principles that are set by the business are for various departments and employees working
over there. Corporate governance involves various attributes such as code of ethics, value of
principal agents, role of management and others. It also helps in managing the interest held
by various stakeholders of the company such as the customers, directors, employees,
financers and community. Corporate governance is such a system of practices, rules and
processes through which a company is controlled and directed. Corporate governance
involves balancing the interests of a company and it involves stakeholders, suppliers,
customers, fianciers, government, management and the community. It also provides the
framework for attaining the objectives of the company and thus it encompasses every
sphere of management from controlling the actions to corporate disclosure and performance
of management. The essay will discuss about the corporate governance of Standard Bank
Group of South Africa. It will analyze the code of ethics, value of agents and other important
parameters under the company’s corporate governance. The board of members of Standard
Group who are involved in corporate governance and providing leadership are based on
different ethical foundations. They are responsible for the success of the bank and also
fulfilling the interest of the stakeholders. The detailed role and responsibilities of the bank are
set up by the board members. The board mandate takes special care to incorporate the
principles of corporate governance and thus comply with the provisions of the companies
act. The board of governance of the Standard Group has certain functions to perform to its
committee along with the corporate governance framework. The executive of the bank
engages them in critical decisions of the bank. The board of members of the Standard Group
conducts monthly meeting and thus various discussions are held for the improvement of the
bank (Dermine 2013).
Discussion
Principal agent theory is one of the parts of corporate governance that shows the
state of affairs in which one principal or the stakeholder takes the decision on behalf of an
agent or the management. Standard Bank Group of South Africa follows a high standard in
its corporate governance. The bank complies with the regulations that have been put forward
with the legislation. The bank is also enhancing their corporate governance strength with the
expansion of its ranches to other countries and region. The organization is involved in taking
continuous initiative to improve their corporate governance hold in order to benefit the
stakeholders (Bovens, Goodin, and Schillemans 2014). The board of directors is involved in
formulating the rules and regulation of the bank that can comply with the needs of the
international practices. These principles needs to be followed by the every agents of the firm
such as the subsidiary firms, Stanbic IBTC Holdings, managers, trustees, stockholders
investors and others. The subsidiary of the company complies by these rules made by the
stakeholders and uses it in their own governance. The corporate governance body also
advices the subsidiaries about the maximum risk tolerance limit by the bank. The board of
directors and other auditors of the company seek permission from the stakeholders of the
bank on certain actions whose rights are particularly reserved with the stakeholders. The
stakeholders or boards of the group take all the governance decision. They are the one that
forms all the governance rule of the bank and offer effective leadership on it after evaluating
the ethical concern of the organization (Filatotchev, Jackson, and Nakajima 2013).
The board comes up with various principles of the corporate governance according to
the Companies Act, which the stakeholders and other bodies of the group need to follow.
The board of the organization is of appropriate size consisting of twenty directors of the
group. The board of the group such as the Chairman and the chief executive follows several
roles. Some of the roles are setting ethical tone, leading the committee, maintaining the trust
of the stakeholders, appointing executive team, formulating group’s strategy, establishing an

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appropriate organizational structure and others. The board is the principal that formulates
the rules and regulation of the governance and other bodies are the agents that need to
follow the rules in the interest of the organization. In 2016, the group held a total of six
meeting in which the board decided about various strategies of the bank (Crane, and Matten
2016). The member of the board such as the chairman, chief executive and secretary set the
agenda of the group. The meeting decided about certain important critical matters about
administration and compliance. The meeting also allowed the peers and non-executive
directors to share their views about the rules and regulation of the company in the absence
of chief executive. The meeting finalized certain governance for the company such as the
retirement of the financial director, appointment of five non-executive directors, promoted the
policy of gender diversity and considered the report put forward by the King Code 4. The
board also shows diversity in a broadest sense in order to ensure that diversity is maintained
in the workplace as well by other member of the bank. However, it is seen that the directors
of the business does not take part in the business meeting in cases when the board thinks it
might lead to conflicts. At those cases the directors of the bank does not take part in any
business matters discussed in the meeting. Further, it is noticed that the directors of the
company are offered with the governance manual in which all the details about the
governance is provided. The details contained under the corporate governance report are
the governance structures, mandates, important policies, legislations, and others. The
directors are informed about this crucial information along with the regulations, code of
conduct, changes made in the rules. This governance manual helps them to direct and
assist other member of the bank residing in different branches. Thus here there are various
stages of principal and agent relationship found in the banking environment. One such pair is
the board and the directors in which the board is the principal and the directors are the
agents. On the other hand the another pair is of the directors and the staffs in which the
directors are the principal that direct the staffs about the governance rule with the help of the
manual (García-Sánchez et al. 2015).
Code of ethics shows the mission and vision of the organization in relation to the
values and ethics. It states the ways by which the directors and other bodies of the
organization as well as the employees should approach each other. It also states the
principles and ethics lying at the core of an organization and the amount of professionalism
maintained by the people. Code of ethics is also known as ethical code in some of the
organization that guides the member of the organization to know the difference between
right and wrong within the campus. These codes of ethics are adopted by both governmental
and nongovernmental organization to carry out their professional responsibility effectively.
For the purpose few organizations carry out code of practice under which they discuss about
the issues, decision, rules that the personals of the organization needs to maintain during
their course of professional practice (Mason and Simmons 2014). Standard Bank Group also
maintains a code of ethics that defines their values within the organization throughout its
branches. The ethical values maintained by the bank ensure that they carry out their
business at a right way in the right direction. For the purpose, the bank has put forward,
certain codes that are the laws the personals of the business needs to follow. These codes
of ethics are also essential for the organization to get the trust of their shareholders. This is
because the stakeholders are imperative to the organization and they have trust on the
organization only if follows certain rules and trails of professionalism. The Standard Bank
Group decides on the values that need to be followed by every brand of the bank. The code
is mostly related to corruption, corporate governance and harassment within the premises of
the bank. These ethics are applied at every place wherever the banks are operative. The
globally recognized code put forward by the group is the King Code (Salvioni and Astori
2015). The code of ethics made by the company needs to be followed by each of its
members including the board. The ethical values that are put forward by the group are also
made aligned with the policies and procedures followed by the group. This is done to assist
the employees, boards and others to easily follow the code of conduct. The group has
formulated eight values for the organization to deal effectively with the stakeholders,

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customers and other members of the bank. While making the values the bank keeps in mind
that customers are important and thus they should always be at the front of any policies. The
important values of the bank are adequate customer service, growth of company’s
personals, offering the best to our stakeholders, effective teamwork, holding respect for each
other irrespective of the designation one holds and various other values that shows the
ethics of the bank (Waemustafa and Abdullah 2015). The company also follows certain
working ways that can comply with their values and ethics such as the bank participates in
any activity in a careful way and tries to avoid sudden reactions or actions for any situation
that might prove to be wrong in future. The organization beliefs on the benefits of teamwork
rather than working individually. These methods are followed across various branches of the
bank and across countries. Further, the team works accordingly to maintain the dignity of
each other as well as of the bank. The bank maintains a sense of respect within its
environment and outside of Standard Bank. The organization makes it clear to it people that
integrity is to be maintained in the environment of the bank.
The bank has also formulated certain principles as well, that has been decided by the
group such as fair relationship with the customers, offering the best service and products to
the customers, keep informing the customers, analyzing the needs f the customers
These are some of the important principle the bank and it is noticed that most of its
principles focuses on building strong customer relationship as they are the one that gives
business to the bank. The second important parameters of our value giving are the
stakeholders that help the business to attract customers and investors for the bank. These
are some of the code of ethics that the bank follows within its business environment and with
the external partners.
The next factor that comes into concern about corporate governance of an
organization is the management that plays a great role in both formulating the governance
as well as following it. The board of the company is responsible in carrying out the day-to-
day task of the company regarding business activities and the ethical values. The board
consists of chief executive officer, the executive board and some of the external board
members. The executive committee of the Standard Bank Group is Group chief executives,
Group financial director, chief executives, Group chief compliance officer, Group chief
information officer and others. Each of these members is responsible of some work or the
other contributing to the growth of the organization and maintaining its dignity in the bank.
The management is responsible for various activities such as for board meeting,
administrative work, maintaining daily data, carrying out remuneration work, auditing and
various other activities. Each of the responsibility is carried out by various leaders and
members assigned for it. The bank has formed a committee consisting of all the required
members of management and has divided the responsibilities accordingly. A director affairs
committee includes all the directors of eh bank and are determined to manage the corporate
governance of the organization. The committee also makes sure that the people responsible
for it properly maintain the laws, regulations and codes. The group of the director committee
is also responsible for further duties such as reviewing the corporate governance report put
forward by the board and prove that the report is achievable. The committee also has to
recommend various section of the organization about the ways they should conduct their job
responsibly. Another committee is the group audit committee that carries out all the audit
work (Haan and Vlahu 2016).
All the corporate organizations in South Africa are aware of “Kings Report” on
corporate governance. The managers of the standard bank group apply the principles of
“King Code IV” which was released in 2009. The managers started using this method from
2015 which was released for public comment by the Institute of Directors in South Africa.
The King IV approach provides an integrated approach to corporate governance by
encompassing the social, economic and environmental spheres. Various effective and
quality corporate behaviors also provide different ways to mitigate the social and economic

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challenges. King IV provides broader scope and acceptance of corporate governance and
thus makes it accessible to the organizations (Yeh et al. 2013). Moreover, King IV also
focuses on “apply and explain” rather than “apply or explain” which was encouraged by King
III. However, earlier King III aimed at encouraging the quantitative explanation and
application on how the principle gets affected. Whereas King IV tries to stipulate the
minimum requirements for different types of remuneration policies and also provides that the
adoption of such policies will be possible through 75% non advisory vote of the stakeholders
(Chu et al. 2016). In such a case, the stakeholder approach will also require that the
governing body will balance, weigh and consider the legitimate interests, needs and
expectations of different stakeholders in taking important decisions for the upliftment of the
organization. The managers of Standard Group will try to promote corporate governance
which will help in the integral running of the organization and thus deliver an ethical culture.
They will also try to enhance the performance of the employees which will help in value
creation of the bank. The managers will also allow the governing body of the bank to take
adequate and effective control measures. This will help in creation of trust among the
employees in the organization (Qian and Yeung 2015).
As corporate governance mentioned by King IV is the exercise of ethical and
effective leadership which is to be implemented by the governing body. The managers of
Standard Group will follow this type of leadership and thus provide strategic direction to the
employees. They will also use different approving policies so that they can apply the
strategies effectively. This type of ethical leadership by the managers will help in building an
ethical culture in the organization. The principles which are associated with King IV is drafted
in such a way that the managers will be imposed with different type of governance duties in
the organization which will help them in setting effective tone and examples in the
organization. They need to be unifie4d on these matters which will fulfill the core purpose of
the organization, values and role of the stakeholders, the culture of the organization,
legitimate grouping of the stakeholders in fulfilling their interests, needs and expectations
(Faleye and Krishnan 2017). The managers of Standard Group must assume the
responsibility of the organization and they must also try to protect the financial resources,
social, intellectual, relational, human and natural capital. Moreover, the managers must also
be responsible for the decisions and the actions which are to be taken by the stakeholders.
This accountability must follow the designation and assumption of the responsibility which
are to be taken by the managers. The governance structure which is adopted by the
managers should connect to the responsibility and accountability of their post. Thus, it is the
responsibility of the managers to communicate clearly with the employees as well as the
stakeholders. It is also the duty of the mangers of Standard Group to ensure that the
decisions taken by them are legitimate and reasonable which will help in fulfilling the
expectations, needs and interests of the stakeholders (Tricker and Tricker 2015).
The managers of Standard Group must ensure that the reports and disclosures of the
stakeholders must be made in such a way that it is easier to assess the performance of the
employees and it includes the impact of the organizational activities. The ability to sustain
the creation of value is also the motive of the organization. The banks should aim for building
stronger ethical culture which is known as self-policing. The cost of failure in managing the
ethics will also be very high (Calomiris and Carlson 2016). The managers of the bank also
focus on opportunity management and thus it proposes risk and opportunity committee in the
bank who will take special measures and care of the different departments. Several
meetings are held to address the agendas in the bank which are responsible for audit and
management of risk in the bank. Moreover, there must be a separate audit committee which
will oversee the accounts related and audit issues. It is also the duty of the manager of
Standard Group to check the functioning of the various departments of the bank. Moreover,
the mangers are also responsible for the ethical conduct of the stakeholders and keep a
close monitoring of them through the stakeholder inclusive approach. Thus, it can be said

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that the policies of King IV helps the managers in the refinement of the bank (Berger et al.
2016).
There are different ways and a board who are responsible for assessing the role of
corporate governance. These board members are responsible for managing the risk of
various activities of the bank on daily basis. They will also be responsible for overseeing the
risks and providing robust challenges to the management team. They will also be
responsible for independent assurance or third party line of defence. The monitoring will be
done by the head of the bank or the business unit. They will be responsible for balance
sheet management and capital management. Moreover, they will also be responsible for
divisional risk and compliance functions. The board of directors will also be responsible for
ensuring that that proper wand responsible person is involved in the management team
(Armstrong et al. 2015). The next level of members who are responsible for corporate
governance are the chief risk officer and the chief compliance officers. The third group of
members who are responsible for corporate governance are the internal and the external
auditors of the bank. They will also be responsible for different outsourcing and
implementation policies of the bank which will guide the accountability for any activity.
Standard Bank Group has given more importance to King III group which has advocated and
implemented the governance structure and supported leadership, corporate citizenship and
sustainability. In order to create transparency in the organizational structure in accordance
with the various lines of responsibility, the Bank has established a separate governance
structure. They will be responsible for effective and full control of the group and its
responsibility and accountability for measuring the performance of the group. This includes
reviewing and monitoring the corporate strategies through the establishments of different key
policies and objectives, determination of the risk, preference and tolerance of the group,
understanding the risk which is to be faced by the government as well as the bank. The
board is also responsible for the overall responsibility of the entire management group and
also maximizing the value of the shareholders. In performing its different responsibilities, the
board members are supported by the senior managers of the bank along with different
panels and forums of the bank. The committee who is responsible in these will have specific
charter and reference and thus they can provide assistance to the board members.
Moreover, the bank also has different committees and thus they also provide support to the
governance team in performing their duties. The various mechanisms such as the strategies,
policies and processes which are to be implemented for providing support to the governance
committee are also to be taken care of by the board members. The nomination committee
also assists the board members in identifying the suitable and the correct members who can
address the requirements in terms of their knowledge and skills. This committee will also be
responsible for succession planning, dismissal, appointments, reviewing committee
structures and remuneration policies. The remuneration committee plays an independent
role to oversee the various processes which are associated with remuneration and to
consider and approve the issues and approvals which are associated with remuneration.
The committee also assigns that the remuneration policy is aligned accordingly and it will
also help in promotion of the strategic objectives of the bank. The social, ethics and
transformation committee is a mandatory board that will discharge the activities of evaluation
and monitoring roles. They will focus on economic empowerment and employability of the
community members in the bank. The risk and the ethical committee will relate to the ethical
behavior within the group members. The role of the actuarial committee will be to act like a
sounding board for the bank (James and Joseph 2015). The audit committee and the
statutory actuary in relation to the actuarial and other related matters of technical nature will
discharge the functions towards the shareholders and the policyholders of the bank. They
will also be responsible in statutory actuary and thus fulfilling the statutory and professional
responsibilities. The fair practice committee will be responsible for carrying out different
functions of the bank such as ensuring fair treatment to the customers as it is the main
responsibility of embedding the corporate value at various levels within the bank. They are
also responsible for various discretionary functions and ensuring that compliance is done

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accordingly. This board will act as an independent governance forum and thus they will be
responsible for overseeing the implementation of adherence from and treating the customers
fairly in accordance with the regulation committee. The risk and compliance committee also
assist the board members in discharging different kinds of responsibility for the various
processes which are associated with different types of management and compliance issues.
This committee will review the overall compliance to the significant regulations and laws.
Thus, the corporate governance team will enable the delivery and discharge of effective
governance to demonstrate adequate control in successful operation (Claessens and
Yurtoglu 2013).
Conclusion
Thus, it can be said that corporate governance plays an important role in all
organizations. The board of directors who are the primary stakeholders plays an important
role in influencing corporate governance. The directors are elected by the shareholders or
are appointed by different board members. The code of ethics of Standard bank ensures that
they do the right business in correct time by complying with the different laws and rules. The
code of ethics is informed by the ethical standards of the bank. The bank also has a
subsidiary framework governance body that will ensure consistent application of sound
governance of the organization. The mechanisms are framed in consultation with the
employees and the stakeholders of the bank. Therefore, careful management of the boards
planning plays an effective role in corporate governance.

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Appendices
Appendix 1
Value of principal agent theory is a part of corporate governance that an organization
requires to see while forming their rules and principal of the organization. The theory of
principal agent occurs at the time when the organization takes decision on behalf of some
person and the decision effects the well being of that person. Such type of relationship
mainly exists between that company’s management and the stakeholders. The stakeholders
of the organization take decisions on behalf of the management. Such type of relationship
always leads to some issues or the other that might affect their self-interest and ethics.
Appendix 2
Code of ethics is a document outlined by an organization and that states the mission,
values and vision of the organization. It also states the ways by which the professionals of
the organization can react or solve the problems arising in the business. These are the
ethical principles that the organization states under its corporate governance report and lies
at the core of the entity. The code of ethics is for the employees and every stakeholders of
the company, which they are deemed to apply in the professional practices. Code of ethics
available publicly and is stated to a person that seeks inclusion in the organization.
Appendix 3
Management has a huge role to play in the success of the corporate governance of
an organization. It is only through their effective management that the organization is able to
ensure operational efficiency, compliance with the rules and regulation and maintaining the
financial quality. The management looks after the day-to-day operation of the organization to
make it consistent with the strategic planning of the company. They are the one that also
forms the rules and regulation required in the business for it success such as the board of
directors and other stakeholders. Thus, management plays a crucial role in any organization
for initiating corporate governance.
Appendix 4
Another aspect of corporate governance rises from the King Code 4 compliance
issue. King Code 4 is considered to offer the governing body with a type of a model through
which they can easily reach out to the area under their governance. King Code 4 has various
objective such as:
 Helps in promoting corporate governance
 Fit the acceptance of King Code 4 across various sectors
 Strengthen the operation of the corporate governance in a holistic manner
 Encourage regular reporting to the stakeholders of the organization
 Regulate the usage of corporate governance according to the process as well as with
compliance with the ethics and conducts
Appendix 5
Role of corporate governance has increased in the economy to improve the function
of the organization. While monitoring the corporate governance the organization should be
sure that, the score presented by the corporate governance is an independent belief. It
should be different from an audit or a credit rating. The efficiency of the financial market also
measures the effectiveness of corporate governance of an organization. This requires that
the stakeholders of the company be allowed to see any information and have a control on
the management. Investors are yet another tool to measure the corporate governance of an

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organization. The organization using corporate governance in its internal environment
attracts better investors compared to the others.