Banks will have to disclose executive pay, major shareholders and encumbered assets under new transparency rules issued by the Bank of Namibia.
The rules, contained in Determination BID-18, were issued in a Government Gazette last week by Bank of Namibia governor Ebson Uanguta.
The bank says the new requirements are intended to improve transparency and encourage greater discipline in the banking sector.
The determination requires banking institutions to disclose information that is “accurate, reliable, relevant, and timely”.
EXECUTIVE PAY UNDER SCRUTINY
One of the key changes is the requirement for banks to provide more information about how senior executives are paid.
Banks must disclose their remuneration policies and explain the role played by their boards and board committees in overseeing executive pay.
Institutions must provide a public breakdown of the “remuneration governance framework and the role of the board of directors and relevant board committees in overseeing remuneration policies and practices”
They must also provide information on the pay of so-called material risk-takers employees whose decisions can have a significant impact on a bank’s risk profile.
This includes the total value of fixed and variable pay, as well as payments such as guaranteed bonuses, sign-on awards and severance packages.
MAJOR SHAREHOLDERS MUST BE IDENTIFIED
The new rules also require banks to disclose their major shareholders.
Any person or company holding 10% or more of a bank’s voting rights must be identified in the institution’s annual financial statements.
Where the shares are held through another company or nominee, the bank must disclose the ultimate beneficial owner, the person who ultimately owns or controls the interest.
Banks must also report significant changes in their shareholding from one reporting period to the next.
ASSETS THAT ARE TIED UP
The rules require banks to provide more information about assets that cannot easily be sold or transferred.
These are known as encumbered assets and may be restricted because of legal, regulatory or contractual obligations.
This refers to assets that the institution is “restricted or prevented from liquidating, selling, transferring, or assigning due to legal, regulatory, contractual, or other limitations,” reads the statement.
Banks must disclose the value of both encumbered and unencumbered assets by category, as well as the policies they use to identify and manage such assets.
The information is intended to give regulators and the public a clearer picture of how much of a bank’s assets are actually available, particularly during periods of financial stress.
