A few days ago I met a director of a financial institution whom I learnt in the conversation lacks enough experience. After a discussion with him, I am extremely worried about the retirement monies I have invested in the institution. Unlike any other institution financial institutions have a special responsibility towards the public to protect public money. In most banks public deposits are over 90 per cent of capital employed so is the case in insurance companies. State banks for example have made a lot of money without any capital infusion from the government.
Financial institutions make large profits using public deposits and premiums more than shareholder money. So when boards appoint directors to take care of public money/premiums they need to appoint experienced people who have an idea of banking and what doing business is. The recent appointment of shareholders’ relatives and children who have no clue of their responsibilities or what banking responsibility entails is dangerous and can be disastrous for the public. My guess is like the director I talked to they would be agreeing to everything due to lack of experience and understanding of what banking or insurance business is and my guess is a clever CEO would very easily run through them and get approval for their pet projects.
The Central Bank should give guidance to financial institutions running on public deposits/premiums about appointments to ensure public money is not at risk. If powerful shareholders wish to appoint their friends, relatives and friends children who are just out of the cradle or even senile they can do so in their private companies and I would not care if they run them down and ruin their businesses.
Not the banks, insurance and finance houses. Please wake up Mr. Regulator, financial institutions boards should not be a place to give jobs to the girls and boys of the shareholders (this applies to both private and public shareholders).