the issues In brief
Ireland records second largest EU trade surplus
Ireland’s €5bn surplus in trade with the US for the first six months of the year was surpassed only by Germany in the EU, leading many to reiterate that Ireland’s recovery will be export-led. Ireland was also among the leading exporters to the US, accounting for 8pc of the total EU exports. In the six months to 30 June, Ireland
exported €9,327m to the US and imported just €4,086m. Meanwhile, the OECD also forecast that the “mild” Irish recovery would be led by its exporting, especially as consumer demand at home would remain sluggish. The OECD said it expected GDP to decline by 0.3pc over 2010. However, it expects growth of 1.5pc in 2011 and a further 2.5pc in 2012. The Irish economy is going through
“massive adjustment”, the OECD report said, adding that after two years of deep recession, activity seems to have reached a bottom in the first half of 2010.
China’s president heads up Forbes powerful list
Hu Jintao, China’s President has been named the world’smost powerful person by Forbes magazine, while Barack Obama sits just below him. The swap at the head of the list was a surprise as the US President has traditionally been top of the pile. The Chinese leader rules over one
fifth of the world’s population in a near- dictatorial manner, without “meddling from pesky bureaucrats”, said Forbes. UK leader David Cameron comes in at
number seven, while Vladimir Putin was named as the world’s fourth most powerful person because of the control he exercises over one ninth of the Earth’s land area, including vast energy and mineral resources. Chancellor of Germany Angela
Merkel and head of India’s ruling Congress Party Sonia Gandhi are the two most powerful women in the world, according to the list as it places them at number six and nine respectively.
New corporate governance rules for banks and insurers
New minimum statu- tory requirements on how banks and insur- ance
companies
should organise their governance were set out by the Financial Regulator inNovember. The Co rpo r at e
Governance Code for Credit Institutions and Insurance Undertakings has been published by the Central Bank in an attempt to avoid any future crises by putting “robust governance arrangements” in place. The Code includes provisions on
MatthewElderfield
five directors and will be reviewed every three years. The Code also says
there has to be a clear separation of the roles of chairman and chief executive. Further to this, a person who has been CEO, director or senior manager can-
not become chairman for at least five years. There will also be a limit on the
the membership of the board of directors, the role and responsibil- ities of the chairman and other directors and the operation of var- ious board committees. Head of financial regulation,
Matthew Elderfield said the finan- cial services sector needs to learn from the financial crisis and improve corporate governance practices, adding that they should not just hope to match interna- tional best practice but set an even higher standard. The new standards are on a
statutory basis – rather than a “comply or explain” Code, said Elderfield. “The buck stops with the board
of directors,” he stated. “It’s time to bring fresh blood into the boardroom, which brings more challenges, asks more awkward questions and devotes more time to assessing risk. Depositors, pol- icy holders and, indeed, Irish tax- payers have the right to expect no less from the guardians of their money.” The boards of major institutions
must have a minimum of seven directors while other financial service firms should have at least
number of directorships that directorsmay hold in financial and non-financial companies. Direct- ors of major institutions can only hold three directorships in a bank or insurer and no more than five directorships in companies outside of those financial institutions. Some leeway will be given to non- major institutions by increasing the limits to five financial direc- torships and eight non-financial directorships. The Code will apply to existing
directors and boards with effect from 1 January 2011. Speaking about the financial cri-
sis, Elderfield did not hold back in his criticism of banking directors for the part they played in it. “Whatever the reason, many
members of boards, and I have in mind particularly non-executive directors, failed on many fronts. They failed to comprehend the risks associated with the business and the potential for disaster in not knowing or confronting these risks. In particular, it is now evi- dent that many non-executive directors, and indeed possibly executive directors, did not under- stand the complex and technical nature of the businesses over which they had charge.” The Central Bank is also work- ing on a Code for investment firms.
10 Irish Director Winter 2010
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