An incompetent board failed African Bank

African Bank Hlumisa shares


African Bank’s fate epitomises organisations in the country badly let down by their boards, says Peter Mushangwe Head of Research at Legae Securities, a Johannesburg Based stock broking firm.
“If you take the 2008 global economic crisis, academic research shows that one of the contributing factors was that the nonexecutive board members on those bank’s boards (the likes of CITI group, Lehman Brothers and other banks) had a notable lack of financial experience. Similarly, at African Bank, questions have arisen over whether the board was competent enough, and had capacity to challenge management”
He explains that board of banks should not be treated as if they are construction or mining businesses, whose sole duty is to protect shareholder interests.
“Banks have a more important role as financial intermediaries in lubricating the economy. The Basel Principles for Enhancing Corporate Governance recognise the need for bank boards to show responsibility to creditors too, beyond simply shareholders.”

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