The ever-more difficult task of staffing banks' boards

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Increasing regulatory requirements around banks' boards is making it even harder to find sufficiently qualified non-executive directors (NEDs) from what was already a shallow talent pool. So, what type of person should financial institutions be looking for now?

One of the issues raised from the Financial Services Authority's remuneration document was that "remuneration committees should have a majority of non-executive directors, one or more of whom should have practical skills and experience of risk management."

When you also consider that Walker review now requires NEDs to commit least 30-36 days a year (which sparked resignations from Lloyds' board), the positions suddenly seem both less attractive and harder to fill.

Stephen Cahill, partner, executive compensation at Deloitte, says: "Fewer people will now want to do these jobs. The extra time commitment, the very public exposure and the pay - which is lower than that you would receive as an advisor to a private equity company, for instance - makes it more difficult to find the right calibre of talent."

RBS recently completed a board re-shuffle as a result of the new rules. It added Philip Scott, former finance director at Aviva, as chair of the risk committee and Penny Hughes, previously head of UK and Ireland for Coca-Cola.

John Collier, director who focuses on non-executive director appointments at headhunters Clive & Stokes, says: "Someone who has had a professional background as a chartered accountant working as auditor will have a thorough understanding of the risk profile of an organisation. Obviously, this would need to be combined with management experience, so an ex-CFO or financial director is an ideal candidate."

Cahill adds: "The FSA doesn't necessarily want a risk professional on the board, but someone with experience of risk. They may have been a finance director - where they would have managed capital risk and liquidity risk in past."

Extra pay for these roles is not forthcoming, but money is a secondary concern to NEDs considering a position in a bank, says Collier, and the majority of people are reluctant to put themselves forward because of potential "reputational damage".

"Add the additional expertise required and the talent pool just gets shallower," he says.

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