Publication

“After the crisis, it was clear we needed boards of directors for large banks to step up. Now, there is an opportunity to emphasize the more important things … to allow boards to focus.”

—Participant 

The role of a non-executive director at a large bank has become increasingly demanding in recent years. After the financial crisis, boards faced pressure from regulators and shareholders to shore up risk management and oversight. The risks requiring oversight were many—capital and liquidity risks, cybersecurity risks, and conduct risks—and they have only grown in the intervening decade. Boards also oversaw the implementation of a massive regulatory reform agenda. Complicating matters, banks face a competitive landscape that is being transformed by technology, and directors must devote increased attention to these changes and new strategic and operational risks.

Now, however, some of those pressures may be easing as part of a broader shift in tone regarding regulation in the United States. While still maintaining stringent standards for risk governance, supervisors are beginning to encourage directors to focus on the issues that matter most. 

At the invitation of Tapestry Networks and EY, non-executive directors, supervisors, and banking professionals have met over the course of several months to share perspectives on the evolving expectations for bank directors and the risks the sector faces. These meetings culminated in a forum on December 4, 2017, in Washington, DC. Directors from the largest US-based regional banks as well as directors from major US subsidiaries of foreign banks were joined by Michael Gibson, director of the Division of Supervision and Regulation at the Federal Reserve Board of Governors, and Morris Morgan, senior deputy comptroller for large bank supervision in the Office of the Comptroller of the Currency (OCC). Over dinner, Richard Davis, chair and recently retired CEO of US Bancorp, shared his perspectives on the challenges and opportunities ahead for bank boards. 

This ViewPoints synthesizes the perspectives and ideas raised in the meeting and in pre-meeting conversations. A list of individuals who participated can be found in the Appendix. The discussions yielded themes and insights of note, summarized in the following sections:

• The regulatory environment is at an inflection point

• Risk governance is adapting to a changing landscape

• Discussion with Richard Davis, US Bancorp