Supervisor of Banks Rony Hizkiyahu accepted the banks' argument against the CROs' veto rights.
Sources inform ''Globes'' that the Bank of Israel will abolish the veto rights clause in the risk managers circular. Supervisor of Banks Rony Hizkiyahu accepted the reservations of Section 15 over the circular's first draft, which gives chief risk officers (CRO) the right to veto decisions at any echelon. Theoretically, this power could stymie every bank transaction.
Two weeks ago, Hizkiyahu met banks' CEOs and the executives responsible for implementing Basel II - The New Basel Capital Accord of the Basel Committee on Banking Supervision. At the meeting, the CEOs expressed their reservations to the CRO's veto right, saying that their status could achieve the same result without formal power. Hizkiyahu accepted the argument.
The circular's second draft stipulates that CROs will not have veto rights on a decision, but that they will have the right to demand a further discussion. The CRO will have the authority to raise issues and transactions that he believes are problematic for further discussion at a higher echelon than the echelon that made the decision.
Published by Globes [online], Israel business news - www.globes-online.com - on December 10, 2009
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