Gabriella Ryna Joanne (000 0000 8049)

Jane Angelica Regina (000 0001 0773)

Nathania Hyacintha Sugiarto (000 0000 6459)

OCBC: A Model For Family Companies And Good Bank Governance?

1. Who is the decision maker in this case, and what is their position and responsibilities?
The decision maker in this case is the
Monetary Authority of Singapore (MAS).
The Monetary Authority of Singapore is
Singapore's central bank and financial
regulatory authority. It administers the
various statutes pertaining to money,
banking, insurance, securities and the
financial sector in general, as well as
currency issuance. Their mission is to
promote sustained non-inflationary economic
growth, and a sound and progressive
financial center. Their function is to act as
the central bank of Singapore, including the
conduct of monetary policy, the issuance of
currency, the oversight of payment systems
and serving as banker to and financial agent
of the Government, to conduct integrated
supervision of financial services and
financial stability surveillance, to manage the
official foreign reserves of Singapore, and to
develop Singapore as an international
financial center.
2. What appears to be the issue (of concern, problem, challenge, or opportunity) and its significance
for the organization?
In December 2010, the Monetary Authority of Singapore (MAS) amended its Banking Corporate
Governance Regulations and guidelines that affect OCBC's corporate governance, those are:
1. Directors who are independent from management, business relationships and substantial shareholders
will no longer be considered independent after they have served for 9 years on the Board.
2. Banks are expected to appoint a Lead Independent Director (LID) where the Chairman has other
relationships with the Financial Institution (FI).
3. Banks shall not appoint a person who is a member of the immediate family of the Chief Executive Of
Officer’s (CEO) as the Board Chairman.
4. The number of independent directors on the Board, Nominating Committee (NC) and Remuneration
Committee (RC) is to be increased from the one-third to a majority.
5. RCs have to ensure that the remuneration practices are aligned with and in accordance with the
remuneration framework, strategic objectives and corporate values.
6. RC should adopt the Principles for Sound Compensation Practices and Implementation Standards
issued by Financial Stability Board (FSB) with regards to remuneration matters.
7. RMC must comprise at least 3 directors and non-executive directors must make up the majority.
8. Board may appoint a Chief Risk Officer (CRO) to oversee the risk management function depending on
the scale, nature and complexity of the business.

3. Why has the issue arisen and why is the decision maker involved now?
OCBC had to change some of its regulations due to the changing that Monetary Authority of
Singapore (MAS) issued. In December 2010, MAS issued the Banking (Corporate Governance)
(Amendment) Regulations and revisions to the corporate governance guidelines for banks, financial
holding companies, and direct insurers incorporated in Singapore. To compensate with the new regulations,
OCBC made some changes in their regulations in the terms of directors’ independence, composition of the
board and board committees, governance over remuneration framework and practices, and governance over
risk management.
With these new regulations, OCBC has been made changes in the company such as resigned one
of its independent directors who has worked for the last 10 years to comply with the regulation of directors
will no longer be considered independent after serving for 9 years period continuously, the board size has
reduced to 13 members with 7 independent directors to comply with the regulations that stated banks to not
appoint a person who is a member of the immediate family of the CEO as the Board Chairman, OCBC’s
NC comprised of 5 members with only 2 independent directors in the committee for OCBC to comply with
the requirement of a majority of NC members to be independent, and the RC comprised of 4 members with
2 independent directors that made OCBC comply with the requirement of a majority of RC members to be
independent. Moreover, changes were made to the remuneration structure by the RC and remuneration of
employees to comply with the guidelines that recommend additional components and factors that the RC
must consider in the design and operation of the remuneration framework.
Not only that, OCBC also complied the regulations that stated RMC must comprise at least 3
directors and non-executive directors must make up the majority by comprising 2 independent directors
and 3 non-executive directors. Lastly, they also made its CRO to reports to both the CEO and RMC and
 Gabriella Ryna Joanne (000 0000 8049)
Jane Angelica Regina (000 0001 0773)
Nathania Hyacintha Sugiarto (000 0000 6459)
doesn’t hold other positions in the bank to comply with the amended guidelines about the Board may
appoint a Chief Risk Officer (CRO) to oversee the risk management function depending on the scale,
nature and complexity of the business and MAS approval for the appointment of CRO is required.

4. When does the decision maker have to decide, resolve, act or dispose of the issue? What is the
urgency of the situation?
OCBC Compliance:
In response to the MAS amendment, OCBC complied in those amended guidelines:
1. Patrick Yeoh, one of OCBC’s independent directors, who had served on the Board of Directors for 10
years retired.
2. Lai Teck Poh as the OCBC’s Chairman is neither an executive director nor an immediate family
member of the CEO
3. OCBC moved to a wholly non-executive board, with a majority of independent directors where there
are 7 independent directors of the 13 members of the board.
4. OCBC complied with the requirement of a majority of NC members to be independent where there are
3 independent directors of the 5 members, Fang Ai Lian, Neo Boon Sion, and Ooi Sang Kuang. OCBC
complied with the requirement of a majority of RC members to be independent where 3 of the 5
members were independent directors, Fang Ai Lian, Neo Boon Sion, and Quah Wee Ghee.
5. The remuneration of employees who are reporting directly to the CEO and are of at least Executive
Vice President in rank are approved by the board. The remuneration of other employees in the group of
senior executives are approved by the remuneration committee.
6. OCBC's performance of the risk and compliance functions is assessed based on the achievement
related to their respective performance measures, independent of the business they oversee.
7. OCBC's variable bonus pool is fully discretionary and the factors taken into consideration are the
Bank’s performance, market conditions and competitive market practices. Executives are also
remunerated according to their own performance measures.
8. OCBC complied with the requirement of a majority of RMC members to be non-executive directors
where with the appointment of Lai Teck Poh there are 4 non-executive directors of the 6 members
9. Gilbert Kohnke holds the rank of Executive Vice President and has been the Head of Group Risk
Management since September 2005.