AT the end of last year the world's banking system was brought to the edge of a disastrous collapse. It was only just averted. In Britain the government asked Sir David Walker, a former banker with experience of the private and public sectors, to review what had happened and to propose changes which would prevent a repetition. His 170 page report, delivered this week, makes 39 recommendations which, he claims, would have stopped the Royal Bank of Scotland and HBOS from imploding. At first sight Sir David's analysis seems simplistic to a fault -- better chairmen, better non-executive directors, better risk control, more active shareholders. There is little new in such recommendations but at the heart of this report is the belief that a strong chairman and well-qualified directors are the only guarantee against headstrong and possibly misguided CEOs and other senior managers. To this end the report recommends that chairmen should be elected annually and spend at least two-thirds of their time on that job. Non-executive directors should be more independent minded and encouraged to challenge bank policy. Sir David Walker's 39 recommendations are not individually original but taken together they could make a big difference. The problem is where the more committed, brighter, sharper, stronger people are going to come from to become the chairman and directors of the future. Banking has been too cosy in the past but giving it new cutting edge will not be easy.


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