The 2024 work conference held by the State Administration of Financial Supervision and Administration on January 30 clearly stated that it will make every effort to promote the reform of small and medium-sized financial institutions to reduce risks, grasp the timeliness and efficiency, and carry out work in a planned and step-by-step manner; At the same time, we will improve the normalization mechanism for financial risk disposal, implement the responsibilities of institutions, shareholders, executives, regulators, territories and industries, and promote the formation of a joint work force.
If you want to stay healthy, you must first prevent illness from entering the mouth and take care of the "first line of defense". In the process of preventing and resolving financial risks, financial institutions are the "first line of defense". How to effectively supervise financial institutions? It is necessary to grasp the "bull's nose" of corporate governance. Corporate governance emerged after the separation of ownership and management rights. As the company's operators, that is, the senior management, are more familiar with and grasp the operating situation, there is inevitably an information asymmetry between them and the company's owners, that is, shareholders, which is also known as the first cost. In order to better manage and control the behavior of the operator, and prevent the latter from enriching their own pockets and harming the rights and interests of shareholders, the owners of the company will formulate and form a set of institutional rules, which is the corporate governance mechanism.
Modern financial institutions must have a complete organizational structure of corporate governance, with the general meeting of shareholders, the board of directors, the board of supervisors and senior management as the main body, and the "three committees and one layer" each perform their duties, effective checks and balances, and coordinate operations. Among them, the reasonable shareholding structure is the key, the effective internal management is the foundation, and the diligent performance of the directors and supervisors is the guarantee.
If corporate governance is not sound, financial institutions are prone to two types of hidden risks. First, senior executives seek personal interests and harm the interests of shareholders, driving financial institutions off the track of compliance operations. Second, shareholders, especially major shareholders, improperly interfere in the daily operations of financial institutions, alienate institutions into their own ATMs, and issue related party loans for themselves in violation of laws and regulations, which ultimately hollows out financial institutions, spills over risks, seriously threatens the security of deposits, and seriously harms the public interest. On the other hand, small and medium-sized banks that have been exposed to risks before, unsound corporate governance are the main ones.
To do a good job in corporate governance, it is necessary to realize the organic integration of the party's leadership and corporate governance. **The Financial Work Conference clearly stated that it is necessary to improve corporate governance and improve the system of modern financial enterprises with Chinese characteristics. Specifically, it is necessary to promote state-owned enterprises and financial enterprises to strengthen the party's leadership in improving corporate governance, embed the party organization into the structure of corporate governance, and ensure that the party committee plays a leading role in guiding the direction, managing the overall situation, and promoting implementation. At the same time, we will further optimize the shareholding structure, standardize the performance requirements of corporate governance entities, and establish a corporate governance mechanism with mutual checks and balances and efficient operation.
To do a good job in corporate governance, we must pay close attention to "key people", "key things" and "key behaviors". Strictly prevent manipulation by major shareholders and insider control. Previously, individual major shareholders split and packaged the equity funds into "shells" that seemed to have nothing to do with them, and held small and medium-sized financial institutions in violation of regulations and excessive proportions, resulting in a monopoly and breeding related party transactions. To this end, it is necessary to strictly control the access qualifications of shareholders and executives, strictly check the quality of capital, and through penetrating supervision, see the actual controller, prevent a dominant share, and strictly prevent the transfer of interests and related party transactions in violation of laws and regulations.
To do a good job in corporate governance, it is also necessary to improve the effectiveness of the operation of the board of directors. For a long time, some directors of individual financial institutions have been virtually non-existent, neither sensible nor indifferent, and basically do not express substantive opinions. Of course, due to the problem of unsound corporate governance, some directors who are willing and able to perform their duties are unable to perform their duties, and even cannot obtain relevant business information of their financial institutions. Next, it is necessary to improve the structure of the board of directors, so that directors can maintain their independence and professionalism, so that independent directors can dare to perform their duties independently, and then form a joint force of supervision. (Author: Guo Ziyuan **Economy**).