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Malaysia proposes new guidelines for bank boards

Malaysia’s central bank Bank Negara Malysia is proposing new rules to raise governance standards in the boards of financial institutions. This, analysts in the country feel, would have wide implications for top state-controlled banks CIMB Holdings and Malayan Banking (Maybank). The rules among other things will prohibit a former chief executive of a financial institution from taking over as chairman of the board of directors. These rules alsospecify  that these institutions must have a majority of independent directors on their respective boards. A spokesperson for the central bank said the thrust of the new rules is to protect the objectivity of the chairman and to clearly lay out the separation between the board and management. The central bank wants to avoid situations where a chairman could be in a position to oversee policies that were put in place when that person was CEO, he added. It is not clear whether the new rules are in response to fallout from the unfolding financial fiasco at state-owned 1Malaysia Development Berhad (1MDB), which has ensnared several Malaysian banks.

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