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>
Financial stability
The financial crisis of 2007-2008 exposed nu-
merous shortcomings in the manner in which
specific financial institutions were governed
worldwide. The supervision of the institu-
tions and the regulatory framework appeared
to fall short too. Certain financial institutions,
for example, paid insufficient attention to
the long-term risks, and they were too big in
proportion to their equity. At the end of June
2007,
the Belgian financial sector had a bal-
ance sheet total (total of possessions or assets)
of €1,595.2 billion. The equity amounted to
only €48.5 billion.
In addition, the conviction was that, on the
international financial stage in particular, the
remuneration policy stimulated rather than
restricted risky behaviour.
One of the major aspects of corporate gov-
ernance is proper risk management. In the
last few years, many initiatives and pieces of
legislation have been introduced to encour-
age companies to adopt better corporate gov-
ernance and more controlled behaviour with
regard to risk. This tendency, for that matter,
is not only perceivable in the financial sector
but in all kinds of sectors in this country and
abroad.
Some examples for the
financial sector:
> The Basel III-regulations 
4
1
provided that the
Belgian financial sector had to phase down
its liabilities (the equity, such as share capi-
4.
The Basel III regulations require that banks maintain much more
capital and liquidity in relation to their outstanding investments.
The rules will be gradually implemented from 2013 and must be
fully in force in 2018.
tal, plus the borrowed capital, such as de-
posits and debts on the interbank market)
by more than a quarter from €1,595.2 billion
at the end of June 2007 to €1,139.4 billion at
the end of March 2012. Over that same pe-
riod, its equity was raised by approximately
20% (
from €48.5 billion to €57.8 billion).
> It was laid down in the federal coalition
agreement of 1 December 2011 that Direc-
tors and Board Members of the financial in-
stitutions that enjoy governmental support
are not entitled to share options, free shares,
bonuses or any other benefits. The agree-
ment also stipulates that it will be ensured
that the remuneration policies of institu-
tions that enjoyed governmental support
are linked to long-term results. A number of
institutions have implemented, for example,
so-called claw-back systems on a voluntary
basis: Board Members and specific senior
managers are paid bonuses, if any, which are
not just spread in time, but their reimburse-
ment may also be demanded if the results
appear not to justify them in the long term.
> On 27 September 2011, the European Bank-
ing Authority (EBA), the supervisor of the
financial institutions in the EU, published
its Guidelines on Internal Governance.
These state for instance that within every
lending institution, internal control mecha-
nisms must be in place to identify, manage
and report risks. On 19 December 2011
that same EBA published a document that
shows that Belgium complies well with the
guidelines.
> The financial institutions make significant
efforts to install better risk management