Supervisory Board Qualifi cation of German Banks Legal Standards and Survey Evidence

Improving the regulation of banks has been at the centre of economic policy actions since the outbreak of the global fi nancial crisis. One of the many and conceptually very diff erent measures proposed is to improve the corporate governance of banks by setting qualifi cation standards for banks’ non-executive directors. To explore the rationale of such a regulation implemented in Germany, we conducted a detailed survey among supervisory board members of German banks covering their educational background, professional status and experience, as well as non-occupation related activities. We document that general education among supervisory board members is high, but very few board members can rely on a professional background in banking and fi nance. Surprisingly, we fi nd that this is especially true for chairpersons and that a higher share of professionals among board members primarily refl ects the presence of employee representatives. However, as regards competencies and skills required to enforce changes against the management, chairpersons more often report leadership experience than ordinary members. Furthermore, some of these fi ndings strongly depend on the bank’s legal form, its size and business model, suggesting that both market forces and institutional characteristics of banking markets are important determinants of the qualifi cation level of non-executive directors. JEL Classifi cation: G21, G28, G34