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EBF comments on the EBA guidelines on internal governance

Brussels, 6 November 2025 –The European Banking Federation (EBF) has submitted its comments on the EBA Guidelines on internal governance. The full document is available for download at the bottom of this page.

Main comments:

• Need of respect for national governance frameworks and national laws: certain provisions of the Guidelines may be overly prescriptive and detailed, which could risk transforming guidance into de facto binding requirements. Proportionality  should therefore be interpreted broadly, considering not only the size, complexity and risk profile of institutions, but also the diversity of national governance frameworks and board structures across the European Union, which reflect deliberate choices by both national legislators and the EU legislator. It is essential that the Guidelines respect national law frameworks, as envisaged in CRD. In several Member States, national  law provides for board systems where the supervisory and the management function are co-present in the body. In such systems, for instance, it is not feasible to individualise responsibilities as suggested in the draft Guidelines, for example by allocating duties to non-executive members or distinguishing between management and supervisory functions. The Guidelines should explicitly acknowledge this reality and avoid imposing expectations that conflict with national law. Moreover, the Guidelines should not  undermine the principle of collective responsibility of the management body, irrespective whether it concerns a one-tier or two-tier board system. In this sense, the removal of the following provisions in paragraph 8 of the Guidelines should not take place: “When implementing these guidelines, competent authorities should take into account their national law and specify, where necessary, to which body or members of the management body those functions should apply”. This removal is not coherent considering the changes introduced by the CRD VI.  Furthermore, the legal nature of the CRD VI is that of a “directive” and, therefore, it has to be transposed by the Member States into the national law with the consequent room for any speciality under national law provided that it does not conflict with the CRD VI. Therefore, we do not understand the reason for removing said provisions of paragraph 8 which are already and currently existing under the EBA Guidelines on internal governance (2021). We believe it is important that the Guidelines explicitly recognise that the diversity of governance frameworks in the EU reflects deliberate choices by both national legislators and the EU legislator. While paragraph 26 of the Consultation Paper acknowledges this diversity, some provisions do not embed these principles, creating an intrinsic contradiction. The CRD framework was designed to accommodate different legal systems, and imposing a uniform governance model through soft law would undermine this balance. By preserving references to national law, the EBA can ensure that governance arrangements remain consistent with national legal environments while achieving sound risk management and effective oversight. Similarly, in connection with the variety of national governance regimes, paragraph 9 of the Guidelines should maintain the reference to the possibility of appointing an internal executive body (e.g. executive committee, chief executive officer (CEO), management team or executive committee) as permitted under certain national laws.

• Article 88(1) of CRD, as last amended, unconditionally prevents the chair of the management body in its supervisory function from simultaneously exercising the functions of a CEO. However, CRD does not prevent the chair from exercising other executive functions within the institution and thus qualifying as an executive member of the management body. The executive chair role is also permitted under national laws of certain Member States and is expressly recognized in paragraph 62 of the Basel Committee on Banking Supervision’s Corporate Governance principles for banks: “[t]o promote checks and balances, the chair of the board should be an independent or nonexecutive board member. In jurisdictions where the chair is permitted to assume executive duties, the bank should have measures in place to mitigate any adverse impact on the bank’s checks and balances, e.g. by designating a lead board member, a senior independent board member or a similar position and having a larger number of non-executives on the board.” [emphasis added]. In light of the foregoing, the recommendation to implement strong checks and balances where the chair assumes executive duties should not be removed from paragraph 37 of the Guidelines, as they have proven successful to avoid an excessive concentration of power and are aligned with relevant national laws. Deleting this long-accepted recommendation throws unjustified and concerning doubts on its effectiveness within institutions with executive chairs that are not based on empirical evidence. If these recommendations were to be deleted, the first sentence of paragraph 37 should be deleted in consequence. The recommendation to have a non-executive chair is not justified or based on any reasoning or empirical evidence.[1] Moreover, recent supervisory experience and past financial crises have shown that institutions with different board structures (whether one-tier or two-tier, with executive or non-executive chairs) can be equally exposed to governance and financial failures. These arguments underline the importance of avoiding a one size fits all approach and instead focusing on ensuring that each institution has robust checks and balances, effective risk management and a strong culture of accountability, rather than imposing a uniform model across the Union.

• In the same vein, we are highly concerned with the risks of guidelines 107 a and b to limit the access of CEOs to the Board of directors within Groups. Those guidelines are not envisaged by CRD and in direct contradiction with national corporate laws which do not provide for any such limitation and are not adapted to the specific models of company governance. It highly limits the organizational flexibility of banking institutions. It also creates legal uncertainty and risk of litigation. Hence we ask for the removal of guidelines 107a and 107b.

• Mapping of duties and statements of roles: the Draft Guidelines include very specific requirements on the mapping of duties, individual statements, reporting lines, and organisational structures. While transparency is important, this degree of prescription risks creating rigid compliance exercises rather than fostering effective governance. In practice, institutions may be forced to focus on producing documentation to satisfy supervisory checklists instead of tailoring governance arrangements to their specific size, complexity, governance and business model, which does not fit with the existing trend towards simplification in the EU and must be avoided. In any case the EBA Guidelines should clarify that the mapping of duties is not required neither for the management body in its supervisory function nor to be performed by the management body in its management functions with the level of detail envisaged in the Guidelines.

• CRD VI confirms that not all Key Function Holders, but the heads of the internal control functions and CFO, only remain subject to both internal (by the bank) and external (by the supervisor) fit and proper assessments. Art. 91a (5) explicitly limits the scope of external supervisory screening to the heads of internal control function and the CFO. This raises questions regarding the scope of the internal assessments. Based on the institution’s definition of KFH, a broader group of people may fall within this category, which suggests that banks are expected to conduct internal assessments for a broader group than those subject to external supervisory screening. It is preferred that the scope of KFH for internal and external assessment is aligned and limited to the heads of internal control functions and CFO. In the absence of such alignment, there is a risk that national supervisors will interpret the scope of KFH differently and this would undermine the objective of a harmonised fit and proper framework across the EU.

• Focus on ESG: the proposed ESG related revisions seem to be rather disproportionately heavy on ESG and do not consider or mention other relevant developments and risk factors, such as for example geopolitical, cyber/AI, etc.

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[1] Several research and studies conclude that having an executive chair does not have a negative impact on the bank’s governance or results. For instance:

• “Independent Chairman Research Spotlight” study points out that “most research finds no evidence that independence status impacts corporate outcomes on average” and concludes that “the evidence suggests that the independence status of the chairman is not a material indicator of firm performance or governance quality” (David F. Larcker and Brian Tayan. Corporate Governance Research Initiative. 2020. Stanford Graduate School of Business).
• In “Separation of Chair and CEO Roles”, reference is made to American and Canadian studies which have concluded that non-executive chairs are not inherently more effective (Matteo Tonello. The Conference Board. 2011. Harvard Law School Forum on Corporate Governance).

For more information:

Blazej Blasikiewicz, Head of Legal, International & Social Affairs, b.blasikiewicz@ebf.eu

The European Banking Federation is the voice of the European banking sector, bringing together national banking associations from across Europe. The federation is committed to a thriving European economy that is underpinned by a stable, secure, and inclusive financial ecosystem, and to a flourishing society where financing is available to fund the dreams of citizens, businesses and innovators everywhere.