Banks’ Boards of Directors in Saudi Arabia and the UK

Abstract

International and local banks try to implement corporate governance in financial institutions to prevent a crisis such as what happened in 2008, it represents the failure of corporate governance in the United Kingdom and some other countries. Corporate governance has failed to prevent the banking system from being affected so, global financial crisis affected the international banking system as a whole, not just troubled banks. It can be alleged that a large number of countries pay great attention to the concept of governance, and defined it as: the relationship and management between the board of directors and shareholders and other bodies that have an interest in a company. It is worth mentioning that, the board of directors has a significance role in implementing governance in a professional manner in banks, hence the research interest will be focused on the board of directors, their tasks, their responsibilities, and their independence. This will be discussed in a comparative manner between the Kingdom of Saudi Arabia and the United Kingdom in addition to the extent to which these principles exist in reality. Basically this dissertation is: identify the law in Saudi Arabia and UK, compare both and explain why the banks corporate governance in Saudi Arabia is not working. Also a question is asked what reforms can be proposed to make the system better? This paper takes a critical and comparative approach to the topic. More than this, this paper clarifies the differences between Saudi and British law and how the culture affects the bank governance guidelines. As the case in the culture of the Kingdom of Saudi Arabia, it is considering challengeable because it allows change very slowly, consequently, Saudi Arabia may need to amend and reform some of its principles by creating a discussion regarding the most important points in governance, roles and responsibilities, and building a strong, qualified board of directors and evaluation of performance according to settled standards.