Case study

BANCOLOMBIA (Colombia)

17 February 2003

Bancolombia is Colombia's largest private bank with more than 1.3 million clients and 7,000 employees.

What was the rationale behind the decision to introduce more comprehensive corporate governance practices? Was the decision driven by a specific event or crisis?

Bancolombia seeks to be a leader in the financial and banking sector and has always observed high standards of corporate governance. Before legislation made the adoption of corporate governance codes mandatory for public companies seeking pension fund resources Bancolombia had adopted a code of conduct covering conflict of interest for employees and directors.

As part of the financial sector controlled by the banking regulatory authority, the bank has implementing procedures in place to comply with regulations on risk management, and on transparency and responsible management.

In 2001, the bank was the first Colombian institution to adopt a corporate governance code in line with Resolution 275 of the Securities and Exchange Commission of Colombia.

Bancolombia is listed on the New York Stock Exchange and has adopted the regulatory regime of the US Securities and Exchange Commission. The bank further complies with the provisions of the Sarbanes- Oxley Act.

Who took the initiative on corporate governance? What was the incentive?

Excellence in corporate governance has always been important for us. The Board of Directors, the CEO and other members of management ensure that corporate government policies are implemented to retain the trust of clients, shareholders and market agents.

Did the bank have external support in implementing corporate governance principles and from whom? What information were you able to access and was it useful?

Bancolombia relied on its own staff, which analysed corporate governance structures and trends. Staff attended local and international seminars and were able to draw on the support of CONFECAMARAS (Colombian Confederation of Chambers of Commerce). We provided comments on regulations to various institutions, among the SEC, the National Association of Pension Funds (Asofondos) and the International Finance Corporation (IFC).

How do you compare the corporate governance provisions now in place with what went before? In what way do they differ? Do you think there is room for improvement?

Bancolombia has a long tradition of corporate governance. Implementation of good practices confirms our principles and philosophy. The code is basically a summary of standards that already existed, although some aspects were new.

What are the implications of corporate governance reforms for the Board of Directors?

The Board keeps track of all policies related to corporate governance. The bank in turn keeps the structure and function of the Board of Directors under constant review. Currently, the board's composition, structure, remuneration, and the number of independent directors as well as conflict of interest issues are subject to re-evaluation. One objective is increase the amount of information disclosed to stakeholders that is posted on the website.

How are the reforms being enforced? Do es a Board member assume responsibility? Is there a specific enforcement mechanism?

See the previous answer. All these questions are dealt with in the programme for the improvement of corporate governance that the Board of Directors and the CEO have adopted.

Has the new corporate governance regime improved the company's standing? Have shareholder relations improved as a result?

Bancolombia's relations with shareholders are excellent. The corporate governance strategy has improved communication with them. The bank is working on improving the efficiency; transparency and integrity of this information. The project aimed at adjusting the bank to local and international standards covers such aspects as a code of ethics, mechanisms for managing conflicts of interest, contract policy, executive evaluation, and disclosure of relevant information.

ICC thanks  Colombian Chambers of Commerce Confederation/Confecamras  and the Center for International Private Enterprise  for their contribution to this case study.

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