9.2 Independence of mind

When assessing the independence of mind as referred to in paragraph 79, institutions should assess whether or not all members of the management body have:

• a. the necessary behavioural skills, including:
• i. courage, conviction and strength to effectively assess and challenge the proposed decisions of other members of the management body;
• ii. being able to ask questions of the members of the management body in its management function; and
• iii. being able to resist groupthink;
• b. conflicts of interest to an extent that would impede their ability to perform their duties independently and objectively.

When assessing the required behavioural skills of a member referred to in paragraph 82 (a), his or her past and ongoing behaviour, in particular within the institution, should be taken into account.

When assessing the existence of conflicts of interest referred to in paragraph 82 (b), institutions should identify actual or potential conflicts of interest in accordance with the institution’s conflict of interest policy²⁴ and assess their materiality. At least the following situations that could create actual or potential conflicts of interests should be considered:

• a. economic interests (e.g. shares, other ownership rights and memberships, holdings and other economic interests in commercial customers, intellectual property rights, loans granted by the institution to a company owned by members of the management body);
• b. personal or professional relationships with the owners of qualifying holdings in the institution;
• c. personal or professional relationships with staff of the institution or entities included within the scope of prudential consolidation (e.g. close family relationships);
• d. other employments and previous employments within the recent past (e.g. five years);
• e. personal or professional relationships with relevant external stakeholders (e.g. being associated with material suppliers, consultancies or other service providers);
• f. membership in a body or ownership of a body or entity with conflicting interests;
• g. political influence or political relationships.

²⁴ Please refer to the EBA’s Guidelines on Internal Governance regarding the conflict of interest policy for staff.

All actual and potential conflicts of interest at management body level should be adequately communicated, discussed, documented, decided on and duly managed by the management body (i.e. the necessary mitigating measures should be taken). A member of the management body should abstain from voting on any matter where that member has a conflict of interest²⁵ .

²⁵ Please refer to the EBA ’s Guidelines on Internal Governance regarding the conflict of interest policy for staff.

Institutions should inform competent authorities if an institution has identified a conflict of interest that may impact the independence of mind of a member of the management body, including the mitigating measures taken.

Being a shareholder, owner or member of an institution, a member of affiliated companies or affiliated entities, having private accounts, loans or using other services of the institution or any entity within the scope of consolidation should not be considered by itself to affect the independence of mind of a member of the management body.²⁶

²⁶ Please refer to the EBA’s Guidelines on Internal Governance para 114.