f myburgh sc to conduct a review of the status of compliance with sound corporategovernance practices within the five largest banking groups in south africa during 2002. 3 / 7 among adv myburgh ’ s findings were that, generally the banks investigated were committed to adherence to and application of high standards of corporate governance ; the banks on their own initiative reviewed their corporate - governance principles from time to time ; and corporate governance in the banks was generally sound but vigilance was required to ensure continued compliance with the best practice in corporate governance which is evolving in south africa and internationally. myburgh ’ s recommendations were, inter alia, that the board of a bank should consist of no more than about 16 members ; a bank ’ s board should not have more than about four executive directors ; the majority of non - executive directors should be independent directors with immediate effect ; and banks should aim for the majority of their directors to be independent directors within not more than five years. the registrar of banks accepted the recommendations made by adv myburgh and is dedicated to reviewing the commitment to sound corporate governance in the banking sector on an ongoing basis and is currently reviewing corporate governance in the remaining “ non - big five ” banks. it needs to be stressed, however, that the objective of regulatory and supervisory authorities world wide can never be to avoid the failure of financial participants, and, that, in a sound system, there will be failures. instead, the objective is to strive for an optimal balance between, on the one hand, the cost of controls and intervention in order to address market failures and, on the other hand, the anticipated benefits of regulation and supervision. the need for a sound relationship and proper coordination between the fiscal authorities and the regulator can also not be overemphasised. 6. emergence of the “ four - pillar ” policy the four pillar policy relates to having a minimum number of substantial banks ( so called “ pillars ” ) on which the domestic banking industry relies and discourages the merger between any of those four banks. the primary reasons for such a policy relate to the maintenance of minimum levels of competition, in the interests of prudential and systemic stability, in order to avoid the spread of risk and to promote reliance on a broader platform of institutions. currently, australia relies heavily on the “ four - pillar ” policy, which originated in 1990 from its previous “ six - pillar ” policy. new zealand, which effectively has the same major banks as australia, is protected by the australian

with the implementation of anti - money - laundering measures. it is also the intention of the registrar of banks to incorporate anti - money - laundering measures into the planned on - site visits to banks. 6 / 7 9. conclusion in summary, therefore, the south african banking sector remains stable, and we are convinced that further growth of the industry may be expected in 2005. such growth, however, will be accompanied by certain challenges. besides preparing for the implementation of basel ii, south african banks will continue to be encouraged to follow international sound corporate governance practices. furthermore, the office for banks remains mindful of the need for banks to ensure that the objectives of the financial services black economic empowerment charter are met. for the charter to succeed, co - operation by all stakeholders is a necessity, and the south african reserve bank will continue to support and assist banks in meeting their objectives. taking into account the strengths of our banking sector, we can look forward to a sector that can continue to establish itself as one of the most sophisticated and integrated banking sectors in the world. 7 / 7