Rethinking bank directors’ duties in the aftermath of the financial crisis: the legal basis of the sui generis nature of bank directors’ duties

The recent banking and financial crisis underscores the evident reality that banks are different corporate entities from other companies. The interconnectedness of the banking system to both domestic and international financial architecture means that they pose a unique and greater risk than other companies. In turn, these risks are set in motion by the decisions of the directors’ that constitute the heart and mind of banking corporations. To a large extent, the decisions taken by these directors led to the recent global financial crisis. Therefore, the decisions of bank directors can have huge implications and far-reaching consequences not just for the banks themselves and their customers but also for governments, taxpayers, creditors, employees and the whole economy. It is notable that despite the critical role played by bank directors in the financial crisis, very few of them have been brought to account for their actions. This has exacerbated the perception that bank managers are somehow above the law when it comes to accountability for their actions. The reasons for this state of affairs are multifaceted but go to the heart of corporate law and practice. This paper argues that the directors of banks are sui generis. In the light of their sui generis nature, their duties, and the beneficiaries of their duties, should be conceptualized differently from other company directors. They should therefore be conceived and treated as a different species of directors. This argument stems from the unique nature of the banking institution and its core stakeholders. This paper advances a legal basis for the special considerations that should apply to bank directors in order to avoid a repetition of the decision-making processes that led to the banking crisis