How the Advisory Council worked

A letter from headquarters addressed to Gideon Maria Boissevain, chairman of the Advisory Council dated 7 July 1873, shows that, in the opinion of the Paris- based management, the Advisory Council was not doing its job properly. The letter describes the format of the reports that the Council was expected to send to Paris and criticises the content of the minutes of the Council meetings.

Basically, what I feel obliged to criticise about the meeting minutes so far is that they are not at all precise and do not include any figures, so that in essence they do not provide any kind of real information. Minutes should be a sort of photograph of the meeting: everything of interest that was said during the meeting should be reported in the minutes because if the only true record is a spoken one, there is really no point in writing minutes.

How the Board of Directors worked in Paris

In those days a bank s Board of Directors worked very differently from the way Boards as we know them today function. They met twice a week and examined not only the transactions but all other aspects of the bank s functioning. In fact it would be true to say that the Board during that period acted simultaneously as the executive board, the risk committee and the human resources committee.

In 1898 the branch participated for an amount of 50,000 guilders in a share and bond issue for the Zuid-Hollandsche Electrische Spoorweg-Maatschappij (South Holland Electric Railway Company). The deal was led by Labouchere, Oyens & Co.

Changes in personnel and organisation

The Amsterdam branch of Banque de Paris et des Pays-Bas was officially established on 30 January 1872, the date of the Board of Directors meeting in Paris which formally agreed its creation. The minutes of the meeting state that the branch will carry on the business and continue the relationships of the institution founded in that city by the Nederlandsche Credit- en Deposito Bank.

During the same meeting, the Board set out very precise rules on how the branch was to be run and the roles and responsibilities of the managers and the members of the Advisory Council. As far as the managers were concerned, the rules were clear: The branch will be run by one or more managers and authorised signatories under the oversight of an Advisory Council. The managers are tasked with centralising and managing all the current discounting and arbitrage business under the supervision of the members of the local Advisory Council and under the direct authority of the Board of Directors and General Management in Paris. They may not, without the formal authorisation of the Board, grant any unsecured credit. They will be required to keep General Management in Paris up to date with all their transactions, either through daily correspondence, or by sending daily and weekly summaries in tables, whose format will be set by common agreement. Any major transactions outside ordinary business must be referred to Paris, even by telegram if the matter is urgent. Each manager will also be required to own fifty registered, non-transferable shares in the bank during his tenure.

Equally clear rules were set out for the members of the Advisory Council. It is important to note that each of the three branches in Geneva, Brussels and Amsterdam had an Advisory Council made up of three to five people chosen from the business world, whose role was to give opinions and advice both to the branch and to general management in Paris. The operating rules of the Advisory Council and the role of its members were set out thus: The members of the Advisory Council, in the same way as the members of the Board of Directors, may not undertake by their actions any personal obligation which commits the company. They will provide assistance to the branch through their advice, experience and moral support. They must exercise a high level of supervision over all the branch s operations, ensuring that all its various services run smoothly and consistently, and they should inform the Management of any improvements to the organisation which they believe it might be useful to make. The Advisory Council will meet at the branch headquarters as often as the interests of the company warrant, and at least twice a month. The committee s discussions must be recorded in a set of minutes which will be entered in a special register and signed by two members. A copy of these minutes must be sent to Paris. Each member of the Advisory Council is required to hold fifty registered, non-transferable shares in the bank during his tenure.

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