Annual report 2015

Transcription

Annual report 2015

Annual report 2015
growth in 2015
skandiabanken.no
2
Annual report 2015
Page Content
4-5
Important events and key figures
6-7
CEO letter
8
History
9
Targets 11-13
Skandiabanken’s business 14-15
Macroeconomic developement 16-17
The Skandiabanken Share 18-23
Corporate governance 24-25
Group Management
26-27
Board of Directors 28-31
Corporate Social Responsibility 32-39
Board of Directors’ report 40-100
Annual Accounts - Group 101-158
Annual Accounts - Parent company 159-160
Auditor’s report 160
Responsibility statement
161
Report of the Control committee
162
Definitions and glossary
3
- ANNUAL REPORT 2015 -
3
Important events
Q1
•
•
Skandia announces that it will evaluate the potential for listing Skandiabanken Norge on the Oslo Stock Exchange as a separate and independent Norwegian bank.
Skandiabanken releases its third version of the online bank since the launch in 2000. The new online bank is a multi-platform online banking solution developed with “mobile first” as the starting point.
First quarter
Profit performance
In NOK million
Q2
Second quarter
Q3
•Skandiabanken reduces interest rates for mortgages for the third time in half a year.
• Dinepenger.no
publishes a study, by Deloitte and Halogen, where the online bank was rated as the 1 200,0
000,0
best1 mobile
banking solution in the Norwegian market.
800,0
• Launch
600,0of the unsecured Consumer loan product (nw.: Brukslån)
400,0
• Norwegian
Customer Satisfaction Barometer (Nw.:Norsk Kundebarometer) shows that 200,0
Skandiabanken
has the highest customer satisfaction in the Norwegian bank market this year as well.
0,0
2012
2013
2014
2015
• Skandiabanken receives
the licence to operate
as a consumer bank
in Norway and Skandiabanken
Net interest
income bonds.
Profit before tax
Net profit
Boligkreditt receives the license to issue
covered
• QR (Quick Response)-code as a log-in option is launched.
• Preparations for the reorganisation and
./0. listing process.
./01
./02
• Skandiabanken reduces interest rates for mortgages once again.
Third quarter
Q4
Forth quarter
./03
Profit performance
In NOK million
Cost/Income (C/I) ratio
In percentages
200,0
• Skandiabanken is reorganised into an independent Norwegian 1bank
on 5 October.
1 000,0
• Moody’s
awards
Skandiabanken
with
a
long
term
rating
of
A3
with
stable
outlook on 6 October. 800,0
70 %
600,0
Covered
bonds
issued
by
Skandiabanken
Boligkreditt
AS
were
simultaneously
awarded a long term 60 %
400,0
rating
of Aaa from Moody’s.
200,0
50 %
0,0
• Skandiabanken
ASA is listed on the Oslo Stock Exchange on 2 November.
40 %
2012
2013
• Introduction
of
a
pilot
for
the
online
distribution
of
car
insurance
products in cooperation with If 30 %
Net interest income
2012
2013
2014
2015
Skadeforsikring.
C/I ratio
./0.
./0.
./03
./01
In percentages
Loan loss ratio
In percentages
Profit performance
In NOK million
0,10 %
70 %
0,08 %
60 %
%
1 0,06
000,0
50 %
1 200,0
0,04
%
800,0
40 %
0,02
%
600,0
200,0
30 %
2012
0,0
2013
2012
2014
2015
Loan loss ratio
2013
2012
2014
Net interest income
Profit before tax
2013
C/I ratio
2014
2015
C/I ratio (adj.) *
2015
Net profit
./0.
./0.
Lending volume
In NOK million
./01
./02
Loan loss ratio
In percentages
60
0,10 %
50
0,08 %
40
Cost/Income
(C/I) ratio
In 30
percentages
0,04 %
0,02 %
10
2012
60 %
2013
2014
0,00 %
2015
2012
Total loan volume
40 %
30 %
2012
2013
C/I ratio
2013
Loan loss ratio
50 %
4
./03
0,06 %
20
70 0%
Profit before tax
C/I ratio (adj.) *
Key figures
0,00
%
400,0
2014
2014
./0.
C/I ratio (adj.) *
2015
./01
./03
2014
2015
./02
Net profit
30
0,0
2012
2013
20 2014
Net interest income
Profit before tax
2015
10
0Net profit
2012
Key figures (continued)
./0.
./01
./02
2015
./03
./0.
./01
./03
Net interest margin
In percentages
70 %
2,00 %
60 %
1,50 %
50 %
1,00 %
40 %
0,50 %
0,00 %
2012
2014
Total loan volume
In percentages
30 %
2013
2013
C/I ratio
2014
2015
1,26 %
1,30 %
2012
2013
1,46 %
1,53 %
2014
2015
Net interest margin
C/I ratio (adj.) *
* C/I ratio (adj.) is calculated after adjustments for one-off effects related to the reorganisation and listing process in 2015.
./0.
./03
In NOK thousand
Reference
Summary of income statement
Loan loss ratio
NetIninterest
income
percentages
Total income
%
Total0,10
operating
expenses
0,08 %
Operating
profit
before loan losses
0,06 %
90
83,6
82,4
81,6
2013
2014
2015
70
60
50
2013
82,1
80
0,04 %
%
Loan0,02
losses
0,00 %
2012
Profit before tax
2015
2014
961 826
1 107 328
-568 503
538 825
845 187
1 016 987
-461 749
555 238
-29 010
509 815
-39 763
515 475
-134 596
375 219
-143 576
371 899
11.0 %
1.53 %
51.3 %
17.2 %
1.46 %
45.4 %
56 876
45 457
83.1 %
11.4 %
63 034
65 581
51 050
42 428
85.4 %
17.3 %
57 982
61 717
0.05 %
0.08 %
14.5 %
16.0 %
17.8 %
5.5 %
n.a.
n.a.
n.a.
n.a.
270
244
3.66
n.a.
Customer satisdaction
Norwegian Customer Barometer (nw: NKB)
2014
2012
Customer satisfaction (NKB)
2015
Loan loss ratio
Tax expense
Net profit
Profitability
Return on equity
Net interest margin
Lending volume
Cost-to-income
In NOK million ratio
1
2
3
60
Balance
sheet figures (NOK million)
50
Total40loan volume
30
Customer
deposits
20
10
Deposit-to-loan
ratio
0
2012
2014
Lending growth
(gross)2013
past 12 months
Total loan volume
Average total assets
Total assets, end of period
Losses and defaults
Total loan loss (%)
4
2015
5
./0.
Net interest margin
Solvency
In percentages
Common Equity Tier 1 ratio
Tier 12,00
capital
ratio
%
Total1,50
capital
ratio
%
1,00 % ratio
Leverage
1,30 %
1,26 %
./01
1,46 %
1,53 %
2014
2015
./03
6
0,50 %
0,00 %
Employment
2012
FTEs
2013
Net interest margin
Share
EPS
References
1) Profit after tax (annualised) as a percentage of average equity in the period.
2) Net interest income (annualised) as a percentage of average total capital.
Customer satisdaction
3) Operating
expenses before loss as a percentage of total income.
Norwegian Customer Barometer (nw: NKB)
4) Average deposits from customers as a percentage of average loan volume
5) Average total assets in the period
90losses 82,1
83,6 of average
82,4
6) Loan
as a percentage
loan volume81,6
in the period
80
70
60
50
5
Skandiabanken is well positioned
for further growth
Monday 2 November 2015 was a landmark day for Skandiabanken, after
16 years as a branch of a foreign bank, Skandiabanken was listed on the
Oslo Stock Exchange. This made Skandiabanken a Norwegian company,
licensed to act as a commercial bank by the Financial Supervisory
Authority of Norway.
However, in 2015 the focus for our employees remained the Bank’s
day-to-day operations, further technological development and securing
customer satisfaction. The spin-off from our Swedish parent company,
the establishment of the Norwegian companies and the IPO on the Oslo
Stock Exchange demanded much of the organisation’s time, attention
and resources. We are therefore delighted to say that at the same
time, we continued to grow and we were able to maintain customer
satisfaction levels.
After all, satisfied customers are the very cornerstone of our business.
In 2015 we once again topped the Norwegian Customer Barometer’s
survey of customer satisfaction in the banking sector. The same was
true of the EPSI’s annual survey. On top of that, RepTrak declared us the
bank with the best reputation in Norway 2015.
We gained 4 700 new shareholders due to the IPO, many of which
are institutional investors in Norway and abroad. However, many
retail investors also took the opportunity to purchase shares. In
total, 90 percent of private individuals who purchased shares were
also customers of the Bank. The IPO has provided us with a form of
ownership that will enable us to continue to grow.
Skandiabanken has been steadily expanding ever since it was founded
in April 2000. This growth has been particularly strong over the last
three years due to a concerted focus on residential mortgages.
We have set ourselves ambitious targets. We are constantly expanding
and adapting our product range. We now offer loans for most purposes
and various kinds of saving products, including mutual funds.
Skandiabanken has thus become a full-service bank for most people.
We shall continue to develop and enhance our product range moving
forward. Our products must satisfy customers’ expectations and needs,
and be adapted to ongoing changes in the peripherial to the banking
industry. In total, these measures will make us attractive to even more
customers.
In 2015, we launched a new online banking platform which functions
equally well on mobile phones as on desktops. The modern, technical
platform allows customers to use all the Bank’s services via mobile
phones and makes us accessible to even more customers when they
need to contact the bank.
6
This modern online bank and its supporting systems can also
accommodate customer growth and higher volumes without any
significant increase in associated costs. The cost effective concept
represent an undoubted benefit in an even more competitive market.
It is a well-known fact that the Norwegian authorities impose stringent
capital requirements on Norwegian banks. This obliges us to maintain
a strong capital adequacy, and on 31 March 2016 we increased our CET1
ratio target to 13.5 percent, well above the regulatory minimum. The
IPO provided the company with new capital and at the end of 2015 our
CET1 ratio was 14.5 percent, which will enable us to generate further
growth.
The financial climate in Norway is changing. Skandiabanken is only
focusing on private customers. Combined with our robust and
automated credit model this gives us a favorable position compared
to our competitors. We have no direct exposure to the oil and offshore
sector and the industries influenced by the downturn. This does not
imply that we will remain unaffected. We monitor market development
and potential impact on our customers. If necessary, we can adapt our
credit models on short notice.
In tougher times, Skandiabanken’s efficient business model and
cost-effective products will appeal to even more people. A significant
proportion of growth in recent years is attributable to our customers
using the Bank in a broader range. We expect this trend to continue,
as we develop our modern platform to gain even more customers.
Everything we do is done with our customers in mind. Each month we
receive around 500 improvement proposals of from our committed
customers. All proposals are registered, assessed and prioritised. This
unique commitment will allow us to create an even better bank and
provide an even better service. Together with our customers we will
become even better, and even bigger.
Skandiabanken aims to remain the Norwegian bank with the most
satisfied customers and to continue to being a key player in the everaccelerating digitalization wave. This will enable us to give a good
return to our shareholders in the future.
Magnar Øyhovden
CEO
Customer Monika Kjørsvik was in charge of the traditional bell-ringing on the first day of admission to the Oslo Stock Exchange on 2 November 2015.
She was joined by the Board of Directors, management and staff.
Customer Monika Kjørsvik and CEO Magnar Øyhovden outside Oslo Stock Exchange after the listing ceremony.
7
History
In April 2000, the Bank was launched as the first pure digital bank
in Norway, operating as a Norwegian branch of Skandiabanken AB,
a part of the Swedish Skandia. Through its differentiated approach,
the Bank was recognised both for its products and services and
for its ability to satisfy its customers within its two first years of
operations.
The Bank continued to be well regarded by its customers and
received a number of awards for information security, reputation
and customer service. In 2012, Livförsäkringsbolaget Skandia,
ömsesidigt (“Skandia Liv”) acquired Skandia AB from Old Mutual,
resulting in the establishment of the Skandia Group. This also
included Skandia AB’s subsidiaries and Skandiabanken AB’s branch
in Norway (Skandiabanken AB NUF).
In 2006, Skandia AB, including Skandiabanken AB and the branch,
was acquired by Old Mutual. Under the ownership of Old Mutual,
the Bank continued to develop its digital banking concept and
added a number of products and services to its offering. In
addition, a rigorous liquidity management system was established
and a process towards establishing an external funding program
was initiated.
Following the transaction, the establishment of an external
funding program was finalised, as Skandiabanken AB issued NOK
denominated senior unsecured bonds, certificates and covered
bonds which were used to fund the Norwegian Business. In 2014,
the Bank made a ”first step launch” of its new digital banking
platform, Skandiabanken 3.0, which was fully introduced in March
2015. The branch was transformed to a standalone company and
listed at Oslo Stock Exchange 2 November 2015.
Industry winner “Best
customer service of the
year” by TNS and
Dolphin
First time winner of
“Most satisfied
customers” award by
EPSI
Skandiabanken.no
launched in Norway as
Norway’s first pure
internet based bank
2000
2001
Launched credit cards
First bank to win the
Norwegian Customer
Satisfaction Barometer’s
(Nw.: Norsk
Kundebarometer’s)
2002
Gold medal in the
categories “internet
accounts” and “savings
accounts” in Dine
Penger’s Norwegian
Championship for banks
2003
Skandia Liv completed
its acquisition of
Skandia AB from Old
Mutual
Old Mutual completed
its acquisition of
Skandia AB
Launched securities
trading
Launched chat function
as support tool for its
customers
2004
2005
2006
Expanded with
Norwegian managed
funds on the fund
platform as the first
nominee bank
distributor in the
Norwegian market
Launched mobile bank
2007
aunched bank savings
accounts
Divested Skandiabanken
Bilfinans
2008
First time winner of
“reputation scope”
across industries by
RepTrak
2009
First time winner of the
Fidus award for good
information security
2010
First bank in Norway to
launch mobile BankID
2011
Market funding
established through
issuance of senior
unsecured bonds and
certificates
2012
First bank in Norway to
launch ethical labelling
of funds
2013
First step launch of new
digital bank
(Skandiabanken.no) as
universal platform with
responsive design
2014
Market funding
expanded through
establishment of
covered bonds program
for the Norwegian
mortgage loans
2015
Fully introduced
Skandiabanken 3.0, first
bank with identical
content independent of
device
Rated Norway’s best
mobile bank app by
penger.no
Launched consumer
loans
Skandiabanken
becomes a separately
company and get listet
at Oslo Stock Exchange
8
Targets
Skandiabanken aims to ensure an attractive and competitive return on equity while supporting the growth, thus creating value for the
owners through increased share price and dividend payments. Skandiabanken Board of Directors has adopted the following medium-term
targets:
Financial targets
14%
Return
30%
Dividends
Return on
equity
Pay-out
ratio
13.5%
CET1
ratio
Operational targe
Growth
Reach a return on equity of 14 percent
Pay-out ratio of up to 30 percent of the bank’s net profit
Growth
37%
Cost-toincome
Capital
Grow the bank’s loan bo
Operational efficienc
Improve the bank’s Cost
Asset quality
Maintain a CET 1 ratio of 13.5 percent
(increased from 13 percent on 31 March 2016)
Loan loss
ratio
Maintain Loan Loss Ratio
Operational targets
Growth
Growth
37%
Cost-toincome
Grow the bank’s loan book to over NOK 75 billion
Operational efficiency
Improve the bank’s Cost-to-Income Ratio to 37 percent
Asset quality
Loan loss
ratio
Maintain Loan Loss Ratio per product at historic levels
The targets are based on capital requirements applicable to the bank and any future regulatory changes or changes in the economic
environment may result in changes to the bank’s strategy and consequently the financial targets above.
9
The annual survey, Norwegian Customer Satisfaction Barometer (Nw.:Norsk Kundebarometer), published by the Norwegian
School of Management (BI), shows that Skandiabanken has had the highest customer satisfaction in the Norwegian bank and
finance sector since 2002.
10
Skandiabanken’s business
Skandiabanken ASA is a branchless digital bank that offers
banking products to Norwegian customers through a user-friendly
platform. The Bank’s value proposition is to offer a differentiated
and transparent banking experience primarily through a dedicated
customer orientation.
Since launch in April 2000, development of the Bank’s concept
has centred on offering a simple and transparent pricing structure
which ensures that the customer gets a fair deal. We also prioritise
continuously updating and optimising our product offering based
on customer feedback in order to maintain an intuitive and
standardised offering that is relevant to customers. Providing
banking products and services across a lean and efficient digital
platform with leading accessibility and usability for desktop
computers, tablets and smartphones represents a further focus
area.
In its 16-year history of operations the Bank has established itself
as a significant player in the Norwegian banking market. In its first
five years, the Bank rapidly gained market share and established
an attractive and loyal customer base by offering a simple and
accessible online bank, competitive interest rates and no fees or
commissions to Norwegian retail banking customers.
In 2012, Skandiabanken AB set a target of doubling the lending
portfolio by the end of 2018. We had virtually achieved this target
as early as the second quarter of 2015. The lending portfolio
expanded from NOK 26.7 billion as of 31 December 2012 to NOK 56.9
billion just three years later. This equates to 2.1 percent of the loan
market for Norwegian households (excluding government lending
institutions such as the Norwegian Public Service Pension Fund).
At the end of 2015 the Bank had 380,731 customers with active
accounts. The respective estimated market shares for transactions
and deposits were 5 percent and 4.1 percent.
In addition to mortgages, the Bank offers payment and card
services, savings, investment products and short-term loans.
Customer services are provided by telephone and e-mail, and
through the online bank’s Chat function. In addition, customers
can interact with the Bank through social media channels. The
Customer Service Centre is open every day, all year round between
6 a.m. and midnight.
Best bank for customer satisfaction and reputation
Each year Skandiabanken comes out top in surveys on reputation,
loyalty and customer satisfaction in the banking sector.
The Bank has won EPSI’s “Most satisfied customers” award in
Norway every year since 2005.
In the RepTrak 2015 reputation survey of the fifty most prominent
companies in Norway, the Bank came in fourteenth in the “Good
reputation” category. This confirms the brand’s positioning on a
par with global brands such as Apple, Toyota, IKEA and Nestlé. The
Bank has been the leading brand in the banking sector since 2007.
In the annual Norwegian Customer Satisfaction Barometer survey
published by the Norwegian School of Management (BI), the Bank
has been rated the Bank with the most satisfied customers in the
Norwegian banking and finance sector since 2002. The 2015 survey
also revealed that the Bank’s customers are considerably more loyal
than customers of other banks operating in the Norwegian market.
Skandiabanken has topped the poll, which covers all sectors, on
two occasions.
Accessible online bank
The Bank constantly focuses on developing an intuitive and uniform
digital platform positioned for steadily increasing use of mobile and
desktop devices. The user interface utilises the same base coding
across all platforms and its layout is responsive to the screen size
of multiple devices, ranging from smartphones to computers. In
addition, the platform is data-light and has a convenient login
solution for mobile devices providing easy access to all products
and services wherever the customer has internet access.
11
Skandiabanken’s business (continued)
Self-service-oriented customer support
The Bank has an efficient and self-service-oriented customer
support system which increases customer involvement at the same
time as limiting costs to the Bank. Self-service is facilitated through
indirect customer “training” using online self-service tools such as
calculators, how-to-guides, FAQs, blogs and social media. The Bank
also offers direct support through the Chat function, e-mail, and
phone. The benefits of the above approach were proven during the
period 1 January 2012–30 June 2015, when the Bank nearly doubled
its loan book and the number of logins increased by around 50
percent. During the same period the number of direct customer
enquiries rose by just 9 percent. In addition, an increasing number
of enquiries are being channelled through the Chat function. At
the reporting date 36 percent of all enquiries were made through
Chat, compared with 24 percent in June 2012. Chat is an attractive
channel for a growing number of customers, in part because it
allows them to multi-task. Customer service staff can also deal with
several enquiries at the same time.
Automated lending
Customers register all loan applications, including mortgages, car
loans, consumer loans and other short-term credit products, in the
online bank themselves. Applications are processed automatically,
and the customer receives an immediate response. Applications are
either approved, rejected or forwarded for further manual analysis
or documentation. Additionally, wherever possible, the highest
possible amount is approved for the customer. Automatically
approved personal loans and short-term credit products are
immediately made available to the customer, while automatically
approved home loans and car loans require further processing
before funds reach customers’ accounts. In 2015 approximately
88 percent of approved home loans and approximately 84 percent
of approved car loans were automatically approved. Around 50
percent of home loans were paperless, with customers using digital
signatures based on their Bank ID.
Customer feedback
Historical loan losses below 0.10 percent in the period 1 January
2012–31 December 2015 are testament to the quality of the Bank’s
total loan book.
Continued growth
In the medium term, the Bank’s objective is to establish an
aggregate loan book of more than NOK 75 billion. The main way
we expect to achieve this is by existing customers buying more
products. We expect the lending mix to remain largely unchanged,
with home loans the largest individual element. Skandiabanken will
continue to focus on the private market.
Most people feel the strongest affiliation with the Bank with
whom they have their home loan. Consequently, we are focusing
on generating growth in the home loan market, among new and
existing customers alike.
Infrastructure and IT systems
We have an in-house platform and solutions for most front-end
applications. The same applies to the online bank used by the
customers.
Core systems are mostly commercial services or software bought
from leading Norwegian and Nordic vendors such as EVRY (bank
deposits, payments and debit cards), Tieto (funds and stocks),
and Banqsoft (loans). These core systems are linked to the frontend solutions through standard web services. The front-end
applications are based on a classic N-tier architecture with a
service-oriented integration layer.
Dialogue with the customer plays a key role in development of the
Bank’s products and services. The online dialogue function is one of
the main reasons behind the Bank’s high levels of customer loyalty
and customer satisfaction.
The front end applications are based on Microsoft technology and
architecture including Internet Information Server (IIS), SQL server
and frameworks such as MVC, Web Forms and WCF. The frontend layer also consists of some off-the-shelf software, such as a
Content management system (EPI server).
Each month we receive around 500 improvement proposals
from our customers. This ensures that customers’ wishes and
needs are taken into account when products and services are
being developed. All improvements, whether driven by customer
feedback or internal processes, are ranked based on criteria such
as financial effect, compatibility with the Bank’s strategy, value for
the customer and the focus on lean automation.
We have 20 IT developers, and the online bank is developed
and administered internally. The front-end applications that are
compatible across all common platforms are developed internally.
Front-end development and integration with core systems is a key
internal competence. In addition, the internal development team
maintains and develops some of the internal applications and
batch jobs.
High-quality lending
The Bank attributes the high quality of its loan book to the Bank’s
conservative risk approach and tried-and-tested risk frameworks.
12
The bulk of the Bank’s lending is aimed at the 35–49-year age
group. In addition, the home loans portfolio, which accounts for
the bulk of the Bank’s lending, primarily residential markets in and
around Norway’s largest cites. This portfolio also had an exposureweighted loan-to-value of 55 percent as of 31 December 2015, which
gives av buffer if the market should drop.
The Bank will insource IT services from Skandia for a transitional
period of 18 months from October 2015. Initiatives to identify and
then start using the services of dedicated suppliers are due to be
completed by the first quarter of 2017.
Employees at our Customer Service Centre are serving customers from 6 in the morning until midnight.
In 2015, the center received 600.000 inquiries by phone, e-mail and chat.
Thomas Refsland is head of the Customer Service Centre.
Two of our authorized financial advisors talking to customers about
investment opportunities.
13
Macroeconomic development
in Norway in 2015
The Norwegian economy has experienced GDP growth below the
trend level, since the summer of 2014. GDP growth is still positive
and the unemployment level is low.
The Norwegian government has stimulated production and
consumption by reducing corporate and private tax rates in 2015
and 2016, and by increasing public spending.
The Norwegian economy grew with 1.8 percent in 2015, down from
2.2 percent in 2014. Low international GDP growth and reduced
activity-level in the Petroleum-sector from the summer of 2014 has
contributed to a GDP growth below the trend level of 2.25 percent.
Statistics Norway (SSB) expects GDP growth of 1.7 percent in 2016
and 2.1 percent in 2017.
The net effect on unemployment has been moderate on a national
level, with the unemployment rate increasing from 3.5 percent in
2014 to 4.4 percent in 2015. The unemployment rate has primarily
increased in Southern and Western part of the country, where the
effects of reduced activity level in the petroleum-sector is most
notable.
The reduced activity-level in the petroleum-sector follows
decreasing investments in exploration and pipelines. Following a
strong increase in oil-prices the investment level increased from
NOK 127 billion in 2010 to NOK 214 billion in 2014. After oil-prices
started falling during the summer of 2014, the investment level
was reduced to NOK 190 billion in 2015. Statistics Norway expects
an investment level of NOK 164 billion in 2016.
Statistics Norway expects the unemployment rate to increase
to 4.6 percent in 2016 before falling to 4.4 percent in 2017.
The negative effect from reduced activity-level in the petroleumsector has by some degree been offset by a depreciation of the
Norwegian Krone, reduced tax-level, increased public spending
and gradually lower interest rates.
Norwegian short-term money market interest rates are still higher
than comparable interest rates in other Nordic countries, the Euro
area and the US, but was reduced during the year, with a NIBOR
(3 months) moving from 1.48 percent at the beginning of 2015 to
1.13 percent end of year.
Norway’s Central Bank key policy rate was reduced from 1.25 to
0.75 percent during 2015. The central bank has signalled further
reductions in the key policy rate during 2016.
14
The Ministry of Finance and the Norwegian Financial Supervisory
Authority have implemented measures to reduce the Banks
willingness to increase the supply of house-loans. New rules
regulating maximum Loan-to-Value and the use of interest-only
periods where implemented during the summer of 2015.
Together with a moderate increase in the unemployment rate,
this has contributed to a gradual slow-down in the house-price
growth during 2015. House-prices grew by 5.8 percent in 2015. The
growth rate fell somewhat during the last months of 2015. Statistics
Norway expects house-prices to increase by 1.5 percent in 2016.
in Norway in 2015 (continued)
Money Market Interest rates
4%
3%
2%
-1 %
EURIBOR 3M
STIBOR 3M
Dec-15
Jun-15
Dec-14
Jun-14
Dec-13
Jun-13
Dec-12
Jun-12
Dec-11
Jun-11
Dec-10
Jun-10
0%
Dec-09
1%
NIBOR 3M
Unemployment (rate)
10 %
8%
6%
4%
2%
0%
2009
2010
2011
2012
Unemployment
2013
2014
2015
Residentail prices
Oil price
$150
$125
$100
$75
$50
Dec-15
Jun-15
Dec-14
Jun-14
Dec-13
Jun-13
Dec-12
Jun-12
Dec-11
Jun-11
Dec-10
Jun-10
$0
Dec-09
$25
15
The Skandiabanken share
Share price development
Following the separation from Skandiabanken AB in October 2015,
Skandiabanken ASA was listed in an IPO on Oslo Stock Exchange
2 November 2015. The bank’s ticker code is SKBN. Skandiabanken
is included in the OSEAX All-share index, the OSE4010 Banks and
OSE40 Financials sector index. The liquidity segment is Match.
Skandiabanken has one share class. All shares have equal voting
rights.
Dividend policy
Rating
Skandiabanken aims to ensure an attractive and competitive return
on equity while supporting the planned growth, thus creating
value for the owners through increased share price and dividend
payments. Skandiabanken’s medium-term dividend target is to
distribute up to 30 percent of net annual profits as yearly dividends,
starting in 2017 and based on the 2016 financial statements.
The target is based on capital requirements applicable to the bank
and any future regulatory changes or changes in the economic
environment may result in changes to the bank’s strategy and
consequently the dividend policy.
Skandiabanken was awarded a long-term rating of A3 with stable
outlook from Moody’s on 6 October 2015. Covered bonds issued
by the bank’s wholly owned mortgage company, Skandiabanken
Boligkreditt AS, were simultaneously awarded a long-term rating of
Aaa from Moody’s.
Shareholder structure
At the end of 2015 the share capital amounted to NOK 1 065 250
000, divided into 106 525 000 shares, with a nominal value of NOK
10 per share. As of 31st December 2015, Skandiabanken had over
4.700 registered shareholders. Of these, 69 institutional investors
across 13 countries represented a total holding of 86 million shares,
or 81 percent of the issued share capital.
9%
49 %
9%
16 %
16
Skandiabanken complies with the Oslo Stock Exchange “Code of
Practice for IR” information issued in June 2014. All information
relevant to the pricing of financial instruments issued by
Skandiabanken will be published simultaneously to all market
participants. All financial information will, after publication,
be made available on Skandiabanken’s website. The quarterly
result presentations will be held in English and will be available
as a web cast. In addition, Investor Relations will hold meetings,
with representatives from group management, with existing and
potential investors and analysts in and outside Norway. Investor
Relations also maintains contact with investors and analysts in both
equity and debt capital markets.
All presentation material used for meetings and conferences with
investors or analysts will be published by use of a stock exchange
report before they are introduced and made available on the
investor relations website. Skandiabanken will ensure that investors
and analyst are given equal oral information, based on previously
published material, during meetings and other direct contact.
8%
9%
Investor relations
Sweden
49 %
United States
16 %
United Kingdom
9%
Norway
9%
Germany
8%
Rest of Europe
9%
A further description of equal treatment of shareholders can be
found in the chapter “Corporate governance”, section 4 on page 19.
Skandiabanken’s Investor Relations policy is available on the
IR-pages at www.skandiabanken.no
At the end of 2015, three brokerage houses officially had analyst
coverage of Skandiabanken. Updated contact information for these
is available at all times on www.skandiabanken.no/ir.
The Skandiabanken share (continued)
Largest ownership as at 31 December 2015*
Livförsäkringsbolaget Skandia, ömsesidigt
Ferd AS
Neuberger Berman, LLC
Deutsche Asset & Wealth Management Investment GmbH
Lannebo Fonder AB
Paradigm Capital Management, Inc.
Grandeur Peak Global Advisors, LLC
GLG Partners LP
Unionen
York Capital Management
TT International
Pioneer Investment Management Ltd.
Lucerne Capital Management, LP
Aktia Asset Management Oy Ab
Nykredit Bank AS
Farringdon Capital Management SA
Handelsbanken Asset Management
Old Mutual Global Investors (UK) Limited
Tredje AP Fonden
BlackRock Advisors (UK) Limited
Total 20 largest
Numbers of shares
Ownership
31 950 000
4 350 000
4 295 521
4 154 424
3 962 711
2 835 000
2 830 200
2 616 141
2 500 000
2 500 000
2 016 688
1 948 638
1 245 076
1 125 000
1 069 143
1 050 000
975 000
856 000
799 354
799 065
73 877 961
29.99 %
4.08 %
4.03 %
3.90 %
3.72 %
2.66 %
2.66 %
2.46 %
2.35 %
2.35 %
1.89 %
1.83 %
1.17 %
1.06 %
1.00 %
0.99 %
0.92 %
0.80 %
0.75 %
0.75 %
69.35 %
* The beneficial owners of shares in nominee accounts are determined on the basis of analyses and discretionary assessments. Unidentified beneficial
owners in brokerage accounts may be among the company`s largest shareholders.
17
Corporate governance
Each year Skandiabanken’s Board of Directors and Group
Management review the Bank’s principles for corporate governance
and their effectiveness within the Group. The formal requirements
for this report are established in Section 3-3b of the Norwegian
Accounting Act and the Oslo Stock Exchange’s requirement to
comply with, or explain deviations from, the Norwegian Code of
Practice for Corporate Governance dated 30 October 2014.
The Bank’s corporate governance procedures can be viewed on the
Bank’s website.
Skandiabanken’s business is stated in the company’s Articles of
Association. The funds available to the Bank shall at all times
be properly managed in accordance with applicable laws and
regulations. Skandiabanken can perform all normal banking
transactions and services in accordance with applicable legislation.
Skandiabanken’s current licence also covers investment services
for customers. The Articles of Association can be viewed in their
entirety on the company’s website. The company’s targets and main
strategies are stated in the annual report.
SECTION 1 DECLARATION ON CORPORATE
GOVERNANCE
Deviations from the recommendation: None.
Skandiabanken complies with all the recommendations of the
Norwegian Code of Practice for Corporate Governance.
The Bank’s object is to conduct banking business within the
applicable legislative frameworks. The Bank shall be able to
perform all transactions and services that are customary or natural
for banks to perform.
SECTION 3 EQUITY AND DIVIDENDS
Skandiabanken’s business concept is to be a listening and
customer-oriented bank that simplifies and enriches people’s daily
lives. By being the market leader in self-service-oriented solutions
and offering outstanding accessibility, the Bank will enable
customers to make sound financial choices.
The Bank’s vision is for everyone to perceive the Bank as the easiest
bank to be a customer of.
The above philosophy is based on values such as transparency,
simplicity and challenging the status quo.
Skandiabanken’s rules for ethics and corporate social responsibility
are founded on the Bank’s vision and values. The Bank shall
maintain high ethical standards and practise efficient corporate
governance.
Skandiabanken’s policy for ethics, business conduct and corporate
social responsibility can be viewed on the company’s website.
The bank’s corporate social responsibility policy is described in
more detail in a separate article in the annual report.
18
SECTION 2 BUSINESS
The Board of Directors constantly evaluates the equity situation
with reference to the company’s targets, strategy and desired risk
profile. At the reporting date Skandiabanken had total equity of
NOK 4.3 billion. In accordance with the applicable calculation rules
for capital adequacy for financial institutions, as of 31 December
2015 the Group had aggregate capital adequacy of 17.8 percent and
a CET1 ratio of 14.5 percent.
Dividends
When considering the annual dividend, particular account is
taken of the Group’s capital needs, including capital adequacy
requirements, and the Group’s targets and strategic plans. Over the
next few years, dividend levels will reflect the fact that the company
is in a growth phase. Skandiabanken targets a payout ratio of up to
30 percent of net profits.
Repurchase of shares
On 2 October 2015 the General Meeting resolved to authorise the
Board of Directors to purchase own shares up to a total nominal
value of NOK 100,000,000, which equaled 10 percent of equity at
the time of resolution. In accordance with the authorisation, the
maximum amount that can be paid per share is NOK 100 and the
minimum amount is NOK 10. The authority was registered in the
Register of Business Enterprises on 5 October 2015 and ceases
on the earlier of the date of the next Annual General Meeting and
30 June 2016. At the time of publication of the annual report the
authority to acquire shares had not been exercised.
The Board of Directors’ authority to increase share capital and
assume loans
At the General Meeting held on 2 October 2015 the Board of
Directors was also authorised to increase the company’s share
capital by up to NOK 150,000,000 in connection with the
company’s initial public offering, with the authority running until
the first listing date. In accordance with the authority, in October
2015 the share capital was increased by NOK 65,250,000.
In addition to the above authorisations, the General Meeting of
2 October 2015 authorised the Board of Directors to increase the
share capital by NOK 100,000,000 in connection with acquisitions
or injection of equity, and the authority to issue subordinated debt
with Nordic Trustee ASA as trustee for the bondholders in a total
nominal value of up to NOK 250,000,000, and the authority to issue
hybrid capital with the same trustee and in an aggregate value of
up to NOK 200,000,000. The mandates apply until the earlier of the
date of the 2016 Annual General Meeting and 30 June 2016.
SECTION 4 EQUAL TREATMENT OF SHAREHOLDERS AND
RELATED-PARTY TRANSACTIONS
Skandiabanken has one share category. All shares confer
equal voting rights. In share capital increases, the existing
shareholders shall be granted pre-emptive rights, unless particular
circumstances indicate that this rule can be varied. Any variation
shall be justified. In cases where the Board of Directors asks the
General Meeting for authority to repurchase own shares, these shall
be purchased at market rates.
Largest shareholder
The life-assurance company Skandia was the Bank’s largest
shareholder at the reporting date, with a shareholding of 29.9
percent. Skandia was the sole shareholder until the IPO on 2
November 2015.
Related-party transactions
The rules of procedure for the Board of Directors comply with the
provisions of the Norwegian Public Limited Liability Companies
Act on transactions between the company and related parties (cf.
Sections 3-8 and 3-9) in agreements between the company and
the parties stated therein. Before non-immaterial agreements are
entered into between the company and shareholders, members
of the Board of Directors or Group management or their related
parties, the Board of Directors shall obtain an independent thirdparty evaluation. The Board of Directors shall approve agreements
between the company and a Board member or the CEO. The Board
of Directors shall also approve agreements between the company
and third parties in which a Board member or the CEO could have
a vested interest. If the Board member identifies a potential issue
of incapacity or a potential conflict of interests between the Board
member’s responsibility on the one side, and the Board member’s
or his/her related parties’ other assignments or interests on the
other side concerning a matter to be reviewed by the Board of
Directors, the Board member shall notify and discuss the matter
with the Chairman of the Board. The same applies to the CEO. The
Board of Directors makes decisions on issues of conflict of interest.
SECTION 6 GENERAL MEETING
The Articles of Association stipulate that the Annual General
Meeting shall be held by the end of April each year. The meeting
notice and registration form shall be sent to the shareholders and
published on the Group’s website no later than 21 days before the
date of the Annual General Meeting.
The procedures for voting and submitting proposals are contained
in the notice of the meeting. In accordance with the Articles
of Association, the Meeting Chair is elected by the attending
shareholders.
The Chairman of the Board and External Auditor attend the General
Meeting. Minutes of the company’s general meetings can be viewed
on the company’s website.
Resolutions are adopted by a simple majority unless otherwise
prescribed in the company’s Articles of Association or the
provisions of the Norwegian Public Limited Liability Companies Act.
Decisions on the divestment of shares, mergers, spin-offs,
divestments of a material part of Skandiabanken’s business or the
issuance of shares in the company require the approval of at least
two-thirds of both the number of votes cast and the share capital
represented at the General Meeting.
The voting form makes it possible to vote individual candidates
onto individual bodies. Shareholders may issue a power of attorney
to a third party. A person can also be appointed to vote for the
shareholders as a proxy.
Insofar as is possible, the proxy form shall be designed to allow
votes to be cast for each agenda item and for individual candidates
up for election.
SECTION 7 NOMINATION COMMITTEE
In accordance with the Bank’s Articles of Association, the General
Meeting and Supervisory Council have established a Nomination
Committee comprising three members. Members are elected
by the General Meeting for a term of office of up to two years.
Neither members of the Board of Directors nor members of Group
Management serve on the Nomination Committee.
The Nomination Committee presents a reasoned recommendation
to the General Meeting.
The Nomination Committee makes recommendations to the
General Meeting concerning:
• Prospective members and deputy members of the Board of Directors
• Remuneration paid to members and deputy members of the Board of Directors
• Candidates for the Nomination Committee
• Remuneration paid to the Nomination Committee
Information about the Nomination Committee and about how to
submit proposals to the Nomination Committee can be viewed at
www.skandiabanken.no/ir/
SECTION 5 FREE TRANSFERABILITY
Deviations from the recommendation: None
>>
The shares are listed on the Oslo Stock Exchange with ticker SKBN
and are freely transferable. The Articles of Association do not
impose any restrictions on transferability.
19
>> Corporate governance (continued)
SECTION 8 GENERAL MEETING AND BOARD OF
DIRECTORS, COMPOSITION AND INDEPENDENCE
General meeting
The General Meeting’s primary task is to elect the Board of Directors
and to supervise the Board of Directors’ and the CEO’s management
of the company.
Control Committee
One meeting of the Control Committee was held in 2015 (disbanded
on 31 December 2015).
Board of Directors
The Board of Directors comprises six members, and in 2015
the following served on the Board of Directors: Niklas Midby
(Chairman), Øyvind Thomassen, Ann-Charlotte Stjerna (until 12
September), Mai-Lill Ibsen, August Baumann, Ragnhild Wiborg
(from 12 September) and Silveli Vannebo. Vannebo is an employee
representative. Individual Board members’ backgrounds are
described on the Bank’s website and in the annual report.
Participation in Board meetings and on Board committees in
2015
A total of ten Board meetings were convened in 2015, six of which
were held by telephone. The Audit Committee, Remuneration
Committee and the Risk Management Committee each held one
meeting.
Board meetings before 5
October 1
(of which by
telephone)
Board meetings after 5
October 2
(of which by
telephone)
3 (2)
5 (2)
5 (2)
3
3
1
0
5 (4)
5 (4)
5 (4)
4 (3)
5 (4)
Silveli Vannebo 7
(Employee representative)
0
2 (2)
Jon Holmedal 7
(Deputy employee
representative)
0
2 (2)
Ann-Charlotte Stjerna 3
Niklas Midby
4
Øyvind Thomassen 4
August Baumann 5
Mai-Lill Ibsen 5
Ragnhild Wiborg 6
Audit
Committee
Remuneration
Committee
1
1
1
1
Risk
Management
Committee
1
1
1
1
1
Before Skandiabanken AB NUF was converted to
Skandiabanken ASA.
2
After Skandiabanken AB NUF was converted to
Skandiabanken ASA and Skandiabanken AB NUF’s business
was transferred to Skandiabanken ASA.
3
Elected to the Board of Directors on 5 May 2015. Left the Board
of Directors on 12 September 2015
4
Elected to the Board of Directors on 5 May 2015
5
Elected to the Board of Directors on 17 August 2015
6
Elected to the Board of Directors on 12 September 2015
7
Elected to the Board of Directors on 2 October 2015
1
Independence of the Board of Directors
All Board members are deemed to be independent of the Bank’s
general management and material business connections.
Niklas Midby is also Chairman of Skandiabanken AB and Øyvind
Thomassen is CEO of the same bank. Skandiabanken AB is part of
the life-assurance company Skandia.
Election of the Board of Directors
The Board of Directors is elected by the General Meeting. Members
are elected for a term of office up to two years. When electing
20
members of the Board of Directors, a suitability assessment
must be performed addressing the need for both continuity
and independence, as well as maintaining a balanced Board
composition. The CEO does not serve on the Board of Directors.
Shareholdings held by Board members as of 31 December 2015:
• Niklas Midby (Chairman), through his related party company Flagstone International Ltd, 10 869 shares.
• Øyvind Thomassen 2 173 shares.
• Silveli Vannebo 543 shares.
SECTION 9 THE WORK OF THE BOARD OF DIRECTORS
Duties of the Board of Directors
The Board of Directors’ duties are laid down in rules of procedure
that regulate the Board’s responsibilities, mandates and case
handling, and establish which items are to be reviewed by the
Board, as well as rules for convening and holding meetings. The
Board of Directors has also established rules of procedure for the
CEO. Each year the Board of Directors adopts meeting and work
plans covering strategic work, financial reports, forecasts for the
Group and control work. The CEO prepares matters to be reviewed
by the Board of Directors together with the Chairman of the Board.
The Board of Directors has established three permanent
committees, which are described in more detail below. The
committees do not adopt any resolutions, but supervise the
administration’s work and prepare matters for review by the
Board on the latter’s behalf within their respective spheres of
responsibility. The committees may utilise Group resources and
engage personnel, advice and recommendations from external
sources.
Remuneration Committee
The members of the Remuneration Committee are August Baumann
(Chairman) and Niklas Midby. The Committee shall perform
preparatory work for review of the company’s remuneration scheme
and other matters such as the salary of the CEO, individuals who
report directly to the CEO and risk-takers in the business for the
Board of Directors. The Committee’s mandate is included in the
rules of procedure for the Board of Directors and separate rules of
procedure have been drawn up for the Remuneration Committee.
Audit Committee
The Audit Committee is chaired by August Baumann with Ragnhild
Wiborg and Mai-Lill Ibsen as members. The composition of the
Committee satisfies the Recommendation’s requirements on
independence and competence. In addition to the members of
the Committee, the CFO, Henning Nordgulen, and the CRO, Eirik
Christensen, attend regular meetings. The Audit Committee shall
ensure that the Group has an independent and effective external
auditor and satisfactory accounting reporting in accordance with
relevant legislation and regulations. The Committee’s mandate is
included in the rules of procedure for the Board of Directors and
separate rules of procedure for the Audit Committee.
Risk Management Committee
Risk Management Committee is chaired by Mai-Lill Ibsen with
Niklas Midby, Øyvind Thomassen and Ragnhild Wiborg as
members. In addition to the members of the Committee, the
CFO, Henning Nordgulen, and the CRO, Eirik Christensen, attends
regular meetings. The Committee shall ensure that the Group’s
risk and capital management complies with the Group’s strategic
development and target achievement and ensures financial stability
and reasonable asset management. The Committee’s mandate is
included in the rules of procedure for the Board of Directors.
Self-evaluation, Board of Directors
The Board of Directors annually reviews its own activities and
competence and proposes improvements in the organisation and
implementation of the Board’s work. The Board of Directors’ selfevaluation report can be viewed by the Nomination Committee.
SECTION 10 RISK MANAGEMENT AND INTERNAL
CONTROL
Risk management is an integral part of the work of Skandiabanken’s
Board of Directors. The Bank shall have a sound risk culture based
on openness, transparency and competence, and shall constantly
challenge its methods, processes and procedures in order to
improve its performance.
Each year Skandiabanken’s Board of Directors establishes the
risk appetite for the risk categories credit risk, liquidity risk,
market risk, operational risk and commercial and strategic risk,
and determines guidelines to operationalise the enterprise’s risk
appetite.
The Bank shall adopt a holistic approach to risk management. The
following overarching principles therefore apply:
• The Bank’s specifications for risk appetite shall be translated into specific risk management frameworks.
• Each risk area shall be allocated capital in line with its actual risk status, which in turn shall be tailored to the Bank’s risk appetite.
• Risk management and reporting shall be performed in accordance with frameworks and objectives.
• The Bank’s risk management systems and procedures shall be appropriate to the complexity of the business.
• Risk management shall be an ongoing and continuous process.
• Risk reporting shall be framed in an understandable manner and provide a clear picture of the Bank’s risk situation to all stakeholders.
• Risk management shall be performed across Group companies, at all levels within each individual Group company, and for the Group as a whole.
• The Bank shall assume only those risks that are understood by the Bank and the individual decision-maker.
• Responsibility for entering into agreements that cause the Bank to incur a risk is delegated through personal authorisations.
• Efforts shall be made to achieve as great a concordance as possible between risk and profitability. Profitability shall be measured individually (at the customer and exposure level), with respect to subportfolios/segments/departments and for the Bank as a whole. Profitability shall be measured on a risk- adjusted basis, and on the basis of financial capital allocated.
The Bank’s organisation is based on its risk management and
internal control principles, and has been designed such that it
ensures the Bank’s risk strategy is implemented.
Skandiabanken’s organisation is based on a principle of three lines
of defence.
First line of defence
The operative units, including all bank employees and managers,
constitute the first line of defence, and shall have ownership of
any risk-taking. The business units are responsible for handling
operation and control of their own risk, for performing risk
assessments and implementing risk and internal controls that
enable the Bank to operate within the frameworks and the risk
appetite specified by the Board of Directors.
Second line of defence
Second-line functions monitor and verify that the Bank is operating
within the risk frameworks. This function is performed by the Chief
Risk Officer (CRO) and the Chief Compliance Officer (CCO). The CRO
heads the Bank’s Risk Management function. The Risk Management
function is responsible for establishing and maintaining systems
and processes that support the Bank’s compliance with those risk
strategies, policies and procedures that have been adopted. The
function prepares regular risk reports for the Board of Directors,
and shall also report any breaches of the frameworks and
guidelines.
The CRO is independent of managers with responsibility for risktaking, and does not take part in decisions that relate directly to
areas that are monitored and reported. Organisationally, the CRO
reports directly to the CEO, but in certain cases also has a right and
a duty to report directly to the Board of Directors. The CRO may not
be dismissed without the Board’s consent.
The CCO is in charge of the function which covers compliance
with procedures and regulations. Administratively, the function
reports to the CEO. In practice, however, it is independent of the
Bank’s management and other central and control functions. The
CCO verifies compliance with regulations based on the Board of
Directors’ instructions, and reports to the Board of Directors on
matters of a professionally relevant nature.
Third line of defence
The third line performs independent tests of the Bank’s risk
management procedures.
The Internal Auditor shall be independent of any of the Bank’s
operative functions, and reports to the Board of Directors. The
Internal Auditor performs audits in accordance with the audit plan
and instructions issued annually by the Board of Directors. The
Internal Auditor presents a summary of the Bank’s internal control
activities once a year.
Skandiabanken’s Board of Directors has adopted a policy for ethics,
corporate conduct and corporate social responsibility that applies
to the Board of Directors and all the Bank’s employees.
The Bank’s activities and services depend on a high degree of trust.
Trust of customers and society is based on a good reputation and
maintaining high ethical standards in all areas of the business.
The Bank shall always conduct its business in line with applicable
instructions, laws and rules. Decisions taken shall be based on the
Bank’s core values and be guiding for corporate culture. The Bank’s
core values and ethical guidelines help to raise awareness of and
compliance with the Bank’s ethical standards.
All new employees receive training on the ethical guidelines
and must sign that they have read and understood associated
guidelines. The policy and associated guidelines shall be reviewed
annually and signed by all staff.
>>
21
Corporate governance (continued)
>>
SECTION 11 REMUNERATION PAID TO THE BOARD OF
DIRECTORS
Remuneration paid to the Board of Directors and its
subcommittees is determined by the General Meeting based on the
recommendation of the Nomination Committee.
Board members’ fees are not linked to the financial performance or
similar measures. With the exception of employee representatives,
none of the other Board members perform tasks for the company
other than Board work. Information about remuneration paid to
individual Board members is presented in Note 33 of the financial
statements.
Skandiabanken’s Board of Directors will handle any takeover bids in
accordance with the principle of equal treatment of shareholders.
The Board of Directors will also help shareholders to obtain as
much supplementary information as possible in all situations that
affect the shareholders’ interests. Approval must be sought from
the Norwegian Financial Supervisory Authority (nw: Finanstilsynet)
for acquisition of shares in a financial institution that would bring
the total shareholding up to more than 10 percent of the acquired
company’s share capital.
SECTION 15 EXTERNAL AUDITOR
SECTION 12 REMUNERATION PAID TO SENIOR
EXECUTIVES
The External Auditor presents an annual plan for audit work to the
Audit Committee and the Board of Directors. The Audit Committee
evaluates and makes recommendations to the Board of Directors
concerning the election of the External Auditor. The Board of
Directors holds an annual meeting with the External Auditor,
which is not attended by members of administration. The Audit
Committee recommends the External Auditor’s fees to the Board
of Directors for approval. The Board of Directors subsequently
proposes approval to the General Meeting.
Skandiabanken’s remuneration scheme applies to all employees.
The scheme shall comply with the Group’s overall targets, risk
tolerance and long-term interests. Furthermore the scheme shall
help to promote and incentivise efficient management and control
of the Group’s risk, counteract excessive or undesired risk-taking
and help to avoid conflicts of interest. The remuneration scheme
is compliant with the regulations on remuneration schemes in
financial institutions, investment firms and management companies
for mutual funds.
The compensation (the sum of remuneration received) shall be
competitive, though not market-leading, and ensure that over time
the Group attracts, retains and develops skilled employees. The
compensation should be perceived to be fair and incentivising.
The remuneration scheme should stimulate efforts which yield
results beyond the individual’s area of responsibility, but always in
accordance with the risk profile of the Group. Fixed salary shall be
the main element of overall compensation, which shall otherwise
comprise variable salary, pensions and various benefits in kind.
The Board of Directors’ guidelines for remuneration paid to senior
executives can be viewed in Note 33.
SECTION 13 INFORMATION AND COMMUNICATION
Skandiabanken has its own investor information pages on
skandiabanken.no/ir/. The Bank makes every effort to provide
accurate, relevant and timely information about the Group’s
development and performance in order to create confidence
amongst investors. All price-sensitive information is published in
Norwegian and English. Stock market notifications, annual and
quarterly reports, presentation materials and webcasts can be
viewed on the company’s website.
Information is also conveyed to the market through quarterly
investor presentations. Regular presentations are given to
international lenders and investors. All reporting is based on
transparency and equal treatment of parties in the securities
market. The Group’s financial calendar is published on the
company’s website.
22
SECTION 14 TAKEOVER BIDS
The External Auditor provides the Audit Committee with a
description of the main elements of the audit of the previous
accounting year, including details of any material internal control
weaknesses identified relating to the accounting reporting process.
Declaration on corporate governance in accordance
with Section 3-3b of the Norwegian Accounting Act.
The declaration complies with statutory requirements.
1. Skandiabanken complies with the Norwegian Code of Practice for Corporate Governance issued by the Norwegian Corporate Governance Board, NUES.
2. The recommendation can be viewed at www.nues.no
3. Any deviations from the recommendation are commented in the Board of Directors’ Declaration on Corporate Governance.
4. Section 10 of the report contains a description of the main elements of the systems for internal control and risk management relating to accounting reporting processes.
5. Skandiabanken has no Articles of Association that deviate from Section 5 of the Norwegian Public Limited Liability Companies Act, which deals with the General Meeting, or from the recommendations of the Norwegian Corporate Governance Board, NUES.
6. The composition of the Board of Directors, the General Meeting and Control Committee is reported. A description is also given of the main elements of guidelines and the mandate for the
bodies in Sections 8 and 9 of the report.
7. The Articles of Association that regulate the appointment and replacement of Board members are reported in Section 8 of the report.
8. Articles of Association and authorisations to allow the Board of Directors to resolve to repurchase shares or increase share capital are stated in Section 3 of the report.
The organisation
CEO
Magnar Øyhovden
Legal
Compliance
Erik O. Husø
Arlin Opsahl Mæland
Strategy
Alliances
Geir Berge Hansen
Gunnar Senum
HR
Bente Rebnor
Risk Management
Eirik Christensen
Finance
Henning Nordgulen
Marketing
& Communication
Johnny Anderson
Product & Process
Anne-Christine Fiksdal
Business
Developement
Magne Angelshaug
IT
Eirunn Skogen
Member of Executive Management team
Reports to CEO
23
Group Management
Magnar Øyhovden | Chief Executive Officer
Magnar Øyhovden joined the Bank in 2006, and was promoted
to branch manager for Skandiabanken AB’s Norwegian branch in
2010. He has nine years tenure in the banking industry, and he was
previously CEO with COOP Power Holding A/S. He holds a degree
in Business Administration from Norwegian School of Economics
(NHH). Magnar Øyhovden owned 6 815 shares in Skandiabanken ASA
31 December 2015.
Henning Nordgulen | Chief Financial Officer
Henning Nordgulen joined the Bank in August 2015 as CFO. He has
held senior financial positions, including 10 years in the banking
industry. Mr. Nordgulen holds a Bachelor degree from BI Norwegian
Business School and has additional studies from IMD in Lausanne.
Henning Nordgulen owned personally, through his related party
North Hill Invest AS, and close family members, 6 814 shares in
Skandiabanken ASA 31 December 2015.
Johnny Anderson | Head of Marketing & Communication
Johnny Anderson joined Skandiabanken AB in 2005 and was
promoted to Head of Marketing & Communication in 2011. He has
held several positions and has 10 years of experience in the banking
industry. He holds a Master of Philosophy in Media Studies from
the University of Bergen. Johnny Anderson owned 2 717 shares in
Bente Rebnor | Head of HR
Bente Rebnor joined the Bank in 2000, and was promoted to Head
of HR and internal communications in 2005. Before joning the
Bank, she held a variety of managerial positions in Vesta Forsikring/
Vesta Finans. She holds studies in economics/marketing from BI
Norwegian School of Business. Bente Rebnor owned 2 173 shares in
Geir Berge Hansen | Head of Strategy
Geir Berge Hansen joined the Bank in 2010 as Head of Strategy.
He holds a degree in Business Studies from Norwegian School of
Economics (NHH) and a candidate degree in Engineering from
Bergen University College. Geir Berge Hansen owned 3 260 shares in
24
Group Management (continued)
Magne Angelshaug | Business development
Magne Angelshaug joined the Bank in 2011 and was promoted to
Head of Business development in 2012. He holds an MBA from
the Norwegian School of Economics (NHH), a Master degree
in Cybernetics from the Norwegian University of Science and
Technology (NTNU) and an Engineering degree from Sogn og
Fjordane University College. Magne Angelshaug owned 2 608 shares
in Skandiabanken ASA 31 December 2015.
Erik O. Husø | Head of Legal
Erik Husø joined the Bank in 2015. Before joning the Bank, he was
Head of Legal in Fana Sparebank. He holdes a degree in law from the
University of Bergen. Erik Husø owned 652 shares in Skandiabanken
ASA 31 December 2015.
Anne-Christine Fiksdal | Head of Product and process
Anne-Christine Fiksdal joined the Bank in 2015, as Head of Product
and process. She holds a bachelor degree from Bergen University
College. Fiksdal owned 3 260 shares in Skandiabanken ASA 31
December 2015.
Eirik Christensen | Chief Risk Officer
Eirik Christensen joined the Bank in 2015 as Chief Risk Officer. Before
joining the Bank, he was Head of Risk Management in Sparebanken
Vest. He holds a Ph.d in Economics from the University of Bergen.
Eirik Christensen owned 2 173 shares in Skandiabanken ASA 31
December 2015.
Eirunn Skogen | Head of IT
Eirunn Skogen joined the Bank in 2002 and was promoted to Head of
IT in 2007. She has studied IT Management at the University of Oslo.
Skogen owned 2 173 shares in Skandiabanken ASA 31 December 2015.
25
Board of directors
Niklas Midby | Chairman
Niklas Midby, Chairman of the Board, has a background mainly in
finance. Mr. Midby started his career with the Boston Consulting
Group and then spent twelve years in international investment
banking where he held various senior positions in corporate finance
and private equity. Returning to Sweden, Mr. Midby joined OM
(now Nasdaq OMX) as an Executive Vice President responsible for
all exchanges and clearing houses, including the Stockholm Stock
Exchange. Since 2003, he serves on several boards, including the
chairmanship of Skandiabanken AB. Mr. Midby holds a B. Sc. in
Finance from the Stockholm School of Economics. Niklas Midby
is a Swedish citizen and resides in Sweden. Through his related
party Flagstone International Ltd, Midby owned 10 869 shares in
Øyvind Thomassen | Board member
Øyvind Thomassen has served as Chief Executive Officer of
Skandiabanken AB (Norway and Sweden) since 2010. Prior to this,
Mr. Thomassen served as branch manager for Skandiabanken AB’s
Norwegian branch. Before joining the Bank, Mr. Thomassen held
various positions in Vesta Forsikring AS. Øyvind Thomassen holds a
M.Sc (Nw.: siviløkonom) from the Norwegian School of Economics
and Business Administration (NHH). Øyvind Thomassen is a
Norwegian citizen and resides in Sweden.
He owned 2 173 shares in Skandiabanken ASA 31 December 2015.
Mai-Lill Ibsen | Board member
Mai-Lill Ibsen has held several senior executive positions in the
international financial sector, including as Chief Executive Officer of
NOS ASA and Citibank International plc, Norway Branch, and Deputy
Chief Executive Officer of Eksportfinans ASA. Ms. Ibsen has held
several directorships over the last ten years, in private, governmentowned and listed companies. Ms. Ibsen holds an MBA from Stanford
Graduate School of Business. Mai-Lill Ibsen is a Norwegian citizen,
and resides in Norway.
26
Board of directors (continued)
August Baumann | Board member
August Baumann has held several senior executive positions in
TeliaSonera Norge AS, including as Chief Executive Officer, Chief
Financial Officer and Vice President HR. August Baumann holds a
M. Sc. in Shipping, Trade and Finance from Cass Business School,
London. August Baumann is a Norwegian citizen and resides in
Norway.
Ragnhild Wiborg | Board member
Ragnhild Wiborg has previously held senior positions in a
number of financial institutions and companies including Wiborg
Kapitalförvaltning, Odin Fund Management, Pareto Securities,
Sundal & Collier, First National Bank of Chicago (now JP Morgan) and
Scandinavian Bank UK. Mrs. Wiborg has several directorships and
committees of listed companies in Norway and Sweden. Ragnhild
Wiborg holds a Bachelor of Science degree in Economics and
International Business from Stockholm School of Economics and
Business Administration, Sweden, and Master Studies in Economics
from Fundacao Getulio Vargas Sao Paulo, Brasil. Ragnhild Wiborg is
a Swedish citizen, and resides in Norway.
Silveli Vannebo | Board member, employee representative
Silveli Vannebo joined the Bank in 2006 and was elected employee
representative in 2008 and promoted to head of employee
representatives in 2013. Silveli Vannebo has been the Branch’s board
member since 2013. Mrs. Vannebo has studied economics and law.
Silveli Vannebo is a Norwegian citizen and resides in Norway. She
owned 543 shares in Skandiabanken ASA 31 December 2015.
Jon Holmedal | Deputy Board member, employee representative
Jon Holmedal joined the Bank in 2000. He has an extensive
background from both insurance and finance, and has studied
economics and insurance. Jon Holmedal is a Norwegian citizen and
resides in Norway. He owned 326 shares in Skandiabanken ASA
31 December 2015.
27
Corporate social responsibility
Corporate Social Responsibility (CSR) is about how value is created.
It is about how Skandiabanken’s operations affect people, the
environment and the society around us. The Bank takes these
challenges seriously.
Being a responsible company means more than just donating funds
for charitable purposes. The Bank also demonstrates corporate
social responsibility through the products, how they are marketed,
and in facilitating involvement from the employees.
Skandiabanken will not have aggressive or misleading marketing.
The Bank’s prices shall not be hidden. Skandiabanken aims to be
a responsible everyday bank that enables its customers to make
smart financial decisions and conscientiously purchase bank
products.
In order to succeed, the Bank’s employees are given an opportunity
to contribute. This internal engagement creates a solid foundation
and pride.
Skandiabanken’s strategy for corporate social
responsibility
Skandiabanken’s policy for ethics, business conduct and corporate
social responsibility applies to the Board of Directors and to all
the employees of Skandiabanken. The policy describes how the
Bank should manage its operations in contact with customers,
employees and society in general.
The products and services of the Bank have an important function
in society. Therefore, it is necessary to have a long-term perspective
and manage operations in a responsible manner.
The Bank should:
• Promote financial insight and knowledge of savings, loans and credit
• Promote own customers ‘and owners’ understanding of the company’s financial position
• Promote information and offer products and services that allow customers to make socially conscious choices
28
• Consider the social impact of investment decisions
• Respect basic human rights and human worth as they are expressed in international conventions, such as the United Nations Human Rights Conventions, the European Convention on Human Rights and other conventions to which Norway has acceded
• Support and follow the principles of the UN Global Compact
According to Section 3-3 c of the Norwegian Accounting Act, the
Bank is obligated to report on the exercise of corporate social
responsibility. Reference is made to the Board of Directors’ report.
Trust, openness and role in society
Skandiabanken’s operations must always be in compliance with
the current instructions, laws and regulations. In general, the
Bank’s core values must form the basis for decisions and govern the
culture of the business. The individual product and business areas
must establish concrete principles, rules and processes to deal
with relevant ethical issues.
Core values
CUSTOMER – We put the customer first
CHALLENGER – Includes innovation and being different
TOGETHER – Together internally and with the customer
OPEN – Open to customers, mutually benefit each other,
transparent (internal and external)
SIMPLE – Making complex things uncomplicated for the best user
experience
The Bank’s operations are based on providing products and services
that optimally meet the needs of various customer segments. The
Bank also has a great responsibility to live up to the trust that it
receives from customers, creditors and the authorities.
In contact with customers the Bank should:
• Act in an open, honest and fair manner
• Facilitate a dialogue in which customers can share their views with an aim to improving the Bank’s products and services
• Give advice that is appropriate for the customer and based on his/her needs
• Sell and market financial services in a clear and transparent manner
• Provide clear information about how the customer’s assets are managed
• Facilitate high availability, based on the customer’s expectations and needs
The Money Laundering Act is not unique to Norway. The Act is
based on international cooperation, and its formulation is based
on the EU Directive. The FATF (Financial Action Task Force) has
prepared 40 recommendations for measures against money
laundering, financing of terrorism and financing of the spread of
weapons of mass destruction. These are recognised as the leading
international standards in the field and provide good guidance as to
how preventive work should be carried out.
Ethics and anti-corruption
Throughout 2015, the Bank has completed several competenceenhancing measures in the area. Amongst other things it has
organised professional gatherings for key persons who work
with anti-money laundering and a special forum for anti-money
laundering has been established.
The Bank’s operations and services require a high degree of
trust. The trust of customers and society in general is based on
a good reputation and a high ethical standard that is maintained
in all parts of the operations. In order to maintain a high ethical
standard, an Ethics Policy has been adopted by the Board of
Directors of Skandiabanken, and it is designed to contribute to
awareness of and compliance with the high ethical standard that
is required by employees of the Bank. These guidelines should
contribute to combating corruption, extortion, bribes, money
laundering, fraud, financing of terrorism and financing of criminal
activity, among other things.
Every year, all employees must complete a mandatory review of the
ethical guidelines. In 2015, employees completed the e-learning
course “Ethical Guidelines 2015”.
Skandiabanken has a special policy for good business ethics with
regard to sales and marketing
• All marketing should be serious, objective and comply with the current marketing rules and good business ethics
• The market or individual customers must never be given a false or exaggerated picture of the Bank or its products and services
• Information on or comparisons with competitors should be unbiased
• Information on competitors must not be misused
• Customers must be advised of the risk associated with the products that are offered
• For personal sales and advice: Never offer a customer a product that he/she does not need
• The customer must never be persuaded to change to a new product unless it gives the customer a benefit
• The Bank must be especially cautious with marketing aimed at children and young people
If an employee experiences incidents, or is made aware of
circumstances that are in violation of the external or internal
regulations, or other reprehensible matters, the Bank has a routine
for dealing with this (whistleblowing). The routines should make
sure that the whistleblower is protected and that the notification
is handled in a good way. Skandiabanken has not received any
notification of violations or reprehensible matters in 2015.
Anti-money laundering
Efforts to prevent money laundering and the financing of terrorism
have been on the agenda of the financial services industry for
a long time. Skandiabanken puts great care into compliance
with regulatory frameworks, and Skandiabanken has a duty to
report and is required by law to make an effort to prevent money
laundering and the financing of terrorism. The Money Laundering
Act and the FATF Recommendations provide the primary guidelines
for the Bank’s work in this area.
In addition, Skandiabanken pay close attention to the fourth EU
anti-money laundering directive, and it will make the necessary
adaptations in order to comply with national and international
obligations.
In 2015, employees completed the mandatory e-learning course
“Measures against Money Laundering and the Financing of
Terrorism at Skandiabanken”.
Human rights
Skandiabanken has a long-term and responsible perspective
for the management of the business. One key component is to
demonstrate responsibility for basic human rights and human
worth. This encompasses people with whom the Bank has a
business association and the Bank’s own employees. The Bank’s
respect for human rights is based on central conventions by the
United Nations.
The Bank fulfils its responsibility by setting requirements for its
partners and suppliers. The Bank requires that employees respect
each other both on and off the job.
Financial contributions
In 2014, the Bank established the Skandiabanken Ideer for Livet
Foundation (en: Ideas for Life) and a CSR program under the same
name in Norway. The inspiration came from Skandia’s long-standing
program with the same name in Sweden. In connection with the
transition to an independent company, the Norwegian foundation
was transferred to Skandia in 2015. At the same time the Norwegian
program was renamed Framgang sammen (en: Advancement
Together) and a foundation is being established with this name in
2016.
The projects that receive support must activate and involve children
and young people up to the age of 25, and they must promote
equality and equal treatment regardless of religion, gender, health,
sexual orientation or ethnic background. When assessing the
applications, the foundation also attaches importance to whether
the idea develops knowledge and/or skills in an engaging manner.
Other factors include whether the idea gives children and young
people an opportunity to socialise and meet new friends, and
whether the idea gives the participants a better self-image.
In 2015, the foundation Ideas for Life granted funding to 25 different
projects. A total of NOK 408,000 was granted. Under the name
Advancement Together, funding totalling NOK 150,000 was granted
to 10 projects in 2015.
>>
29
>> Corporate social responsibility (continued)
Projects that were supported in 2015:
Ethical labelling of funds
22B Contact Centre for Children and Young People
Active Breathing Space
Autism Association, Møre and Romsdal
Bjølsen School’s Cultural Forum
Bøler Textile Workshop, Østensjø
Children’s Red Cross Lillehammer (BARK)
Children’s Walking Club on Averøy
Fargespill Foundation
For the Families of Prisoners, Trøndelag
Girls Group at Styve Gard
Herøya Local Community Centre
Incredibly Important
Kongsvinger Fortress American Football Club
Larsen and Saturday Pancakes
Lismarka Rock School
Local Community Activities, Oppegård Municipality
Loen Youth Club, Hå Cultural Market
Norna-Salhus Sports Club
Norwegian Foster Home Association, Østfold
Norwegian Trekking Association Oslo at Sætren Gård
Open Air Gang, Skjervøy Primary School
Rabalder, Trondheim
Radio Harstad
Regncon Gaming Club
Rødbysætra Activity Centre
Salvation Army’s Music School in Oslo
Sandsli Coding Club
Single Parent Association of Rogaland
Single Parent Association of Rogaland
Single Parent Association of Østfold
Stine Sofie Foundation
Tausevika Residents’ Association
Toten State Reception Centre
Youth Mental Health, Asker and Bærum
The aim of ethical labelling is to give customers information that
enables them to make choices that they believe to be correct based
on their ethical norms. This labelling was introduced in 2010, and
Skandiabanken was the first bank to introduce such labelling.
Skandiabanken also supports projects by sponsorship.
The Bank’s office is located near a public transport hub, which
makes it easier for employees to use public transport traveling to
work. Arrangements have also been made for charging electric cars
in the Bank’s parking facility, and Skandiabanken cooperates with a
carpooling company to encourage employee carpooling.
The aim is for the sponsorship to be based on Skandiabanken’s
social engagement and make a positive contribution to the
marketing of Skandiabanken. Skandiabanken must only use
sponsorship funding for purposes that are consistent with the
Bank’s core values. The following purposes are relevant:
• Innovation and creativity
•Entrepreneurship
• Social commitment
• Humanitarian initiatives
For example, the Bank has sponsored Amnesty International since
2005. Skandiabanken aims to be open and available to students
and researchers who would like to study at the Bank. In 2015, two
leading researchers from the Norwegian School of Economics
studied conditions at the Bank.
30
On the Bank’s website, it is easy to see what funds have positive
or negative ethical labelling. This makes it easier for customers
to make conscious decisions when they save. At the same time,
they receive information on the ethical profile of the funds they are
saving in at all times.
Skandiabanken has established an Ethics Council acting as a
council for the responsible investment profile. Representatives
from management and committed employees work together with
a goal to establish a clear position as the most socially conscious
bank. The ethical labeling of funds is one of the results of this work.
Environment
The Bank’s employees should have a conscious attitude towards
consumption, travel, transport requirements and energy
consumption.
The Bank is continuously developing new products that reduce the
impact on the environment. Applying and signing for loans on the
Internet, mobile banking, SMS services and electronic distribution
of letters and agreements, reduce the need for transport and
consumption of paper. The goal is for all processes to be paperless.
In order to contribute to a transition to a more environmentally
friendly fleet of cars, Skandiabanken offers less expensive loans
for cars that satisfy the EU limit of less than 120 grams of CO2
emissions per kilometre.
Relationship to suppliers
Skandiabanken has the same requirements for suppliers as it
does for its own operations with regards to corporate social
responsibility and ethics. The Bank aims to assess the social
impact of the investments, and in this way contribute to
sustainable development and minimise the negative impact on the
environment.
Unity and friendship on stage
“Vera Verandas Vilje” is a children’s and
young people’s musical produced by
Bjølsen School’s Arts Forum. Around 40
children aged 10–14 from the Sagene area of
Oslo took part.
In other words, many children benefited
from support from the Framgang sammen
scheme (en: Advancement Together). It is
also an excellent voluntary project. Both
young and old are collaborating to get the
show on the road, and have managed to
hire free premises for the production.
It’s also free for children to attend. Sagene
is an urban area characterised by major
social differences. This part of the city is
home to both affluent and impoverished
families. The project prioritises establishing
meeting places where families from all
kinds of backgrounds can come together,
and everyone has the same opportunities
regardless of parental income.
A real enthusiast who never gives up
Together with the Childrens’ parents Anne
Britt Granaas has run the school choir
ever since its future was threatened by
a lack of funding. She is also involved in
a number of other projects in the area,
and is particularly keen to find places for
young people to meet irrespective of their
background.
The “Blue Crew” practises for the musical.
The application references were effusive
in their praise of Anne Britt. They were
impressed by Granaas’ enormous ability to
involve parents and children from families
who would not normally show such an
active interest in their local community, and
how she gets everyone to join in.
“She is a real enthusiast who never quits.
Whenever Anne Britt puts her mind to
something, you just know you’ll see
results.”
Skandiabanken’s Framgang sammen is
proud to sponsor Vera Verandas Vilje.
Performance of the musical Vera Verandas Vilje.
31
Board of Directors’ report
Operational review 2015
In 2015, Skandiabanken continued its strong growth in loan volumes
and income, and improved its net interest margin, while undergoing
a transformation from a branch to a fully independent bank.
Highlights of 2015 are:
• Separation from the Skandia Group and listing of Skandiabanken ASA
• Release of the third version of the online bank (“Skandiabanken 3.0”)
• Skandiabanken was, also this year, rated as the Bank in Norway with the most satisfied customers by EPSI
• Introduction of unsecured consumer loans
• Continued strong growth in lending
• Moody’s awarded Skandiabanken ASA a long term rating of A3 with stable outlook
• The effect of the upcoming transaction between Visa Inc. and Visa Europe Ltd.
In January 2015, the Bank’s ultimate owner, Livförsäkringsbolaget
Skandia, ömsesidigt(“Skandia Liv”), started an evaluation of the
potential for listing the Norwegian branch of Skandiabanken
AB on the Oslo Stock Exchange as a separate and independent
Norwegian bank. This process was concluded by the reorganisation
of the business into Skandiabanken ASA on 5 October 2015 (the
“Reorganisation”), and the subsequent listing of this company
on the Oslo Stock Exchange on 2 November 2015 (“the IPO”). A
detailed description of the establishment of Skandiabanken ASA is
found in note 3 to the financial statements.
In the first quarter of 2015, Skandiabanken released its third version
of the online bank since the launch in 2000. Skandiabanken 3.0
is a multi-platform online banking solution developed with small
mobile screens as the starting point. The new platform was rated,
by DinePenger.no, as the best mobile banking solution in Norway.
Further improvements to the user experience and functionality was
implemented throughout the year, among them was login by the
use of QR-code.
EPSI Rating group published its yearly customer satisfaction rating
for the Norwegian banking market in October. Skandiabanken was,
also this year, rated as the Bank in Norway with the most satisfied
customers.
After analysing the growing market for unsecured consumer loans,
and assessing the needs of the customer base, the Bank launched
“Brukslån” as a new product in April 2015. The product is primarily
aimed at existing customers with low to medium risk profile. The
product launch was well received and volume growth has been
better than expected. At year-end 2015, outstanding consumer
loans were NOK 694.9 million.
In November, the Bank started a pilot for the online distribution of
car insurance products related to car loans in cooperation with If
Skadeforsikring. Skandiabanken will evaluate this pilot during 2016.
In 2015, Skandiabanken continued its strong growth in loans to
customers, with an increase of 11.4 percent from NOK 51.0 billion at
the end of 2014 to NOK 56.8 billion at the end of 2015. The strong
growth was achieved despite a moderate growth in lending during
32
the first half of 2015, when the Bank adjusted its funding as part of
the preparations for the separation from Skandiabanken AB. Over
the last three years, loans to customers have increased by 112.7
percent, from NOK 26.7 billion.
Skandiabanken made a net profit of NOK 375.2 million in 2015 an
increase of NOK 3.3 million compared to NOK 371.9 million in 2014.
The profit was influenced by cost related to the Reorganisation and
the IPO.
Skandiabanken has successfully adapted deposit rates and lending
rates to the development in the money market. Together with
improvements to the Bank’s funding and liquidity management, and
a transition from the Swedish to the Norwegian deposit guarantee
scheme, the result was an increase in net interest margin from 1.46
percent to 1.53 percent.
Skandiabanken was awarded a long term rating of A3 with stable
outlook from Moody’s on 6 October 2015. Covered bonds issued by
Skandiabanken Boligkreditt AS were simultaneously awarded a long
term rating of Aaa from Moody’s.
On 2 November 2015, Visa Inc. and Visa Europe Ltd. announced
a transaction whereby Visa Inc. will acquire Visa Europe Ltd.
Skandiabanken has estimated a fair value of the cash payment and
preferred shares related to this transaction of total NOK 131 million
which has been entered as an “available for sale” asset in the
balance sheet per 31 December 2015.
Strategy and goals
Skandiabanken is a branchless digital challenger bank that offers
modern everyday banking products to Norwegian retail customers
through a user-friendly and adaptable banking platform. The
Bank’s value proposition is to offer a differentiated and transparent
banking experience in the Norwegian retail banking market,
primarily through a dedicated customer orientation, by which the
Bank has obtained a high standing amongst customers.
The development of the Bank’s concept has since launch in 2000
been pursued in a consistent manner across three dimensions: (i)
to offer a simple and transparent pricing structure which ensures
that the customer gets a “fair deal”, (ii) to continuously update and
optimise the product offering based on customer feedback in order
to maintain an intuitive and standardised offering that is relevant
to its customers, and (iii) to provide banking products and services
across a lean and efficient digital platform with leading accessibility
and usability across a broad range of user devices.
The key pillars of the Bank’s strategy are: (i) continued lending
growth through increased penetration within existing customer
base, (ii) increased penetration within investment products through
the migration of deposit based savings, (iii) maintaining a strong
balance sheet through balanced risk approach, (iv) further utilise
transaction-driven concept and industry-leading reputation to
increase the Bank’s share of wallet, and (v) leverage the scalability
of the business model to achieve an attractive return for the
shareholders.
The Bank has the following medium term financial and operational
targets:
Medium-term target
Actuals as of 2015
Return:
Reach a return on equity
of 14 percent
Dividend:
Pay-out ratio of up to 30
percent of the bank’s net
profit
Capital:
Maintain a CET 1 ratio of
13.5 percent (increased
from 13 percent on 31
March 2016)
11.0%
Not applicable
14.5%
Growth:
Grow the bank’s loan
book to over NOK 75
billion
Efficiency:
Improve the bank’s Costto-Income Ratio to 37
percent
51.3%
Maintain Loan Loss Ratio
per product at historic
levels
0.05%
Asset quality:
NOK 56.9 billion
The targets are based on capital requirements applicable to the
Bank and any future regulatory changes or changes in the economic
environment may result in changes to the Bank’s strategy and
consequently the financial targets above.
After the Reorganisation on 5 October 2015, the Bank’s capital
was strengthened in the fourth quarter of 2015 by way of: (i) NOK
292.5 million in new equity (net of fees) from the primary issue in
connection with the IPO, (ii) NOK 399.0 million in new perpetual
debt (net of fees) and (iii) NOK 131.0 million due to the accounting
effect of the Visa transaction.
The Bank’s return on equity was affected by non-recurring expenses
related to the separation and IPO process as well as the increased
capital mentioned above.
The Bank maintained a high quality in its loan book in 2015 and
continued the trend of low loan losses.
The Skandiabanken Group consists of Skandiabanken ASA and the
wholly owned subsidiary Skandiabanken Boligkreditt AS.
Financial results
In accordance with the provisions of the Norwegian Accounting Act,
the Board of Directors confirms that the financial statement has
been prepared on a going concern basis and that the going concern
assumption applies.
Pursuant to Section 3-9 of the Norwegian Accounting Act,
Skandiabanken prepares consolidated annual accounts in
accordance with IFRS, International Financial Reporting Standards,
(continued)
approved by the EU. The statutory accounts of Skandiabanken
ASA have been prepared in accordance with Norwegian IFRS
regulations.
Improved net interest margin, together with a strong growth in
lending, resulted in an increase of 13.8 percent in net interest
income to NOK 961.8 million (845.2).
The growth in net interest income was a result of a 11.4 percent
increase in loans to customers, together with an increase in net
interest margin from 1.46 percent to 1.53 percent. The increase in
loans to customers was driven primarily by an increase in home
loans. The new consumer finance product contributed positively,
while volumes of car-loans and other credit products were stable.
Net fee and commission income increased by 5.8 percent to NOK
156.7 million (148.1).The increase was primarily due to increased
funds under management (“FUM”) driven by positive net client cash
flow and higher market value of the mutual funds. The net fee and
commission income related to interbank and card payments was
relatively unchanged from 2014, while securities trading showed a
slightly negative trend.
2015 was influenced by the transition from a Norwegian branch of a
Swedish company, to an independent listed Norwegian commercial
bank. One-off expenses related to these changes amounted to NOK
95.8 million during 2015.
Operating expenses increased by NOK 106.8 million to NOK 568.5
million (461.7). Excluding costs related to the establishment of an
independent Norwegian bank and preparations for the planned IPO,
operating expenses increased by NOK 19.0 million, equivalent to an
increase of 4.1 percent. One-off costs related to other result items
are not included in these numbers.
The increase in underlying cost level was primarily related to
increased personnel costs following a planned increase in capacity
necessary to establish independent finance, accounting, treasury,
risk and compliance functions to replace services previously
delivered by Skandia Liv.
The Bank had a Cost-to-Income Ratio of 51.3 percent in 2015.
Adjusted for one-off expenses related to the separation and IPO
process in 2015 the ratio was 43.0 percent.
Net write-downs and provisions on loans and guarantees were NOK
16.1 million in 2015 (27.9). An amount of NOK 9.3 million (11.5) was
recovered from previously written-off claims. Actual losses were
NOK 22.2 million (23.4). The net cost of losses was NOK 29.0 million
(39.8). The loan loss ratio was 0.05 (0.08).
Skandiabanken made a net profit of NOK 375.2 million in 2015
compared to NOK 371.9 million in 2014.
On 2 November 2015, Visa Inc. and Visa Europe Ltd. announced
a transaction whereby Visa Inc. will acquire Visa Europe Ltd.
(the “Transaction”). The Transaction consists of an upfront cash
payment of EUR 11.5 billion, convertible preferred shares valued
at EUR 5.0 billion at the time of announcement, and a conditional
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33
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cash payment of up to EUR 4.7 billion, payable after the fourth
anniversary of the closing of the Transaction. The Transaction
is expected to close in the 2nd quarter of 2016 and is subject to
approval from competition authorities in the affected markets.
Skandiabanken is a member the Norwegian association “Visa Norge
FLI” (“Visa Norge”) which is a shareholder of Visa Europe Ltd.
Skandiabanken has in January 2016 received information from Visa
Norge, which has made it possible to estimate the Bank’s share of
the expected sales proceeds to Visa Norge.
The estimated fair value of the cash payment and preferred
shares related to the Transaction of total NOK 131 million has been
recognised as an “available for sale” asset in the balance sheet per
31 December 2015. The positive effect on CET1 is 0.4 percentage
points. For further detail please refer to note 39 of the financial
statements.
billion, down from NOK 15.7 billion last year. The covered bonds
issued by Skandiabanken Boligkreditt AS amounted to NOK 12.7
billion.
Skandiabanken held liquidity of NOK 8.5 billion (9.6) at yearend. The liquidity consisted of NOK 1.2 billion (1.5) in short term
lending to other credit institutions and central banks and NOK
7.3 billion (9.1) in interest bearing securities mainly issued by the
government, municipalities, financial institutions and investment
grade corporates.
Tax
At year-end, the Bank had a liquidity coverage ratio (LCR) of
186 percent. The Bank’s net stable funding ratio (NSFR) was 140
percent.
The total assets recognised on the balance sheet increased from
NOK 61.7 billion to NOK 65.6 billion. This was primarily due to an
increase in loans to customers. During 2015 a total of NOK 2.9
billion in loans was sold to Skandiabanken Boligkreditt AS after the
initial NOK 13.5 billion transferred at 5 October 2015 in connection
with the Reorganisation.
Skandiabanken’s tax expense was NOK 134.6 million in 2015 (143.6)
corresponding to an effective tax rate of 26.4 percent (27.9). The
lower tax rate is mainly a result of the tax effect from costs booked
against other equity related to capital increase and interest
payments to Tier 1 capital investors.
Net loans to customers increased to NOK 56.8 billion (51.0). After
having aimed for a moderate lending growth the first half year of
2015, the Bank had solid lending growth of 7.3 percent in the second
half of 2015. From the end of 2014, total loans to customers have
increased by 11.4 percent.
Financing, liquidity and balance sheet
During the first nine months of 2015, no new market funding
was issued by Skandiabanken while establishing the necessary
structures of the Reorganisation as well as to optimise the amount
of funding being transferred. Credit margins for both covered bonds
and ordinary senior debt increased through the second half of 2015.
The credit margin for subordinated and perpetual debt was also
widened during the same period.
In connection with the Reorganisation, Skandiabanken ASA issued
subordinated debt with a nominal value of NOK 500 million and
perpetual debt (“Hybrid capital”) with a nominal value of NOK 400
million.
The Hybrid capital instrument is perpetual with an option for the
issuer to redeem the capital at specific dates, the first time being 12
October 2020, 5 years after the issue date. The instrument has an
interest rate of NIBOR 3 months plus a margin of 4.1 percent.
Skandiabanken relies on customer deposits as the primary source
of funding. It is expected that market funding will play a more
important role as the Bank continues to grow the balance sheet
according to the medium-term plans.
Skandiabanken maintained a deposit-to-loan ratio of 83.1 percent
(85.3) during the year. Maintaining an attractive deposit product
has been important during 2015 to support the lending growth,
while preparations for the Reorganisation put a hold to other
funding activities.
At year-end total capital market funding amounted to NOK 15.0
34
(continued)
The Bank’s new consumer loan product showed a strong volume
development after its launch in the second quarter. At year-end,
outstanding consumer loans were NOK 694.9 million compared to
NOK 367.5 million at the end of the second quarter. Volumes of car
loans and other credits (accounts credits, credit cards and custody
account lending) have been stable over the past year.
Customer deposits increased to NOK 45.5 billion (42.4), which
is 7.4 percent higher than at the end of last year, and in line with
expectations.
Total equity increased significantly during 2015 to NOK 4.3
billion (2.7). The majority of the increase is related to the equity
injections and additional Tier 1 capital raised in connection with the
Reorganisation as well as the primary issue in connection with the
IPO.
The customers’ net investments in funds under management
increased to NOK 6.7 billion (4.7). The increase reflects a
substantial growth in net client cash flow in mutual funds and
an increase in the market value of mutual funds from last year.
Net client cash flow was significantly higher in 2015 compared to
previous years, especially during the first half, ending up in a total
of NOK 1.4 billion.
Dividend and allocation of profit
Skandiabanken financial target is to ensure an attractive and
competitive return on equity while supporting the planned growth,
thus creating value for the owners through increased share price
and dividend payments. Skandiabanken’s medium-term target is to
distribute up to 30 percent of net annual profits as yearly dividends,
starting 2017.
When considering the dividend proposal of 2015 both the
underlying targets and strategic plans presented in the IPO as well
as capital adequacy requirements have been taken into account.
The Board of Directors has thus proposed a dividend for 2015 of
NOK 0 per share, in line with dividend plans presented in the IPO.
Due to the Reorganisation the parent bank’s profit represents
the period 5 October 2015 to 31 December 2015. Net profit for
the period until 4 October 2015 of NOK 270.7 million is related to
Skandiabanken AB NUF and was allocated to retained earnings
as a part of the Reorganisation. The board proposes the following
allocation for 2015:
In NOK thousands
Parent bank’s net profit for the year
Distributable to Tier 1 capital investors
Distributable to equity investors
Dividend
Retained earnings
Total
NOK million
84.2
5.0
79.1
0.0
79.1
79.1
In the opinion of the board, following the proposed allocations,
Skandiabanken will have a strong financial position and have
sufficient flexibility to support the Bank’s planned activities.
Risk and capital adequacy
Capital adequacy
During 2015, the capitalisation has been improved as a result of
the Reorganisation taking place on 5 October 2015 as well as the
primary equity issue in connection with the IPO. Additionally, an
accounting effect due to the transaction between Visa Inc. and Visa
Europe had positive effects on the capital adequacy in the fourth
quarter.
At year-end, Skandiabanken had a leverage ratio of 5.5 percent.
At the same time the Bank had a CET1 ratio of 14.5 percent and a
total capital ratio amounting to 17.8 percent. Comparable figures
for 2014 are not presented as the Bank did not have a separate
calculation of capital adequacy and leverage ratio as a branch of
Skandiabanken AB.
At year-end, Skandiabanken had a CET1 ratio target of 13 percent
and a total capital ratio target of 16.5 percent. Based on the ICAAP
report conducted in the first quarter of 2016, the Board of Directors
decided on 31 March 2016 to increase Skandiabanken’s CET1 ratio
target to 13.5 percent, to implement a Tier 1 capital ratio target of
15 percent and increase the total capital ratio target to 17 percent.
In the ICAAP report the Pillar 2a requirement is assessed to be 1
percent and the Pillar 2b requirement to be 0 percent, implying a
total Pillar 2 requirement of 1 percent. The increased capital ratios
entail that Skandiabanken targets a capital adequacy well above
the regulatory minimum, while our strong capital position enables
further growth.
(continued)
Risk management
Skandiabanken’s core business is to offer standard banking services
and creating value by assuming recognised and acceptable risks
deriving from this. The Bank shall have a sound and balanced
risk culture, based on transparency and competence, and shall
constantly challenge its methods, processes and routines in order
to improve its performance.
The Bank applies a holistic approach to risk management. The most
important risks the Bank is exposed to are credit risk, market risk,
liquidity risk and operational risk.
Credit risk
Credit risk accounts for the majority of Skandiabanken’s risk and is
defined as the risk of loss resulting from a counterparty not fulfilling
their obligations, simultaneously as the collateral pledged does not
cover the outstanding claim.
Skandiabanken’s lending to the public comprises retail market
credit to individuals primarily in the form of mortgages, car-loans,
home equity credit loans, consumer loans, account credits and
credit cards, as well as custody account credits. The Bank’s lending
portfolio is of high quality and mortgages have a relatively low loan
to value (LTV). At the end of 2015, the weighted average LTV was
57.0 percent (58.2).
When granting credits, an automated credit decision system
based on defined criteria and scorecards that evaluate solvency,
probability of default and security collateral is used. Automated
credit decision ensures a homogeneous loan portfolio where the
quality is high.
Skandiabanken’s excess liquidity of NOK 8.5 billion is invested
in short term loans to other financial institutions and securities
issued by the government, municipalities, financial institutions and
investment grade corporates.
Market risk
Market risk is the risk of loss due to unfavourable changes in market
variables, such as interest rates, exchange rates and credit spreads.
Skandiabanken is exposed to market risks such as interest rate risk,
currency risk, equity risk and credit spread risk.
Skandiabanken does not have lending or funding in any foreign
currency and thus has a low currency risk.
The bank has limited price risk related to equities; the exposure
was NOK 8.5 million at year-end.
All lending provided by Skandiabanken has variable interest rates.
The same applies to deposits, and the bank’s capital market
funding mainly has NIBOR 3 months as reference rate. This results
in low interest rate risk.
Credit spread risk is the risk that the value of interest-bearing
securities will be reduced as a result of an increase in the credit
margin for corresponding credit instruments in the market. The
bank calculates its exposure to credit spread risk in accordance
with the methodology prescribed by the Norwegian Financial
Supervisory Authority (the “Norwegian FSA”, Nw.: “Finanstilsynet”)
>>
35
>>
(circular 9/2015). The bank’s credit spread risk at year end was
estimated to NOK 103 million and relates to interest bearing
securities issued by municipalities and to covered bonds.
Liquidity risk
Liquidity risk comprises the following two elements: refinancing
risk which is the risk of the bank being unable to refinance its
obligations as they fall due for payment, and price risk which is the
risk of the bank being unable to refinance its obligations without a
material increase in costs.
Skandiabanken maintains a prudent liquid asset buffer of high
quality unencumbered assets in line with the LCR requirement as
described under Credit risk above.
At year end, the bank’s LCR and NSFR was 186 percent and 140
percent respectively.
Skandiabanken ASA has a long-term rating of A3 with a stable
outlook from Moody’s. Covered bonds issued by Skandiabanken
Boligkreditt AS has a long-term rating of Aaa from Moody’s.
Operational risk
Operational risk is defined as the risk of unexpected losses due to
inadequate internal controls, human errors, a failure of processes
or systems or unexpected losses arising from external events.
The risk also includes the risk that agreements or other legal
enforcements cannot be enacted as assumed, and the risk that the
bank will not be compliant with applicable laws and regulations
(compliance risk).
The bank offers only services to the consumer market and any
granting of new loans are to a large degree based on automated
loan and credit processes, which reduce the risk of human errors,
and thus reduce the operational risk profile.
In its operational risk management, the bank places emphasis
on its internal controls including a strong control environment, a
systematic risk assessment process and established procedures in
case of critical events.
Technology and product development
Skandiabanken released its third version of the online bank in 2015.
Skandiabanken 3.0 is a multi-platform online banking solution
developed with “mobile first” as the starting point. The responsive
design ensures that customers face the same interface, with the
same functionality and products available across all devices and
screen sizes.
The new Skandiabanken 3.0 is highly flexible with content
adaptable to each customer. In a study by Deloitte and Halogen,
published in April 2015, the new mobile bank solution was rated as
the best solution in the Norwegian market.
The bank applies agile-framework and methods for the
development and maintenance processes and strives to frequently
introduce updates to customers.
36
(continued)
In line with Skandiabanken’s ambition to continuously improve
and simplify the user experience, Skandiabanken has six different
log-in options, including the use of QR-code launched in 2015. In
early 2016, Skandiabanken opened up for login with Touch-ID for
customers using Apple’s iPhone.
During 2015, the bank also introduced an updated stock trading
platform in the online bank with improved design and functionality
based on the same responsive user interface as Skandiabanken 3.0.
Skandiabanken has continued its strong emphasis on security. After
receiving the “Fidus price” for distinguished work with IT-security
in both 2010 and 2011, Skandiabanken was nominated for this price
also in 2015. The focus on security is assured through a competent
security organisation and important security issues are discussed
monthly in a dedicated security forum.
The bank monitors IT-stability based on several measures.
During 2015, user experienced stability has been satisfactory and
according to internal targets.
Corporate governance
Skandiabanken follows the Norwegian code of practice for
Corporate Governance, as described in this report on pages 18 to
23. During 2015 the Board of Directors of Skandiabanken ASA held
ten meetings including meetings held before the Reorganisation on
5 October 2015.
The main focus of the board in 2015 has been the transition from
a Norwegian branch of Skandiabanken AB to an independent
Norwegian bank, and the subsequent listing of the bank’s shares
on the Oslo Stock Exchange. The board’s key priorities during
this phase were to ensure a proper capitalisation of the bank and
relevant systems, procedures, capacity and competence for risk
management. The bank’s strategy, financial results, funding and
risk management have also been priorities, as well as changes to
the macroeconomic and regulatory environment.
The Board of Directors has three sub-committees: the
Audit committee, the Risk Management committee and the
Compensation committee. The sub-committees have scheduled
meetings related to their respective areas of responsibility.
Corporate Social Responsibility
The bank’s products and services constitute an important function
in the society. Therefore, it is necessary to practice a long-term
perspective and manage the business in a responsible manner.
As a former part of the Skandia Group, Skandiabanken benefitted
from being a part of the Skandia Group’s CSR programme. After the
Reorganisation the bank is in the process of establishing its own
CSR activities and guidelines.
The bank shall respect fundamental human rights and human
dignity as expressed in international conventions, such as: UN
human rights conventions, the European Convention on Human
Rights and other conventions to which Norway is a signatory. The
bank shall also support and adhere to the principles of the UN
Global Compact.
Skandiabanken aims to be a responsible bank. Everything the
bank does and communicates shall be transparent and «fair deal»
shall be evident in concepts, product development and pricing.
Skandiabanken shall be a responsible everyday bank which enables
its customers to make smart economic choices and conscientious
purchases of banking products.
Ethics and anti-corruption
Skandiabanken has an established policy for ethics, which sets out
criteria and guidelines to further awareness of, and compliance
with, the high ethical standards required of all Skandiabanken
employees and the Board of Directors. Ethical standards are also an
integral part of the bank’s standard conditions of employment. All
new employees are trained in the policy and supporting guidelines,
which is also subject to a mandatory annual review for all of the
bank’s employees.
Anti-money laundering
Skandiabanken has an established policy for anti-money
laundering, which sets out the control and surveillance
mechanisms, risk analyses and activities in order to secure
adequate controls in respect of the identified risks. Internal
activities are coordinated by dedicated anti-money laundering
responsible staff.
Customer privacy and information security
Skandiabanken handles substantial amounts of customer data.
Skandiabanken has an established policy for information security,
which sets out the protective actions against undesired deviations
within confidentiality, integrity, availability and traceability.
Operations and the environment
Skandiabanken’s direct impact on the climate and the environment
is mainly related to general consumption, business travel, waste
management and energy-efficient operations.
The bank continuously develops new products and services which
reduces the impact on the environment. Application and signing
of credit agreement online, mobile banking, SMS services and
electronic distribution of letters and agreements reduces both
logistics and paper consumption. The target is that all processes
shall become paperless.
As the first bank in Norway, Skandiabanken in 2010 introduced
ethical branding of mutual funds available on its fund trading
platform.
In order to contribute to the transition towards a more
environmental friendly car fleet in Norway, Skandiabanken offers
more affordable loans to cars which fulfil the EU limit of less than
120 grams CO2 emission per kilometre.
The bank’s offices are located close to a public transport hub,
which enables employees to use public transport in commuting to
their job. The bank’s parking premises facilitate charging of electric
vehicles, and Skandiabanken encourages the use of carpooling.
(continued)
Work environment, sickness absence and HSE
In order for the bank to be able to attract and retain capable
employees, the bank aims to create a positive working environment
characterised by well-being and satisfied employees. The bank
promotes work/life balance and has flexible work schemes that
make it easier to combine a career with family life. This leads to
highly motivated and high performing employees that can evolve
and combine their expertise with customer focus and commitment.
In 2015, sickness absence was 4.7 percent, up from 3.0 percent
in 2014. The bank closely monitors and evaluates the sickness
absence measure on a monthly basis to ensure proper actions are
initiated as early as possible.
Employees on long-term sickness leave are offered coaching and
guidance by the bank’s HR-department.
Every year the bank performs two organisational surveys focusing
on culture as well as employee satisfaction and leadership. The
results are overall positive. Among other aspects, the surveys seek
to measure differences between genders regarding salary and
development opportunities, employee accountability, satisfaction
and commitment as well as issues regarding harrassment. The
results are followed up closely by line managers and the HRdepartment.
Skandiabanken aims to actively protect the working environment.
The bank’s ethical guidelines emphasises the bank’s focus to
prevent discrimination and harassment.
During 2015, no work related injuries or accidents were recorded.
Equal rights
The bank’s policy is to combat discrimination based on ethnicity,
religion, gender, age, marital status, sexual orientation or
disabilities.
In 2015 Skandiabanken had a workforce corresponding to 270 full
time equivalents, of which 53 percent men and 47 percent women.
The Board of directors consists of six members of which three men
and three women. The Executive management group consists of ten
members, of which seven men and three women. Skandiabanken
has a total of 23 appointed managers, of which 13 men and 10
women.
Regulatory framework
On June 15, The Ministry of Finance established a new regulation
regarding requirements for new mortgages. The regulations
stipulate requirements regarding the customers’ ability to
service the loan, loan-to-value and it regulate the use of grace
periods. The new regulations did not have any material effect on
Skandiabanken’s product offerings.
The Ministry of Finance decided on June 18 that the level of the
countercyclical capital buffer requirement for banks, a part of the
CET1 requirements under Pillar 1, will be increased to 1.5 percent
>>
37
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from 30th of June 2016, up from 1 percent that was in effect from
1st of June 2015. Based on this decision, Skandiabanken will face a
CET1 requirement under Pillar 1 of 11.5 percent from 30 June 2016.
at the end of 2015 mainly due to the depreciation of the Norwegian
krone. Norges Bank expects the inflation rate to gradually decrease
as the effect of the depreciation of the krone subsides.
The circular 9/2015 «Finanstilsynets praksis for vurdering av risiko
og kapitalbehov» describes the Norwegian FSA’s method for
assessment of the institutions’ overall risk level and accompanying
capital requirement, including division of the banks into five groups
based on size, complexity, scope and the degree of risk the bank
represents for the financial system (group 1 being the top).
Norges Bank’s key policy rate was reduced by 0.5 percentage
points, from 1.25 to 0.75 percent during 2015.
Towards the end of the fourth quarter, the Norwegian FSA informed
Skandiabanken ASA that the bank has been categorised in group
2, cfr. Circular 9/2015. This means that the Norwegian FSA every
second year will perform a detailed evaluation with a formal
response, unless specific conditions should imply otherwise. The
response will be based on Skandiabanken’s filed risk and capital
adequacy assessment (ICAAP) and the Norwegian FSA‘s risk
assessment. The Norwegian FSA will, as part of this process, set
an individual Pillar 2 requirement for the bank, to cover risks not
provided for, or only partly provided for by Pillar 1 requirements.
Activity in the real estate market was high in 2015, and average
prices for residences increased by 7.2 percent from 2014. In
December the 12-month growth in prices was 5 percent, indicating
a slow-down in the price-growth. The Stavanger area saw a price
decrease of 5.3 percent from December 2014 to December 2015,
reflecting the effect of a slow-down in oil-related activities in this
region.
The ICAAP is performed annually. After the transition from a
foreign branch to a stand-alone Norwegian bank, Skandiabanken
conducted an update of the ICAAP for the period 2016-2018 in
the first quarter for 2016. Based on this new ICAAP report the
Board of Directors decided to increase the capital targets. In the
report Skandiabanken assesses its Pillar 2 requirement to be 1
percent. The ICAAP has been filed with the Norwegian FSA but
Skandiabanken does not expect to receive the Norwegian FSA’s
response and stipulation of the Pillar 2 buffer until the second
quarter of 2016,
at the earliest.
ICAAP for the period 2017-2019 is planned to be conducted in the
autumn of 2016 and be filed with the Norwegian FSA in the fourth
quarter.
On 25 November, The Ministry of Finance disclosed new regulatory
requirements for Liquidity Coverage Ratio (LCR) under the EU’s
CRR/CRD IV regulations. The regulatory requirement will be an LCR
of 70 percent from 31 December 2015, 80 percent from 31 December
2016 and 100 percent from 31 December 2017.
The Norwegian economy is undergoing a moderate slowdown
mainly led by reduced investments in the oil sector, a weak global
economy and a low growth in mainland investments. Preliminary
numbers from Statistics Norway imply that GDP growth decreased
from 2.2 percent in 2014 to 1.8 percent in 2015. Statistics Norway
expects a decrease in GDP growth to 1.7 percent in 2016 before a
gradual increase in growth from 2017.
Unemployment is still low, but increased from 3.8 percent at the
end of 2014 to 4.5 percent at the end of 2015. Statistics Norway
expects the unemployment rate to increase to 4.6 percent in 2016
before a reduction to 4.4 percent in 2017.
The inflation rate, measured by CPI (ex. energy and adjusted for
taxes) increased from 2.4 percent at the end of 2014 to 3.0 percent
38
(continued)
Statistics Norway expects a moderate cyclical upturn from the
second half of 2016, led by a significant increase in public spending
and a turnaround in mainland industry investments.
Subsequent events
The transaction whereby Visa Inc. will acquire Visa Europe Ltd.
is expected to close in the 2nd quarter of 2016 and is subject to
approval from competition authorities in the affected markets.
Skandiabanken has in January 2016 received information from
Visa Norge, which has made it possible to estimate the bank’s
share of the expected sales proceeds to Visa Norge. Please refer
to information above and note 39 to the financial statements for
further details.
In January 2016, Skandiabanken ASA has entered into agreements
with Atea AS for operating the bank’s office IT platform, Basefarm
AS for operating the bank’s business IT platform and Tieto Norway
AS for the bank’s equity and fund trading platform. These services
will replace services currently provided by Livförsäkringsbolatet
Skandia («Skandia Liv») and Skandiabanken AB under Transitional
Service Agreements (“the TSA’s”).
In January 2016, Skandiabanken in cooperation with Holberg
Fondsforvaltning launched three lifecycle funds. The funds invest
in other mutual funds, and the investment and risk profiles of the
individual life cycle funds are adapted to three alternative time
horizons.
The Ministry of Finance has in February 2016 confirmed the fee for
entering into the Norwegian Banks’ Guarantee Fund (Nw.: Bankenes
Sikringsfond) to NOK 7.8 million, compared to the earlier estimate
of NOK 40.0 million
The bank lowered the interest rate level for home loans as well
as deposit products with effect from 30 March 2016. Norges Bank
lowered its key policy rate from 0.75 percent to 0.50 percent on 17
March 2016.
Based on the ICAAP report conducted in the first quarter of 2016,
the Board of Directors decided on 31 March 2016 to increase
Skandiabanken’s CET1 ratio target to 13.5 percent, to implement
a Tier 1 capital ratio target of 15 percent and increase the total
capital ratio target to 17 percent. In the ICAAP report the Pillar
2a requirement is assessed to be 1 percent and the Pillar 2b
requirement to be 0 percent, implying a total Pillar 2 requirement
of 1 percent. The increased capital ratios imply that Skandiabanken
targets a capital adequacy well above the regulatory minimum,
while the strong capital position enables further growth.
Outlook
The economic forecasts from Norges Bank document an increasing
unemployment in regions with a strong connection to the oil service
industry, and indicate that national unemployment is expected
to increase somewhat in 2016. The growth in housing prices also
weakened in 2015, but there are regional differences, and in some
areas housing prices have corrected as a result of the development
in the petroleum sector.
A lower interest rate level and a weakened NOK exchange rate has
in isolation a stimulating effect on the mainland economy, and
the low interest rate level has a stimulating effect on the housing
market. The incumbent government is showing willingness to
implement measures in order to stimulate the Norwegian economy.
Skandiabanken continuously evaluates its credit policies to ensure
that the risk in the loan book does not increase significantly as a
result of the macroeconomic development.
Based on implemented price changes Skandiabanken expects a
relatively stable development in the interest margin short term. If
Norges Bank implements several key policy rate reductions in 2016,
the net interest margin could be reduced during the year.
(continued)
The EU Commission has changed the regulation concerning
interchange fees for card-based payment transactions. The
change is introduced with effect from 2016 and means that
provision income from card services will be reduced in 2016.
Following the conversion from a foreign branch to a Norwegian
commercial bank Skandiabanken ASA was listed on the Oslo Stock
Exchange in the fourth quarter of 2015. In order to secure the
required competence, capacity and access to support systems, the
bank will in a period of up to 18 months from the establishment have
certain services provided by Skandia Liv and Skandiabanken AB.
The new positions necessary to operate as a stand-alone bank, fully
independent of its previous owner, have been filled during the first
quarter of 2016. The treasury function is expected to be operating
with internal resources on the new IT platform from the second
quarter of 2016. The phasing in of new IT-operation services and
new equity and fund trading platform is in progress and is expected
to be in operation late in the second half of 2016.
Increased staffing and the phasing in of new IT systems, while the
Bank during the same period purchases external services through
the TSA’s, will have a negative impact on operating expenses in
2016. After the TSA’s with Skandia Liv and Skandiabanken AB are
terminated, it is expected that the terms of the new agreements
to a large extent will compensate for the increase in personnel
expenses and other running costs related to becoming an
independent bank.
Bergen 31 March 2016
Niklas Midby
Mai-Lill Ibsen
August Baumann
Øyvind Thomassen
Ragnhild Wiborg
Jon Holmedal
(Chairman)
Magnar Øyhovden
(CEO)
39
40
40
SKANDIABANKEN ASA GROUP
Annual accounts and notes Skandiabanken ASA Group
Page Content
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Income statement
Statement of comprehensive income
Balance sheet
Statement of changes in equity
Statement of cash flows
Notes Skandiabanken ASA Group
Note 1 Accounting principles
Note 2 Critical accounting estimates and judgment in applying accounting policies
Note 3 The establishment of Skandiabanken ASA
Note 4 Segments
Note 5 Capital adequacy
Note 6 Calculation of Leverage Ratio
Note 7 Financial risk management
Note 8 Credit risk
Note 9 Loans to customers
Note 10 Loans to customers by geographical area
Note 11 Credit risk exposure and collateral
Note 12 Loans to and receivables from credit institutions
Note 13 Loans to and receivables from central banks
Note 14 Loan losses
Note 15 Non-performing and doubtful loans
Note 16 Guarantees and collateralised debt
Note 17 Liquidity risk
Note 18 LCR and NSFR
Note 19 Maturity analysis of liabilities
Note 20 Subordinated loan
Note 21 Additional Tier 1 capital (hybrid capital)
Note 22 Debt securities issued
Note 23 Deposits from customers
Note 24 Market risk and sensitivity
Note 25 Repricing structure
Note 26 Financial derivatives
Note 27 Operational risk
Note 28 Net interest income
Note 29 Net commission and fee income
Note 30 Net gain (loss) on financial instrument
Note 31 Operating expenses
Note 32 Remuneration to the statutory auditor
Note 33 Personnel expenses and benefits/remuneration to executive management and governing bodies
Note 34 Tax expense
Note 35 Classification of financial instruments
Note 36 Commercial paper and bonds
Note 37 Shares and mutual funds
Note 38 Fair value of financial instruments at amortised cost
Note 39 Financial instruments at fair value
Note 40 Other assets
Note 41 Intangible assets
Note 42 Property, plant and equipment
Note 43 Other liabilities
Note 44 Pensions
Note 45 Related party transactions
Note 46 Shareholders
Note 47 Earnings per share
Note 48 Subsequent events
41
Income statement
In NOK thousands
Note
2015
2014
Interest income
Interest expense
Net interest income
28
28
1 900 901
-939 075
961 826
2 092 985
-1 247 798
845 187
Commission and fee income
Commission and fee expense
Net commission and fee income
29
29
272 734
-116 018
156 716
267 359
-119 295
148 064
Net gain/(loss) on financial instruments
Other income
Other operating income
30
-11 272
58
-11 214
20 573
3 163
23 736
33, 44
31, 32
31
-197 063
-370 142
-1 298
538 825
-172 362
-287 901
-1 486
555 238
Loan losses
Profit before tax
14
-29 010
509 815
-39 763
515 475
Tax expense
Profit for the period
34
-134 596
375 219
-143 576
371 899
47
21
370 173
5 046
375 219
371 899
n.a
371 899
2015
2014
375 219
371 899
Other comprehensive income:
Net change in fair value of financial assets available for sale
Tax effect
Other comprehensive income that can be reclassified to profit or loss after tax
93 265
8 881
102 146
-7 063
1 907
-5 156
19 411
-5 435
13 976
-5 159
1 393
-3 766
Total components of other comprehensive income (after tax)
116 122
-8 922
Total comprehensive income for the period
491 341
362 977
486 295
5 046
491 341
362 977
n.a
362 977
Personnel expenses
Administrative expenses
Depreciation and impairment of fixed and intangible assets
Profit before loan losses
Attributable to
Attributable to shareholders
Attributable to additional Tier 1 capital holders
In NOK thousands
Actuarial gains (losses)
Tax effect
Other comprehensive income that can not be reclassified to profit or loss after tax
Attributable to
42
Note
44
21
Balance sheet
In NOK thousands
Note
Assets
Cash and receivables with central bank
Loans to central bank
Loans to and receivables from credit institutions
Loans to customers
Total loans to customers, central bank and credit institutions
Commercial paper and bonds available for sale
Shares and funds available for sale
Derivatives
Intangible assets
Deferred tax assets
Property, plant and equipment
Other assets
Advance payments and accrued income
Total assets
Liabilities
Loans and deposits from credit institutions
Deposits from customers
Debt securities issued
Taxes payable
Pension commitments
Other liabilities
Subordinated loan
Total liabilities
Equity
Synthetic capital
Share capital
Share premium
Additional Tier 1 capital
Other equity
Total equity
Total liabilities and equity
31.12.15
31.12.14
11, 13
11, 13
11, 12
8, 9, 10, 11, 14
559 507
0
605 532
56 763 604
57 928 643
587 744
700 000
203 103
50 951 177
52 442 024
11, 16, 36, 39
11, 37, 39
11, 26
41
34
42
40
7 280 733
139 912
555
832
10 068
3 581
139 159
77 499
65 580 982
9 057 050
2 486
0
0
7 473
2 425
97 701
107 763
61 716 922
12
17, 19, 23
17, 19, 22
34
44
43
17, 20
11 515
45 457 206
14 992 661
32 789
23 092
278 895
498 812
61 294 970
11 638
42 427 557
15 688 089
139 139
43 407
284 365
443 045
59 037 240
0
1 065 250
2 609 918
405 046
205 798
4 286 012
65 580 982
956 278
0
0
0
1 723 404
2 679 682
61 716 922
46
21
Subsequent events
48
Niklas Midby
Mai-Lill Ibsen
August Baumann
Øyvind Thomassen
Ragnhild Wiborg
Jon Holmedal
(Chairman)
Magnar Øyhovden
(CEO)
43
In NOK thousands
Equity as at 01.01.14 Skandiabanken AB NUF
Synthetic
capital
Share
capital
Share
premium
Additional
Tier 1
capital
297 000
-21 382
17 254
0
Actuarial gains and losses for the period
Net change in fair value of financial instruments
available for sale
Changes in
fair value
of financial
Actuarial instruments
gains and available for
losses
sale
Total equity
1 360 309
1 653 181
371 899
371 899
-3 766
0
-3 766
-5 156
Implementing effect of IAS19R 01.01.14
-5 156
4 246
4 246
Capital increase in Skandiabanken AB NUF in the
period 01.01.14 to 31.12.14
659 278
Balance sheet as at 31.12.14
956 278
-20 902
12 098
1 732 208
2 679 682
956 278
-20 902
12 098
1 732 208
2 679 682
270 694
270 694
659 278
Profit for the period (01.01.15 to 04.10.15)
(01.01.15 to 04.10.15)
-859
available for sale (01.01.15 to 04.10.15)
Capital increase in Skandiabanken AB NUF
in the period 01.01.15 to 04.10.15
Hereof share capital as at 05.10.15 in
Skandiabanken ASA (see note 3)
423 600
-21 761
589
2 382 780
2 382 780
-21 761
1 000 000
2 382 780
-21 761
-21 761
589
589
589
3 361 608
99 478
Profit for the period to Tier 1 capital holders
(05.10.15 to 31.12.15)
5 046
(05.10.15 to 31.12.15)
14 835
14 835
113 657
292 388
400 000
1 065 250
113 657
227 138
Issue of Tier 1 capital 05.10.15 net of issuing cost
2 609 918
* Expenses of NOK 7.5 million related to the capital increase is recorded against the share premium
99 478
5 046
65 250
3 361 608
1 000 000
Profit for the period to other equity
(05.10.15 to 31.12.15)
2 002 902
1 000 000
Hereof accumulated changes in fair value of
financial instruments available for sale as at
05.10.15 in Skandiabanken ASA
Capital increase 02.11.15 net of issuing cost*
-11 511
423 600
1 379 878
Hereof actuarial gains and losses as at 05.10.15 in
Skandiabanken ASA
Total ingoing balance as at 5.10.15 in
Skandiabanken ASA
-859
-11 511
Hereof share premium as at 05.10.15 in
44
Other
equity
405 046
-6 926
114 246
-1 000
399 000
98 478
4 286 012
01.01 - 31.12
In NOK thousands
Note
Cash flow from operating activities
Net payments on loans to customers
Interest received on loans to customers
Net receipts on deposits from customers
Interest paid on deposits from customers
Net receipts/payments from buying and selling financial instruments at fair value
Interest received from commercial paper and bonds
Receipts related to commissions and fees
Payments related to commissions and fees
Payments related to administrative expenses
Payments related to personnel expenses
Taxes paid**
Other receipts/payments
Net cash flows from operating activities
2014
-5 816 226
1 767 940
3 029 648
-695 861
1 733 656
142 062
271 146
-111 640
-374 199
-197 178
-240 091
-10 360
-501 103
-7 533 181
1 834 727
4 639 486
-933 460
-1 937 272
157 913
266 492
-117 886
-288 438
-181 786
-84 755
51 123
-4 127 037
42
41
-2 440
-847
-3 287
-593
0
-593
EQ*
20
EQ*
20
28
21
423 600
-443 045
292 388
498 750
-12 772
400 000
0
3 305 000
-4 035 000
-250 339
178 582
659 728
-2 365 088
0
0
-13 327
0
0
10 500 000
-3 485 000
-271 495
5 024 818
Total net cash flow
-325 808
897 188
Cash at the beginning of the period
Cash at the end of the period
Change in cash
1 490 847
1 165 039
-325 808
593 659
1 490 847
897 188
Cash
Loans to credit institutions
Total cash
559 507
0
605 532
1 165 039
587 744
700 000
203 103
1 490 847
Cash flows from investment activities
Payments on the acquisition of fixed assets
Payments on the acquisition of intangible assets
Net cash flows from investment activities
Cash flows from financing activities
Receipts on synthetic capital to Skandiabanken AB NUF before 04.10.15
Payment of subordinated loan to Skandiabanken AB
Receipts on share capital and share premium net of issuing cost
Receipts on subordinated loan net of issuing cost
Interest paid on subordinated loan
Receipts on issued additional Tier 1 capital
Interest paid on additional Tier 1 capital
Receipts on issued bonds and commercial paper
Payments on matured and redeemed bonds and commercial paper
Interest paid on issued bonds and commercial paper
Net cash flows from financing activities
9, 10
28
23
28
36
28
29
29
31, 32
33
34
2015
22
22
28
EQ* = see Statement of changes in equity
** = see note 34 Tax expense
45
46
Notes
46
1. General information
Skandiabanken ASA and its wholly owned subsidiary Skandiabanken Boligkreditt AS are incorporated in Norway. Its registered
office is Folke Bernadottesvei 38 in Bergen, Norway.
Skandiabanken ASA and Skandiabanken Boligkreditt AS were
incorporated 17 April 2015. On 5 October 2015 the business of
Skandiabanken AB NUF (branch of Skandiabanken AB in Sweden)
was reorganised into Skandiabanken ASA and Skandiabanken
Boligkreditt AS. The reorganisation is accounted for as a capital
reorganisation. Reference is made to note 3 for a description of the
transaction and the accounting treatment.
Skandiabanken ASA was listed on Oslo Stock Exchange on 2
November 2015.
2. Basis of preparation
The consolidated financial statements have been prepared in ac
cordance with International Financial Reporting Standards (IFRS).
The Bank has applied all standards and interpretations approved by
International Accounting Standards Board (IASB) and International
Financial Reporting Interpretations Committee (IFRIC), as endorsed
by the EU, that are relevant to the business of the Bank and that are
mandatory for accounting periods starting 1 January 2015.
The consolidated financial statements have been prepared under
the historical cost convention, except for financial instruments
measured at fair value through profit or loss.
The comparable figures for 2014 are to some extent restated
or reclassified to comply with the presentation of the financial
statements of 2015. This has been done solely for presentation
purposes and to provide better comparability for the reader.
Reference is made to Note 3.
The consolidated financial statements have been prepared on a
going concern basis, and were approved by the Board of Directors
31 March 2016.
3. New or revised standards and interpretations effective from
1 January 2015
The Bank has not adopted any new standards, revised standards
or interpretations effective from 1 January 2015 that have had a
material impact on the financial statements. Skandiabanken ASA
was listed on Oslo Stock Exchange on 2 November 2015, and as a
result the Bank now report earnings per share in accordance with
IAS 33 Earnings per share.
In addition, IFRS 8 Operating segments, is mandatory for the Bank.
The Bank consider the business of Skandiabanken ASA to be one
operating segment, “Private consumer market”.
4. New and revised standards effective from 1 January 2016
or later
Certain new standards and interpretations have been issued that
are mandatory for the annual periods beginning on or after 1
January 2016 or later, and which the Bank has not early adopted.
IFRIC 21 “Levies”
The interpretation clarifies the accounting for an obligation to pay
a levy that is not income tax. The obligating event that gives rise to
a liability is the event identified by the legislation that triggers the
obligation to pay the levy. Skandiabanken ASA is member of “The
Norwegian Banks’ Guarantee Fund” and pays an annual levy to the
fund that is imposed 1 January each year. In accordance with IFRIC
21, the levy to the fund is recognised as a cost in the first quarter,
while prior practice was to recognise the levy over the four quarters
of the year as the annual fee covered a one-year membership.
IFRS 15 Revenue from contracts with customers
IFRS 15 will replace IAS 18 which covers contracts for goods and
services and IAS 11 which covers construction contracts. The new
standard is based on the principle that revenue is recognised when
control of a good or service transfers to a customer – so the no
tion of control replaces the existing notion of risks and rewards.
For Skandiabanken ASA it is mainly recognition of revenue from
commissions that will affected by the standard. Management is yet
to assess the full effects of the standard, but the preliminary view
is that the impact will be limited except for increased disclosure
requirements.
IFRS 9 Financial instruments: Classification and measurement
IFRS 9 Financial instruments introduce new features of categoris
ing financial instruments and measurement. IFRS 9 is effective for
accounting periods starting on 1 January 2018 or later.
The key features of IFRS 9 are as follows:
Financial assets are required to be classified into three categories:
fair value through other comprehensive income, fair value through
profit or loss and amortised cost. The decision is to be made at
initial recognition, and the classification depends on the entity’s
business model for managing its financial instruments and the
contractual cash flow characteristics of the instrument.
An instrument is subsequently measured at amortised cost only
if it is a debt instrument and both (i) the objective of the entity’s
business model is to hold the asset to collect the contractual cash
flows, and (ii) the asset’s contractual cash flows represent pay
ments of principal and interest only (that is, it has only “basic loan
features”). All other financial instruments are to be measured at
fair value through profit or loss.
IFRS 9 also introduces the expected loss model, in which the entity
will recognise expected loss for the next twelve months on initial
recognition rather than today’s practice of recognising loss when it
is incurred.
Hedge accounting requirements were amended to align accounting
more closely with risk management.
Managements is yet to quantify the effects of the standard, but
expects a change in recognised loss provisions.
IFRS 16 Leases
IFRS 16 will be effective as of 1 January 2019. The standard is not
yet endorsed by EU. In accordance with IFRS 16, all future lease
payment obligations under material lease agreements with a lease
term of more than 12 months, shall be recognised in the balance
sheet as a liability. Accordingly, the future right to use the leased
assets shall be recognised in the balance sheet as an asset.
5. Revenue recognition
Net interest income
Interest income is recognised on an accrual basis using the
effective interest method. This method defers, as part of interest
income or expense, all fees paid or received between the parties
>>
47
>> Note 1 Accounting principles (continued)
to the contract that are an integral part of the effective interest
rate, transaction costs and all other premiums or discounts.
Fees integral to the effective interest rate include origination fees
received or paid by the entity relating to the creation or acquisition
of a financial asset or issuance of a financial liability.
Income from different customer services are recognised depending
on the type of services. Fees are recognised as income when the
service is rendered or when a material part of the service have
been completed. Commissions arise from transactions and are
recognised as revenue when the transactions have been settled.
6. Foreign currency translation
The presentation currency and functional currency of the Group
is NOK. Transactions in foreign currency are translated into the
functional currency at the exchange rate on the date of transaction.
Realised currency gains or losses arising from the settlement of
transactions and from the translation of monetary assets and
liabilities at the end of the period exchange rates are recognised in
profit or loss.
7. Property, plant and equipment
Property, plant and equipment is stated at historical cost less
depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items. Subsequent costs are
included in the assets carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic
benefits associated with the item will flow to the group and that the
cost of the item can be measured reliably. The carrying amount of
any component accounted for as a separate asset is derecognized
when replaced. All other repairs and maintenance are charged to
profit or loss during the reporting period in which they are incurred.
8. Intangible non-current assets
Costs associated with maintaining software programmes are
recognised as an expense as incurred. Development costs that are
directly attributable to the design and testing of identifiable and
unique software products controlled by the group are recognised
as intangible assets when the following criteria are met:
• It is technically feasible to complete the software so that it will be available for use
• Management intends to complete the software and use or sell it
• There is an ability to use or sell the software
• It can be demonstrated how the software will generate
probable future economic benefits
• Adequate technical, financial and other resources to complete the development and to use or sell the software are available; and
• The expenditure attributable to the software during its
development can be reliably measured.
Capitalised development costs are recorded as intangible assets
and amortised from the point at which the asset is ready for use.
9. Financial instruments
Recognition and derecognition
Financial instruments are recognised when the entity becomes a
party to the contractual provisions of the instrument. All purchases
and sales of financial assets that require delivery within the time
frame established by regulation or market convention (“ordinary
48
way” purchases and sales) are recorded at trade date, which is
the date on which the Group commits to deliver a financial asset.
Trading securities, derivatives and other financial instruments at
fair value through profit or loss are initially recorded at fair value.
All other financial instruments are initially recorded at fair value
plus transaction costs. Fair value at initial recognition is best
evidenced by the transaction price.
The Group derecognises financial assets when (a) the assets are
redeemed or the rights to cash flows from the assets otherwise
expired or (b) the Group has transferred the rights to the cash flows
from the financial assets or entered into a qualifying pass-through
arrangement while (i) also transferring substantially all risks and
rewards of ownership of the assets or (ii) neither transferring nor
retaining substantially all risks and rewards of ownership, but
not retaining control. Control is retained if the counterparty does
not have the practical ability to sell the asset in its entirety to an
unrelated third party without needing to impose restrictions on the
sale.
Financial assets are on initial recognition classified in one of the
following categories:
-Trading
- Loans and receivables
- Financial assets at fair value through profit or loss
-Available-for-sale
- Investments held to maturity
Trading
A financial asset is classified as held for trading if it is acquired or
incurred principally for the purpose of selling or repurchasing it in
the near term or that on initial recognition is part of a portfolio of
identified financial instruments that are managed together and for
which there is evidence of a recent actual pattern.
Loans and receivables
Loans and receivables are non-derivative financial assets with cash
flows that are fixed or determinable that are not quoted in an active
market.
Impairment losses are recognised in profit or loss for the year when
incurred as a result of one or more events (“loss events”) that
occurred after the initial recognition of the financial assets and
which have an impact on the amount or timing of the estimated
future cash flows of the financial asset or group of financial assets
that can be reliably estimated. If the Group determines that no
objective evidence exists that impairment was incurred for an
individually assessed financial asset, whether significant or not, it
includes the asset in a group of financial assets with similar credit
risk characteristics, and collectively assesses them for impairment.
Investment securities available for sale
This classification includes investment securities which the Group
intends to hold for an indefinite period of time and which may be
sold in response to needs for liquidity or changes in interest rates,
exchange rates or equity prices. Investment securities available for
sale are carried at fair value. Dividends on available-for-sale equity
instruments are recognised in profit or loss for the year when the
Group’s right to receive payment is established and it is probable
that the dividends will be collected. All other elements of changes
in the fair value are recognised in other comprehensive income
until the investment is derecognised or impaired, at which time the
cumulative gain or loss is reclassified from other comprehensive
income to profit or loss for the year. Impairment losses are
recognised in profit or loss for the year when incurred as a result
of one or more events (“loss events”) that occurred after the initial
recognition of investment securities available for sale. A significant
or prolonged decline in the fair value of an equity security below its
cost is an indicator that it is impaired. The cumulative impairment
loss – measured as the difference between the acquisition cost
and the current fair value, less any impairment loss on that asset
previously recognised in profit or loss – is reclassified from other
comprehensive income to profit or loss for the year. Impairment
losses on equity instruments are not reversed and any subsequent
gains are recognised in other comprehensive income. If, in a
subsequent period, the fairvalue of a debt instrument classified
as available for sale increases and the increase can be objectively
related to an event occurring after the impairment loss was
recognised in profit or loss, the impairment loss is reversed through
profit or loss for the year.
12. Fair value
Investments held to maturity
Held-to-maturity investments are non-derivate financial assets with
fixed or determinable payments and fixed maturity that an entity
has the positive intention and ability to hold to maturity other than:
- Those that the entity upon initial recognition designates as at fair value through profit or loss
- Those that the entity designates as available for sale; and
- Those that meet the definition of loans and receivables.
Investments held to maturity is recognised at amortised cost using
the effective interest method.
Reference is made to note 39 for a description of the fair value
hierarchy.
10. Financial debt
The Banks financial debt consist of debt to other banks, customer
deposits and issued securities (covered bonds).
Due to other banks and customer deposits
Amounts due to other banks and deposits from customers are
recorded at fair value on initial recognition, and subsequently
carried at amortised cost using the effective interest rate method.
The Bank has through its subsidiary Skandiabanken Boligkreditt AS
issued covered bonds. The covered bonds are recognised initially at
fair value adjusted for transaction costs. Subsequently, the covered
bonds are carried at amortised cost using the effective interest rate
method.
Subordinated debt
Subordinated debt is recognised at fair value initially, including
transaction costs. Subsequently, the subordinated debt are carried
at amortised cost using the effective interest rate method.
11. Additional Tier 1 capital
5 October 2015, Skandiabanken ASA issued a hybrid capital
instrument with a nominal value of NOK 400 million. The
instrument is perpetual with rights for the issuer to redeem the
capital at specific dates. The loan agreement fulfils the Norwegian
regulatory capital requirements for inclusion in the Bank’s Tier 1
capital. The Bank has the right at its sole discretion, to withhold
interest and/or redemption of the instrument. Due to these
characteristics, the loan does not meet the definition of debt
according to IAS 32 and as such is classified as equity.
A share of profit that corresponds to accrued interest under the
instrument is allocated to the debt investors and accumulated
as additional tier 1 capital, classified as equity. Paid interest will
reduce the additional tier 1 capital upon payment. Transaction
costs related to the issue of additional tier 1 capital is charged
directly to other equity, which is similar to the accounting
treatment of transaction costs related to share issues.
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. For financial
assets with quoted prices in an active market place, fair value is
determined to be the quoted price on the last trade date prior to
the measurement date.
When a price for an asset or liability is not observable in an active
market, the Group measures fair value using another valuation
technique that maximises the use of relevant observable inputs and
minimises the use of unobservable inputs. Valuation techniques
include discounted cash flow models and option pricing models.
13.Dividends
Dividends from investments are recognised when the Bank has an
unconditional right to receive the dividend.
14. Liabilities accruals
Provisions for liabilities and charges are non-financial liabilities of
uncertain timing or amount. They are accrued when the Group has
a present legal or constructive obligation as a result of past events,
it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation, and a reliable
estimate of the amount of the obligation can be made.
15. Post-employment benefits
Defined benefit plans are recognised at the present value of the
defined benefit obligation at the end of the reporting period less
the fair value of plan assets. The defined benefit obligation is
calculated annually by independent actuaries.
The present value of the defined benefit obligation is determined by
discounting the estimated future cash outflows using interest rates
of covered bonds that are denominated in the currency in which
the benefits will be paid, and that have terms approximating to the
terms of the related obligation.
The net interest cost is calculated by applying the discount rate
to the net balance of the defined benefit obligation and the fair
value of plan assets. This cost is included in employee benefit
expense in the statement of profit or loss. Remeasurement gains
and losses arising from experience adjustments and changes in
actuarial assumptions are recognised in the period in which they
occur, directly in other comprehensive income. They are included in
retained earnings in the statement of changes in equity and in the
balance sheet.
Changes in the present value of the defined benefit obligation
resulting from plan amendments or curtailments are recognised
immediately in profit or loss as past service cost.
16. Income tax
Income taxes have been provided for in the consolidated financial
statements in accordance with legislation enacted or substantively
enacted by the end of the reporting period. The income tax
charge comprises current tax and deferred tax and is recognised
in profit or loss for the year, except if it is recognised in other
>>
49
Note 1 Accounting principles (continued)
>>
comprehensive income or directly in equity because it relates to
transactions that are also recognised, in the same or a different
period, in other comprehensive income or directly in equity.
Current tax is the amount expected to be paid to, or recovered
from, the taxation authorities in respect of taxable profits or
losses for the current and prior periods. Taxable profits or losses
are based on estimates if the financial statements are authorised
prior to filing relevant tax returns. Taxes other than on income are
recorded within administrative and other operating expenses.
Deferred income tax is provided using the balance sheet liability
method for tax loss carry forwards and temporary differences
arising between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes. In accordance
with the initial recognition exemption, deferred taxes are not
recorded for temporary differences on initial recognition of an asset
or a liability in a transaction other than a business combination if
the transaction, when initially recorded, affects neither accounting
nor taxable profit. Deferred tax liabilities are not recorded for
temporary differences on initial recognition of goodwill, and
subsequently for goodwill which is not deductible for tax purposes.
Deferred tax balances are measured at tax rates enacted or
substantively enacted at the end of the reporting period, which are
expected to apply to the period when the temporary differences
will reverse or the tax loss carryforwards will be utilised. Deferred
tax assets and liabilities are netted only within the individual
companies of the Group.
Deferred tax assets for deductible temporary differences and
tax loss carryforwards are recorded only to the extent that it is
probable that future taxable profit will be available against which
the deductions can be utilised.
Deferred income tax is not recognised on post acquisition retained
earnings and other post acquisition movements in reserves of
subsidiaries where the Group controls the subsidiary’s dividend
policy, and it is probable that the difference will not reverse through
dividends or otherwise in the foreseeable future.
17.Consolidation
power to direct relevant activities of the entity that significantly
affect their returns, has exposure, or rights, to variable returns from
its involvement with the entity and has the ability to use its power
over the entity to affect the amount of investor’s returns. Noncontrolling interests are part of the Group’s equity.
Elimination of intercompany transactions
All intercompany balances, gain or loss arising from transactions
between group companies are eliminated in the consolidated
accounts.
18. Operating segments
No segment information has been prepared, as the entire operation
of the Skandiabanken ASA group is deemed to constitute one
segment “Private Consumer Market” under IFRS 8. Currently, the
Skandiabanken ASA group offers services and products intended
exclusively for private individuals. In the supervisory activities
performed by the board and management, the customer base
is not divided into different business segments that are followed
up over time. The company’s products are divided into various
groups which are followed up by different value chains and product
managers.
The groups comprise the following products and services:
Lending: Home loans, car loans, credit cards, overdraft facilities,
personal loans and custody account lending.
Deposits: All-in-one, high-interest and security deposit accounts,
as well as BSU (young home buyer’s savings account).
Payment services: Invoice payments, international payments, card
transactions, etc.
Security: Log-in, security solutions, etc.
The products in these groups are followed up by management,
but the focus is shifted depending on the overall situation for the
business as a whole. The Bank’s own investment activities do not
form a separate reportable segment, and are therefore presented
in conjunction with Private Market. Since the Bank operates only in
Norway, the reporting of geographical and secondary segments is
not considered relevant. Important classes of assets (home loans)
and liabilities (deposits) are, however, broken down geographically
and presented in a separate note.
The consolidated accounts include Skandiabanken ASA and
subsidiaries that Skandiabanken ASA controls because it has the
Note 2 Critical accounting estimates and
judgments in applying accounting policies
The preparation of financial statements requires the use of
accounting estimates which, by definition, will seldom equal the
actual results. Management also needs to exercise judgment in
applying the group’s accounting policies.
This note provides an overview of the areas that involved a higher
degreed of judgment or complexity, and of items which are more
likely to be materially adjusted due to estimates and assumptions
turning out to be incorrect.
The Group makes estimates and assumptions that affect the
50
amounts recognised in the consolidated financial statements,
and the carrying amounts of assets and liabilities within the next
financial year. Estimates and judgments are continually evaluated
and are based on management’s experience and other factors,
including expectations of future events that are believed to be
reasonable under the circumstances.
Management also makes certain judgments, apart from those
involving estimations, in the process of applying the accounting
policies. Judgments that have the most significant effect on the
amounts recognised in the consolidated financial statements and
judgments in applying accounting policies (continued)
estimates that can cause a significant adjustment to the carrying
amount of assets and liabilities within the next financial year
include:
1. Fair value of financial assets and financial liabilities
There is an inherent uncertainty related to the fair value of financial
instruments that are not quoted in an active market, in particular
securities that are recognised at fair value using unobservable
inputs (Level 3 in the fair value hierarchy).
Reference is made to note 39 for further description of the
valuation process of financial instruments.
2. Impairment losses
Loans and advances carried at amortised cost are assessed for
impairment at each balance sheet date. Impairment losses are
recognition of the financial asset and which have an impact on the
amount or timing of the estimated future cash flows of the financial
asset or group of financial assets that can be reliably estimated.
If the Group determines that no objective evidence exists that
impairment was incurred for an individually assessed financial
asset, whether significant or not, it includes the asset in a group
of financial assets with similar credit risk characteristics, and
collectively assesses them for impairment.
The primary factors that the Group considers when determining
whether a financial asset is impaired are its overdue status and
whether the collateral cover the outstanding claim. The following
other principal criteria are also used to determine whether there is
objective evidence that an impairment loss has occurred:
- any instalment is overdue and the late payment cannot be attributed to a delay caused by the settlement systems;
- the borrower experiences a significant financial difficulty as evidenced by the borrower’s financial information that the Group obtains;
- the borrower considers bankruptcy or a financial reorganisation;
- there is an adverse change in the payment status of the borrower as a result of changes in the national or local economic conditions that impact the borrower; or
- the value of collateral significantly decreases as a result of deteriorating market conditions.
For the purposes of a collective evaluation of impairment,
financial assets are grouped on the basis of similar credit risk
characteristics. Those characteristics are relevant to the estimation
of future cash flows for groups of such assets by being indicative
of the debtors’ ability to pay all amounts due according to the
contractual terms of the assets being evaluated.
Future cash flows in a group of financial assets that are collectively
evaluated for impairment, are estimated on the basis of the
contractual cash flows of the assets and the experience of
management in respect of the extent to which amounts will become
overdue as a result of past loss events and the success of recovery
of overdue amounts. Past experience is adjusted on the basis of
current observable data to reflect the effects of current conditions
that did not affect past periods, and to remove the effects of past
conditions that do not exist currently.
If the terms of an impaired financial asset held at amortised
cost are renegotiated or otherwise modified because of financial
difficulties of the borrower or issuer, impairment is measured using
the original effective interest rate before the modification of terms.
The renegotiated asset is then derecognised and a new asset is
recognised at its fair value only if the risks and rewards of the asset
substantially changed. This is normally evidenced by a substantial
difference between the present values of the original cash flows
and the new expected cash flows.
Impairment losses are always recognised through an allowance
account to write down the asset’s carrying amount to the present
value of expected cash flows (which exclude future credit losses
that have not been incurred) discounted at the original effective
interest rate of the asset. The calculation of the present value of
the estimated future cash flows of a collateralised financial asset
reflects the cash flows that may result from foreclosure less costs
for obtaining and selling the collateral, whether or not foreclosure
is probable.
If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an
event occurring after the impairment was recognised (such as
an improvement in the debtor’s credit rating), the previously
recognised impairment loss is reversed by adjusting the allowance
account through profit or loss for the year.
Uncollectible assets are written off against the related impairment
loss provision after all the necessary procedures to recover the
asset have been completed and the amount of the loss has been
determined. Subsequent recoveries of amounts previously written
off are credited to impairment loss account in profit or loss for the
year.
Fair value of defined post-employment benefit liabilities are
estimated based on a number of actuarial and economical
assumptions. The discount rate will have the most important
impact. The post-employment benefit obligations are valued
by independent qualified actuaries, based on assumptions
recommended by the Norwegian Accounting Standards Board
(“NRS”), adjusted if needed to reflect circumstances specific for
the Bank.
4. Intangible assets
In the event of impairment indicators, intangible assets are
assessed for impairment by estimating the assets recoverable
amount. The estimation uncertainty in these tests are related to
discount rate and cash flow forecasts.
51
Background
In January 2015 Livförsäkringsbolaget Skandia, ömsesidigt
announced that it was considering a listing of Skandiabanken
AB’s Norwegian banking business (Skandiabanken AB NUF to
facilitate continued growth. Skandiabanken ASA was floated on
the Oslo Stock Exchange on 2 November 2015. Skandiabanken AB’s
Norwegian business was organised as a branch of Skandiabanken
AB, and legally registered in Norway as Skandiabanken AB NUF. In
order to spin the business off as an independent listed company, a
number of transactions were carried out in advance of flotation.
Skandiabanken ASA was incorporated on 17 April 2015 as Midgard
Prosjekt 1 ASA. On 5 October 2015 the business belonging to
Skandiabanken AB NUF (with the exception of business activities
transferred to Skandiabanken Boligkreditt AS) was transferred
in a cross-border demerger/merger (pursuant to s 14-12(4) of
the Public Limited Companies Act and Chapter 11 of the Taxation
Act) to Midgard Prosjekt I ASA (which later changed its name to
“Skandiabanken ASA”). Skandiabanken AB retained all rights to the
brand name “Skandiabanken”, “Skandia”, “Ideer for livet”, domain
names associated with the brand names and liabilities associated
with tax for Skandiabanken AB. Since Skandiabanken AB NUF had
never had these rights, it is not deemed to be a relevant issue in the
assessment below. All other assets and liabilities associated with
the Norwegian business were spun off from Skandiabanken AB.
On the same day, 17 April 2015, Skandiabanken Boligkreditt AS
(“Boligkreditt”) was incorporated as a subsidiary of Midgard
Prosjekt I ASA with the name Midgard Prosjekt II AS. Its object was
to act as a Covered Bonds company for the Skandiabanken Group in
Norway. In connection with the spin-off of the Norwegian banking
business from Skandiabanken AB on 5 October, the covered bonds
belonging to the Norwegian business were moved to Boligkreditt
by means of a “redemption-in-kind”, which means that the old
bonds were swapped for newly issued bonds from Boligkreditt
on the same terms and conditions as the old ones. At the same
time, sufficient home loans were transferred to Boligkreditt to
satisfy the funding surety requirements. These transactions were
a prerequisite for the reorganization and was there part of the
agreement structure.
1) Consolidated financial statements for Skandiabanken ASA
In the Bank’s opinion, a transaction encompassing companies
under the same control, where a newly incorporated parent
company takes over an existing business must be recognised as
a “capital reorganisation”. Such a transaction is not deemed to
be a business combination under IFRS 3, nor a combination with
reverse takeover, since the newly established parent has no existing
business. The establishment of the Skandiabanken ASA Group
(Skandiabanken ASA and Skandiabanken Boligkreditt AS together),
where the business previously belonging to Skandiabanken AB
NUF and assets and liabilities associated with the Norwegian
business operated through the branch Skandiabanken AB NUF are
transferred to the newly established companies Skandiabanken
ASA and Skandiabanken Boligkreditt AS, is deemed to represent
such a case.
This means that assets and liabilities in the existing business
are recognised in Skandiabanken ASA’s consolidated financial
statements at their book value at the time the transaction took
52
place (continuity). The reason for this is that, for accounting
purposes, there is no financial substance to the transaction,
since, in reality, the new group structure takes over the entire
business previously organised in the branch, Skandiabanken AB
NUF and thereby reflects the profit/loss and balance of the existing
business. The only thing that is changed by the transactions is
the legal structure. In a capital reorganisation the new company’s
consolidated financial statements will reflect the existing
business’s results (including comparable figures), even though the
reorganisation has occurred in the middle of a financial period.
The consolidated financial statements, which comprise
Skandiabanken ASA and Skandiabanken Boligkreditt AS, and which
close on 31 December 2015, will therefore show the accounting
information for the two entities combined for the entire period and
for the entire comparable period, which means that Skandiabanken
AB NUF’s financial statements will be used as the basis for
the periods in which Skandiabanken ASA and Skandiabanken
Boligkreditt AS formally had no business activity.
2) Recognition and presentation in the parent company’s
financial statements
In the financial statements of the parent company, Skandiabanken
ASA, it will also be natural to make use of a capital reorganisation
perspective, since it is a transaction under the same control, where
a newly incorporated “parent” has no commercial activity before
the transaction takes place. The same conditions are relevant in
connection with the establishment of Skandiabanken Boligkreditt
AS.
With respect to the presentation of comparable figures, one
must, however, take into account that only part of the business
belonging to Skandiabanken AB NUF has been transferred to
Skandiabanken ASA (the rest, including covered bond financing and
home loans) has been transferred to Skandiabanken Boligkreditt
AS). The objective of showing a full accounting history in a capital
reorganisation is to show the unit as if no transaction has occurred,
since performance of the transactions causes no real financial
change on the part of the joint owner. However, for Skandiabanken
ASA’s parent company financial statements there will not be a oneto-one relationship between the old business in Skandiabanken
AB NUF and the new Skandiabanken ASA. It is therefore not
expedient to present comparable figures, since only part of the
former business has wound up in the parent company. Such an
apportionment could quickly give the impression of being pro
forma, since many of the items must be allocated.
In our assessment, there is no duty to choose the same solution
for the consolidated financial statements and the parent company
financial statements in such a case. One can therefore choose a
solution where the parent company’s financial statements present
figures only for the period in which the parent (and correspondingly
the subsidiary) has existed (but where assets taken over
from Skandiabanken AB NUF are measured and recognised at
Skandiabanken AB NUF’s book values at that time, i.e. another
variant of the continuity perspective).
The income statement for Skandiabanken ASA Group for the period
from the transaction date and until 31. December 2015 is found on
the next page.
(continued)
Income statement for the period 05.10.15 to 31.12.15 for Skandiabanken ASA Group
In NOK thousands
5.10.2015 - 31.12.2015
Interest income
Interest expense
Net interest income
428 158
-178 365
249 793
62 557
-32 396
30 161
Net gain (loss) on financial instruments
Other income
1 169
13
1 182
Personnel expenses
Depreciation and impairment of fixed assets and intangible assets
-54 213
-79 498
-321
147 104
Loan losses
Profit before tax
-8 601
138 503
Tax expense
-33 979
104 524
In NOK thousands
5.10.2015 - 31.12.2015
104 524
Other comprehensive income
Tax effect
Tax effect
109 034
4 623
113 657
20 588
-5 753
14 835
128 492
233 016
53
Note 4 Segments
No segment information has been prepared, as the entire operation
of the Skandiabanken ASA group is deemed to constitute one
segment “Private Consumer Market” under IFRS 8. Currently, the
Skandiabanken ASA group offers services and products intended
managers.
personal loans and custody account lending
as well as BSU (young home buyer’s savings account)
transactions, etc.
The capital adequacy regulations are intended to improve
institutions’ risk management and achieve closer concordance
between risk and capital. The applicable regulations for Norwegian
banks are adapted to the EU’s capital adequacy regulations for
credit institutions and investment firms (CRD IV/CRR).
Skandiabanken ASA uses the standard method to establish the
calculation basis for credit risk and the basic method to establish
the calculation basis for operational risk. At the balance sheet
date no exposure was included in the calculation basis for market
54
risk. The Group solely engages in banking business and the Bank’s
wholly owned subsidiary, Skandiabanken Boligkreditt AS, is fully
consolidated. There is therefore no difference between solvency
and accounting consolidation.
No comparative figures are available due to the fact that
Skandiabanken AB NUF was a branch of the Swedish company
Skandiabanken AB as of 31 December 2014 and thus no separate
regulatory capital ratio calculation was performed for the Bank.
Note 5 Capital adequacy (continued)
In NOK thousands
2015
Nominal exposure
Central governments
Regional governments
Multilateral Development Banks
Institutions
Retail
Secured by mortgages on fixed property
Exposures in default
Covered bonds
Equity
Other items
Total credit risk, standardised approach
Credit value adjustment risk (CVA)
Operational risk
Total risk weighted volume
559 507
3 444 961
360 006
869 652
9 758 251
62 506 961
167 501
3 375 965
139 912
29 863
81 212 579
Capital base
Share capital
Share premium
Other equity
Total booked equity
Additional Tier 1 capital instruments included in total equity
Common equity Tier 1 capital instruments
Deductions
Goodwill, deferred tax assets and other intangible assets
Value adjustment due to the requirements for prudent valuation (AVA)
Common equity Tier 1 capital
Tier 1 capital
Tier 2 instruments
Own funds (primary capital)
Capital requirements
Minimum required Common equity Tier 1 capital
Capital conservation buffer
Systemic risk buffer
Countercyclical capital buffer
Tier 2 instruments
Total minimum and buffer requirements own funds (primary capital)
Available Common equity Tier 1 capital after buffer requirements
Available Own funds (primary capital)
Capital ratio %
Tier 1 capital
Tier 2 instruments
Total capital ratio
Risk Weighted
volume
0
561 852
0
173 930
3 388 482
20 230 691
176 350
337 596
139 912
29 863
25 038 676
245
1 764 015
26 802 936
1 065 250
2 609 918
205 798
405 046
4 286 012
-405 046
3 880 966
-624
-7 283
3 873 059
400 000
4 273 059
500 000
4 773 059
4.5%
2.5%
3.0%
1.0%
1.5%
2.0%
14.5%
1 206 132
670 073
804 088
268 029
402 044
536 059
3 886 426
886 633
886 633
14.5%
1.5%
1.9%
17.8%
55
According to section 14-4 of the Norwegian Finance Institutions
Act, the Tier 1 Capital or Common equity Tier 1 Capital in financial
institutions shall at least comprise a defined percentage of the
value of the company’s assets and off-balance-sheet liabilities,
calculated without a risk weighting (Leverage Ratio). The Leverage
Ratio is intended to prevent banks from using too low a calculation
basis in the capital adequacy calculations, and to ensure that
the Banks maintain a minimum capital, even with skewing of
the portfolio towards low-risk segments. The Leverage Ratio is
discussed in the CRD IV Regulation (CRR, EU No. 575/2013) Article
430.
The Basel Committee’s original proposal from 2011 was based on
a minimum requirement of 3 percent. The EU Commission has not
proposed any final minimum requirements and they are discussing
differentiated requirements depending on the business model. The
Norwegian Ministry of Finance has instructed Finanstilsynet to draw
up a consultation memorandum and regulations on the Leverage
Ratio by March 2016, including definitions of the denominator
and the numerator used in the capital fraction. The Authority has
also been mandated to assess which level it will be appropriate to
apply.
The table below shows the calculation for the Bank at year-end
based on existing rule proposals.
In NOK thousands
2015
Derivatives market value
Potential future exposure on derivatives
Off balance sheet commitments
Loans and advances and other assets
Regulatory adjustments included in Tier 1 capital
Total leverage exposure
Tier 1 capital
Leverage ratio (%)
555
524
12 783 267
65 579 647
0
78 363 993
4 273 059
5.5 %
The Bank’s risk strategy comprises its risk philosophy, risk appetite
and risk management principles
Risk policy
The Bank’s core business involves offering standard banking
services such as deposits, savings, lending and payment
transactions to private customers. The Bank shall not assume any
material risk other than that deriving from this core business, i.e.
primarily credit risk and liquidity risk.
The Bank shall be a secure and solid bank for private individuals,
and shall adhere to a conservative credit policy.
The Bank shall have a sound risk culture, based on openness,
transparency and competence, and shall continuously challenge
its methods, processes and procedures in order to improve its
performance.
Risk appetite
For purposes of risk management, the Bank classifies risk into the
-
-
-
-
-
Credit risk
Liquidity risk
Market risk
Operational risk, including risks relating to reputation, compliance and IT
Commercial and strategic risk
Skandiabanken’s Board of Directors determines the Bank’s risk
appetite with respect to each of the above-mentioned categories,
and issues guidelines to the business on how this risk appetite
should be operationalised. The Bank operates in accordance with
the following risk appetite:
56
-
-
-
-
-
Credit risk: Low to moderate
Liquidity risk: Low
Market risk: Low
Operational risk: Low to moderate
Commercial and strategic risk: Moderate
Risk management principles
The Bank adopts a holistic approach to risk management. The
following principles therefore apply:
- The Bank’s specifications for risk appetite shall be translated into specific risk management frameworks.
- Each risk area shall be allocated capital in line with its actual risk status, which in turn shall be tailored to the Bank’s risk appetite.
- Risk management and reporting shall be performed in accordance with the above-mentioned frameworks and objectives.
- The Bank’s risk management systems and procedures shall be appropriate to the complexity of the business.
- Risk management shall be an ongoing and continuous process.
- Risk reporting shall be framed in an understandable manner and provide a clear picture of the Bank’s risk situation to all stakeholders.
- Risk management shall be performed across Group companies, at all levels within each individual Group company, and for the Group as a whole.
- The Bank shall assume only those risks that are understood by the Bank and the individual decision-maker.
- The Bank shall execute risk assessments before any material changes are effectuated.
- Responsibility for entering into agreements that cause the Bank to incur a risk is delegated through personal authorisations.
Note 7 Financial risk management (continued)
-
Efforts shall be made to achieve as great a concordance as possible between risk and profitability. Profitability shall be measured individually and on a risk-adjusted basis, and on the basis of financial capital allocated.
Organisation of risk management
The Bank’s organisation is based on its risk management and
internal control principles, and has been designed such that it
ensures the Bank’s risk strategy is implemented.
Board of Directors
Skandiabanken’s Board of Directors has the principal responsibility
for ensuring that the Bank manages risk efficiently. The Board of
Directors determines the Bank’s risk appetite and the frameworks
for risk management, and monitors the Bank’s risk exposure. The
Bank’s Board of Directors is also responsible for ensuring that the
Bank is adequately capitalised in relation to risk factors.
The Board of Directors’ Audit Committee
The Audit Committee monitors and secures the quality of financial
reporting, internal controls for financial reporting and the external
auditor’s work and independence.
The Board of Directors’ Risk Management Committee
The Risk Management Committee monitors and issues
recommendations to the Board of Directors concerning
management of the Bank’s risk exposure. The Committee’s mandate
includes regularly assessing whether the Bank’s internal control and
management systems are appropriately adapted to risk exposure
and the scope of the Bank’s operations, in addition to evaluating
the work and independence of the internal auditor.
The Board of Directors’ Remuneration Committee
The Remuneration Committee is responsible for securing thorough
and impartial preparation of all matters relating to remuneration
paid to the Bank’s executive employees.
The CEO and committees
The CEO has the principal operative responsibility for implementing
risk management procedures and securing achievement of the
Board of Directors’ adopted objectives, including efficient risk
management and internal control systems. A number of advisory
committees have been established to support the CEO in the
exercise of his/her responsibility for risk management.
The Risk Management and Compliance Committee
The Risk Management and Compliance Committee is chaired by the
Bank’s CRO and reports to the CEO. The Committee monitors the
Bank’s risk management and compliance programme, including its
risk management and internal control systems. The Committee also
regularly evaluates aggregate risk exposure, concentration risk and
compliance with the regulatory framework.
ALCO
The Asset and Liability Committee (ALCO) is chaired by the
Bank’s CFO and reports to the CEO. The Committee is responsible
for strategic management of the Bank’s balance sheet and risk
management framework for all treasury risks; principally market,
liquidity, capital and counterparty credit risks and associated
earnings volatility.
The Product Pricing and Interest Rate Committee
Chaired by the Bank’s CFO, the Bank’s Product Pricing and Interest
Rate Committee reports to the CEO and reviews and approves the
pricing strategy and decisions relating to the Bank’s products. The
Product Pricing and Interest Rate Committee coordinates measures
with senior management to identify, measure, control and report
relevant categories of risk associated with products pricing strategy
and interest rate changes..
The Credit Committee
Chaired by the Head of Credit, the Bank’s Credit Committee reports
to the CEO and evaluates current and future risk exposure, defines
parameters for the granting of credit and approves important or
complex credit applications.
The Bank’s framework for internal control and risk management
consists of three lines of defence, which constitute the
organisational model for the Bank’s risk management, risk control
and compliance.
The first line of defence includes all categories of employees and
management of the Bank (except second-line employees). The
first line performs risk assessments and implements risk controls
that enable the Bank to operate within the risk framework and risk
appetite defined by the Board of Directors. First line is considered
to be the risk owner, i.e. the party responsible for monitoring and
implementing control actions.
The second line of defence consists of two independent control
functions – the Risk Management function and the Compliance
function – that monitor and check that the Bank is operating within
its risk limits and relevant laws and regulations.
The CRO heads the Bank’s Risk Management function. The
Risk Management function is responsible for establishing and
maintaining systems and processes that support the Bank’s
compliance with those risk strategies, policies and procedures that
have been adopted. The function prepares regular risk reports for
the Board of Directors, and shall also report any breaches of the
relevant frameworks and guidelines.
report directly to the CEO, but in certain cases also has a right and
a duty to report directly to the Board of Directors. The CRO may not
be dismissed without the Board of Directors’ consent.
The CCO leads that part of the second line of defence which covers
compliance with procedures and regulations. Administratively, the
function reports to the CEO. In practice, however, it is independent
of the Bank’s management and other control functions. The
CCO verifies compliance with regulations based on the Board of
Directors’ instructions, and reports to the Board of Directors on
matters of a professionally relevant nature.
operational functions, and reports to the Risk Management
Committee and the Board of Directors. The Internal Auditor
performs audits in accordance with the audit plan and instructions
issued each year by the Board of Directors. The Internal Auditor
presents a summary of the Bank’s internal control activities once a
year.
An External Auditor is appointed by the General Meeting, and
reports directly to the Board of Directors and the Audit Committee.
57
Note 8 Credit risk
Credit risk accounts for the bulk of Skandiabanken’s risk. Credit risk is
its obligations, and pledged collateral not covering the outstanding
claim.
The way credit is managed depends on whether the credit risk is
attributable to lending to the public in the form of the mass-market
or whether the credit risk relates to other exposures, in particular the
placement of surplus liquidity.
Counterparty risk, including for derivatives, is included in credit risk.
Credit risk also includes concentration risk, including risk relating to
material exposure to a specific customer group or geographical area.
The Bank endeavours to reduce concentration through product and
geographical diversification.
Skandiabanken’s lending to the public comprises mass-market
exposures with individuals, primarily in the form of loans secured by
mortgage, real estate or a motor vehicle, amortised loans, unsecured
personal loans, overdrafts and credit cards, as well as securitiesbased credit.
Skandiabanken only have lending to the consumer market, in which
there is no concentration risk, and the entire portfolio is categorised
as retail in accordance with § 5–8 of the Capital Adequacy Regulation
or as exposures secured by mortgages or real estate (§ 5–9).
Concentration risk in the liquidity portfolio is managed through the
establishment of limits for individual counterparties within overall
frameworks determined by the Board of Directors. The frameworks
also take into account the Regulation on Large Exposures.
Risk relating to mass-market lending for all credit cases is managed by
assessing the borrower’s ability and propensity to pay, and by valuing
any collateral. Account is also taken of the counterparty’s aggregate
exposure, including any exposure attributable to co-borrowers. Credit
assessments are essentially performed by applying automated credit
regulations in which credit scoring represents a key element.
Risk shall be weighed against returns and balanced such that the Bank
remains within the specified risk appetite. Credit risk higher than the
Bank’s specified risk appetite shall not be compensated by means of a
high price. Rules and tools for credit assessment shall ensure that the
Bank avoids high-risk credit exposures. Please refer to the note 11 for
an overview of exposure to credit risk and associated collateral.
The Bank uses credit risk models to measure credit risk related to
mass-market lending. Credit risk is classified and quantified using a
number of different systems, processes and methods. Credit scoring
models for all lending products are based on statistical data; however,
some models also make use of expert evaluations. These models
estimate the probability of defaults, taking into account factors such
as payment history, income, assets and the number of borrowers.
Losses on collateralised loans are estimated based on defaults, where
the extent of losses is based on the value of collateral in relation to the
size of the loan.
Risk classification of lending to the mass-market
Credit risk is measured and monitored by calculating economic capital
in the lending portfolio.The main components for this calculation are
Probability of Default (PD), expected Exposure at Default (EAD) and
Loss Given Default (LGD).
Skandiabanken maintains surplus liquidity which is invested in shortterm interbank lending and securities with counterparties and issuers
in the government, local authority, institutional and commercial
sectors. Risk is managed and exposures are evaluated by assessing
the counterparty’s financial position and ability to repay. The Board
of Directors has issued guidelines on the frameworks that can be
allocated to counterparties/issuers, while responsibility for approval
of counterparties/issuers and removal of credit frameworks is
delegated to ALCO.
PD is defined as the probability of a customer defaulting on its
exposure during the next 12 months. This could include payment
defaults of more than 60 days of a minimum of NOK 200 or other
specific matters that affect the customer’s ability to service the loan.
PD for the home loan portfolio is calculated using statistical models
based on logistic regression of internal data. PD for the other products
is calculated using a model based on external data that is calibrated
for an internal product-specific PD.
The following grouping is used to classify PD:
Low risk: Moderate risk: High risk: 2015
In NOK thousands
58
PD < 1.25%
PD 1.25%–5%
PD > 5%
Gross loans distributed in risk groups
Home loans
Car loans
Custody
account lending
Other loans,
unsecured
Low risk
Medium risk
High risk
Total not defaulted or doubtful
Non-performing and doubtful loans
Total gross loans
50 014 257
2 051 973
1 021 113
53 087 344
154 492
53 241 836
1 247 467
109 149
9 677
1 366 293
13 931
1 380 224
163 603
0
0
163 603
0
163 603
263 570
1 139 626
594 313
1 997 509
92 741
2 090 251
51 688 897
3 300 748
1 625 104
56 614 749
261 164
56 875 914
Total
Unutilised credit lines distributed in risk groups
Home loans
Car loans
Custody
account lending
Other loans,
unsecured
Total
Low risk
Medium risk
High risk
Total unutilised credit lines
6 175 983
6 240
606
6 182 829
686
6 183 514
0
0
0
0
0
0
1 191 804
0
0
1 191 804
0
1 191 804
1 593 798
1 845 435
1 484 375
4 923 608
9 028
4 932 636
8 961 585
1 851 675
1 484 981
12 298 241
9 714
12 307 955
Loan- and funding commitments
3 212 282
111 615
0
0
3 323 898
Maximum exposure to credit risk
62 637 632
1 491 839
1 355 407
7 022 890
72 507 767
In NOK thousands
31.12.15
31.12.14
Loans to customers
Loans without agreed maturity or notice period
Loans with agreed maturity or notice period
Total loans to customers (gross)
1 558 938
55 316 976
56 875 914
1 568 545
49 481 861
51 050 406
Write-downs for individually assessed impaired loans
Write-downs for collectively assessed impaired loans
Total loans to customers (net)
105 347
6 963
56 763 604
92 089
7 140
50 951 177
2.93%
5.49 %
9.07 %
11.33 %
3.71 %
5.65 %
n.a
11.52 %
1 563 192
773 114
2 231 445
10 349 094
41 959 069
56 875 914
1 568 376
659 251
1 925 427
8 855 483
38 041 869
51 050 406
Average interest
Home loans
Car loans
Consumer loans
Other loans*
Residual time to maturity (gross loans)
Upon request
Maximum 3 months
3 months - 1 year
1-5 years
More than 5 years
Total
* inculdes credit card, account credit and custody account credit
Lending by geographical area*
In NOK thousands
31.12.2015
Geographical area
Østfold
Akershus
Oslo
Hedmark
Oppland
Buskerud
Vestfold
Telemark
Aust-Agder
Vest-Agder
Rogaland
Hordaland
Sogn og Fjordane
Møre og Romsdal
Sør-Trøndelag
Nord-Trøndelag
Nordland
Troms
Finnmark
Total gross lending per geographical area
31.12.2014
Percentage
Gross lending
Percentage
Gross lending
5.1%
22.9%
20.0%
1.1%
0.9%
6.3%
4.0%
0.8%
0.9%
1.2%
9.6%
14.1%
0.2%
1.7%
4.4%
0.7%
2.3%
3.0%
0.7%
100.0%
2 911 618
13 034 330
11 378 544
607 811
527 284
3 571 063
2 286 105
482 364
512 260
669 710
5 450 156
8 016 478
111 982
963 446
2 526 059
379 845
1 326 014
1 701 343
419 502
56 875 914
4.9%
22.9%
20.5%
1.0%
0.9%
6.3%
3.9%
0.9%
0.9%
1.2%
9.9%
13.9%
0.2%
1.6%
4.5%
0.6%
2.3%
2.8%
0.6%
100.0%
2 514 478
11 679 812
10 473 290
526 249
467 348
3 191 316
2 016 076
447 096
441 483
620 704
5 044 877
7 093 555
111 379
837 650
2 303 872
323 967
1 181 318
1 443 734
331 641
51 050 406
* the basis for the geographical distribution is the customer’s residential address.
59
Credit risk or counterparty risk is the risk of loss as a result of the
Bank’s customers and counterparties failing to fulfil their payment
obligations. The Bank’s maximum credit exposure will be the book
value of financial assets and any associated off-balancesheet
liabilities.
The Bank’s customer exposures comprices the bulk of the Bank’s
total credit exposure. A high percentage of the Bank’s lending is
collateralised. Collateral in the private retail market essentially
comprise fixed property and vehicles.
The table below shows the relationship between total credit
exposure and the associated collateral distributed to exposure
class. Lending secured by motgages includes the percentage
distributed of exposure relating to the various loan-to-value levels.
For example, the line 0-40% means that the exposures amount to
less than 40 percent of the value of the collateral. 100% means
that the loan amount exceeds the value of the hedging object or
that the loan is unsecured. The entire loan per collateral is placed
in the same loan-to-value category.
The property values on which the calculations are based are
updated in the last month of each quarter and are therefore
representative of the current market value. The calculation of loanto-value does not take into account any additional collateral.
In NOK thousands
31.12.2015
Distribution
in percent
Number of
loans
Gross carrying
amounts
Off-balance
sheet amounts
Maximum
exposure to
credit risk
0 % - 40 %
19 %
14 771
9 929 045
2 324 453
12 253 498
40 % - 60 %
30 %
10 734
15 890 603
2 363 365
18 253 967
60 % - 80 %
40 %
10 176
21 241 605
1 308 598
22 550 204
80 % - 90 %
9%
2 050
5 043 936
103 283
5 147 219
90 % - 100 %
1%
310
701 923
30 703
732 626
> 100 %
1%
242
434 724
53 112
487 835
53 241 836
6 183 514
59 425 350
0
3 212 282
3 212 282
Loan-to-value, Home Loans
Home loans, secured by fixed property
Loan- and funding commitments, home loans
Car loans, secured
Custody account credit, secured
Consumer credit, unsecured
1 380 224
111 615
1 491 839
163 603
1 191 804
1 355 407
694 915
0
694 915
Other loans, unsecured
1 395 336
4 932 639
6 327 975
Exposure to customers
56 875 914
15 631 853
72 507 767
559 507
0
559 507
605 532
0
605 532
7 280 733
0
7 280 733
139 912
0
139 912
555
0
555
231 139
0
231 139
8 817 378
0
8 817 378
65 693 292
15 631 853
81 325 145
Loans to and receivables with central bank
Derivatives at fair value to profit and loss
Other assets
Exposure to others
Gross exposure
The table below shows the percentage allocation of exposures for home loans for various levels of loan-to-value. Where the entire
exposure in the table above is placed in a related loan-to-value level, the relative share of the loan exposure at each level is shown in the
table below.
In NOK thousands
Loan-to-value, Home Loans (relative distrbution)
0 % - 85 %
Distribution in
percent
Gross carrying
amounts
99.51 %
52 979 673
85 % - 100 %
0.32 %
172 360
> 100 %
0.17 %
89 803
60
31.12.2015
53 241 836
Note 11 Credit risk exposure and collateral (continued)
Skandiabanken ASA has taken a lien in the vehicle in all car loans granted. The value of the collateral is calculated when granting
the loan and determines, among other aspects, the interest rate applied.
In NOK thousands
31.12.2015
Distribution in
percent
Gross carrying
amounts
0 % - 80 %
74.96 %
1 034 659
80 % - 100 %
25.04 %
345 565
Loan-to-value, Car loans
Car loans, secured
1 380 224
In NOK thousands
31.12.2015
Number of
loans
Loan-to-value, custody account lending
Custody account lending
870
Total loans secured by collateral in securities
In NOK thousands
Carrying
amounts
Fair value of
collateral
Average LTV
163 303
561 518
29.1%
163 303
561 518
29.1%
31.12.2014
Distribution
in percent
Number of
loans
Gross carrying
amounts
Off-balance
sheet amounts
Maximum
exposure to
credit risk
18 %
13 809
8 821 366
1 983 826
10 805 192
40 % - 60 %
28 %
9 480
13 420 387
2 128 811
15 549 198
60 % - 80 %
39 %
9 387
18 854 021
1 217 456
20 071 477
80 % - 90 %
12 %
2 384
5 577 113
85 895
5 663 008
90 % - 100 %
1%
353
702 250
33 531
735 781
> 100 %
1%
358
595 374
60 897
656 271
47 970 511
5 510 416
53 480 927
0
2 925 098
2 925 098
0 % - 40 %
Loan and funding commitments, home loans
Car loans, secured
1 511 350
113 329
1 624 679
Custody account credit, secured
162 630
1 082 850
1 245 480
0
0
0
1 405 915
4 534 726
5 940 641
51 050 406
14 166 419
65 216 825
1 287 744
0
1 287 744
Other assets
Exposure to others
Gross exposure
203 103
0
203 103
9 057 050
0
9 057 050
2 486
0
2 486
0
0
0
215 362
0
215 362
10 765 745
0
10 765 745
61 816 151
14 166 419
75 982 570
>>
61
>> Note 11 Credit risk exposure and collateral (continued)
In NOK thousands
Loan-to-value, Home Loans (relative distribution)
0 % - 85 %
31.12.2014
Distribution in
percent
Gross carrying
amounts
99.46 %
47 710 626
85 % - 100 %
0.34 %
163 476
> 100 %
0.20 %
96 409
In NOK thousands
47 970 511
31.12.2014
Distribution
in percent
Gross carrying
amounts
0 % - 80 %
73.00 %
1 103 310
80 % - 100 %
Car loans, secured
27.00 %
408 040
1 511 350
In NOK thousands
Total loans secured with collateral in securities
62
31.12.2014
Number of
loans
Carrying
amounts
Fair value of
collateral
Average LTV
808
162 630
559 082
29.1 %
162 630
559 082
29.1 %
Note 12 Loans to and receivables from credit
institutions
In NOK thousands
2015
2014
Loans to and receivables without maturity or notice period
Loans to and receivables with agreed maturity or notice period
Gross loans to and receivables from credit institutions
45 532
560 000
605 532
38 103
165 000
203 103
Net loans to and receivables from credit institutions
0
0
605 532
0
0
203 103
Geographical areas
Oslo and Akershus
Abroad
597 218
8 314
605 532
202 839
264
203 103
11 515
0
11 515
11 638
0
11 638
Liabilities to credit institutions
Loans and deposits from credit institutions without agreed maturity or notice period
Loans and deposits from credit institutions with agreed maturity or notice period
Total liabilities to credit institutions
Residual time to maturity
Upon request
Less than 3 months
3 - 12 months
1-5 years
More than 5 years
11 515
11 638
11 515
11 638
Geographical areas
Oslo and Akershus
Abroad
11 515
0
11 515
11 638
0
11 638
In NOK thousands
2015
2014
Loans to and receivables from central banks
Gross loans to and receivables from central banks
559 507
0
559 507
587 744
700 000
1 287 744
Net loans to and receivables from central banks
0
0
559 507
0
0
1 287 744
63
Note 14 Loan losses
Loan loss provisions
In NOK thousands
Opening balance individual write-downs
+ Increase in write-downs on loans
- Reversal of write-downs on loans
Closing balance individual write-downs
2015
2014
92 089
20 260
7 002
105 347
69 419
25 394
2 724
92 089
7 140
-177
6 963
5 287
1 853
7 140
Closing balance total write-downs
112 310
99 229
Individual write-downs
Individual write-downs (collectively considered)
Collective write-downs
Total write-downs
26 331
79 016
6 963
112 310
19 994
72 095
7 140
99 229
Specification of loan losses
Actual losses
Increase in write-downs
Reversal of write-downs
Recoveries of previously written off loans
Net cost on loans osses in the period
-22 166
-23 127
7 002
9 282
-29 010
-23 437
-30 593
2 724
11 543
-39 763
Losses by sector and industry
Retail market (individuals)
Total
-29 010
-29 010
-39 763
-39 763
Losses by product group
Home loans
Car loans
Other loans
Total
29 471
11 315
71 524
112 310
23 664
9 837
65 728
99 229
2015
14 714
1 009
5 668
1 219
2 341
18 335
3 478
3 089
1 591
1 985
20 137
7 674
787
4 236
2 131
3 995
1 709
3 992
7 257
105 347
2014
14 047
1 021
3 957
1 372
2 206
16 448
3 277
3 093
1 506
2 180
14 711
6 364
883
4 115
2 165
3 842
1 394
3 348
6 158
92 089
Opening balance collective write-downs
+/- Change in collective write-downs in the period
Closing balance collective write-downs
Individual write-downs by geographical area:
In NOK thousands
Akershus
Aust-Agder
Buskerud
Finnmark
Hedmark
Hordaland
Møre og Romsdal
Nordland
Nord-Trøndelag
Oppland
Oslo
Rogaland
Sogn og Fjordane
Sør-Trøndelag
Telemark
Troms
Vest-Agder
Vestfold
Østfold
Total
64
Skandiabanken has internal routines for ongoing monitoring of
exposures for which repayments and interest have not been paid
on time or for which authorised overdraft limits are exceeded,
where the reason is deemed to be the customer’s inability or lack of
propensity to pay. Payment defaults of more than 60 days and more
than NOK 200 are always reported as non-performing. If other
matters are identified that make it probable that the customer’s
financial position will result in loss, the exposure is classified as
doubtful. The need to recognise individual impairments is assessed
against the value of available collateral for the exposure. The table
below shows the relationship between the gross book value of
non-performing and doubtful loans and the associated individual
impairments.
In NOK thousands
Non-performing loans with write-downs
Non-performing loans without write-downs
Total non-performing loans (more than 60 days)
Doubtful loans
Gross non-performing and doubtful loans
- Individual write-downs
Net non-performing and doubtful loans
2015
Provisioning ratio
Overdue loans without write-downs - age distribution
The table below shows the book value of overdue loans and
overdrawn amounts on credits allocated by number of days after
maturity, where no impairments have been recognised. The
table is intended to provide an analysis of exposures where there
2014
177 981
59 994
237 975
23 189
261 164
-105 347
155 817
107 796
45 941
153 737
20 841
174 578
−92 089
82 489
40 %
60 %
is inadequate ability or propensity to pay, rather than overdue
amounts attributable to a delay in transferring funds. Based on this
and the Bank’s internal routines for monitoring overdue exposures,
the default must exceed NOK 200 for more than 6 days to be
included in the table below.
31.12.2015
In NOK thousands
7-30 days
31 - 60 days
61 - 90 days
More than
90 days
Total
Home loans
677 495
139 821
18 633
41 298
877 247
Car loans
30 004
5 838
-
-
35 842
Other loans
22 642
15 576
-
63
38 281
730 141
161 235
18 633
41 361
951 370
Loans to customers
31.12.2014
In NOK thousands
7-30 days
31 - 60 days
61 - 90 days
More than
90 days
Total
Home loans
568 828
82 095
7 798
38 143
696 864
Car loans
36 600
2 557
39 157
21 324
17 533
38 857
626 752
102 185
Other loans
Loans to customers
7 798
38 143
774 878
65
Skandiabanken ASA has provided securities as collateral for borrowing facilities with Norges Bank. In order to be granted loans or credit
facilities in Norges Bank it is required to provide collateral in interest carrying securities which fulfils certain criteria. As of 31 December
2015 Skandiabanken ASA did not have any loans in Norges Bank.
In NOK thousands
Fair value (carrying value) of securities deposited as collateral in Norges Bank
Haircut
Net value of securities deposited in Norges Bank
2015
2 542 289
-106 142
2 436 147
2014
3 484 832
-184 274
3 300 558
As of 31 December 2015, Skandiabanken ASA had additional securities with fair value of NOK 2.75 billion, which would have qualified as
collateral in Norges Bank.
Intra group liquidity facility
Skandiabanken ASA has provided a credit facility relating to the maturity of covered bonds issued by Skandiabanken Boligkreditt AS.
In NOK thousands
Nominal value issued of covered bonds
- own holdings
Net intra group liquidity facility
Less than 6 months
6 - 12 months
1-2 years
2-5 years
More than 5 years
Total
2015
2014
12 685 000
0
12 685 000
n.a
n.a
n.a
600 000
2 585 000
2 000 000
6 500 000
1 000 000
12 685 000
Liquidity risk
Liquidity risk comprises the following two elements:
- Refinancing risk: The risk of the Bank being unable to refinance its obligations as they fall due for payment, and the risk of the bank being unable to finance planned growth.
- Price risk: The risk of the Bank being unable to refinance its obligations without a material rise in costs or that financing growth will cost substantially more.
Liquidity risk shall be managed such that the Bank minimises its
financing costs, at the same time as the refinancing risk is kept
within the Board of Directors’ specified risk appetite. Liquidity risk
shall be managed at group level, at company level and for each
individual transaction.
The Bank measures liquidity risk over the short and long term.
Short-term risk measures include the liquidity coverage ratio (LCR),
and internal stress tests. The main long-term measure is the net
stable funding ratio (NSFR). The LCR and NSFR are measured in
66
accordance with methodology established by Finanstilsynet.
Skandiabanken maintains a liquidity portfolio comprising liquid
funds managed by Treasury and which qualify, or will qualify, as
collateral at Norges Bank. This can be used to even out fluctuations
in the Bank’s liquidity requirements.
Management of inherent risk relating to maturity structures
The CFO is responsible for ensuring that ongoing forecasts are
prepared covering the Group’s financing requirements for at least
the next 12 months. The financing plan is reviewed by ALCO at
the start of each forecast period, as a minimum quarterly. ALCO
determines the financing plan, and Treasury’s operations are
subsequently based on this plan. In addition, the management
frameworks for LCR and intraday and overnight financing
requirements contribute to keeping short-term financing risk
low. The Group shall endeavour to maintain a balanced maturity
profile, and as a main rule shall not have a maturity concentration
under which more than 30 percent of the capital market financing
matures within one year.
LCR (Liquidity Coverage Ratio)
In NOK thousands
2015
Level 1 - assets exclusive Covered bonds
Level 1 Covered bonds
Level 2A - assets
Level 2B - assets
Assets ineligble as "liquid assets"
Total assets
Net outflows
LCR %
The liquidity requirements are intended to guarantee satisfactory
liquidity management by ensuring that the institutions have
sufficient liquid assets to cover their liabilities on maturity and have
stable and long-term financing at all times. The Liquidity Coverage
Ratio (LCR) is intended to ensure that institutions can convert
sufficient assets to cash to cover expected net liquidity outflows
over the next 30 days in stressed situations in the money and
capital markets. The Net Stable Funding Ratio (NSFR) is intended
to ensure that less liquid assets are financed over the long term.
On 22 December 2015, based on the CRR/CRD IV Regulation,
Finanstilsynet issued its Regulation on Calculation of Liquid
Assets, Payments and Deposits in the Liquidity Coverage Ratio
(LCR). For banks deemed not to be systematically important,
including Skandiabanken, this requirement will be gradually
Carrying value
Value LCR
1 792 657
2 681 382
2 817 055
0
58 289 888
65 580 982
1 792 657
2 493 685
1 689 181
0
0
5 975 523
3 204 429
186 %
phased in, starting with 70 percent from 31 December 2015, rising
to 80 percent from 31 December 2016, and to 100 percent from
31 December 2017. This applies at consolidated level and for the
parent bank. For credit institutions, including Skandiabanken
Boligkreditt AS, phasing in of the 70 percent requirement has been
deferred until 30 June 2016. Otherwise, the phasing-in plan for
credit institutions is the same as for banks, as outlined above.
The NSFR has still not been introduced as a minimum requirement.
The EU Commission is expected to present a draft proposal by
the end of 2016, which is expected to be introduced from 2018.
Based on the Basel Committee’s recommendations of October 2014
the Bank has an NSFR of 140 percent compared to an expected
requirement of 100 percent.
In NOK thousands
Cash flows, undiscounted 2015
Less than
1 month
1-3
months
3 - 12
months
From 1 to
5 years
More than
5 years
Without
maturity
Total
Maturity overview
Interest disbursement, deposits
Interest disbursement, debt securities issued
11 515
11 515
45 457 206
45 457 206
4
0
7 797
0
0
0
7 801
600 000
0
3 285 000
10 120 000
1 000 000
0
15 005 000
42 276
15 692
152 179
392 787
Subordinated loan
Interest disbursement, subordinated loan
4 063
0
10 685
Taxes payable
Other financial liabilities (ex. accrued interest)
63 376
19 956
0
622 890
500 000
0
500 000
104 346
0
182 470
0
32 789
32 789
240 452
23 092
Hybrid capital instrument
Interest disbursement, hybrid capital instrument *
Off-balance sheet commitments
5 295
0
14 636
83 167
0
263 544
400 000
400 000
382 229
485 327
15 631 853
0
0
0
0
0
15 631 853
61 992 664
15 692
3 503 086
10 659 330
2 029 623
400 000
78 600 395
Outgoing contractual cash flows
51 973
n.a
n.a
n.a
n.a
n.a
51 973
Incoming contractual cash flows
51 973
n.a
n.a
n.a
n.a
n.a
51 973
Total disbursements
Financial derivatives
>>
* Interest disbursement for the hybrid capital instrument is calculated for the period until 31 December 2035.
67
>> Note 19 Maturity analysis of liabilities (continued)
In NOK thousands
Less than
1 month
Cash flows, undiscounted 2014
1-3
months
3 - 12
months
From 1 to
5 years
More than
5 years
Without
maturity
Total
11 638
11 638
42 427 557
42 427 557
4
7 797
7 801
570 000
0
615 000
11 000 000
3 500 000
15 685 000
53 584
20 321
207 859
735 569
71 891
1 089 223
3 210
9 630
51 360
37 662
101 477
Subordinated loan
443 045
Taxes payable
443 045
0
0
64 200
139 139
192 154
43 407
235 561
0
14 166 419
57 421 356
68 990
933 966
11 786 929
4 058 343
0
74 269 583
n.a
n.a
n.a
n.a
n.a
n.a
n.a
n.a
n.a
n.a
n.a
n.a
n.a
n.a
Total disbursements
14 166 419
In NOK thousands
Subordinated loan
Total subordinated loan
Currency
NOK
NOK
2015
2014
498 812
498 812
443 045
443 045
Specification of subordinated loan as at 31.12.15:
ISIN
NO0010746464
Issuing company
Nominal
value
Currency
Interest
Maturity*
Skandiabanken ASA
500 000
NOK
3M Nibor +2.1 %
12.10.2025
Carrying
amounts
498 812
498 812
* First possible call date for the issuer is 12 October 2020.
The loan agreement has covenants to qualify as Tier 2 capital.
Changes in subordinated loan during the year:
31.12.2014
68
Issued 2015
Matured
Redeemed
Other
adjustments
31.12.2015
Subordinated loan (nominal value)
443 045
500 000
-443 045
0
0
500 000
Total
443 045
500 000
-443 045
0
0
500 000
On 4 October 2015, Skandiabanken ASA issued a hybrid capital
instrument is perpetual with an option for the issuer to redeem
the capital at specific dates, the first time being 12 October 2020,
5 years after the issue date. The instrument has an interest rate of
NIBOR 3 months plus a margin of 4.1 percent.
The loan agreement fulfils the Norwegian regulatory requirements
for inclusion in the Bank’s Tier 1 capital. This implies that the issuer,
at its sole discretion, has the right to withhold interest and/or
redemption of the instrument. This implies that the instrument do
not fulfil the definition of a debt instrument according to IAS 32 and
is such defined as equity in the Bank’s balance sheet.
In NOK thousands
Total Additional Tier 1 capital
Currency
NOK
NOK
2015
2014
400 000
400 000
0
0
Specification of additional Tier 1 capital as at 31.12.15:
ISIN
NO0010746456
Issuing company
Nominal
value
Currency
Interest
Maturity*
Skandiabanken ASA
400 000
NOK
3M Nibor + 4.1 %
Perpetual
Total additional Tier 1 capital
Carrying
amounts
400 000
400 000
* The Tier1 capital is perpetual with an option for the issuer to redeem the capital at specific dates, the first time being 12 October 2020.
Changes in additional Tier 1 capital during the year:
31.12.2014
Issued 2015
Matured
Redeemed
Other
adjustments
31.12.2015
0
400 000
0
0
0
400 000
Total
0
400 000
0
0
0
400 000
As at 31 December 2015, there is NOK 5 million in accrued interest related to additional Tier 1 capital.
This has been recognised against the additional Tier 1 capital and the carried value including accrued interest is 405 million NOK.
69
Recognised at amortised cost:
In NOK thousands
Commercial paper issued
Currency
Bonds issued
Total debt securities issued
2015
2014
NOK
699 876
0
NOK
14 292 785
14 992 661
15 688 089
15 688 089
Specification of commercial paper and bonds as at 31.12.15:
Issuing company
Nominal value
Currency
Interest
Maturity*
Carrying
amounts
NO0010753130
Skandiabanken ASA
200 000
NOK
3M Nibor + 1.60 %
30.08.2016
199 934
NO0010748536
Skandiabanken ASA
500 000
NOK
3M Nibor + 1.52 %
23.05.2016
In NOK thousands
Commercial paper
Total commercial paper
499 942
699 876
Senior unsecured bonds
NO0010712425
Skandiabanken ASA
920 000
NOK
3M Nibor + 0.38%
26.05.2017
920 302
NO0010719826
Skandiabanken ASA
700 000
NOK
3M Nibor + 0.48%
10.09.2019
699 495
Total senior unsecured bonds
1 619 797
Covered bonds
NO0010745318
Skandiabanken Boligkreditt AS
600 000
NOK
3M Nibor + 0.17%
15.01.2016
599 998
NO0010745292
2 000 000
NOK
3M Nibor + 0.47%
04.10.2018
1 990 991
NO0010745284
2 585 000
NOK
3M Nibor + 0.28%
04.10.2016
2 586 333
NO0010745300
2 000 000
NOK
3M Nibor + 0.50%
29.10.2019
1 995 578
NO0010745326
2 000 000
NOK
3M Nibor + 0.27%
31.07.2017
1 998 366
NO0010745334
2 500 000
NOK
3M Nibor + 0.42%
14.08.2020
2 502 555
NO0010745342
1 000 000
NOK
3M Nibor + 0.28%
14.10.2021
999 167
Total covered bonds
12 672 988
Total commercial paper, senior unsecured bonds and covered bonds
14 992 661
* All covered bond loans have “soft bullet” with the possibility to extend the maturity with one year.
Changes in debt securities during the year:
ISIN
Commercial paper (nominal value)
70
31.12.2014
Issued 2015
Matured
Redeemed Other adjustments
0
700 000
Bonds (nominal value)
15 735 000
2 605 000
-1 185 000
-2 850 000
Total
15 735 000
3 305 000
-1 185 000
-2 850 000
31.12.2015
700 000
14 305 000
0
15 005 000
2015
2014
In NOK thousands
Share
Deposits
Share
Deposits
Deposits without an agreed term to maturity
100 %
45 457 206
100 %
42 427 557
0
0%
Deposits with an agreed term to maturity
0%
Total
Avarage deposit rate
Covered by the Norwegian Banks’ Guarantee Fund
96.2 %
42 427 557
1.39 %
2.18 %
43 736 306
2015
In NOK thousands
0
45 457 206
97 %
41 189 758
2014
Share
Deposits
Share
Deposits
100 %
45 457 206
100 %
42 427 557
Deposits by sector and industry
Retail customers
Total deposits from customers
45 457 206
2015
In NOK thousands
Share
42 427 557
2014
Deposits
Share
Deposits
Deposits by geographic area
Østfold
3.6%
1 656 373
3.5%
1 488 327
Akershus
17.5%
7 960 135
17.1%
7 253 740
Oslo
22.9%
10 398 743
22.8%
9 689 632
Hedmark
1.3%
593 762
1.3%
564 924
Oppland
1.4%
644 905
1.4%
599 260
Buskerud
4.7%
2 115 431
4.6%
1 962 127
Vestfold
3.6%
1 646 925
3.6%
1 526 305
Telemark
1.2%
561 439
1.3%
560 010
Aust-Agder
1.2%
564 426
1.2%
501 266
Vest-Agder
1.6%
706 231
1.6%
668 532
Rogaland
7.1%
3 241 863
7.4%
3 124 787
Hordaland
15.8%
7 192 276
15.8%
6 693 852
Sogn og Fjordane
0.8%
371 034
0.8%
350 850
Møre og Romsdal
2.6%
1 191 928
2.7%
1 130 506
Sør-Trøndelag
6.0%
2 706 994
6.0%
2 561 164
Nord-Trøndelag
1.3%
584 537
1.3%
556 625
Nordland
3.0%
1 372 931
3.2%
1 336 983
Troms
3.2%
1 462 277
3.3%
1 410 994
Finnmark
1.1%
484 996
1.1%
447 673
100 %
45 457 206
100 %
42 427 557
100 %
45 457 206
100 %
42 427 557
Upon request
Less than 3 months
3 - 12 months
1-5 years
More than 5 years
Total
45 457 206
42 427 557
71
Market risk
The Group is exposed to the following market risks:
- Interest rate risk is the risk of loss resulting from a general change in market rates due to different terms to maturity on the asset and liability sides of the balance sheet.
- Exchange rate risk is the risk of loss resulting from changes in exchange rates. If borrowing is to be undertaken in any currency other than NOK, hedging transactions shall be entered into such that the exchange rate risk is minimised.
- Credit spread risk is the risk that interest-bearing securities will fall in value as a result of an increase in the margin
mark-up for corresponding credit instruments in the market. The Bank calculates its exposure to credit spread risk in accordance with Finanstilsynet’s practice for the assessment of risk and capital adequacy (circular 9/2015).
- Securities risk is the risk of loss resulting from a fall in share prices.
Interest rate sensitivity
The interest rate sensitive part of Skandiabanken’s balance sheet
primarily comprises variable interest rate positions, plus some
fixed-interest bonds. A two percentage-point parallel shift in
interest rates is used to measure interest rate risk, in accordance
with Circular 9/2015 from Finanstilsynet.
2015
Balance sheet
Volume (thousands)
Loans to customers
Other assets
Total asssets
Weighted duration
Change in value
56 763 604
0.12
130 993
7 280 733
0.15
21 961
1 536 645
-
-
65 580 982
0.12
152 953
45 457 206
0.12
104 901
14 992 660
0.08
24 481
Additional tier 1 capital and subordinated loan capital
898 812
0.02
389
Other liabilities
346 078
-
-
Equity
3 886 226
-
-
65 580 982
0.11
129 771
Total
23 182
The table below shows six stress scenarios from the Basel
Committee’s proposals for handling interest rate risk in the banking
book (June 2015) which is currently at the consultation stage. At the
reporting date Skandiabanken had no balance sheet items exposed
to interest rate changes for a forward period of more than eight
In NOK thousands
months. Consequently, the scenario for terms over 6–9 months
will have no effect on Skandiabanken, with the result that Scenario
3 and 6 and Scenario 4 and 5 are identical. In addition, a two
percentage point parallel shift in the interest rate level is shown for
the same time periods as are included in the stress scenarios.
Overnight
O/N - 1
mnd
1 - 3 mnd
3 -6 mnd
6 - 9 mnd
9-12 mnd
More than
12 mnd
0.74 %
0.93 %
1.10 %
1.13 %
1.06 %
0.00 %
0.00 %
Parallel shock up; 2 percentage points increase in interest rates
-
-6 000
33 834
-2 018
-2 633
-
-
Scenario 1 : parallel shock up (60%)
-
-4 448
29 774
-1 825
-2 241
-
-
Scenario 2 : parallel shock down (60%)
-
-1 112
7 444
-456
-560
-
-
Scenario 3: short term rates down 85% long term rates up 40%
-
-417
2 791
-171
-210
-
-
Scenario 4: short term rates up 85%, long term rates down 40%
-
-5 143
34 426
-2 110
-2 591
-
-
Scenario 5: short term rates up (85%)
-
-5 143
34 426
-2 110
-2 591
-
-
Scenario 6: short term rates down (85%)
-
-417
2 791
-171
-210
-
-
Interest rate curve 31.12.2015
The yield curve consists of NOWA, NIBOR, NOK SWAP and interpolated points between them.
72
Currency
The net currency position (long or short) is measured in each currency. Long and short positions are also summarised. Exposure against
limit is the highest absolute value of the long and short position. The exchange rate risk as of 31 December 2015 is NOK 17 million.
A weakening of 10 percent in the NOK-SEK exchange rate would increase exchange rate risk by NOK 1.5 million.
In NOK thousands
Net currency position TNOK
USD
SEK
EUR
JPY
CHF
GBP
Other
2 861
-16 793
-175
0
0
1
0
Shares and funds
Skandiabanken’s equity investments relate to strategic ownership positions and certain minor shareholdings in newly established funds.
The total expected fair value amounts to NOK 8.91 million. A weakening of the price of the share or fund of 30 percent would reduce the
value of the portfolio by NOK 6.24 million.
Share and fund portfolio
Fair value (in NOK thousands)
Value after 30 percent drop
1 533
1 073
BankAxept AS
Bank ID Norge AS
1 379
965
Utsikt2050
2 000
1 400
Utsikt2040
2 000
1 400
Utsikt2030
2 000
1 400
Total share and fund portfolio
8 91 2
6 238
Credit spread risk
The calculation of credit spread risk is based on Solvency II, ref. Finanstilsynet’s Circular 9/2015, and is modelled as a stress test.
In NOK thousands
Fair value 31.12.2015
(thousands)
Duration (weighted)
AAA (sovereign)
413 047
2 652
-
-
AAA (covered bonds)
3 370 516
2 352
6
47 557
AA (municipalities)
3 497 170
1 445
11
55 572
Total
7 280 733
-
-
103 128
Rating
Spread change
Credit spread risk
Unrated Norwegian municipalities are placed in rating category AA.
73
In NOK thousands
2015
1 month
1-3
months
3-12
months
1-5 year
Without
Over interest rate
5 years
exposure
Total
559 507
559 507
605 532
605 532
Loans to customers
262 960
56 612 954
56 875 914
- 105 347
Write-downs for individually assessed impaired loans to customers
Write-downs for collectively assessed impaired loans to customers
Net loans to customers, central bank and credit institutions
Commercial paper and bonds
1 427 999
56 612 954
-
1 475 817
5 225 236
579 680
-
-
- 105 347
- 6 963
- 6 963
-112 310
57 928 643
7 280 733
139 912
139 912
Derivatives at fair value through profit and loss
555
555
Intangible assets
832
832
10 068
10 068
3 581
3 581
Other assets
139 159
139 159
Advance payment and accrued income
77 499
77 499
259 296
65 580 982
Deferred tax assets
Total assets
2 903 816
61 838 190
579 680
-
-
Liabilities
11 515
11 515
45 457 206
45 457 206
Taxes payable
10 170 435
4 122 351
Other liabilities
Subordinated loan
Total liabilities
74
32 789
32 789
699 875
14 992 661
301 987
498 812
10 680 762
301 987
498 812
49 579 557
-
-
-
1 034 651
61 294 970
Note 25 Repricing structure (continued)
In NOK thousands
2014
1 month
1-3
months
3-12
months
1-5 year
Without
Over interest rate
5 years
exposure
Total
587 744
587 744
700 000
700 000
203 103
Loans to customers
262 489
203 103
50 787 917
51 050 406
Write-downs for individually assessed impaired loans to customers
-92 089
-92 089
Write-downs for collectively assessed impaired loans to customers
-7 140
-7 140
-99 229
52 442 024
1 753 336
50 787 917
-
2 191 592
5 377 637
1 487 822
-
-
9 057 050
2 486
Intangible assets
-
Deferred tax assets
7 473
Other assets
Total assets
2 486
3 944 928
56 165 554
1 487 822
-
-
7 473
2 425
2 425
97 701
97 701
107 763
107 763
118 619
61 716 922
Liabilities
11 638
11 638
42 427 557
42 427 557
Taxes payable
139 139
11 484 797
4 203 292
Other liabilities
Subordinated loan
Total liabilities
327 772
327 772
466 911
59 037 240
443 045
53 923 992
4 646 337
139 139
15 688 089
443 045
-
-
-
75
Skandiabanken ASA uses currency derivatives to manage exchange
rate risk. The scope of the above is limited as the company does
not have any lending or borrowing in foreign currency. Derivatives
are therefore only used in relation to other liabilities in foreign
currency.
Skandiabanken ASA does not use hedge accounting. Consequently,
currency derivatives are recognised at fair value through profit and
loss and included in the trading portfolio.
No other types of derivative contracts such as interest-related
contracts were entered into in 2015, as the company does not make
any fixed-interest loans.
Derivatives in the trading portfolio:
In NOK thousands
31.12.2015
Nominal value
Positive
market value
Negative
market value
Currency derivatives
51 973
555
0
Total currency derivatives
51 973
555
0
As of 31 December 2014, Skandiabanken ASA (Skandiabanken AB NUF) had no derivatives in the balance sheet. Comparative figures for 2014 are therefore not presented.
Offsetting through ISDA agreements
Skandiabanken ASA has in connection with derivatives trading
entered into ISDA agreements with Skandia Capital AB. This means
that Skandiabanken ASA has a right to offset if the counterparty
defaults on their obligations.
Skandiabanken ASA has not entered into other agreements with
counterparties which are entitled to set-off.
Operational risk
Operational risk means unexpected fluctuations in results which
are attributable to inadequacies or failures in internal processes
and systems, employees or external events, which oblige the
Bank to retain financial capital in order to safeguard itself against
substantial and unexpected operational losses. The definition also
includes legal risk, i.e. the risk that an agreement or legal action
cannot be performed in line with underlying assumptions; and
compliance risk, i.e. the risk of non-compliance with statutory
provisions, internal guidelines, industry standards, etc., as well as
reputation risk.
The policy for operational risk, including contingency plans,
describes preventive and mitigating measures. In addition to
policies and instructions, and procedure and job descriptions,
Skandiabanken has a self-evaluation process for operational risk.
This process is intended to identify operational risk and quantify
any potential ensuing losses. This work results in action plans
whose implementation is subject to ongoing monitoring. The
evaluation is performed each year and includes quarterly updates
and follow-up.
76
Commercial risk is the risk that earnings will weaken and is largely
attributable to the following risk factors: Changes in volumes,
interest margins and other price changes associated with
borrowing and lending, weakened net commission income and
earnings that are insufficient to cover costs.
Measurement of commercial risk takes into account changes due
to credit losses and other risks such as market risk, liquidity risk
and operational risk. The size of commercial risk is essentially
affected by variations in net interest and commission. Some costs
vary in line with volume- and transaction-based changes in income,
other costs are deemed to be variable without being volume- or
transaction-based, while further costs are deemed to be fixed.
Management’s short-term opportunities to influence potential
losses of income depend on the ratio of variable to fixed costs.
Commercial risk is managed through diversification of income,
stable revenue generation and cost control.
Strategic risk refers to the long-term risk that arises as a result of
erroneous or imperfectly conceived commercial decisions, poor or
incorrect implementation of decisions, or inadequate sensitivity to
changes in society, competition, technology, the regulatory system
or the financial sector.
Net interest income:
2015
In NOK thousands
Loans to customers
2014
Recognised at
amortised cost
Recognised
at fair value
Total
Recognised at
amortised cost
Recognised
at fair value
Total
14 733
0
14 733
21 004
0
21 004
1 757 523
0
1 757 523
1 905 327
0
1 905 327
0
128 645
128 645
0
166 654
166 654
1 772 256
128 645
1 900 901
1 926 331
166 654
2 092 985
-7 380
0
-7 380
-6 368
0
-6 368
-620 181
0
-620 181
-874 020
0
-874 020
Total interest income
-236 615
0
-236 615
-291 671
0
-291 671
Subordinated loan
-12 772
0
-12 772
-13 327
0
-13 327
Other interest expenses
-62 127
0
-62 127
-62 412
0
-62 412
Total interest expense
-939 075
0
-939 075
-1 247 798
0
-1 247 798
833 181
128 645
961 826
678 533
166 654
845 187
Net interest income
Interest income from loans to customers:
In NOK thousands
2015
Home loans
Car loans
Consumer loans
Other loans*
Total interest income from loans to customers
1 471 343
79 408
29 843
176 929
1 757 523
2014
1 635 912
82 876
0
186 539
1 905 327
* credit card, account credit and custody account credit
77
In NOK thousands
2015
2014
Interbank commissions
Card commissions
Securities commissions
Payment processing
Insurance services
Total commission and fee income
1 625
84 018
58 448
127 471
1 172
272 734
1 643
83 501
48 085
132 832
1 298
267 359
Card commissions
Payment processing
Insurance services
Total commission and fee expenses
-6 813
-38 544
-18 089
-35 519
-17 053
-116 018
-7 717
-43 644
-13 623
-35 576
-18 735
-119 295
156 716
148 064
Note 30 Net gain (loss) on financial instrument
Gain (loss) on financial instruments recognised through profit and loss:
In NOK thousands
2015
2014
1) Realisation of financial instruments available for sale:
Gain (loss) by realisation of financial instruments available for sale
-hereof shares and funds
-hereof commercial paper, bonds and other interest bearing securities
Total gain by realisation of instruments available for sale
1 519
0
1 519
1 519
23 702
18 825
4 877
23 702
555
555
0
0
-8 855
-8 855
-2 592
-2 592
Net gain (loss) on currency items
Total gain (loss) on currency items
-4 491
-4 491
-537
-537
Total gain (loss) on financial instruments recognised through profit and loss:
-11 272
20 573
2) Financial instruments at fair value through profit and loss
Unrealised gain on derivatives
Total gain on financial instruments at fair value through profit and loss
3) Financial instruments at amortised cost:
Gain (loss) by repurchase of own bonds/commercial paper at amortised cost:
Total loss on financial instruments at amortised cost
4) Currency
78
Other administrative expenses
In NOK thousands
Properties and premises expenses
IT expenses
Advertisement and marketing expenses
Services provided by Skandia Group companies excluding IT-cost
Temporary employment agencies
Consultants and other external services
Telephone and postage
Other operating expenses
Total administrative expenses
2015
-16 915
-112 874
-34 980
-103 328
-25 723
-49 704
-12 278
-14 340
-370 142
2014
-15 580
-96 130
-33 519
-37 560
-30 720
-43 701
-15 227
-15 463
-287 901
Depreciations and write-downs on fixed and intangible assets
In NOK thousands
Depreciations during the year
Write-downs during the year
Total depreciations and write-downs during the year
2015
2014
-1 298
0
-1 298
-1 486
0
-1 486
In NOK thousands
2015
2014
Remuneration to the statutory auditor
Statutory audit
Other certification services
Tax-related services
Other services
Total remuneration to the statutory auditor
1 127
0
21
105
1 253
641
0
0
141
782
Remuneration to the statutory auditor is presented including VAT.
During 2015, the statutory auditor for the Skandiabanken Group has been Deloitte AS.
79
Note 33 Personnel expenses and benefits/remuneration
to executive management and governing bodies
Personnel expenses
In NOK thousands
Wages
Pension costs
- defined contribution pensions
- defined benefit pensions
- other pension related costs
Payroll tax
Other personnel expenses
Total personnel expenses
2015
2014
144 503
15 807
5 734
7 507
2 566
26 189
10 564
197 063
126 939
14 515
5 174
7 317
2 024
21 907
9 001
172 362
Restricted assets
In NOK thousands
Income tax account
Total restricted assets
2015
2014
10 511
10 511
6 933
6 933
2015
2014
258
238
242
32
220
205
220
39
Employees
Total employees as at 31.12
Total FTEs as at 31.12
Average number of employees
FTEs temporary employees as at 31.12
Remuneration to Executive management, the Board of Directors, the Control committee etc.
2015
Name and position
Executive management
Magnar Øyhovden,
Chief Executive Officer
Henning Nordgulen, Chief Financial
Officer (from 3 August 2015)
80
Agreed
fixed
annual
salary
2015
Paid
perfor- Paid other
Paid
variable
mancesalaries
salary
related
2015 salary 2015
2015
Total paid
salaries
2015
Benefits
in kind
and other
benefits
2015
Total
remuneration
paid /
received
in 2015
Pension Loan as at
cost 2015 31.12.2015
Shares
as at
31.12.2015
1)
2)
3)
4)
5)
2 227
2 469
540
996
4 004
37
4 041
337
4 614
6 815
1 900
760
-
272
1 032
28
1 060
27
0
6 814
1 634
1 800
338
564
2 702
47
2 749
66
2 947
3 260
Geir Berge Hansen, Head of Strategy
Johnny Anderson, Head of Marketing
& Communication
1 056
1 164
127
227
1 518
35
1 553
68
1 786
2 717
Bente Rebnor, Head of HR
1 445
1 630
174
274
2 078
166
2 244
375
0
2 173
Eirunn Skogen, Head of IT
Eirik Christensen, Chief Risk Officer
(from 1 October 2015)
Erik Husø, Head of Legal
Anne-Christine Fiksdal,
Head of Product and Process
(from 14 September 2015)
Magne Angelshaug,
Head of Business Development
1 106
1 218
133
106
1 457
214
1 671
315
2 948
2 173
1 150
276
-
83
359
4
363
16
0
2 173
1 130
271
-
49
320
4
324
16
0
652
1 100
317
-
48
365
5
370
19
0
3 260
1 141
1 350
138
266
1 754
18
1 772
66
0
2 608
6)
to executive management and governing bodies (continued)
Remuneration to Executive Management, the Board of Directors, the Control Committee etc.
2015
Name and position
Agreed
annual
board
remuneration
2015
Agreed
Agreed
annual
annual
remuremuneration
neration
for board from group
commit- companies
tees 2015
2015
Paid
board
remuneration
2015
Paid
Paid
remucommitneration Paid other
tee remu- from group compenneration companies
sation
2015
2015
2015
Total
remuneration
paid /
received Loan as at
in 2015 31.12.2015
Shares
as at
31.12.2015
The Board of Directors
Niklas Midby (chairman)
450
63
-
225
31
-
450
706
-
10 869
August Baumann
-
125
70
-
100
295
-
-
250
140
Mai-Lill Ibsen
250
175
101
125
88
50
100
363
-
-
Ragnhild Wiborg
250
113
101
125
56
50
100
332
-
-
-
-
-
-
-
-
878
878
49
2 173
-
-
-
-
-
-
-
-
6 980
543
-
-
-
-
-
-
-
-
1 910
326
-
-
-
-
-
-
-
-
-
-
Øyvind Thomassen 7)
Silveli Vannebo,
Employee representative
Jon Holmedal,
Employee representative (deputy)
The Control Committee
Bjarne Haldorsen
Erik Hoffmann-Dahl
-
-
-
-
-
-
-
-
3 456
-
Vidar Broder Lund
-
-
-
-
-
-
-
-
-
-
Tore Mydske
-
-
-
-
-
-
-
-
-
-
Loans to employees in Skandiabanken ASA
385 606
Executive Management, the Board of Directors, the Control Committee etc.
2014
Name and position
Magnar Øyhovden,
Branch manager for Skandiabanken
AB’s Norwegian branch
Agreed
fixed
annual
salary as
at 31.12.14
Paid
perfor- Paid other
Paid
variable
mancesalaries
salary
related
2014 salary 2014
2014
1)
2)
3)
4)
2121
2 176
168
258
Total paid
salaries
2014
Benefits
in kind
and other
benefits
2014
5)
2 344
19
Total
remuneration
paid /
received
in 2014
2 363
Loan as at
Pension 31.12.2014
cost 2014
217
Shares
as at
31.12.2014
1 739
n.a
In 2014, Magnar Øyhovden was the only person in the Norwegian management team to be part of the Executive management of Skandiabanken AB.
As a result he was the only one regarded as a senior executive for Skandiabanken AB NUF.
1) Agreed annual fixed salary/fees at the end of the year.
2) Paid fixed salary and holiday pay for both profit-related pay and other variable pay.
3) Paid profit-related pay earned in previous years. The CEO and Head of Strategy also received pay related to an expired 2011 performance scheme in 2015. Profit-related pay earned in 2015 will be paid out in 2016.
4) Paid variable pay such as extraordinary compensation other than profit-related pay. For 2015 this also includes compensation for work related to the reorganisation and
IPO-process. In December 2015, Mr. Øyhovden received an erroneous other variable salary of NOK 150 thousand which was paid back in January 2016.
5) Other benefits in kind include the cost of telephones, broadband, insurance, loans at beneficial interest rates, use of company cars etc.
6) Includes 293 shares owned by close family members.
7) Paid profit-related pay earned in previous years as Head of Skandiabanken AB Nuf. Serves as a representative for Skandia Liv and has elected not to receive remuneration for his duties on the Board of Directors.
8) Employee representatives do not receive separate remuneration for their duties on the Board of Directors.
The Board of Directors’ declaration on the setting of salaries and other remuneration to Executive
Management in Skandiabanken ASA
1. In general
This declaration has been prepared by the Board of Directors of
Skandiabanken ASA (“the Company”) pursuant to Section 6-16a of the
Norwegian Public Limited Liability Companies Act for consideration at the
annual general meeting of 28 April 2016.
The Board of Directors has appointed a special remuneration committee
consisting of two directors. The committee functions as an advisory body
for the Board of Directors and shall arrange for a thorough and independent
preparation of matters involving remuneration to the Company’s
management employees.
>>
81
>> Note 33 Personnel expenses and benefits/remuneration
to executive management and governing organs
(continued)
2.Main principles for the company’s management compensation policy
Management compensation at Skandiabanken ASA is determined on the
basis of the following main principles:
opportunity to affect. Maximum performance-based compensation is one
and one half of monthly salary. The performance-related compensation
scheme is determined by the Board of Directors.
Management compensation shall be competitive and suited to attracting
and retaining capable managers.
The compensation (the sum of remuneration received) should normally
be around the average of management compensation for corresponding
managers at comparable enterprises. Management compensation shall be
set at all times with appropriate consideration for the Company’s financial
situation and shall be set at a level that can be justified on the basis of the
Company’s financial position.
The scheme is general, and the payments do not constitute more than 1.5
of monthly salary per year and are a part of a general, non-discretionary
policy which covers the entire institution. This means that the scheme may
be exempted from the Norwegian Regulations relating to Remuneration
Systems in Financial Institutions, see Norwegian Financial Supervisory
Authority Circular 15/2014 (in Norwegian only).
Management compensation shall be composed so that it motivates
additional effort for improvement of the enterprise and the Company’s
results.
The main element in management compensation shall be fixed salaries,
but variable additional payments may be made of such a type that they
motivate managers’ efforts for the Company. Variable payments shall be
reasonable based on the Company’s results in the year in question but
limited to a maximum one and one half of monthly salary. The variable
payments shall be related to factors which the individual has an opportunity
to affect. The compensation system should stimulate efforts which yield
results beyond the individual’s area of responsibility, but always according
to the risk profile the Bank has defined as acceptable.
The compensation system shall be comprehensible and acceptable both
internally at Skandiabanken and externally.
The compensation system shall not be disproportionately difficult to
explain to the public and shall not result in disproportionate complexity for
administration.
The compensation system shall be flexible so that adjustment may be done
when the needs change.
In order to offer competitive compensation, Skandiabanken must have a
flexible compensation system. The compensation system must allow for
special solutions being agreed that are adapted to the individual’s needs,
but it shall nevertheless be clear and simple.
3.Guidelines for setting salaries and other remuneration during the
2016 fiscal year
The starting point for setting salaries is the total level of base salary and
other benefits. This level shall be competitive, but not a pacesetter among
salaries. The base salary should normally be the main element in managers’
compensation. The base salary will be set on the basis of duties, level
of responsibility, competence and seniority. The individual benefits that
are used are commented on more specifically below. Unless otherwise
indicated below, special terms and conditions, frameworks or allocation
criteria shall not apply for the mentioned remuneration.
Performance-related compensation scheme
The Company has a common performance-related compensation scheme
for all permanent employees with positions equivalent to 40% or more
of full-time employment. The scheme shall ensure that the Company
reaches overall goals and strategies, as well as ensure good interaction
across the Company’s units. The performance-based compensation is tied
to Skandiabanken’s results and other factors which the individual has an
82
Options and other forms of remuneration that are tied to shares or the trend
in the share price
The Company may not provide remuneration to management employees
in the form of options and other remuneration that is tied to shares in
the Company or the share price. This includes establishment of incentive
programmes or option programmes.
Pension schemes
Agreements have not been made on early retirement pension schemes.
However, the Company may enter into such agreements in the future.
The Company is required to have an occupational pension scheme under
the Norwegian Mandatory Occupational Pension Act. Skandiabanken’s
pension schemes satisfy the requirements in the Act. Management
employees participate in the Company’s occupational pension scheme.
Post-employment compensation schemes
The Company does not have special agreements on post-employment
compensation for management employees.
Benefits in kind
Managers may be granted benefits in kind that are customary for
comparable positions, such as free telephone, home computer, free
broadband connection, newspapers, company car/car allowance and
parking. There are no special limitations on what kinds of benefits in kind
may be agreed.
Other benefits
Other variable elements may be used in the remuneration or other special
benefits may be granted than what is mentioned above, if this is considered
appropriate in order to attract and/or retain a manager. There are no special
limitations on what kinds of other benefits may be agreed.
4.Setting of management compensation at other companies in the
Skandiabanken Group
Other companies in the Skandiabanken Group shall follow the main
principles for the Company’s management compensation policy as
described in Section 2. The objective is to coordinate the compensation
policy and the schemes that are used for variable benefits in the entire
Group.
5.Statement regarding management compensation policy and effects of
agreements on remuneration in the 2015 fiscal year.
The management compensation policy at Skandiabanken for the 2015 fiscal
year has been implemented according to the guidelines for setting salaries
and other remuneration as described above.
Note 34 Tax expense
In NOK thousands
2015
2014
133 745
139 139
851
165
Specification of tax expense:
Taxes payable
Changes in deferred tax
Correction of deferred tax previous year
0
6 477
Correction of taxes payable previous year
0
-2 205
134 596
143 576
Profit before tax
509 815
515 475
Expected tax expense at nominal rate of 27 %
137 650
139 178
Total tax expense
Reconciliation of the tax expense
Tax effect from none deductible expenses and tax-exempt income
691
165
Tax effect from tax-exempt income from shareholdings and funds
-20
-39
Tax effect of changed tax rate for deferred tax assets recognised in the balance sheet
269
0
Tax effect from costs booked against other equity related to capital increase and interest to Tier 1 capital holders
Correction previous year (net)
Total tax expense
Effective tax rate
-3 994
0
0
4 272
134 596
143 576
26.4 %
27.9 %
7 473
10 815
The year's changes in deferred tax asset (deferred tax):
Deferred tax asset as at 1 January
Change recognised through profit and loss
Change recognised through other comprehensive income
Correction of deferred tax asset previous year
Total deferred tax assets (deferred tax) as at 31 December
Change related to fixed assets and intangible assets
-851
-165
3 446
3 300
0
-6 477
10 068
7 473
-340
-36
Change related to pension liabilities
-511
-129
Total change in deferred tax assets recognised through profit and loss
-851
-165
Change related to interest bearing securities and shares
8 881
-5 435
1 907
1 393
Total change in deferred tax assets recognised through other comprehensive income
3 446
3 300
Spesification of deferred tax assets (deferred tax) related to temporary differences:
Fixed assets and intangible assets
Interest bearing securities and shares
Net pension liabilities
26
366
4 269
-4 612
5 773
11 719
10 068
7 473
Deferred tax assets (deferred tax) in the balance sheet recognised through profit and loss
3 365
4 216
Deferred tax assets (deferred tax) in the balance recognised through other comprehensive income
6 702
3 257
10 068
7 473
Total deferred tax assets (deferred tax)
Deferred tax assets and deferred tax liabilities are offset and recognised net
when this is legally justifiable and the items relate to the same tax authority.
In connection with the establishment of Skandiabanken ASA, tax payable
in the balance sheet was reduced by around NOK 100 million in respect of
actual tax payable for the period 1 January 2015 to 31 December 2015.
The reduction was attributable to the fact that the liability for tax payable
for the period 1 January 2015 – 4 October 2015 rests with the Swedish
company Skandiabanken AB. At the same time NOK 100 million in liquid
funds was also transferred to Skandiabanken AB to enable the company to
cover this liability on maturity.
83
In NOK thousands
Financial
instruments
at fair value
through profit
and loss
Financial
instruments
carried at
amortised cost
Total
559 507
559 507
605 532
605 532
56 763 604
56 763 604
31.12.2015
Financial
instruments
available for
sale
Financial Assets
Loans to customers
Shares and funds
Derivatives
7 280 733
7 280 733
139 912
139 912
555
555
Other assets
Total financial assets
555
7 420 645
216 658
216 658
58 145 301
65 566 501
Financial liabilities
11 515
11 515
45 457 206
45 457 206
14 992 661
14 992 661
Subordinated loan
498 812
498 812
Other liabilities
278 895
278 895
-
61 239 089
61 239 089
Financial
instruments
available for
sale
Financial
instruments
carried at
amortised cost
Total
1 287 744
1 287 744
Total financial liabilities
In NOK thousands
31.12.2014
Financial
instruments
at fair value
through profit
and loss
Financial Assets
Loans to customers
Shares and funds
203 103
50 951 177
9 057 050
9 057 050
2 486
Other assets
203 103
50 951 177
9 059 536
2 486
205 464
205 464
52 647 488
61 707 024
11 638
11 638
42 427 557
42 427 557
15 688 089
15 688 089
Subordinated loan
443 045
443 045
Other liabilities
284 365
284 365
58 854 694
58 854 694
Assets recognised at amortised cost are classified in the category loans and receivables.
84
-
In NOK thousands
2015
Nominal value
State- and state guaranteed securities
Cost value
Fair value
Relative share
413 000
412 995
413 046
5.7 %
Other governmental issuer (municipalties)
3 505 032
3 506 524
3 497 170
48.0 %
Covered bonds
3 371 500
3 382 290
3 370 516
46.3 %
Total commercial paper and bonds
7 289 532
7 301 809
7 280 733
100,0 %
Listed securities
Non-listed securities
4 906 880
67.4 %
2 373 852
32.6 %
7 280 733
100.0 %
In NOK thousands
2014
Nominal value
Cost value
Fair value
Relative share
458 000
458 065
457 609
5.1 %
4 984 787
4 987 163
4 991 717
55.1 %
Covered bonds
3 574 500
3 594 736
3 607 724
39.8 %
9 017 287
9 039 964
9 057 050
100.0 %
5 193 924
57.3 %
Listed securities
3 863 126
42.7 %
9 057 050
100.0 %
85
Shares and mutual funds, available for sale:
In NOK thousands
2015
2014
2 912
6 000
131 000
139 912
2 486
0
0
2 486
Share assessed based on other valuation techniques (Level 3)*
133 912
2 486
Listed securities
Total shares and mutual funds, available for sale
0
139 912
139 912
0
2 486
2 486
Shares
Mutual funds
Membership in VISA Norge FLI
Valuations techniques:
Investments in shares and mutual funds as at 31 December 2015:
In NOK thousands
Name
Country
Bank Axept AS
Norway
Bank ID Norge AS
Norway
VISA Norge FLI*
Norway
Utsikt 2030
Norway
Utsikt 2040
Norway
Utsikt 2050
Norway
* Reference is made to further description in note 39.
86
Carrying value
Number of
shares
Ownership
1 533
1 533
2 630
2.60 %
1 379
1 379
740
1.48 %
131 000
131 000
n.a
5.85 %
2 000
2 000
2 000
2 000
2 000
2 000
Fair value
Note 38 Fair value of financial instruments at
amortised cost
In NOK thousands
Carrying value
31.12.2015
Fair value
31.12.2015
559 507
559 507
Assets
0
0
605 532
605 532
56 763 604
56 763 604
216 658
216 658
58 145 301
58 145 301
11 515
11 515
45 457 206
45 457 206
14 992 661
14 881 584
498 812
491 900
Loans to customers
Other assets
Total financial assets at amortised cost
Liabilities
Subordinated loan
Other liabilities
Total financial liabilities at amortised cost
31.12.2015
Level 1
278 895
278 895
61 239 089
61 121 100
Level 2
Level 3
Total
Assets
559 507
Loans to customers
Other assets
559 507
559 507
0
0
605 532
605 532
56 763 604
56 763 604
216 658
216 658
57 585 794
58 145 301
Liabilities
11 515
11 515
45 457 206
45 457 206
14 881 584
0
14 881 584
491 900
0
491 900
278 895
278 895
15 373 484
45 747 616
61 121 100
Subordinated loan
Other liabilities
Fair value of financial instruments measured at amortised cost
Cash and cash equivalents, loans to credit institutions and loans to
customers, deposits, subordinated debt and debt securities are measured
at amortised cost.
Measurement at amortised cost imply that a financial asset or liability is
recognised to the present value of the contractual cash flows using effective
interest rate method, adjusted for potential impairment. This measurement
method will not necessarily provide a carrying value equal to the fair value
of the financial instrument due to volatility in the market, changed market
conditions, asymmetrical information and changes in investors risk- and
return expectations.
>>
Cash and cash equivalents and loans and advances: Fair value is estimated
based on amortised cost as all assets are recognised in the accounts based
on the contractual cash flow with floating interest rate and that loans with
impairment indicators are written down to fair value of expected cash flows.
There is no active market for loan portfolios.
Deposits and debt to credit institutions are liabilities with floating interest
rate and as there have not been any significant changes in the credit spread,
amortised cost is assumed to be a reasonable approximation to fair value.
Debt securities and subordinated loans are measured at fair value based on
prices sourced from Nordic Bond Pricing. Nordic Bond Pricing has estimated
the fair value based on available price information from investment banks
and brokers trading in the bond markets.
87
>> Note 38 Fair value of financial instruments at
amortised cost (continued)
Carrying value
31.12.2014
Fair value
31.12.2014
587 744
587 744
700 000
700 000
203 103
203 103
50 951 177
50 951 177
205 464
205 464
52 647 488
52 647 488
11 638
11 638
42 427 557
42 427 557
15 688 089
15 768 000
443 045
443 045
In NOK thousands
Assets
Loans to customers
Other assets
Liabilities
Subordinated loan
Other liabilities
31.12.2014
Level 1
284 365
284 365
58 854 694
58 934 605
Level 2
Level 3
Total
Assets
587 744
700 000
Loans to customers
Other assets
587 744
1 287 744
700 000
203 103
203 103
50 951 177
50 951 177
205 464
205 464
51 359 744
52 647 488
Liabilities
0
15 768 000
443 045
443 045
Other liabilities
284 365
284 365
43 166 605
58 934 605
Reference is made to a description of the fair value hierarchy in note 39.
88
11 638
42 427 557
Subordinated loan
15 768 000
11 638
42 427 557
15 768 000
Note 39
Financial instruments at fair value
In NOK thousands
Carrying value
31.12.2015
Fair value
31.12.2015
7 280 733
7 280 733
139 912
139 912
555
555
7 421 200
7 421 200
0
0
Assets
Derivatives
Total financial assets at fair value
Liabilities
Total financial liabilities at fair value
31.12.2015
Level 1
Level 2
2 384 993
0
Derivatives
Level 3
Total
4 895 740
0
7 280 733
6 000
133 912
139 912
0
555
0
555
2 384 993
4 902 295
133 912
7 421 200
There has been no transfers of financial instruments between Level 1 and Level 2 in 2015.
Financial instruments recognised at fair value, level 3:
In NOK thousands
Shares available for sale
Opening balance 1 January 2015
Total
2 486
2 486
131 426
131 426
Acqusitions/exits
0
0
Sale
0
0
Settlement
0
0
Transferred from level 1 or level 2
0
0
Transferred to level 1 or level 2
0
0
Other
0
0
133 912
133 912
Closing balance at 31 December 2015
>>
89
>> Note 39 Financial instruments at fair value (continued)
Information regarding fair value of securities at Level 3:
1) Calculation of the fair value of the holdings in BankAxept AS
and BankID Norge AS:
Skandiabanken ASA has opted to use the tax values of 1 January
2016 as basis for the calculation of fair value as of 31 December
2015. Based on information gathered from both companies as well
as restrictions related to ownership, Skandiabanken has considered
that the tax value to be a prudent approximation of fair value.
2) Calculation of the fair value of the membership in Visa Norge
FLI (“Visa Norge”):
Skandiabanken ASA refers to the press release of 27 January 2016
regarding the increased value of the membership in Visa Norge
related to the sale of Visa Europe Ltd. to Visa Inc. Skandiabanken
ASA has recognised an increase in the holdings of Visa Norge of
NOK 131 million in the balance sheet as of 31 December 2015.
The increase in value is in part based on information and
assumptions presented in an information memorandum received
from Visa Norge containing descriptions of the preliminary estimate
of the proceeds Visa Norge expects from sales of its share of Visa
Europe Ltd. to Visa Inc.
Visa Norge’s proceeds:
As described in the information memorandum, Visa Norge’s
estimated proceeds will contain the following elements (for further
information, please refer to the Visa Inc. PPA):
1) Cash payment:
Visa Norge has estimated its share of the cash payment to amount to EUR 244.4 million.
2) Convertible stocks:
Visa Norge has estimated its share of convertible stocks to amount to EUR 83.9 million. This is based on an estimate of 93,564 Series C Convertible Preferred Stock with a conversion factor of 1 to 13,952 of listed Class A common stocks.
3) Conditional cash payment:
According to Visa Norge the conditional cash payment may vary from 0 to EUR 4.7 billion in total for all owners of Visa Europe Ltd. It is considered difficult to estimate an amount related to this element as the determining factors are unknown.
Skandiabanken ASA’s share of the proceeds:
Visa Norge has stated in its information memorandum that the final
allocation amongst its membership banks in Norway will be based
on the same principles Visa Europe Ltd. has used in its allocation.
Parameter
Shift in exchange rate of NOK/EUR of +/- 10 %
Shift in exchange rate of NOK/USD of +/- 10 %
Shift in share price of Visa Inc. of +/- 10 %
Shift in liquidity discount on the stocks received of +/- 10 basis points
Shift in Visa Norge’s share of the transaction of +/- 10 % basis points
90
As indicated in the information memorandum an estimate for this
allocation could be each member’s voting rights in Visa Norge.
Skandiabanken ASA has estimated the voting rights to be 5.85
percent based on average voting rights over the last three years,
deducted for estimated discounts and market support the Bank has
received from the Visa-system.
Fair value estimate of Skandiabanken ASA’s membership in Visa
Norge:
Based on the information presented above, Skandiabanken has
based the estimate of fair value of Skandiabanken’s membership in
Visa Norge to consist of the following components:
1) Cash payment: NOK 137.5 million
2) Convertible stocks:NOK 26.4 million
3) Conditional cash payment: NOK 0
In the calculation of the estimate for convertible stocks,
Skandiabanken has assumed a liquidity discount of 50%. This is
based on the restrictions in transferability of the shares as well as
uncertainty regarding Visa Norge’s right to distribute the shares to
its member’s earlier than after 4 years.
Skandiabanken has opted not to recognise any value to the
conditional cash proceeds as the conditions for the distribution are
highly uncertain.
Additionally, Skandiabanken has opted to discount the above
mentioned estimates by 20 percent based on share price risk,
currency risk, risk regarding tax treatment of the transaction and
the risk of the transaction not being performed (based on lack of
accept from competition authorities or other external factors).
According to the information memorandum, the tax treatment of
the transaction is not concluded. It is however expected that the
transactions will comply with the exemption method (Norwegian:
“Fritaksmetoden”) and thereby will be taxed with 25 percent on 3
percent income gain. In a case where ordinary gains tax treatment
is applied, the values transferred to the Banks equity will be
reduced.
Based on the above, the estimate for fair value of Skandiabanken
ASA’s membership in Visa Norge amounts to NOK 131 million as of 31
December 2015.
Sensitivity analysis:
The sensitivity in the above mentioned estimate is presented in the
following table. This is calculated as isolated effects and any effects
where the parameters correlate are not considered.
Effect in NOK millions
+/- 11.0
+/- 2.0
+/- 2.0
+/- 8.5
+/- 6.6
Note 39 Financial instruments at fair value (continued)
In NOK thousands
Carrying value
31.12.14
Fair value
31.12.14
9 057 050
9 057 050
2 486
2 486
0
0
9 059 536
9 059 536
0
0
Assets
Derivatives
Liabilities
31.12.2014
Level 1
Level 2
Level 3
Total
0
9 057 050
0
9 057 050
0
0
2 486
2 486
Derivatives
0
0
0
0
0
9 057 050
2 486
9 059 536
There has been no transfers of financial instruments between Level 1 and Level 2 in 2014.
Financial instruments recognised at fair value, level 3:
In NOK thousands
Total
Opening balance 1 January 2014
n.a
n.a
n.a
n.a
2 486
2 486
n.a
n.a
Acqusitions/exits
Sale
Settlement
n.a
n.a
n.a
n.a
n.a
n.a
Other
n.a
n.a
2 486
2 486
Financial assets and debt recognised at fair value, either due to
classification as held for trade, designated at fair value through
profit or loss on initial recognition (fair value option) or held for
sale, shall be classified in a fair value hierarchy depending on the
reliability of the fair value estimate. Level 1 is assets or liabilities
priced in an active market, level 2 are prices determined based
on observable input data from similar assets (either directly or
indirectly) and level 3 is fair value based on unobservable input
data.
Fair value hierarchy
Level 1: Quoted prices in active markets for identical assets or
liabilities that the entity has access to at the reporting date. Active
market is a market where quoted prices are easily accessible at a
stock exchange or similar trading place, a broker or other entity
that publish price information. Quoted prices shall represent actual
and frequent transactions. For Skandiabanken, level 1 assets and
liabilities comprise listed interest-bearing bonds and shares.
>>
91
>> Note 39 Financial instruments at fair value
(continued)
Level 2: Other prices than the quoted prices in level 1 and that are
observable either directly or indirectly. Interest-bearing bonds that
are valued based on prices sourced from trading places, brokers
or other entities that publish price information, but where there
are no active market since no official prices are available, are
categorised as level 2. When using valuation methods, external
data are applied to discounted cash flows (e.g. prices quoted by
third-parties or prices for similar instruments). The discount rate
is implicit in the market interest rate with respect to credit- and
liquidity risk. For all financial instruments on level 2, fair value is
determined by discounted cash flow models.
Level 3: If one or more of the significant inputs is not based on
observable market data, the instrument is included in level 3.
This is the case for unlisted equity securities and the membership
interest in Visa Norge.
In NOK thousands
Receivables from fund managers and other receivables
Other assets
Total other assets
2015
2014
133 698
5 461
139 159
94 266
3 435
97 701
Receivables from fund managers and other receivables constitutes mainly of unsettled settlements against fund managers arising from customer sales of funds.
92
In NOK thousands
Acquistion cost at 01.01.2014
Additions during the year
Software
and licenses
Total
69 360
69 360
-
Disposals during the year
-
69 360
69 360
Accumulated depreciation at 01.01.2014
69 347
69 347
13
13
-
-
-
-
69 360
69 360
-
-
69 360
69 360
847
847
70 207
70 207
Balance sheet value at 31.12.2014
69 360
69 360
15
15
-
-
-
-
69 375
69 375
832
832
Expected useful life
5 years
93
In NOK thousands
Leasehold
improvements
Machinery,
fixtures and
means of
transport
Total
4 126
12 574
16 700
-
593
593
-
5 028
5 028
4 126
8 139
12 265
2 745
10 612
13 357
576
896
1 472
-
-
-
4 990
4 990
3 321
6 518
9 839
805
1 621
2 426
4 126
8 139
12 265
164
2 276
2 440
-
741
741
4 290
9 674
13 964
3 321
6 518
9 839
238
1 046
1 283
-
-
-
-
741
741
3 559
6 825
10 383
731
2 850
3 581
5 years
3-5 years
In NOK thousands
Fund settlement
Accrued costs
2014
120 785
89 723
75 230
64 721
Accrued interest
51 740
92 210
Accounts payable
15 469
21 344
Other liabilities
Total other liabilities
94
2015
15 671
16 367
278 895
284 365
Note 44 Pensions
Description of pension schemes at Skandiabanken ASA
Skandiabanken ASA is required to have an occupational pension
scheme pursuant to the Mandatory Occupational Pensions Act. The
company’s pension schemes satisfy the requirements of the Act.
Skandiabanken ASA had a defined benefit pension scheme for
all of its employees until 31 December 2008. This was closed as
at 1 January 2009, and all the employees could choose between
maintaining their defined benefit pension scheme or voluntarily
converting to a defined contribution scheme. Everyone who has
been employed after 1 January 2009 has been automatically
registered as a member of the defined contribution scheme.
When the actuary makes his calculations related to the value of
the net pension obligation, a number of economic assumptions
are made in the calculation. These assumptions are based on
the assumptions recommended by the Norwegian Accounting
Standards Board as at 31 December 2015 and are specified in a
separate table below. The factor that most affects the size of the
obligation is the discount rate. In 2015, the covered bond rate has
been used instead of the previously used government bond rate
to discount the pension commitments. It has been assessed that
the Norwegian market for covered bonds satisfies the requirement
for corporate bonds with a market that is adequately deep. The
management regards this a change in estimate and not a change in
principle.
The defined benefit scheme has a maximum pensionable income of
12 G (G is the National Insurance base amount) for all employees,
and there are no employees who have additional pension schemes
beyond this. This scheme is an insured scheme provided by
Livsforsikringsselskapet Nordea Liv Norge AS. In the defined benefit
scheme, the retirement benefit, in combination with benefits from
the National Insurance Scheme and taking into account any paidup policies from previous employment, represents approximately
66 percent of the salary earned at retirement age, assuming a full
contribution period of 30 years. The retirement age is 67.
All else being equal, continued use of the government bond rate as
the discount rate would have yielded a pension commitment that
was approximately NOK 12 million higher as at 31 December 2015.
In the defined contribution scheme, employees receive
a contribution paid into a personal pension account with
Livsforsikringsselskapet Nordea Liv Norge AS every month. The
contribution constitutes 5 percent of pay between 1 and 6 G, and 8
percent of pay between 6 and 12 G. This corresponds to the earlier
maximum rates for defined contribution schemes. The retirement
age is 67.
The average expected remaining period of service is 9.62 years at
the end of 2015.
As at 1 January 2016, 1 G was NOK 90,068.
More about defined benefit schemes
In the defined benefit scheme, employees will receive an retirement
benefit of approximately 66 percent of their pensionable income
(maximum 12 G), assuming a full contribution period of 30 years.
Employees do not bear any risk beyond the possibility of death
before retirement age, which would result in the assets passing to
other members of the pension scheme and not their survivors.
Based on factors such as future wage inflation, pension weight,
longevity, etc., the present value of the expected pension
commitments is calculated on the date of measurement.
Pension assets will be measured at market value on the date of
measurement. The difference between the present value of the
commitment and the market value of the assets will be recognised
in the accounts as the net pension obligation. If the value of the
assets exceeds that of the commitments, they will be recognised
as net pension assets on the balance sheet. Differences between
the estimated pension commitments and the estimated value of
the pension assets at the end of the previous financial year and the
actuarially calculated pension commitments and fair value of the
pension assets at the beginning of the year are recognised in other
comprehensive income.
The expected return on pension assets is based on long-term
expectations of the return on various asset classes.
The pension costs for the year are classified in the income
statement as a personnel expense and the actuarial gains/losses
are recognised in other comprehensive income.
More about defined contribution pension schemes
Defined contribution pension plans entail that Skandiabanken
does not guarantee a future pension of a specific amount, instead
the Bank pays an annual contribution to the employees’ pension
savings plan. The future pension will depend on the size of the
contribution and the annual return on the pension savings.
Skandiabanken does not have any further obligation after the
annual contribution has been paid. There are no provisions
for accrued pension commitments in such schemes. Definedcontribution pension plans are charged directly as an expense.
Contractual early retirement scheme (AFP)
Skandiabanken ASA participates in the Joint Scheme for Collective
Agreement Pensions, AFP. The private AFP scheme provides a
lifelong supplement to the ordinary pension. Employees can
choose to receive benefits from the AFP scheme from the age of
62, also while continuing to work. Even if the AFP scheme is a
defined benefit plan, it is recognised as a defined contribution plan
pursuant to the exception in IAS 19.34.
The private AFP scheme is financed by an annual premium that is
set as a percentage of pay between 1 and 7.1 G. The premium for
2015 has been set at 2.4 percent (2014: 2.2 percent).
>>
95
>> Note 44 Pensions (continued)
Economic assumptions
The main economic assumptions that are used by the actuary in his calculatons are as follows:
In NOK thousands
2015
2014
2.70 %
2.70 %
2.50 %
2.25 %
2.25 %
Actual acceptance
K2013
2.70 %
2.70 %
3.25 %
3.00 %
3.00 %
Actual acceptance
K2013
6 470
2 373
-1 456
120
7 507
5 734
2 566
15 807
6 058
2 557
-1 590
292
7 317
5 174
2 024
14 515
Remeasurement (gains)/losses changes in economic assumptions, pension commitments
Remeasurement (gains)/losses experience-based adjustments
Remeasurement gains - changes in other factors, pension funds
Payroll tax
Total recognised in other comprehensive income before tax effect
Deviations related to IAS 19R
Total effect from actuarial gains or losses
-11 005
-11 427
5 424
-2 398
-19 411
-19 411
-68
4 589
0
638
5 159
-5 816
-657
Actuarial gains or (losses) as at 1.1, gross before tax effect
Actuarial gains or (losses) as at 31.12, gross after tax effect
-28 632
-9 226
-6 926
-29 290
-28 632
-20 901
73 264
-53 026
20 238
2 854
23 092
88 296
-50 253
38 043
5 364
43 407
88 296
5 543
2 373
-11 005
-11 428
-515
73 264
77 893
5 154
2 557
-351
3 833
-790
88 296
Discount rate
Expected return on pension funds
Anticipated rise in salaries
Anticipated rise in basic amount
Anticipated rise in pensions
Anticipated CPA (contractual pension scheme) acceptance from 62 years
Demographic assumptions about mortality
Pension expenses
Net present value of pension entitlements
Interest expense on pension commitments
Calculated return on pension funds
Net recognised defined benefit costs including payroll tax
Defined contribution schemes incl. payroll tax
CPA Scheme incl. payroll tax
Net pension expenses
Effects recognised in other comprehensive income
Net pension commitments in the balance sheet
Net present value pension commitments
Fair value of pension funds
Net pension commitments excl. payroll tax
Payroll tax
Changes in the pension commitments in the balance sheet
Opening balance
Net present value of this year pension entitlements
Interest expenses
Actuarial (gains)/losses related to change in parameters
Actuarial (gains)/losses related to change in expectations
Pension payments
Closing balance
96
In NOK thousands
2015
2014
50 253
1 456
-120
-515
7
-5 432
7 377
53 026
43 952
1 590
-292
-791
-284
-755
6 833
50 253
Changes in the pension funds in the balance sheet
Opening balance
Expected return
Pension payments
Premium paid
Closing balance
Investment of the pension funds
The insured pension scheme in Norway is insured primarily through Livsforsikringsselskapet Nordea Liv Norge AS, and thus the
pension assets are linked to an insurance policy. There is an interest rate guarantee linked to the insurance, which entails that
Livsforsikringsselskapet Nordea Liv Norge AS bears the risk for the return on the pension assets.
The table below shows the distribution of pension funds on different asset classes.
Asset classes
Shares
Bonds
Property
Other
Total
2015
2014
9.10 %
74.30 %
13.80 %
2.80 %
100.00 %
10.40 %
73.00 %
15.10 %
1.50 %
100.00 %
Sensitivity analysis of pension commitment
The sensitivity analysis is based on a change in one of the assumptions, given that all the other assumptions remain constant. In reality,
there would be covariation between the assumptions, so that changes in any of the assumptions may covary.
Effect on pension commitments
Change in
the economic
assumptions
Change in
the pension
commitments
Discount rate
0.50 %
-8 638
Discount rate
-0.50 %
6 740
In NOK thousands
Annual rise in salaries
0.50 %
3 036
-0.50 %
-5 450
Annual rise in pensions and basic amount
0.50 %
2 885
-0.50 %
-5 168
Life expectancy
+ 1 year
3 481
Members in the pension schemes
Number of persons covered by the pension schemes:
- defined benefit schemes
- retirement and disability pensions
- defined contribution schemes
2015
2014
65
6
193
65
8
153
Average expected remaining service for employees covered by the defined benefit plan are 9,2 years.
Expected contributions to pension schemes in 2016:
2016
Expected contributions to defined benefit schemes
Expected contributions to defined contribution schemes
Total expected contributions to pension schemes incl. payroll tax
7 179
6 000
13 179
97
Description of agreements with related parties:
Sale of home loans to Skandiabanken Boligkreditt AS: Skandiabanken
ASA sells home loans to its subsidiary, Skandiabanken Boligkreditt AS.
Only loans with a LTV lower than 75% may be sold to Skandiabanken
Boligkreditt AS. The sale and transfer of loans is carried out at market terms
and conditions. After the loans have been transferred, Skandiabanken
Boligkreditt AS assumes all the risks and benefits associated with the home
loans sold.
The practicalities relating to the transfer of new loans and the writeback of loans are undertaken by employees of Skandiabanken ASA. In
general, the write-back of loans from Skandiabanken Boligkreditt AS to
Skandiabanken ASA will be relevant only if a customer wishes to increase/
refinance the loan. Any such write-back will also be carried out at market
terms and conditions. Delinquent loans will remain with Skandiabanken
Boligkreditt AS, and are treated in the same way as delinquent home loans
in Skandiabanken ASA.
Management agreement between Skandiabanken ASA and
Skandiabanken Boligkreditt AS: A management agreement has been
entered into between Skandiabanken ASA and Skandiabanken Boligkreditt
AS, under the terms of which Skandiabanken Boligkreditt AS purchases
administrative services from Skandiabanken ASA. These services relate,
inter alia, CEO, to Treasury, IT, Finance and Accounting, and Risk
Skandiabanken Boligkreditt AS’s credit facilities: Skandiabanken
ASA has granted an overdraft facility and a revolving credit facility to
Skandiabanken Boligkreditt. The overdraft is divided in two credit facilities,
each in the amount of NOK 3 billion and with a term of 364 days and three
years, respectively. The revolving credit facility equals Skandiabanken
Boligkreditt’s payment obligations for the next 12 months in respect of
issued covered bonds, and with a term extending four months after the last
maturity date of issued covered bonds. Both facilities are at floating interest
rates, three-month NIBOR plus a margin..
Deposit accounts in Skandiabanken ASA: Skandiabanken Boligkreditt AS
has two ordinary deposit accounts with Skandiabanken ASA with an interest
at the market rate.
Transitional Service Agreements with Skandia AB and Skandiabanken
AB: Skandiabanken ASA has entered into a Transitional Service Agreement
with Skandia AB and Skandiabanken AB (“the TSA”), whereby Skandiabanken
ASA will receive certain services in a period of up to 18 months from
closing of the transaction on 5 October 2015. The services comprise the
following main areas: (i) IT infrastructure and operations, (ii) accounting
and reporting tools (iii) treasury services and (iv) equities and mutual
funds trading services. Taking the SEK/NOK exchange rate into account, the
monthly cost is approximately NOK 6.0 million
Management. The agreement has been entered into at market terms and
conditions.
Receivables from and liabilities to Skandiabanken Boligkreditt AS:
In NOK thousands
Receivables related to overdraft facilities to Skandiabanken Boligkreditt AS
Liabilities related to deposits from Skandiabanken Boligkreditt AS
31.12.15
31.12.14
1 853 330
491 149
n.a.
n.a.
05.10.15 - 31.12.15
01.01.14 - 31.12.14
Transactions with Skandiabanken Boligkreditt AS:
In NOK thousands
Purchase of services in line with service agreement
Interest on overdraft facility
Interest on deposit
1 255
n.a.
10 361
n.a.
156
n.a.
All related party transactions between Skandiabanken ASA and Skandiabanken Boligkreditt AS are eliminated in the consolidated financial statements.
Loans from Skandiabanken AB:
In NOK thousands
Opening balance
Change in the period
Closing balance
Interest expense on loans from Skandiabanken AB
Guarantees issued from Skandiabanken AB
31.12.15
31.12.14
424 790
2 803 071
−424 790
−2 378 281
0
424 790
12 710
19 214
0
0
Transactions with companies in the Skandia Group
The following table specifies the cost of services provided by the Skandia Group. Until 4 October 2015, the cost mainly comprise services related to Finance,
Treasury, Risk, Compliance and IT-operations. The services were provided to Skandiabanken as part of the shared services of the Skandia Group. In 2015, the
cost also include services related to the reorganisation and listing process. After 4 October 2015, the cost relates to services provided according to the TSA
mentioned above. As of 31 December 2015, there are NOK 4.9 million in accounts payable to the Skandia Group for services provided.
In NOK thousands
Services provided by the Skandia Group until 04.10.15
Services provided by the Skandia Group according to the TSA from 05.10.15
Total cost of services provided
Transactions with all related parties are based on the arm’s length principle.
98
01.01.15 - 31.12.15
01.01.14 - 31.12.14
122 210
65 784
14 554
0
136 764
65 784
Share capital:
31.12.2015
Changes in share capital during the year
On 17 April, Skandiabanken ASA was incorporated as Midgard Prosject 1 ASA.
On 5 October, Capital increase with net value of transferred assets (non-cash contrbution)
Changes in
share capital
Total
share capital
Nominal
value
NOK
Number
of shares
1 000 000
1 000 000
10
100 000
1 000 000 000
1 001 000 000
10
101 000 000
On 5 October, Capital reduction with cash refund to owner
- 1 000 000
1 000 000 000
10
100 000 000
On 2 November, Capital increase with cash contribution
65 250 000
1 065 250 000
10
106 525 000
Nominee
Number of
shares
Ownership in
percent
LIVFORSAKRINGSBOLAGET SKANDIA
No
31 950 000
29.99 %
SKANDINAVISKA ENSKILDA BANKEN AB
Yes
7 011 262
6.58 %
FERD AS
No
4 350 000
4.08 %
The bank OF NEW YORK MELLON SA/NV
Yes
3 503 658
3.29 %
MORGAN STANLEY & CO. INTERNATIONAL
Yes
3 077 623
2.89 %
STATE STREET BANK AND TRUST CO.
Yes
2 727 067
2.56 %
CARNEGIE INVESTMENT BANK AB
Yes
2 630 563
2.47 %
JP MORGAN CLEARING CORP.
Yes
2 500 000
2.35 %
Yes
2 069 086
1.94 %
J.P. MORGAN CHASE BANK N.A. LONDON
Yes
1 977 693
1.86 %
SOCIETE GENERALE S.A
Yes
1 784 435
1.68 %
STATE STREET BANK & TRUST COMPANY
Yes
1 505 364
1.41 %
MORGAN STANLEY & CO. LLC
Yes
1 413 997
1.33 %
GOLDMAN SACHS INTERNATIONAL EQUITY
Yes
1 379 836
1.30 %
Yes
1 327 716
1.25 %
STATE STREET BANK & TRUST CO.
Yes
1 303 700
1.22 %
Yes
1 295 096
1.22 %
GRANDEUR PEAK INTERNATIONAL OPPORT
No
1 268 200
1.19 %
NYKREDIT BANK A/S
Yes
1 069 143
1.00 %
UBS AG, LONDON BRANCH
Yes
1 050 000
0.99 %
Shareholder structure at 31 December 2015:
Specification of the largest shareholders
Total for the twenty largest investors
Total
75 194 439
70.59 %
106 525 000
100.00 %
The register of shareholders is based on the Norwegian Central Securities Depository’s (VPS) shareholder register as of 31 December 2015. Please refer to separate section of the
Annual report for a list of the beneficial owners of shares in nominee accounts.
Geographical areas per 31.12.15:
Number of
shares
Ownership
in percent
Norway
14 553 925
13.66 %
Rest of Europe
75 633 297
71.00 %
North-America
16 324 898
15.32 %
Other
12 880
0.02 %
Total
106 525 000
100.00 %
As of 31 December 2015 Skandiabanken ASA had a total of 4,767 shareholders, 3,516 of whom held 1,000 or fewer shares.
Skandiabanken ASA held no own shares at the reporting date, nor did it hold any own shares during the accounting period.
99
>> Note 47 Earnings per share
In NOK
2015
Profit for the period to shareholders
Number of shares (weighted average)
Earnings per share (basic)
Earnings per share (diluted)
Until 5 October 2015, Skandiabanken did not issue shares, being a branch
of Skandiabanken AB. On 5 October 2015, the Bank implemented a capital
reorganisation and issued a total of 100,000,000 shares with a nominal
value of NOK 10. In connection with the listing on 2 November 2015, a
capital increase was implemented with the issue of 6,525,000 new shares
bringing the total number of shares as of 31 December 2015 to 106,525,000.
To calculate earnings per share in 2015, a weighted average has been
applied for the entire period, where it has been assumed that the number
370 172 606
101 041 667
3,66
3,66
of shares for the period January to October is 100,000,000. If the same
number of shares had been applied for the same period in 2014, earnings
per share would have been NOK 3.68 for 2014 as a whole.
The main purpose of the earnings per share ratio is to show the return to the
Group’s ordinary shareholders. Accrued interest in the period, which is paid
to hybrid capital investors, has therefore been excluded from the profit for
the period in the calculation of earnings per share for the period.
Skandiabanken ASA is a member of Visa Norge FLI (“Visa Norge”), which
is in turn a shareholder in Visa Europe Ltd. In January 2016 Skandiabanken
received information from Visa Norge that makes it possible to estimate
the fair value of assets at the reporting date. This is discussed in the Report
from the Board of Directors and in note 39.
In February 2016 the Norwegian Ministry of Finance introduced a joining
fee for the Norwegian Banks’ Guarantee Fund of NOK 7.8 million, which has
been recognised as an interest expense.
In January 2016, Skandiabanken ASA has entered into agreements with
Atea AS for operating the Bank’s office IT platform, Basefarm AS for
operating the Bank’s business IT platform and Tieto Norway AS for the
Bank’s equity and fund trading platform. These services will replace services
currently provided by Livförsäkringsbolaget Skandia («Skandia Liv») and
Skandiabanken AB under Transitional Service Agreements (“the TSA’s”).
100
Fondsforvaltning launched three lifecycle funds. The funds invest in other
mutual funds, and the investment and risk profiles of the individual life
cycle funds are adapted to three alternative time horizons.
Based on the ICAAP report conducted in the first quarter of 2016, the Board
of Directors decided on 31 March 2016 to increase Skandiabanken’s CET1
ratio target to 13.5 percent, to implement a Tier 1 capital ratio target of
15 percent and increase the total capital ratio target to 17 percent. In the
ICAAP report the Pillar 2a requirement is assessed to be 1 percent and the
Pillar 2b requirement to be 0 percent, implying a total Pillar 2 requirement
of 1 percent.
101
102
102
SKANDIABANKEN ASA PARENT COMPANY
Annual Accounts and notes Skandiabanken ASA Parent company
Page Content
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104
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106
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113
114
115
116
117
117
119
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Income statement
Balance sheet
Notes Skandiabanken Parent company
Note 2 Critical accounting estimates and judgments in applying accounting policies
Note 4 Segments
Note 8 Credit risk
Note 12 Loans to and receivables from credit institutions
Note 14 Loan losses
Note 30 Other income
Note 31 Net gain (loss) on financial instruments
Note 34 Personnel expenses and benefits/remuneration to executive management and governing bodies
Note 35 Tax expense
Note 39 Shares in subsidiary
Note 40 Fair value of financial instruments at amortised cost
Note 46 Pensions
103
Income statement
In NOK thousands
Notes
2015
Interest income
Interest expense
Net interest income
28
28
352 433
-133 824
218 609
29
29
62 557
-32 396
30 161
Other income
31
30
1 169
1 244
2 413
Personnel expenses
Depreciation and impairment of fixed and intangible assets
34, 46
32, 33
32
-54 214
-78 685
-321
117 963
Loan losses
Profit before tax
14
-7 329
110 634
Tax expense
35
-26 454
84 180
49
21
79 134
5 046
84 180
Notes
2015
Attributable to
In NOK thousands
Other comprehensive income:
Tax effect
Tax effect
46
109 034
4 623
113 657
20 588
-5 753
14 835
128 492
212 672
Attributable to
104
84 180
21
207 626
5 046
212 672
Balance sheet
In NOK thousands
Notes
Assets
Loans to customers
Derivatives
Shares in subsidiary
Intangible assets
Deferred tax assets
Other assets
Total assets
Liabilities
Taxes payable
Pension commitments
Other liabilities
Subordinated loan
Total liabilities
Equity
Share capital
Share premium
Other equity
Total equity
11, 13
11, 13
11, 12
8, 9, 10, 11, 14
559 507
0
2 458 300
41 777 893
44 795 700
11, 16, 37, 40
11, 38, 40
11, 26
38,39
43
35
44
42
7 280 733
139 912
555
900 030
832
10 068
3 581
139 159
62 659
53 333 229
12
17, 19, 23
17, 19
35
46
45
17, 20
502 665
45 457 206
2 319 672
25 265
23 092
240 849
498 812
49 067 561
48
1 065 250
2 609 918
405 046
185 454
4 265 668
53 333 229
21
Subsequent events
31.12.15
50
105
In NOK thousands
Total balance as at 04.10.15 in
Skandiabanken AB NUF
Hereof ingoing share capital as at 05.10.15 in
Synthetic
capital
Share
capital
Share
premium
Additional
Tier 1
capital
1 379 878
Changes in
fair value
of financial
Actuarial instruments
gains and available for
losses
sale
-21 761
2 382 780
-21 761
1 000 000
2 382 780
-21 761
-21 761
589
589
589
3 361 608
Profit for the period to other equity
(05.10.15 to 31.12.15)
79 134
Profit for the period to Tier 1 capital holders
(05.10.15 to 31.12.15)
5 046
(05.10.15 to 31.12.15)
14 835
14 835
113 657
65 250
227 138
1 065 250
2 609 918
Issue of Tier 1 capital 05.10.15 net of issuing cost
113 657
292 388
400 000
* Expenses of 7.5 million NOK related to the capital increase is recorded against the share premium.
79 134
5 046
106
3 361 608
2 382 780
Hereof accumulated changes in fair value of
financial instruments available for sale as at
2 002 902
1 000 000
Hereof ingoing actuarial gains and losses as at
Capital increase 02.11.15 net of issuing cost*
Total equity
1 000 000
Hereof ingoing share premium as at 05.10.15 in
Total ingoing balance as at 5.10.15 in
Skandiabanken ASA
589
Other
equity
405 046
-6 926
114 246
-1 000
399 000
78 134
4 265 668
In NOK thousands
Note
Cash flows from operating activities
Net receipts/payments on loans to customers*
Interest received on loans to customers
Net receipts on deposits from customers
Interest paid on deposits from customers
Payments on loans to group company
Interest received on loans to group company
Interest received on loans to credit institutions
Payments on deposits from credit institutions
Receipts on deposits from credit institutions
Interest payment on deposits from credit instituions
Net receipts/payments from buying and selling financial instruments at fair value
Interest received from commercial paper and bonds
Receipts on commissions and fees
Payments related to commissions and fees
Payments related to administrative expenses
Payments related to personal expenses
Taxes paid**
Other receipts/payments
Net cash flows from operating activities
Cash flows from investment activities
Payments on the acquisition of fixed assets
Payments on the acquisition of intangible assets
Net cash flows from investment activities
9, 10
28
23
28
47
47
28
12
47
28
37
28
29
29
32, 33
34
35
44
43
Cash flows from financing activities
Receipts on share capital and share premium net of issuing cost
Receipts on subordinated loan net of issuing cost
Interest paid on subordinated loan capital
Receipts on issued additional Tier 1 capital
Interest paid on additional Tier 1 capital
Receipts on issued bonds and commercial paper
Payments on matured and redeemed bonds and commercial paper*
Interest paid on issued bonds and commercial paper
Net cash flows from financing activities
Total net cash flow
EQ **
20
28
21
22
22
28
2015
12 369 310
314 691
370 556
-113 190
-1 853 330
10 360
3 967
-900 000
491 149
-2 876
-752 316
24 379
63 457
-32 396
-78 683
-49 566
-101 026
-935
9 763 551
-640
-847
-1 487
292 388
498 812
-3 891
400 000
0
1 000 000
-11 438 177
-35 818
-9 286 686
475 378
Cash at the beginning of the period
Cash at the end of the period
Change in cash
689 648
1 165 026
475 378
Cash
Loans to credit institutions***
Total cash
559 507
0
605 519
1 165 026
* The changes are mainly related to transfer of loans and covered bonds between Skandiabanken ASA og Skandiabanken Boligkreditt AS the 5 October 2015, also see note 3.
** se note 35 Tax expense
EQ** See Statement of changes in equity
*** Loans to group company is in the statement of cash flows taken out of loans to credit institutions (cash) and classified as a payment to group company under operating
activities
107
108
Notes
108
1. General information
Skandiabanken ASA and its wholly owned subsidiary Skandiabanken
Boligkreditt AS are incorporated in Norway. Its registered office is
Folke Bernadottesvei 38 in Bergen, Norway. The Banks principal
business activity is retail banking with a focus on mortgage lending
and car loans.
Skandiabanken ASA was incorporated 17 April 2015. Operations
started on 5 October 2015, after a transaction where Skandiabanken
AB NUF (branch of Skandiabanken AB in Sweden) was reorganised
into Skandiabanken ASA and Skandiabanken Boligkreditt AS.
The reorganisation is accounted for as a capital reorganisation.
Reference is made to note 3 for a description of the transaction and
the accounting treatment.
Skandiabanken ASA was listed on Oslo Stock Exchange on 2
November 2015.
2. Basis of preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS). The Bank has
applied all standards and interpretations approved by International
Accounting Standards Board (IASB) and International Financial
Reporting Interpretations Committee (IFRIC), as endorsed by
EU, that are relevant to the business of the Bank and that are
mandatory for accounting periods starting 1 January 2015.
The financial statements have been prepared for the period 17 April
2015 to 31 December 2015. As the company had no operations prior
to 5 October 2015, that date is used for presentation purposes.
The financial statements have been prepared under the historical
cost convention, except for financial instruments measured at fair
value through profit or loss.
Management prepared these financial statements on a going
concern basis, and the financial statements were approved by
the Board of Directors 31 March 2016.
3. New or revised standards and interpretations effective from 1
January 2015
The Bank has not adopted any new standards, revised standards
or interpretations effective from 1 January 2015 that have had a
material impact on the financial statements. Skandiabanken ASA
was listed on Oslo Stock Exchange on 2 November 2015, and as a
result the Bank now report earnings per share in accordance with
IAS 33 Earnings per share.
In addition, IFRS 8 Operating segments, is mandatory for the Bank.
The Bank consider the business of Skandiabanken ASA to be one
operating segment, “Private consumer market”.
4. New and revised standards effective from 1 January 2016 or
later
Certain new standards and interpretations have been issued that
are mandatory for the annual periods beginning on or after 1
January 2016 or later, and which the Bank has not early adopted.
IFRIC 21 “Levies”
The interpretation clarifies the accounting for an obligation to pay
a levy that is not income tax. The obligating event that gives rise to
a liability is the event identified by the legislation that triggers the
obligation to pay the levy. Skandiabanken ASA is member of “The
Norwegian Banks’ Guarantee Fund” and pays an annual levy to the
fund that is imposed 1 January each year. In accordance with IFRIC
21, the levy to the fund is recognised as a cost in the first quarter,
while prior practice was to recognise the levy over all four quarters
as the annual fee covered a one-year membership.
IFRS 15 Revenue from contracts with customers
IFRS 15 will replace IAS 18 which covers contracts for goods and
services and IAS 11 which covers construction contracts. The new
standard is based on the principle that revenue is recognised
when control of a good or service transfers to a customer – so the
notion of control replaces the existing notion of risks and rewards.
For Skandiabanken ASA it is mainly recognition of revenue from
commissions that will affected by the standard. Management is yet
to assess the full effects of the standard, but the preliminary view
is that the impact will be limited except for increased disclosure
requirements.
IFRS 9 Financial instruments: Classification and measurement
IFRS 9 Financial instruments introduce new features of categorising
financial instruments and measurement. IFRS 9 is effective for
accounting periods starting on 1 January 2018 or later.
The key features of IFRS 9 are as follows:
Financial assets are required to be classified into three categories:
fair value through other comprehensive income, fair value through
profit or loss and amortised cost. The decision is to be made at
initial recognition, and the classification depends on the entity’s
business model for managing its financial instruments and the
contractual cash flow characteristics of the instrument.
An instrument is subsequently measured at amortised cost only
if it is a debt instrument and both (i) the objective of the entity’s
business model is to hold the asset to collect the contractual
cash flows, and (ii) the asset’s contractual cash flows represent
payments of principal and interest only (that is, it has only “basic
loan features”). All other financial instruments are to be measured
at fair value through profit or loss.
IFRS 9 also introduces the expected loss model, in which the entity
will recognise expected loss for the next twelve months on initial
recognition rather than today’s practice of recognising loss when it
is incurred.
Hedge accounting requirements were amended to align accounting
more closely with risk management.
Managements is yet to quantify the effects of the standard, but
expects a change in recognised loss provisions.
IFRS 16 Leases
IFRS 16 will be effective as of 1 January 2019. The standard is not
yet endorsed by EU. In accordance with IFRS 16, all future lease
payment obligations under material lease agreements with a lease
term of more than 12 months, shall be recognised in the balance
sheet as a liability. Accordingly, the future right to use the leased
assets shall be recognised in the balance sheet as an asset.
5. Revenue recognition
Net interest income
Interest income is recognised on an accrual basis using the
effective interest method. This method defers, as part of interest
income or expense, all fees paid or received between the parties
to the contract that are an integral part of the effective interest
>>
109
rate, transaction costs and all other premiums or discounts.
Fees integral to the effective interest rate include origination fees
received or paid by the entity relating to the creation or acquisition
of a financial asset or issuance of a financial liability.
date on which the company commits to deliver a financial asset.
Trading securities, derivatives and other financial instruments at
fair value through profit or loss are initially recorded at fair value.
All other financial instruments are initially recorded at fair value
Income from different customer services are recognised depending
on the type of services. Fees are recognised as income when the
service is rendered or when a material part of the service have
been completed. Commissions arise from transactions and are
recognised as revenue when the transactions have been settled.
plus transaction costs. Fair value at initial recognition is best
evidenced by the transaction price.
6. Foreign currency translation
The presentation currency and functional currency of the company
is NOK. Transactions in foreign currency are translated into the
functional currency at the exchange rate on the date of transaction.
Realised currency gains or losses arising from the settlement of
transactions and from the translation of monetary assets and
liabilities at the end of the period exchange rates are recognised in
profit or loss.
7. Property, plant and equipment
Property, plant and equipment is stated at historical cost less
depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items. Subsequent costs are
included in the assets carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic
benefits associated with the item will flow to the company and
that the cost of the item can be measured reliably. The carrying
amount of any component accounted for as a separate asset is
derecognized when replaced. All other repairs and maintenance are
charged to profit or loss during the reporting period in which they
are incurred.
8. Intangible non-current assets
Costs associated with maintaining software programmes are
recognised as an expense as incurred. Development costs that
are directly attributable to the design and testing of identifiable
and unique software products controlled by the company are
recognised as intangible assets when the following criteria are met:
• It is technically feasible to complete the software so that it will be available for use
• Management intends to complete the software and use or sell it
• There is an ability to use or sell the software
• It can be demonstrated how the software will generate probable future economic benefits
• Adequate technical, financial and other resources to complete the development and to use or sell the software are available; and
• The expenditure attributable to the software during its development can be reliably measured.
Capitalised development costs are recorded as intangible assets
and amortised from the point at which the asset is ready for use.
9. Financial instruments
Recognition and derecognition
Financial instruments are recognised when the entity becomes a
party to the contractual provisions of the instrument. All purchases
and sales of financial assets that require delivery within the time
frame established by regulation or market convention (“ordinary
way” purchases and sales) are recorded at trade date, which is the
110
The company derecognises financial assets when (a) the assets
are redeemed or the rights to cash flows from the assets otherwise
expired or (b) the company has transferred the rights to the cash
flows from the financial assets or entered into a qualifying passthrough arrangement while (i) also transferring substantially
all risks and rewards of ownership of the assets or (ii) neither
transferring nor retaining substantially all risks and rewards of
ownership, but not retaining control. Control is retained if the
counterparty does not have the practical ability to sell the asset in
its entirety to an unrelated third party without needing to impose
restrictions on the sale.
Financial assets are on initial recognition classified in one of the
-Trading
- Loans and receivables
- Financial assets at fair value through profit or loss
-Available-for-sale
- Investments held to maturity
Trading
A financial asset is classified as held for trading if it is acquired or
incurred principally for the purpose of selling or repurchasing it in
the near term or that on initial recognition is part of a portfolio of
identified financial instruments that are managed together and for
which there is evidence of a recent actual pattern.
Loans and receivables
Loans and receivables are non-derivative financial assets with cash
flows that are fixed or determinable that are not quoted in an active
market.
Impairment losses are recognised in profit or loss for the year when
incurred as a result of one or more events (“loss events”) that
occurred after the initial recognition of the financial assets and
which have an impact on the amount or timing of the estimated
future cash flows of the financial asset or group of financial assets
that can be reliably estimated. If the company determines that
no objective evidence exists that impairment was incurred for an
individually assessed financial asset, whether significant or not, it
includes the asset in a group of financial assets with similar credit
risk characteristics, and collectively assesses them for impairment.
Investment securities available for sale
This classification includes investment securities which the
company intends to hold for an indefinite period of time and which
may be sold in response to needs for liquidity or changes in interest
rates, exchange rates or equity prices. Investment securities
available for sale are carried at fair value. Dividends on availablefor-sale equity instruments are recognised in profit or loss for the
year when the company’s right to receive payment is established
and it is probable that the dividends will be collected. All other
elements of changes in the fair value are recognised in other
comprehensive income until the investment is derecognised or
impaired, at which time the cumulative gain or loss is reclassified
from other comprehensive income to profit or loss for the year.
Impairment losses are recognised in profit or loss for the year
when incurred as a result of one or more events (“loss events”)
Note 1 Accounting principles (continued)
that occurred after the initial recognition of investment securities
available for sale. A significant or prolonged decline in the fair
value of an equity security below its cost is an indicator that it
is impaired. The cumulative impairment loss – measured as the
difference between the acquisition cost and the current fair value,
less any impairment loss on that asset previously recognised in
profit or loss – is reclassified from other comprehensive income to
profit or loss for the year. Impairment losses on equity instruments
are not reversed and any subsequent gains are recognised in other
comprehensive income. If, in a subsequent period, the fair value of
a debt instrument classified as available for sale increases and the
increase can be objectively related to an event occurring after the
impairment loss was recognised in profit or loss, the impairment
loss is reversed through profit or loss for the year.
12.Fair value
Investments held to maturity
Held-to-maturity investments are non-derivate financial assets with
fixed or determinable payments and fixed maturity that an entity
has the positive intention and ability to hold to maturity other than:
- Those that the entity upon initial recognition designates as at fair value through profit or loss
- Those that the entity designates as available for sale; and
- Those that meet the definition of loans and receivables.
Investments held to maturity is recognised at amortised cost using
the effective interest method.
Reference is made to note 41 for a description of the fair value
hierarchy.
10.Financial debt
Provisions for liabilities and charges are non-financial liabilities of
uncertain timing or amount. They are accrued when the company
has a present legal or constructive obligation as a result of past
events, it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation, and a
reliable estimate of the amount of the obligation can be made.
The Banks financial debt consist of debt to other banks, customer
deposits and issued securities (covered bonds).
Due to other banks and customer deposits
Amounts due to other banks and deposits from customers are
recorded at fair value on initial recognition, and subsequently
carried at amortised cost using the effective interest rate method.
The Bank has through its subsidiary Skandiabanken Boligkreditt AS
issued covered bonds. The covered bonds are recognised initially at
fair value adjusted for transaction costs. Subsequently, the covered
bonds are carried at amortised cost using the effective interest rate
method.
Subordinated debt
Subordinated debt is recognised at fair value initially, including
transaction costs. Subsequently, the subordinated debt are carried
at amortised cost using the effective interest rate method.
11.Additional Tier 1 capital
5 October 2015, Skandiabanken ASA issued a hybrid capital
instrument is perpetual with rights for the issuer to redeem
the capital at specific dates. The loan agreement fulfils the
Norwegian regulatory capital requirements for inclusion in the
Bank’s Tier 1 capital. The Bank has the right at its sole discretion,
to withhold interest and/or redemption of the instrument. Due to
these characteristics, the loan do not meet the definition of debt
according to IAS 32 and as such is classified as equity.
A share of profit that corresponds to accrued interest under the
instrument is allocated to the debt investors and accumulated
as additional tier 1 capital, classified as equity. Paid interest will
reduce the additional tier 1 capital upon payment. Transaction
costs related to the issue of additional tier 1 capital is charged
directly to other equity, which is similar to the accounting
treatment of transaction costs related to share issues.
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. For financial
assets with quoted prices in an active market place, fair value is
determined to be the quoted price on the last trade date prior to
the measurement date.
When a price for an asset or liability is not observable in an active
market, the company measures fair value using another valuation
technique that maximises the use of relevant observable inputs and
minimises the use of unobservable inputs. Valuation techniques
include discounted cash flow models and option pricing models.
13.Dividends
Dividends from investments are recognised when the Bank has an
unconditional right to receive the dividend.
14.Liabilities accruals
15.Post-employment benefits
Defined benefit plans are recognised at the present value of the
defined benefit obligation at the end of the reporting period less
the fair value of plan assets. The defined benefit obligation is
calculated annually by independent actuaries.
The present value of the defined benefit obligation is determined by
discounting the estimated future cash outflows using interest rates
of covered bonds that are denominated in the currency in which
the benefits will be paid, and that have terms approximating to the
terms of the related obligation.
The net interest cost is calculated by applying the discount rate
to the net balance of the defined benefit obligation and the fair
value of plan assets. This cost is included in employee benefit
expense in the statement of profit or loss. Remeasurement gains
and losses arising from experience adjustments and changes in
actuarial assumptions are recognised in the period in which they
occur, directly in other comprehensive income. They are included in
retained earnings in the statement of changes in equity and in the
balance sheet.
Changes in the present value of the defined benefit obligation
resulting from plan amendments or curtailments are recognised
immediately in profit or loss as past service cost.
16.Income tax
Income taxes have been provided for in the financial statements in
accordance with legislation enacted or substantively enacted by
the end of the reporting period. The income tax charge comprises
current tax and deferred tax and is recognised in profit or loss
>>
111
for the year, except if it is recognised in other comprehensive
income or directly in equity because it relates to transactions that
are also recognised, in the same or a different period, in other
comprehensive income or directly in equity.
Current tax is the amount expected to be paid to, or recovered
from, the taxation authorities in respect of taxable profits or
losses for the current and prior periods. Taxable profits or losses
are based on estimates if the financial statements are authorised
prior to filing relevant tax returns. Taxes other than on income are
recorded within administrative and other operating expenses.
Deferred income tax is provided using the balance sheet liability
method for tax loss carryforwards and temporary differences
arising between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes. In accordance
with the initial recognition exemption, deferred taxes are not
recorded for temporary differences on initial recognition of an asset
or a liability in a transaction other than a business combination if
the transaction, when initially recorded, affects neither accounting
nor taxable profit. Deferred tax liabilities are not recorded for
temporary differences on initial recognition of goodwill, and
subsequently for goodwill which is not deductible for tax purposes.
Deferred tax balances are measured at tax rates enacted or
substantively enacted at the end of the reporting period, which are
expected to apply to the period when the temporary differences
will reverse or the tax loss carryforwards will be utilised.
Deferred tax assets for deductible temporary differences and
tax loss carryforwards are recorded only to the extent that it is
probable that future taxable profit will be available against which
the deductions can be utilised.
112
17.Operating segments
No segment information has been prepared, as the entire
operation of the Skandiabanken ASA is deemed to constitute one
segment “Private Consumer Market” under IFRS 8. Currently,
the Skandiabanken ASA offers services and products intended
managers.
personal loans and custody account lending.
as well as BSU (young home buyer’s savings account).
transactions, etc.
judgment in applying accounting policies
The preparation of financial statements requires the use of
accounting estimates which, by definition, will seldom equal the
actual results. Management also needs to exercise judgment in
applying the company’s accounting policies.
This note provides an overview of the areas that involved a higher
degreed of judgment or complexity, and of items which are more
likely to be materially adjusted due to estimates and assumptions
turning out to be incorrect
The company makes estimates and assumptions that affect the
amounts recognised in the financial statements, and the carrying
amounts of assets and liabilities within the next financial year.
Estimates and judgements are continually evaluated and are
based on management’s experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances.
Management also makes certain judgments, apart from those
involving estimations, in the process of applying the accounting
policies. Judgments that have the most significant effect on the
amounts recognised in the financial statements and estimates that
can cause a significant adjustment to the carrying amount of assets
and liabilities within the next financial year include:
1. Fair value of financial assets and financial liabilities
There is an inherent uncertainty related to the fair value of financial
instruments that are not quoted in an active market, in particular
securities that are recognised at fair value using unobservable inputs
(Level 3 in the fair value hierarchy).
Reference is made to note 41 for further description of the valuation
process of financial instruments.
2. Impairment losses
Loans and advances carried at amortised cost are assessed for
impairment at each balance sheet date. Impairment losses are
recognition of the financial asset and which have an impact on the
amount or timing of the estimated future cash flows of the financial
asset or group of financial assets that can be reliably estimated.
If the company determines that no objective evidence exists that
impairment was incurred for an individually assessed financial asset,
whether significant or not, it includes the asset in a group of financial
assets with similar credit risk characteristics, and collectively
assesses them for impairment.
The primary factors that the company considers when determining
whether a financial asset is impaired are its overdue status and
whether the collateral cover the outstanding claim. The following
other principal criteria are also used to determine whether there is
objective evidence that an impairment loss has occurred:
- any instalment is overdue and the late payment cannot be attributed to a delay caused by the settlement systems;
- the borrower experiences a significant financial difficulty as evidenced by the borrower’s financial information that the company obtains;
- the borrower considers bankruptcy or a financial reorganisation;
- there is an adverse change in the payment status of the borrower as a result of changes in the national or local economic conditions that impact the borrower; or
- the value of collateral significantly decreases as a result of deteriorating market conditions.
For the purposes of a collective evaluation of impairment, financial
assets are grouped on the basis of similar credit risk characteristics.
Those characteristics are relevant to the estimation of future cash
flows for groups of such assets by being indicative of the debtors’
ability to pay all amounts due according to the contractual terms of
the assets being evaluated.
Future cash flows in a group of financial assets that are collectively
evaluated for impairment, are estimated on the basis of the
contractual cash flows of the assets and the experience of
management in respect of the extent to which amounts will become
overdue as a result of past loss events and the success of recovery of
overdue amounts. Past experience is adjusted on the basis of current
observable data to reflect the effects of current conditions that did
not affect past periods, and to remove the effects of past conditions
that do not exist currently.
If the terms of an impaired financial asset held at amortised
cost are renegotiated or otherwise modified because of financial
difficulties of the borrower or issuer, impairment is measured using
the original effective interest rate before the modification of terms.
The renegotiated asset is then derecognised and a new asset is
recognised at its fair value only if the risks and rewards of the asset
substantially changed. This is normally evidenced by a substantial
difference between the present values of the original cash flows and
the new expected cash flows.
Impairment losses are always recognised through an allowance
account to write down the asset’s carrying amount to the present
value of expected cash flows (which exclude future credit losses
that have not been incurred) discounted at the original effective
interest rate of the asset. The calculation of the present value of
the estimated future cash flows of a collateralised financial asset
reflects the cash flows that may result from foreclosure less costs
for obtaining and selling the collateral, whether or not foreclosure is
probable.
If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an
event occurring after the impairment was recognised (such as an
improvement in the debtor’s credit rating), the previously recognised
impairment loss is reversed by adjusting the allowance account
through profit or loss for the year.
Uncollectible assets are written off against the related impairment
loss provision after all the necessary procedures to recover the
asset have been completed and the amount of the loss has been
determined. Subsequent recoveries of amounts previously written off
are credited to impairment loss account in profit or loss for the year.
Fair value of defined post-employment benefit liabilities are
estimated based on a number of actuarial and economical
assumptions. The discount rate will have the most important impact.
The post-employment benefit obligations are valued by independent
qualified actuaries, based on assumptions recommended by the
Norwegian Accounting Standards Board (“NRS”), adjusted if needed
to reflect circumstances specific for the Bank.
4. Intangible assets
In the event of impairment indicators, intangible assets are assessed
for impairment by estimating the assets recoverable amount. The
estimation uncertainty in these tests are related to discount rate and
cash flow forecasts.
113
Background
In January 2015 Livförsäkringsbolaget Skandia, ömsesidigt
announced that it was condisering a listing of Skandiabanken
AB’s Norwegian banking business (Skandiabanken AB NUF to
facilitate continued growth. Skandiabanken ASA was floated on
the Oslo Stock Exchange on 2 November 2015. Skandiabanken AB’s
Norwegian business was organised as a branch of Skandiabanken
AB, and legally registered in Norway as Skandiabanken AB NUF. In
order to spin the business off as an independent listed company, a
number of transactions were carried out in advance of flotation.
Skandiabanken ASA (issuer) was incorporated on 17 April 2015 as
Midgard Prosjekt 1 ASA. On 5 October 2015 the business belonging
to Skandiabanken AB NUF (with the exception of business activities
transferred to Skandiabanken Boligkreditt AS) was transferred
in a cross-border demerger/merger (pursuant to s 14-12(4) of
the Public Limited Companies Act and Chapter 11 of the Taxation
Act) to Midgard Prosjekt I ASA (which later changed its name to
“Skandiabanken ASA”). Skandiabanken AB retained all rights to the
brand name “Skandiabanken”, “Skandia”, “Ideer for livet”, domain
names associated with the brand names and liabilities associated
with tax for Skandiabanken AB. Since Skandiabanken AB NUF had
never had these rights, it is not deemed to be a relevant issue in the
assessment below. All other assets and liabilities associated with
the Norwegian business were spun off from Skandiabanken AB.
On the same day, 17 April 2015, Skandiabanken Boligkreditt AS
(“Boligkreditt”) was incorporated as a subsidiary of Midgard
Prosjekt I ASA with the name Midgard Prosjekt II AS. Its object was
to act as a Covered Bonds company for the Skandiabanken Group in
Norway. In connection with the spin-off of the Norwegian banking
business from Skandiabanken AB on 5 October, the covered bonds
belonging to the Norwegian business were moved to Boligkreditt
by means of a “redemption-in-kind”, which means that the old
bonds were swapped for newly issued bonds from Boligkreditt
on the same terms and conditions as the old ones. At the same
time, sufficient home loans were transferred to Boligkreditt to
satisfy the funding surety requirements. These transactions were
a prerequisite for the reorganization and was there part of the
agreement structure.
1) Consolidated financial statements for Skandiabanken ASA
In the Bank’s opinion, a transaction encompassing companies
under the same control, where a newly incorporated parent
company takes over an existing business must be recognised as
a “capital reorganisation”. Such a transaction is not deemed to
be a business combination under IFRS 3, nor a combination with
reverse takeover, since the newly established parent has no existing
business. The establishment of the Skandiabanken ASA Group
(Skandiabanken ASA and Skandiabanken Boligkreditt AS together),
where the business previously belonging to Skandiabanken AB
NUF and assets and liabilities associated with the Norwegian
business operated through the branch Skandiabanken AB NUF are
transferred to the newly established companies Skandiabanken
ASA and Skandiabanken Boligkreditt AS, is deemed to represent
such a case.
This means that assets and liabilities in the existing business
are recognised in Skandiabanken ASA’s consolidated financial
statements at their book value at the time the transaction took
place (continuity). The reason for this is that, for accounting
114
purposes, there is no financial substance to the transaction,
since, in reality, the new group structure takes over the entire
business previously organised in the branch, Skandiabanken AB
NUF and thereby reflects the profit/loss and balance of the existing
business. The only thing that is changed by the transactions is
the legal structure. In a capital reorganisation the new company’s
consolidated financial statements will reflect the existing
business’s results (including comparable figures), even though the
reorganisation has occurred in the middle of a financial period. The
consolidated financial statements, which comprise Skandiabanken
ASA and Skandiabanken Boligkreditt AS, and which close on 31
December 2015, will therefore show the accounting information
for the two entities combined for the entire period and for the
entire comparable period, which means that Skandiabanken AB
NUF’s financial statements will be used as the basis for the periods
in which Skandiabanken ASA and Skandiabanken Boligkreditt AS
formally had no business activity.
2) Recognition and presentation in the parent company’s
financial statements
In the financial statements of the parent company, Skandiabanken
ASA, it will also be natural to make use of a capital reorganisation
perspective, since it is a transaction under the same control, where
a newly incorporated “parent” has no commercial activity before
the transaction takes place. The same conditions are relevant in
connection with the establishment of Skandiabanken Boligkreditt
AS. With respect to the presentation of comparable figures, one
must, however, take into account that only part of the business
belonging to Skandiabanken AB NUF has been transferred to
Skandiabanken ASA (the rest, including covered bond financing and
home loans) has been transferred to Skandiabanken Boligkreditt
AS). The objective of showing a full accounting history in a capital
reorganisation is to show the unit as if no transaction has occurred,
since performance of the transactions causes no real financial
change on the part of the joint owner. However, for Skandiabanken
ASA’s parent company financial statements there will not be a oneto-one relationship between the old business in Skandiabanken
AB NUF and the new Skandiabanken ASA. It is therefore not
expedient to present comparable figures, since only part of the
former business has wound up in the parent company. Such an
apportionment could quickly give the impression of being pro
forma, since many of the items must be allocated.
In our assessment, there is no duty to choose the same solution
for the consolidated financial statements and the parent company
financial statements in such a case. One can therefore choose a
solution where the parent company’s financial statements present
figures only for the period in which the parent (and correspondingly
the subsidiary) has existed (but where assets taken over
from Skandiabanken AB NUF are measured and recognised at
Skandiabanken AB NUF’s book values at that time, i.e. another
variant of the continuity perspective).
Note 4 Segments
No segment information has been prepared, since the entire
operation of Skandiabanken ASA is deemed to constitute one
segment “Private Market” under IFRS 8. Currently, Skandiabanken
ASA offers services and products intended exclusively for private
individuals. In the supervisory activities performed by the board
and management, the customer base is not divided into different
business segments that are followed up over time. The company’s
products are divided into various groups which are followed up by
different value chains and product managers.
personal loans and custody account lending
as well as BSU (young home buyer’s savings account)
transactions, etc.
The products in these groups are followed up by management, but
are accorded varying degrees of emphasis and focus depending
on the overall situation for the business as a whole. The Bank’s
own investment activities do not form a separate reportable
segment, and are therefore presented in conjunction with Private
Market. Since the Bank operates only in Norway, the reporting of
geographical and secondary segments is not considered relevant.
Important classes of assets (home loans) and liabilities (deposits)
are, however, broken down geographically and presented in a
separate note.
The capital adequacy regulations are intended to improve
institutions’ risk management and achieve closer concordance
between risk and capital. The applicable regulations for Norwegian
banks are adapted to the EU’s capital adequacy regulations for
credit institutions and investment firms (CRD IV/CRR).
Skandiabanken ASA uses the standard method to establish the
calculation basis for credit risk and the basic method to establish
the calculation basis for operational risk. At the reporting date no
exposure was included in the calculation basis for market risk.
No comparative figures are available due to the fact that
Skandiabanken AB NUF was a branch of the Swedish company
Skandiabanken AB as of 31 December 2014 and thus no separate
regulatory capital ratio calculation was performed for the Bank.
>>
115
>> Note 5 Capital adequacy (continued)
In NOK thousands
Risk Weighted volume
Central governments
Regional governments
Multilateral Development Banks
Institutions
Retail
Secured by mortgages on fixed property
Exposures in default
Covered bonds
Equity
Other items
Total credit risk, Standardised approach
Credit value adjustment risk (CVA)
Operational risk
Total risik weighted volume
31.12.2015
Nominal exposure
559 507
3 444 961
360 006
19 542 641
9 758 240
47 510 429
163 482
3 375 965
1 039 730
29 862
85 784 823
Capital base
Share capital
Share premium
Other equity
Total booked equity
Additional Tier 1 capital instruments included in total equity
Common equity Tier 1 capital instruments
Deductions
Goodwill, deferred tax assets and other intangible assets
Value adjustment due to the requirements for prudent valuation (AVA)
Tier 1 capital
Tier 2 instruments
Own funds (primary capital)
Capital requirements
Minimum required Common equity Tier 1 capital
Capital conservation buffer
Systemic risk buffer
Countercyclical capital buffer
Tier 2 instruments
Total minimum and buffer requirements own funds (primary capital)
Available Common equity Tier 1 capital after buffer requirements
Available Own funds (primary capital)
Capital ratio %
Tier 1 capital
Tier 2 instruments
Total capital ratio
116
Risk Weighted
volume
0
561 852
0
2 046 507
3 388 474
14 965 383
172 331
337 596
1 039 730
29 862
22 541 735
245
1 481 830
24 023 810
1 065 250
2 609 918
185 454
405 046
4 265 668
-405 046
3 860 622
-624
-7 283
3 852 715
400 000
4 252 715
500 000
4 752 715
4.5%
2.5%
3.0%
1.0%
1.5%
2.0%
14.5%
1 081 071
600 595
720 714
240 238
360 357
480 476
3 483 452
1 210 096
1 269 263
16.0%
1.7%
2.1%
19.8%
According to section 14-4 of the Norwegian Finance Institutions
act, the Tier 1 Capital or Common equity Tier 1 Capital in financial
institutions shall at least comprise a defined percentage of the
value of the company’s assets and off-balance-sheet liabilities,
calculated without a risk weighting (Leverage Ratio). The Leverage
Ratio is intended to prevent banks from using too low a calculation
basis in the capital adequacy calculations, and to ensure that
the Banks maintain a minimum capital, even with skewing of
the portfolio towards low-risk segments. The Leverage Ratio is
discussed in the CRD IV Regulation (CRR, EU No. 575/2013) Article
430.
The Basel Committee’s original proposal from 2011 was based on
a minimum requirement of 3 percent. The EU Commission has not
proposed any final minimum requirements and they are discussing
differentiated requirements depending on the business model. The
Norwegian Ministry of Finance has instructed Finanstilsynet to draw
up a consultation memorandum and regulations on the Leverage
Ratio by March 2016, including definitions of the denominator
and the numerator used in the capital fraction. The Authority has
also been mandated to assess which level it will be appropriate to
apply.
The table below shows the calculation for the Bank at the end of
the year based on existing rule proposals.
In NOK thousands
2015
Derivatives market value
Potential future exposure on derivatives
Off balance sheet commitments
Loans and advances and other assets
Regulatory adjustments included in Tier 1 capital
Total leverage exposure
Tier 1 capital
Leverage ratio (%)
555
524
29 286 966
53 311 683
0
82 599 728
4 252 715
5.1 %
The Bank’s risk strategy comprises its risk philosophy, risk appetite
and risk management principles
Risk policy
The Bank’s core business involves offering standard banking services
such as deposits, savings, lending and payment transactions to
private customers. The Bank shall not assume any material risk other
than that deriving from this core business, i.e. primarily credit risk
and liquidity risk.
The Bank shall be a secure and solid bank for private individuals, and
shall adhere to a conservative credit policy.
The Bank shall have a sound risk culture, based on openness,
transparency and competence, and shall continuously challenge
its methods, processes and procedures in order to improve its
performance.
Risk appetite
For purposes of risk management, the Bank classifies risk into the
-
-
-
-
-
Credit risk
Liquidity risk
Market risk
Operational risk, including risks relating to reputation, compliance and IT
Skandiabanken’s Board of Directors determines the Bank’s risk
appetite with respect to each of the above-mentioned categories,
and issues guidelines to the business on how this risk appetite
should be operationalised. The Bank operates in accordance with the
following risk appetite:
-
-
-
-
-
Credit risk: Low to moderate
Liquidity risk: Low
Market risk: Low
Operational risk: Low to moderate
Commercial and strategic risk: Moderate
Risk management principles
The Bank adopts a holistic approach to risk management. The
following principles therefore apply:
- The Bank’s specifications for risk appetite shall be translated into specific risk management frameworks.
- Each risk area shall be allocated capital in line with its actual risk status, which in turn shall be tailored to the Bank’s risk appetite.
- Risk management and reporting shall be performed in accordance with the above-mentioned frameworks and objectives.
- The Bank’s risk management systems and procedures shall be appropriate to the complexity of the business.
- Risk management shall be an ongoing and continuous process.
- Risk reporting shall be framed in an understandable manner and provide a clear picture of the Bank’s risk situation to all stakeholders.
- Risk management shall be performed across Group companies, at all levels within each individual Group company, and for the Group as a whole.
- The Bank shall assume only those risks that are understood by the Bank and the individual decision-maker.
- The Bank shall execute risk assessments before any material changes are effectuated.
- Responsibility for entering into agreements that cause the Bank - ANNUAL REPORT 2015 -
>>
117
>> Note 7 Financial risk management (continued)
-
to incur a risk is delegated through personal authorisations.
Efforts shall be made to achieve as great a concordance as possible between risk and profitability. Profitability shall be measured individually and on a risk-adjusted basis, and on the basis of financial capital allocated.
Organisation of risk management
The Bank’s organisation is based on its risk management and internal
control principles, and has been designed such that it ensures the
Bank’s risk strategy is implemented.
Board of Directors
Skandiabanken’s Board of Directors has the principal responsibility
for ensuring that the Bank manages risk efficiently. The Board of
Directors determines the Bank’s risk appetite and the frameworks for
risk management, and monitors the Bank’s risk exposure. The Bank’s
Board of Directors is also responsible for ensuring that the Bank is
adequately capitalised in relation to risk factors.
The Board of Directors’ Audit Committee
The Audit Committee monitors and secures the quality of financial
reporting, internal controls for financial reporting and the external
auditor’s work and independence.
The Board of Directors’ Risk Management Committee
The Risk Management Committee monitors and issues
recommendations to the Board of Directors concerning management
of the Bank’s risk exposure. The Committee’s mandate includes
regularly assessing whether the Bank’s internal control and
management systems are appropriately adapted to risk exposure and
the scope of the Bank’s operations, in addition to evaluating the work
and independence of the internal auditor.
The Board of Directors’ Remuneration Committee
The Remuneration Committee is responsible for securing thorough
and impartial preparation of all matters relating to remuneration
paid to the Bank’s executive employees.
The CEO and committees
The CEO has the principal operative responsibility for implementing
risk management procedures and securing achievement of the Board
of Directors’ adopted objectives, including efficient risk management
and internal control systems. A number of advisory committees
have been established to support the CEO in the exercise of his/her
responsibility for risk management.
The Risk Management and Compliance Committee
The Risk Management and Compliance Committee is chaired by the
Bank’s CRO and reports to the CEO. The Committee monitors the
Bank’s risk management and compliance programme, including its
risk management and internal control systems. The Committee also
regularly evaluates aggregate risk exposure, concentration risk and
compliance with the regulatory framework.
ALCO
The Asset and Liability Committee (ALCO) is chaired by the
Bank’s CFO and reports to the CEO. The Committee is responsible
for strategic management of the Bank’s balance sheet and risk
management framework for all treasury risks; principally market,
liquidity, capital and counterparty credit risks and associated
earnings volatility.
The Product Pricing and Interest Rate Committee
Chaired by the Bank’s CFO, the Bank’s Product Pricing and Interest
Rate Committee reports to the CEO and reviews and approves the
pricing strategy and decisions relating to the Bank’s products. The
118
Product Pricing and Interest Rate Committee coordinates measures
with senior management to identify, measure, control and report
relevant categories of risk associated with products pricing strategy
and interest rate changes..
The Credit Committee
Chaired by the Head of Credit, the Bank’s Credit Committee reports
to the CEO and evaluates current and future risk exposure, defines
parameters for the granting of credit and approves important or
complex credit applications.
The Bank’s framework for internal control and risk management
consists of three lines of defence, which constitute the organisational
model for the Bank’s risk management, risk control and compliance.
The first line of defence includes all categories of employees and
management of the Bank (except second-line employees). The
first line performs risk assessments and implements risk controls
that enable the Bank to operate within the risk framework and risk
appetite defined by the Board of Directors. First line is considered
to be the risk owner, i.e. the party responsible for monitoring and
implementing control actions.
The second line of defence consists of two independent control
functions – the Risk Management function and the Compliance
function – that monitor and check that the Bank is operating within
its risk limits and relevant laws and regulations.
The CRO heads the Bank’s Risk Management function. The Risk
Management function is responsible for establishing and maintaining
systems and processes that support the Bank’s compliance with
those risk strategies, policies and procedures that have been
adopted. The function prepares regular risk reports for the Board
of Directors, and shall also report any breaches of the relevant
frameworks and guidelines.
report directly to the CEO, but in certain cases also has a right and a
duty to report directly to the Board of Directors. The CRO may not be
dismissed without the Board of Directors’ consent.
The CCO leads that part of the second line of defence which covers
compliance with procedures and regulations. Administratively, the
function reports to the CEO. In practice, however, it is independent
of the Bank’s management and other control functions. The CCO
verifies compliance with regulations based on the Board of Directors’
instructions, and reports to the Board of Directors on matters of a
professionally relevant nature.
operational functions, and reports to the Risk Management
Committee and the Board of Directors. The Internal Auditor performs
audits in accordance with the audit plan and instructions issued
each year by the Board of Directors. The Internal Auditor presents a
summary of the Bank’s internal control activities once a year.
An External Auditor is appointed by the General Meeting, and reports
directly to the Board of Directors and the Audit Committee.
Note 8 Credit risk
Credit risk accounts for the bulk of Skandiabanken’s risk. Credit risk is
its obligations, and pledged collateral not covering the outstanding
claim.
The way credit is managed depends on whether the credit risk is
attributable to lending to the public in the form of the mass market
or whether the credit risk relates to other exposures, in particular the
placement of surplus liquidity.
Counterparty risk, including for derivatives, is included in credit risk.
Credit risk also includes concentration risk, including risk relating to
material exposure to a specific customer group or geographical area.
The Bank endeavours to reduce concentration through product and
geographical diversification.
Skandiabanken’s lending to the public comprises mass-market
exposures with individuals, primarily in the form of loans secured by
mortgage, real estate or a motor vehicle, amortised loans, unsecured
personal loans, overdrafts and credit cards, as well as securitiesbased credit.
Skandiabanken only have lending to the consumer market, in which
there is no concentration risk, and the entire portfolio is categorised
as retail in accordance with § 5–8 of the Capital Adequacy Regulation
or as exposures secured by mortgages or real estate (§ 5–9).
Concentration risk in the liquidity portfolio is managed through the
establishment of limits for individual counterparties within overall
frameworks determined by the Board of Directors. The frameworks
also take into account the Regulation on Large Exposures.
Risk relating to mass-market lending for all credit cases is managed by
assessing the borrower’s ability and propensity to pay, and by valuing
any collateral. Account is also taken of the counterparty’s aggregate
exposure, including any exposure attributable to co-borrowers. Credit
assessments are essentially performed by applying automated credit
regulations in which credit scoring represents a key element.
Risk shall be weighed against returns and balanced such that the Bank
remains within the specified risk appetite. Credit risk higher than the
Bank’s specified risk appetite shall not be compensated by means of a
high price. Rules and tools for credit assessment shall ensure that the
Bank avoids high-risk credit exposures. Please refer to the note 11 for
an overview of exposure to credit risk and associated collateral.
The Bank uses credit risk models to measure credit risk relating to
mass-market lending. Credit risk is classified and quantified using a
number of different systems, processes and methods. Credit scoring
models for all lending products are based on statistical data; however,
some models also make use of expert evaluations. These models
estimate the probability of defaults, taking into account factors such
as payment history, income, assets and the number of borrowers.
Losses on collateralised loans are estimated based on defaults, where
the extent of losses is based on the value of collateral in relation to the
size of the loan.
Risk classification of lending to the mass-market
Credit risk is measured and monitored by calculating economic capital
in the lending portfolio. The main components for this calculation are
Probability of Default (PD), expected Exposure at Default (EAD) and
Loss Given Default (LGD).
Skandiabanken maintains surplus liquidity which is invested in shortterm interbank lending and securities with counterparties and issuers
in the government, local authority, institutional and commercial
sectors. Risk is managed and exposures are evaluated by assessing
the counterparty’s financial position and ability to repay. The Board
of Directors has issued guidelines on the frameworks that can be
allocated to counterparties/issuers, while responsibility for approval
of counterparties/issuers and removal of credit frameworks is
delegated to ALCO.
PD is defined as the probability of a customer defaulting on its
exposure during the next 12 months. This could include payment
defaults of more than 60 days of a minimum of NOK 200 or other
specific matters that affect the customer’s ability to service the loan.
PD for the home loan portfolio is calculated using statistical models
based on logistic regression of internal data. PD for the other products
is calculated using a model based on external data that is calibrated
for an internal product-specific PD.
The following grouping is used to classify PD:
Low risk: PD < 1.25%
Moderate risk: PD 1.25%–5%
High risk: PD > 5%
31.12.2015
In NOK thousands
Gross loans distributed in risk groups
Home loans
Car loans
Custody
account lending
Other loans,
unsecured
Total
Low risk
Medium risk
High risk
Total gross loans
35 728 729
1 629 951
745 702
38 104 382
150 472
38 254 854
1 247 467
109 149
9 677
1 366 293
13 931
1 380 224
163 603
0
0
163 603
0
163 603
263 570
1 139 626
594 313
1 997 509
92 741
2 090 251
37 403 369
2 878 726
1 349 692
41 631 788
257 144
41 888 931
Unutilised credit lines distributed in risk groups
Home loans
Car loans
Custody
account lending
Other loans,
unsecured
Total
Low risk
Medium risk
High risk
Total unutilised credit lines
6 175 983
6 240
606
6 182 829
686
6 183 514
0
0
0
0
0
0
1 191 804
0
0
1 191 804
0
1 191 804
1 593 798
1 845 435
1 484 375
4 923 608
9 028
4 932 636
8 961 585
1 851 675
1 484 981
12 298 241
9 714
12 307 955
Loan- and funding commitments
3 212 282
111 615
0
0
3 323 898
Maximum exposure to credit risk
47 650 650
1 491 839
1 355 407
7 022 890
57 520 785
119
In NOK thousands
31.12.15
Loans to customers
Loans without agreed maturity or notice period
Loans with agreed maturity or notice period
Total loans to customers (gross)
1 558 938
40 329 993
41 888 931
Total loans to customers (net)
105 347
5 691
41 777 893
Maturity
Residual time to maturity (gross loans)
Upon request
Maximum 3 months
3 months - 1 year
1-5 years
More than 5 years
Total
1 558 938
587 010
1 662 434
7 360 002
30 720 547
41 888 931
Lending by geographical area*
In NOK thousands
Geographical area
Østfold
Akershus
Oslo
Hedmark
Oppland
Buskerud
Vestfold
Telemark
Aust-Agder
Vest-Agder
Rogaland
Hordaland
Sogn og Fjordane
Møre og Romsdal
Sør-Trøndelag
Nord-Trøndelag
Nordland
Troms
Finnmark
Total gross lending per geographical area
* The basis for the geographical distribution is the customer’s residential address.
120
31.12.2015
Percentage
Gross lending
5.4%
22.4%
18.7%
1.2%
0.9%
6.6%
4.2%
1.0%
1.0%
1.2%
9.9%
14.1%
0.2%
1.8%
4.4%
0.8%
2.4%
2.9%
0.8%
100.0%
2 245 347
9 377 336
7 851 739
486 923
396 600
2 747 418
1 775 139
403 247
425 330
515 072
4 160 222
5 899 026
89 479
750 734
1 854 136
318 131
1 025 056
1 232 690
335 306
41 888 931
Credit risk or counterparty risk is the risk of loss as a result of the
Bank’s customers and counterparties failing to fulfil their payment
obligations. The Bank’s maximum credit exposure will be the book
value of financial assets and any associated off-balance sheet
liabilities.
The Bank’s customer exposures comprises the bulk of the Bank’s
total credit exposure. A high percentage of the Bank’s lending is
collateralised. Collateral in the private retail market essentially
comprise fixed property and vehicles.
The table below shows the relationship between total credit
exposure and the associated collateral distributed to exposure
class. Lending secured by mortgages includes the percentage
distributed of exposure relating to the various loan-to-value levels.
For example, the line 0-40% means that the exposures amount to
less than 40 percent of the value of the collateral. 100% means
that the loan amount exceeds the value of the hedging object or
that the loan is unsecured. The entire loan per collateral is placed
in the same loan-to-value category.
The property values on which the calculations are based are
updated in the last month of each quarter and are therefore
representative of the current market value. The calculation of loanto-value does not take into account any additional collateral.
In NOK thousands
31.12.2015
Distribution
in percent
Number of
loans
Gross carrying
amounts
Off-balance
sheet amounts
Maximum
exposure to
credit risk
0 % - 40 %
17 %
12 076
6 648 171
2 324 453
8 972 624
40 % - 60 %
27 %
7 959
10 370 217
2 363 365
12 733 582
60 % - 80 %
40 %
7 698
15 123 583
1 308 598
16 432 181
80 % - 90 %
13 %
2 010
4 984 396
103 283
5 087 679
90 % - 100 %
2%
305
697 021
30 703
727 724
> 100 %
1%
239
431 466
53 112
484 578
38 254 854
6 183 514
44 438 368
Loan- and funding commitments, home loans
0
3 212 282
3 212 282
1 380 224
111 615
1 491 839
Custody account lending, secured
163 603
1 191 804
1 355 407
694 915
0
694 915
Car loans, secured
1 395 336
4 932 639
6 327 975
41 888 931
15 631 853
57 520 785
559 507
0
559 507
2 458 300
0
2 458 300
7 280 733
0
7 280 733
139 912
0
139 912
900 030
0
900 030
555
0
555
Other assets
Exposure to others
Gross exposure
216 299
0
216 299
11 555 336
0
11 555 336
53 444 268
15 631 853
69 076 121
The table below shows the percentage allocation of exposures for home loans for various levels of loan-to-value. Where the entire
exposure in the table above is placed in a related loan-to-value level, the relative share of the loan exposure at each level is shown in the
table below.
>>
121
>> Note 11 Credit risk exposure and collateral (continued)
In NOK thousands
31.12.2015
Distribution in
percent
Gross carrying
amounts
99,32 %
37 995 106
85 % - 100 %
0,45 %
170 645
> 100 %
0,23 %
89 103
Loan-to-value, Home Loans (relative distribution)
0 % - 85 %
Home loans, secured by mortages
38 254 854
Skandiabanken ASA has taken a lien in the vehicle in all car loans granted.
The value of the collateral is calculated when granting the loan and determines, among other aspects, the interest rate applied.
In NOK thousands
31.12.2015
Distribution in
percent
Gross carrying
amounts
0 % - 80 %
74.96 %
1 034 659
80 % - 100 %
Car loans, secured
25.04 %
345 565
1 380 224
In NOK thousands
Total loans secured with collateral in securities
122
31.12.2015
Number of
loans
870
Carrying
amounts
Fair value of
collateral
Average LTV
163 303
561 518
29.1 %
163 303
561 518
29.1 %
Note 12 Loans and liabilities to credit institutions
In NOK thousands
2015
Gross loans to and receivables from credit institutions
45 532
2 412 768
2 458 300
0
0
2 458 300
Geographical areas
Oslo and Akershus
Hordaland and Rogaland
Abroad
597 218
1 852 768
8 314
2 458 300
Liabilities to credit institutions
Loans and deposits from credit institutions without agreed maturity or notice period
Loans and deposits from credit institutions with agreed maturity or notice period
502 665
0
502 665
Maturity
Upon request
Less than 3 months
3 - 12 months
1-5 years
More than 5 years
502 665
Geographical areas
Oslo and Akershus
Hordaland and Rogaland
Abroad
11 515
491 150
0
502 665
502 665
In NOK thousands
2015
Loans to and receivables from central banks
Gross loans to and receivables from central banks
559 507
0
559 507
Net loans to and receivables from central banks
0
0
559 507
123
Note 14 Loan losses
Loan loss provisions
In NOK thousands
Opening balance individual write-downs
+ Increase in write-downs on loans
- Reversal of write-downs on loans
Closing balance individual write-downs
Opening balance collective write-downs
+/- Change in collective write-downs in the period
Closing balance group collective-downs
2015
100 817
6 474
1 944
105 347
6 813
-1 122
5 691
Closing balance total write-downs
111 038
Individual write-downs
Individual write-downs (collectively considered)
Collective write-downs
Total write-downs
26 331
79 016
5 691
111 038
Specification of loan losses
Actual losses
Increase in write-downs
Reversal of write-downs
Recoveries of previously written off loans
Net cost of losses in the period
-6 137
-5 927
1 944
2 791
-7 329
Losses by sector and industry
Retail market (individuals)
Total
-7 329
-7 329
Losses by product group
Home loans
Car loans
Other loans
Total
28 199
11 315
71 524
111 038
Individual write-downs by geographical area:
In NOK thousands
Akershus
Aust-Agder
Buskerud
Finnmark
Hedmark
Hordaland
Møre og Romsdal
Nordland
Nord-Trøndelag
Oppland
Oslo
Rogaland
Sogn og Fjordane
Sør-Trøndelag
Telemark
Troms
Vest-Agder
Vestfold
Østfold
Total
124
2015
14 714
1 009
5 668
1 219
2 341
18 335
3 478
3 089
1 591
1 985
20 137
7 674
787
4 236
2 131
3 995
1 709
3 992
7 257
105 347
The Bank has internal routines for ongoing monitoring of exposures
for which repayments and interest have not been paid on time
or for which authorised overdraft limits are exceeded, where
the reason is deemed to be the customer’s inability or lack of
propensity to pay. Payment defaults of more than 60 days and more
than NOK 200 are always reported as non-performing. If other
matters are identified that make it probable that the customer’s
financial position will result in loss, the exposure is classified as
doubtful. The need to recognise individual impairments is assessed
against the value of available collateral for the exposure. The table
below shows the relationship between the gross book value of
non-performing and doubtful loans and the associated individual
impairments.
In NOK thousands
Non-performing loans with write-downs
Non-performing loans without write-downs
Total non-performing loans (more than 60 days)
Doubtful loans
Gross non-performing and doubtful loans
- Individual write-downs
Net non-performing and doubtful loans
Provisioning ratio
2015
177 981
55 974
233 955
23 189
257 144
-105 347
151 797
41 %
Overdue loans without write-downs - age distribution
The table below shows the book value of overdue loans and
overdrawn amounts on credits allocated by number of days after
maturity, where no impairments have been recognised. The table
is intended to provide an analysis of exposures where there is
inadequate ability or propensity to pay, rather than overdue
amounts attributable to a delay in transferring funds. Based on this
and the Bank’s internal routines for monitoring overdue exposures,
the default must exceed NOK 200 for more than 6 days to be
included in the table below.
31.12.2015
In NOK thousands
2015
Home loans
7-30 days
31 - 60 days
61 - 90 days
More than
90 days
Total
499 759
108 493
14 613
41 298
664 163
Car loans
30 004
5 838
-
-
35 842
Other loans
22 642
15 576
-
63
38 281
552 405
129 907
14 613
41 361
738 286
Loans to customers
125
Skandiabanken ASA has provided securities as collateral for borrowing facilities with Norges Bank. In order to be granted loans or drawing
lines in Norges Bank it is required to provide collateral in interest carrying securities which fulfils certain criteria. As per 31 December 2015
Skandiabanken ASA did not have any loans in Norges Bank.
In NOK thousands
Fair value (carrying value) of bonds deposited in Norges Bank
Haircut
Net value of securities deposited in Norges Bank
2015
2 542 289
-106 142
2 436 147
As of 31 December 2015, Skandiabanken ASA had additional securities with fair value of NOK 2.75 billion, which would have qualified as
collateral in Norges Bank.
Intra group liquidity facility
Skandiabanken ASA has provided a credit facility relating to the maturity of covered bonds issued by Skandiabanken Boligkreditt AS.
In NOK thousands
Nominal value issued covered bonds
- own holdings
Net intra group liquidity facility
Less than 6 months
6 - 12 months
1-2 years
2-5 years
More than 5 years
Total
2015
12 685 000
0
12 685 000
600 000
2 585 000
2 000 000
6 500 000
1 000 000
12 685 000
Liquidity risk
Liquidity risk comprises the following two elements:
- Refinancing risk: The risk of the Bank being unable to refinance its
obligations as they fall due for payment, and the risk of the Bank
being unable to finance planned growth.
- Price risk: The risk of the Bank being unable to refinance its
obligations without a material rise in costs or that financing growth
will cost substantially more.
Liquidity risk shall be managed such that the Bank minimises its
financing costs, at the same time as the refinancing risk is kept
within the Board of Directors’ specified risk appetite. Liquidity risk
shall be managed at group level, at company level and for each
individual transaction.
The Bank measures liquidity risk over the short and long term.
Short-term risk measures include the liquidity coverage ratio (LCR),
and internal stress tests. The main long-term measure is the net
stable funding ratio (NSFR). The LCR and NSFR are measured in
accordance with methodology established by Finanstilsynet.
126
Skandiabanken maintains a liquidity portfolio comprising liquid
funds managed by Treasury and which qualify, or will qualify, as
collateral at Norges Bank. This can be used to even out fluctuations
in the Bank’s liquidity requirements.
Management of inherent risk relating to maturity structures
The CFO is responsible for ensuring that ongoing forecasts are
prepared covering the Group’s financing requirements for at least
the next 12 months. The financing plan is reviewed by ALCO at
the start of each forecast period, as a minimum quarterly. ALCO
determines the financing plan, and Treasury’s operations are
subsequently based on this plan. In addition, the management
frameworks for LCR and intraday and overnight financing
requirements contribute to keeping short-term financing risk
low. The Group shall endeavour to maintain a balanced maturity
profile, and as a main rule shall not have a maturity concentration
under which more than 30 percent of the capital market financing
matures within one year.
LCR (Liquidity Coverage Ratio)
In NOK thousands
2015
Level 1 - assets exclusive Covered bonds
Level 1 Covered bonds
Nivå 2A - assets
Nivå 2B - assets
Assets ineligble as "liquid assets"
Total assets
Net payments
LCR %
The liquidity requirements are intended to guarantee satisfactory
liquidity management by ensuring that the institutions have
sufficient liquid assets to cover their liabilities on maturity and have
stable and long-term financing at all times. The Liquidity Coverage
Ratio (LCR) is intended to ensure that institutions can convert
sufficient assets to cash to cover expected net liquidity outflows
over the next 30 days in stressed situations in the money and
capital markets. The Net Stable Funding Ratio (NSFR) is intended to
ensure that less liquid assets are financed over the long term.
On 22 December 2015, based on the CRR/CRD IV Regulation,
Finanstilsynet issued its Regulation on Calculation of Liquid
Assets, Payments and Deposits in the Liquidity Coverage Ratio
(LCR). For banks deemed not to be systematically important,
including Skandiabanken, this requirement will be gradually
Carrying value
Value LCR
1 792 657
2 681 382
2 817 055
0
46 042 135
53 333 229
1 792 657
2 493 685
1 689 181
0
0
5 975 523
4 262 088
140 %
phased in, starting with 70 percent from 31 December 2015, rising
to 80 percent from 31 December 2016, and to 100 percent from
31 December 2017. This applies at consolidated level and for the
parent bank. For credit institutions, including Skandiabanken
Boligkreditt AS, phasing in of the 70 percent requirement has been
deferred until 30 June 2016. Otherwise, the phasing-in plan for
credit institutions is the same as for banks, as outlined above.
The NSFR has still not been introduced as a minimum requirement.
The EU Commission is expected to present a draft proposal by
the end of 2016, which is expected to be introduced from 2018.
Based on the Basel Committee’s recommendations of October 2014
the Bank has an NSFR of 140 percent compared to an expected
requirement of 100 percent.
In NOK thousands
Cash flows, undiscounted
Less than
1 month
1-3
months
3 - 12
months
From 1 to
5 years
More than
5 years
Without
maturity
Total
502 665
-
-
-
-
-
502 665
45 457 206
-
-
-
-
4
7 797
-
-
-
-
7 801
-
-
700 000
1 620 000
-
-
2 320 000
-
6 193
24 325
30 432
-
-
60 951
500 000
-
500 000
Subordinated loan
Taxes payable
Hybrid capital instrument
Interest disbursement, hybrid capital instrument *
Total disbursements
45 457 206
4 063
-
10 685
63 376
104 346
-
182 470
-
-
25 265
-
-
-
25 265
263 549
-
-
-
23 092
-
286 641
-
-
-
-
-
400 000
400 000
5 295
-
14 636
83 167
382 229
-
485 327
15 631 853
-
-
-
-
-
15 631 853
61 864 635
13 990
774 911
1 796 975
1 009 667
400 000 65 860 179
51 973
n.a
n.a
n.a
n.a
n.a
51 973
51 973
n.a
n.a
n.a
n.a
n.a
51 973
* Interest disbursement for the hybrid capital instrument is calculated for the period until 31 December 2035.
127
In NOK thousands
Subordinated loan
Currency
2015
NOK
NOK
498 812
498 812
Specification of subordinated loan as at 31.12.15:
ISIN
NO0010746464
Issuing company
Nominal
value
Currency
Interest
Maturity*
Carrying
amounts
Skandiabanken ASA
500 000
NOK
3M Nibor +2.1 %
12.10.2025
498 812
498 812
Changes of subordinated loan during the year:
05.10.2015
Matured
Redeemed
Other
adjustments
31.12.2015
Subordinated loan (nominal value)
0
500 000
0
0
0
500 000
Total
0
500 000
0
0
0
500 000
* First possible call date for the issuer is 12 October 2020.
The loan agreement has standard covenants.
Skandiabanken ASA has in 2015 fulfilled all obligations related to the loan agreement.
128
Issued
On 4 October 2015, Skandiabanken ASA issued a hybrid capital
instrument is perpetual with an option for the issuer to redeem
the capital at specific dates, the first time being 12 October 2020,
5 years after the issue date. The instrument has an interest rate of
NIBOR 3 months plus a margin of 4.1 percent.
The loan agreement fulfils the Norwegian regulatory requirements
for inclusion in the Bank’s Tier 1 capital. This implies that the issuer,
at its sole discretion, has the right to withhold interest and/or
redemption of the instrument. This implies that the instrument do
not fulfil the definition of a debt instrument according to IAS 32 and
is such defined as equity in the Bank’s balance.
In NOK thousands
Total Additional Tier 1 capital
Valuta
2015
NOK
NOK
400 000
400 000
Spesification of additional Tier 1 capital as at 31.12.15:
ISIN
NO0010746456
Issuing company
Nominal
value
Currency
Interest
Maturity*
Skandiabanken ASA
400 000
NOK
3M Nibor + 4,1 %
Perpetual
Total additional Tier 1 capital
Carrying
amounts
400 000
400 000
* The Tier1 capital is perpetual with an option for the issuer to redeem the capital at specific dates, the first time being 12 October 2020.
Change of additonal Tier 1 capital
05.10.2015
Issued
Matured
Redeemed
Other
adjustments
31.12.2015
0
400 000
0
0
0
400 000
Total
0
400 000
0
0
0
400 000
As at 31 December 2015, there is NOK 5 million in accrued interest related to additional Tier 1 capital. This has been recognised against the additional Tier 1 capital and the carrying
value including accrued interest is NOK 405 million.
129
Recognised at amortised cost:
In NOK thousands
Commercial paper issued
Bonds issued
Total debt securities issued
Currency
2015
NOK
NOK
699 876
1 619 797
2 319 672
Specification of commercial paper and bonds as at 31.12.15:
Issuing company
Nominal value
Currency
Interest
Maturity
Carrying
amounts
NO0010753130
Skandiabanken ASA
200 000
NOK
1.60 %
30.08.2016
199 934
NO0010748536
Skandiabanken ASA
500 000
NOK
1.52 %
23.05.2016
499 942
ISIN
Commercial paper
Total commercial paper
699 876
Bonds
NO0010712425
Skandiabanken ASA
920 000
NOK
3M Nibor + 0.38 %
26.05.2017
NO0010719826
Skandiabanken ASA
700 000
NOK
3M Nibor + 0.48 %
10.09.2019
920 302
699 495
Total bonds
1 619 797
2 319 672
Changes in debt securities during the year:
ISIN
Commercial paper (nominal value)
130
05.10.2015
Issued 2015
0
700 000
Matured
Redeemed Other adjustments
31.12.2015
700 000
Bonds (nominal value)
1 620 000
300 000
0
-300 000
Total
1 620 000
1 000 000
0
-300 000
1 620 000
0
2 320 000
2015
In NOK thousands
Share
Deposits
Desposits with no agreed term to maturity
100 %
45 457 206
Desposits with agreed term to maturity
0%
0
45 457 206
Avarage deposit rate
1.39 %
Covered by the Norwegian Banks’ Guarantee Fund
96.2 %
Deposits by sector and industry
Retail customers
100 %
43 736 306
45 457 206
45 457 206
2015
In NOK thousands
Share
Deposits
3.6 %
1 656 373
Deposits by geographic area
Østfold
Akershus
17.5 %
7 960 1 35
Oslo
22.9 %
10 398 743
Hedmark
1.3 %
593 762
Oppland
1.4 %
644 905
Buskerud
4.7 %
2 115 431
Vestfold
3.6 %
1 646 925
Telemark
1.2 %
561 439
Aust-Agder
1.2 %
564 426
Vest-Agder
1.6 %
706 231
Rogaland
7.1 %
3 241 863
Hordaland
15.8 %
7 192 276
Sogn og Fjordane
0.8 %
371 034
Møre og Romsdal
2.6 %
1 191 928
Sør-Trøndelag
6.0 %
2 706 994
Nord-Trøndelag
1.3 %
584 537
Nordland
3.0 %
1 372 931
Troms
3.2 %
1 462 277
1.1 %
484 996
100.0 %
45 457 206
100.0 %
45 457 206
Finnmark
Upon request
Less than 3 months
3 - 12 months
1-5 years
More than 5 years
45 457 206
131
Market risk
The company is exposed to the following market risks:
- Interest rate risk is the risk of loss resulting from a general change in market rates due to different terms to maturity on the asset and liability sides of the balance sheet.
- Exchange rate risk is the risk of loss resulting from changes in exchange rates. If borrowing is to be undertaken in any currency other than NOK, hedging transactions shall be entered into such that the exchange rate risk is minimised.
- Credit spread risk is the risk that interest-bearing securities will fall in value as a result of an increase in the margin mark-up for corresponding credit instruments in the market. The Bank
calculates its exposure to credit spread risk in accordance with Finanstilsynet’s practice for the assessment of risk and capital adequacy (circular 9/2015).
- Securities risk is the risk of loss resulting from a fall in share prices.
Interest rate sensitivity
The interest rate sensitive part of Skandiabanken’s balance sheet
primarily comprises variable interest rate positions, plus some
fixed-interest bonds. A two percentage-point parallel shift in
interest rates is used to measure interest rate risk, in accordance
with Circular 9/2015 from Finanstilsynet.
Balance sheet
Volume (thousands)
Weighted duration
Change in value
41 777 893
0.12
96 411
7 280 733
0.15
21 961
Other assets
4 274 603
-
-
Total asssets
53 333 229
0,12
118 371
45 457 206
0.12
104 901
2 319 672
0.15
11 857
898 812
0.02
389
Loans to customers
Additional tier 1 capital and subordinated loan
Other liabilities
791 871
-
-
3 865 668
-
-
53 333 229
0.12
117 148
Equity
Total
1 224
The table below shows six stress scenarios from the Basel
Committee’s proposals for handling interest rate risk in the banking
book (June 2015) which is currently at the consultation stage. At the
reporting date Skandiabanken had no balance sheet items exposed
to interest rate changes for a forward period of more than eight
Interest rate curve 31.12.2015
Parallel shock up; 2 percentage points increase in
interest rates
months. Consequently, the scenario for terms over 6–9 months
will have no effect on Skandiabanken, with the result that Scenario
3 and 6 and Scenario 4 and 5 are identical. In addition, a two
percentage point parallel shift in the interest rate level is shown for
the same time periods as are included in the stress scenarios.
Overnight
O/N - 1
month
1-3
months
0.74 %
0.93 %
1.10 %
1.13 %
9-12
months
More than
12 month
1.06 %
n.a
n.a
-
932
4 943
-2 018
-2 633
-
-
Scenario 1 : parallel shock up (60%)
-
691
4 350
-1 825
-2 241
-
-
Scenario 2 : parallel shock down (60%)
Scenario 3: short term rates down 85% long term rates
up 40%
Scenario 4: short term rates up 85%, long term rates
down 40%
-
173
1 087
-456
-560
-
-
-
65
408
-171
-210
-
-
-
799
5 029
-2 110
-2 591
-
-
Scenario 5: short term rates up (85%)
-
799
5 029
-2 110
-2 591
-
-
Scenario 6: short term rates down (85%)
-
65
408
-171
-210
-
-
The yield curve consists of NOWA, NIBOR, NOK SWAP and interpolated points between them.
132
3 -6
months 6 - 9 months
Currency
The net currency position (long or short) is measured in each currency. Long and short positions are also summarised. Exposure against
limit is the highest absolute value of the long and short position. The exchange rate risk as of 31 December 2015 is NOK 17 million. A
weakening of 10 percent in the NOK-SEK exchange rate would increase exchange rate risk by NOK 1.5 million.
Net currency position TNOK
USD
SEK
EUR
JPY
CHF
GBP
Other
2 861
-16 793
-175
0
0
1
0
Shares and funds
Skandiabanken’s equity investments relate to strategic ownership positions and certain minor shareholdings in newly established funds.
The total expected fair value amounts to NOK 8.91 million. A weakening of the price of the share or fund of 30 percent would reduce the
value of the portfolio by NOK 6.24 million.
Share and fund portfolio
Fair value
Value after 30 % drop
BankAxept AS
1 533
1 073
Bank ID Norge AS
1 379
965
Utsikt2050
2 000
1 400
Utsikt2040
2 000
1 400
Utsikt2030
2 000
1 400
Total share and fund portfolio
8 91 2
6 238
Credit spread risk
The calculation of credit spread risk is based on Solvency II, ref. Finanstilsynet’s Circular 9/2015, and is modelled as a stress test.
In NOK thousands
(thousands)
Duration (weighted)
AAA (sovereign)
413 047
2 652
-
-
AAA (covered bonds)
3 370 516
2 352
6
47 557
AA (municipalities)
3 497 170
1 445
11
55 572
Total
7 280 733
-
-
103 128
Rating
Spread change
Credit spread risk
Unrated Norwegian municipalities are placed in rating category AA.
133
In NOK thousands
2015
1-3
months
1 month
3-12
months
1-5 year
Without
Over interest rate
5 years
exposure
Total
559 507
559 507
2 458 300
2 458 300
Loans to customers
Write-downs for individually assessed impaired loans to
customers
Write-downs for collectively assessed impaired loans to
customers
3 217 313
41 689 425
-
1 475 817
5 225 236
579 680
199 506
41 689 425
41 888 931
-
-
-105 347
-105 347
-5 691
-5 691
-111 038 44 795 700
7 280 733
900 030
900 030
139 912
139 912
Derivatives
555
555
Intangible assets
832
832
10 068
10 068
3 581
3 581
Other assets
139 159
139 159
62 659
62 659
1 145 758
53 333 229
Deferred tax assets
Total assets
4 693 130
46 914 661
579 680
-
-
Liabilities
502 665
502 665
45 457 206
45 457 206
Taxes payable
-
1 619 796
-
Other liabilities
Subordinated loan
Total liabilities
134
25 265
25 265
699 875
2 319 671
263 941
498 812
1 001 477 47 077 002
263 941
498 812
-
-
-
989 081 49 067 560
Skandiabanken ASA uses currency derivatives to manage exchange
rate risk. The scope of the above is limited as the company does
not have any lending or borrowing in foreign currency. Derivatives
are therefore only used in relation to other liabilities in foreign
currency.
Skandiabanken ASA does not use hedge accounting. Consequently,
currency derivatives are recognised at fair value through profit and
loss and included in the trading portfolio.
No other types of derivative contracts such as interest-related
contracts were entered into in 2015, as the company does not make
any fixed-interest loans.
31.12.2015
In NOK thousands
Nominal value
Positiv marked value
Negativ marked value
Currency derivatives
51 973
555
0
Total derivates
51 973
555
0
As of 31 December 2014 Skandiabanken ASA (Skandiabanken AB NUF) had no derivatives in the balance sheet.
There are therefore no comparative figures for 2014.
Offsetting through ISDA agreements
Skandiabanken ASA has in connection with derivatives trading entered into ISDA agreements with Skandia Capital AB. This means that
Skandiabanken ASA has a right to offset if the counterparty defaults on their obligations.
Skandiabanken ASA has not entered into other agreements with counterparties which are entitled to set-off.
135
Operational risk
Operational risk means unexpected fluctuations in results which
are attributable to inadequacies or failures in internal processes
and systems, employees or external events, which oblige the
Bank to retain financial capital in order to safeguard itself against
substantial and unexpected operational losses. The definition also
includes legal risk, i.e. the risk that an agreement or legal action
cannot be performed in line with underlying assumptions; and
compliance risk, i.e. the risk of non-compliance with statutory
provisions, internal guidelines, industry standards, etc., as well as
reputation risk.
The policy for operational risk, including contingency plans,
describes preventive and mitigating measures. In addition to
policies and instructions, and procedure and job descriptions,
Skandiabanken has a self-evaluation process for operational risk.
This process is intended to identify operational risk and quantify
any potential ensuing losses. This work results in action plans
whose implementation is subject to ongoing monitoring. The
evaluation is performed each year and includes quarterly updates
and follow-up.
136
Commercial risk is the risk that earnings will weaken and is largely
attributable to the following risk factors: Changes in volumes,
interest margins and other price changes associated with
borrowing and lending, weakened net commission income and
earnings that are insufficient to cover costs.
Measurement of commercial risk takes into account changes due
to credit losses and other risks such as market risk, liquidity risk
and operational risk. The size of commercial risk is essentially
affected by variations in net interest and commission. Some costs
vary in line with volume- and transaction-based changes in income,
other costs are deemed to be variable without being volume- or
transaction-based, while further costs are deemed to be fixed.
Management’s short-term opportunities to influence potential
losses of income depend on the ratio of variable to fixed costs.
Commercial risk is managed through diversification of income,
stable revenue generation and cost control.
Strategic risk refers to the long-term risk that arises as a result of
erroneous or imperfectly conceived commercial decisions, poor or
incorrect implementation of decisions, or inadequate sensitivity to
changes in society, competition, technology, the regulatory system
or the financial sector.
Net interest income
2015
In NOK thousands
Loans to customers
Recognised at
amortised cost
Recognised at
fair value
Total
14 327
0
14 327
314 918
0
314 918
0
23 188
23 188
329 245
23 188
352 433
-3 022
0
-3 022
-113 192
0
-113 192
-6 114
0
-6 114
Subordinated loan
-3 891
0
-3 891
Other interest expenses
-7 605
0
-7 605
Total interest expense
-133 824
0
-133 824
195 421
23 188
218 609
Total interest income
Net interest income
Interest income from loans to customers:
In NOK thousands
2015
Home loans
Car loans
Consumer loans
Other loans*
Total interest income from loans to customers
239 081
17 594
14 942
43 301
314 918
* Credit card, account credit and custody account credit.
In NOK thousands
2015
Card commissions
Payment processing
Insurance services
Total commission and fee income
396
19 669
13 777
28 443
272
62 557
Card commissions
Payment processing
Insurance services
Total commission and fee expenses
-1 665
-8 866
-5 790
-10 258
-5 817
-32 396
30 161
137
Note 30 Other income
In NOK thousands
2015
Group contribution and dividend from subsidiary
Other income from services delivered to subsidiary
Total other income
0
1 244
1 244
Note 31 Net gain (loss) on financial instruments
Gain (loss) on financial instruments recognised through profit and loss:
In NOK thousands
2015
1) Realisation of financial instruments available for sale:
Gain (loss) by realisation of financial instruments available for sale
-hereof shares and funds
-hereof commercial paper, bonds and other interest bearing securities
Total gain by realisation of instruments available for sale
960
0
960
960
2) Financial instruments at fair value through profit and loss
Unrealised gain on derivatives
Total gain on financial instruments at fair value through profit and loss
555
555
3) Financial instruments at amortised cost:
Gain (loss) by repurchase of own bonds/commercial paper at amortised cost:
Total loss on financial instruments at amortised cost
0
0
4) Currency
138
Net gain (loss) on currency items
Total gain (loss) on currency items
-346
-346
Total gain (loss on financial instruments recognised through profit and loss:
1 169
In NOK thousands
2015
Other administrative expenses
Properties and premises expenses
IT expenses
Advertisement and marketing expenses
Services provided by Skandia Group companies excluding IT-cost
Temporary employment agencies
Consultants and other external services
Telephone and postage
Other operating expenses
Total administrative expenses
-4 437
-33 583
-5 445
-6 891
-4 652
-16 128
-3 149
-4 401
-78 685
Depreciations and write-downs on fixed and intangible assets:
In NOK thousands
2015
Depreciations during the period
Write-downs during the period
Total depreciations and write-downs during the period
-321
0
-321
In NOK thousands
Statutory audit
Other certification services
Tax-related services
Other services
Total remuneration to the statutory auditor
2015
313
0
0
63
375
Remuneration paid to the auditor includes Value Added Tax.
The company’s elected auditor for the accounting period was Deloitte AS.
139
to executive managemet and governing bodies
Personnel expenses
In NOK thousands
2015
Wages
Pension costs
- defines contribution pensions
- defined benefit pensions
- other pension related costs
Payroll tax
Other personnel expenses
38 814
3 952
1 434
1 877
641
8 128
3 320
Total personnel expenses
54 214
Income tax account
In NOK thousands
2015
Income tax account
Total restricted assets
10 511
10 511
Employees
2015
Total employees as at 31.12
Total FTEs as at 31.12
Average number of employees
FTEs temporary employees as at 31.12
258
238
242
32
Remuneration to Executive management, the Board of Directors, the Control comittee etc.
2015
Name and position
Executive management
Magnar Øyhovden,
Chief Executive Officer
Henning Nordgulen, Chief Financial
Officer (from 3 August 2015)
140
Agreed
fixed
annual
salary as
at 31.12.15
Paid
perfor- Paid other
Paid
variable
mancesalaries
salary
related
2015 salary 2015
2015
Total paid
salaries
2015
Benefits
in kind
and other
benefits
201
Total
remuneration
paid /
received
in 2015
Pension Loan as at
cost 2015
31.12
Shares as
at 31.12.
1)
2)
3)
4)
5)
2 227
534
-
1 083
1 617
19
1 636
84
4 614
6 815
1 900
456
-
271
727
4
731
16
-
6 814
1 634
392
-
374
767
17
783
17
2 947
3 260
Geir Berge Hansen, Head of Strategy
Johnny Anderson, Head of Marketing
& Communication
1 056
253
-
167
421
9
430
17
1 786
2 717
Bente Rebnor, Head of HR
1 445
347
-
252
599
41
640
93
-
2 173
Eirunn Skogen, Head of IT
Eirik Christensen, Chief Risk Officer
Erik Husø, Head of Legal
Anne-Christine Fiksdal,
Head of Product & Process
(from 14 September 2015)
Magne Angelshaug,
Head of Business Development
1 106
265
-
142
407
50
457
79
2 948
2 173
1 150
276
-
83
359
4
362
16
-
2 173
1 130
271
-
49
320
4
324
16
-
652
1 100
317
-
48
365
5
370
14
-
3 260
1 141
274
-
207
481
4
484
16
-
2 608
6)
to executive managemet and governing bodies (continued)
Remuneration to Executive management, the Board of Directors, the Control committee etc.
2015
Name and position
Agreed
annual
board
remuneration
2015
Agreed
Agreed
annual
annual
remuremuneration
neration
for board from group
commit- companies
tees 2015
2015
Paid
board
remuneration
2015
Paid
Paid
remucommitneration Paid other
tee remu- from group compenneration companies
sation
2015
2015
2015
Total
remuneration
paid /
received Loan as at
in 2015
31.12
Shares as
at 31.12
The Board of Directors
Niklas Midby (chairman)
450
63
-
225
31
-
450
706
-
10 869
August Baumann
250
140
-
125
70
-
100
295
-
-
Mai-Lill Ibsen
250
175
101
125
88
50
100
363
-
-
Ragnhild Wiborg
250
113
101
125
56
50
100
332
-
-
-
-
-
-
-
-
878
878
49
2 173
-
-
-
-
-
-
-
-
6 980
543
-
-
-
-
-
-
-
-
1 910
326
-
-
-
-
-
-
-
-
-
-
Øyvind Thomassen 7)
Silveli Vannebo,
Employee representative
Jon Holmedal,
Employee representative (deputy)
The Control Committee
Bjarne Haldorsen
Erik Hoffmann-Dahl
-
-
-
-
-
-
-
-
3 456
-
Vidar Broder Lund
-
-
-
-
-
-
-
-
-
-
Tore Mydske
-
-
-
-
-
-
-
-
-
-
Loans to other employees in Skandiabanken ASA
385 606
9)
1) Agreed annual fixed salary/fees at the end of the year.
2) Paid fixed salary and holiday pay for both profit-related and ither variable pay.
3) Paid profit-related pay earned in previous years excl. holiday pay, paid in Skandiabanken AB Nuf before 05. October 2015
4) Paid variable pay such as extraordinary compensation other than profit-related pay. For 2015 this also includes compensation for work related to the reorganisation and
IPO-process.
5) Other benefits in kind include the cost of telephones, broadband, insurance, loans at beneficial interest rates, use of company cars etc.
6) Includes 293 shares owned by close family members.
7) Paid profit-related pay earned in previous years as Head of Skandiabanken AB Nuf. Serves as a representative for Skandia Liv and has elected not to receive remuneration for his duties on the Board of Directors.
8) Employee representatives do not receive separate remuneration for their duties on the Board of Directors.
9) Includes loans in all group companies.
The Board of Directors’ declaration on the setting of salaries and other remuneration to Executive
Management in Skandiabanken ASA
1. In general
This declaration has been prepared by the Board of Directors of
Skandiabanken ASA (“the Company”) pursuant to Section 6-16a of the
Norwegian Public Limited Liability Companies Act for consideration at the
annual general meeting of 28 April 2016.
The Board of Directors has appointed a special remuneration committee
consisting of two directors. The committee functions as an advisory body
for the Board of Directors and shall arrange for a thorough and independent
preparation of matters involving remuneration to the Company’s
management employees.
2.Main principles for the company’s management compensation policy
Management compensation at Skandiabanken ASA is determined on the
basis of the following main principles:
Management compensation shall be competitive and suited to attracting
and retaining capable managers.
The compensation (the sum of remuneration received) should normally
be around the average of management compensation for corresponding
managers at comparable enterprises. Management compensation shall be
set at all times with appropriate consideration for the Company’s financial
situation and shall be set at a level that can be justified on the basis of the
Company’s financial position.
Management compensation shall be composed so that it motivates
additional effort for improvement of the enterprise and the Company’s
results.
The main element in management compensation shall be fixed salaries,
but variable additional payments may be made of such a type that they
motivate managers’ efforts for the Company. Variable payments shall be
>>
141
>> Note 34 Personnel expenses and benefits/remuneration
to executive managemet and governing bodies (continued)
reasonable based on the Company’s results in the year in question but
limited to a maximum one and one half of monthly salary. The variable
payments shall be related to factors which the individual has an opportunity
to affect. The compensation system should stimulate efforts which yield
results beyond the individual’s area of responsibility, but always according
to the risk profile the Bank has defined as acceptable.
Options and other forms of remuneration that are tied to shares or the trend
in the share price
The Company may not provide remuneration to management employees
in the form of options and other remuneration that is tied to shares in
the Company or the share price. This includes establishment of incentive
programmes or option programmes.
The compensation system shall be comprehensible and acceptable both
internally at Skandiabanken and externally.
The compensation system shall not be disproportionately difficult to
explain to the public and shall not result in disproportionate complexity for
administration.
Pension schemes
Agreements have not been made on early retirement pension schemes.
However, the Company may enter into such agreements in the future.
The Company is required to have an occupational pension scheme under
the Norwegian Mandatory Occupational Pension Act. Skandiabanken’s
pension schemes satisfy the requirements in the Act. Management
employees participate in the Company’s occupational pension scheme.
The compensation system shall be flexible so that adjustment may be done
when the needs change.
In order to offer competitive compensation, Skandiabanken must have a
flexible compensation system. The compensation system must allow for
special solutions being agreed that are adapted to the individual’s needs,
but it shall nevertheless be clear and simple.
3.Guidelines for setting salaries and other remuneration during the
2016 fiscal year
The starting point for setting salaries is the total level of base salary and
other benefits. This level shall be competitive, but not a pacesetter among
salaries. The base salary should normally be the main element in managers’
compensation. The base salary will be set on the basis of duties, level
of responsibility, competence and seniority. The individual benefits that
are used are commented on more specifically below. Unless otherwise
indicated below, special terms and conditions, frameworks or allocation
criteria shall not apply for the mentioned remuneration.
Performance-related compensation scheme
The Company has a common performance-related compensation scheme
for all permanent employees with positions equivalent to 40% or more
of full-time employment. The scheme shall ensure that the Company
reaches overall goals and strategies, as well as ensure good interaction
across the Company’s units. The performance-based compensation is tied
to Skandiabanken’s results and other factors which the individual has an
opportunity to affect. Maximum performance-based compensation is one
and one half of monthly salary. The performance-related compensation
scheme is determined by the Board of Directors.
The scheme is general, and the payments do not constitute more than 1.5
of monthly salary per year and are a part of a general, non-discretionary
policy which covers the entire institution. This means that the scheme may
be exempted from the Norwegian Regulations relating to Remuneration
Systems in Financial Institutions, see Norwegian Financial Supervisory
Authority Circular 15/2014 (in Norwegian only).
142
Post-employment compensation schemes
The Company does not have special agreements on post-employment
compensation for management employees.
Benefits in kind
Managers may be granted benefits in kind that are customary for
comparable positions, such as free telephone, home computer, free
broadband connection, newspapers, company car/car allowance and
parking. There are no special limitations on what kinds of benefits in kind
may be agreed.
Other benefits
Other variable elements may be used in the remuneration or other special
benefits may be granted than what is mentioned above, if this is considered
appropriate in order to attract and/or retain a manager. There are no special
limitations on what kinds of other benefits may be agreed.
4.Setting of management compensation at other companies in the
Skandiabanken Group
Other companies in the Skandiabanken Group shall follow the main
principles for the Company’s management compensation policy as
described in Section 2. The objective is to coordinate the compensation
policy and the schemes that are used for variable benefits in the entire
Group.
5.Statement regarding management compensation policy and effects of
agreements on remuneration in the 2015 fiscal year.
The management compensation policy at Skandiabanken for the 2015 fiscal
year has been implemented according to the guidelines for setting salaries
and other remuneration as described above.
Note 35 Tax expense
In NOK thousands
2015
Specification of tax expense:
Taxes payable
25 265
Changes in deferred tax
1 189
Correction of deferred tax previous year
0
Correction of taxes payable previous year
0
Total tax expense
26 454
Reconciliation of the tax expense
Profit before tax
110 634
Expected tax expense at nominal rate of 27 %
29 871
Tax effect from none deductible expenses and tax-exempt income
352
Tax effect from tax-exempt income from shareholdings and funds
-44
Tax effect of changed tax rate for deferred tax assets recognised in the balance sheet
269
Tax effect from costs booked against other equity related to capital increase and interest to Tier 1 capital holders
Correction previous year (net)
-3 994
0
Total tax expense
26 454
Effective tax rate
23.9%
The year's changes in deferred tax asset (deferred tax):
Deferred tax asset 5 October
12 386
Change recognised through profit and loss
-1 189
Change recognised through other comprehensive income
-1 129
Correction of deferred tax asset previous year
0
Total deferred tax assets (deferred tax) 31 December
10 068
Change related to fixed assets and intangible assets
-216
-973
Total change in deferred tax assets recognised through profit and loss
-1 189
Change related to interest bearing securities and shares
4 624
-5 753
Total change in deferred tax assets recognised through other comprehensive income
-1 129
Spesification of deferred tax assets (deferred tax) related to temporary differences:
Fixed assets and intangible assets
26
Interest bearing securities and shares
4 269
Net pension liabilities
5 773
10 068
Deferred tax assets (deferred tax) in the balance sheet recognised through profit and loss
3 365
Deferred tax assets (deferred tax) in the balance recognised through other comprehensive income
6 702
10 068
Deferred tax assets and deferred tax liabilities are offset and recognised net when this is legally justifiable and the items relate to the same tax authority.
In connection with the establishment of Skandiabanken ASA, tax payable in the balance sheet was reduced by around NOK 100 million in respect of actual tax payable for the
period 1 January 2015 to 31 December 2015. The reduction was attributable to the fact that the liability for tax payable for the period 1 January 2015 – 4 October 2015 rests with the
Swedish company Skandiabanken AB. At the same time NOK 100 million in liquid funds was also transferred to Skandiabanken AB to enable the company to cover this liability on
maturity.
143
In NOK thousands
31.12.2015
Financial
instruments
at fair value
through profit
and loss
Financial
instruments
available for
sale
Financial
instruments
carried at
amortised cost
Total
Financial assets
Loans to customers
41 777 893
41 777 893
7 280 733
139 912
139 912
900 030
900 030
201 818
201 818
45 897 548
53 318 748
555
555
Other assets
559 507
2 458 300
7 280 733
Shares and funds
Derivatives
559 507
2 458 300
555
7 420 645
Subordinated loan
Other liabilities
502 665
502 665
45 457 206
45 457 206
2 319 672
2 319 672
498 812
498 812
240 849
240 849
-
49 019 204
49 019 204
Nominal value
Cost value
Fair value
Relative share
413 000
412 995
413 046
5.7%
3 505 032
3 506 524
3 497 170
48.0%
Covered bonds
3 371 500
3 382 290
3 370 516
46.3%
7 289 532
7 301 809
7 280 733
100.0%
4 906 880
67.4%
Assets recognised at amortised cost are classified in the category loans and receivables.
In NOK thousands
2015
Listed securities
144
2 373 852
32.6%
7 280 733
100.0%
Shares and mutual funds, available for sale:
In NOK thousands
2015
Shares
Mutual funds
Membership in VISA Norge FLI
2 912
6 000
131 000
139 912
Valuations techniques:
Share assessed based on other valuation techniques (Level 3)*
133 912
Listed securities
0
139 912
139 912
Shares in subsidiary Skandiabanken Boligkreditt AS
Total shares in subsidiaries
900 030
900 030
Investments in shares and mutual funds as at 31 December 2015:
In NOK thousands
Carrying
value
Number of
shares
Ownership
1 533
1 533
2 630
2.60 %
1 379
1 379
740
1.48 %
131 000
n.a
5.85 %
900 030
60 300
100 %
Name
Country
Fair value
Bank Axept AS
Norway
Bank ID Norge AS
Norway
VISA Norge FLI*
Norway
131 000
Norway
n.a
Utsikt 2030
Norway
2 000
2 000
Utsikt 2040
Norway
2 000
2 000
Utsikt 2050
Norway
2 000
2 000
* Reference is made to further description in note 41
Note 39 Shares in subsidiary
In NOK thousands
Org number
Office
915287662
Bergen
Ownership Voting share
100 %
Total shares in subsidiary
100 %
Share
capital
Cost value
Carried value 31.12.15
60 030
900 030
900 030
60 030
900 030
900 030
The investment in Skandiabanken Boligkreditt AS is recognised at cost in Skandiabanken ASA.
145
Note 40 Fair value of financial instruments
at amortised cost
In NOK thousands
Carrying value 31.12.2015
559 507
559 507
0
0
Assets
2 458 300
2 458 300
Loans to customers
41 777 893
41 777 893
900 030
900 030
Other assets
201 818
201 818
45 897 548
45 897 548
502 665
502 665
45 457 206
45 457 206
2 319 672
2 294 324
498 812
491 900
Liabilities
Subordinated loan
Other liabilities
31.12.2015
Level 1
240 849
240 849
49 019 204
48 986 944
Level 2
Level 3
Total
559 507
-
559 507
Assets
0
0
2 458 300
2 458 300
Loans to customers
41 777 893
41 777 893
900 030
900 030
201 818
201 818
45 338 041
45 897 548
502 665
502 665
45 457 206
45 457 206
0
2 294 324
Other assets
559 507
Liabilities
Subordinated loan
2 294 324
491 900
Other liabilities
Fair value of financial instruments measured at amortised cost
Cash and cash equivalents, loans to credit institutions and loans to
customers, deposits, subordinated debt and debt securities are measured
at amortised cost.
Measurement at amortised cost imply that a financial asset or liability is
recognised to the present value of the contractual cash flows using effective
interest rate method, adjusted for potential impairment. This measurement
method will not necessarily provide a carrying value equal to the fair value
of the financial instrument due to volatility in the market, changed market
conditions, asymmetrical information and changes in investors risk- and
return expectations.
146
2 786 224
0
491 900
240 849
240 849
46 200 720
48 986 944
Cash and cash equivalents and loans and advances: Fair value is estimated
based on amortised cost as all assets are recognised in the accounts based
on the contractual cash flow with floating interest rate and that loans with
impairment indicators are written down to fair value of expected cash flows.
There is no active market for loan portfolios.
Deposits and debt to credit institutions are liabilities with floating interest
rate and as there have not been any significant changes in the credit spread,
amortised cost is assumed to be a reasonable approximation to fair value.
Debt securities and subordinated loans are measured at fair value based on
prices sourced from Nordic Bond Pricing. Nordic Bond Pricing has estimated
the fair value based on available price information from investment banks
and brokers trading in the bond markets.
In NOK thousands
Carrying value 31.12.15
Fair value 31.12.15
7 280 733
7 280 733
139 912
139 912
Assets
Derivatives
555
555
7 421 200
7 421 200
0
0
Liabilities
31.12.2015
Level 1
Level 2
Level 3
Total
Assets
2 384 993
4 895 740
0
7 280 733
0
6 000
133 912
139 912
Derivatives
0
555
0
555
2 384 993
4 902 295
133 912
7 421 200
Total
There were no transfers of securities between Level 1 and Level 2 in 2015.
Financial instruments recognised at fair value, level 3
In NOK thousands
Opening balance 5 October 2015
Total
2 486
2 486
131 426
131 426
Acqusitions/exits
-
-
Sale
-
-
Settlement
-
-
-
-
-
-
Other
-
-
133 912
133 912
>>
147
>> Note 41 Financial instruments at fair value (continued)
Information about fair value of securities at Level 3:
1) Calculation of the fair value of the holdings in BankAxept AS
and BankID Norge AS:
Fair value estimate of Skandiabanken ASA’s membership in Visa
Norge:
Skandiabanken ASA has opted to use the tax values of 1 January
2016 as basis for the calculation of fair value as of 31 December
2015. Based on information gathered from both companies as well
as restrictions related to ownership, Skandiabanken has considered
that the tax value to be a prudent approximation of fair value.
Based on the information presented above, Skandiabanken has
based the estimate of fair value of Skandiabanken’s membership in
Visa Norge to consist of the following components:
2) Calculation of the fair value of the membership in
Visa Norge FLI (“Visa Norge”):
Skandiabanken ASA refers to the press release of 27 January 2016
regarding the increased value of the membership in Visa Norge
related to the sale of Visa Europe Ltd. to Visa Inc. Skandiabanken
ASA has recognised an increase in the holdings of Visa Norge of
NOK 131 million in the balance sheet as of 31 December 2015.
The increase in value is in part based on information and
assumptions presented in an information memorandum received
from Visa Norge containing descriptions of the preliminary estimate
of the proceeds Visa Norge expects from sales of its share of Visa
Europe Ltd. to Visa Inc.
Visa Norge’s proceeds:
As described in the information memorandum, Visa Norge’s
estimated proceeds will contain the following elements (for further
information, please refer to the Visa Inc. PPA):
1) Cash payment:
Visa Norge has estimated its share of the cash payment to amount to EUR 244.4 million.
Visa Norge has estimated its share of convertible stocks to amount to EUR 83.9 million. This is based on an estimate of 93,564 Series C Convertible Preferred Stock with a conversion factor of 1 to 13,952 of listed Class A common stocks.
3) Conditional cash payment:
According to Visa Norge the conditional cash payment may vary from 0 to EUR 4.7 billion in total for all owners of Visa Europe Ltd. It is considered difficult to estimate an amount related to this element as the determining factors are unknown.
Skandiabanken ASA’s share of the proceeds:
Visa Norge has stated in its information memorandum that the final
allocation amongst its membership banks in Norway will be based
on the same principles Visa Europe Ltd. has used in its allocation.
As indicated in the information memorandum an estimate for this
allocation could be each member’s voting rights in Visa Norge.
Skandiabanken ASA has estimated the voting rights to be 5.85
percent based on average voting rights over the last three years,
deducted for estimated discounts and market support the Bank has
received from the Visa-system.
148
1) Cash payment:
NOK 137.5 million
NOK 26.4 million
3) Conditional cash payment: NOK 0
In the calculation of the estimate for convertible stocks,
Skandiabanken has assumed a liquidity discount of 50%. This is
based on the restrictions in transferability of the shares as well as
uncertainty regarding Visa Norge’s right to distribute the shares to
its member’s earlier than after 4 years.
Skandiabanken has opted not to recognise any value to the
conditional cash proceeds as the conditions for the distribution are
highly uncertain.
Additionally, Skandiabanken has opted to discount the above
mentioned estimates by 20 percent based on share price risk,
currency risk, risk regarding tax treatment of the transaction and
the risk of the transaction not being performed (based on lack of
accept from competition authorities or other external factors).
According to the information memorandum, the tax treatment of
the transaction is not concluded. It is however expected that the
transactions will comply with the exemption method (Norwegian:
“Fritaksmetoden”) and thereby will be taxed with 25 percent on 3
percent income gain. In a case where ordinary gains tax treatment
is applied, the values transferred to the Banks equity will be
reduced.
Based on the above, the estimate for fair value of Skandiabanken
ASA’s membership in Visa Norge amounts to NOK 131 million as of 31
December 2015.
Sensitivity analysis:
The sensitivity in the above mentioned estimate is presented in the
following table. This is calculated as isolated effects and any effects
where the parameters correlate are not considered.
Parameter
Effect in NOK million
Shift in exchange rate of NOK/EUR of +/- 10 %
+/- 11.0
Shift in exchange rate of NOK/USD of +/- 10 %
+/- 2.0
Shift in share price of Visa Inc. of +/- 10 %
+/- 2.0
Shift in liquidity discount on the stocks received
of +/- 10 basis points
+/- 8.5
Shift in Visa Norge’s share of the transaction
of +/- 10 % basis points
+/- 6.6
Note 41 Financial instruments at fair value (continued)
Financial assets and debt recognised at fair value, either due to
classification as held for trade, designated at fair value through
profit or loss on initial recognition (fair value option) or held for
sale, shall be classified in a fair value hierarchy depending on the
reliability of the fair value estimate. Level 1 is assets or liabilities
priced in an active market, level 2 are prices determined based
on observable input data from similar assets (either directly or
indirectly) and level 3 is fair value based on unobservable input
data.
Fair value hierarchy
Level 1: Quoted prices in active markets for identical assets or
liabilities that the entity has access to at the reporting date. Active
market is a market where quoted prices are easily accessible at a
stock exchange or similar trading place, a broker or other entity
that publish price information. Quoted prices shall represent actual
and frequent transactions. For Skandiabanken, level 1 assets and
liabilities comprise listed interest-bearing bonds and shares.
Level 2: Other prices than the quoted prices in level 1 and that are
observable either directly or indirectly. Interest-bearing bonds that
are valued based on prices sourced from trading places, brokers
or other entities that publish price information, but where there
are no active market since no official prices are available, are
categorised as level 2. When using valuation methods, external
data are applied to discounted cash flows (e.g. prices quoted by
third-parties or prices for similar instruments). The discount rate
is implicit in the market interest rate with respect to credit- and
liquidity risk. For all financial instruments on level 2, fair value is
determined by discounted cash flow models.
Level 3: If one or more of the significant inputs is not based on
observable market data, the instrument is included in level 3.
This is the case for unlisted equity securities and the membership
interest in Visa Norge.
In NOK thousands
2015
Receivables from fund managers and other receivables
Other assets
Total other assets
133 698
5 461
139 159
Receivables from fund managers and other receivables constitutes mainly of unsettled settlements against fund managers arising from customer sales of funds.
149
Software
and licenses
Total
69 360
69 360
847
847
70 207
70 207
In NOK thousands
Acqusition cost as at 05.10.2015
69 360
69 360
Depreciations during the year (note 32)
15
15
Write-downs during the year (note 32)
-
-
-
150
69 375
69 375
832
832
5 years
Leasehold
improvements
Machinery,
fixtures and
means of
transport
Total
4 290
9 035
13 325
-
640
640
-
-
4 290
9 675
13 964
3 480
6 595
10 075
79
228
307
-
-
-
-
-
-
3 559
6 824
10 383
In NOK thousands
-
731
2 850
5 years
3-5 years
3 581
In NOK thousands
2015
Fund settlement
Accrued costs
Accrued interest
Accounts payable
120 785
75 195
15 351
15 469
Other liabilities
Total other liabilities
14 049
240 849
151
Note 46 Pensions
Description of pension schemes at Skandiabanken ASA
Skandiabanken ASA is required to have an occupational pension
scheme pursuant to the Mandatory Occupational Pensions Act. The
company’s pension schemes satisfy the requirements of the Act.
Skandiabanken ASA had a defined benefit pension scheme for
all of its employees until 31 December 2008. This was closed as
at 1 January 2009, and all the employees could choose between
maintaining their defined benefit pension scheme or voluntarily
converting to a defined contribution scheme. Everyone who has
been employed after 1 January 2009 has been automatically
registered as a member of the defined contribution scheme.
The defined benefit scheme has a maximum pensionable income of
12 G (G is the National Insurance base amount) for all employees,
and there are no employees who have additional pension schemes
beyond this. This scheme is an insured scheme provided by
Livsforsikringsselskapet Nordea Liv Norge AS. In the defined benefit
scheme, the retirement benefit, in combination with benefits from
the National Insurance Scheme and taking into account any paidup policies from previous employment, represents approximately
66 percent of the salary earned at retirement age, assuming a full
contribution period of 30 years. The retirement age is 67.
All else being equal, continued use of the government bond rate as
the discount rate would have yielded a pension commitment that
was approximately NOK 12 million higher as at 31 December 2015.
In the defined contribution scheme, employees receive
a contribution paid into a personal pension account with
Livsforsikringsselskapet Nordea Liv Norge AS every month. The
contribution constitutes 5 percent of pay between 1 and 6 G, and 8
percent of pay between 6 and 12 G. This corresponds to the earlier
maximum rates for defined contribution schemes. The retirement
age is 67.
The average expected remaining period of service is 9.62 years at
the end of 2015.
As at 1 January 2016, 1 G was NOK 90,068.
More about defined benefit schemes
In the defined benefit scheme, employees will receive an retirement
benefit of approximately 66 percent of their pensionable income
(maximum 12 G), assuming a full contribution period of 30 years.
Employees do not bear any risk beyond the possibility of death
before retirement age, which would result in the assets passing to
other members of the pension scheme and not their survivors.
Based on factors such as future wage inflation, pension weight,
longevity, etc., the present value of the expected pension
commitments is calculated on the date of measurement.
Pension assets will be measured at market value on the date of
measurement. The difference between the present value of the
commitments and the market value of the assets will be recognised
in the accounts as the net pension commitment. If the value of the
assets exceeds that of the commitments, they will be recognised
as net pension assets on the balance sheet. Differences between
the estimated pension commitments and the estimated value of
the pension assets at the end of the previous financial year and the
actuarially calculated pension commitments and fair value of the
pension assets at the beginning of the year are recognised in other
comprehensive income.
152
When the actuary makes his calculations related to the value of
the net pension commitment, a number of economic assumptions
are made in the calculation. These assumptions are based on
the assumptions recommended by the Norwegian Accounting
Standards Board as at 31 December 2015 and are specified in a
separate table below. The factor that most affects the size of the
obligation is the discount rate. In 2015, the covered bond rate has
been used instead of the previously used government bond rate
to discount the pension commitments. It has been assessed that
the Norwegian market for covered bonds satisfies the requirement
for corporate bonds with a market that is adequately deep. The
management regards this a change in estimate and not a change in
principle.
The expected return on pension assets is based on long-term
expectations of the return on various asset classes.
The pension costs for the year are classified in the income
statement as a personnel expense and the actuarial gains/losses
are recognised in other comprehensive income.
More about defined contribution pension schemes
Defined contribution pension plans entail that Skandiabanken
does not guarantee a future pension of a specific amount, instead
the Bank pays an annual contribution to the employees’ pension
savings plan. The future pension will depend on the size of the
contribution and the annual return on the pension savings.
Skandiabanken does not have any further obligation after the
annual contribution has been paid. There are no provisions
for accrued pension commitments in such schemes. Definedcontribution pension plans are charged directly as an expense.
Contractual early retirement scheme (AFP)
Skandiabanken ASA participates in the Joint Scheme for Collective
Agreement Pensions, AFP. The private AFP scheme provides a
lifelong supplement to the ordinary pension. Employees can
choose to receive benefits from the AFP scheme from the age of
62, also while continuing to work. Even if the AFP scheme is a
defined benefit plan, it is recognised as a defined contribution plan
pursuant to the exception in IAS 19.34.
The private AFP scheme is financed by an annual premium that is
set as a percentage of pay between 1 and 7.1 G. The premium for
2015 has been set at 2.4 percent (2014: 2.2 percent).
Note 46 Pensions (continued)
Economic assumptions
The main economic assumptions that are used by the actuary in his calculatons are as follows:
In NOK thousands
2015
Discount rate
Expected return on pension funds
Anticipated rise in salaries
Anticipated rise in basic amount
Anticipated rise in pensions
Anticipated CPA (contractual pension scheme) acceptance from 62 years
Demographic assumptions about mortality
2,70 %
2,70 %
2,50 %
2,25 %
2,25 %
Actual acceptance
K2013
Pension expenses
Net present value of pension entitlements
Interest expense on pension commitments
Calculated return on pension funds
Net recognised defined benefit costs including payroll tax
Defined contribution schemes incl. payroll tax
CPA Scheme incl. payroll tax
Net pension expenses
05.10.15-31.12.15
1 618
593
-364
30
1 877
1 434
642
3 952
Effects recognised in other comprehensive income
Remeasurement (gains)/losses changes in economic assumptions, pension commitments
Remeasurement (gains)/losses experience-based adjustments
Remeasurement gains - changes in other factors, pension funds
Payroll tax
Total recognised in other comprehensive income before tax effect
Deviations related to IAS 19R
Total effect from actuarial gains or losses
Actuarial gains or (losses) as at 31.12, gross after tax effect
05.10.15-31.12.15
-12 181
-11 427
5 424
-2 404
-20 588
0
-20 588
-29 814
-9 226
-6 926
2015
73 264
-53 026
20 238
2 854
23 092
Net present value pension commitments
Fair value of pension funds
Net pension commitments excl. payroll tax
Payroll tax
Changes in the pension commitments in the balance sheet
2015
95 018
1 386
593
-12 181
-11 428
-124
73 264
Opening balance
Net present value of this year pension entitlements
Interest expenses
Pension payments
Closing balance
>>
153
>> Note 46 Pensions (continued)
In NOK thousands
2015
Changes in the pension funds in the balance sheet
Opening balance
Expected return
Pension payments
56 401
364
-30
-129
7
-5 432
Premium paid
Closing balance
1 844
53 026
Investment of the pension funds
The insured pension scheme in Norway is insured primarily through Livsforsikringsselskapet Nordea Liv Norge AS, and thus the
pension assets are linked to an insurance policy. There is an interest rate guarantee linked to the insurance, which entails that
Livsforsikringsselskapet Nordea Liv Norge AS bears the risk for the return on the pension assets.
The table below shows the distribution of pension funds on different asset classes
Asset classes
2015
Shares
Bonds
Property
Other
Total
9.10 %
74.30 %
13.80 %
2.80 %
100.00 %
Sensitivity analyse pension commitments
based on a change in one of the assumptions, given that all the other assumptions remain constant. In reality, there would be covariation
between the assumptions, so that changes in any of the assumptions may covary.
Effect on pension commitments
Change in
the economic
assumptions
Change in
the pension
commitments
Discount rate
0.50 %
-8 638
Discount rate
-0.50 %
6 740
0.50 %
3 036
In NOK thousands
-0.50 %
-5 450
0.50 %
2 885
-0.50 %
-5 168
Life expectancy
+ 1 year
3 481
Members in the pension scheme
2015
Number of persons covered by the pension schemes:
- defined benefit schemes
- retirement and disability pensions
- defined contribution schemes
65
6
193
Average expected remaining service for employees covered by the defined benefit plan are 9,2 years.
Expected contributions to pension schemes in 2016:
2016
Expected contributions to defined benefit schemes
Expected contributions to defined contribution schemes
Total expected contributions to pension schemes incl. payroll tax
154
7 179
6 000
13 179
Description of agreements with related parties:
Sale of home loans to Skandiabanken Boligkreditt AS: Skandiabanken
ASA sells home loans to its subsidiary, Skandiabanken Boligkreditt AS.
Only loans with a LTV lower than 75% may be sold to Skandiabanken
Boligkreditt AS. The sale and transfer of loans is carried out at market terms
and conditions. After the loans have been transferred, Skandiabanken
Boligkreditt AS assumes all the risks and benefits associated with the home
loans sold.
The practicalities relating to the transfer of new loans and the writeback of loans are undertaken by employees of Skandiabanken ASA. In
general, the write-back of loans from Skandiabanken Boligkreditt AS to
Skandiabanken ASA will be relevant only if a customer wishes to increase/
refinance the loan. Any such write-back will also be carried out at market
terms and conditions. Delinquent loans will remain with Skandiabanken
Boligkreditt AS, and are treated in the same way as delinquent home loans
in Skandiabanken ASA.
Management agreement between Skandiabanken ASA and
Skandiabanken Boligkreditt AS: A management agreement has been
entered into between Skandiabanken ASA and Skandiabanken Boligkreditt
AS, under the terms of which Skandiabanken Boligkreditt AS purchases
administrative services from Skandiabanken ASA. These services
relate, inter alia, CEO, to treasury, IT, finance and accounting, and risk
management. The agreement has been entered into at market terms and
conditions.
Skandiabanken Boligkreditt AS’s credit facilities: Skandiabanken
ASA has granted an overdraft facility and a revolving credit facility to
Skandiabanken Boligkreditt. The overdraft is divided in two credit facilities,
each in the amount of NOK 3 billion and with a term of 364 days and three
years, respectively. The revolving credit facility equals Skandiabanken
Boligkreditt’s payment obligations for the next 12 months in respect of
issued covered bonds, and with a term extending four months after the last
maturity date of issued covered bonds. Both facilities are at floating interest
rates, three-month NIBOR plus a margin.
Deposit accounts in Skandiabanken ASA: Skandiabanken Boligkreditt AS
has two ordinary deposit accounts with Skandiabanken ASA with an interest
at the market rate.
Transitional Service Agreements with Skandia AB and Skandiabanken
AB: Skandiabanken ASA has entered into a Transitional Service
Agreement with Skandia AB and Skandiabanken AB (“the TSA”),, whereby
Skandiabanken ASA will receive certain services in a period of up to 18
months from closing of the transaction on 5 October 2015. The services
comprise the following main areas: (i) IT infrastructure and operations,
(ii) accounting and reporting tools (iii) treasury services and (iv) equities
and mutual funds trading services. Taking the SEK/NOK exchange rate into
account, the monthly cost is approximately NOK 6.0 million.
Receivables from and liabilities to Skandiabanken Boligkreditt AS:
In NOK thousands
31.12.15
Receivables related to overdraft facilities to Skandiabanken Boligkreditt AS
Liabilities related to deposits from Skandiabanken Boligkreditt AS
1 853 330
491 149
Transactions with Skandiabanken Boligkreditt AS:
In NOK thousands
Purchase of services in line with service agreement
05.10.2015 - 31.12.2015
1 255
Interest on overdraft facility
10 361
Interest on deposit
156
Transactions with companies in the Skandia Group:
Transactions with the Skandia Group consist of services provided according to the TSA mentioned above. As of 31 December 2015, there are
NOK 4.9 million in accounts payable to the Skandia Group for services provided.
In NOK thousands
05.10.2015 - 31.12.2015
Services provided by the Skandia Group according to the TSA
14 554
Total cost of services provided
14 554
Transactions with all related parties are based on the arm’s length principle
155
Share capital:
Changes in share capital during the year
17 April 2015 Skandiabanken ASA was incorporated as Midgard Prosject 1 ASA.
Changes in
share capital
Total
share capital
Nominal
value
NOK
Number
of shares
1 000 000
1 000 000
10
100 000
5 October 2015 Capital increase with net value of transferred assets (non-cash contrbution) 1 000 000 000
1 001 000 000
10
101 000 000
5 October 2015 Capital reduction with cash refund to owner
-1 000 000
1 000 000 000
10
100 000 000
2 November 2015 Capital increase with cash contribution
65 250 000
1 065 250 000
10
106 525 000
Nominee
Number of
shares
Ownership
in percent
LIVFORSAKRINGSBOLAGET SKANDIA
No
31 950 000
29.99 %
Yes
7 011 262
6.58 %
FERD AS
No
4 350 000
4.08 %
Yes
3 503 658
3.29 %
MORGAN STANLEY & CO. INTERNATIONAL
Yes
3 077 623
2.89 %
Yes
2 727 067
2.56 %
CARNEGIE INVESTMENT BANK AB
Yes
2 630 563
2.47 %
JP MORGAN CLEARING CORP.
Yes
2 500 000
2.35 %
Yes
2 069 086
1.94 %
J.P. MORGAN CHASE BANK N.A. LONDON
Yes
1 977 693
1.86 %
SOCIETE GENERALE S.A
Yes
1 784 435
1.68 %
STATE STREET BANK & TRUST COMPANY
Yes
1 505 364
1.41 %
MORGAN STANLEY & CO. LLC
Yes
1 413 997
1.33 %
GOLDMAN SACHS INTERNATIONAL EQUITY
Yes
1 379 836
1.30 %
Yes
1 327 716
1.25 %
STATE STREET BANK & TRUST CO.
Yes
1 303 700
1.22 %
Yes
1 295 096
1.22 %
GRANDEUR PEAK INTERNATIONAL OPPORT
No
1 268 200
1.19 %
NYKREDIT BANK A/S
Yes
1 069 143
1.00 %
UBS AG, LONDON BRANCH
Yes
1 050 000
0.99 %
Shareholder structure at 31 December 2015
Specification of the largest investors
Total for the twenty largest investors
Total
75 194 439
70.59 %
106 525 000
100.00 %
The register of shareholders is based on the Norwegian Central Securities Depository’s (VPS) shareholder register as of 31 December 2015. Please refer to separate section of the
Annual report for a list of the beneficial owners of shares in nominee accounts.
Geographical areas per 31.12.15:
Number of shares
Ownership i percent
14 553 925
13.66 %
Rest of Europe
75 633 297
71.00 %
North-America
16 324 898
15.32 %
Norway
Other
12 880
0.02 %
Total
106 525 000
100.00 %
As of 31 December 2015 Skandiabanken ASA had a total of 4,767 shareholders, 3,516 of whom held 1,000 or fewer shares.
Skandiabanken ASA held no own shares at the reporting date, nor did it hold any own shares during the accounting period.
156
In NOK
Profit for the period to shareholders
Number of shares (weighted average)
Earnings per share (basic)
Earnings per share (diluted)
2015
79 134 000
104 350 000
0.76
0.76
Until 5 October 2015, Skandiabanken did not issue shares, being
a branch of Skandiabanken AB. On 5 October 2015, the Bank
implemented a capital reorganisation and issued a total of
100,000,000 shares with a nominal value of NOK 10. In connection
with the listing on 2 November 2015, a capital increase was
implemented with the issue of 6,525,000 new shares bringing the
total number of shares as of 31 December 2015 to 106,525,000. To
calculate earnings per share in 2015, a weighted average has been
applied for the entire period of 05.10.15 to 31.12.15.
The main purpose of the earnings per share ratio is to show the
return to the Group’s ordinary shareholders. Accrued interest in
the period, which is paid to hybrid capital investors, has therefore
been excluded from the profit for the period in the calculation of
earnings per share for the period.
Skandiabanken ASA is a member of Visa Norge FLI (“Visa Norge”),
which is in turn a shareholder in Visa Europe Ltd. In January 2016
Skandiabanken received information from Visa Norge that makes it
possible to estimate the fair value of assets at the reporting date.
This is discussed in the Report from the Board of Directors and in
note 39.
In February 2016 the Norwegian Ministry of Finance introduced a
joining fee for the Norwegian Banks’ Guarantee Fund of NOK 7.8
million, which has been recognised as an interest expense.
In January 2016, Skandiabanken ASA has entered into agreements
with Atea AS for operating the bank’s office IT platform, Basefarm
AS for operating the bank’s business IT platform and Tieto Norway
AS for the bank’s equity and fund trading platform. These services
will replace services currently provided by Livförsäkringsbolatet
Skandia («Skandia Liv») and Skandiabanken AB under Transitional
Service Agreements (“the TSA’s”).
Fondsforvaltning launched three lifecycle funds. The funds invest
in other mutual funds, and the investment and risk profiles of the
individual life cycle funds are adapted to three alternative.
Based on the ICAAP report conducted in the first quarter of 2016,
the Board of Directors decided on 31 March 2016 to increase
Skandiabanken’s CET1 ratio target to 13.5 percent, to implement
a Tier 1 capital ratio target of 15 percent and increase the total
capital ratio target to 17 percent. In the ICAAP report the Pillar
2a requirement is assessed to be 1 percent and the Pillar 2b
requirement to be 0 percent, implying a total Pillar 2 requirement
of 1 percent.
157
Responsibility Statement
Pursuant to section 5-5 of the Securities Trading Act
We hereby confirm, to the best of our knowledge, that the financial statements for the Group and the company for 2015 have been
prepared in accordance with applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and
profit or loss of the Group and the company taken as a whole.
We also confirm that the Board of Directors’ report gives a true and fair view of the development and performance of the business and
the position of the Group and the company, as well as a description of the principal risks and uncertainties facing the Group.
Niklas Midby
Mai-Lill Ibsen
August Baumann
Øyvind Thomassen
Ragnhild Wiborg
Jon Holmedal
(Chairman)
Magnar Øyhovden
(CEO)
158
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160
SkandiabankenASA–ReportoftheControlCommitteefor2015
SkandiabankenASA'sControlCommitteewasappointedeffective5October2015.TheCommittee's
workceasedon31December2015followingacompanyresolutionpursuanttothenewNorwegian
FinanceInstitutionsAct,whichabolishedtherequirementtohaveaControlCommittee.TheActentered
intoforceon1January2016.
Inlightofitsshorttermofoffice,theCommitteedecidedtofocusonspecificmattersthatitdeemedto
beparticularlysignificantduringthatbriefperiod.SuchmattersprimarilyrelatedtotheBank's
conversionfromaNorwegianbranchofaSwedishcompanytoaNorwegianbank(ASA),andin
particular:
• SkandiabankenASA'sandthesubsidiarySkandiabankenBoligkredittAS'capitalsituationfollowing
theconversion
• TheGroup'sfundingstructure,includingthelegalagreementbetweenSkandiabankenASAand
SkandiabankenBoligkredittAS
• Contractualmattersrelatingtothede-merger/conversion
• ThattheconversionwascarriedoutinaccordancewiththeguidelinesfromtheFinancialSupervisory
AuthorityofNorway
• Potentialtaxliabilityasaresultofthecross-borderde-merger
TheCommitteealsoperformedareviewofselectedBoardminutes.
Theabovepointswereaddressedinmeetingswithmanagement,theBank’sauditors/consultantsand
selectedemployeesofSkandiabankenASA.TheCommitteereceivedresponsestotheissuesthatwere
raised.
IntheopinionoftheCommittee,theBank’sworkperformedinconnectionwiththeestablishmentof
SkandiabankenASAanditssubsidiarySkandiabankenBoligkredittAS,andthesubsequentfollow-up,has
beensatisfactory.Thesameappliestotheothermattersmentionedabove.
TheCommitteehasnotreviewedtheBank'sincomestatementandbalancesheetfor2015.
Bergen,4January2016
BjarneHaldorsen
VidarBroderLund
ErikHoffmann-Dahl - ANNUAL REPORT 2015 -
161
Definitions and glossary
AiE
Alt-i-Ett (“all-in-one”) accounts.
AUM
Assets under Management.
Average Loan Book
Board of Directors
Calculated as the average balance of the
bank’s lending to and receivables from
customers for the period based on monthly
averages.
The Board of Directors of the bank.
Board Members
The members of the Board of Directors.
Bank (or Group)
Skandiabanken ASA and its wholly owned
subsidiary Skandiabanken Boligkreditt AS
Skandiabanken Boligkreditt AS, subsidiary of
Skandiabanken ASA
Boligkreditt
(or Skandiabanken
Boligkreditt)
CAGR
CCO
Chief compliance officer of the bank.
CEO
Chief executive officer of the bank.
CET1
Core equity tier 1.
CET1 capital
CFO
CET1 capital as percentage of risk-weighted
assets.
Chief financial officer of the bank.
Control Committee
The control committee of the bank.
Cost-to-Income Ratio
CRD IV
Calculated as Operating Expense as a percentage of Operating Income.
DIRECTIVE 2013/36/EU.
CRO
Chief risk officer of the bank.
Deposit-to-Loan Ratio
Calculated as Average Deposits divided
Average Loan Book.
Mortgages purchased by Boligkreditt,
satisfying eligibility requirements in
accordance with Skandiabanken Boligkreditt’s credit policy and Chapter 2,
Subsection IV of the Norwegian Financial
Institutions Act and regulation of 25 May
2007 issued by the Norwegian Ministry of
Finance under the authority conferred on
it by the Financial Institutions Act.
Funds under management.
Eligible Loans
FUM
Greater Oslo
Home loans
ICAAP
IFRS
Interest Bearing Assets
Interest Bearing Funding
LCR
Leverage Ratio
162
Compound annual growth rate.
Includes Oslo, Akershus and several
municipalities in the counties of Buskerud,
Oppland, Vestfold and Østfold.
Mortgages and Home equity credit lines
Internal Capital Adequacy Assessment
Process.
International Financial Reporting Standards.
The sum of cash and cash equivalents with
the central bank, lending to the central
bank, lending to credit institutions, lending to and receivables from customers and
interest bearing securities.
The sum of debt to credit institutions,
deposits from customers, debt securities in
issue (“external funding”) and subordinated
debt.
Liquidity Coverage Ratio.
The CET1 capital divided by the total exposure amount (reference is made to note 6 of
the financial statements).
Loan book
LTV
The bank’s total loans to and receivables
from customers.
Calculated as net loan losses divided
by the bank’s Average Loan Book.
Loan-to value.
LTV ratio
Loan-to value ratio.
MIFID
Moody’s
Directive 2004/39/EC (Markets in
Financial Instruments Directive.
Moody’s Investor Service.
MTN
Medium term note.
Net Interest Margin
NFSR
Calculated as net interest income divided by
average Interest Bearing Assets.
Net stable funding ratio.
NIBOR
The Norwegian Interbank Offer Rate.
NOK
Norwegian Kroner
Norges Bank
The central bank of Norway.
Norwegian Banks’
Guarantee Fund
The Norwegian guarantee fund for banks
(Nw.: Bankenes Sikringsfond) as regulated
by the Norwegian Guarantee Schemes Act.
The Norwegian Financial Supervisory
Authority (Nw.: Finanstilsynet).
The extraordinary and non-recurring items
related to the reorganisation and listing
process of 2015.
Customers with both an AiE account and a
debit card that have logged in at least once
over the last 3 months and has more than
NOK 1,000 in deposits or more than
Skandiabanken AB’s transfer of the assets,
rights and liabilities relating to the
Norwegian business to Skandiabanken ASA
and Skandiabanken Boligkreditt AS on 5
October 2015.
The bank’s risk committee.
Loan Loss Ratio
Norwegian FSA
One-off Items
Primary customers
Reorganisation
Risk Committee
Risk-weighted assets
(or RWA)
Skandia Liv
Skandia Group
Calculated based on the bank’s assets
and off-balance sheet exposures,
weighted according to risk.
Skandia AB
and its consolidated subsidiaries.
Försäkringsaktiebolaget Skandia (publ).
Skandiabanken AB
Skandiabanken Aktiebolag (publ).
Skandiabanken
Skandiabanken ASA
SSB
Norway’s central institution for producing
official statistics.
Total capital as a percentage of risk weighted assets.
The transitional services agreement
entered into on 18 September 2015
between Skandiabanken, Skandia AB
and Skandiabanken AB.
The Norwegian Central Securities
Depository (Nw.: Verdipapirsentralen).
An account with VPS for the registration
of holdings of securities.
Total capital ratio
TSA
VPS
VPS account
163
Skandiabanken ASA
Postboks 7077
5020 Bergen
skandiabanken.no

Annual report 2015

Transcription

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