Management and governance
Good governance forms the foundation for solid relations between shareholders, the Board of Directors, executives, employees, customers and other stakeholders, and encourages objectivity, integrity, transparency and responsibility in the management of the Bank.
Board of Directors of Landsbankinn
The Board of Directors is ultimately responsible for the Bank’s activities as provided for by law, regulations and its Articles of Association. The Board of Directors formulates the Bank’s general strategy and shall ensure that the Bank’s organisation and activities are adequate and effective at all times. The Board of Directors also monitors the Bank’s general activities and ensures that control of accounting and financial management is satisfactory. The Board of Directors is elected at the Annual General Meeting (AGM) for a one-year term and consists of 7 regular members and 2 alternates.
There are four sub-committees to the Board of Directors: The Audit Committee, the Risk Committee, the Remuneration Committee and the Strategic Development Committee. Amongst other duties, the committees prepare the Board’s discussion of certain aspects of the Bank's activities and follow up on related matters.
Alternates to the Board of Directors are Guðrún Ó. Blöndal (from March 2018) and Sigurður Jón Björnsson (from April 2019).
Hersir Sigurgeirsson resigned from the Board of Directors in November 2020 as he started work on new projects he considered incompatible with continued directorship.
Executive Board
The Executive Board is comprised of the CEO and managing directors of all divisions. The Bank’s CEO is responsible for the Bank’s day-to-day operations and is authorised to take decisions on all matters not entrusted to others by law, the Bank’s Articles of Association or decisions by the Board of Directors. The CEO shall ensure that the Bank's operation complies with law, regulations and the Articles of Associations, and with Board decisions. She shall ensure that the Bank’s accounting complies with law and good business practice and that handling of the Bank’s assets is secure.
Corporate Governance Statement
Landsbankinn complies with recognised guidelines on corporate governance and publishes an annual statement on its governance practices in its annual report, including information on the Bank’s compliance with such guidelines.
In August 2020, Stjórnvísi renewed the recognition of Landsbankinn as a model of corporate governance for the period 2019-2020 based on a review undertaken by external advisors of the Bank's governance practices in March 2020.
Organisation of Landsbankinn
Landsbankinn’s organisation aims to ensure solid and effective operation while creating opportunities for successful collaboration between departments and groups. Emphasis is placed on ensuring that employees can cooperate on projects across departments and divisions, sharing and enjoying the benefits of diverse expertise. We work as a team, guided by the interests and satisfaction of our customers. Changes were made to the Bank’s organisational structure in 2020, to sharpen the roles of its various divisions and encourage internal collaboration. These changes also aimed to enhance asset management and the division formerly called Markets is now Asset Management & Capital Markets.
Personal
Personal Banking tends to financial services for private individuals and small and medium-sized enterprises in rural Iceland, in close cooperation with Corporate Banking. The focus is on providing first-rate service based on utilisation of the Bank’s data and that customers can both seek advice and tend to their own business through digital service channels, as well as in the Bank’s branches.
Corporate
Service and financing of corporates, municipalities and institutions lies with the Corporate Banking division. We are sharpening our focus on digital service, especially for small and medium-sized enterprises, and self-service solutions. Specialised account managers attend to the needs of companies and legal entities in all sectors. Corporate Finance is part of Corporate Banking and provides, among other services, comprehensive and professional advice on the purchase, sale and merger of companies.
Asset Management & Capital Markets
Asset Management & Capital Markets offers services in securities brokerage, FX and derivatives to institutional investors and larger customers. The division provides extensive services in the fields of private banking and asset management for individuals, companies and institutional investors. The division was previously called Markets. With organisational changes that took effect in late 2020, its name was changed to Asset Management & Capital Markets to better reflect its role. Emphasis is placed on personal service, responsible advice and informed decisions.
Finance & Operations
The Bank’s funding, bond issuance, market making and treasury functions all fall under the scope of the Finance & Operations division. Settlement, accounting and business plans are also under Finance & Operations, along with loan administration and transaction services, and management of the Bank’s property.
Information Technology (IT)
The IT division is responsible for the operation, security and development of digital infrastructure and services. The activities of IT are based on multidisciplinary teams and collaboration with the Bank’s other units in order to provide and develop first-rate tech solutions and digital services. There is a strong focus on leveraging data in all levels of the Bank’s operation and to ensure that the Bank continues to lead the way in utilising information technology in the domestic financial market.
Risk Management
Risk Management is responsible for the effectiveness of the Group’s risk management framework. The division is also responsible for information disclosure on risk exposure to various departments and units within the Bank, and external regulators.
Five departments operate across the Bank
In addition, there are five departments that operate across the Bank’s divisions, directly under the CEO, along with her staff. These are Human Resources, Marketing & Public Relations and Economic Research, collectively referred to as Community, and Compliance and Legal Services.
Internal Audit
Internal Audit is an independent and autonomous function directly responsible to the Board of Directors. The role of Internal Audit is to improve and protect the Bank’s value with risk-focused and objective verification, consultation and insight. Internal Audit evaluates and improves the effectiveness of risk management, control measures and governance processes through systematic and disciplined practices.
Clear policy on sale of assets
Landsbankinn has adopted a clear policy on the sale of assets, intended to promote transparency and credibility in the sale of assets and build confidence in the Bank. The policy forms a foundation on which to build quality internal governance procedures for the sale of assets and to limit the operational and reputational risk such sale may entail. Assets are sold on commercial grounds, so that a fair price is obtained for the assets.
Assets sold in 2020*
In 2020, Landsbankinn sold 496 appropriated assets, two vehicles, shareholdings in two unlisted companies and 108 pieces of art.** The total sales value of these assets amounted to ISK 4,478 million. All these assets were sold in an open sale process.
| Assets sold in 2020 | Number | Total sales value |
|---|---|---|
| Residential apartments | 9 | 350,100,000 |
| Commercial housing | 1 | 50,000.000 |
| Building sites | 7 | 54,650,000 |
| Land | 1 | 215,000,000 |
| Building sites for cottages | 23 | 32,100,000 |
| Vehicles and equipment | 454 | 447,626,929 |
| Shares in unlisted companies | 2 | 3,285,210,000 |
| Other | 111 | 43,613,200 |
| Total | 608 | 4,478,300,129 |
Assets for sale at year-end 2020
A total of 368 assets appropriated by the Bank were held for sale as at 31 December 2020. Their book value was around 991 milljónir króna. In addition, four real estate properties, previously Bank premises, were listed for sale at year-end 2020.
At year-end 2020, sale processes for holdings in 11 unlisted companies were on-going. These holdings are variously owned by Landsbankinn or Hömlur fyrirtæki ehf., a subsidiary of the Bank. Information about these holdings have been disclosed on the Bank's website.
| Appropriated assets listed for sale at year-end 2020 | |
|---|---|
| Residential aparments | 4 |
| Commercial housing | 1 |
| Building sites for residential apartments and commercial housing | 23 |
| Building sites for cottages | 211 |
| Land | 5 |
| Vehicles and equipment | 124 |
| Total | 368 |
More robust measures to prevent money laundering
In 2020, we continued to build our defences to prevent money laundering and terrorist financing. The Bank’s control systems were enhanced, processes strengthened even further and work to develop digital solutions to enable customers to complete due diligence online continued.
A risk assessment was carried out on Landsbankinn’s operation, its customers, and products and distribution channels that employees look to during control and decision-making. At the same time, the Board of Directors approved a new policy on measures to combat money laundering and terrorist financing.
Monitoring of international payments was enhanced in 2020 for the purpose of mitigating even further the risk of money laundering and terrorist financing, corruption and bribery. Landsbankinn has set itself a policy against bribery and corruption that is in the implementation phase.
In 2020, the Financial Action Task Force (FATF), removed Iceland from its list of countries that have declared their willingness to implement an action plan for remedy of the situation. The impact on the Bank’s operation and services was limited, with the Bank benefiting from solid business relations with non-domestic banks, and the short time it took for Icelandic authorities to have the country removed from the list.
Emphasis on data protection
As before, we emphasise responsible and secure handling of the personal data of customers, employees and others in our operation and comply with laws on data protection and the processing of personal data, and the EU General Data Protection Regulation (GDPR). The Bank's Privacy Policy was updated in 2020 and we will continue to update and improve processes, rules and information in the field of personal data protection, including in electronic solutions, with an eye to safeguarding customer rights.
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