Corporate Governance

This sec­tion con­tains a brief overview of FINCOR’s com­pli­ance with the best prac­tice rules of the Dutch Cor­po­rate Gov­er­nance Code (in this sec­tion known as the Code). On 8 De­cem­ber 2016 the Cor­po­rate Gov­er­nance Code Mon­i­tor­ing Com­mit­tee has pub­lished the re­vised Dutch Cor­po­rate Gov­er­nance Code. It should be noted that due to our pri­vate own­er­ship struc­ture, the Code’s pro­vi­sions on share­hold­ers/gen­eral meet­ing (rights, meet­ings, oblig­a­tions, pro­tec­tive mea­sures – see Chap­ter IV of the Code) are, to a large ex­tent, not ap­plic­a­ble to FINCOR. As FINCOR has adopted a two-tier struc­ture, chap­ter 5 of the Cor­po­rate Gov­er­nance Code (one-tier gov­er­nance struc­ture) does not ap­ply. In 2020 FINCOR re­ports on its com­pli­ance with the Cor­po­rate Gov­er­nance Code as fol­lows:

Long-Term Value Creation

The bank’s fo­cus on long-term value cre­ation (as op­posed to achiev­ing short-term gains) is in­her­ent to its pri­vate own­er­ship struc­ture. The (long-term value cre­ation) busi­ness strat­egy of the bank for the pe­riod un­til 2023 is in­cluded in a strat­egy doc­u­ment (for more de­tails on the con­tents of the Strat­egy Doc­u­ment ref­er­ence is made to sec­tion D of the Cor­po­rate Gov­er­nance chap­ter in­cluded in the bank’s an­nual re­port). This doc­u­ment has been pre­pared by the Man­ag­ing Board and is ex­ten­sively dis­cussed with and ap­proved by the Su­per­vi­sory Board.

Long term sus­tain­abil­ity is given a promi­nent role in de­ter­min­ing the bank’s strat­egy and in the de­ci­sion-mak­ing process. All stake­hold­ers’ in­ter­ests are care­fully con­sid­ered in this process. On an an­nual ba­sis the strat­egy is be­ing re­viewed and where nec­es­sary up­dated (as a re­sult of the most re­cent strate­gic dis­cus­sions, the bank will par­tic­u­larly fo­cus on trade fi­nance ac­tiv­i­ties, dig­i­tal bank­ing and cul­tural trans­for­ma­tion). In­ter alia through the reg­u­lar up­dates that are given on the im­ple­men­ta­tion of the bank’s strat­egy, the Su­per­vi­sory Board mon­i­tors the im­ple­men­ta­tion thereof. It is of great im­por­tance for the bank to be con­tin­u­ously in­formed about the lat­est (tech­nol­ogy) de­vel­op­ments in this rapidly chang­ing so­ci­ety. In or­der to ad­e­quately an­tic­i­pate to this, in­ter­nal train­ings are be­ing or­ga­nized and ex­ter­nal sem­i­nars/courses are at­tended.

FINCOR has es­tab­lished an In­ter­nal Au­dit de­part­ment in ac­cor­dance with the prin­ci­ples and best prac­tice pro­vi­sions of the Cor­po­rate Gov­er­nance Code. FINCOR’s risk man­age­ment frame­work is com­pre­hen­sive and man­aged by an in­de­pen­dent risk man­age­ment func­tion un­der di­rect re­spon­si­bil­ity of the Chief Risk Of­fi­cer. Risk man­age­ment plays a cen­tral role in the bank’s de­ci­sion mak­ing process. More in­for­ma­tion on FINCOR’s Risk Man­age­ment can be found in note 37 of the Con­sol­i­dated Fi­nan­cial State­ments. The Su­per­vi­sory Board –in­ter alia– over­sees the ef­fec­tive­ness of the de­sign and the op­er­a­tion of the in­ter­nal risk man­age­ment and con­trol sys­tems.

Within the Su­per­vi­sory Board an Au­dit & Risk Com­mit­tee (“ARC”) has been es­tab­lished. Ernst & Young Ac­coun­tants LLP has been ap­pointed by the bank’s gen­eral meet­ing of share­hold­ers (at the nom­i­na­tion of the Su­per­vi­sory Board) as the bank’s ex­ter­nal au­di­tor. At least an­nu­ally the ARC dis­cusses the bank’s au­dit plan and any find­ings of the ex­ter­nal au­di­tor. Ex­change of in­for­ma­tion be­tween the Man­ag­ing Board/Su­per­vi­sory Board and the ex­ter­nal au­di­tor takes places in meet­ings of the ARC, in meet­ings be­tween the Man­ag­ing Board and the ex­ter­nal au­di­tor, but also out­side these meet­ings there is reg­u­lar con­tact with the bank’s ex­ter­nal au­di­tor to share in­for­ma­tion and dis­cuss spe­cific top­ics in more de­tail.

Effective Management and Supervision

The cur­rent com­po­si­tion of the Su­per­vi­sory Board and Man­ag­ing Board is very well bal­anced in­ter alia tak­ing into ac­count the spe­cific knowl­edge and ex­pe­ri­ence of each of the mem­bers. Cur­rently, the Su­per­vi­sory Board has six mem­bers and the Man­ag­ing Board has four mem­bers. Con­sid­er­ing the size and na­ture of the bank such num­ber is deemed suf­fi­cient to prop­erly per­form their tasks. The in­de­pen­dence of the Su­per­vi­sory Board is not fully com­pli­ant with best prac­tice pro­vi­sion 2.1.7 as half of the mem­bers is in­de­pen­dent. How­ever, the cur­rent com­po­si­tion of the Su­per­vi­sory Board is in line with DNB’s re­quire­ments in re­spect of in­de­pen­dence. At this mo­ment, ex­cept for one fe­male Su­per­vi­sory Board mem­ber, all mem­bers of the Su­per­vi­sory Board and Man­ag­ing Board are male. The Su­per­vi­sory Board is aim­ing to ap­point an­other fe­male board mem­ber be­fore 2022. Upon ap­point­ment of this board mem­ber, one of third of the Su­per­vi­sory Board will con­sist of fe­male board mem­bers.

The bank has adopted a di­ver­sity and in­clu­sion pol­icy. The main goal of the pol­icy is to pro­mote di­ver­sity and in­clu­sion in the work­place as dri­vers for in­no­va­tion, growth and bet­ter bal­anced de­ci­sions. The pol­icy cov­ers amongst oth­ers di­ver­sity/in­clu­sion in the fol­low­ing ar­eas: ed­u­ca­tional and pro­fes­sional back­ground, gen­der com­po­si­tion, na­tion­al­ity com­po­si­tion and ge­o­graph­i­cal prove­nance and age and se­nior­ity. The pol­icy is be­ing im­ple­mented through the bank’s re­cruit­ment pol­icy, ed­u­ca­tion of the bank’s staff and keep­ing board mem­bers (and staff) in­formed on di­ver­sity and in­clu­sion trends, prac­tices and achieve­ments. The main item for im­prove­ment re­flected in the bank’s di­ver­sity and in­clu­sion pol­icy re­mains hav­ing a more bal­anced gen­der split amongst FINCOR’s staff. At con­sol­i­dated level of the bank­ing group the male-fe­male ra­tio is very well-bal­anced. How­ever, at en­tity level in the dif­fer­ent coun­tries there is some room for fur­ther im­prove­ment. This is an agenda item for the man­age­ment and dis­cus­sions are on­go­ing.

The com­po­si­tion of the bank’s Su­per­vi­sory Board and Man­ag­ing Board can be im­proved in terms of­male/fe­male ra­tio. In the past years the bank main­tained, as much as pos­si­ble, the cur­rent com­po­si­tion of its Su­per­vi­sory Board and Man­ag­ing Board in or­der to keep up with the rapidly chang­ing en­vi­ron­ment and the sub­se­quent ef­fect thereof on the bank’s busi­ness plans. In or­der to be, by Jan­u­ary 2022, more in line with the statu­tory tar­gets for male and fe­male mem­bers in the Man­ag­ing Board and Su­per­vi­sory Board, the aim is to ap­point fe­male can­di­dates in case of new ap­point­ments to these boards and/or in case of re­place­ments of cur­rent mem­bers. In ad­di­tion, the bank adopted a di­ver­sity pol­icy to have a more bal­anced gen­der split amongst FINCOR’s staff and its boards. As men­tioned here­in­above, the Su­per­vi­sory Board aims to ap­point an­other fe­male board mem­ber be­fore 2022, which will bring the male/fe­male ra­tio to two third vs one third, re­spec­tively. In the past years, no new ap­point­ments were made to the Man­ag­ing Board (on the con­trary, the num­ber of Man­ag­ing Board mem­bers was re­duced from 6 (in 2018) to 4 (in 2019/2020). In line with the state­ments made here­in­above, in case of new ap­point­ments to or re­place­ments of cur­rent mem­bers of the Man­ag­ing Board it is the in­ten­tion to ap­point a fe­male can­di­date.

The rules to be ob­served and pro­ce­dures to be fol­lowed in case of ap­point­ment and reap­point­ment of Su­per­vi­sory Board and Man­ag­ing Board mem­bers are set out in the bank’s in­ter­nal poli­cies/char­ters (such as the ‘Re­cruit­ment and Se­lec­tion pol­icy for the Su­per­vi­sory Board and Man­ag­ing Board’). A suc­ces­sion plan­ning doc­u­ment for the bank’s se­nior man­age­ment has been pre­pared. This doc­u­ment has taken the ra­tio­nale of the di­ver­sity pol­icy into ac­count. An­nu­ally the func­tion­ing of the Man­ag­ing Board and Su­per­vi­sory Board and its in­di­vid­ual mem­bers is be­ing eval­u­ated. For the or­ga­ni­za­tion of the Su­per­vi­sory Board ref­er­ence is made to rel­e­vant para­graphs of the Su­per­vi­sory Board Re­port as in­cluded in the bank’s an­nual re­port. The di­verse com­po­si­tion of the Su­per­vi­sory Board and Man­ag­ing Board in terms of age, back­ground and ex­per­tise en­ables bal­anced de­ci­sion-mak­ing by these bod­ies cor­po­rate. The high level of trans­parency be­tween the Su­per­vi­sory Board and Man­ag­ing Board also con­tributes to ef­fec­tive and bal­anced de­ci­sion-mak­ing. The Su­per­vi­sory Board’s sub-com­mit­tees also sup­port the bal­anced de­ci­sion-mak­ing. The re­spec­tive in­ter­ests of the bank’s main stake­hold­ers (be­ing FINCOR’s cus­tomers, em­ploy­ees and busi­ness part­ners, the share­hold­ers, reg­u­la­tors as well as so­ci­ety) are taken into con­sid­er­a­tion in the de­ci­sion-mak­ing process. The Su­per­vi­sory Board and Man­ag­ing Board mem­bers an­nu­ally dis­cuss other (board) po­si­tions held by the board mem­bers. In or­der to pro­mote and cre­ate the de­sired cul­ture aimed at long term value cre­ation, upon em­ploy­ment the bank’s em­ploy­ees par­tic­i­pate in an in­duc­tion pro­gram dur­ing which they are trained on the bank’s core val­ues, its main poli­cies/reg­u­la­tions (in­clud­ing the bank’s code of con­duct and the staff hand­book) and the bank’s cul­ture.

For all em­ploy­ees FINCOR or­ga­nizes reg­u­lar the­matic aware­ness train­ings and dur­ing quar­terly staff events the (de­sired) cul­ture within the bank is high­lighted and dis­cussed. In 2017 the bank’s se­nior man­age­ment at­tended a train­ing pro­gram on cul­ture and core val­ues. As part of the train­ing pro­gram new core val­ues have been de­vel­oped (these are dy­namism, di­ver­sity and ex­per­tise). The ini­tial roll-out of the new core val­ues has taken place in 2018 and in 2019 the core val­ues have been fur­ther em­bed­ded in the bank’s or­ga­ni­za­tion.

An­other way to pro­mote a cul­ture aimed at long term value cre­ation is the bank’s re­mu­ner­a­tion pol­icy (see herein be­low and sec­tion F of the Cor­po­rate Gov­er­nance chap­ter in­cluded in the bank’s an­nual re­port). To en­able the bank’s em­ploy­ees to re­port and to deal with re­port­ing of mis­con­duct or ac­tual or sus­pected ir­reg­u­lar­i­ties within the bank an in­ter­nal alert sys­tem (whis­tle blower pol­icy) has been es­tab­lished. This pol­icy de­scribes amongst oth­ers the pur­pose of the in­ter­nal alert sys­tem, us­age of the in­ter­nal alert sys­tem, anony­mous re­port­ing, con­fi­den­tial­ity and ex­ter­nal whistle­blow­ing pro­ce­dures. In case of (ma­te­r­ial) mis­con­duct or ir­reg­u­lar­i­ties the Su­per­vi­sory Board is in­formed. Through the Com­pli­ance Over­sight Com­mit­tee, the Su­per­vi­sory Board mon­i­tors the op­er­a­tion of the in­ter­nal alert sys­tem, how is dealt with signs of mis­con­duct or ir­reg­u­lar­i­ties and in case of mis­con­duct or ir­reg­u­lar­i­ties how ad­e­quate fol­low-up of any rec­om­men­da­tions for re­me­dial ac­tions is per­formed. The bank has es­tab­lished dif­fer­ent poli­cies and pro­ce­dures to man­age and pre­vent con­flicts of in­ter­ests (these in­clude a Con­flicts of In­ter­ests Han­dling pol­icy and a Re­lated Party Trans­ac­tions pol­icy). For more in­for­ma­tion on the han­dling of po­ten­tial con­flicts of in­ter­ests ref­er­ence is made to sec­tion E of the Cor­po­rate Gov­er­nance chap­ter in­cluded in the bank’s an­nual re­port.

Remuneration

FINCOR’s Group Re­mu­ner­a­tion Pol­icy is in line with na­tional and in­ter­na­tional reg­u­la­tions. The pol­icy ap­plies to FINCOR and its sub­sidiaries. It also cov­ers the re­mu­ner­a­tion of Man­ag­ing Board mem­bers of FINCOR and its sub­sidiaries. Through its con­ser­v­a­tive re­mu­ner­a­tion pol­icy, FINCOR pro­motes a sound re­mu­ner­a­tion cul­ture with a long term fo­cus. The Group Re­mu­ner­a­tion Pol­icy is re­viewed and ap­proved by amongst oth­ers the Su­per­vi­sory Board. The Su­per­vi­sory Board mon­i­tors the proper im­ple­men­ta­tion of the pol­icy by the Man­ag­ing Board. An­nu­ally the com­pli­ance to the rules and pro­ce­dures un­der the pol­icy is re­viewed in line with the Con­trol Func­tions Re­mu­ner­a­tion Mon­i­tor­ing Pro­ce­dure. The HR & Re­mu­ner­a­tion Com­mit­tee meets at least each quar­ter and pre­pares the de­ci­sion-mak­ing process for the Su­per­vi­sory Board, tak­ing into ac­count the long-term in­ter­ests of all stake­hold­ers of FINCOR. The Su­per­vi­sory Board de­ter­mines the level of re­mu­ner­a­tion for the mem­bers of the Man­ag­ing Board in line with the prin­ci­ples of the Group Re­mu­ner­a­tion Pol­icy. The re­mu­ner­a­tion re­ceived by the mem­bers of the Su­per­vi­sory Board is not de­pen­dent on the (fi­nan­cial) re­sults of the bank. Each Su­per­vi­sory Board mem­ber re­ceives an ap­pro­pri­ate amount of com­pen­sa­tion tak­ing into ac­count the to­tal num­ber of hours spent for the tasks and the com­pen­sa­tion paid to Su­per­vi­sory Board mem­bers of com­pa­nies of com­pa­ra­ble size and busi­ness.

The bank’s Re­mu­ner­a­tion Re­port is in­cluded in sec­tion F of the Cor­po­rate Gov­er­nance chap­ter in­cluded in the bank’s an­nual re­port and is also made avail­able on the bank’s web­site. The main el­e­ments of the agree­ment of a Man­ag­ing Board mem­ber with the bank are not pub­lished on the bank’s web­site as FINCOR holds the view that suf­fi­cient in­for­ma­tion is dis­closed in the bank’s Re­mu­ner­a­tion Re­port.

Conflict of Interest Policy

Credit Eu­rope Bank has adopted a group of pro­ce­dures suit­able for man­ag­ing po­ten­tial con­flicts of in­ter­ests. Such arrange­ments have to be com­plied with for pro­fes­sional in­tegrity – and trans­parency rea­sons. The generic arrange­ments aim at set­ting cri­te­ria and con­trols that iden­tify and gov­ern po­ten­tial con­flicts of in­ter­est aris­ing from, amongst oth­ers pri­vate in­vest­ment trans­ac­tions by em­ploy­ees, se­nior man­age­ment or mem­bers of the Man­ag­ing and Su­per­vi­sory Board. A spe­cial cat­e­gory of po­ten­tially con­flict­ing sit­u­a­tions forms the bank en­ter­ing into a trans­ac­tion with a re­lated party. Par­ties re­lated to Credit Eu­rope Bank in­clude all Fiba and Fina Group as­so­ci­ated com­pa­nies, any mem­ber of the Su­per­vi­sory- or Man­ag­ing Board as well as their close fam­ily mem­bers and any en­ti­ties owned and/or con­trolled by them. Re­lated party trans­ac­tions are set­tled in the nor­mal course of busi­ness and on an ar­m’s length ba­sis, i.e. un­der the same com­mer­cial and mar­ket terms that ap­ply to non-re­lated par­ties. The kind of trans­ac­tions that fall un­der re­lated party trans­ac­tions are var­i­ous: loans, de­posits or for­eign ex­change trans­ac­tions. The bank has spe­cific arrange­ments in place to en­sure a proper man­age­ment of po­ten­tial con­flicts of in­ter­ests in re­lated party trans­ac­tions. These arrange­ments in­clude pro­ce­dures to iden­tify, au­tho­rize and re­port re­lated party trans­ac­tions to the Man­ag­ing Board and the Au­dit & Risk Com­mit­tee. In every Au­dit & Risk Com­mit­tee meet­ing, an overview with the ex­po­sures out­stand­ing to re­lated par­ties and in­for­ma­tion on whether the bank acted in con­for­mity with its es­tab­lished pro­ce­dures is pre­sented. On an an­nual ba­sis, the bank’s In­ter­nal Au­dit de­part­ment car­ries out au­dit pro­ce­dures to pro­vide rea­son­able as­sur­ance that the bank’s poli­cies and pro­ce­dures for re­lated party trans­ac­tions are prop­erly and ef­fec­tively ex­e­cuted.