The corporate governance of the Savings Banks Amalgamation is based on European Union and national legislation, government regulations and guidelines, as well as the Amalgamation’s Principles for reliable management and internal control.
The Principles for reliable management and internal control define the key principles of the governance systems of the Savings Banks Amalgamation, such as the structure and functions of the Amalgamation and its principal parts, the functions and responsibilities of the main governing bodies and principles of internal controls. The Principles for reliable management and internal control have been approved by the Board of Directors of the central institution and apply to all banks and other companies belonging to the Amalgamation. The principles help to ensure that the Amalgamation’s operations are open and transparent.
The Code of Conduct that supplements the principles for reliable management and internal control is additionally aimed at ensuring that the Savings Banks Group operates responsibly, ethically and in compliance with laws as well as orders and instructions issued by the authorities.
Corporate governance statement
An account of the corporate governance of the Savings Banks Amalgamation referred to in chapter 7, sections 1–5 and section 7 of the Act on Credit Institutions
This report is an account of the corporate governance of the Savings Banks Amalgamation referred to in chapter 7, sections 1–5 and section 7 of the Act on Credit Institutions. The corporate governance principles of the Savings Banks Amalgamation are described in the Principles for reliable management and internal control. The principles are confirmed by the Board of Directors of the central institution of the Savings Banks Amalgamation.
Reliable governance comprises the Board and executive directors of the Savings Banks Amalgamation, relations between the shareholders and other stakeholder groups, the setting of targets, deciding on the means of attaining them and monitoring performance. The Board of Directors approves the principles of reliable governance. The executive management is responsible for ensuring that the operation is organised in compliance with these principles. The implementation of reliable governance is ensured by a clear frame of reference, consistently and comprehensively documented guidelines and clearly defined decision-making levels.
Internal control covers financial and other supervision. Internal control forms part of operational activities and is the responsibility of all functions and organisational levels. Internal control is part of the daily activities. An effective and efficient control relies on the specification of the appropriate internal control structure and control actions for all business levels, including sufficient guidelines, control actions, monitoring and reporting.
2. The structure of the Savings Banks Group
2.1. Savings Banks Amalgamation and Savings Banks Group
The member companies of the Savings Banks Amalgamation form a financial institution as defined in the Act on the Amalgamation of Deposit Banks, in which Savings Banks' Union coop and its member credit institutions are ultimately jointly and severally liable for each other’s liabilities and commitments.
The ideological basis and starting point of the strategic goals of the Savings Banks Amalgamation is the responsible promotion of thrift and the financial wellbeing and wealth of Finns. This is the root of its values, basic service principles and quality customer work.
The Savings Banks Amalgamation is part of the Savings Banks Group, which comprises the Savings Banks Amalgamation and other institutions belonging to the Savings Banks Group. The coverage of the Savings Banks Group differs from that of the Savings Banks Amalgamation in that the Savings Banks Group also includes institutions other than credit and financial institutions or service companies. The most notable of these are Sb Life Insurance Ltd and Sp-Koti Oy. The Savings Bank Group does not constitute a financial and insurance conglomerate as referred to in the Act on the supervision of financial and insurance conglomerates.
The Savings Banks Amalgamation does not constitute a company in the sense defined in the Accounting Act or a consolidation group defined in the Act on Credit Institutions. However, the Amalgamation’s central institution must prepare the Amalgamation’s consolidated financial statements as defined in Section 9 of the Act on the Amalgamation of Deposit Banks.
2.2. Savings Banks’ Union Coop and its functions
The Savings Banks’ Union Coop steers the operations of the Savings Banks Group and is the central institution responsible for the internal control framework. Members of the central institution may be credit institutions with rules or articles which comply with the provisions of the Act on the Amalgamation of Deposit Banks and approved by the central institution. Decisions on the approval of membership are made by the General Meeting of the Savings Banks’ Union Coop based on the Board’s proposal.
The basic mission of the central institution is to create the conditions for the Amalgamation’s shared strategic goals to be attained. The central institution is responsible for the steering and oversight of the Savings Banks Amalgamation in accordance with the Act on the Amalgamation of Deposit Banks, as well as centralised development and service provision functions.
The highest decision-making power in the central institution rests with the cooperative meeting in which the member Savings Banks exercise decision-making powers. The members of the Board of Supervisors and the Board of Directors are elected by the cooperative meeting.
2.3. Savings Banks
Savings Banks are regional and local deposit banks operating in the retail banking sector, with the specific purpose of promoting savings. The Savings Banks focus on low-risk retail banking, particularly services related to daily business, saving and investments, and lending services. The product and service range covers all the main banking services for both private and business customers. They are complemented by other financial sector services and products provided together with partners.
The corporate structure of the Savings Banks is either that of a traditional savings bank or a savings bank limited company. The supreme decision-making power in the Savings Banks rests with the trustees, who are representatives of the depositors and possible equity capital shareholders. The supreme decision-making power in savings bank limited companies is exercised at the General Meeting by the shareholders, who as a rule are savings bank trusts. The Trustees or the General Meeting elect the Board for the bank. The duties and responsibilities of the Board of Directors are described in the rules of procedure, which the Board of Directors approves for itself.
2.4. Product and service companies
The Savings Banks Group aims to improve its competitive edge in the financial markets by creating partnerships for cooperation. The central institution and the Savings Banks Group’s product and service companies provide the Savings Banks with support in developing their business activities. The function of the product and service companies is to ensure that the Savings Banks’ operating conditions are secure and capable of development. In addition, according to the responsibility management model, product companies participate in the implementation of the responsibility strategy and roadmap, for example.
Sp-Fund Management Company Ltd engages in investment fund activities. In addition, it manages alternative investment funds, as authorised by the Financial Supervisory Authority in 2016. The company promotes long-term saving and acts as the Savings Banks’ investment market specialist unit. In addition to Savings Banks, the investment products produced by the company are also sold through other distribution channels.
Sp-Henkivakuutus Oy [Sp Life Insurance] complements the Savings Banks’ core business and strategy of saving and investment. The company offers life insurance products and services for both private customers and corporate saving, investment and personal risk coverage, and they are offered through Savings Banks as well as other distribution channels.
Central Bank of Savings Banks Finland Plc [Säästöpankkien Keskuspankki Suomi Oyj] provides the amalgamated Savings Banks with refinancing solutions, as well as representing the banks in their transaction services through the SEPA payment system, and it functions as the central credit institution. In addition, the Central Bank acts as the issuer of Savings Banks' customers' cards and as the issuer of unsecured consumer credit.
Sp Mortgage Bank Plc issues euro-denominated bonds with residential mortgage loans as collateral, i.e. covered bonds, in accordance with the Act on Mortgage Credit Banks. Residential mortgage loans distributed by savings banks for Sp Mortgage Bank will be used as collateral for the covered bonds.
Savings Bank Services Ltd manages the back office functions of the Savings Banks. Figure Taloushallinto Oy provides financial sector companies with financial administration services. Sp-Koti Oy is the central company of a franchise estate agency chain. The operation of Sp-Koti Oy is based on a business model whereby it selects independent local entrepreneurs as its partners. They in turn obtain the strong support of the local Savings Bank for their operation, as well as use of the banks’ logo.
The governance of the product and service companies is based on the relevant legislation. The proposals for member selection for the governing bodies are prepared by the appointments committee of the central institution.
2.5. The Savings Bank Centre
The Savings Bank Centre is a business organisation consisting of the Savings Banks’ Union Coop, the Central Bank of Savings Banks, Sp-Mortgage Credit Bank, Sp-Fund Management Company, Sp-Life Insurance, Savings Bank Services and Sp-Koti. The Savings Bank Centre is the centralised provider of the joint sales promotion, product development and business support functions required by the Savings Banks.
The Savings Bank Centre is responsible for
- The completion, competence assurance, sales support and sales promotion related to the products, services, multi-channel processes and customer experience of Savings Banks and Savings Banks’ customers
- Group-level responsibilities include information management, financial administration, risk management, compliance, internal audit, legal affairs, HR administration, marketing and communications, and ensuring competence in these fields
- Ensuring competitive funding for the Savings Banks Group under all conditions, including risk management
The Savings Bank Centre is managed by the Management Group of the Savings Banks’ Union Coop, which is described in section 3.6.
In addition, steering groups have been established to support the Savings Bank Centre in the management and development of the group’s business and to promote the unity and competitiveness of the group through its activities.
3. Governance model of the central institution
3.1. Savings Banks’ Union Coop General Meeting
The General Meeting of the Savings Banks’ Union Coop is held annually before the end of May at the cooperative’s registered office location in Helsinki, or in Espoo or Vantaa. The established practice is for the meeting to be held in March. The meeting is convened by the Board of Directors. An extraordinary General Meeting is held whenever the Board deems it necessary or one must be held for statutory reasons.
The agenda of the annual General Meeting includes the items listed in the central institution rules, including the adoption of the central institution’s income statement and balance sheet for the previous accounting period, presentation of the consolidated financial statements of the Amalgamation and selection of members for the Board of Supervisors and Board of Directors and of the auditor.
The invitation to the General Meeting must be sent to the members at the earliest four weeks and at the latest one week prior to the meeting to the postal address in the possession of the central institution, or to an email address or other data communication link supplied to the central institution by the member for the purpose of delivering the invitation, or by issuing a notice of the meeting on the central institution’s Intranet.
At the General Meeting, a member has the same number of votes as his or her holding of central institution shares. The Savings Banks obtain additional votes in a way described in more detail in the central institution rules, so that additional votes may account at most for half the number of votes based on shares. However, a member may only vote using no more than ten per cent of the number of votes represented at the meeting. A member at a General Meeting only has a single vote, if, for reasons of his or her own financial difficulties, the member has been in receipt of financial support based on a cooperative decision, and the support fulfils the criteria detailed in the central institution rules.
Central institution member organisations owned by central institution members and those owned jointly with the central institution may participate in the General Meeting in that they have a right to speak but no voting right.
3.2. Savings Banks’ Union Coop Board of Supervisors
The central institution’s Board of Supervisors comprises at least 9 and at most 35 members selected by the cooperative meeting. Each member has a designated deputy. The Board of Supervisors’ members’ term of office is one year. In accordance with the Group’s operating principles, primarily the chairman of each Savings Bank is appointed to the Board of Supervisors as a member, and the deputy chairman as a deputy.
The function of the Board of Supervisors is to oversee the administration of the central institution, which is the responsibility of the Board of Directors and CEO, and to ensure that the operation of the central institution is conducted competently and diligently in accordance with the Cooperatives Act and for the benefit of the central institution and the Savings Banks Group. A particular task of the Board of Supervisors is to maintain and promote internal cooperation. The Board of Supervisors may provide the Board of Directors with guidance in issues that are wide-reaching or important in terms of policy. Among other things, the Board of Supervisors approves the solvency management principles and other general guidance principles based on the Board of Directors’ proposal. A further task of the Board of Supervisors is to approve the guidelines on the inspection activities and the operational principles of the inspections of the Savings Banks Amalgamation, as well as provide the annual General Meeting of of the Savings Banks’ Union Coop with a statement on the annual financial statements and annual report.
The Board of Supervisors confirms its own rules of procedure.
The Board of Supervisors convenes on the invitation of the chairman, or if the chairman is indisposed, the vice-chairman or the Board of Directors, and a quorum is reached if more than half the members are present. A decision is formed when more than half of those present are in favour of a view, or, if the vote is hung, the view supported by the chairman. Minutes are kept of the meetings, containing the names of those present, decisions made, and the results of any votes.
Customarily, the Board of Supervisors meets 3–4 times a year. The matters addressed at the meetings are mostly prepared by the Board of Directors of the central institution and proposed by the Managing Director.
The remuneration of the Board of Supervisors members is decided by the cooperative meeting. The Board of Supervisors members receive no other benefits on the basis of this service.
3.3. Savings Banks’ Union Coop Board of Directors
The central institution’s Board of Directors comprises at least 6 and at most 9 members. The Board members are selected by the cooperative society meeting based on the appointments committee’s proposal. The members’ term of office begins at the close of the annual cooperative meeting that made the selection and ends at the close of the next annual cooperative meeting. A person older than 65 years cannot be selected as member of the Board of Directors. The Board of Directors approves an agenda that guides its operation.
The Board of Directors is tasked with directing the operation of the central institution in accordance with the Cooperatives Act, the Act on the Amalgamation of Deposit Banks and the rules of Savings Banks’ Union Coop. The Board of Directors is, among other things, responsible for the strategy of the Savings Banks Group and development of its internal cooperation, it approves the agenda and budget of the central institution, prepares the matters to be proposed to the cooperative meeting and the Board of Supervisors, prepares and presents to the annual cooperative meeting the consolidated financial statement of the central institution and its member credit institutions, organises the internal controls of the Savings Banks Amalgamation, and selects and discharges the CEO and other principal officials of the central institution, as well as determines their remuneration and other benefits. The Board of Directors also regularly reviews responsibility issues on its agenda on an annual basis in accordance with the responsibility management model.
The Board of Directors convenes as necessary and a quorum is reached when more than half the members are present. In practice, the Board meets in accordance with an annually agreed schedule, mostly once a month, and at other times as required.
A decision is formed when more than half of those present are in favour of a view, or, if the vote is hung, the view supported by the chairman. As well as the Board members, the meetings are attended by the Managing Director and/or Deputy Managing Director, and the central institution lawyer acting as the Board secretary.
The agenda of the meeting and crucial meeting documentation are delivered to the Board members for perusal in good time before the meeting. The matters to be addressed by the Board are presented by the Managing Director or a presenter specifically invited to the meeting by the Managing Director. The presentations are customarily in writing. Minutes are kept of the meetings, containing those present, decisions made, and any differences of opinion.
If the urgency of the matter or some other reason so demands, a Board of Directors’ meeting may be conducted by remote connections, telephone or email, or through other communication channels. In order to make decisions, the Board members must have channels of mutual communication.
The Board has an annual plan in which matters related to planning and oversight and other most important issues are scheduled for addressing over the year at Board meetings. The Board carries out a self-assessment of its operation and procedures every year. In addition, the Board of Directors annually makes an assessment of the collective suitability of Board members.
The remuneration of the Board members is decided by the cooperative meeting. The Board members receive no other benefits on the basis of this service.
3.4. Savings Banks’ Union Coop committees
The central institution has set up supporting committees as follows:
- Nomination Committee
- Remuneration Committee
- Audit Committee
- Risk Committee
- Asset and Liability Committee
Rules of procedure have been drawn up for each committee, setting out the purpose, composition, operation and duties of each committee.
The Nomination Committee prepares a recommendation regarding the members of the governing bodies and their remuneration to the Savings Banks’ Union Coop General Meeting and General Meetings of the Savings Banks.
The Remuneration Committee prepares recommendations to the Savings Banks’ Union Coop’s Board of Directors concerning the remuneration policies and systems of the Managing Directors’ and the members of the executive management reporting directly to Managing Directors in member credit institutions of the Savings Banks Amalgamation and other member organisations of the Amalgamation. The Committee also prepares the Remuneration Principles and Remuneration Guidelines documents for approval by the Board of Directors of the central institution.
The Audit Committee assists the Board of Directors of Savings Banks’ Union Coop in ensuring that Savings Banks’ Union Coop and the Amalgamation apply comprehensive and appropriately organised accounting, accounting practices followed in the financial statements and financial reporting. The Committee also supports the Board of Directors and supervises that the Amalgamation employs adequate and appropriately organised internal controls, internal audit systems and audit procedures in order to ensure the accuracy and reliability of the reporting of financial statements data.
The Risk Committee assists the Board of Directors of Savings Banks’ Union Coop in matters concerning risk strategies and taking of risk and monitoring that the amalgamation complies with the risk strategies as approved by the Board of Directors of the central institution. The Risk Committee monitors and ensures the efficiency and adequacy of the capital adequacy management process within the and evaluates the adequacy of the policies, controls and processes related to these risks. The Risk Committee assists the Remuneration Committee in creating healthy compensation systems. The Risk Committee must take all types of risks into account in its work and, in support of its work, must receive all relevant information about the business of the amalgamation. The Risk Committee shall receive regular reports on the findings and recommendations of internal control functions and on the status of corrective measures. The Risk Committee shall also receive regular information on the findings and recommendations of internal and external audits. In addition, in accordance with the responsible management model, the Risk Committee reviews and approves the estimates, targets and limits of ESG risks and opportunities as part of other risk reviews and supervises the management and compliance of sustainability risks.
The role of the Asset and Liability Committee is to assist the Risk Committee in matters related to interest rate, market and liquidity risks. The Asset and Liability Committee reports these risks to the Risk Committee, directs the activities of the operating organisation in the areas, and plans and coordinates the refinancing of the amalgamation with the treasury of the Central Bank of Savings Banks.
3.5. Managing Director of the Savings Banks Union Coop
The CEO of the central institution is charged with the day-to-day governance of the central institution in accordance with the stipulations of the Cooperatives Act, implementation of the Savings Banks Group strategy in accordance with the directions and orders of the Board of Directors, preparation of matters to be proposed to the Board, and assisting the Board in preparing matters for presentation to the Board of Supervisors and the cooperative meeting.
3.6. Management Group of the Savings Banks Union Coop
The Management Group is tasked with the operational management of the Savings Banks' Union Coop, which acts as the amalgamation’s central institution, with the authorisations granted by the Board of the Union and the Managing Director.
The Management Group of the Savings Banks' Union Coop also acts as the Management Group of the Savings Bank Centre. The Management Group consists of the Managing Director and the directors responsible for key business and support functions appointed by the Board of Directors of the Union.
4. Internal control
4.1. Internal control
The Amalgamation’s control system, i.e. internal control, consists of control carried out by the central institution’s Board of Supervisors and the Board of Directors, control carried out by independent functions on the basis of annual planning and risk assessment, and business operations’ and support functions’ control of their own activities.
Internal control covers financial and operational supervision. Internal control refers to the part of management and operations which aim to ensure:
- the achievement of set objectives and goals
- economical and efficient processes
- the management of the risks involved in operations, including ESG risks
- the fairness and accuracy of financial and other management information
- compliance with regulations and instructions
- the adequate protection of operations, data, as well as the entity’s property and customers’ assets and
- adequate and appropriately organised manual and IT systems for the support of operations.
4.2. Supervision by the Board of Supervisors and Board of Directors
The function of the Board of Supervisors of the central institution is to oversee the administration of the central institution, which is the responsibility of the Board of Directors and CEO, and to ensure that the operation of the central institution is conducted competently and diligently in accordance with the Cooperatives Act and for the benefit of the central institution and the Savings Banks Group. The Board of Directors of the central institution is tasked with leading the operations of the Central Institution in accordance with the Cooperatives Act, the Act on the Amalgamation of Deposit Banks and the governance policies of the central institution and to see to the arrangement of the internal control of the Savings Banks Amalgamation.
The senior management of each of the entities belonging to the amalgamation is responsible for the tasks with regard to their respective entities.
4.3. Three lines of defence in supervision
The Savings Banks Amalgamation follows a control model based on “three lines of defence”. The first line of defence is internal control of their own operations by business and support functions. The second line of defence consists of supervision by independent supervisory functions, i.e. risk control, compliance function and data protection officer. The third line of defence is control by the internal audit function.
The Boards of Directors of the central institution and each member entity of the Amalgamation are responsible for arranging the entity’s supervision in line with the three lines of defence and ensuring that the independent audit functions have the authority, importance and resources required for their operations.
5. Requirements for the reliability and competence of the management
A member of a Board of Directors and executive management of a member bank of the Savings Banks Amalgamation and the central institution must be a reliable and reputable person who is not bankrupt or prohibited from doing business and whose competence is not otherwise restricted.
A member of a Board of Directors and executive management must have the knowledge and experience of the credit institution’s business, the key risks associated with it and management such as is necessary for the role of the person and the quality, scope and diversity of the credit institution's activities.
At the Savings Banks Amalgamation, the assessment of reliability and suitability is described in the Reliability and Suitability Reviews guideline. An assessment of reliability, suitability and competence is made for Board members, deputy members, the Managing Director and the Managing Director’s deputy as specified in the guideline. In addition, an assessment is made for all persons under the direct authority of the Managing Director who hold senior management positions of the organisation or who effectively direct the activities of the company, such as members of the Management Group and persons responsible for key functions. With regard to the central institution, the assessment is also carried out for the members and deputy members of the Board of Supervisors.
The assessment is always carried out when a new person is selected for an above-mentioned position of responsibility for leadership, a core function or one of the above-mentioned positions of trust. In addition, the assessment is carried out when a person is reselected to continue in his or her former position and if more than two years have elapsed since the previous assessment. The assessment is also always carried out if the reliability, suitability or competence of the person is questioned.
6. Management’s time usage
A member of the Board of Directors, Managing Director and any other member of the executive management of a member bank of the Savings Banks Amalgamation and the central institution shall devote sufficient time to the performance of their duties. The assessment of the adequate time usage by a member of the management shall take into account, inter alia, the number of simultaneous positions of trust and other managerial responsibilities held by the member, the geographical area in which the member operates and the travel time required for the role, the number of meetings planned for the management and the nature of the member’s position and duties.
Aito Säästöpankki Oy, 2286574-2
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Tammisaaren Säästöpankki, 0131296-2
Asematie 6, 10600 Tammisaari
p. 019 222 500
Central Bank of Savings Bank