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. We comply with recognised guidelines on corporate governance and publish an annual governance statement with the Annual & Sustainability Report.
The Board of Directors is elected at the AGM for a one-year term. Seven directors and two alternates are elected.
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 conducted properly. The Board of Directors also monitors the Bank’s general activities and ensures that control of accounting and financial management is satisfactory.
There are three sub-committees to the Board of Directors: The Audit Committee, the Risk Committee and the Remuneration 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.
Alternate members of the Board are Sigríður Olgeirsdóttir (since March 2021) and Sigurður Jón Björnsson (since April 2019).
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 operation 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 a dedicated chapter in its Annual & Sustainability Report.
In August 2021, Stjórnvísi renewed the recognition of Landsbankinn as a model of corporate governance for the period 2020-2021 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.
Personal Banking provides all services to private individuals, including the development of digital solutions. 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. Service to small and medium-sized companies in rural Iceland is also handled by Personal Banking, in close collaboration with Corporate Banking.
Service and financing for corporates, municipalities and institutions lies with the Corporate Banking division, which is sharpening its 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 high-net worth individuals, companies and investors assistance in finding the right investment and asset development solutions. The division offers extensive services in the field of asset management, both private banking and professional investor services, in addition to brokerage of securities, currency and derivatives for professional investors and larger customers. Emphasis is placed on personal service, responsible advice and informed decisions.
Finance & Operations
The Bank’s funding, liquidity management and market making 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. Project management of construction of the Bank’s new headquarters at Austurbakki are under this division.
Information Technology (IT)
The IT division is responsible for the operation, security and development of Landsbankinn’s digital infrastructure. Its activities 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 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.
The Community combines human resources, marketing, education, PR, sustainability and economic research under one hat. The Community spearheads the shaping of the Bank’s corporate culture and plays a key role in implementing its strategy which emphasises a new approach to customer relations, including through education, communication and employee training.
Compliance and Legal Services
Two departments operate across the Bank and are directly under the CEO, Compliance and Legal Services.
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.
Assets sold in 2022
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.
Securities and other financial instruments listed for trade on a registered market are sold on the market and that process is considered an open sale process. Such transactions are not included in the table above.
In 2022, Landsbankinn sold 58 appropriated assets, two real estate properties (Strandgata 1, Akureyri and Austurbakki 2/lot 6 (North Wing)), three vehicles, shares in one unlisted company and 164 pieces of art. The total sales value of these assets was around ISK 8,272 billion.
In 2009, the Ministry of Education commissioned a professional valuation of the Bank’s collection. It was suggested that pieces in category I would become public property, that category II pieces should not be sold without consulting with the National Gallery of Iceland and that category III pieces would be offered on loan to cultural institutions. Other pieces were marked as uncategorised and the Bank was made free to dispose of them without any provisos. In 2019, the Bank owned around 2,200 pieces of art, mainly paintings, but also ceramic art, reproductions, photographs and more. Since the valuation, pieces owned by savings banks that merged with Landsbankinn have been added to the collection and undergone a similar appraisal. In 2019, the Bank owned a total of around 2,200 pieces of art, mainly paintings but also ceramic art, reproductions, photographs and more. Around 1,600 pieces were valued as uncategorised and only such pieces have been or will be sold. The sale value of the pieces sold in 2022 totalled ISK 2.7 million, having regard for sales commissions. Sale took place via open sale process (online auction).
|Assets sold in 2022||Number||Total sales value|
|Building sites for vacation housing||24||92,100,000|
|Shares in unlisted companies||1||242,167,376|
|Vehicles and equipment||18||43,533,998|
At year-end 2022, 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.
Assets for sale at year-end 2022
A total of 132 assets appropriated by the Bank were held for sale as at 31 December 2022. Their book value was around ISK 190 billion.
|Appropriated assets undergoing sale process at year-end 2022|
|Building sites for residential apartments and commercial housing||4|
|Building sites for vacation housing||123|
Sale of shareholding in Auðkenni hf.
In 2022, the Bank finalised the sale of its 25.55% shareholding in Auðkenni hf. The National Treasury of Iceland purchased all shares in the company, including Landsbankinn's holding. The agreement was finalised between the parties on 1 July 2021 but was subject to approval by the Icelandic Competition Authority, which came in March 2022. The sale of the shareholding in Auðkenni deviated from the main rule of employing an open sale process, with full authorisation by the Board of Directors and in accordance with the Bank’s rules on the sale of assets. The decision had regard for the company's importance as a provider of infrastructure service in the field of digital authentication and that the Icelandic State would ensure responsible and continued operation, thus securing the interests of the Bank and the financial system as regards reliable infrastructure.
Sale of the North Wing of Austurbakki
At the end of September 2022, the Bank concluded an agreement with the National Treasury of Iceland providing for the sale of part of Landsbankinn’s new building at Austurbakki, the so-called North Wing. The aim is for the building to house the Ministry of Foreign Affairs and function as a space for the exhibitions and activities of the National Gallery of Iceland. The new building is 16,500 square metres, of which the North Wing is around 5,900 square metres. In determining the purchase price, the average of solicited valuations was used. The National Treasury pays ISK 4.6 billion based on closing according to the original schedule, which provides that the ground floor and basement area will be handed over ready for furnishings while the office space on floors 2-4 will be fully furnished. The purchase contract stipulates that the Bank will finalise all parts of the building before closing, adding an estimated ISK 1.4 billion to the purchase contract for final completion and furnishing of the ground floor and basement, as well as adjustment of the space to the State’s purposes. The purchase price thus comes to a total of around ISK 6 billion.
The sale of the building to the State deviated from the main rule of employing an open sale process, with full authorisation by the Board of Directors. The Bank’s rules on the sale of assets allow for exceptions from the main rule of employing an open sale process such as when it is deemed contrary to the Bank’s interest or if other legitimate reasons speak against an open sale process. Direct sale of almost the entire part of the building the Bank does not intend to use eliminates possible risk from a protracted sale or leasing process almost entirely. Selling to one trusted buyer is convenient, its operation aligns well with the Bank’s own activity and opens the possibility of joint operation of certain internal operations. Having regard for the Bank’s interests and other legitimate reasons, cf. Article 6 of the Bank's policy on the sale of assets, the Board of Directors concluded that derogation could be made from the main rule.
The Bank sold one vehicle without advertising it for sale and the sale price was ISK 1.7 million. A 50% share in real estate was sold without advertisement for the sale price of ISK 39 million and the asset was sold in collaboration with the co-owner.
Continuous development in data utilisation
We review work processes and evaluate the efficiency of internal control with the Bank in an on-going manner. Continuing to build on and improve data utilisation has allowed the Bank to streamline processes for measures against money laundering and terrorist financing, both on the customer and employee side. In 2022, we took into use a revised risk assessment and control system for measures to combat money laundering and terrorist financing.
Privacy risk is managed in accordance with the Bank’s data protection governance system and data protection is integrated in its product and service platform. According to an updated ESG risk assessment from Sustainalytics in 2022, there was considered negligible risk of the Bank experiencing losses from a possible security breach that related to privacy and personal data.
No formal cases were brought against the Bank by the Data Protection Authority in 2022.