Governance

Governance_02

The Nordic Investment Bank (NIB) was established on 4 December 1975 through a treaty between Denmark, Finland, Iceland, Norway and Sweden. As of 1 January 2005, Estonia, Latvia and Lithuania became members of the Bank on equal terms with the original member countries.

NIB is governed by the Agreement concerning the Nordic Investment Bank among its Member countries signed in 2004, the related Statutes and the Host Country Agreement concluded between the Government of Finland and the Bank in 2010.

According to the Statutes, the Bank shall have a Board of Governors, a Board of Directors, a President and the staff necessary to carry out its operations. In addition, the Bank shall have a Control Committee.

NIB promotes transparency, predictability, accountability, responsibility and disclosure as general principles enhancing and furthering good governance. NIB aims to follow best practices in the field of corporate governance. As part of enhancing good governance, the Board of Directors continued in 2015 its efforts to further improve the efficiency of its decision-making process on the basis of a self-evaluation survey.

Board of Governors

The Board of Governors is composed of eight governors, one designated by each member country from among the Ministers in its Government. The Board of Governors appoints a Chairman for one year according to the rotation scheme it has adopted.

The Governor for Denmark is currently serving as Chairman until 31 May 2016.

The Board of Governors held its annual meeting by written procedure on 29 May 2015.

Board of Directors

All the powers that are not exclusively vested in the Board of Governors are entrusted to the Board of Directors. The Board of Directors consists of eight directors and eight alternates designated by each member country.

The Board of Directors considers for approval all lending transactions, borrowing and administrative issues proposed by the President. The Board of Directors may delegate its powers to the President to the extent it considers appropriate. The Chairman of the Board of Directors cannot be the President or an employee of the Bank.

The Board of Directors held eight meetings in 2015.

President

The President is responsible for conducting the Bank’s current operations and is appointed by the Board of Directors for a term of five years at a time. Since 1 April 2012, Mr Henrik Norrman has been the President and Chief Executive Officer of the Bank.

Advisory bodies to the President

The President is assisted in his work by the Executive Committee, the Credit Committee, the Asset and Liability Committee, the Finance Committee and the ICT Council.

The Executive Committee is a forum for addressing all aspects of the performance, policy and financial soundness of the Bank. The Executive Committee consists of the President and six senior officers, whose appointments are confirmed by the Board of Directors. The Executive Committee meets formally approximately twice a month. In 2015, it met 23 times. The meetings are ordinarily chaired by the President, who reaches decisions having consulted the members of the committee. The Executive Committee meets informally at the commencement of every working day.

The Credit Committee is responsible for the preparation and decision-making related to the Bank’s credit matters and treasury counterparty matters. The President exercises his executive powers concerning lending operations through the Credit Committee. The Credit Committee includes the President and six senior officers appointed by the Board of Directors. At the end of 2015, the Credit Committee had the same members as the Bank’s Executive Committee. The Credit Committee is chaired by the President or, in his absence, by one of its members. As a rule, the Credit Committee meets once a week. In 2015, it met 59 times.

The Asset and Liability Committee assists and advises the President in strategic balance sheet planning and is a forum for sharing information on issues relating to the Bank’s asset and liability management. The members of the Asset and Liability Committee are appointed by the President who chairs the committee. In 2015, the Asset and Liability Committee consisted of the members of the Executive Committee and the Chief Risk Officer. The Asset and Liability Committee meets approximately six times a year, but can convene more frequently if necessary. In 2015, the Asset and Liability Committee met six times.

The Finance Committee assists and advises the President in monitoring the market risk, borrowing activities and treasury portfolio management of the Bank. The Finance Committee includes the President, the Head of Treasury and the Head of Risk and Finance. The Finance Committee usually convenes once a month. In 2014, it met eleven times.

The ICT Council assists and advises the President in information and communications technology matters, and functions as a steering committee for ICT development projects. The President, however, makes decisions on ICT matters in the Executive Committee. The ICT Council consists of the Head of ICT and other senior staff members appointed by the President. The chairman of the Council shall be a member of the Executive Committee. In 2015, the ICT Council met six times.

Other internal committees

In addition to the aforementioned advisory bodies to the President, the Bank has also the following permanent internal committees; the New Product and Structure Committee, the Committee on Fighting Corruption and the Trust Fund Committee, all composed of senior staff members.

The New Product and Structure Committee scrutinizes product and deal structure proposals significantly different to what NIB has entered into previously from risk and administrative perspectives, and gives its recommendations to the Finance Committee or the Credit Committee for their decision.

The Committee on Fighting Corruption deals with both corruption prevention and cases of suspected corruption and gives recommendations of actions to the President for decision. For further information see Ethics and Integrity.

The Trust Fund Committee ensures that the purposes of the trust funds managed by NIB are fulfilled in the most efficient way. The Committee also approves the activity plan of the trust funds as well as proposed allocations from trust funds. The Committee gives its recommendations to the respective donor(s) for their final decision.

Control Committee

The Control Committee is a supervisory body that ensures that the operations of the Bank are conducted in accordance with the Statutes. The Control Committee is responsible for the audit of the Bank’s accounts, and annually delivers an audit statement to the Board of Governors. The audit of the financial statements of the Bank is carried out by external professional auditors appointed by the Control Committee.

Remuneration and incentive programmes

The Board of Governors determines annually the remuneration and attendee allowance for the Board of Directors and for the Control Committee. The President’s terms of employment, including remuneration, are determined by the Board of Directors. The Control Committee determines the principles for remuneration of the professional auditors.

The principles for the remuneration of staff are set out in the Compensation Policy. The Bank applies a fixed salary-based system in which individual performance plays an important role, as well as a small bonus programme that rewards exceptional performance on a yearly basis.

For further information on remuneration, see Note 5 in the Financial Report.

Internal control

NIB’s internal control system has the dual objective of securing and developing the long-term financial preconditions for operations while conducting cost-efficient operations that comply with rules and regulations. Internal control is focused on managing various forms of financial, compliance and operational risks.

NIB’s operational risk management focuses on proactive measures in order to ensure business continuity, the accuracy of information used internally and reported externally, the expertise and integrity of the Bank’s personnel and its adherence to established rules and procedures, as well as security arrangements to protect the physical and ICT infrastructure of the Bank.

The Compliance function assists the Bank in identifying, assessing, monitoring and reporting on compliance risk in matters relating to the institution, its operations and the personal conduct of staff members. The Chief Compliance Officer reports to the President, with full and unlimited access to the Chairman of the Board of Directors and the Chairman of the Control Committee.

NIB’s internal audit adheres to international professional standards established by the Institute of Internal Auditors. The task of the Internal Audit function is to provide assurance on the effectiveness of the Bank’s internal control, risk management and governance processes, and to make recommendations to the management.

The Internal Audit function of the Bank reports to the Board of Directors and to the Control Committee and works administratively under the auspices of the President. The Board of Directors approves the annual plan for the Internal Audit.

For further information on risk management, see the Financial Report.