Post on 13-Mar-2020
Corporate Governance in Danske BankCommunicating with a diversified investor base
Frederik ReumertChief governance officer &Head of Operational Risk
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Agenda
1) Danske Bank�s corporate identity2) Why good governance?3) Danske Bank�s governance infrastructure4) Relevant codes5) Governance initiatives
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Danske Bank�scorporate identity
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Danske Bank�s corporate identity
MissionTo be the best local financial partner
VisionOne platform � exceptional brands
Core ValuesIntegrity � Accessibility � Value creation � Expertise � Commitment
One Group �One System
Effective Governance and Risk Management
Corporate Citizenship
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Financial targets and Group ratings
� Solvency ratio of 9.0%-10.0%� Core (tier 1) capital ratio of 5,5%-6.0%� Hybrid core capital of 1.0%-1.5%� Payout ratio of 30%-50%
Group ratings
Short-term p-1 A-1+ F1+
Long-term Aa1 AA� AA�
Mortgage bonds Aaa AAA -
Life insurance - AA� -
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Why good governance?
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Financial symptoms have set the agenda
However, NOT at Danish phenomenon!
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The results of governance malpractice�
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The value of good corporate governance
� Value creating as it can reduce the cost of capital� Institutional investors are willing to pay a premium for good
governance practices
Governance premium, %
An overwhelming majority of investors are prepared to pay a premium for companies exhibiting high governance standards
Source: McKinsey & Co. Global Investor Opinion Survey
20-25%
12-14%
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15
20
25
30
North America andWestern Europe
Asia and LatinAmerica
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Danske Bank�sgovernance infrastructure
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Danish statutory provisions
� The Danske Bank Group is managed in accordance with Danish statutory provisions
� The Group�s corporate governance must therefore be understood in the framework of that legislation� Danish Companies Act� Danish Financial Business Act� Danish stock exchange rules
� The ownership structure of Danske Bank is global� Thus, Danske Bank�s corporate governance must also be
understood internationally
� versus international ownership
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Two-tiered governance structure is in place
Board committees
AuditCredit
Salary & BonusNominationInternal
Audit Department
Banking Activities Danske Markets
Mortgage Finance Other Business Areas
Danica Pension Resource Areas
Executive Committee15 members
Executive Board4 members
Board of Directors15 directors
Board of Directors Secretariat
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International ownership structure
� Danske Bank holds about 300,000 shareholders� 1/3 of the shares are held outside of Denmark
Geographical shareholder breakdown
� Governance framework:� The Sarbanes-Oxley Act� EU recommendations� The Combined Code� OMX Nordic Exchange
Recommendations� Governance Metrics International
Danmark50%
Øvrige18%
USA/Canada12%
Storbritannien10%
Øvrige Europa9%
Asien1%
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Effective governance at Danske Bank
An effective, independent BoardProactive work within
relevant committees
Effective risk andcapital management
Clear, enforcedpolicies and procedures
Effective measurementand accountability
Core values forethical behaviour
An objectiveinternal audit function
A sound internalcontrol framework
Transparent disclosure,effective communication
Independent,external audit
Incentive programmes
Good governance
Rules of procedure forExecutive management
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Ambition and disclosure
� The goal is �Best in Class�� Annual report important, but�� An extensive website� Planning cycle
� A designated teamhandles all day-to-day governance communications
� extensive use of website
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Relevant codes
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Relevant codes � a comparative analysis
CSE Committee Sarbanes-Oxley Combined Code
Board structure Two-tiered One-tiered One-tiered
Board tasks and responsibilities
IndependenceFormal evaluation
procedure
Corporate responsibility for financial reports
IndependenceFormal evaluation and
nomination procedures
Board committees Charter specifications if applied
Audit committee appoints auditor
Smith Guidance on Audit Committees
Management remuneration
Full disclosure on individual basis
Transaction disclosures
Prohibition on loans
Full disclosure on individual basis
Internal controls A supplement to current legislation
Management assessment (COSO)
Audit Committee evaluates controls
Risk management Risk identification and risk planning
Corporate and criminal fraud accountability
Board evaluates risk management
Disclosures Openness and transparency
Real time disclosure on material changes
Focus on AGM and Investor Relations
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Corporate governance in Denmark
� With very few exceptions Danske Bank complies with the OMX recommendations and have already issued a �comply-or-explain�-statement� Shareholders� and stakeholders� role� Openness and transparency� Board tasks and responsibilities� Management remuneration� Risk management and audit
�Copenhagen Stock Exchange Recommendations
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The Sarbanes-Oxley Act
� Sarbanes-Oxley codifies certain standards of �good governance� into specific requirements
� A number of the requirements in the Sarbanes-Oxley Act are covered by Danish statutory provisions
� The Bank�s website compares selected aspects of the legislation with Danish legislation and Danske Bank�s practice� Auditors� independence� Management�s assessment� Internal controls� Analysts� conflicts of interest
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The Combined Code
� By virtue of its compliance with Danish law, Danske Bank automatically fulfils a number of the recommendations in the Combined Code
� The Bank�s website compares selected aspects of the code with Danish legislation and Danske Bank�s practice� Board responsibilities� Board composition and independence� Election� Performance evaluation� Board remuneration� Responsibility and auditing
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Governance initiatives
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To comply or not to comply...
� International developments in corporate governance provide ideas and background information for the Danske Bank Group management
� Compliance is not a one-off proposition� Compliance requires ongoing and constant enforcement
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Core governance initiatives by the Bank
� Publication of the rules of procedures� New Board committee structure with expanded charters� Publication of remuneration policy� Expanded information on the remuneration and salaries of
the individual directors and the members of the Executive Board, including individual shareholdings
� Launch of separate risk and capital management website� Webcast of Chairman�s report at AGM� Amendment to the Articles of Association
reducing the board members� term of service to two years
www.danskebank.com/cg