Responsible lending
Providing loans for retail and corporate customers is the bank’s core activity. Our long-term profitability depends on our customers making responsible choices. As a lender, we have the influence to contribute to sustainable initiatives and solutions. ESG assessments will also be important from a risk management perspective in this work.
The bank’s credit risk strategy stresses that customers’ creditworthiness should be viewed from a long-term perspective. Sparebanken Møre must conduct itself in accordance with high ethical standards and shall not be associated with activities, customers or industries of dubious repute. Sparebanken Møre is open to all types of customers within defined market areas and will not discriminate against customers based
on age, gender, nationality, religion or marital status.
A number of enterprises the bank has made loans to have operations that will have an impact on the environment. The bank’s provision of credit gives it an indirect opportunity to impact the external environment. Sparebanken Møre must not provide financing to customers:
- with operations within tobacco, pornography, controversial weapons or to companies with significant activities in coal and oil sands
- that we have reason to believe do not comply with the bank’s Code of Conduct or that in some other manner operate activities that conflict with general perceptions of good ethical conduct
- that have acted dishonestly in their dealings with the bank or that are known to have acted dishonestly in their dealings with other stakeholders or where it is known that the company or owners have been involved in criminal activities
- that operate in violation of public acts, regulations and mandatory environmental requirements
Measures implemented in 2020
Sparebanken Møre’s loan portfolio is made up of approximately 70 per cent retail customers and 30 per cent corporate customers. The corporate portfolio is broadly composed within the trade/service industry, industry, marine, real estate and offshore/supply industry sectors. Although the corporate portfolio only accounts for 30 per cent of the bank’s total loan portfolio, it is in relation to corporate customers that the bank can have the greatest influence with respect to sustainability/ESG.
In 2020, we made sustainability a priority on our internal agenda in the bank with respect to granting credit to corporate customers. The year was spent improving expertise and raising awareness, and the topics has, among other things, become one of the bank’s industry strategies. At the very end of the year, the bank also started a project aimed at establishing guidelines and requirements for ESG assessments in connection with granting credit to businesses. A special assessment tool has been developed for this work, which should help to map the bank’s customers in relation to ESG. Analyses and assessments must be documented and included in the basis for making decisions when granting credit or conducting annual reviews of credit commitments. All of the dimensions (ESG) will be included, although the main focus will still be on our customers’ impacts (positive and negative) on the environment and climate. This work will continue in 2021.
We maintain a good dialogue with our customers regarding financing such that they do not through their activities damage the environment, breach human rights or labour rights, and to ensure that they work for anti-corruption and transparency. The goal is to avoid harm to people, society and the environment. This will be further strengthened in 2021 through, among other things, implementing ESG assessments in credit ratings that will address the requirements of PRB, OECD and other frameworks.
We established our first green framework in 2020. The green framework encompasses both Sparebanken Møre and its wholly owned subsidiary Møre Boligkreditt AS. Funds in the green framework will be used to finance and/or refinance loans linked to energy efficient homes and commercial buildings, renewable energy, as well as loans to environmentally efficient and circular economy adapted products and services, and processes in the aquaculture industry. Swedbank helped to draw up the framework, Multiconsult submitted its technical report and the framework has been independently assessed by Sustainalytics.
The Covid-19 situation and shutdown of Norway in March left many companies and retail customers in an uncertain situation. Several companies had to close their doors or experienced decreases in customer numbers, resulting in a drop in earnings and also furloughs for some. Many abruptly faced uncertain future prospects. As an immediate measure, the bank introduced web-based applications for interest-only periods for loans to customers facing such a situation. This provided rapid relief for those who needed it. Interest rate cuts were also moved up in order to make life easier for customers. The customers were followed up closely and via various measures, one-to-one interviews, newsletters, articles and webinars, we focused on providing good support in a difficult situation.
In 2020, the bank established a sustainability committee, in which the credit environment is represented by the head of credit, the head of corporate banking staff and the head of retail banking staff.
Planned measures
We will continue to focus on training and improving the skills of employees who work with credit in the bank.
Corporate Banking Division
The work on sustainability within the corporate market will be intensified in 2021. The aforementioned project in which guidelines and requirements for ESG assessment are being established will be completed and implemented during the first half of the year. The objective is to ensure that all loan customers with commitments in excess of a threshold value will be subject to an ESG assessment via a set of questions and evaluations that will be conducted in relation to the individual customer. The assessment form will have a general and an industry-specific part. Unit leaders and advisers are taking part in the preparation of the assessment form. The ESG assessment will result in a customer score and if this indicates a high risk the customer will be required to establish measures/take actions that mitigate its ESG risk. The bank will follow up these measures with the customer. The ESG assessment will be updated at least annually, with more frequent follow-up in high-risk cases. We may find that the bank’s customers’ levels of skills in relation to these issues vary and a good close dialogue with the customers is, therefore, important.
Further comprehensive training will be provided in connection with the implementation of ESG assessments of the bank’s cooperate customers (loans). The focus will be on learning more about assessing climate-related risks.
The bank’s industry strategies will also be sharpened in relation to ESG and climate risk assessments in 2021.
Retail Banking Division (RM)
For the Retail Banking Division, sustainable finance is a specific topic in the authorisation scheme. All advisers in the Retail Banking Division are authorised or in the process of gaining authorisation. This means all of them have to complete a sustainability module in their knowledge tests and further knowledge updates. More training modules will also be offered within sustainability-related topics via the Møre Academy in 2021. Several of these will be compulsory modules.
In 2021, the Retail Banking Division will focus on improving its expertise in sustainability for the benefit of customers, society and the bank through the provision of good customer advice and engagement in sustainability. We will work to ensure that sustainability forms a natural part of the dialogue with the customer. We have to provide customers with good advice that helps them make good, sustainable choices, whether it concerns upgrading homes or investing their funds. The Retail Banking Division must also offer green investment options as well as develop and launch green loans.
The Retail Banking Division should encourage local trade, use dividend funds for local communities in a smart and sustainable manner, provide training and make customers, school pupils and the rest of society more responsible. Ensuring that customers have a good overview and control of their spending is also an important task for the bank.
The bank currently offers customers several products and services with a social profile.
- Student loan (consumer loan for study purposes at a lower price)
- Deposit account
- First home mortgage
- Møre young mortgage (cheaper mortgages for customers aged 18-33)
- Mastercard young (credit card for customers aged 18-33 with a lower credit limit and stricter repayment terms)
At year end 2020, the total figures for this portfolio were just under NOK 11 billion, or around 24 per cent of the RM portfolio.
Customers in the Retail Banking Division also have a personal adviser who follows them up every year with general advice. Our advisers in the Retail Banking Division are authorised for the entire range of services (investments and savings, non-life insurance, personal insurance and credit).
Measurement and evaluation
Around 80 per cent of Sparebanken Møre’s customers have been assigned an account manager who follows them up via a chat at least once a year. In addition, commitments in the Corporate Banking Division exposed to more risk are followed up extra closely.
The follow-up was close throughout 2020 due to Covid-19 in order to provide assistance in the challenging and unresolved situation that still exists. This has resulted in a deeper understanding of the situations of both our retail and corporate customers.
When we start conducting ESG assessments of corporate customers in 2021, we will be able to tell even more about their status and identify which measures should be implemented in both the short and long term.
Responsible unit(s)
Risk Management and Compliance Unit and the Credit Department.
Key governing documents
The most important governing documents for responsible lending are the credit strategy and credit manual. The credit risk strategy is revised annually. The target frameworks in the strategy and status of credit risk must will be monitored, including through the bank’s monthly risk reports. The credit manual is subject to constant updating/revision.
GRI indicators:
103-1, 103-2, 103-3, FS7, FS8