Declaration of the Norddeutsche Landesbank Girozentrale on the German Corporate Governance Code
The German Corporate Governance Code incorporates key guidelines relating to the management and monitoring of listed German companies. It contains nationally and internationally recognised standards for good and trust-based corporate governance, in particular in connection with the management and organisation of a company, for control mechanisms and also the cooperation between the Managing Board and the Supervisory Board. The aim of the Code is to promote the trust of investors, customers, employees and the public in the management and monitoring of a company.
Due to its legal applicability for listed companies the code is not legally binding on NORD/LB as a bank with the legal form of a registered public institute. However, it is important for NORD/LB to position itself in the market as a reliable and trustworthy partner. For us, transparent corporate governance is a key aspect of this objective. For this reason the Bank decided to follow the recommendations and suggestions of the Code to the extent that this is possible and appropriate in the scope of the given legal form.
In particular NORD/LB observes those guidelines that relate to the structure of the executive bodies, their roles and interaction and to the transparency of the company. In these areas NORD/LB largely complies with the recommendations and suggestions of the Code. In the interests of transparency, all information published by the Bank - including the Group's annual reports, half-yearly and quarterly financial reports - is also available via its website.
The Managing Board is responsible for managing the bank with the aim of creating value in a sustainable manner and in particular being mindful of the interests of its guarantors, employees and its public duties as a regional bank and clearing bank. The Managing Board manages the business in compliance with statutory provisions, the bank's constitution and the general and specific guidelines as resolved by the Guarantors' Meeting and the Supervisory Board and is working towards the observance of these by the affiliated companies in the group. In particular the Managing Board ensures that the Risk Management and Risk Controlling systems that are in place are in line with the bank's business structure.
The Managing Board consists of the Chairman, the Deputy Chairmen and other ordinary members. It is composed based on principles of diversity. The Chairman of the Managing Board coordinates the allocation of duties in agreement with the other members of the Managing Board. Each member of the Managing Board is assigned at least one discrete business segment. The Managing Board is represented by at least one member at each of the bank's registered offices.
The Managing Board sets the strategic direction of the bank in consultation with the Supervisory Board and discusses the status of the implementation of the strategy with it at regular intervals. In line with the notification and reporting obligations specifically set down, it regularly reports to the Supervisory Board on important matters affecting the bank, in particular the intended business policy and other fundamental issues related to corporate planning; the bank's profitability and in particular its equity; the course of business; the state of the bank; transactions that may have a significant impact on the bank's profitability and liquidity and its position in terms of assets, finances and revenues; and the bank's risk position and its remuneration systems.
Further, the Managing Board immediately reports to the Supervisory Board, in particular in terms of risk, if circumstances arise that are of substantial importance to the bank's position, and takes fundamental decisions with it accordingly.
The remuneration of the members of the Managing Board is determined and regularly reviewed by supervisory board on a proposal from the remuneration committee and comprises fixed and variable (performance-related) components. The intention is that executive pay is affected by both positive and negative business performance.
The role of the Supervisory Board is to advise the Managing Board regularly and to monitor its management of the business. It passes resolutions on the appointment and dismissal of members of the Managing Board, the general principles underlying the bank's business, the annual planning to be provided by the Managing Board, the rules of procedure for the Managing Board, the appointment of the auditor, the approval of the annual report and entering into investments in companies. The Supervisory Board may resolve that other transactions and measures that are of particular significance for the bank require its approval. It provides rules of procedure for itself and its committees.
The Supervisory Board is made up of 18 members of whom twelve are representatives of the guarantors and a further six are selected from the bank's employees in accordance with the provisions of the Act on Employee Representation of Lower Saxony. Tenure is for a period of four years at a time. The Chairman of the Supervisory Board is the Minister of Finance of the federal state of Lower Saxony. The First Deputy Chairman is the Chairman of the Association of Savings Banks and Girobanks in Lower Saxony and the Second Deputy Chairman is the Finance Minister of the federal state of Saxony-Anhalt. If the Chairman is unable to act, he is represented by one of his deputies. Former members of the Managing Board are not represented in the bank's Supervisory Board: its constitution does not permit former members of the Managing Board to sit on the Supervisory Board.
To support it in respect of the bank's business structure, the Supervisory Board has a presiding and nomination committee, an audit committee, a remuneration committee and a risk committee. Other committees may be formed as required. The members of the committees are members of the supervisory board. On termination of membership of the supervisory board, membership of the committees also terminates. Apart from the legal tasks of the nomination committee according to the German Banking Act, the presiding and nomination committee is responsible for preparing the meetings and resolutions of the supervisory board and completing urgent business.
The audit committee performs its tasks according to the German Banking Act, monitors the bank's annual reports and consolidated financial statements and reports to the Supervisory Board - based on the auditors' reports - on the outcome of the audit of the annual report. It is responsible for monitoring the accounting process and the effectiveness of the internal control, audit and risk management systems. Finally, the audit committee checks and monitors the independence of the auditor, in particular in respect of the additional services the auditor provides to the Bank. At least one member of the audit committee must be independent and have expertise in the fields of accounting or auditing. The Chairman of the Supervisory Board cannot also be the Chairman of the audit committee.
The remuneration committee performs its tasks according to the German Banking Act and monitors – among others – the appropriateness of the remuneration systems of the Managing Board and the employees.
The role of the risk committee is to safeguard the rights and obligations of the supervisory board in the advising and monitoring of the bank's management in regular meetings. In addition it performs the legal tasks of the risk committee according to the German Banking Act, particularly it advises the Supervisory Board on the total risk-bearing capacity and risk strategy of the bank, today and in future.
The guarantors, and thus owners, of the bank are the state of Lower Saxony, the state of Saxony-Anhalt, the Association of Savings Banks and Girobanks of Lower Saxony, the Holding Association of the Savings Banks of Saxony-Anhalt and the Special Purpose Holding Association of the Savings Banks of Mecklenburg-Western Pomerania. Each guarantor appoints up to two representatives to the Guarantors' Meeting. Voting rights are determined in accordance with the proportion of the bank's share capital held. The representatives of each guarantor can only vote unanimously.
Members of the bank's Managing Board participate in the meetings in an advisory capacity on the invitation of the Chairman of the Guarantors' Meeting. The Guarantors' Meeting takes decisions about matters of fundamental importance, in particular about amendments to the constitution, all matters affecting the share capital and other equity, the basic principles of business policy, the acquisition by the bank of other public legal entities, taking stakes in such institutes or merging the Bank with other public banks, the flotation of the bank or conversion to a different legal form.
The Guarantors' Meeting further passes resolutions on the utilisation of the accumulated profits, ratification of the acts of the Managing Board and Supervisory Board, the remuneration of the members of the Managing Board, committees and advisory boards and all other matters assigned to it in the constitution.
The members of the bank's executive bodies work together closely in its best interests and have a duty to promote the Bank to the best of their abilities. They are under a duty of confidentiality. The members of the Managing Board are required to manage the business with the care of a reasonable and conscientious manager. If the members of the Managing Board breach their duties, they are obliged to reimburse the Bank for any loss incurred in line with the principles of the business-judgement rule.
This applies accordingly to the duty of care and responsibility exercised of the members of the Supervisory Board. The members of the Supervisory Board are not bound by directions and instructions. They are obliged to disclose any conflicts of interest to the Supervisory Board.
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