Application of the Dutch Banking Code by Achmea Bank N.V.

Transcription

1 Application of the Dutch Banking Code by Achmea Bank N.V. Review of the way in which Achmea Bank N.V. complies with the Dutch Banking Code over the year 2015 (May 2016) Application of the Dutch Banking Code by Achmea Bank N.V. over the year

2 Contents Introduction Compliance Sound and ethical operation Supervisory board Executive board Risk Policy Remuneration Policy Application of the Dutch Banking Code by Achmea Bank N.V. over the year

3 Introduction In September 2009, the Dutch Banking Association published the Banking Code. This Banking Code laid out the principles for Dutch banks in terms of corporate governance, risk management, audit and remuneration Following the first Banking Code in 2010, the Committee Wijffels published a report in 2013 on the structure of Dutch banks ( Towards a serviceable and stable banking system ). This report paid great attention to the stability of the industry and the importance of competition and diversity in Dutch banking. In its report the Committee called on the banks to take additional steps towards regaining trust from customers and society as a whole by setting out the role they want to play in society in a social charter. In response to this request, the Dutch Banking Association introduced a document called Future-oriented Banking. This document contains a Social Charter, the rules of conduct associated with the bankers oath and an update of the Banking Code. The update of the Banking Code takes into account the recommendations of the Banking Code Monitoring Commission, the report of the Committee Wijffels and the vision of the NVB as presented in A new balance: Towards a service-oriented, stable and competitive banking sector. The new Banking Code came into effect on January 1, 2015 and applies to all banks that are established in the Netherlands and licensed by the Dutch Central Bank pursuant to Section 2:11 of the Financial Supervision Act. The principles of the old Banking Code which have now been incorporated into legislation and regulations are not repeated in the new Banking Code. Achmea Bank will evidently continue to obey these national and international rules. The Banking Code does not replace applicable legislation or regulatory requirements that will prevail above the Banking Code in case of a conflict. Achmea Bank strongly supports the principles of the Banking Code to regain trust, ensure stability and protect the interests of our stakeholders. Regaining trust requires a sustainable approach and continuous attention. Following the significant steps taken to comply with the principles of the Banking Code from 2010 onwards, Achmea Bank has continued and improved its efforts over the financial year Achmea Bank recognizes that complying with these principles will be an on-going process In this publication, Achmea Bank N.V. reports how the principles of the Banking Code are applied and where applicable explain why (part of) a principle is not complied with. In addition, this publication will elaborate on the progress made in applying the principles and give certain specific examples how these principles are applied. *This publication is a translations of the Dutch publication Toepassing Code Banken door Achmea Bank N.V. of May The original Dutch text shall prevail in case of any variance between the Dutch text and the English translation. Application of the Dutch Banking Code by Achmea Bank N.V. over the year

4 1. Compliance Text Banking Code 2015 Each year each bank reports the manner in which it applied the Banking Code in the previous year on its website. In this way, the bank reports to what extent it has made progress in applying the principles. The bank also gives specific examples of how compliance has occurred. Implementation By Achmea Bank Achmea Bank applies this principle. Achmea Bank reports annually on the manner in which it applied the Banking Code in the previous year on its website ( If applicable, the bank gives reasons why a principle may not have been (completely) applied ("comply or explain"). Application of the Dutch Banking Code by Achmea Bank N.V. over the year

5 2. Sound and ethical operation Text Banking Code 2015 To acquire and maintain its position as a stable and reliable partner, a bank formulates a mission, a strategy and objectives. These are aimed at the long term and expressed in, among others, the bank's risk policy and the policy with regard to sustainability and corporate social responsibility. A bank chooses its position so that business interests and the social role it fills are an extension of each other. This is also expressed in the bank's governance structure and is leading in the implementation of the bank's policy based on its mission, strategy and objectives. Implementation By Achmea Bank Achmea Bank applies this principle. Achmea Bank main objective is to provide savings and mortgage products to retail clients as part of the propositions of Achmea. The products and services which we develop and market are simple and customer friendly. We want to provide long-term security for our customers. This means that we: Manage savings of our clients so they can have financial security Provide house loans to customers so they can buy a house and enjoy living Our customers trust us with their savings. That means that we must manage the savings of our clients in a very responsible manner. It also means that Achmea Bank is committed to safeguarding the continuity and reliability of its services. We have a healthy balance sheet, a low risk mortgage portfolio and a sound risk management structure. Achmea Bank s mission, strategy and objectives can be found on our website (achmeabank.com). Our business model is directed towards the longterm interests of our customers and stakeholders. We aspire to gain the full trust of our customers, distribution partners, employees, regulators, investors and shareholders. For that reason, we always keep the stakeholders interests in mind when making decisions. Achmea Bank offers transparency in its activities, services, products and financial soundness. We treat our customers and stakeholders with utmost respect and are committed to satisfying our customer needs. The policy on sustainability and corporate social responsibility (CSR) is enshrined in the Social Charter of Achmea Bank and the CSR Policy of Achmea. In the annual report of Achmea we reflect on our responsibilities and report on our results regarding sustainability. The annual report can be downloaded from achmea.com. Achmea Bank s risk appetite is directly linked to our mission, strategy and objectives and is periodically revised and updated. Together the Executive board and Supervisory Board with due regard to their individual tasks and authorities are responsible for setting up a proper governance structure and for the compliance with these governance principles. The members of these boards will set an example to all of the bank s employees and exhibit this in their day-to-day activities. The supervisory board will evaluate the way the members of the executive board are setting an example each year. Achmea Bank applies this principle. Achmea Bank has a sound governance structure in line with laws and regulations and a comprehensive internal control framework. The Executive Board and Supervisory Board of Achmea Bank ensure proper compliance with the internal governance. Achmea Bank also has an active dialogue with regulatory bodies. Balanced decision making is embodied in Achmea s stakeholder model in which the stakeholders are clients, shareholders, distribution partners and employees. The Executive Board ensures that the interests of all stakeholders are considered while making decisions. Hereby taking into account the continuity of the bank, the social environment in which the bank operates as well as legislation and regulations that apply to the bank. Application of the Dutch Banking Code by Achmea Bank N.V. over the year

6 The governance structure of Achmea Bank is enshrined in Articles of Association, Charters and the Bank Governance Manual. These documents are available to all employees and can be found on the intranet of the bank. Together the Executive board and Supervisory Board with due regard to their individual tasks and authorities are responsible for the development, promotion and maintenance of standards in the bank with regard to integrity, morality and leadership. Additionally, they are also responsible for good "checks & balances" and ensuring a robust IT infrastructure, which is essential for the functioning of the bank. Good checks and balances implies that the compliance function is ensured within the Executive board and Supervisory Board as well. Achmea Bank applies this principle. Care for our customers interests is embedded in Achmea Bank s working culture. Our employees have a high level of integrity, are knowledgeable and professional. The members of the Executive Board and Supervisory Board set an example to all of the bank s employees in their day-to-day activities. Our standards of integrity, morality and leadership are laid down in the Achmea Code of Conduct. In addition, all Achmea Bank employees and all members of the Executive Board Banking as well as the Supervisory Board have taken the Banker s Oath. Achmea Bank has an internal control framework with 'checks and balances' that ensure a robust IT infrastructure. Quarterly Risk Assessment are held and the results are reported to the Executive board and Supervisory Board. In 2015 Achmea Bank performed an integrity risk analysis. The objective of this risk self-assessment was: Understanding the integrity risks and current internal control system at Achmea Bank Determination of risk mitigating measures or accept risks Determination of possible actions for improvement and responsible action holders The self-assessment showed that the inherent risk profile of Achmea Bank can be classified as "Low". The compliance function operates independently and is hierarchically positioned under the Finance & Risk Director. The Compliance Officer also has a functional line to the Group Compliance Officer of Achmea. The Supervisory Board ensures that the Compliance Officer can report alleged irregularities of a general, operational or financial nature. Alleged irregularities concerning the functioning of members of the Executive Board can be reported to the Chairman of the Supervisory Board. The Executive board promotes responsible behaviour and a healthy culture, both at the top of the bank and throughout the entire organisation. It is aware of the interests of the bank's customers and other stakeholders. The Supervisory Board shall oversee this. Achmea Bank applies this principle. Achmea s cooperative roots ensure that the principle of putting Customer Interests First is central to everything we do. This is an integral part of the identity, vision and structure, in which we balance the interests of shareholders and customers. Care for our customers interests is embedded in Achmea Bank s working culture. The Executive Board and Supervisory Board lead by example. At Achmea Bank's we pay a lot of attention to a culture where the customer interest is a driver for change. Examples on how Achmea Bank puts this into practice are: Customer objectives were embodied in the personal goals of employees A Customer Council was established for Woonfonds. The Council advises us on Application of the Dutch Banking Code by Achmea Bank N.V. over the year

7 improvement our products and services A dedicated customer manager was appointed A Customer Complaints Committee was set up In 2015 customer centricity was set as one of the the main objective in the Business Plan. As part of our care for customers we have started to proactively contact customers who can improve their product. For example, in 2015 we contacted customers who qualify for interest rates and customers with an investment mortgage who may not meet their investment objective. Also in 2015 a Preventive Measures department was established. The objective of this department is to make customers aware of potential risks at an early stage. For example, if the mortgage loan is higher than the house value. This department also helps customers that face difficulty meeting their payments e.g. as a result of unemployment. We offer these customers a budget coach or job coach free of charge. Product reviews are systematically carried out on all products for compliance with internal and external criteria. In 2015 Achmea Bank has completed all Product Reviews. Customer surveys for the various labels under which Achmea Bank products are marketed saw a steadily increase throughout As a result of these initiatives Achmea Bank showed significant improvement in the monitoring dashboards for Savings an de Mortgage products of the AFM (Authority for the Financial Markets). Improvements can still be made in arrears handling and arrears policies. This will be shaped further in 2016 after the implementation of a new credit management system. A bank s culture must also express the assumptions in the Social Charter of the Dutch Banking Association. These must be embedded in the bank s organisation and the bank will include them in its contact with its stakeholders. It will provide an insight into the way in which the bank deals with the assumptions in the Social Charter. Achmea Bank applies this principle. The ambitions of Achmea Bank are closely linked to the Achmea ambition in the field of Corporate Social Responsibility (CSR). This means that we follow Achmea s Sustainability Policy, Remuneration Policy, Procurement and Investment. More information on CSR policies of Achmea and the results regarding sustainability can be found at achmea.com. Achmea Bank has drawn up a new Social Charter in It describes how Achmea Bank fulfills its social role toward customers, employees and society as a whole. The Social Charter of Achmea Bank is in line with the Social Charter of the Dutch Banking Association and is complementary to the CSR policy of Achmea. The implementation and safeguarding of the principles of the Social Charter will be shaped further in All employees shall comply with the formal regulations and self-regulations that apply to them. The Executive board and the Supervisory Board are responsible for this with due regard for their tasks and authorities. The Executive board is responsible for the employees being aware of and continuing to observe all rules, values and norms applicable to the bank and continuing to focus on them. The Supervisory Board shall oversee this. Achmea Bank did not fully meet this requirement. In 2015 and the first quarter of 2016 all employees have taken the banker's oath. Achmea Bank s Executive Board decided to organise small, intensive and meaningful gatherings for all employees in which staff swore the oath or made the solemn promise. These intensive sessions ensured a good appreciation of the occasion on the part of staff. The sessions were conducted by the members of Achmea Bank's Executive Board, who have also made the employees swear the oath or make the promise. These meetings were organised Application of the Dutch Banking Code by Achmea Bank N.V. over the year

8 on a monthly basis. As of April 1, 2015 all new employees are required to swear the banking oath (or make the solemn promise) within three months of enrollment. In 2015 circumstances prevented a very small number of new staff (none of which were decision makers) from taking the banking oath within three months. This has not compromised the integrity and control of operations at all. The rules of conduct are laid down in the Achmea Code of Conduct. The contract of employment for all new employees contains a reference to the Code of Conduct. Application of the Dutch Banking Code by Achmea Bank N.V. over the year

9 3. Supervisory board Text Banking Code 2015 The Supervisory Board is composed in such a way that it can fulfil its task as it should. It shall establish a risk committee and an audit committee. The members of the Supervisory Board are prepared and able to free up enough time and demonstrate their dedication and involvement. At the same time, they are critical and independent. Implementation By Achmea Bank Achmea Bank applies this principle. Possession of this necessary knowledge and experience is a requirement of the Supervisory Board profile. The Supervisory Board has ascertained that the members complement each other well in terms of background, expertise, experience and responsibilities. There were a number of changes in the Achmea Bank Supervisory Board in As of May 1, 2015 Mrs. P. Hofsté was appointed as Chairman of the Supervisory Board. This position became vacant because the previous chairman (Mr. E. van de Merwe) reached the end of the statutory term. As of November 18, Mr. H. te Beest has joined the Supervisory Board and Mrs. B. Tetteroo resigned due to her appointment to the Executive Board of Achmea Group. The functioning of the Supervisory Board is regulated by the company s Articles of Association and the Supervisory Board by-laws. Two members of the Supervisory Board form the Audit & Risk Committee (A&RC) of Achmea Bank. Also attending the meetings are the internal and external auditors. The A&RC s findings are discussed in the plenary Supervisory Board meeting, as required by the Supervisory Board by-laws of Achmea Bank. Each member of the Supervisory Board shall be aware of the social role of a bank and of the interests of the different stakeholders. For the members of the Supervisory Board's risk committee and audit committee, there are specific requirements with regard to competence and experience. Members of the risk committee must have a thorough knowledge of the financial-technical aspects of the risk management or have the necessary experience that allows for a sound assessment of risks. Members of the audit committee must have a thorough knowledge of financial reporting, internal control and audit or have the necessary experience that allows for a sound supervision of these topics. The chairman of the Supervisory Board shall ensure the existence of a programme of continuing training for all members of the Supervisory Board The objective of this programme shall be to maintain the expertise of the supervisory directors and, where necessary, to broaden it. In any case, the education shall be related to relevant developments within the bank and the financial sector, to corporate governance in general and those in the financial sector in particular, to the duty of care toward and the interest of the customer, integrity, IT infrastructure, risk management, financial reporting and audit. The members of the Supervisory Board are sufficiently available to perform their tasks and their presence is recorded in the attendance lists of the various committees and sub-committees. If a member is unable to attend, his or her input is channeled via the chairman. There are also interim conference calls, additional meetings and communications. Achmea Bank applies this principle. All members of the Supervisory Board have extensive experience in the financial sector. They have a thorough knowledge of the functions of a bank in society and are able to carefully consider the interests of all the parties involved. Opinions are deliberated, having due regard to a bank s function in society. Two members of the Supervisory Board form the Audit & Risk Committee (A&RC). These members both have extensive experience in Risk, Finance, Auditing and Compliance. Possession of this necessary knowledge and experience is a requirement of the profile of a member for this committee. Achmea Bank applies this principle. Taking into account the limited size of the bank and the objective of sharing knowledge equally, the Supervisory Board and Executive Board have decided to undertake a joint programme of continuing training. The training programme is adjusted periodically to current developments. In recent years, all subjects as mentioned in the Banking Code were addressed. Two training sessions were held in 2015, covering the topics: High Priority Bank Risk Management Application of the Dutch Banking Code by Achmea Bank N.V. over the year

10 Each member of the Supervisory Board shall participate in the programme and comply with the requirements of continuing training. The assessment of the effectiveness of the programme of continuing training is part of the annual evaluation of the Supervisory Board's functioning. In the annual self-evaluation, the members of the Supervisory Board are asked to evaluate the programme and whether they have any individual educational requirements. In 2015 the Supervisory Board s has reviewed the programme as satisfactory, however also determined that there is room for improvement. For 2016 a new programme has been drafted tailored to the needs of the Supervisory Board and the Executive Board. For 2016 the following topics are planned: In addition to the annual evaluation of the Supervisory Board 's functioning, this functioning shall be evaluated every three year under independent supervision. The involvement of each member of the Supervisory Board, the culture within the Supervisory Board and the relationship between the Executive board and the Supervisory Board shall be part of this evaluation. Each member of the Supervisory Board shall receive an appropriate compensation in relation to the time required for the activities. This compensation does not depend on the results of the bank. Duty of care for customers and integrity monitoring Developments in legislation in the banking sector IT developments in the banking sector Corporate Governance, Audit and financial reporting Achmea Bank did not fully meet this requirement. Both the Executive Board and the Supervisory Board take a critical look at the way in which they are functioning in annual self-evaluations. According to the Code, the Supervisory Board should have organised an evaluation conducted by an external party in However, in view of changes in the composition of the Supervisory Board, the chairman decided not to do so. However, at the end of 2015, an adequate, internal self-evaluation was performed which has contributed to the functioning of the Supervisory Board. An external evaluation will be held in This course of action is in accordance with the aim and spirit of the Code. Members of the Supervisory Board are appropriately remunerated by Achmea Bank, as shown by the financial statements. Their remuneration does not depend on the bank s results and is set by the General Meeting of Shareholders. Application of the Dutch Banking Code by Achmea Bank N.V. over the year

11 4. Executive board Text Banking Code 2015 The Executive board shall be composed in such a way that it can fulfil its task as it should. Each member of the Executive board shall be aware of the social role of a bank and of the interests of the different stakeholders. Implementation By Achmea Bank Achmea Bank applies this principle. The Executive Board of Achmea Bank has three directors who together constitute the official Executive Board. The functioning of the Executive Board is regulated by the Company Articles of Association and the Executive Board By-laws. All members of the Executive Board have extensive experience in the financial sector. They have a thorough knowledge of the functions of a bank in society and are able to carefully consider the interests of all the parties involved. Opinions are deliberated, having due regard to a bank s function in society. The Executive Board has ascertained that the members complement each other well in terms of background, expertise, experience and responsibilities. One of the members of the Executive board shall have the task of preparing the decision-making process within the Executive board with regard to risk management. The involved member of the Executive board shall be involved in a timely fashion in the preparation of decisions that have a material meaning for the bank for the risk profile, particularly where these decisions may result in derogation from the risk preparedness approved of by the Supervisory Board. The member may combine his/her office with other areas of special attention, on the condition that he/she does not carry any individual commercial responsibility for and functions independently from commercial areas of responsibility. In practicing the risk-management function, the effect that systemic risks may have on the risk profile of the bank shall also be focused on. Achmea Bank applies this principle. Within the Executive board the Chief Financial Officer is primarily responsible for risk management. The Chief Financial Officer s portfolio covers the following areas: Control, Financial Risk, Operational Risk and Compliance. The agreed targets for Chief Financial Officer show that he does not bear any individual commercial responsibility and operates independently of commercial task areas. The Finance & Risk Committee (F&RC) is the body responsible for preparing, implementing, monitoring and adjusting the risk policies of Achmea Bank concerning financial risks, compliance risks and operational risks. The Finance & Risk Committee oversees the Bank s overall risk policy. The Integral Risk Monitor is discussed on a quarterly basis in the Finance & Risk Committee. All members of the Executive Board sit on the Finance & Risk Committee, with the Chief Financial Officer as chairman. The Executive Board takes all decisions that are of material significance for the risk profile, the capital allocation or the liquidity impact. The chairman of the Executive board shall supervise the presence of a programme of continuing training for all members of the Executive board. The objective of this programme shall be to maintain the expertise of the directors and, where necessary, to broaden it. In any case, the education is shall be related to relevant developments within the bank and the financial sector, with corporate governance in general and that of the financial sector in particular, with the duty of care toward and the interest of the customer, integrity, risk management, financial reporting and audit. Each member of the Executive board shall participate in the programme and comply with the requirements of continuing training. Achmea Bank applies this principle. Taking into account the limited size of the bank and the objective of sharing knowledge equally, the Supervisory Board and Executive Board have decided to undertake a joint programme of continuing training. The training programme is adjusted periodically to current developments. In recent years, all subjects as mentioned in the Banking Code were addressed. Two training sessions were held in 2015, covering the topics: High Priority Bank Risk Management Assessment of the programme was part of the self-evaluation performed by the Executive Board. In 2015 the Executive Board has reviewed the programme as satisfactory, however also determined that there is room for improvement. Application of the Dutch Banking Code by Achmea Bank N.V. over the year

12 For 2016 a new programme has been drafted tailored to the needs of the Supervisory Board and Executive Board. For 2016 the following topics are planned: Duty of care for customers and integrity monitoring Developments in legislation in the banking sector IT developments in the banking sector Corporate Governance, Audit and financial reporting Application of the Dutch Banking Code by Achmea Bank N.V. over the year

13 5. Risk Policy Text Banking Code 2015 The risk policy of a bank shall be characterized by an integral approach, shall be transparent and shall be aimed at both the short term and the long term. The risk policy shall also take into account reputational risks and non-financial risks. The Executive board of a bank shall be responsible for the risk policy of the bank and guarantee a sufficient risk management. Implementation By Achmea Bank Achmea Bank applies this principle. Although Achmea Bank is part of a larger group, its policy is to secure its continuity independently. Achmea Bank spreads its financial risks over different counterparties and its transactions over time. The Achmea Bank Executive Board receives a management report each month covering important financial and non-financial aspects of Achmea Bank. Achmea Bank applies this principle. In accordance with the Executive Board By-laws, the Executive Board ensures that the management of the risks related to the bank s business activities is subjected to systematic audit. Risk management is organised so that the Executive Board is informed immediately of all material risks in order that they can be controlled. The Bank s Governance Manual specifies how the various departments are to monitor the bank s risk management. The Balance Sheet Management & Financial Risk department monitors the financial risks. The Operational Risk Management department monitors the operational risks. Compliance risks are monitored by the Compliance Officer. The Finance & Risk Committee (F&RC) is the body responsible for preparing, implementing, monitoring and adjusting the risk policies of Achmea Bank concerning financial risks, compliance risks and operational risks. The Finance & Risk Committee gets input from various subcommittees, such as an Asset & Liability Committee, a Credit Committee and a Product Committee. These committees are granted delegated powers from the F&RC to make decisions, on the basis of policy frameworks. The duties and responsibilities of the committees are defined in the various by-laws of the concerning committees. At the suggestion of the Executive board, the risk preparedness shall be submitted at least once a year to the Supervisory Board for approval. Any interim material changes of the risk preparedness shall also be submitted to the Supervisory Board for approval. The Supervisory Board shall supervise the risk policy administered by the Executive board. To that end, the Supervisory Board shall discuss the risk profile of the bank and assess at a strategic level whether allocation of capital and liquid assets tied up generally agree with the approved risk preparedness and whether the business activities in general fit within the risk preparedness of the bank. In practicing this supervisory role, the Supervisory Board shall be advised by the risk committee of the Supervisory Board Achmea Bank did not fully meet this requirement. The bank s risk appetite is discussed annually in the Audit & Risk Committee (A&RC) and ratified by the Supervisory Board. In 2015 he Bank's risk appetite was periodically discussed with the Supervisory Board. In February 2016, the overall risk appetite was formally put before and approved by the Supervisory Board, after receipt of the SREP report from DNB. The previous revision of the risk appetite by the Supervisory Board took place late Therefore the risk appetite was not formally revised in 2015, but early Achmea Bank applies this principle. The Integral Risk Monitor is discussed on a quarterly basis in the Audit & Risk Committee of the Supervisory Board. Both financial and nonfinancial risks are discussed against the background of the bank s approved risk appetite. The A&RC meets at least four times per year. The results of the A&RC s deliberations are discussed by the Supervisory Board in plenary session. Application of the Dutch Banking Code by Achmea Bank N.V. over the year

14 6. Audit Text Banking Code 2015 The Executive board of a bank shall ensure systemic monitoring of the management of the risks that are connected to the business activities of the bank. Implementation By Achmea Bank Achmea Bank applies this principle. In accordance with the Executive Board By-laws, the Executive Board ensures that the management of the risks related to the bank s business activities is subjected to systematic audit. Risk management is organised so that the Executive Board is informed immediately of all material risks in order that they can be controlled. Achmea Bank s risk management relies on three lines of defence: 1. The first line consists of the Executive Board, the managers of the departments and the process and system owners. These managers bear the primary operational responsibility for risk management in the underlying processes and systems; 2. The second line consists of specific risk management and compliance departments which assist in the identification, assessment, reporting and monitoring of risks. These departments do not have any accountability for operations or results. 3. The third line consists of Internal Audit, which audits the entire risk management framework, including the functioning of second-line risk management. To that end, there shall be an independently positioned internal audit function within a bank. The head of that audit function shall report to the chairman of the Executive board. He shall also have a direct reporting line to the chairman of the audit committee of the supervisory board The Internal Audit Team of Achmea Bank reports to the Executive Board and the Audit & Risk Committee. Every six months an Audit Memorandum is published. These reports are discussed at length. Achmea Bank applies this principle. The Achmea Bank Internal Audit Team performs the internal audit function and is part of the Achmea Internal Audit Department. The Internal Audit Management Team member with responsibility for Achmea Bank reports to Internal Audit s General Manager. The Achmea Bank Internal Audit charter is intended to provide a more specific definition of the internal audit function within Achmea Bank and to make its position and authority transparent. The audit charter takes account of the specific circumstances which Achmea Bank (as part of Achmea Group) has to contend with. The independence of Achmea Bank Internal Audit is guaranteed because the Internal Audit Management Team member with responsibility for Achmea Bank reports to the chairman of Achmea Bank s Executive Board and has a direct open line of communication to the chairman of the Audit & Risk Committee of Achmea Bank. Achmea Bank applies this principle. The Internal Audit department of Achmea Bank makes an audit plan each year (which also covers actions to be taken for the medium term planning). The selection of topics for the annual audit plan is based on an annually revised risk analysis. The topics covered by the annual audit plan includes an assessment of the most important internal control measures and the quality and functional effectiveness of the system of governance, risk management and control procedures within the bank. Achmea Bank Internal Audit reports its findings direct to both the responsible management and the chairman of the Executive Board of Achmea Bank. Every six months, Achmea Bank Internal Audit reports to the Audit & Application of the Dutch Banking Code by Achmea Bank N.V. over the year

15 There shall be a periodic information exchange between the internal audit function, the external auditor and the audit committee of the supervisory board. At an early stage, the internal audit function shall initiate a discussion of each other's risk analysis, findings and audit plan with DNB and the external auditor at least once a year. The Executive board and the internal audit function of the bank shall promote the periodic occurrence of this tripartite consultation. In this they shall aim at a clear delineation of one another's tasks and responsibilities. Risk Committee of Achmea Bank in an Audit Memorandum. Reporting to the Executive Board of Achmea is the responsibility of the Achmea Bank Supervisory Board or the Internal Audit Management Team member responsible for Achmea Bank Internal Audit, after agreement with the chairman of the Achmea Bank Supervisory Board. Achmea Bank applies this principle. Internal Audit s annual plan and risk analysis is determined in agreement with the Executive Board, the external auditors and Internal Audit s General Manager. Achmea Bank s Audit & Risk Committee has the right to amend and approve the annual audit plan and the risk analysis. After adoption, the annual audit plan and the risk analysis are also communicated to the Dutch Central Bank. Assurances for the proper exchange of information are provided by, among other, the Audit & Risk Committee (A&RC) with the external auditors and the Internal Audit Management Team member responsible for Achmea Bank in attendance. Agenda items of the Audit & Risk Committee include the Audit Memorandum prepared by Internal Audit Achmea Bank, the Audit Report produced by the external auditors and the annual audit plan jointly produced by Internal Audit Achmea Bank and the external auditors, including the risk analyses relating to the Achmea Bank. Achmea Bank applies this principle. After adoption by the Audit & Risk Committee, the annual audit plan was communicated to the Dutch Central Bank in Internal Audit Achmea Bank initiated talks with the Central Bank and the external auditors in 2015 to discuss the annual audit plan and the Audit Memorandum produced by Internal Audit Achmea Bank as well as the adopted audit approach and the audit report produced by the external auditors. Application of the Dutch Banking Code by Achmea Bank N.V. over the year

16 7. Remuneration Policy Text Banking Code 2015 A bank shall pursue a careful, controlled and durable remuneration policy that is clear and transparent, in line with national and international regulations. The remuneration policy shall be aimed primarily at the long term and in line with the risk policy of the bank. It shall be characterised by balanced relationships, both internal and external, by which the expectations of the different stakeholders and the social basis of support shall be taken into account. It shall also take into account the relevant international context. Implementation By Achmea Bank Achmea Bank applies this principle. Achmea Bank conforms to the Remuneration Policy of the Achmea Group. Achmea s Remuneration Policy is periodically evaluated and ratified by the Supervisory Board. The underlying principles and intentions behind Achmea s remuneration policy are as follows. The remuneration policy: derives from the Achmea identity: it is restrained, proportionate and not excessive; reflects our involvement in society; supports the continuity of the company; is aimed at long-term value creation for all stakeholders; should not contain any elements that are an incentive to irresponsible risk-taking; contains checks and balances; comprises both penalty and clawback provisions governing remuneration (and variable components thereof). All aspects of the remuneration policy are described in detail, including responsibilities, procedures and monitoring. The Supervisory Board By-laws and the rules governing the Supervisory Board Remuneration Committee guarantee that the aforementioned principles are adhered to. The total income of a member of the Executive board of a bank shall, at the time of adoption, be below the median for comparable positions within and outside of the financial sector, taking into account the relevant international context. The variable remuneration of a member of the Executive board shall be established in agreement with national and international regulations. Achmea Bank applies this principle. The Achmea Remuneration Policy refers to the Median Based on Total Remuneration Perspective. This means taking account of all components of the remuneration policy. It has been decided that, for all members of the Executive Board, the total income should remain below the median of people in comparable positions both inside and outside the financial sector. Achmea Bank applies this principle. The target setting for the Executive Board and senior management is based on risk-adjusted key risk indicators. The key performance indicators and key risk indicators are also related to the profitability and continuity of the company. Whenever it is decided to award variable remuneration (contingently or otherwise), 50% of such variable remuneration is deferred for a period of five years. Payment is only made following a sustainability test. Application of the Dutch Banking Code by Achmea Bank N.V. over the year