Conflict of interest
Qred Bank AB (hereinafter referred to as "Qred").
The general meeting
Qred is a banking company with a licence to conduct banking operations in accordance with the Banking and Financing Business Act (2004:297).
The general meeting
The general meeting is Qred's highest decision-making body where shareholders exercise their voting rights and decisions are made on, among other things, the balance sheet and income statement in the annual report, discharge from liability, board members for the coming year, and the election of auditors.
Board of Directors
Qred's Board of Directors is responsible for Qred's organisation and management of its affairs in accordance with, among other things, the Swedish Companies Act, and has ultimate responsibility for ensuring that operations are conducted in accordance with good internal governance and control. Qred's internal governance and control is formalised through internal regulations in the form of policies and instructions as well as supporting routine descriptions, process descriptions and checklists.
The Board shall decide on the internal regulations for internal governance and control, while the CEO is responsible for implementing them in Qred's operations in line with the Board's instructions.
The Board is also responsible for ensuring that Qred conducts its operations in an ethically responsible and professional manner, that conflicts of interest are identified and managed in an adequate and appropriate manner and that Qred maintains a sound risk culture.
Chairman of the Board
The Chairman of the Board leads the Board's work and ensures that the Board fulfils its obligations under the Swedish Companies Act and other applicable rules. The Chairman of the Board shall, through contact with the CEO, follow Qred's development.
Qred's Chairman of the Board is responsible for conducting an annual suitability assessment to ensure that Board members, the CEO and senior management are individually suitable for their assignments at any given time. This involves an assessment of whether they
- Are of sufficiently good repute
- Possess sufficient knowledge, skills and experience to fulfil their duties.
- Can act with honesty, integrity and the ability to think independently to effectively assess and challenge decision-making where necessary.
- Are able to allocate sufficient time to fulfil their duties.
The suitability assessments and the result is documented.
In order to support the Board in certain specific areas, the Board has established two committees that are responsible for preparing the basis for decisions on issues that fall within the remit of each committee:
- Remuneration Committee
- Risk and Audit Committee
Each committee consists of 2-3 board members and 1-3 senior executives from the Company. The committees shall assist the Board with expertise and prepare proposals, advice and preparation of matters in their respective areas. The work of the committees is regulated in more detail in instructions.
The Board appoints Qred's CEO, who is authorised to make decisions on all matters that are not to be decided by the Board or General Meeting. The CEO is responsible for the day-to-day management according to the Board's instructions and for such obligations incumbent on the CEO under external regulations.
The CEO is responsible for ensuring that policies, instructions and routine and process descriptions are implemented within the organisation and that all employees have access to relevant documentation.
The company's CEO has an advisory forum, the management team, with the aim of ensuring that the company's operations are conducted in a sound and efficient manner. In its work, the management team shall always consider the interests of the Company and its customers. The management team shall normally meet when necessary but at least every month. The CEO convenes and chairs the meetings, which shall have a standing agenda and shall be minuted.
Internal governance and control
Three lines of defense
Qred applies the principle of three lines of defence to define where in the organisation responsibility for and control of the organisation's risk-taking should be located.
The first line of defence consists of the business operations, including the CEO, who is responsible for and controls the daily risk management and compliance. The business operations are also responsible for performing controls of the processes that Qred applies, in the form of internal controls.
The second line of defence consists of the Risk Control function and the Compliance function, which among other things monitor, control and report on Qred's risks and how the company complies with internal and external regulations. The control functions in the second line of defence are subordinate to the CEO and are primarily the CEO's independent control body, but shall report directly to both the Board and the CEO.
The third line of defence consists of the Internal Audit function. The Internal Audit function reports directly to the Board of Directors and is the Board's independent control body. The third line of defence reviews and evaluates the first and second lines of defence.
Remuneration Policy and remuneration system
Qred has a remuneration policy ( the “Policy") whose purpose is to describe and establish principles for how the Company's remuneration system is designed, controlled and continuously monitored. The Policy shall be consistent with and promote effective risk management and counteract excessive risk-taking. Furthermore, the Policy shall ensure that customers' interests are not negatively affected by the Company's incentive structure. The remuneration system shall promote Qred's ability to attract and retain competent personnel and contribute to ensuring that the Company's long-term goals can be achieved.
The Board of Directors is ultimately responsible for the content, establishment, implementation and compliance of the remuneration policy. The Policy shall be regularly, at least annually, reviewed and, if necessary, updated prior to approval by the board. A risk analysis shall form the basis for the Board's decision to adopt the Policy. The Board shall further decide on:
- Remuneration of the Management Team,
- Remuneration of the control functions,
- The outcome and payment of any variable remuneration, and
- Measures to monitor the application of the Policy.
The Board has appointed a Remuneration Committee.
The Remuneration Committee is responsible for, at least annually, monitoring and assessing the Company's remuneration system and for preparing decisions on remuneration issues for the board of directors' decision. In the follow-up of the remuneration system, the Remuneration Committee shall also monitor the development of unjustified salary differences between women and men.
The board of directors shall, where applicable, adhere to the remuneration decisions taken by the annual general meeting.
An annual risk analysis shall be made by the Company in order to identify employees whose duties have a significant impact on the Company's risk profile. The analysis shall consider all risks to which the Company is or may be exposed, including the risks associated with this Policy and the Company's remuneration system. The analysis shall be documented and attached to this Policy. The Remuneration Committee shall review the risk analysis before the Policy is adopted by the Board of Directors.
The Company's remuneration system shall be designed in a way that is compatible with and promotes sound and effective risk management and prevents excessive risk-taking. Remuneration systems shall encourage employees to perform well and help the Company to attract and retain competent employees. The remuneration system shall be applied in a gender-neutral manner.
The basis of the Company's remuneration system is a fixed salary. Fixed salary is determined on a rolling basis, with the first review usually taking place 12 months after the start of employment. As a general rule, salary reviews shall take place once a year.
Employees' fixed salary shall be determined on the basis of objective criteria and be in line with market conditions. In the case of new employment, the fixed salary shall be determined based on the market situation for the corresponding profile and the value that the employee is expected to add to the Company. In subsequent salary reviews and in the event of a change of job role, an individual assessment shall form the basis for setting the salary, based on parameters such as work performance, independence, initiative, responsibility and personal development. Discriminatory or other unjustified differences between employees' fixed salaries shall not occur.
In connection with a salary review, the salary setting manager shall conduct a development and salary discussion with the employee, where the connection between work tasks, work results and performance in general as well as salary development is made clear to the employee.
Vacation benefits are determined in accordance with current legislation and individually in connection with employment and salary reviews.
The Board of Directors decides on variable remuneration for the Management Team and employees whose duties have a significant impact on the Company's risk profile. The CEO can decide whether other employees (outside of the above mentioned group) should be entitled to receive variable remuneration.
The Company applies a system of variable remuneration in the form of performance-based bonuses for the CEO, the Management Group and most functions and business units. Performance-based bonuses shall be designed in a way that meets the criteria in this section and the Policy in general. The criteria for receiving variable remuneration shall be based on the Company's overall performance as well as the employee's individual performance and the performance of the business unit in which the employee works.
The variable remuneration shall be based on:
- Achievement of financial targets related to the budget;
- Operational targets for the business; and/or
- Performance-based targets related to the performance of the individual or group.
Results that form the basis for calculating variable remuneration shall mainly be based on risk-adjusted profit measures. The Company shall take into account both current and future risks as well as cost of capital and liquidity required by the business. The Company shall ensure that variable remuneration is based on long-term sustainable results by assessing the results in a multi-year perspective.
Further, the Company's underlying economic cycle and business risks shall be taken into account when the variable remuneration is approved and paid out.
When determining variable remuneration, the assessment of employees' individual results and performance shall take into account both financial and non-financial factors. Among the non-financial factors, the Company shall consider, inter alia, compliance with internal rules, accountability, customer satisfaction and safeguarding of customers' interests.
If the Company's control functions for risk control, compliance and internal audit are employed by the Company and are entitled to variable remuneration, the Company shall ensure that such remuneration is determined on the basis of objectives linked to each control function, regardless of the performance of the business areas they review.
The Company shall ensure that any variable remuneration does not affect the Company's ability to maintain a sufficient capital base or to strengthen the capital base if necessary.
The Company shall maintain a reasonable balance between employees' fixed and variable remuneration. Employees' fixed remuneration should always be at a high enough level to set the variable part of the remuneration to zero. The total variable remuneration that employees receive may never be at a level that risks undermining the Company's capital base and ability to generate a positive result in the long term. The total variable remuneration to an employee shall never exceed 100% of the employee's annual fixed remuneration. The Company's sales function, which is completely disconnected from the Company's credit function and credit decisions, is exempt from the above limitation, but can never exceed SEK 100,000 per month in variable remuneration.
Guaranteed variable remuneration
As a general rule, the Company shall not provide variable remuneration that is guaranteed to any employee. If there are special reasons, the Board may decide on guaranteed variable remuneration to an employee, but only in connection with new employment and only during the employee's first year of employment.
Ethical guidelines and conflicts of interest
Qred has established an ethics policy with the aim of ensuring that the business is conducted in an ethically responsible and professional manner in line with Qred's internal and external rules. The purpose of this Policy is further to promote transparency, integrity and a corporate culture that protects Qred's operations from corruption.
The Policy sets common standards to promote Qred's ethical approach and to facilitate employees in situations where applicable rules are missing or contain limited guidance.
Conflict of interest
Qred has established a Policy and an instruction for managing conflicts of interest that may arise in the business.
Qred's employees are always expected to act in Qred's best interests and exercise good judgement that is not influenced by private interests or divided loyalties.
No employee may participate in managing a case or making a credit decision that concerns a relative, a relative's company or otherwise when there may be a risk of fraud. An employee may also not handle matters in which the employee has a personal interest or matters in which such an interest is held by a relative of the employee or with a company in which the employee or a relative of the employee has a substantial interest. In such a situation, the employee must be exempted from credit processing and the credit decision.
Qred's employees shall not purchase goods or services from related parties without prior approval from the CEO, and the CEO shall not purchase goods or services from related parties without prior approval from the board.