The Norwegian Financial Supervisory Authority has published a supervisory report on SpareBank 1 Østfold Akershus following an inspection of governance, corporate credit risk, IFRS 9 loss assessments, and liquidity and funding risk. Its main finding is that the bank’s ambitious growth strategy, combined with high concentration in the real estate market, rising risk in the corporate portfolio, higher lending limits and frequent policy deviations, is increasing the risk of weaker portfolio quality. The authority said the board should give particular attention to risk management so that credit practices and internal guidelines are followed within approved limits and risk appetite. The report points to weaknesses in the bank’s credit framework and control environment. The credit policy contains few absolute approval requirements and many criteria can be waived, while a review of cases found deviations in collateral valuation, equity assessment and documentation of compensating measures. The authority noted that 18 percent of corporate loans granted in 2025 were approved with policy breaches, mainly linked to equity and collateral. It expects stronger first- and second-line quality controls, tighter and clearer requirements for collateral valuations and external appraisals, closer monitoring of property exposures and other vulnerable borrowers, and board reporting that better captures risk developments. On provisioning, it said the bank should better reflect macroeconomic uncertainty in IFRS 9 assessments, improve triggers for identifying distressed real estate exposures, and strengthen documentation and assumptions for Stage 3 loss calculations. On liquidity risk, it found the bank’s stress test assumptions too mild, particularly on deposit outflows and haircuts on the liquidity reserve. In its response cited in the report, the board said it will further develop risk reporting, clarify guidelines so that the policy framework better supports the bank’s risk appetite and control framework, and require better documented assessments in committees and at board level. The board also said the liquidity stress testing measures will be followed up.
Norwegian Finanstilsynet2026-07-01
Norwegian Financial Supervisory Authority flags elevated credit risk at SpareBank 1 Østfold Akershus and calls for stronger risk management
The Norwegian Financial Supervisory Authority’s supervisory report on SpareBank 1 Østfold Akershus says rapid growth, heavy real estate concentration and frequent policy deviations are increasing credit risk. It called for tighter credit controls, closer monitoring of vulnerable exposures, more robust IFRS 9 provisioning and stronger liquidity stress testing. The board said it will improve reporting, clarify guidelines and follow up the measures.