The Financial Supervisory Authority of Norway has published a supervisory report from its onsite inspection of Valdres Sparebank on 25–26 March 2025, covering internal governance, credit risk including IFRS 9 loss assessments, and liquidity risk. The supervisor concludes that the bank must strengthen credit practices in its business (BM) segment and improve its processes and documentation for loss provisions, with closer board follow-up. Finanstilsynet finds improvement potential in how the bank assesses and documents debt-servicing capacity, collateral values, independent valuations and realisation values, and in the follow-up of deviations, and requires a review of credit guidelines to clarify the bank’s risk appetite. The report also flags long-standing capacity constraints that have weakened segregation of duties and independent control, including the absence of independent control of monthly loss provisioning assessments, and notes that board documentation of assessments and follow-up actions in risk and compliance reporting has been limited. The final report follows a preliminary report issued on 28 May 2025 and the board’s response of 20 June 2025. The bank is strengthening the BM area through new hires towards the end of 2025, and had planned to adjust its strategy during the second quarter of 2025.
Norwegian Finanstilsynet 2025-08-26
Financial Supervisory Authority of Norway identifies shortcomings in Valdres Sparebank’s business lending practices and IFRS 9 loss provisioning
The Financial Supervisory Authority of Norway's report on Valdres Sparebank highlights deficiencies in credit practices, loss provision processes, and internal governance. The bank is advised to enhance credit guidelines, documentation, and independent control measures, addressing long-standing capacity constraints. Valdres Sparebank is taking steps to strengthen its business segment and adjust its strategy.