The Norwegian Financial Supervisory Authority has published the results of a thematic review of six Norwegian banks’ compliance with requirements to identify and group connected counterparties for large-exposure purposes. The work found significant variation in practices and pointed to recurring weaknesses in how grouping assessments are operationalised, documented and translated into regulatory reporting. Supervision was conducted through digital meetings and reviews of governance documentation, exposure reporting and selected credit cases, with banks selected using reported group affiliations in exposure reporting compared with information from the shareholder register. Several banks’ guidelines were not fully updated for Commission Regulation (EU) 2024/1728, which is in force in Norway and clarifies that control and economic dependence are standalone, equally weighted grouping criteria, with a prudence principle where there is doubt. Common findings included insufficient documentation of grouping judgements at decision time, instances where entities with common ownership or economic links were reported without appropriate group membership or in groups inconsistent with available ownership information, and reporting errors linked to weak quality controls, system changes and data issues. Finanstilsynet expects banks to update frameworks and working instructions, embed systematic and auditable documentation into the credit process, and strengthen quality assurance and accountability for reporting, including monitoring changes in ownership and economic connections, supported by clearer governance anchoring and staff training. The thematic report and individual inspection reports were issued to Sparebank 1 Helgeland, Sparebank 1 Hallingdal Valdres, Luster Sparebank, Trøndelag Sparebank, Sparebanken Vest and Sparebank 68 Grader Nord.
Norwegian Finanstilsynet 2025-12-12
Norwegian Financial Supervisory Authority publishes thematic review urging banks to strengthen connected-counterparty grouping and reporting
The Norwegian Financial Supervisory Authority's thematic review of six Norwegian banks revealed significant variations and weaknesses in compliance with large-exposure requirements for connected counterparties. Key issues included outdated guidelines, insufficient documentation, and reporting errors due to weak quality controls. Finanstilsynet expects banks to update frameworks, improve documentation, and enhance quality assurance and governance.