The Financial Supervisory Authority of Norway published an onsite inspection report on SpareBank 1 SMN covering governance, controls and exposures related to market risk and liquidity and funding risk. The supervisor’s overall assessment highlights weaknesses in documentation, compliance with newer regulatory requirements and the board’s involvement in key decision-making. At the time of the inspection in November 2025, the bank’s internal measurement system (IMS) for interest rate risk in the banking book (IRRBB) was not approved by the board and neither the model nor the IRRBB control framework had been reviewed by internal audit. The board subsequently considered the model in December 2025 and an internal audit review is planned for 2026, but Finanstilsynet expects clearer documentation of regulatory gaps, a formal validation framework and the development of bank-specific shock scenarios in addition to those prescribed in EU Regulation 2024/856. Non-maturity deposit (NMD) modelling was assessed as inconsistent with European Banking Authority guidance, including the five-year cap on weighted-average reprising assumptions, and Finanstilsynet found no general exemptions beyond those explicitly set out in the guidelines. On liquidity and funding risk, the report questions whether the operational requirements for high-quality liquid assets used in the liquidity coverage ratio (LCR) are sufficiently evidenced where bonds are managed under an outsourcing arrangement with SpareBank 1 Markets, and calls for stronger board reporting and strategy coverage of LCR totals and by currency. It also notes Pillar 2 requirements for LCR in Norwegian kroner and euros of 50 and 100 percent, and points to funding governance improvements including minimum limits for the share of deposits covered by the deposit guarantee scheme, conservative NSFR assumptions for deposits sourced via the Fixrate platform, and the use of reverse liquidity stress tests. SpareBank 1 SMN must report back on how it will follow up the findings by 15 December 2026, and Finanstilsynet asked the bank to provide a copy of the report to its auditor. The supervisor also indicated it plans to develop dedicated IRRBB guidance and will return to the treatment of NMDs once that guidance is prepared.
Norwegian Finanstilsynet 2026-04-13
Financial Supervisory Authority of Norway publishes inspection report flagging IRRBB and liquidity governance gaps at SpareBank 1 SMN
The Financial Supervisory Authority of Norway published an onsite inspection report on SpareBank 1 SMN identifying weaknesses in governance, documentation and compliance related to market risk, interest rate risk in the banking book, and liquidity and funding risk. Finanstilsynet expects enhancements to the bank’s internal measurement system for interest rate risk in the banking book, non-maturity deposit modelling, and liquidity coverage ratio governance, including clearer regulatory gap analyses, validation frameworks and bank-specific shock scenarios.