The Financial Supervisory Authority of Norway has published a thematic inspection report on Luster Sparebank’s policies and practices for identifying and grouping connected counterparties for large exposure purposes. The supervisor concludes that the bank has a solid foundation, but needs to strengthen its operational framework and documentation practices to ensure compliance with applicable requirements. The review found that the bank’s overarching guidelines align with core principles in the Capital Requirements Regulation (CRR) and that its internal limits for exposures to single clients and groups are more conservative than the 25 percent cap under the large exposures framework. However, the guidelines do not fully reflect the requirements of Commission Implementing Regulation (EU) 2024/1728 as implemented in Norway, and the bank lacks a sufficiently detailed work description to ensure consistent application in practice. Finanstilsynet also identified several instances of incorrect grouping in the bank’s third quarter 2024 large exposure reporting, which the bank linked partly to technical issues during a transition to a new reporting solution; while controls have since been strengthened, the supervisor expects quality assurance to detect errors arising from system changes. For selected client groups examined during the inspection, the bank’s analyses were considered thorough and aligned with the rules, but the supervisor noted that documentation was not consistently embedded in the original credit cases and recommended checklists or similar routines to make assessments and documentation systematic and integral to the credit process. Finanstilsynet notes that the board has considered the findings and recommendations and that necessary improvement measures are or will be implemented, and it asks the bank to provide a copy of the report to its auditor.

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