Strategy and Governance

The fruits of the Bank’s labours to advance digital technology became clear in 2018 when several new solutions in digital technology for both corporate and private customers were introduced. Landsbankinn considers digital technology and personal business relationships to go hand in hand.

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Universal financial service that meets customers’ needs

Landsbankinn's strategy is to provide universal financial services to meet its customers' needs. Landsbankinn aims to be a dynamic presence that operates in harmony with the environment and society.

The Bank's vision is to be exemplary and its role is to be a trusted financial partner. The Bank wants customers to be able to say: "This is what a bank should be like!"

Role: Landsbankinn is a trusted financial partner

In 2017, the Bank introduced new focus points in its strategy, putting development in digital technology and customer service front and centre. The strategy is fourfold:

Accessibility: Customers can easily tend to all main banking business wherever and whenever they like. They have easy access to information and a good overview of their finances.

Efficiency: Customers save time and effort through use of the Bank's solutions. Their business is tended to expediently and securely using the service channel of the customer's choosing.

Value-adding: Customers receive personal service tailored to meet their needs. They experience their relationship with the Bank as valuable and see that their business history is taken into account.

Initiative: We are attentive to customers and they are listened to. Customers see that the Bank's employees conduct their work in a professional manner and show initiative.

  • We put the customer first.
  • We build on strong partnerships and continuous progress.
  • At Landsbankinn, every single individual is responsible for achieving success.

Leader in banking services in Iceland

Landsbankinn provides universal banking services and places key emphasis on ensuring that services meet customer needs and that the Bank’s operation is sound in both the short and long term. Strong systemic foundations, market share and size, service channels, personal business relationships and exemplary employees are the core pillars the Bank builds on for the future. Product development, changes and innovation are a constant and necessary aspect of growth and operation that support the Bank as a leading provider of banking services in Iceland.

Digital technology and personal business relationships

Personal service is important and experience has shown that digital technology and personal business relationships are a good combination. Landsbankinn considers successful digital technology to be a product of numerous factors, such as user experience, accessibility, developing employee competencies, security, dependability, price, simplicity, image and marketing. The key point is to ensure that customers always receive the same quality service no matter the channel he or she chooses each time.

Several new digital solutions in 2018

In 2018, priority was given to projects involving advances in digital technology for the benefit of customers. Success quickly followed and around 20 digital solutions were introduced to customers in the course of the year. Among these are the Landsbankinn app, foreign payments in online banking for individuals, self-service changes to credit card limits and online credit assessment. Landsbankinn was the first Icelandic bank to offer a banking app that allows customers to use their mobile phones to pay for goods and services in contactless card readers throughout the world, it became possible to become a Landsbankinn customer via the app and online banking, etc., etc. Customer reception of these innovative solutions has been extremely positive and it is clear that customers wish to be able to tend to banking business whenever and wherever.

More information about new solutions in digital technology is provided in the chapter Better Banking.

Sale of assets by Landsbankinn in 2018

The objective of Landsbankinn’s policy on the sale of assets is to form a foundation on which to build quality internal governance procedures for the sale of assets and to limit the operational and reputational risk such sale may entail. The policy is intended to promote transparency and credibility in the sale of assets and in so doing build confidence in the Bank. The sale of assets is to be made on commercial grounds, so that a fair price is obtained for assets.

Assets for sale at year-end 2018

A total of 304 assets appropriated by the Bank were held for sale as at 31 December 2018. Their book value was around ISK 930 bn. At the beginning of the year, the Bank also held for sale commercial real estate that previously housed the Bank’s operation.

At year-end 2018, sales processes for holdings in 12 unlisted companies were on-going. These holdings are variously owned by Landsbankinn or Hömlur fyrirtæki ehf., a subsidiary of the Bank. Information about these holdings have been disclosed, inter alia, on the Bank's website.

Assets sold in 2018

In 2018, Landsbankinn sold 190 appropriated assets, three real estate properties, four vehicles and holdings in two companies. The total sales value of these assets was around ISK 10 bn.

Disclosure about departure from the main rule of employing an open sale process

The Bank’s policy on the sale of assets provides that the main rule of employing an open sale process can be deviated from if an open sale process is deemed to violate its lawful interest, if business reasons prevent the utilisation of an open sale process or if other legitimate reasons speak against an open sale process or if the low value of an asset does not justify the expense of an open sale process.

The policy stipulates that departure from the main rule of employing an open sale process shall be substantiated and documented. Such departures are contingent on approval by the Board of Directors. The Board of Directors may grant the CEO universal authorisation to approve dispensation from the rule when the asset value is below a set limit.

In 2018, there were two departures from the main rule of employing an open sale process. These departures were approved by the Board of Directors. These cases involved the sale of holdings in two real estate properties with the combined sale value of around ISK 40 million.

Categories of assets for sale at year-end 2018:
Residential apartments 8
Commercial housing 2
Building sites for residential apartments and commercial housing 31
Building sites for cottages 248
Cottages 0
Other real estate 3
Land 3
Vessels 3
Vehicles and equipment 5
Inventories 1

Assets sold in 2018 fell into the following categories:* Number Total sales value
Residential apartments 40 1,128,294,320
Building sites 31 3,769,650,000
Commercial housing 16 439,200,000
Land 10 362,900,000
Building sites for cottages 17 36,049,550
Cottages 4 88,300,000
Vessels 4 19,200,000
Other 3 113,550,000
Vehicles and equipment 72 60,762,772
Shareholdings in companies 2 3,956,352,643
Total 199 9,974,259,285

*Securities and other financial instruments listed for trade on a registered market are sold on the market and that process is considered an open sale process. Such transactions are not included in the table above.

The State's net profit from Landsbankinn amounts to ISK 168.7 bn

Upon the establishment of Landsbankinn hf. in fall of 2008, the Icelandic State provided the Bank with equity in the amount of ISK 122 bn. In so doing, the State gained an 81.33% share in the Bank. Ownership of the Bank changed on 11 April 2013, when an 18.67% share, held by Landskil on behalf of the Winding-up Board of LBI hf., was transferred to the Icelandic State and Landsbankinn.

Since the establishment of Landsbankinn and up to and including the year 2018, the Bank has paid ISK 131 bn in dividend to the State, or what amounts to 107% of the initial purchase price. Having regard for the State's interest expenses, dividends and the initial purchase price, costs incurred by the State for purchasing shares in the Bank amount to ISK 69.7 bn whereas the holding was valued* at ISK 238.3 bn at year-end 2018. The State's net profit thus amounts to ISK 168.7 bn.

The National Treasury also holds shares in Landsbankinn through its holdings in savings banks Sparisjóður Vestmannaeyja and Sparisjóður Norðurlands. These holdings have not been taken into account in the above summary. The State held 99.8% of outstanding shares in Landsbankinn at year-end 2018.

State's profit from Landsbankinn holding
Initial capital contribution -122,000
Interest on initial capital contribution -71,693
Extrapolated interest impact** -6,637
Dividend payments 130,660
Interest in equity 238,347
State's net profit 168,677

* Based on the book value of equity as at 31.12.2018

** Extrapolated interest on interest payments and dividends

All amounts in ISKm

Landsbankinn a model of good governance

The governance structure of Landsbankinn forms the foundation for solid relations between shareholders, the Board of Directors, executives, employees and other stakeholders and encourages objectivity, integrity, transparency and responsibility in the Bank’s management. Landsbankinn adheres to recognised guidelines on corporate governance and regularly reviews the Bank’s compliance with such guidelines.

In April 2018, the Centre of Corporate Governance renewed its recognition of Landsbankinn as a model of corporate governance for the period 2017-2018 based on a review undertaken by Deloitte ehf. of the Bank's governance practices in January 2017. The aim is first and foremost to encourage debate and actions that promote good corporate governance.

New policy on data protection and the processing of personal data

A new Act on Data Protection and the Processing of Personal Data entered into force on 15 July 2018, transposing the EU General Data Protection Regulation into Icelandic law. Landsbankinn was well prepared for the new Act and, in June 2018, the Bank adopted a new policy on data protection and the processing of personal data. The Bank has updated related work processes and rules. The Bank’s personnel has received comprehensive instruction about the new data protection law and the resulting changes to work procedures.

Shortly before the law entered into force, Landsbankinn opened a Customer Data Rights Portal on its website. Individuals can use the portal to, amongst other things, request access to their own personal data that the Bank uses in its operation, and request correction or deletion of certain personal data from the Bank's systems. In 2018, Landsbankinn processed around 250 access requests to personal data from customers.

Actions to combat money laundering and terrorist financing

Landsbankinn seeks to fulfil the strictest requirements made domestically and internationally of financial undertakings with regard to combating money laundering and terrorist financing.  

Landsbankinn implemented a new electronic control system in 2018 which is an important aspect of monitoring daily transactions. Electronic control systems play an important role in preventing Landsbankinn's operations from being misused for money laundering or terrorist financing purposes. Work also began on implementing a new Act on Actions to Combat Money Laundering and Terrorist Financing that entered into effect on 1 January (Act No. 140/2018). As provided for by the Act, the Bank will risk-assess its operations, as well as customers.

Landsbankinn complies with recognised guidelines on corporate governance and publishes a Corporate Governance Statement annually. The Statement includes information on the Board of Directors and its sub-committees.

Read the Corporate Governance Statement

Customer Data Rights Portal**In Icelandic