Annual Report
2021
Bank of Åland Plc
Going our own way
Annual Report
Financial calendar
The Bank of Åland will publish the following Interim Reports
during the financial year:
• January–March Interim Report April ,
• January–June Half-Year Financial Report July ,
• January–September Interim Report October ,
The Annual Report and all Interim Reports will be published
on the Bank’s website: www.alandsbanken.fi
They can be ordered from: info@alandsbanken.fi or from
Secretariat, Bank of Åland Plc, PB , AX- Mariehamn,
Åland, Finland.
The Head Oce of the Bank of Åland is in Mariehamn,
capital of the autonomous Finnish province of Åland.
Located in the Baltic Sea midway between Sweden and
Finland, the ,-island Åland archipelago has more than
, inhabitants. Its ocial language is Swedish.
This translation of the Swedish-language Annual Report
uses the international currency codes for the European
Central Bank euro (EUR) and the Swedish krona (SEK).
At year-end , the middle rate for EUR was USD .
and SEK ..
“The Bank” refers to the Bank of Åland Plc (Ålandsbanken Abp),
Parent Company of the Bank of Åland Group. Amounts have
generally been rounded o to millions or thousands, but
percentage figures, totals, ratios etc. are calculated on the
exact amounts. The abbreviation M refers to million(s), and
K means thousand(s).
Translation: Victor Kayfetz, SCAN EDIT, Oakland, CA
Cover: Anton Sucksdor
About the Bank of Åland ...............................
The year in brief.................................
Legal structure of the Group and organisational chart ......
Statement by the Managing Director ....................
Strategy .............................................
The Baltic Sea Project ................................
A stimulating workplace ..............................
The Bank of Åland’s sustainability strategy ...............
Private Banking ......................................
Premium Banking ...................................
Partnerships .........................................
Corporate units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Information Technology ..............................
Report of the Directors ...............................
Facts on Bank of Åland shares .........................
Consolidated income statement .......................
Consolidated statement of comprehensive income .......
Consolidated balance sheet ............................
Statement of changes in equity capital ..................
Consolidated cash flow statement......................
Table of contents, notes to the consolidated
financial statements....................................
Notes to the consolidated financial statements...........
Parent Company income statement ...................
Parent Company balance sheet .......................
Parent Company statement of changes in equity capital . .
Parent Company cash flow statement..................
Table of contents, notes to the Parent Company
financial statements .................................
Notes to the Parent Company financial statements ......
Proposed allocation of profit .........................
Auditors’ Report....................................
Corporate Governance Statement ....................
Board of Directors ..................................
Executive Team.....................................
Definitions ........................................
Stock exchange releases in .....................
Address list . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Table of contents
Bank of Åland Plc
About the Bank of Åland
• The Bank of Åland (Ålandsbanken) was founded in as Ålands
Aktiebank and has been listed on the Helsinki Stock Exchange (now
the Nasdaq Helsinki Oy) since .
• The Head Office is located in Mariehamn, Åland. The Bank of Åland
has a total of two offices in the Åland Islands and six offices on the
Finnish mainland: in Helsinki, Tampere, Vaasa, Oulu, Turku and
Parainen. In Sweden, the Bank of Åland has three offices: Stockholm,
Gothenburg and Malmö.
• The Bank of Åland Group has two subsidiaries: the fund management
company Ålandsbanken Fondbolag Ab and the information technol-
ogy company Crosskey Banking Solutions Ab Ltd.
• In the Åland Islands, the Bank of Åland is a bank for all residents and
is both in a position and with a desire to help develop the Åland of
the future.
• On the Finnish mainland and in Sweden, the Bank of Åland has a
niche strategy targeted to entrepreneurs, wealthy families and indi-
vidual customers with sound finances. We offer two concepts: Private
Banking and Premium Banking
®
.
• Over the years, the Bank of Åland has been an innovative pioneer in
the financial services industry. The Bank of Åland’s Premium Bank-
ing
®
, launched in , has served as a model for competitors in the
Nordic countries. The Åland Index, launched in , has become
established as an international standard for measuring the climate
impact of consumption.
• The Bank of Åland has business partnerships with several financial
technology (“fintech”) companies and supplies services to compa-
nies operating in the financial services sector. The Bank is also a
shareholder in a number of strategic partners.
• The Bank of Åland has proactively chosen to offer products that
benefit the customer at various levels: first and foremost financially,
but also by contributing to sustainable development. Including the
amount, over the years the Bank’s Baltic Sea Account (formerly
the Environmental Account) has contributed almost EUR . M to
projects that improve and protect the environment.
Bank of Åland Group
EUR M
Income
Net operating profit
. . . . .
Profit for the year attributable to shareholders
. . . . .
Volume
Lending to the public , , , , ,
Deposits from the public , , , , ,
Actively managed assets
, , , , ,
Equity capital
Risk exposure amount , , , , ,
Financial ratios
Return on equity after taxes (ROE),
. . . . .
Expense/income ratio
. . . . .
Loan loss level,
. . . . .
Gross share of loans in stage ,
. . . . .
Liquidity coverage ratio (LCR),
Loan/Deposit ratio,
Common equity Tier capital ratio,
. . . . .
Tier capital ratio,
. . . . .
Total capital ratio,
. . . . .
Working hours re-calculated to full-time equivalent positions
Earnings per share, EUR
. . . . .
Equity capital per share, EUR
. . . . .
Dividend per share, EUR . . . . .
Actively managed assets encompassed managed assets in the Group’s
own mutual funds as well as discretionary and advisory securities volume
plus external funds with contractual earnings.
Profit for the reporting period attributable to shareholders/Average
shareholders’ portion of equity capital.
Expenses/Income.
Impairment losses on loan portfolio and other commitments from
lending to the public/Lending to the public at the end of the period.
Share of loans in stage /Gross lending to the public.
LCR assets at level and /-day net cash outflow.
Corrected calculation compared to Year-end Report.
Lending to the public/Deposits from the public.
Common equity Tier capital/Risk exposure amount.
Tier capital/Risk exposure amount.
Own funds/Risk exposure amount.
Shareholders’ portion of profit for the period/Average number of shares.
Shareholders’ portion of equity capital/Number of shares on closing day.
Annual Report
The year in brief
Financial summary of
• Net operating profit increased by per
cent to EUR . M (.).
• Earnings per share increased by per
cent to EUR . (.).
• Return on equity after taxes (ROE)
increased to . per cent (.).
• Net interest income increased by per
cent to EUR . M (.).
• Net commission income increased by
per cent to EUR . M (.).
• Total expenses increased by per cent
to EUR . M (.).
• Net impairment losses (including
recoveries) amounted to EUR . M (.),
equivalent to a loan loss level of .
(.) per cent.
• Actively managed assets increased by
per cent to EUR , M (,).
• Deposits increased by per cent to EUR
, M (,).
• Lending increased by per cent to EUR
, M (,).
• The common equity Tier capital ratio
decreased to . per cent (.).
• The Board of Directors proposed a regular
dividend of EUR . per share plus an
extra dividend of EUR . per share.
Important events in
• On January the Board of Directors of the
Bank of Åland approved the distribution of
a dividend of EUR . per share (a regular
dividend of EUR . and a th
anniversary dividend of EUR .) for the
financial year, in compliance with the
authorisation that the Board received
from the Bank’s Annual General Meeting
(AGM) on April , .
• The Bank of Åland opened a new office in
Oulu on the Finnish mainland.
• In March, for the first time ever the Bank
of Åland issued an additional Tier (AT)
capital instrument totalling SEK M.
• Borgo AB, an associated company of the
Bank of Åland, received permission from
the Swedish Financial Supervisory
Authority to operate a financing business
and to issue covered bonds.
• The AGM on March re-elected the
Board, consisting of Nils Lampi, Christoffer
Taxell, Åsa Ceder, Anders Å. Karlsson,
Ulrika Valassi and Anders Wiklöf. At the
statutory meeting of the Board the same
day, Nils Lampi was elected as Chairman
and Christoffer Taxell as Vice Chairman.
• The AGM approved the distribution of a
dividend of EUR . per share for the
financial year.
• Together with its customers, the Bank of
Åland continued its commitment to a
cleaner Baltic Sea. The Baltic Sea Project
contributed EUR , to various
projects that promote the health of the
Baltic Sea.
• For the eighth consecutive year, the Bank
of Åland (Ålandsbanken) Euro Bond Fund
was named the best Nordic fund in its
category by Refinitiv Lipper. The
Morningstar investment research
company, which compares fund data and
funds in their respective classes, also
assigned the Bank of Åland Euro Bond
Fund its highest rating – five stars – in all
review cycles.
• On June Alandia Holding, an associated
company of the Bank of Åland, completed
its acquisition of the Rettig Group’s entire
stake (. per cent) in the marine
insurance company Alandia Försäkring.
• Net operating profit during the quarter
was the highest ever in the Bank’s history.
• In August the Bank of Åland sold its
shareholding in the company Åland Index
Solution as well as intellectual property (IP)
rights to the Åland Index to Doconomy,
a Swedish-based fintech company.
The Bank of Åland still has a significant
ownership stake in Doconomy.
• In September the Bank of Åland carried
out an early redemption of SEK . billion
in covered bonds from the Swedish pool
with a final due date in November .
At the same time, the Bank issued new
covered bonds in the amount of SEK .
billion with a final due date in September
. The bond issue was unique, since
these bonds carry contractual conditions
that allow them to move from the Finnish
to the Swedish legislative framework, and
from the Bank of Åland as counterparty
to Borgo as counterparty, when the
Bank’s Swedish mortgage loan portfolio
is transferred to Borgo during the first
half of .
• Net operating profit during the quarter was
again the highest ever in the Bank’s history.
• The Bank of Åland announced new long-
term financial targets.
• Borgo started its operations in Sweden.
• In December, for the first time ever the
Bank of Åland issued a green Tier (T)
supplementary capital instrument
totalling SEK M.
• For the third consecutive year, full-year
net operating profit was the highest ever
in the Bank’s history.
0
3
6
9
12
15
20212020201920182017
0
10
20
30
40
50
20212020201920182017
Net operating profit
EUR M
Return on equity after taxes (ROE)
per cent
0
3
6
9
12
15
20212020201920182017
Common equity Tier capital ratio
per cent
Bank of Åland Plc
Bank of Åland Group
Organisational chart
Bank of Åland Plc
Internal Auditing
Monica Österlund
Board of Directors
Nils Lampi, Chairman
Chief Executive Officer
Peter Wiklöf, Managing Director
Crosskey Banking Solutions Ab Ltd
Niclas Södergård, Managing Director
Åland
Business Area
Mikael Mörn,
Director
Private Banking
Premium Banking
– City oce
– Local branch oces
Corporate Services
Legal Advisory Service
Finnish Mainland
Business Area
Anne-Maria Salonius,
Director
Private Banking
Premium Banking
Helsinki
Tampere
Turku
Parainen
Vaasa
Oulu
Sweden Business
Area
Magnus Johansson,
Director
Private Banking
Premium Banking
Stockholm
Gothenburg
Malmö
CFO
Corporate Unit
Jan-Gunnar Eurell,
Chief Financial Ocer,
Deputy Managing
Director
Group Finance
Treasury
CAO
Corporate Unit
Tove Erikslund,
Chief Administrative
Ocer
Human Resources
Business Development
Customer Service
& Market Support
Business Support
Business Support
Capital Market
CRO
Corporate Unit
Juhana Rauthovi,
Chief Risk &
Compliance Ocer
Risk Control
Compliance
Legal Aairs
Operational Risks
& Security
Credit Scoring
Credit Processes
Ålandsbanken Fondbolag Ab
Tom Pettersson, Managing Director
Partnerships
Business Area
Sofie Holmström,
Manager
Legal structure of the Group
Associated companies consolidated in the Group: Mäklarhuset Åland Ab, ; IISÅ Holdco AB, ; Borgo AB, ., Alandia Holding .
Crosskey Banking Solutions Ab Ltd
Ålandsbanken Fondbolag Ab
Ålandsbanken Abp
Ålandsbanken Fonder Ab
Ålandsbanken Fonder II Ab
Ålandsbanken Fonder III Ab
Ålandsbanken Fonder IV Ab
Ålandsbanken Fonder V Ab
Ålandsbanken Fonder VI Ab
S-Crosskey Ab
Annual Report
Statement by the Bank of Åland’s Managing Director
Another year of strong volume growth and momentum
The ongoing coronavirus pandemic again
dominated events in . The year began
with continued recommendations about
remote work and avoiding larger gather-
ings, as well as not travelling. During the
summer it began to feel as if the authori-
ties could begin to ease the restrictions,
but a new and more contagious corona-
virus variant (Omicron) arrived late in
the year, causing tighter restrictions to
be reintroduced.
Despite a year of widespread global pan-
demic restrictions, stock markets performed
very favourably. We saw the Helsinki Stock
Exchange gain per cent and the Stockholm
exchange per cent. In the United States,
the S&P index grew by per cent.
In fixed income markets, we continued to
experience very low or negative interest rates
and bond yields. This included short-term
benchmark rates that are important to the
Bank: the -month Euribor averaged –.
per cent and the -month Stibor –. per
cent. By the end of , however, we could
see clearly rising inflation figures, which led to
rising long-term yields and caused the world’s
central banks to begin talking about ending
their large-scale stimulative asset purchases
and start hiking their key interest rates during
the next couple of years. This communication
led to increased volatility in the stock markets.
The good growth we have seen in recent
years in our Private Banking and Premium
Banking operations continued at a faster
pace during . The various pandemic
restrictions thus did not hinder the develop-
ment of our business. Digital meetings and
various kinds of webinars became part of
our everyday lives. Customers showed great
understanding of our pandemic-adapted
working methods. We were pleased to note
that many new customers chose the Bank of
Åland, both in Finland and in Sweden.
Because of this clear interest in our ser-
vices from new customers, during we
decided to start our first new office on the
Finnish mainland in over years. The office
Peter Wiklöf, Managing Director
Photographer: Viktor Fremling
Bank of Åland Plc
was opened in Oulu and got off to a good
start in its operations.
Our lending and deposits continued to
grow at a healthy pace. Lending grew by
per cent to EUR , million and deposits
by per cent to EUR , M. This growth
occurred in both our Private Banking and
Premium Banking segments. However, lend-
ing was helped by our collaboration with ICA
Bank, which as part of preparations for the
start-up of the jointly owned mortgage com-
pany Borgo sold home mortgages directly
in our balance sheet in the Swedish market.
The most exciting feature of our growth
in was a very sharp increase in actively
managed assets on behalf of our customers.
The Bank of Åland has never before seen
anything like the strong net inflow of new
customer volume that we had during the
year. By the end of , we were able to
record a positive net inflow of EUR M.
Combined with strong stock markets and
good asset management earnings, this ena-
bled our actively managed assets to grow by
per cent during the year to EUR , M.
During our total income grew by per
cent to EUR . M. Rising business volume
during the year led to a strong income trend.
Our net interest income rose by per cent to
EUR . M despite continued strong pres-
sure on margins and negative market inter-
est rates. Net commission income was the
biggest cause for rejoicing in terms of earn-
ings. Here we saw a per cent increase to
EUR . M. The main reason for this surge
was the good volume trend in actively man-
aged assets.
A few years ago, net interest income was
still our largest source of earnings, but
because of our success in financial invest-
ment operations together with our custom-
ers, net commission income is now clearly
larger. This is a trend that we have wanted
and have worked systematically to achieve.
Information technology (IT) income rose
by per cent to EUR . M. Our IT subsidi-
ary Crosskey had another year of heavier
demand for its services.
During we enjoyed some nonrecur-
ring sources of income. This included selling
our rights related to the Åland Index to the
Swedish fintech company Doconomy. The
Åland Index is a method for measuring one’s
carbon footprint, created by the Bank of
Åland. The purpose of the sale was to enable
further global expansion of this method. We
continue to have a strong ownership stake in
Doconomy. Another source of positive non-
recurring income came from our associated
company Alandia Holding’s acquisition of a
. per cent stake in Alandia Försäkring, a
marine insurance company. The net effect of
nonrecurring transactions on the Bank’s
earnings totalled about EUR M.
We continued our planned expansion efforts
by investing in additional human resources
and IT. Recalculated to full-time positions,
we increased our employee count by .
About half the new positions were at
Crosskey and the other half at the Bank,
where we added people both in our busi-
ness operations and our corporate units.
Staff costs rose by per cent to EUR . M.
Other expenses rose by per cent to
EUR . M. The largest increase was from
higher IT expenses. Due to some major pro-
jects requiring consultant expenses, as well
as new customers at Crosskey, during
we set up new infrastructure enabling the
company to launch increased production.
Total expenses rose by per cent to
EUR . M.
Despite the pandemic, we did not experi-
ence any general deterioration in our credit
quality. The Bank of Åland had no large
exposure to companies that were hard hit by
the pandemic, but we have local exposure in
Åland. We were thus pleased to note that the
summer of was a very good tourist sea-
son in Åland, with tourists from the Finnish
mainland arriving in unprecedented num-
bers. Our impairment losses during the year
were at the same level as in : EUR .
M. These write-downs were mainly due to
three large loan commitments. We chose
not to withdraw the approximately EUR .
M in reserves created in because of
the coronavirus pandemic, since we were
still seeing extensive virus transmission in
neighbouring regions.
Overall, we can report another year of
record-breaking earnings. Net operating
profit increased by per cent to EUR .
M. This was our fifth straight year of higher
net operating profit.
Return on equity after taxes (ROE) rose
to . per cent, compared to . per cent
in . Because of the Bank’s earnings
success, during the Board of Directors
chose to update our long-term financial
targets.
As for the Bank’s return on equity after
taxes, our new target is that it shall exceed
per cent over time (previously per
cent). The common equity Tier capital ratio
shall exceed the Finnish Financial Supervi-
sory Authority’s minimum requirement by
.–. percentage points. The payout ratio
shall be per cent or higher (previously
per cent), provided that capital adequacy
does not fall below target.
Our own measurements during showed
that customers’ ratings of us improved from
already good levels. We were pleased to note
this both in our Private Banking segment
and in Premium Banking.
The broad external customer survey con-
ducted every year by market research com-
pany Kantar SIFO Prospera ranked the Bank
of Åland as number one for Private Banking
in Finland. The survey showed that custom-
ers especially appreciate and value our
knowledge in the financial investment field,
our personalised approach and our service-
mindedness. We will continue to work hard
to maintain this appreciation and the high
marks from our customers.
Our customers also appreciated our
asset management operations, which very
successfully handled their investments dur-
ing the year. For example, our Nordiska
Småbolag fund had the best return of more
Annual Report
than mutual funds in Finland (.
per cent), while our broader Kapitalförvalt-
ning fund received the maximum rating of
five stars from Morningstar.
One of our biggest projects over the past
two years has been the start-up of the new
mortgage company Borgo in Sweden. The
Bank of Åland has several roles here. We
are one of the founders of the company
together with ICA Bank, Ikano Bank and
Söderberg & Partners. The savings bank
Sparbanken Syd will also become a co-
owner. Home mortgage management has
clear economies of scale, and together with
the other co-owners we want to help create
a Swedish market player that has both
expertise in mortgage management and a
far-flung distribution network.
In addition to our co-ownership role,
we have assumed the role of providing
day-to-day management of the business.
Through a platform agreement, the Bank
of Åland will deliver both the IT solution
and service management in accounting,
treasury, payments, deposits and home
mortgages. This gives our skilled corpo-
rate units an opportunity to sell their
extensive knowledge to other market
players outside of the Bank of Åland.
The third role that the Bank of Åland
will have in this partnership is to serve as
one of the distributors of Borgo’s home
mortgages. We have agreed to transfer
most of our existing mortgages in the
Swedish market to Borgo early in .
The transfer will consist of approximately
SEK . billion worth of mortgages. This
transaction will have no major impact on
the Bank of Åland’s customers, since the
Bank will continue to handle all contacts
with its customers. The transfer will have
a positive effect on the Bank of Åland’s
net operating profit in the first quarter of
, but after that it will mean a smaller
loan portfolio in the Bank’s own balance
sheet and thus lower current net interest
income. In the future, the Bank will
instead receive distribution payments for
brokered loans and platform income for
maintaining its various services to Borgo.
One of the areas that we attach great
importance to and are constantly working
with is sustainability. The Bank of Åland
was the only Finnish bank among the co-
founders of the Net-Zero Banking Alliance.
It was one of a total of founding banks in
this United Nations global initiative.
To enable us to monitor our progress
in the sustainability field, our ability to
measure and establish targets for our
impact is absolutely crucial. This is not an
easy task, and our entire industry is now
working intensively to find models and
methods for calculating our climate foot-
print. In many areas, our ability to meas-
ure our impact is still rather crude, but
that does not prevent us from starting to
do so. I am convinced that our methods
will improve over the coming years.
During we expanded climate cal-
culation efforts in our business opera-
tions. For the first time, we also calcu-
lated the climate impact of our core busi-
ness, defined as our loan and treasury
portfolios as well as our customers’
financial investment business with us.
We have also established our first climate
targets according to the Paris Agreement
and have decided that we shall become
climate-neutral in keeping with Finland’s
climate policy decision.
Through these decisions, sustainabil-
ity issues have become an integral part
of our normal business planning. Making
measurements and setting targets in the
sustainability field will thus have a direct
impact on our future policy decisions.
Over the next few years, the authorities
will increase pressure on our industry
related to sustainability by enacting more
and more regulations. We want to be well
equipped for this necessary task.
We are starting with continued good
forward momentum. The Bank of Åland is
in a strong position. We are well equipped
for an exciting future journey, as a growing
team whose collective expertise will be
better than ever before.
It is an inspiring task to lead our ambi-
tious and conscientious Bank of Åland
team. I would like to express my sincere
gratitude to all our employees, who have
taken on the challenges created by the
pandemic in an admirable way and who
have not merely maintained the status
quo, but have clearly moved our Bank
forward.
Many thanks also to our existing and
new customers for the trust that you
show us.
Peter Wiklöf
Managing Director
Bank of Åland Plc
Our aim is to be the self-evident bank for individuals with ambitions
and companies that value relationships.
The Bank of Åland is a bank for investors, with financing know-how.
The Bank of Åland generates value for individuals and companies
by delivering a large bank’s range of services with a smaller bank’s
thoughtfulness and sense of dedication.
At the Bank of Åland, we focus on what problems we solve, what
opportunities we create and how we deliver different types of value
to our customers. We always go our own way, and that is how we
persuade more and more friends to join us on this path. Our choice
of position is ambitious and it is a position where the Bank of Åland
foresees a clear customer need and a growing market. We are grow-
ing within selected target groups, putting special emphasis on finan-
cial investment operations at the same time as we deliver financing
solutions and other banking services in an outstanding way.
, -
The Bank of Åland’s proficiency as a bank for investors has been
confirmed in all its markets over the past few years. This is demon-
strated by its increasing number of customers, along with various
industry awards. Our financing know-how has long traditions and
will continue to play a central role.
All sound banking business is based on trust. This is especially
evident in the way that customers handle their financial invest-
ments. We know that it requires time and dedication to build trust
among new customers. The Bank of Åland offers a bank as it should
be – a bank that wants individuals, companies and the community
to have fertile ground for development.
We are convinced that strong, long-term relationships are built
through good performance by ambitious people.
The Bank of Åland has always welcomed new technology that
makes everyday life easier for our customers. Our Internet Bank
has thus been a forerunner in the industry since its inception. In
our development work, we draw no distinctions between personal
and digital encounters. Regardless of the channel, our customers
shall always feel that they are receiving good service. Our relation-
ships shall be equally strong in every channel. But we also take
advantage of the special strengths of the various channels.
Personal meetings are the most suitable channel for advisory
services, while our Internet Office – delivered via the Web – and
our banking app using mobile devices enable customers to gain
a clear overview and seamlessly manage their everyday finances.
-
For many years, the Bank of Åland has collaborated with other mar-
ket players within the IT field via its subsidiary Crosskey Banking
Solutions. In the world that is now emerging, we are seeing that the
Bank of Åland has the ability and the potential to offer products and
services to other market players within a substantially broader field
than IT services alone. In fintech, today the Bank of Åland is already
a versatile and capable partner with the capacity to deliver solutions
to companies in most financial service areas.
Given our close connection to the small community of Åland,
located among thousands of islands in the middle of the Baltic Sea,
sustainability work has been a natural element of our core values for
a long time. Together with our customers, we have created products
and services that both increase awareness and support concrete
sustainability projects. Sustainability issues are an integral part of
our usual operational management, where the Board of Directors,
the Executive Team and all our employees have their role. Each
quarter we transparently report our greenhouse gas emissions
according to Greenhouse Gas Protocol (GHGP).
We begin with our materiality analysis, which is based on the
United Nations sustainable development principles. We analyse our
operations and identify the areas where we have positive and
negative impacts. Then we set clear sustainable development tar-
gets and regularly follow up our work. Our long-term target is to
become a climate-neutral group and finally achieve net-zero emis-
sions. In we joined the Net-Zero Banking global alliance, which
means that by we shall report net-zero greenhouse gas emis-
sions, in line with the Paris Agreement. With the help of GHGP
Scope –, we will calculate and report greenhouse gas emissions
on a quarterly basis from our own operating activities and from the
loan and treasury portfolios in our balance sheet, as well as from
our customers’ financial investment portfolios.
Daring to go our own way
Strategy
As large banks become ever larger and their customers feel ever smaller, a clear need
arises – the need for a bank where each customer feels seen, heard and appreciated.
The Bank of Åland has nearly a century behind it as an independent, innovative and
customer-oriented bank. This is why it is self-evident that we will continue along a path
where the needs of our customers are the guiding principle for our development.
Annual Report
Bank of Åland Plc
The Baltic Sea Project
Projects that promote the health of the Baltic Sea
In the largest single grant went to a snow melting and cleaning
project by Clewat, a company that specialises in waste removal from
waterways. Stara, the City of Helsinki’s construction service com-
pany, tested Clewat’s new snow melting machine near the Viikii
snow receiving site in the winter of . During a test period of six
weeks, just over , cubic meters of snow were melted and fil-
tered. This is equivalent to , truckloads.
The Baltic Sea Project granted EUR , to the city of Marie-
hamn to build a wetland at the mouth of the Sviby River. Wetlands
can reduce the amount of nutrients in runoff that cause eutrophica-
tion, improving the local aquatic environment and increasing biodi-
versity. This year the Baltic Sea Project also funded research and
youth projects and provided grants to long-term partners.
• Clewat, Snowhow Project, EUR ,
• Baltic Sea Action Group, EUR ,
• John Nurminen Foundation, EUR ,
• City of Mariehamn, Svibyå wetland, EUR ,
• Race for the Baltic, EUR ,
• Finnish Environment Institute (SYKE), plastics in nesting areas,
EUR ,
• WWF, EUR ,
• Friends of the Eider (Ådans Vänner), EUR ,
• Vahtolanlahti Bay Restoration Plan, EUR ,
• Rotary Water Kit Backpack youth project, EUR ,
Funding for the Baltic Sea Project is based on deposits in the Bank’s
Baltic Sea Accounts. Every year, the Bank donates an amount equiv-
alent to up to . per cent of deposits in Baltic Sea Accounts for
environmental work. Over the years, the Bank has donated EUR
,, for the benefit of the environment.
The Bank of Åland has supported the important work of various environmental
organisations for more than years. Through the Baltic Sea Project, the Bank has
funded projects that promote a healthier Baltic Sea since . Funding is divided into
five different categories – digital innovations, concrete kilograms, engaging projects,
local water protection projects as well as children’s and youth projects.
Annual Report
The Bank of Åland Group is continuously recruiting new employ-
ees. Those who start in the Group have many opportunities for
professional development. They are encouraged to follow their
own ambitions and interests. A summer job may lead to a perma-
nent position and eventually to the next step on the career ladder.
Some employees move up very rapidly, sometimes to a new role
in a new area.
“We have a great need for personnel. Our number of full-time posi-
tions increased by more than during , despite the current
pandemic,” say Johan Haglöf, Human Resources Manager at the
Bank of Åland, and Monika Sigmark, HR Manager at Crosskey.
The Group is a workplace where an employee has many different
opportunities to develop new skills and create a career. This applies
both to new graduates and to people who already have some years
of work behind them. “Since the Bank of Åland is a full-service bank,
we offer most of the same services as major banks. But our depart-
ments are much smaller. Employees must take great personal
responsibility, and they gain a broader insight into the overall bank-
ing business. At the Bank, we have around different positions.
This means there is a wide range and that there are good opportuni-
ties to find a role that suits your interests and ambitions. The fact
that we have offices both to the east and west of the Head Office in
Mariehamn adds extra spice to certain positions. You can be sta-
tioned in Åland and work with Sweden, which has its own its laws
and regulations, or vice versa,” says Mr Haglöf.
At the Bank, service adviser and service specialist jobs are two
examples of classic entry-level positions that are suitable for those
who have studied economics at some level. Other experiences may
also be relevant, such as a background in a service profession or in
the marketing industry.
These positions quickly provide an insight into how the Bank
works, what services it offers and what customers want. This gives
you a solid base to stand on and a strong advantage if you want to
take on new challenges.
Collaboration with universities
Crosskey has engaged in intensive collaboration with several educa-
tional institutions both in Åland and elsewhere to cover its need
for employees. It offers trainee programmes and paid internships. A
traineeship period generally begins during the summer and may con-
tinue on an hourly basis while the trainees complete their studies.
“We are flexible as employers and offer different alternatives.
Summer job holders can continue working on an hourly basis during
the winter if it suits them, for example so they can complete their
studies at the same time. Then they can return for a permanent job
and after that there are many opportunities for various career paths
at Crosskey,” says Ms Sigmark.
Many professional development opportunities
A stimulating workplace
Johan Haglöf, Human Resources Manager, Bank of Åland, and Monika Sigmark, Human Resources Manager at Crosskey.
Photographer: Therese Andersson
Bank of Åland Plc
Many employees have been recruited from outside Åland. Some
of them work at offices outside the province. Others have moved to
Åland with their whole family. This in itself is positive for the Åland
community, which welcomes new residents. Crosskey is also one of
the participants in the Åland provincial government’s Grit:lab pro-
ject, a new form of technological training under the motto ”Innova-
tive Coding Education.”
Banking knowledge is needed
Crosskey is unique – compared to pure IT companies – in needing
product specialists with banking knowledge. This, in turn, means
that there are opportunities for bank employees who are interested
in IT to find a new career path at Crosskey. For example, they can
become important key individuals who know what is required to
make banking systems user-friendly and can thus translate these
requirements and needs for Crosskey’s system developers. It also
works the other way around: people with IT knowledge and having
worked a number at Crosskey can continue to a position at the Bank
of Åland.
”We also need people who want to be managers, and this
doesn’t necessarily require an IT background”, says Ms Sigmark.
She adds: “We try to create an inspiring atmosphere at Crosskey
where employees help and support each other and they can be
themselves. We have examples of our employees applying for jobs
elsewhere, but then returning to us after a while. We see that as a
positive recommendation! ”
“I landed an internship at Crosskey during
my studies at Åland University of Applied
Sciences. Then I worked there evenings and
weekends during my semesters. In the
spring of I got a permanent job as an
Application Developer. The focus of my
working group was on internet banking and
mobile apps. This was followed by a job
in development of mobile apps. In ,
I became an Application Manager and was
given greater responsibility for development
work and operations. As a System Architect,
which I became in , I am one of those
responsible for overall technical design. I
have always been more interested in tech-
nology than in things like personnel and
managerial responsibilities, and I have had
good opportunities for professional devel-
opment at Crosskey. I have been encour-
aged to take on new tasks, and our industry
is constantly growing and changing, which
offers new challenges and opportunities.”
Jimmy Mattsson,
System Architect at Crosskey.
“I had studied IT in Uppsala and worked for
two years as an IT consultant in Stockholm,
but I wanted to go home to Åland. In I
got a job as a process owner at the Bank of
Åland, responsible for development of pay-
ment services. The banking world was new
to me, but my IT experience was very useful.
In , I moved to a position as a standards
and testing manager and later to a position
as a business developer. These roles
included project management and manag-
ing the task of ensuring the benefits and
quality of system orders. In , I changed
jobs within the Group and started at Cross-
key, where I now have a management role.
These jobs have succeeded each other in a
natural way. Each time I have benefited from
my previous experiences, meanwhile learn-
ing new areas. It has been a more meaning-
ful journey than I expected when I started at
the Bank.“
Johanna Hamnström,
Product Manager at Crosskey.
“My journey within the Bank of Åland began
in May . I had studied economics in
Västerås and got a summer job as a service
advisor at the office in Godby. After that, I had
the same job at the office in Mariehamn until
November when a new door opened a
substitute position at Business Development
where I first worked with the development of
the Mobile Bank and as a project manager,
and later as a business developer for partner-
ships. This, in turn, led to the job I have today
as a partnership manager at the Partnerships
Business Area. I wanted to advance, and the
Bank offers good opportunities to develop
your skills according to your own ambitions
and interests. If you show that you want to,
you can go far. I’m happy where I am now,
but I also see that there are even more oppor-
tunities for professional development within
the Group.”
Victoria Eriksson,
Partnership Manager in the Partnerships
Business Area at the Bank of Åland.
Annual Report
The Bank of Åland’s sustainability strategy
During we established our climate targets
At the Bank of Åland today, sustainability issues are a natural ele-
ment of operational management, with the Board of Directors,
Executive Team and other employees all assuming clear roles.
Our ambition to be part of the change towards a sustainable society
is the most im-portant driver. To help us, we have external regula-
tions and internal governance in the form of policy documents and
guidelines. The European Union has adopted regulations for achiev-
ing the goals of the Paris Agreement as well as the United Nations
sustainable development goals.
The Bank of Åland’s sustainability strategy has four areas of
responsibility:
• Responsible investments
• Responsible lending
• Environmental responsibility
• Social responsibility
The purpose of these areas of responsibility is two-fold. First,
they help us carry out responsible business operations. Second,
they clarify how we contribute to the UN’s Agenda for
sustainable development.
Agenda comprises goals, divided into targets. We
perform a materiality analysis based on the sustainable develop-
ment goals. We analyse our operations and identify the areas where
we have a positive or negative impact. Then we establish clear
development goals and follow up this work regularly.
Another source of support in our efforts to move our operations
towards meeting the global goals is the UN Principles for Responsible
Banking (PRB), which we have adopted and introduced at the Bank of
Åland. As early as we signed the UN Principles for Responsible
Investments (UNPRI), and in we adopted the six PRB principles:
• Alignment
• Impact and target setting
• Clients and customers
• Stakeholders
• Governance and culture
• Transparency and accountability
During we focused on the second principle: by carrying out a
climate calculation of our balance sheet assets in the form of the loan
portfolio and Treasury portfolio, as well as the financial investment
portfolios we provide to our customers, we can analyse our own cli-
mate impact and identify goals.
The first principle has also been important in order to ensure that
we are moving our operations in the right direction in terms of goals
and our own impact, especially on the climate and environment.
In we joined the global Net-Zero Banking Alliance, which
requires that by we shall report net-zero greenhouse gas emis-
sions, in line with the Paris Agreement. Using Scope – of the Green-
house Gas Protocol (GHGP), we will calculate and report greenhouse
gas emissions from our own business operations and emissions from
the loan and treasury portfolios in our balance sheet as well as our
customers’ financial investment portfolios on a quarterly basis.
What our climate targets mean
Our long-term climate targets state that no later than the Bank
of Åland shall be a climate-neutral organisation, which is in line with
Finland’s climate policy decision. We shall also report net-zero emis-
sions by . Our climate neutrality target also supports the Åland
regional government’s target of climate neutrality no later than
as well as Sweden’s target of climate neutrality by .
In addition, the Bank’s climate target supports Goal of the
Bärkraft initiative for a sustainable Åland: A significantly higher
proportion of energy from renewable sources plus increased
energy efficiency.
To enable the Bank of Åland to achieve the climate targets it has
established, we need a climate strategy which ensures that we will
take continuous steps towards reducing emissions. This strategy will
be adopted during .
Our sustainability governance
At the Bank of Åland, sustainability issues are a natural element of
our regular operational management, with the Board of Directors,
Executive Team and other employees all assuming clear roles.
During many people in our organisation were given expanded
responsibility for sustainability issues.
The development, management and governance of the Bank’s
sustainability work are based on the priorities of our stakeholders,
external regulations and our own ambition to be part of the move
towards a sustainable society. Regulations and frameworks such as
the EU Taxonomy and Disclosure Regulations will also be an impor-
tant focus in the future.
The Board of Directors has the ultimate responsibility for govern-
ance of the Bank’s sustainability work and is actively engaged in
The Bank of Åland’s long-term climate targets are now in place. By our greenhouse gas
emissions (in CO
e) shall be per cent lower, by we shall be climate neutral and by
our emissions shall be net-zero. These are ambitious but achievable targets. During many
people in our organisation were given expanded responsibility for sustainability issues.
UN principles followed by the Bank of Åland
Adopted
UN Principles for Responsible Investment (UNPRI)
UN Environment Program Finance Initiative (UNEP FI)
Net-Zero Banking Alliance (NZBA)
Bank of Åland Plc
sustainability issues. The Board adopts the Bank’s sustainability
strategy every two years.
The Managing Director/Chief Executive is responsible for ensur-
ing implementation of the Bank’s strategy, which shows which way
the Bank is moving and what is needed to achieve its established
targets. This responsibility also includes sustainability.
The Group-wide Executive Team is responsible for strategic sus-
tainability work at the Bank of Åland. Based on a yearly materiality
analysis and the Bank’s sustainability strategy, the Executive Team
creates plans for each sustainability area.
The Sustainability Team carries out the Bank’s overall sustainability
work and acts as a forum for questions and decisions. The team con-
sists of four people: our sustainability manager, sustainability strate-
gist, sustainability developer and responsible investment manager.
The Group’s ESG Committee is tasked with monitoring global
events, overseeing developments in sustainable investments and
ensuring that the Bank of Åland’s investment activities follow the
strategy and guidelines for sustainable investments.
The Bank’s regulatory group compiles all global monitoring results
and also maintains a list of the regulations that must be implemented.
The Bank’s project organisation carries out those development and
implementation projects which are related to sustainability.
Our sustainability work during in a nutshell
There was a strong focus on climate issues in . We devoted
a lot of work to the actions that are required for a transition that
will enable us to meet the upcoming Paris Agreement deadline.
In UNEP FI’s PRB Collective Report, we note that the entire finan-
cial sector at the global level has focused on climate issues and
worked to identify and set goals for the transition. One common
denominator for all actors is a lack of reporting standards. It is thus
a challenge to collect and produce comparable data on how climate
impact is measured. But there is an important consensus on taking
action now and starting with what we know. This consensus is based
on the realisation that key stakeholder groups expect increased
transparency regarding both climate and sustainability issues.
In addition, regulations in this field are expanding. This will help
to establish a clear framework for such matters as reporting, trans-
parency, objectives and timetables.
The Bank of Åland’s contributions to the UN global goals
Today the UN global sustainable development goals are an estab-
lished source of guidance in our sustainability work. Together with
the principles for responsible banking that we have adopted, we
have all the prerequisites to contribute to a sustainable transition.
The purpose of the Bank of Åland’s materiality analysis is to iden-
tify areas for sustainable development in both the short and long
term. The materiality analysis includes all targets associated
with the global goals. It is used in order to look at our business
from four responsibility perspectives: lending, investments, environ-
ment and social issues.
The materiality analysis includes monitoring of global events, iden-
tification of our stakeholders and their interests and identification of
our impact from a sustainability perspective. The analysis helps us to
identify the issues on which it is essential for the Bank to continue
focusing and developing – based on areas in which our activities have
a positive or negative impact on the UN’s global goals.
Two issues are increasingly central: first, how we will increase our
knowledge and awareness of the impact of our core business on the
climate and environment, and second, our impact on other goals
that are part of the UN’s global goals.
It is clear that regulations are increasingly extensive in the finan-
cial sector. For example, the European Union has adopted regula-
tions aimed at helping achieve the objectives of the Paris Agree-
ment and the UN’s global sustainable development goals:
The EU Taxonomy Regulation is a tool for classifying what eco-
nomic activities are environmentally sustainable. The purpose of the
classification is to help investors identify and compare environmen-
tally sustainable investments. Part of the taxonomy went into effect
in January and we thus report the proportion of our assets in
that were covered or not covered by the taxonomy. See page .
Our reporting for is connected with presenting economic
activities that contribute significantly to the taxonomy’s environ-
mental targets for climate change mitigation and adaptation.
Reporting requirements will increase gradually in the next few
years. Our reporting for will include four of the Taxonomy’s
additional environmental objectives: sustainable use and protection
of water and marine resources; transition to a circular economy;
pollution prevention and control; and restoration of biodiversity
and ecosystems.
The Disclosure Regulation is an EU regulation on sustainability-
related information that aims at creating a standard for how sustain-
ability risks in financial products shall be presented. We worked with
implementation of the regulation before it went into effect into
force in March , among other things by categorising our prod-
ucts according to the regulation and updating our policy for integrat-
ing sustainability risks in investment decisions and in our advisory
services on investment and insurance. Later in we worked with
the more detailed requirements that will go into effect on January ,
and with implementing supplementary disclosure obligations
for investment products according to the Taxonomy. During
we will continue our implementation of the regulations, which will
include continuously evaluating the main negative consequences
for sustainability factors that our investment decisions may represent.
Annual Report
We must ask customers’ sustainability preferences when provid-
ing investment advisory services from August onward, in com-
pliance with amendments to MiFID . Since our customers will base
future investment decisions on sustainability preferences, this will
partially fulfil the EU’s objective that capital should increasingly flow
into sustainable investments.
Our stakeholders will play a larger role, and requirements for
transparency and external communication will be broadened. In
order to understand the needs and driving forces that are important
to stakeholders, we conduct stakeholder dialogues, both qualitative
and quantitative, through various channels during the year. Customer
and brand surveys, as well as industry forums where current issues
and trends are addressed, are other examples of such dialogues.
Dialogues are initiated both by the Bank of Åland and by stakeholders.
Sustainable products are increasingly seen as a hygiene factor
throughout our product range, instead of as a separate product cat-
egory. We view sustainability risks and impact assessments for sus-
tainable development as an indisputable necessity.
• Regulations: Our continued work with interpretation and imple-
mentation of regulations has provided us with greater clarity about
reporting, follow-up and communication.
• Responsible lending and investments: By analysing available data,
we have increased our knowledge and awareness about our
impact on the climate and environment. These insights have also
helped us to work strategically to reduce our negative impact in
keeping with the global goals.
• Stakeholders: We have deepened our understanding of what
needs our stakeholders have and what drives their choices in vari-
ous decision-making situations. The lowest common denominator
for all stakeholder categories is that they expect increased trans-
parency and credibility as well as more information than before.
• Climate: We have developed a climate calculation and analysis
model in order to understand the impact that we, as a company,
have on the climate and environment. These insights are
fundamental now that we will be crafting the Bank of Åland’s
climate strategy.
• Commitment: We will continue working to create the right condi-
tions for retaining strong employee and social commitment.
’
• Customers • Resellers
• Shareholders • Suppliers
• Debt investors • Partnership organisations
• Employees and • Special interest
potential employees organisations
• Rating agencies • Media
Like many other financial sector players, we worked during
to increase our understanding of the impact of our operations on
the climate and environment, including water, biodiversity and eco-
systems. This work is a direct consequence of our decision in
to define the Bank of Åland’s long-term climate targets as soon
as possible.
In we thus took a further step to deepen our knowledge
and analysis of the climate impact of our operations. We are doing
this by calculating our emissions based on Scope , and of the
Greenhouse Gas Protocol (GHGP), both upstream and downstream.
Upstream refers to emissions that are created by how we carry out
our own operations, for example through heating of the premises
where we operate and business travel by our employees. Down-
stream refers to emissions that occur due to what we produce and
sell. But financial products are a little special in nature. It is far from
obvious how emissions from financial products should be calculated
or what financial products should be included in the calculation.
In , we took a major step forward and significantly expanded
our calculations. We are now calculating emissions from the Bank of
Åland’s own business operations (upstream) as well as from its core
operations in the form of lending, the assets in our treasury opera-
tions, assets and investment services in the form of mutual funds
and certain securities portfolios (downstream). Our ambition is to
continue expanding these calculations, and our ultimate goal is to
calculate emissions for all operations. Today quite a lot of the data
is missing.
Climate calculations face challenges in terms of obtaining reliable
data and comparable standards for calculations within Scope ,
and . We calculate as transparently as we can with the data we cur-
rently have. We will aim at expanding our calculations as we gain
access to new data.
We are thus aware that in the future, we must broaden and
adjust our calculations as standardised calculation models become
available. It is also worth pointing out that today it is challenging to
compare climate calculations in the finance sector, since standards
are lacking and different organisations calculate in different ways.
The Bank of Åland’s climate targets
During we established the Group’s climate targets, which sup-
port the Paris Agreement and its important goal in the fight against
climate change: that the global temperature increase should be kept
well below degrees and that efforts should be made to limit it to
. degrees.
• The Bank of Åland shall reduce its CO
e emissions by per cent
no later than , compared to .
• The Bank of Åland shall be a climate-neutral organisation no later
than , in line with Finland’s climate policy decision.
• The Bank of Åland shall achieve net-zero emissions by .
Climate calculations form the basis for our ability to develop a cli-
mate strategy that tells us how, and at what pace, we should reduce
our greenhouse gas emissions in order to achieve the established
climate target. This strategy will be completed in .
The basis for our climate strategy is to gradually reduce green-
house gas emissions according to clear targets on a yearly basis and
Bank of Åland Plc
in the longer term. We are also aware that in the short term, we will
not be able to reduce all emissions. One important element of our
climate strategy is thus to include climate compensation for the
emissions we are unable to avoid.
The Group-wide Executive Team has thus decided that from
onwards, the Bank of Åland will compensate for the proportion of
CO
e emissions that are related to our own business operations and
encompass Scope and plus supplier-related emissions from pur-
chases in Scope (upstream), which we can measure today.
What climate compensation represents
Simply put, climate compensation enables individuals, organisations
and nations to support environmental projects around the world in
order to offset their own carbon footprint.
Carbon compensation is a reduction in carbon dioxide or other
greenhouse gas emissions that is made in order to offset emissions
caused elsewhere. Every tonne of emissions that are reduced or
removed by a compensatory project creates a carbon credit. Com-
panies, nations and individuals can invest in these projects directly
or buy credits for the emissions they generate.
There are many types of compensation projects, but they can
generally be divided into two categories: projects that reduce car-
bon dioxide emissions, ones that reduce future emissions (such as
wind power projects) and carbon capture projects that remove car-
bon dioxide from the atmosphere (such as forest-planting projects).
Carbon credits are certified for quality and impact according to
internationally recognised standards.
Climate and environmental impact
Like other banks, the Bank of Åland has a relatively limited climate
impact if we look at its own business operations. But via a bank’s
financial investment products, its customers own equity or debt
instruments in businesses that have a climate impact. Through a
bank’s financing services, customers also own asset such as real
estate and securities or carry out business activities that have a cli-
mate impact. The Bank of Åland’s main negative climate impact
occurs due to its financial investment and financing operations.
Climate targets combined with a climate strategy create the nec-
essary conditions to deliberately and actively reduce that impact.
Although the greatest impact can be found in indirect emissions
from its financial investment and financing operations, the Bank of
Åland will continue to focus on the impact that our operational
activities cause and strategically reduce CO
e emissions.
During our focus was on the Bank’s impact on the climate
and environment. As a first step we established as a target that in
line with the Paris Agreement, we will reduce our CO
e emissions by
per cent no later than , compared to .
Our emissions in totalled ,, tonnes of CO
e. We saw
the following climate impacts in our core business operations and
from our customers’ financial investment portfolios, our loan port-
folio and our treasury portfolio. This calculation is based on the GHG
Accounting and Reporting standard and is based on available data
within Scope , and parts of Scope :
Our own business operations
During the fourth quarter, the Bank of Åland implemented the
GHGP for calculating and reporting greenhouse gas emissions.
Emissions are reported in three scopes, where the Bank of Åland’s
climate calculation initially includes Scopes and as well as sup-
plier-related emissions from purchases in Scope .
Total emissions in were tonnes of CO
e, an increase of
. tonnes compared to the previous year. Scope upstream is the
category with the largest emissions, where the “waste” sub-cate-
gory is the largest emission item. On the plus side, almost per
cent of our purchased electricity has a “green” origin label.
The Bank’s environmental work has always come naturally,
thanks to our geographic location in the Baltic Sea. The Environmen-
tal Account evolved into the Baltic Sea Account and today we are
seeing that our contributions to improve the health of the Baltic Sea
will also affect the climate. In the future, we will also see an
increased focus on the impact of biodiversity on the climate.
Responsible lending
The Bank of Åland’s lending to the public totalled EUR , M on
December , . In calculating emissions, the exposure of the
entire loan portfolio was included.
The Bank of Åland’s estimate of the total emissions financed via
its lending in is , tonnes of carbon dioxide equivalent
(refer to note). The Bank of Åland’s target is to reduce CO
emissions
from lending by per cent between and .
The Bank of Åland has estimated the CO
e emissions financed
via its lending by using the Åland Index climate impact tool, availa-
ble data on properties and loan-to-value ratios, and published aver-
age emissions in Finland and Sweden. We estimate that our funding
of companies and financial investments contributes the largest sin-
gle impact on the Bank’s financed emissions ( per cent of total
estimated emissions), compared to their share of the loan portfolio
( per cent).
The financing of traditionally emission-intensive activities, such
as agriculture and waste management, is assumed to contribute a
high individual impact but makes up a marginal share of our loan
portfolio. It should be noted that our calculations are based on cur-
rent available data. Our calculations and models will be corrected as
more data become available.
Our estimate of emissions financed via home mortgage loans
was based on GHG Accounting and Reporting, a global standard.
When calculating the carbon dioxide emissions from our lending, we
calculated the emissions from activities financed within Scope and .
CO
e emissions in various operations
Thousand tonnes Quantity
Own business operations .
Responsible lending .
Treasury portfolio .
Responsible investments ,.
Total ,.
Annual Report
The treasury portfolio
The treasury portfolio totalled EUR , M on December , .
When calculating the CO
e emissions of our treasury portfolio, we
followed the GHGP standard, with Bloomberg as our primary data
source. The calculation includes Scope and , but not Scope .
Bloomberg does not provide data for per cent of our treasury
portfolio. For that portion of the portfolio, we obtained CO
e data
either from other public data sources or made estimates using sec-
tor data or comparable issuers.
In , the treasury portfolio’s total emissions amounted to
, tonnes of CO
e. Seven per cent of the treasury portfolio
accounts for per cent of CO
e emissions. Among those with the
heaviest emissions were corporate bonds from the energy and
manufacturing sectors, municipalities and covered bonds.
From the base year to the year , the treasury portfo-
lio’s CO
e emissions shall be reduced by per cent.
Responsible investments
On December , , the Bank of Åland had actively managed
assets of EUR , M. Our estimate of carbon dioxide emissions
from these assets was EUR , M. These figures consist of UCITS
funds, since data for all AIF funds are missing. The figures do not
include cash holdings of the funds or indirect positions such as ETFs
and derivatives. For discretionary portfolios that are managed
according to the Bank’s model portfolios, we have only been able to
include emissions data from direct shareholdings. We are thus miss-
ing emissions data on all funds, ETFs and all fixed income manage-
ment that does not occur via direct models, as well as all “odd” port-
folios that are classified as discretionary but that contain holdings
(including equities) that do not belong to any model.
We have calculated the carbon dioxide emissions of the Bank’s
mutual funds and model portfolios on the basis of Scope , and
(estimate). The calculations are made according to GHGP recom-
mendations. All emissions have been converted to carbon dioxide
equivalents (CO
e). The Bank of Åland’s total emissions from
investment activities amounted to ,, tonnes of CO
e. Scope
and Scope emissions comprise about per cent of total emis-
sions, and per cent is found in Scope emissions from the com-
panies in which investments were made.
Since climate reporting is expected to improve in the next few
years, we foresee that the calculation methods for other financial
instruments, such as outside mutual funds and ETFs, will become
better. When that happens, the total emission figures from our
financial investment operations are highly likely to be larger than
the figures we are now reporting. All calculations are market value-
weighted to reflect our ownership stake in companies.
Looking at emission data for the Bank’s mutual funds compared
to other funds, we see that all our funds have lower emissions than
equivalent funds in each category. One example is our Europe Fund,
which is one of those with the lowest emissions compared to other
Europe funds offered in Sweden and Finland. The fund is under-
weight in holdings associated with large emissions; it is especially
underweight in energy sector companies.
In both mutual funds and model portfolios, we see at the secto-
ral level that holdings in basic industries and electric power compa-
nies are among those with the largest emissions. We want to point
out that these emissions are indirect figures, i.e. these companies’
emissions will not decrease if we choose to reduce our holding. On
the other hand, we see advocacy work dialogue with companies
as an important tool in influence the transition towards a world
with lower emissions.
In our financial investment operations, our target is a halving of
emissions by compared to . In addition, these operations
will follows the Group’s target of being net-zero by and climate-
neutral by in line with Finland’s goal.
The target of being net-zero by goes hand in hand with the
ability of portfolio companies to achieve the Paris Agreement’s goal
of a global temperature increase no more than . degrees Celsius.
Today this process will require a per cent annual emissions reduc-
tion in a global portfolio. We will measure our portfolios’ emissions
and follow this plan. Our ambition is to own shares in companies
that are in line with the Paris Agreement target of . degrees and
influence companies that are not to change their operations.
Our compensation portfolio
We have developed a compensation portfolio that offsets emissions
from our own operations the tonnes of CO
e reported for the
year . This was done in collaboration with the Finnish non-profit
Compensate, which offers companies and individuals easy access to
high-quality greenhouse gas emission compensation.
Compensate’s model, with its dynamic compensation portfolio,
ensures the best climate impact and reduces the risks that may
affect individual projects without compromising the integrity of the
entire portfolio.
To ensure both climate integrity and actual impact, Compensate
has a high standard of sustainability based on three pillars:
• Close collaboration with the research community.
• A highly selective compensation portfolio.
• Built-in overcompensation to guarantee an actual reduction of at
least one tonne of CO
for each tonne of CO
e compensation.
The contributions of the compensation portfolio:
• per cent of the portfolio consists of projects that reduce and
store greenhouse gases.
• per cent of the portfolio consists of innovation projects, for
example new technology for carbon capture and storage.
• The portfolio contains a built-in overcompensation to guarantee
a genuine reduction in carbon dioxide.
• The portfolio makes a strong contribution to maintaining biologi-
cal diversity and reducing socio-economic vulnerability.
• The portfolio contributes to all of the UN’s goals for sustaina-
ble development.
Bank of Åland Plc
Greenhouse gas emissions (CO
e)
Thousand tonnes Quantity Quantity
Greenhouse gases, thousand tonnes of CO
e
Scope
Emissions from owned and controlled sources . .
Total Scope . .
Scope
Energy-related emissions* . .
of which emissions from electricity
according to the market-based method
. .
Total Scope . .
Scope upstream
Purchased goods and services . .
Capital goods . . –
Transport and distribution . .
Waste generated by own operations . .
Business travel . . –
Leased assets . .
Total scope . . –
Total greenhouse gases . .
Climate compensation –.
Net greenhouse gases, thousand tonnes of CO
e . .
*Emissions from electricity according to
location-based method subtracted from
Nordic residual mix
. .
Supplier-related emissions from purchases
Greenhouse gas emissions (CO
e)
Thousand tonnes Quantity
Greenhouse gases, thousand tonnes of CO
e
Scope downstream, investments
Loan portfolio exposure
s
Residential properties .
Other properties .
Loans for purchases of securities .
Other .
Total private individuals .
Shipping .
Agriculture, forestry and fishing .
Energy, water and waste .
Other corporate loans .
Total companies .
Total loan portfolio exposures
.
Treasury
.
Customers’ financial investments
Mutual funds
,.
Discretionary mandates
.
Total customers’ financial investments ,.
Total greenhouse gases, thousand tonnes of CO
e ,.
Only data for December , are available.
Estimate based on the Åland Index climate impact tool, available data for
properties and loan-to-value ratios and published average emission figures in
Finland and Sweden.
The Bank of Åland’s model provides a rough estimate of the loan portfolio’s
CO
e emissions. The model is not exact enough to be used for comparisons with
other banks.
All bonds in the Treasury portfolio are included in the calculations. Scope and
Scope emissions in the invested issuers are weighted by ownership share based
on holdings owned by the Bank of Åland on December , . Bloomberg has been
used as a data source, and in cases where data are not available from the issuer,
estimates have been used. The treasury portfolio’s cash positions and derivatives are
not included in the calculations.
All UCITS funds are included in the calculations. Data are not available for AIF
funds. Emissions in invested companies are weighted by the proportion of total
shares owned by the funds on December , . Bloomberg was used as a data
source and in cases where data have not been available from the companies,
estimates were used, This is largely the case in Scope figures. The funds’ cash posi-
tions, ETF holdings and derivatives were not included in the calculations.
Discretionary customer portfolios that follow model portfolios are included in the
calculations. The emissions in the invested companies are weighted by ownership
interest based on holdings owned by the funds on December , . Bloomberg has
been used as a data source, and where data are not available from the companies,
estimates have been used. This is largely the case with the Scope figures. Emission
data are based on direct shareholdings. All funds, ETFs and all fixed-income mana-
gement that does not occur via direct models are not included in the calculations.
The same applies to all ”odd” portfolios that are classified as discretionary but that
contain holdings (including equities) that do not belong to any model.
Consumption
Quantity Quantity
Paper consumption, tonnes . .
Energy consumption, GwH . .
of which renewable . .
of which other . .
Number of businesss trips , –
of which aircraft –
of which ship
of which train –
Annual Report
Taxonomy reporting
Covered assets, of total
Covered assets, of total
Assets included in reporting
Exposures to economic activities subject to the taxonomy
. .
Exposures to economic activities not subject to the taxonomy
. .
Exposures exempted from reporting
.
Derivatives . .
Exposures to companies not subject to NFRD
. .
On-demand interbank loans
Exposures not included in covered assets
.
Exposures to central governments, central banks and supranational issuers
Trading portfolio
(EU) / and (EU) / Article .
Home mortgages and housing-related loans to private individuals secured by underlying property as collateral, which are covered by technical screening criteria . – . in the
European Commission’s Delegated Regulation (EU) /.
For exposures not subject to the taxonomy, the Bank of Åland has chosen not to report anything since first-hand data were not available and an assessment of whether the
exposure is subject to the taxonomy was not possible.
Exposures excluded from the numerator in the Green Asset Ratio (GAR) and that are thus not assessed in the taxonomy.
In the case of the Bank of Åland, exposures not subject to the Non-Financial Reporting Directive (NFRD, //EU) include companies with fewer than employees,
which mainly include Åland companies and entrepreneur-run companies on the Finnish mainland and in Sweden, as well as housing companies, tenant-owner associations
and municipalities.
Exposures that are excluded from both the numerator and the denominator of the Green Asset Ratio.
Total assets minus assets to be excluded from both the numerator and the denominator of the GAR.
Taxonomy reporting
Starting in , the Bank of Åland is reporting exposures in the bal-
ance sheet that are covered by the EU’s Taxonomy for sustainable
investments. If an exposure is regarded as covered by the Taxon-
omy, this means there are criteria for assessing whether it is envi-
ronmentally sustainable. Reporting is limited to first-hand data and
thus does not include estimates or derivations, for example from the
EU’s so-called NACE codes. This limitation means that only part of
the Bank of Åland’s exposures could be reported, since the lack of
first-hand data meant that the extent of exposure to the Taxonomy
could be neither defined nor quantified. The Bank of Åland esti-
mates that Taxonomy reporting will increase in scope starting in the
second year of implementation as more data become available.
Bank of Åland Plc
Our focus on the
UN global sustainable
development goals
In we put a lot of effort into identifying our impact on the
climate and environment. An expanded calculation and deeper
analysis of the impact of our core business showed that – based
on our current knowledge our emissions have a particularly
negative impact on six of the UN’s goals in terms of climate and
environment. These are goals , , , , , and . In addition to
our direct impact on the climate, we also have an impact on goals
closely connected to climate and environment. One example is
goal , Responsible consumption, where we can link the impact of
our CO
e emissions to the opportunity to influence consumption
in order to reduce harmful emissions.
Overall, it is clear that a well-defined climate strategy will now be
important in our future work. This strategy should include distinct
targets, both yearly and long-term, and have a clear follow-up
mechanism. We also know that beyond creating a climate strat-
egy, the Bank of Åland should continue pursuing various activities
that will help move us towards the established targets. An addi-
tional focus area is growth connected to goal .
CLEAN WATER AND SANITATION
Goal
According to the Bank of Åland’s climate strategy.
Commitments
We will begin to measure the water-intensity of
our investments.
Using the Åland Index, our customers will gain
access to reports on their water consumption.
One goal is to help reduce pollution in the Baltic
Sea. We contribute to this work through the Baltic
Sea Project, which supports companies and
organisations that work actively to reduce pollu-
tion of waterways.
The Bank of Åland was one of the founders of the
Stockholm Water Prize, which is awarded by the
Stockholm International Water Institute (SIWI).
We are still contributing to the annual awarding
of the prize.
We have informally eco-labelled the water taps in
our offices, which means that we only serve
unbottled water.
Targets:
6.1
6.3
6.5
6.6
6B
AFFORDABLE AND CLEAN
ENERGY
Goal
According to the Bank of Åland’s climate strategy.
Our goal is per cent energy from renewable
sources.
Commitments
We give preference to green investment products
and offer our customers investment products that
benefit environment characteristics (Article ,
Sustainable Finance Disclosure Regulation).
Since our Vindkraftsfond (Wind Power Fund)
invests in wind farm projects, we are helping to
increase the proportion of renewable energy in
the Nordic countries.
In November the Bank of Åland’s mutual fund
company and its Swedish wind power partner OX
signed a memorandum of understanding to
develop the Noatun offshore wind power project
Noatun in the Baltic Sea south of Åland. The Noa-
tun project is in an early phase and, when com-
pleted, will consist of about wind turbines that
together will produce about TWh per year,
equivalent to the annual electricity consumption of
some four million households. Noatun’s production
capacity will be per cent higher than that of the
Olkiluoto nuclear power plant in Finland, which
will go into service in the summer of .
Targets:
7.2
7.3
The Bank of Åland’s climate
targets
• The Bank of Åland shall reduce its CO
e emissions by per
cent no later than , compared to .
• The Bank of Åland shall be a climate-neutral organisation no
later than , in line with Finland’s climate policy decision.
• The Bank of Åland shall achieve net-zero emissions by .
Our goal is
energy from renewable
sources.
Annual Report
RESPONSIBLE CONSUMPTION
AND PRODUCTION
Goal
According to the Bank of Åland’s climate strategy.
Commitments
The Bank of Åland’s Code of Conduct helps us
and our suppliers to act responsibly and ethically.
We follow regulations as well as policies on ethi-
cal conduct and the identification and manage-
ment of conflicts of interest. Through training
programmes and technical development, we
help combat corruption, money laundering and
other criminal activities.
During , we participated in a food waste
campaign organised as part of the Åland sustain-
ability agenda Bärkraft. The aim of the campaign
was to highlight the importance of healthy habits
to reduce food waste.
Through the Baltic Sea Account and the Baltic Sea
Card with the Åland Index, our customers have
the opportunity to make their own environmen-
tally friendly choices.
Together with the charity Emmaus Åland, we
have made it easy for our employees to recycle
clothes and shoes by using collection bins in
the office.
How we travel is of great importance for our cli-
mate impact. Our business travel policy is thus
part of our climate strategy to achieve the Bank of
Åland’s climate goals.
Targets:
12.5
12.6
12.7
12.8
12.2
12.3
12.4
LIFE BELOW WATER
Goal
According to the Bank of Åland’s climate
strategy.
Commitments
Through the Baltic Sea Account and the Baltic
Sea Project, we and our customers help reduce
pollution in the Baltic Sea. Various companies
and organisations are given the opportunity to
receive funds to turn their ideas for a healthier
sea into reality. Our environmental work
started as early as and has its origins in
our location in a mid-Baltic Sea archipelago.
Targets:
14.1
14.2
14.3
14.5
14.A
CLIMATE ACTION
Goal
According to the Bank of Åland’s climate
strategy.
Commitments
We calculate CO
e emissions from our core busi-
ness and our own operations in accordance with
the GHG protocol.
We will compensate for climate emissions in
from our own operations through a com-
pensation portfolio (read more on page ).
Our investment process includes analyses from
the global index provider MSCI. We take into
account company data such as environment,
social responsibility, corporate governance, sus-
tainability risks and combating climate change,
which thus gives us a clearer overall picture of
each company that is analysed. We offer Nordic
Eco-labelled funds and are working to expand
our product range. We invest in green bonds
that contribute to lower emissions. We exclude
investments in coal companies.
The Bank of Åland launched its framework for
green bonds in October .
We are part of the Climate Action
initiative.
Targets:
13.1
13.2
13.3
S
V
A
N
E
N
M
Ä
R
K
E
T
Fond
3101 0027
LIFE ON LAND
Goal
According to the Bank of Åland’s climate
strategy.
Commitments
Protecting, restoring and promoting the sus-
tainable use of land-based ecosystems, sus-
tainable forest management, combating
desertification, halting and reversing soil deg-
radation and halting the loss of biodiversity.
Through the Åland Index, we are increasing
our employees’ and customers’ awareness of
their own carbon footprint. At the same time,
we are working to reduce our carbon dioxide
emissions. Our employees are trained and
committed to sustainability and environmental
work, for example through local “keep nature
clean” projects.
Targets:
15.1
15.5
15.A
Bank of Åland Plc
DECENT WORK AND ECONOMIC
GROWTH
Goal
According to the Bank of Åland’s climate strategy.
The Bank of Åland’s long-term financial targets:
Return on equity after taxes (ROE) shall exceed per cent
over time.
The common equity Tier capital ratio shall exceed the FIN-
FSA’s minimum requirement by .–. percentage points.
The payout ratio shall be per cent or higher, provided that
capital adequacy does not fall below target.
Commitments
We want to ensure the customer’s repayment capacity
and ensure that the loan meets the customer’s needs.
We work to integrate sustainability risk into our risk
assessment when new loans are granted. We offer bank-
ing services and lending to individuals and to companies
of varying sizes.
Our investments exclude companies that violate the Global
Compact, which helps to ensure decent working conditions.
We work actively to promote integration into society and
diversity. For example, by welcoming work and language
trainees we can contribute to employment, integration
and diversity.
An annual salary analysis is a self-evident part of our gender
equality work, and we apply a salary model that will ensure
equal pay for equivalent work. Our goal is an equal gender
distribution. The entire organisation shall be permeated by
our goal of equal gender distribution, with at least per
cent women and a maximum of per cent men.
We are pursuing gradual work environment improve-
ments and we comply with applicable legal requirements.
We attach great importance to continuously improving
cooperation between us as employers and our staff and
union representatives.
During , the Bank of Åland in addition to being a
bank also became an external banking service provider.
Based on partnerships with fintech companies, which we
have engaged in since , we developed into a full-
scale service provider to Borgo AB, a new lender in the
Swedish mortgage market. This collaboration will achieve
economies of scale, and the Swedish market can enjoy
competitive interest rates. All the partnerships in which
the Bank of Åland participates aim at improving economic
efficiency and include technical innovation. Our partners
share our values and have sustainable development as an
important point in their shared everyday activities.
We are an active player in the business community and
maintain a broad community involvement, mainly in
Åland. We participate in various networks and share our
expertise and experience when this is requested.
Another of our focus
areas is our significant
impact on UN goal
number
Decent work and economic growth. Our business is grow-
ing continuously and we have a clear long-term target for
our financial growth. In Åland, we are a sizeable
employer and provide jobs and taxes. Our role as an
employer is especially important and we maintain
decent working conditions based on collective bargain-
ing agreements and current regulations. We work
actively to promote social sustainability – an inclusive
society, equal worth, sound values and broad community
involvement. The Bank also complies with current regu-
lations to combat corruption, money laundering and
other criminal activities.
Targets:
8.1
8.2
8.3
8.5
8.7
8.8
8.10
Annual Report
All the goals are
important to us
Our materiality analysis for also made it clear that other UN
sustainable development goals, besides the six goals described on
pages –, are also important to us and our stakeholders. Our
development plans thus also include these goals. We have identi-
fied several measurable objectives for , besides the above-
mentioned climate targets, to ensure that we have the right
strategy to achieve progress.
Analysing one’s own operations from a global sustainability per-
spective can sometimes be challenging. But the insights that this
work provides will help advance our sustainability efforts. One
example of a challenge is the two UN goals No poverty and No
hunger, which we have discussed a lot internally. Although on an
emotional level these goals feel extremely important, we are
forced to realise and admit that we are not currently helping to
promote them.
On the other hand, we are convinced that in the long run we will
be able to pull our weight. Below we provide an overview of how
our operations affect the UN’s global sustainable development
goals. Sustainability is a natural element of our business and
therefore this year we have integrated other sustainability report-
ing into the existing chapters of our annual report.
SUSTAINABLE CITIES AND
COMMUNITIES
Make cities and human settlements
inclusive, safe, resilient and sustainable.
The Bank’s Bostadsfonden real estate mutual
fund helps create a mix of rental and owner-
occupied homes. Our Tomtfonden mutual fund
contributes to urban infrastructure. We gener-
ate jobs while helping to reduce housing
segregation.
In the premises where we work, we are
expanding waste recycling, thereby helping to
reduce our environmental impact. Our employ-
ees are encouraged to use fossil fuel-free
modes of transport or use public transport.
Targets:
11.1
11.3
11.4
11.6
11.A
PARTNERSHIPS FOR THE
GOALS
By connecting our operations to the UN’s sustain-
able development goals and by being transpar-
ent, we are helping make these goals known to
our stakeholders.
Thanks to several business partnerships, we are
able to contribute to national and global aware-
ness of sustainable development.
We have adopted the UN principles for responsi-
ble banking and responsible investment.
Targets:
17.13
17.14
17.16
INDUSTRY, INNOVATION AND
INFRASTRUCTURE
Build resilient infrastructure, promote
inclusive and sustainable industrialisation
and foster innovation.
We support local entrepreneurship in Åland by
providing funding guaranteed by the European
Investment Fund (EIF). Our ambition is to con-
tribute to greater awareness of sustainability
issues among our corporate customers. This is
done primarily through a dialogue about a com-
pany’s sustainability plans at the time of lending.
Targets:
9.1
9.3
9.4
9.5
9.B
QUALITY EDUCATION
Ensure inclusive and equitable quality
education and promote lifelong learning
opportunities for all.
We create conditions that enable our custom-
ers to study, by offering them student loans as
well as affordable and specially tailored bank-
ing services for students.
All our asset managers have undergone Certi-
fied ESG Financial Analyst training. We aim at
per cent participation in our internal finan-
cial expertise training related to regulatory
requirements. We provide a yearly advanced
training course for those employees who have
are certified investment advisors. We have also
implemented an improved system for creating
our own training programmes.
We have a well-established leadership pro-
gramme that is provided yearly.
We participate in various networks and share
our expertise and experience when this is
requested.
Targets:
4.4
4.
Bank of Åland Plc
REDUCED INEQUALITIES
Reduce inequality within and among
countries.
All employees must enjoy the same rights and
pre-conditions regarding professional develop-
ment. We offer language traineeships for peo-
ple with native languages other than Swedish.
As for the psychological work environment, we
have zero tolerance for discrimination, harass-
ment and bullying. Through dialogue, educa-
tion, awareness, clear guidelines and resolute
action, our goal is openness and a safe envi-
ronment for all.
We judge all customers and their repayment
ability on the same basis. Our salary model and
annual salary survey aim at ensuring equal pay
for equivalent work.
Targets:
10.2
10.4
10.5
10.7
10.1
PEACE, JUSTICE AND STRONG
INSTITUTIONS
Promote peaceful and inclusive societies
for sustainable development, provide
access to justice for all and build effective,
accountable and inclusive institutions at
all levels.
We maintain high ethical standards and follow
regulations, policy documents and our Code of
Conduct regarding ethical behaviour as well as
identifying and managing conflicts of interest.
Through training programmes and technical
development, we help combat corruption,
money laundering and other criminal activities.
Our corporate culture is characterised by open-
ness to different opinions. There is a high level
of commitment within our organisation and we
are continuing our efforts to improve it.
Targets:
16.4
16.5
16.6
16.7
GENDER EQUALITY
Achieve gender equality and empower all
women and girls.
We make a conscious effort to ensure that all
employees enjoy equal rights and opportuni-
ties with regard to compensation and profes-
sional development. We aim at achieving at
least a / gender balance. At team and
department levels, as well as in certain posi-
tions, there may still be imbalances. Our salary
model and annual salary survey aim at ensur-
ing equal pay for equivalent work. Our aim is
to ensure that women’s salaries are – per
cent of men’s salaries.
We contribute by judging all customers and
their repayment capacity on the same basis.
In the Group’s gender equality work, we aim at
achieving a gender balance when we recruit
employees.
Locally, we endeavour to contribute to gender
equality.
Targets:
5.1
5.4
5.5
5.A
5.B
5.C
GOOD HEALTH AND
WELLBEING
Ensure healthy lives and promote well-
being for all at all ages.
By providing banking services to companies
and organisations, we can help increase health
and well-being locally where we are.
We endeavour to create a good physical and
psychological work environment, as well as a
high level of commitment among all employ-
ees. Our long-term target is a commitment
index above ..
As for the psychological work environment, we
have zero tolerance for discrimination, harass-
ment and bullying. Through dialogue, training,
awareness, clear guidelines and decisive
action, our goal is openness and a safe envi-
ronment for all.
Targets:
3.4
3.5
3.
Annual Report
0
200
400
600
800
1 000
202120202019
0
10
20
30
40
50
202120202019
0
10
20
30
40
50
60
70
80
202120202019
0
150
300
450
600
750
900
202120202019
0
10
20
30
40
50
202120202019
0
15
30
45
60
75
90
202120202019
Information about employees
By gender
Women
Men
By region
Åland
Finnish mainland
Sweden
By age category
–
Expansion
Åland
Finnish mainland
Sweden
Women
Men
Employee turnover
By gender By regionBy age category
–
The Group hired new regular employees during . Expansion was
. per cent compared to total full-time equivalent employees, which
was an increase from . per cent in .
In the Bank of Åland Group, people ended their regular employ-
ment during . This included retirements. As a percentage of
total full-time equivalent employees, this was an employee turnover
of . per cent, an increase from . per cent in .
Åland Finnish mainland Sweden
Regular
Employment contract type by region
Åland Finnish mainland Sweden
Temporary, monthly
Åland Finnish mainland Sweden
Temporary, hourly
Women Men
Regular
Employment contract type by gender
Women Men
Temporary, monthly
Women Men
Temporary, hourly
Employee mobility
Expansion, . . .
Employee turnover, . . .
Sustainable key figures
Bank of Åland Plc
Information about diversity
Healthy attendance and accidents
Healthy attendance, . . .
Accidents
Part-time/full-time
by gender
Gender Part-time Full-time Total Part-time Full-time Total Part-time Full-time Total
Women
Men
Totalt
Gender breakdown
Gender Number Number Number
Senior
executives
Women
Men
Total
Board
Women
Men
Total
Employees
Women
Men
Total
Age breakdown
Age Number Number Number
Senior
executives
–
>
Total
Board
–
>
Total
Employees
–
>
Total
The number of jobs in the Group totalled at the end of
(: ). Of these employees, ( per cent) had perma-
nent contracts and ( per cent) had temporary contracts. Women
accounted for per cent and men for per cent of those with
permanent contracts.
Women accounted for per cent of all part-time jobs while men
accounted for per cent. Just over half the work force was stationed
in Åland, while the remainder are divided between the Finnish main-
land and Sweden.
Healthy attendance means the percentage of unique individuals among
all employees who did not have a continuous absence longer than two
weeks due to illness.
Our goal is a balanced gender breakdown (at least /). Total gender
representation in the Group was / during . Among senior
executives the breakdown was per cent women and per cent
men. At the Board level, the breakdown was per cent women and
per cent men.
“Senior executives” refers to the Group’s Executive Team plus the
managing director and deputy managing director of subsidiaries.
“Board” refers to all board members in each Group company. These
figures were compiled on the last day of each respective year.
Annual Report
Information about community involvement
Economic value-added
EUR M
Total income minus impairment losses . .
Value-added generated by serving
the Bank’s customers . .
Employees
Salaries . .
Social security and other sta costs . .
Total value to employees . .
To central government
Income taxes . .
Non-deductible value-added taxes . .
Deposit guarantee fees . .
Fees to government stability fund . .
Total value to central government . .
Suppliers
. .
Sponsorships . .
Total other value to society . .
Transactions with shareholders
Dividend paid
. .
CET capital instrument, dividend .
New share issue –. –.
Total transactions with shareholders . –,
Remaining in the Bank
Reinvested economic value . .
Refers to miscellaneous administrative expenses and depreciation/amortisation.
On January , , the Board of Directors approved a dividend of EUR per share
for the financial year. The dividend was paid to shareholders in January .
0
30
60
90
120
150
180
20212020
Economic value-added
Employees
Central government
Other public entities
Shareholders
Reinvested
economic value
Aside from paying income and value added taxes to the Finnish govern-
ment, the Bank of Åland is a sizeable employer, especially in its Åland
home market.
The Bank contributes to employment by providing about jobs in
Åland, which makes us the second largest private employer in Åland.
By paying social security fees, the Bank of Åland helps strengthen
social protection. In addition, the Bank pays fees to the government’s
stability fund, which helps maintain financial stability in Finland.
The Bank is deeply involved in the Åland community and contributes
to it mainly by supporting culture, sports and studies. By doing so,
we are helping to create meaningful leisure activities and a future for
children and young people. The Bank considers it important to ensure
that Åland is a vibrant community that people want to remain in, move
to and return to.
Through the Bank’s employees, we participate actively in numerous
community functions that are important to Åland.
The Bank of Åland’s community involvement
Bank of Åland Plc
Private Banking
Photographer: Viktor Fremling
Magnus Johansson, Director of the Sweden Business Area; Mikael Mörn, Director of the Åland Business Area;
and Anne-Maria Salonius, Director of the Finnish Mainland Business Area.
Finland's best Private Banking provider
The Private Banking segment encompasses
Private Banking operations in Åland, on the
Finnish mainland and in Sweden as well as
asset management (Ålandsbanken Fond-
bolag Ab, Ålandsbanken Fonder Ab, Ålands-
banken Fonder II Ab, Ålandsbanken Fonder
III Ab, Ålandsbanken Fonder IV Ab, Ålands-
banken Fonder V Ab and Ålandsbanken
Fonder VI Ab).
Our Private Banking offering is one of the
cornerstones of the Bank’s business opera-
tions. Private Banking is where the Bank of
Åland has its largest market share both on
the Finnish mainland and in Sweden.
Net operating profit from Private Bank-
ing in amounted to EUR . M, which
was equivalent to per cent of the Bank’s
total net operating profit. Return on allo-
cated equity was . per cent. Actively
managed assets rose by per cent.
Private Banking continued to attract new
customers in all three geographic home
markets. During a number of new
members were added to the team in order
to meet heavy demand and be able to serve
customers in the best way.
Due to the coronavirus pandemic, many
customer meetings and customer events
took place in digital formats during as
well, but the Bank’s customer surveys show
that customers continue to appreciate us
greatly, especially due to the Bank’s exper-
tise and personalised service as well as high
ethical standards and sustainability work.
During the year, the Bank of Åland was
named Finland’s best Private Banking pro-
vider in Kantar Prospera’s annual survey.
Ålandsbanken Fondbolag manages the
Bank of Åland’s mutual funds and, as an
intra-Group service, delivers all material
supporting the Bank’s asset management
services to customers: from overall market
outlook reports and asset allocation recom-
Annual Report
0
2,000
4,000
6,000
8,000
10,000
20212020201920182017
Actively managed assets
EUR M
mendations to model portfolios for individ-
ual securities.
The final outcome of our management
of Bank of Åland mutual funds and model
portfolios was generally good, benefiting
the Bank’s customers. Some funds and
portfolios performed exceptionally well
during the year, driven both by the right
management strategies and the market’s
overall strong performance.
The year has the potential to go
down in history as one of the strongest years
for risk assets in modern times. A combina-
tion of strong demand growth and extensive
monetary and fiscal policy stimulus meas-
ures contributed to surprisingly strong prof-
itability growth in the private sector. Rising
corporate earnings laid a good foundation
for stock markets, which rose on a broad
front throughout the year and ended
at close to historic record levels, despite in-
creased inflationary pressures that led to
gradually rising interest rates and bond yields.
The corporate bond market showed a
mixed performance, where rising risk-free
yields could not be fully offset by lower risk
premiums. “High yield” bonds generated a
positive return during the year while bonds
with stronger credit quality generally lost
some value as a result of rising risk-free yields.
Looking at , we continue to view
the global economic situation optimisti-
cally, although there are many indications
that growth will decelerate somewhat
compared to last year's extreme levels.
Uncertainty about inflation and central
bank actions should lead to more volatile
markets in the short term. Further ahead,
we foresee good potential for generating
a healthy risk-adjusted return for our mutual
fund investors.
In , the medium-term corporate
bond fund Ålandsbanken Euro Bond
received the Refinitiv Lippers Fund Award
for the eighth year in a row as the best fund
in its comparison category.
In May the Ålandsbanken Premium
fund merged with Ålandsbanken Pre-
mium , which at the same time changed
its name to Ålandsbanken Kapitalförvalt-
ning. During the year, the fund’s returns
were well above the level in its comparative
category. Meanwhile it received a maximum
-star rating from Morningstar for its perfor-
mance over the past three years. Following
the merger, the fund will be positioned as a
balanced active asset management fund
targeted to both the Premium and Private
Banking customer segments.
When stock markets entered a strong
recovery phase after the initial coronavirus
crisis in the spring of , we launched a
new equity fund specialising in small and
medium sized enterprises (SMEs), the
Ålandsbanken Nordiska Småbolag. The
fund's first operating period in already
looked very promising, since its returns were
well above its benchmark index. During the
full year it became the best-performing
mutual fund in Finland, with a return of .
per cent.
The Bank’s real estate mutual funds con-
tinued their strong performance during the
year. During the housing fund Ålands-
banken Bostadsfond successfully completed
several real estate projects, resulting in
strong returns to fund investors.
Ålandsbanken Tomtfond, which special-
ises in housing sites, has continued to per-
form according to expectations. However, its
ability to identify investments that meet its
return targets has been a limiting factor for
growth in recent years, and it has normally
held significant liquid assets while waiting to
find suitable investment projects.
Ålandsbanken Vindkraft (Wind Power)
got off to a flying start during its first year of
operation. This mutual fund was launched
late in and immediately invested in its
first wind farm. In terms of timing, the
launch was highly successful, since demand
for wind farms rose sharply during .
Meanwhile fossil fuel prices have risen,
which has strengthened the trend towards
green energy. Technological advances are
boosting the efficiency of wind power pro-
duction. The upturn in price levels for wind
farms was reflected in the fund's value
through an . per cent upturn in .
This clearly exceeds the long-term expected
return for the fund, which is – per cent
annually.
Ålandsbanken Fondbolag is actively par-
ticipating in a project to create large-scale
offshore wind power in the Baltic Sea
according to the provincial government’s
Åland Sea Plan, which may open up major
investment opportunities in the future. The
Bank’s wind power mutual fund appears to
have good potential to grow in a profitable
way. Wind power is the cheapest way to gen-
erate electricity, and the business is cur-
rently profitable without government subsi-
dies. The demand for electricity is expected
to soar as a result of the continued electrifi-
cation of society. Meanwhile global climate
targets are becoming stricter, which will
require reduced emissions from fossil fuel
energy production. Combined with the very
strong advances in wind turbine technology
in recent years, this means that the outlook
for Ålandsbanken Vindkraft is promising.
During asset management opera-
tions established a climate strategy that fol-
lows the Bank of Åland's climate targets.
Ålandsbanken Fondbolag’s target is to halve
carbon dioxide emissions in asset manage-
ment by (compared to the level)
and to be a carbon-neutral asset manager
by , in line with Finland's objectives.
This is consistent with the Bank of Åland's
emission reduction and carbon neutrality
targets. Our method for achieving these
goals within asset management will include
research to ensure that the companies
we invest in can demonstrate that their
operations take into account the targets
of the Paris Agreement in all their
investment strategies.
Generally speaking, the Bank of Åland’s
mutual funds show a good level of overall
sustainability. Among other things, the car-
bon dioxide intensity of their activities is low
compared to the mutual fund sector as a
whole. Two of the Bank’s own mutual funds
are also Nordic Swan Eco-labelled: the
equity fund Ålandsbanken Global Aktie and
the Green Bond ESG fund. Among the
requirements for a Nordic Swan eco-label is
that a fund may not invest in fossil fuel busi-
nesses. The Nordiska Småbolag mutual fund
is also fossil fuel-free in nature.
Bank of Åland Plc
Premium Banking
More customers have financial investment potential
During the Premium Banking concept
continued its focus on asset management
and financial investments, primarily for the
upper segment in its target group who have
larger investable assets. While Private Bank-
ing has seen its customer base shift towards
customers with increasing wealth that must
be managed, the trend is similar in Premium
Banking, although the financial investment
volume per customer is substantially lower
than in Private Banking.
The growth of actively managed assets
remained very high. Deposits also continued
to grow. Even though the Bank of Åland has
chosen not to participate in price competi-
tion in the home mortgage market, but
instead to concentrate on providing person-
alised service and advice, lending volume
also increased.
Net operating profit from Premium
Banking totalled EUR . M in .
Before impairment losses, operating
profit increased by per cent and
amounted to EUR . M.
Customer surveys continue to confirm
that our customers appreciate the personal-
ised service we provide. Customer satisfac-
tion was at a record level. To a great extent,
customers are willing to recommend us to
their friends. Customer meetings via digital
channels increased during the year due to
coronavirus pandemic.
During the year, we continued working to
achieve profitable growth. One special focus
area was financial investments on behalf of
affluent individuals. An innovation in
was that we were the first bank in Finland to
launch a share savings account with discre-
tionary management, which is a product
that complements our fund offering.
We continuously invest in skills development,
and our employees participated in both
internal and external training during the year.
The Bank of Åland’s Corporate Services unit
is the market leader in Åland and offers a
wide range of services and products adapted
for Åland-based companies. During the year,
the department was divided into a Corpo-
rate Services unit and Bank of Åland Corpo-
rate Banking in order to broaden our offer-
ing and also provide services outside Åland.
Corporate Banking handles larger corpo-
rate groups with an international focus
domiciled in Åland. In addition, the new
unit offers advanced financing services to
existing and potential customers through
Private Banking on the Finnish mainland
and in Sweden.
In the Corporate Services unit
worked actively to offer Åland-based com-
panies liquidity loans supported by the
Åland provincial government to bridge over
the negative impact of the coronavirus pan-
demic and related restrictions on their oper-
ations. The Åland business community is
also being offered funding guaranteed by
the European Investment Fund (EIF). With
the help of EIF guarantees, the Bank's capital
and credit risk expenses are decreasing,
which in turn benefits companies. As a
result, the Bank of Åland has been able to
offer more favourable funding terms for
small and medium sized companies that
wish to expand their operations or make
environmental and sustainability-related
investments, for example.
The ambition of the Corporate Services
unit is to be in the forefront in supplying
the Åland business community with capital
to invest in the transition to a more sustain-
able society. During the year, Corporate
Services continued its involvement in pro-
jects and working groups organised by the
Åland Chamber of Commerce and the pro-
vincial government. In this way, we want to
contribute to a positive view of entrepre-
neurship and give business owners the
opportunity to get started or expand their
operations more easily business with the
help of effective tools.
All individual and corporate customers who are not Private Banking customers are
reported in the Premium Banking business segment. The Bank’s Corporate Services
unit in Åland is also part of this segment.
Photographer: Staan Sundström
Bank of Åland Plc
Partnerships
External service deliveries provide a broadened business model
Photographer: Therese Andersson
Sofie Holmström, Manager of the Partnerships Business Area.
The Bank of Åland’s business partner-
ships include collaboration with Swedish
fintech companies, service deliveries
in the payments field in Sweden and
Finland and delivery of wide-ranging
services to the newly established Swed-
ish mortgage company Borgo. The Bank
of Åland also has ownership stakes in
three partner companies: Dreams,
Doconomy and Borgo.
The emergence of an increasingly digitised
banking industry has led to the establish-
ment of many financial technology (fintech)
companies in recent years. The Bank has
explored how the expertise within the Bank
of Åland Group can be used to reach an ever
larger market through business partner-
ships. The Bank was among the pioneers of
this trend, initiating its first fintech partner-
ship with Swedish-based Dreams AB as early
as . As a natural next step, the Bank’s
broad expertise has been packaged as
external service deliveries to the new Swed-
ish home mortgage company Borgo AB,
a partnership that began in . Once
again, the Bank of Åland has taken the lead
this time by expanding the ability of mar-
ket participants to outsource full-scale
banking services as well as reporting to
authorities, internal business follow-up and
financial reporting.
Annual Report
Outsourcing of such internal operations
as IT services has existed in the banking
industry for many years. The Bank’s subsidi-
ary Crosskey was established in , and
through this company the Group was able to
start offering IT services to external parties,
thereby generating new revenue. In addi-
tion, IT development remained an important
field of intra-Group expertise. Together with
other market players, the Bank of Åland
Group has carried out further development
work to continue maintaining top quality.
By now also offering external back office
services in banking, the Bank is maintaining
this intra-Group expertise as before, while
enabling more market players to benefit
from our knowledge.
The Bank’s mortgage collaboration with
Borgo has been a focus of attention during
. This large-scale implementation pro-
ject ran throughout the year. During the first
quarter, Borgo received permission from the
Swedish Financial Supervisory Authority to
conduct financing operations and to issue
covered bonds. During the fourth quarter,
Borgo was able to begin offering its services
to the Swedish mortgage market, and the
Bank of Åland began providing service deliv-
ery for loan management, customer and
account management as well as payments,
treasury and financial reporting. During the
year, the southern Swedish savings bank
Sparbanken Syd joined the partnership
alongside ICA Bank, Ikano Bank, Söderberg
& Partners and the Bank of Åland, which
launched the joint venture in and are
all co-owners of Borgo.
On February , , the Bank of Åland
transferred its Swedish home mortgage to
Borgo, and covered bonds were also trans-
ferred. Upon this transfer, the mortgages
provided to customers of ICA Bank and
Söderberg & Partners, which have been
temporarily handled by the Bank of Åland
pending the launch of Borgo, will also be
transferred. These transfers will have a posi-
tive effect on earnings, while the col-
laboration will subsequently find its natural
growth rate and continue to contributin-
creasingly to the Bank of Åland's earnings.
In lending services will be expanded
and the implementation project will be fully
completed. When Sparbanken Syd's mort-
gages are transferred to Borgo, a significant
increase in volume will enable the Bank of
Åland's platform service to be utilised to an
even greater extent.
During , collaboration with the
Swedish fintech company Doconomy grew,
since the Åland Index is now used in more
than countries and by million peo-
ple, establishing a global banking standard
for carbon footprint calculation. Since April,
the index has been offered to MasterCard
customers all over the world and to the fin-
tech company Klarna's customers via their
own app.
Since fresh water is also in short supply
in many countries and water consumption is
an important factor in sustainable develop-
ment, Doconomy further refined the Åland
Index during by launching the world's
first water impact calculator. Based on data
from card transactions, the index responds
with information on the amount of water
that has been consumed, and users are
made aware of their climate impact. In ,
the Bank of Åland's customers will also be
included in such water impact calculations.
In addition, a calculation model for climate
impact based on a person's lifestyle was
launched during the year. The calculation,
which is available to the general public,
is based on how you answer selected
questions. It then provides a measurement
of your individual carbon footprint and
inspiration for reducing your impact.
In order to make continued rapid expan-
sion possible, in August the Bank of Åland
chose to sell the intellectual property (IP)
rights to the Åland Index to Doconomy and
thus its stake in the jointly owned company
Åland Index Solutions. The use of the Åland
Index will continue to expand, and last
autumn Doconomy carried out the largest
funding round in Europe for climate fintech
companies, securing investments of EUR
M. The Bank of Åland also participated in
the funding round.
During Dreams continued to attract
many users to its research-based savings
app, which helps people achieve greater
financial well-being. The Bank of Åland pro-
vides account management, payments ser-
vices and mutual fund savings for more than
, customers. In the product
range will be expanded to also offer savings
products that help private individuals
become debt-free more quickly and achieve
balanced household finances. As a result of
their successful collaboration since ,
Dreams and the Bank of Åland have agreed
to extend their partnership, since they will
both benefit from continuing to create inno-
vative services. The Bank of Åland has an
ownership stake in Dreams AB, which is
based in Sweden.
In the payments field, digitisation is also
driving continued advances in the fintech
sector. The Bank of Åland offers payments
services that enable fintech companies to
tailor the e-commerce and transaction
payments experience of private individuals
in new ways. Because of the Bank's long-
term presence in both the euro and Swedish
krona areas, its offering is competitive.
There is good potential in this field
going forward.
Bank of Åland Plc
Corporate units
Photographer: Viktor Fremling
Tove Erikslund, Chief Administrative Ocer; Jan-Gunnar Eurell, Chief Financial Ocer;
and Juhana Rauthovi, Chief Risk & Compliance Ocer.
Selling their knowledge outside the Bank
CFO Corporate Unit
Chief Financial Ocer Jan-Gunnar Eurell is
in charge of the Treasury and Group Finance
departments. The CFO Corporate Unit has
more than employees in Mariehamn,
Helsinki and Stockholm.
Treasury is responsible for optimising the
Bank of Åland’s portfolio and liquidity man-
agement. The department ensures that the
Bank can meet its need for cost-effective refi-
nancing in both the short and long term. Its
responsibility for portfolio management also
includes managing the interest rate, foreign
exchange and liquidity risks that the Bank’s
business operations transfer to Treasury via
internal prices.
Treasury manages a portfolio of about
EUR . billion, of which about EUR . billion
is the Bank’s liquidity reserve. About per
cent of the holdings of debt instruments in
the treasury portfolio consist of green bonds.
Treasury manages capital market borrowing
of about EUR . billion. Treasury operations
are highly important to the Bank’s earnings.
Fortunately, the trend towards falling capital
market funding costs continued during .
The year witnessed many new types of
capital market transactions. For the first time,
Treasury issued an additional Tier (AT) capi-
tal instrument amounting to SEK M, a
green supplementary capital (T) instrument
for SEK M and a new issue of SEK . bil-
lion in covered bonds with contractual condi-
tions allowing them to move from Finnish law
to Swedish law and from the Bank of Åland as
counterparty to Borgo as counterparty when
the Bank’s Swedish mortgage portfolio is
transferred to Borgo during the first half
of .
The task of Group Finance is to deliver
public information to the market and regula-
tory authorities, but also to develop and
manage the Group’s financial and business
control. In addition, the department has
Group-wide responsibility for the purchasing
process, ownership of shared technical plat-
forms and systems as well as workplaces
and data warehousing.
The processes at Group Finance maintain
high standards, with consolidated financial
statements and internal financial control
reports ready on the fifth banking day after
Annual Report
each report period. Estimated customer anal-
ysis and profitability reports are updated
from the data warehouse. Work station
equipment has gradually been modernised
and rationalised, enabling the department to
successfully manage the need for remote
work during the coronavirus crisis. A system-
atic effort to streamline purchasing and sup-
plier relationships has led to gradually lower
expenses for purchased services. Sustainabil-
ity has become an integral part of operational
planning as well as financial reporting.
During the CFO Corporate Unit will
continue its efforts to streamline and raise
the quality of its work processes. Two of
the Bank of Åland’s platform services to
the new Swedish mortgage company Borgo
are treasury service and accounting service.
One special project area is business intelli-
gence and data management, with more
and more data being stored in the “cloud”
and increasingly forward-looking data
analysis work becoming possible.
CAO Corporate Unit
Chief Administrative Ocer Tove Erikslund is
in charge of the Business Support, Business
Support Capital Market, Customer Service &
Market Support, Business Development and
Human Resources departments, as well as
the sustainable development unit. The CAO
Corporate Unit has about employees in
Mariehamn, Helsinki and Stockholm.
The Business Support Capital Market and
Business Support departments are the largest
clients of the Bank’s prioritised development
projects.
During the continued main focus
was development work to adapt operations to
current regulatory and market requirements.
More than half of the costs of the Bank’s pri-
oritised development work during the year
were related to new or amended regulations.
During the coming year, the Bank expects it
will need substantial work and investments
for regulatory adaptations, especially in the
payments and lending areas.
A large proportion of development work
during was related to the Bank’s invest-
ment in the Swedish mortgage company
Borgo, where the Bank supplies the compa-
ny’s platform service. Further development
and completion of these deliveries will con-
tinue during .
During the year, efficiency improvement
projects otherwise focused on reducing
licensing expenses for IT systems, improving
systems back-up for customer advisors and
reducing paper print-outs. A multi-year
effort to create mutually compatible cus-
tomer databases is one example of deliver-
ies with a substantial cost impact that were
completed during . To run efficient back
office operations, it is increasingly important
to develop common processes and systems
for all business areas and different customer
segments. IT development for the Bank’s
business partners and management of these
services also create new requirements.
Robotic Process Automation (RPA) and
the use of data warehousing also expanded
during the year.
In the digitisation field, a number of inno-
vations and improvements were made in the
Internet Office and the Mobile Bank. For
example, the Mobile Bank added mutual fund
trading, applied to join the Swish mobile pay-
ments system in Sweden and now displays
the share savings account in Åland and on the
Finnish mainland. During the Bank
broadened its service offering by adding a
new credit card targeted to Private Banking
customers as well as the Apple Pay and
Google Pay mobile payments solutions.
Development work related to anti-money
laundering and combating the financing of
terrorism (AML/CFT) is continuously under
way, since the field is steadily growing and
banks are required to meet ever-higher
standards.
The volume of cases handled by Customer
Service continued to increase during .
Customers can contact the Bank via tele-
phone, the Internet Office messaging service,
email or online chat. One explanation for the
increase in cases is the accessibility offered
by the Mobile Bank. During the number
of cases per month averaged about ,,
compared to , in . More and more
customers are choosing to activate their e-ID,
which makes it easier to identify themselves
as well as log into the Internet Office and
Mobile Bank.
The surveys that we continuously conduct
show that Customer Service maintains high
quality in its encounters with our customers.
The surveys provide comparative background
data on some other banks in Finland and
Sweden. The Bank of Åland’s Net Promoter
Score (NPS) of represents an improvement
over , when its NPS was . The banking
sector’s average was . General satisfaction
with Customer Service was per cent dur-
ing the year, compared to per cent for the
banking sector.
Human Resources devoted a lot of effort
to coordinating the Group’s COVID-related
work and managing the large expansion in
staffing that occurred during the year. The
department recruited people to the Bank
and its mutual fund subsidiary Ålandsbanken
Fondbolag in . Another focus was on
skills development related to regulatory
requirements. To improve employee empow-
erment work, it further refined various pro-
cesses related to performance reviews and
management by objectives as well as ways to
measure employee commitment and work
satisfaction.
During sustainability work was
strengthened by creating a formal organisa-
tional structure for this purpose, which
focused on the climate change issue. We
worked to understand the Bank of Åland’s
climate impact – both from the organisation
itself and via our operations in the form of
the loan and treasury portfolios and our asset
management business. We did this by making
climate calculations of operations based on
Scope , and of the international Green-
house Gas Protocol (GHGP). This climate cal-
culation was instrumental in enabling us to
establish Group climate targets in December
; our long-term targets are to achieve
climate neutrality by and net-zero
by .
During the Bank of Åland joined
the Net-Zero Banking Alliance to further
strengthen the important work that the finan-
cial sector needs to do in order to combat
climate change.
As part of its efforts to achieve these
targets, in the Bank of Åland also paid
climate compensation for its own operational
emissions.
CRO Corporate Unit
Chief Risk & Compliance Ocer Juhana
Rauthovi is in charge of the Risk Control,
Compliance, Operational Risks & Security,
Legal Aairs, Credit Scoring and Credit
Processes departments. The corporate unit
consists of about people in Mariehamn,
Helsinki and Stockholm.
Bank of Åland Plc
The Risk Office Corporate Unit is primarily
entrusted with protecting the Bank of Åland’s
assets, earnings and brand by providing a
framework for risk and credit management.
Its purpose is to maintain a healthy risk cul-
ture that corresponds to the Bank’s risk appe-
tite and risk-bearing ability.
The Risk Control department is responsi-
ble for independent oversight and reporting
of the Bank’s financial risks. The finan-
cial year was dominated by new regulatory
requirements, and this will continue during
. During Risk Control worked with
the implementation of a new internal defini-
tion of default and made a concerted effort,
together with outside consultants, to update
credit risk models to comply with the new
definition and demanding new regulations,
while improving them to even better reflect
risk in the Bank’s loan portfolios. The Finnish
Financial Supervisory Authority has not yet
approved the new models; this is expected
during .
During the financial year, Risk Con-
trol will continue with implementation of new
regulatory requirements, primarily the Basel
IV regulation. In addition, the department is
participating in efforts to develop tools for
identifying, measuring, monitoring and
reporting risks attributable to climate change.
Risk Control also works with the Bank’s sus-
tainability plan and strategy as they relate to
responsible lending. This work has two
aspects: both to preserve those portions of
the Bank’s lending that already have a posi-
tive impact on sustainable development and
to design its lending to ensure that it will have
a positive impact on selected targets that are
part of the United Nations sustainable devel-
opment goals.
Compliance is an independent depart-
ment that identifies and monitors the Bank’s
compliance risks and reports on these to the
Executive Team and the Board of Directors.
The department provides advisory services
and back-up to the Executive Team and the
Bank’s business operations on how to man-
age compliance risks in order to ensure that
banking operations can follow regulatory
requirements, focusing on the interests of
customers. During the department’s
priorities included monitoring and providing
back-up to banking operations by means of
regulator-mandated development work that
will reinforce the Bank’s efforts to combat
money laundering and financing of terrorism.
Compliance strengthened its team in the field
of investment services and was thus able to
provide clearer back-up for compliance in
the Bank’s financial investment business.
The department also monitored and pro-
posed measures related to how the Bank
should oversee and follow up outsourcing
arrangements.
During the department will continue
to prioritise monitoring of compliance in
financial investment services as well as imple-
mentation of new and coming sustainability
regulations, with a focus on customer protec-
tion. Developing and improving the Bank’s
efforts to prevent money laundering and
financing of terrorism are always high on the
agenda, and this will continue in .
Operational Risks & Security is an inde-
pendent department that provides advisory
services and back-up and sets standards for
operational risk management. Its main areas
of activity are information security, data pro-
tection, releases, continuity and emergency
planning, security, criminal security, risk anal-
ysis and reporting and the new product
approval (NPA) process. The department
focuses on increasing awareness of opera-
tional risks, monitoring compliance in the
field of liability and reporting operational risks
and incidents to the Executive Team and pub-
lic authorities. The financial year was
dominated by participation in project work,
research and acquisition of systems support
for the Bank’s records of processing activities
under the General Data Protection Regulation
(GDPR), improved cybersecurity, quality
assurance of risk analyses, planning and coor-
dination of the Bank’s participation in the
FATO national emergency preparedness
exercise as well as process development
related to the partly owned mortgage com-
pany Borgo.
During the financial year the depart-
ment will continue to focus on advisory ser-
vices, back-up, standard-setting, monitoring
and reporting of operational risks. Back-up
during implementation of systems support
for establishing the Bank’s registry of pro-
cessing, further development of the fraud
prevention process, quality assurance of the
release process, back-up for physical security,
evaluation of the Bank’s cyber-maturity as
well as further development of the Business
Impact Analysis (BIA) are examples of
planned activities. The department will con-
tinue to share its process development exper-
tise in connection with the Bank’s partly
owned mortgage company Borgo.
The Legal Affairs department is responsi-
ble for meeting the needs of the Bank and the
Group for legal expertise, since the Bank
operates as a credit institution and issuer of
securities. The department works continu-
ously to provide back-up for business areas as
well as corporate units in developing and
supplying products and services to the Bank’s
customers. During the department
worked on implementation of new regula-
tions, with an emphasis on sustainability-
related regulations, legal issues related to
the new mortgage company and the expan-
sion of existing business partnerships.
During the department will work with
operational changes related to the start-up
of the Borgo mortgage company partner-
ship and continued implementation of new
regulations again with a strong emphasis
on sustainability and legal issues related to
new and existing business partnerships.
The Credit Scoring department develops
and carries out credit analyses and oversight
in order to ensure good credit quality in the
Bank’s lending. Despite the coronavirus pan-
demic, the proportion of unsettled loans in
the lending portfolio remained at about the
same level as at the beginning of the year,
excluding some large exposures that are not
connected to the coronavirus. There is good
potential to keep the proportion of unsettled
loans at current levels, provided the econ-
omy remains stable and real estate and
share prices remain steady as the pandemic
begins to fade. The department actively
participates in deliveries related to the
mortgage partnership as well as deliveries
required by European Banking Authority
(EBA) guidelines on loan origination and
monitoring. The Credit Scoring department
will participate in loan-related sustainability
work in keeping with credit processes, regu-
latory requirements and the wishes of the
Bank’s lending business.
The Credit Processes department is
responsible for administering and developing
the Bank’s lending process and ensuring that
it fulfils internal and external regulations. The
year was dominated by the implementation
of new regulations such as the EBA guidelines
on loan origination and monitoring, which
went into effect in June, as well as developing
a home loan platform for the new jointly
owned mortgage company Borgo. A mile-
stone was reached when the new home loan
platform went into service during the fourth
quarter. During there will be a focus on
continued development of Borgo’s digital
home loan platform as well as ensuring sus-
tainable and scalable processes related to
new regulations. Credit Processes will also
participate, together with Risk Control and
Credit Scoring, in the implementation of
coming sustainability regulations.
Annual Report
Crosskey is growing very fast
Information Technology
Crosskey is continuing its rapid expansion. At the end of the Bank of Åland’s IT
subsidiary had more than full-time positions. During the past two years alone,
this number increased by , or per cent. In addition, the number of positions for
outside consultants rose sharply.
Crosskey is becoming an increasingly large
and important part of the Bank of Åland
Group. The Bank’s growing business part-
nerships are being made possible by ever-
closer collaboration between the Bank and
Crosskey to deliver not only IT services, but
also complete banking services.
During Model IT, which was acquired
in , was merged with Crosskey. Model
IT has enabled Crosskey to accelerate its
growth as a provider of capital market
services.
Crosskey extended and expanded its
cooperation agreement with Finland’s
S-Bank (S-Pankki). The agreement is a con-
tinuation of the existing agreement that
was signed in and which now encom-
passes all of Crosskey's banking solutions.
During Crosskey, in collaboration
with the Bank of Åland, launched the bank-
ing platform for the new Swedish home
mortgage bank Borgo, which is jointly
owned by ICA Bank, Ikano Bank, Söderberg
& Partners and the Bank of Åland.
Wealth manager Garantum's new capital
market system in Sweden was also launched
during the autumn.
In a happy start to the new year ,
POP Bank has chosen Crosskey as its central
banking system partner. On January , POP
Bank signed a cooperation agreement with
Crosskey on the renewal of its core banking
system. POP Bank anticipates that it will
introduce the new core banking system dur-
ing . The POP Bank Group is a Finnish
financial group consisting of cooperative
banks, the digitally operating non-life insur-
ance service Skadeförsäkring Ab, the central
credit institution Bonum Bank Plc, and the
central institution POP Bank Centre coop.
On October , Niclas Södergård
took over as Managing Director, succeeding
Thomas Lundberg. Södergård has a long
background at Crosskey, including as the
company's Chief Technology Officer.
Employee satisfaction is measured by
our yearly employee survey and is an impor-
tant metric for Crosskey's efforts to achieve
a sustainable human resource policy. During
the spring of , the employee satisfaction
level rose to the highest in company history.
Crosskey is a certified Great Place to Work.
Satisfaction among Crosskey's customers
also rose to a record level, which is an
important confirmation of its efforts
to build long-term sustainable customer
relationships.
Crosskey's computer halls are per
cent powered by electricity from renewable
sources. In Åland, Crosskey is participating
in a large Group-wide collaboration aimed at
realising Åland's vision of being a completely
sustainable society by . One milestone
on that path will be to fulfil the United
Nations Agenda , with its global
sustainable development goals, by .
0
5
10
15
20
25
20212020201920182017
Non-Group income, Crosskey
EUR M
Niclas Södergård, Managing Director at Crosskey Banking Solutions Ab Ltd.
Bank of Åland Plc
Report of the Directors
Photographer: Anton Sucksdor
Annual Report
Report of the Directors
Macro situation
The COVID- (coronavirus) pandemic domi-
nated as well. The pandemic initially faded
in our area of operations and most restrictions
were lifted, but late in the year the Omicron var-
iant struck with great force, with new restric-
tions as a consequence.
Fiscal and monetary stimulus measures
have been large. The economic recovery has
been strong. For the local economy in the Åland
Islands, the record-strong summer tourist sea-
son represented a welcome positive injection.
During long-term market yields began
to move higher, but short-term market interest
rates – which are more important to the Bank
of Åland’s net interest income – remained at
record-low levels. Central banks in Europe are
expected to keep their key interest rates
unchanged for a long time to come.
,
,
Euribor mo –. –.
Euribor mo –. –.
Stibor mo –. .
During share prices according to the Nas-
daq Helsinki stock exchange’s OMXHPI index
rose by per cent, while the Nasdaq Stock-
holm’s OMXSPI index rose by per cent.
The average value of the Swedish krona
(SEK) in relation to the euro (EUR) was per
cent higher during than in the year-earlier
period and per cent lower than at year-end
. When converting the income statement
of the Bank’s Swedish operations into euros, the
average exchange rate for the period has been
used, while the balance sheet has been con-
verted at the exchange rate prevailing on the
closing day of the report period.
Important events
On January , the Board of Directors of the
Bank of Åland approved the distribution of a
dividend totalling EUR per share (a regular div-
idend of EUR . and a th anniversary divi-
dend of EUR .) for the financial year, in
compliance with the authorisation that the
Board received from the Bank’s Annual General
Meeting on April , .
On March , , the Annual General
Meeting (AGM) approved the distribution of a
dividend of EUR . per share for the financial
year .
The AGM also decided to authorise the
Board to approve acquisitions of no more than
,, of the Bank of Åland’s Series B
shares. This is equivalent to about per cent
of all shares in the Company and about .
per cent of all Series B shares in the Company.
The Company’s own shares may be acquired in
order to change the Company’s capital struc-
ture, to be used as consideration in acquisitions
of companies or sectoral reorganisations or as
part of the Company’s incentive programmes
and may otherwise be transferred onward, be
kept by the Company or be annulled. The shares
may be acquired in one or more rounds.
The AGM re-elected the Board, consisting of
Nils Lampi, Christoffer Taxell, Åsa Ceder, Anders
Å Karlsson, Ulrika Valassi and Anders Wiklöf.
At the statutory meeting of the Board the
same day, Nils Lampi was elected as Chairman
and Christoffer Taxell as Deputy Chairman of
the Board.
In March, for the first time ever the Bank of
Åland issued an additional Tier (AT) capital
instrument, totalling SEK M. This is a per-
petual financial instrument, with a possibility of
early redemption after five years. For financial
reporting purposes, the instrument is regarded
as equity capital.
In December, for the first time ever the Bank
of Åland issued a green Tier (T) supplemen-
tary capital instrument, totalling SEK M.
This instrument has a -year maturity, with a
possibility of early redemption after five years.
The proceeds of the instrument will be used for
financing and refinancing wind power projects
and mortgage loans for properties with high
energy performance ratings.
During the report period, the number of
Series B shares outstanding increased by
, as a result of the Bank’s obligations
within the framework of its employee in-
centive programmes.
During the period, the Bank of Åland opened
a new office in Oulu on the Finnish mainland.
In March Borgo AB, an associated com-
pany of the Bank of Åland, received permission
from the Swedish Financial Supervisory Authority
to operate a financing business and to issue cov-
ered bonds. In the fourth quarter, the company
started its operations in Sweden. In September
Borgo entered into a partnership with ICA
Bank, Ikano Bank, Söderberg & Partners and the
Bank of Åland (IISÅ Holdco AB) for the purpose
of creating a new Swedish mortgage company.
In August Sparbanken Syd (a southern
Swedish savings bank) also signed a binding
agreement with Borgo to join the partnership.
0
3
6
9
12
20212020201920182017
Average EUR/SEK exchange rate
–0.75
–0.50
–0.25
0.00
0.25
20212020201920182017
Euribor/Stibor, -month averages
Per cent
Euribor Stibor
–10
0
10
20
30
40
20212020201920182017
OMXHPI and OMXSPI
Per cent
OMXHPI OMXSPI
Bank of Åland Plc
Together with its information technology sub-
sidiary Crosskey Banking Solutions, the Bank of
Åland is supplying platform solutions for the
new mortgage company and contributing its
existing knowledge on mortgage loan
management.
Together with its customers, the Bank of
Åland is continuing its commitment to a cleaner
Baltic Sea. This year the Baltic Sea Project con-
tributed EUR , to various projects that
promote the health of the Baltic Sea.
Since the Bank of Åland has awarded
EUR . M to various environmentally related
projects.
For the eighth consecutive year, the Bank
of Åland (Ålandsbanken) Euro Bond Fund was
named the best Nordic fund in its category by
Refinitiv Lipper. The Morningstar investment
research company, which compares fund data
and funds in their respective classes, also
assigned the Bank of Åland Euro Bond Fund
its highest rating – five stars – in all its
review cycles.
On June Alandia Holding completed its
acquisition of Rettig Group’s entire stake (.
per cent) in the marine insurance company
Alandia Försäkring. Alandia Holding is a com-
pany created by the Bank of Åland, the pension
insurance company Veritas Pensionsförsäkring,
the cruise ferry company Viking Line, Förenin-
gen Konstsamfundet (an association that sup-
ports the arts in Swedish-speaking Finland),
Lundquist Shipping Company and Wiklöf Hold-
ing for the purpose of acquiring this sharehold-
ing in Alandia Försäkring. The express desire
of the owners of Alandia Holding is to act as a
long-term owner of Alandia Försäkring. Alandia
Holding is an associated company of the Bank
of Åland.
In August the Bank of Åland sold its share-
holding in the company Åland Index Solution as
well as intellectual property (IP) rights to the
Åland Index to Doconomy, a Swedish-based
fintech company. The Bank still has a substantial
ownership stake in Doconomy.
Earnings
Net operating profit rose by EUR . M or per
cent to EUR . M (.). About EUR . M of
net operating profit for the report period was
attributable to nonrecurring items.
Profit for the period attributable to share-
holders increased by EUR . M or per cent
to EUR . M (.).
Return on equity after taxes (ROE) increased
to . per cent (.).
Total income rose by EUR . or per cent
to EUR . M (.).
Net interest income rose by EUR . M or
per cent to EUR . M (.). The increase
came from higher lending volume and lower
costs of deposits and capital market borrowing.
Net commission income rose by EUR . M
or per cent to EUR . M (.), mainly due
to higher income from the Bank’s asset man-
agement business.
Net income on financial items fell by EUR
. M to EUR -. M (.), mainly due to lower
capital gains and re-measurement of liabilities
attributable to an earn-out (contingent con-
sideration) related to the purchase price of
an asset.
Information technology (IT) income rose by
EUR . M or per cent to EUR . M (.).
The increase came from higher project income.
Other income included nonrecurring posi-
tive effects related to associated companies
and divestment of IP rights.
Total expenses increased by EUR . M or
per cent and totalled EUR . M (.).
Higher staff costs and IT expenses plus in-
creased depreciation/amortisation were
the main reasons.
Total net impairment losses on financial
assets were unchanged and amounted to EUR
. M (.), equivalent to a loan loss level of .
(.) per cent. These impairment losses were
mainly due to a small number of individual
loans. In the first quarter of , the Bank
made sizeable model-driven provisions for
impairment losses in compliance with the IFRS
international financial reporting standard,
which have not yet been utilised.
Tax expense amounted to EUR . M (.),
equivalent to an effective tax rate of . (.)
per cent.
Operating segments
The Group’s EUR . M increase in net operating
profit to EUR . M was allocated as follows:
• Private Banking –.
(higher impairment provisions)
• Premium Banking .
(lower impairment provisions)
• IT –.
(higher expenses and earn-out)
• Corporate Units & Eliminations .
(mainly nonrecurring effects)
Net commission income
EUR M
0
20
40
60
80
20212020201920182017
Total expenses
EUR M
0
30
60
90
120
150
20212020201920182017
Net interest income
EUR M
0
20
40
60
80
20212020201920182017
Profit attributable to shareholders
EUR M
0
10
20
30
40
20212020201920182017
Annual Report
Business volume
Actively managed assets on behalf of customers
increased by EUR , M or per cent com-
pared to year-end and amounted to EUR
, M (,). The increase was due to both
positive net inflows and a positive market effect.
Deposits from the public rose by per cent
compared to year-end and amounted to
EUR , M (,).
Lending to the public increased by per cent
compared to year-end and totalled EUR
, M (,).
All these business volume figures were the
highest recorded in the Bank of Åland’s history.
Balance sheet total and o-balance
sheet obligations
During the Group’s balance sheet increased
by EUR M or per cent to EUR , M
(,). The increase was primarily related to
lending to the public. The increase in assets was
funded mainly through increased deposits from
the public. Off-balance sheet obligations rose by
EUR M or per cent to EUR , M. The
increase was mainly related to lines of credit.
Credit quality
Lending to private individuals comprised per
cent of the loan portfolio. Home mortgage
loans accounted for per cent of this. Loans
for the purchase of securities, with market-
listed securities as collateral, comprised the
second-largest type of lending to individuals.
Historically, the Bank of Åland has not had any
substantial loan losses on this type of lending.
The corporate portfolio has a close affinity with
the retail portfolio, since many of the compa-
nies are owned by customers who, as individu-
als, are also Private Banking customers.
The Bank of Åland Group had EUR . M
in impairment loss provisions on December ,
(. on December , ), of which EUR
. M (.) in Stage , EUR . M (.) in Stage
and EUR . M (.) in Stage . During ,
Stage loans increased by EUR . M to EUR
. M.
Stage loans as a share of gross lending to
the public totalled . per cent (.). The level
of provisions for Stage loans amounted to
() per cent. Most of these loans have good
collateral.
Liquidity and borrowing
The Bank of Åland’s liquidity reserve in the form
of cash and deposits with the central bank,
account balances and investments with other
banks, liquid interest-bearing securities plus
holdings of unencumbered covered bonds
issued by the Bank amounted to EUR , M
on December , (, on December ,
). This was equivalent to () per cent of
total assets and () per cent of lending to
the public.
In September the Bank of Åland carried
out an early redemption of SEK . billion in cov-
ered bonds from the Swedish pool with a final
due date in November . At the same time,
the Bank issued new covered bonds in the
amount of SEK . billion with a final due date in
September . The bond issue was unique,
since these bonds carry contractual conditions
that allow them to move from the Finnish to the
Swedish legislative framework, and from the
Bank of Åland as counterparty to Borgo as
Profit attributable to shareholders, by segment
EUR M
–5
0
5
10
15
20
25
Corporate &
eliminations
ITPremium BankingPrivate Banking
Impairment losses, EUR M
Loan loss level,
0
1
2
3
4
5
20212020201920182017
0.00
0.05
0.10
0.15
Impairment losses and loan loss level
EUR M
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
20212020201920182017
Balance sheet total
EUR M
Bank of Åland Plc
counterparty, when the Bank’s Swedish mort-
gage loan portfolio is transferred to Borgo
during the first half of .
In September EUR M in non-covered
bonds also matured. The Bank chose not to
renew them.
On December , , the average remain-
ing maturity of the Bank of Åland’s bonds out-
standing was about . (.) years.
The loan/deposit ratio amounted to ()
per cent.
Of the Bank of Åland’s external funding
sources aside from equity capital, deposits from
the public accounted for () per cent and
covered bonds issued accounted for ()
per cent.
The liquidity coverage ratio (LCR) amounted
to () per cent.
The net stable funding ratio (NSFR) amounted
to () per cent.
Rating
The Bank of Åland had a credit rating from the
Standard & Poor’s Global Ratings agency of
BBB/A- with a positive outlook for its long- and
short-term borrowing. Covered bonds issued by
the Bank of Åland have a credit rating of AAA
with a stable outlook.
Equity and capital adequacy
During the report period, equity capital
changed in the amount of profit for the period,
EUR . M; other comprehensive income, EUR
. M; the issuance of new shares as part of the
incentive programme, EUR . M; distributed
dividends totalling EUR . M to shareholders;
distributed dividends of EUR . M to holders of
additional Tier (AT) capital instruments; and
issuance of AT capital, EUR . M. On Decem-
ber , , equity capital amounted to EUR
. M (. on December , ).
Other comprehensive income included
re-measurements of defined-benefit pension
plans by EUR . M after taxes, in compliance
with IAS .
Common equity Tier capital rose by EUR
. M during the report period to EUR . M
(.). The Finnish Financial Supervisory
Authority has granted permission for buy-
backs of the Bank’s own shares. The maximum
amount that may be used for buy-backs is EUR
. M. The amount is a fully deductible item in
the capital base (own funds) even when these
buy-backs have not occurred.
The risk exposure amount increased by
per cent during the report period and totalled
EUR , M (,). The risk exposure amount
for credit risk rose by EUR M or per cent.
The elimination of the risk weight floor for mort-
gage loans in Finland decreased the risk expo-
sure amount by EUR M. A . per cent
standardised upward adjustment of the risk
exposure amount, calculated according to the
IRB approach while awaiting an updated,
approved IRB approach, increased the risk
exposure amount by EUR M. The opera-
tional risk exposure amount fell by EUR M.
The common equity Tier (CET) capital ratio
decreased to . (.) per cent.
The Tier (T) capital ratio, which had pre-
viously always been identical with the CET
capital ratio, rose due to the issuance of AT
instruments totalling SEK M in March
and amounted to . (.) per cent.
The total capital ratio decreased to .
(.) per cent.
A mitigation measure in the calculation of
the leverage ratio has been introduced, exempt-
ing exposures to central banks with relevance
for the transmission of monetary policy. The
Bank of Åland has taken this into account in its
calculation of the leverage ratio, which
amounted to . (.) per cent on December ,
. Excluding the mitigation measure, it
would have amounted to . (.) per cent.
In addition to the basic capital requirement,
various buffer requirements apply. These are
mainly imposed by national regulatory authori-
ties. Due to the coronavirus crisis, several of
these buffer requirements have been lowered.
The capital conservation buffer requirement,
. per cent of common equity Tier capital,
applies in all European Union countries. The
countercyclical capital buffer requirement may
vary between –. per cent. For Finnish and
Swedish exposures, the requirement remains
. per cent. However, the Swedish Financial
Supervisory Authority has decided to raise the
amount of the countercyclical buffer to . per
cent. The new buffer amount applies starting on
September , . The Swedish FSA is aiming
at gradually raising the buffer amount to . per
cent during if the economic recovery
continues.
The buffer requirement established by the
Finnish Financial Supervisory Authority (FIN-
FSA) related to Pillar capital adequacy regula-
tions, totalling . per cent of the Group’s risk
exposure amount (REA), was lowered to . per
0
1,000
2,000
3,000
4,000
5,000
20212020201920182017
Lending
EUR M
0
250
500
750
1,000
1,250
1,500
20212020201920182017
Covered bonds
EUR M
0
750
1,500
2,250
3,000
3,750
4,500
20212020201920182017
Deposits
EUR M
0
50
100
150
200
250
300
350
20212020201920182017
Equity capital
attributable to shareholders
EUR M
Annual Report
cent starting on September , . This buffer
requirement was previously supposed to be
covered only by CET capital. Starting in ,
part of the Pillar requirement may also be cov-
ered by AT capital and supplementary capital,
respectively.
The new minimum levels applicable to
the Bank of Åland starting on September ,
are:
• Common equity Tier capital ratio, .
per cent
• Tier capital ratio, . per cent
• Total capital ratio, . per cent
In relation to the above buffer requirements,
the Bank of Åland has an ample capital surplus:
• Common equity Tier capital ratio, .
percentage points
• Tier capital ratio, . percentage points
• Total capital ratio, . percentage points
Effective on January , , Finland’s Financial
Stability Authority has given the Bank of Åland
a formal minimum requirement for own funds
and eligible liabilities (MREL) under European
Union regulations, but in practice this does not
represent any extra capital requirement beyond
the already existing minimum requirements
related to the Bank’s total capital ratio and
leverage ratio.
Due to an interpretation error regarding a
bank-specific regulatory requirement, the Bank
of Åland reported inaccurate capital adequacy
disclosures earlier during . The corrected
disclosures were presented in a stock exchange
release on December .
Acquisitions of the bank’s own shares
The Board of Directors of the Bank of Åland has
decided to begin acquisitions of the Bank’s own
shares, as authorised by the Annual General
Meeting (AGM) on March , . The maxi-
mum number of shares that may be acquired on
the basis of the Board’s acquisition decision, in
one or more rounds, is , Series B shares,
which is equivalent to . per cent of the total
number of Series B shares and . per cent the
total number of shares. The maximum amount
that may be used for the buy-back is EUR .
M. The Finnish Financial Supervisory Authority
(FIN-FSA) has granted permission for the buy-
back of the Bank’s own shares.
The acquisition of shares will end at the
latest on March , . The shares will be
acquired using unrestricted equity capital in
public trading on the Nasdaq Helsinki Oy
(Helsinki Stock Exchange) in one or more
rounds at a price determined in public trading
on the Nasdaq Helsinki Oy on the day of the
acquisition. The shares will be acquired and
paid for according to the rules of Nasdaq
Helsinki Oy.
The shares will be acquired in order to
change the Bank of Åland’s capital structure,
to be used as consideration in acquisitions of
companies or sectoral reorganisations or as part
of the Bank of Åland’s incentive programmes
and may otherwise be transferred onward or
kept by the Bank of Åland. There are thus weighty
financial reasons to carry out a targeted acquisi-
tion of the Bank’s own shares.
No acquisitions of the Bank’s own shares
had been carried out yet on December , ,
but the maximum buy-back amount of EUR
. M is nevertheless fully deductible from
the Bank of Åland’s CET capital.
Sustainability information
During the fourth quarter of , the Bank of
Åland implemented the Greenhouse Gas Proto-
col (GHGP) to estimate and report its greenhouse
gas emissions. These emissions are reported in
three scopes, where the Bank of Åland’s climate
estimate initially encompasses Scope and plus
supplier-related emissions from purchases in
Scope .
Emissions in totalled tonnes of
carbon dioxide equivalents, which was an
increase of tonnes compared to the preced-
ing year. In its accounts, the Bank of Åland
has set aside a cost of EUR ,, which is
equivalent to full climate compensation for
the estimated emissions.
Dividend
The Board of Directors proposes that the
Annual General Meeting approve payment of
a regular dividend of EUR . per share for the
financial year, equivalent to a total amount
of EUR . M. The dividend is equivalent to
a per cent payout ratio.
The Board also proposes that the AGM
approve payment of an extra dividend of EUR
. per share, on the condition that the planned
transfer of most of the Bank’s Swedish mortgage
loan portfolio to Borgo is implemented.
Lending by economic sector
EUR M
0 500 1,000 1,500 2,000 2,500 3,000
Home mortgage
loans to individuals
Other household purposes
Real estate operations, companies
Financial and insurance
operations, companies
Housing operations, companies
Maritime shipping, companies
Other companies
Common equity Tier capital ratio
Tier capital ratio
Supplementary capital ratio
0
5
10
15
20
20212020201920182017
Capital ratios
Per cent
Bank of Åland Plc
Important events after close of
report period
POP Bank has chosen Crosskey as its central
banking system partner. On January ,
POP Bank signed a cooperation agreement
with Crosskey on the renewal of its core
banking system. POP Bank anticipates that it
will introduce the new core banking system
during .
The POP Bank Group is a Finnish finan-
cial group consisting of cooperative
banks, the digitally operating non-life insur-
ance service P&C Insurance Ltd, the central
credit institution Bonum Bank Plc, and the
central institution POP Bank Centre coop.
On February , , most of the Bank
of Åland’s Swedish mortgage loans and
related previously issued covered bonds
were transferred to Borgo. The nominal
amount of the mortgage portfolio that was
transferred is EUR . billion. The nominal
amount of the previously issued covered
bonds, which now have Borgo as their
issuer, is EUR . billion. A smaller mortgage
portfolio in the range of EUR billion in size
will be transferred later in . After the
transaction, the Bank of Åland’s ownership
stake in Borgo amounts to . per cent.
The transaction will increase the Bank of
Åland’s net operating income during the first
quarter of , with a nonrecurring positive
effect in the EUR M range. At the same
time, this will mean a smaller loan portfolio
in the Bank of Åland’s own balance sheet
and thus a lower current net interest income.
In the future, the Bank of Åland will instead
receive distribution fees for brokered loans
and platform revenues for maintaining vari-
ous services to Borgo. The total full-year
effect on earnings is expected to
be positive.
Risk and uncertainties
The single largest risk and uncertainty factor
is still the global coronavirus pandemic.
The Bank of Åland’s earnings are affected
by external changes that the Company itself
cannot control. Among other things, the
Group’s trend of earnings is affected by mac-
roeconomic changes and changes in general
interest rates, share prices and exchange
rates, along with higher expenses due to reg-
ulatory decisions and directives as well as the
competitive situation.
The Group aims at achieving operations
with reasonable and carefully considered
risks. The Group is exposed to credit risk,
liquidity risk, market risk, operational risk and
business risk. The Bank does not engage in
trading for its own account.
Since the Bank of Åland has had a
pending case with the Swedish Tax Agency
concerning value-added tax (VAT) for the
financial year . The Tax Agency has
announced a decision on the matter, in which
it states that the Bank of Åland must pay
about EUR . M in VAT. The Bank of Åland
does not agree with the Tax Agency’s assess-
ment and will appeal the Administrative
Court’s negative ruling of December . A
provision for half the amount has been made
as a tax expense in the financial accounts.
Future outlook
The Bank of Åland expects its net operating
profit in to about the same as in .
The Bank is especially dependent on the
performance of the fixed income and stock
markets. There are concerns about eco-
nomic developments in a number of im-
portant markets. For this reason, there
is some uncertainty about the Bank’s
current forecast.
Updated long-term financial targets
The Board of Directors has approved the fol-
lowing updated long-term financial targets:
• Return on equity after taxes (ROE) shall
exceed per cent over time.
• The common equity Tier capital ratio
shall exceed the FIN-FSA’s minimum
requirement by .-. percentage
points.
• The payout ratio shall be per cent or
higher, provided that capital adequacy
does not fall below target.
The previous targets, which the Bank of
Åland had since with only minor adjust-
ments in their language, were:
• Return on equity after taxes (ROE) shall
exceed per cent.
• The Bank’s capital adequacy, primarily
defined as the common equity Tier
capital ratio under the Basel regulations,
shall clearly exceed all regulatory
requirements.
• The payout ratio shall eventually amount
to per cent. The payout ratio target
presupposes that the capital adequacy
target can be maintained.
The Bank of Åland has a strategy and busi-
ness model which implies that a growing
proportion of earnings will come from asset
management operations, IT operations and
business partnerships that require compara-
tively limited equity capital. Combined with
the growth that the Bank has experienced,
this justifies raising the profitability target
– expressed as return on equity after taxes
– from to per cent.
The newly quantified target of a common
equity Tier capital ratio that is at least .
percentage points above the minimum
required by regulatory authorities indicates
a slightly higher minimum than is customary
in the banking sector. This reflects the Bank
of Åland’s conservative approach to risk.
As long as the capital adequacy target is
achieved, at least per cent of profit for
the year shall be distributed to shareholders.
In order to ensure efficient use of capital,
share repurchases will also be employed.
0
30
60
90
120
150
20212020201920182017
Loan/deposit ratio
Per cent
0
30
60
90
120
150
180
20212020201920182017
Liquidity coverage ratio
Per cent
Annual Report
-
Bank of Åland Group
EUR M
Net interest income . . . . .
Net commission income . . . . .
Net income from financial items carried at fair value –. . . . – .
IT income . . . . .
Other income . . . . .
Total income . . . . .
Sta costs –. –. –. –. –.
Other expenses –. –. –. –. –.
Derpreciation/amortisation and
impairment losses on tangible and intangible assets –. –. –. –. –.
Total expenses –. –. –. –. –.
Profit before impairment losses . . . . .
Impairment losses on loans
and other commitments –. –. –. –. –.
Net operating profit . . . . .
Income taxes –. –. –. –. –.
Profit for the report period . . . . .
Attributable to:
Non-controlling interests . . . . .
Shareholders in Bank of Åland Plc . . . . .
Volume
Lending to the public , , , , ,
Deposits from the public , , , , ,
Actively managed assets
, , , , ,
Equity capital
Balance sheet total , , , , ,
Risk exposure amount , , , , ,
Financial ratios
Return on equity after taxes (ROE),
. . . . .
Expense/income ratio
. . . . .
Loan loss level,
. . . . .
Gross share of loans in stage ,
. . . . .
Liquidity coverage ratio (LCR),
Net stable funding ratio (NSFR),
Loan/deposit ratio,
Common equity Tier capital ratio,
. . . . .
Tier capital ratio,
. . . . .
Total capital ratio,
. . . . .
Leverage ratio,
. . . . .
Working hours re-calculated to full-time
equivalent positions
Earnings per share, EUR
. . . . .
Equity capital per share, EUR
. . . . .
Dividend per share, EUR . . . . .
Actively managed assets encompassed managed assets in the Group’s own mutual
funds as well as discretionary and advisory securities volume plus external funds
with contractual earnings.
Profit for the reporting period attributable to shareholders/Average shareholders’
portion of equity capital.
Expenses/Income.
Impairment losses on loan portfolio and other commitments from lending to
the public/Lending to the public at the end of the period.
Share of loans in stage /Gross lending to the public.
LCR assets at level and /-day net cash outflow.
Corrected calculation compared to the figure in the Year-end Report.
Available stable funding/Stable funding requirement.
Lending to the public/Deposits from the public.
Common equity Tier capital/Risk exposure amount.
Tier capital/Risk exposure amount.
Own funds/Risk exposure amount.
Tier capital/Total exposure metric.
Shareholders’ portion of profit for the period/Average number of shares.
Shareholders’ portion of equity capital/Number of shares on closing day.
Bank of Åland Plc
Share capital
The share capital of the Bank of Åland is EUR
,,.. The shares are divided into
,, Series A and ,, Series B
shares. Each Series A share represents twenty
() votes at shareholders’ meetings and each
Series B share one () vote. The Articles of
Association stipulate that no representative at
a General Meeting may vote for more than one
fortieth of the number of shares represented
at the Meeting.
In April , the Annual General Meeting
voted to authorise the Board to decide on the
issuance of shares, option rights and other spe-
cial rights entitling their holders to shares, as
provided by the Finnish Companies Act, Chapter
, Section . The authorisation concerns Series
B shares. The total number of shares that may
be issued with the support of the authorisation
may not exceed ,, Series B shares.
The authorisation covers one or more issues in
exchange for payment or without payment and
may also cover divestment of the Company’s
own shares. The authorisation replaces all of the
Annual Meeting’s earlier unutilised authorisa-
tions of shares, option rights and other special
rights entitling their holders to shares. The
Board’s mandate is in force until April , .
So far , Series B shares (as of December ,
) have been issued or divested as author-
ised, and consequently an additional ,,
Series B shares may be issued or divested on
the basis of the authorisation.
Shares as part of variable
compensation programmes
Newly issued or purchased Series B shares in
the Bank are paid as part of the Bank of Åland’s
incentive programmes. In spring , ,
newly issued Series B shares were disbursed.
In March , about , newly issued
Series B shares will be disbursed. Another
approximately , Series B shares will be
disbursed as a delayed portion of incentive
programmes during the years –,
provided that the criteria for disbursement are
fulfilled. The number of shares is dependent
on the share price on the disbursement date.
Acquisitions of the Bank’s own shares
On March , , the Annual General Meet-
ing (AGM) authorised the Board of Directors to
decide on acquisitions of the Bank of Åland’s
own Series B shares. The authorisation covers a
maximum of ,, Series B shares and is
in force until the end of the next AGM, but no
longer than until September , .
On the basis of this authorisation, the Board
has decided to begin acquisitions of the Bank’s
own shares. The maximum number of shares
that may be acquired on the basis of the Board’s
acquisition decision, in one or more rounds, is
, Series B shares, which is equivalent to
. per cent of all Series B shares and . per
cent of all shares in the Bank of Åland. The
maximum amount that may be used for the
buy-back is EUR . M. The Finnish Financial
Supervisory Authority (FIN-FSA) has granted
permission for the buy-back of the Bank’s
own shares.
The acquisition of shares will end at the
latest on March , . The shares will be
acquired using unrestricted equity capital in
public trading on the Nasdaq Helsinki Oy
(Helsinki Stock Exchange) in one or more
rounds at a price determined in public trading
on the Nasdaq Helsinki Oy on the day of the
acquisition. The shares will be acquired and paid
for according to the rules of Nasdaq Helsinki Oy.
The shares will be acquired in order to
change the Bank of Åland’s capital structure, to
be used as consideration in acquisitions of com-
panies or sectoral reorganisations or as part of
the Bank of Åland’s incentive programmes and
may otherwise be transferred onward or kept by
the Bank of Åland. There are thus weighty finan-
cial reasons to carry out a targeted acquisition.
On December , , no acquisitions of the
Bank’s own shares had been made yet.
Facts on Bank of Åland shares
Market capitalisation
EUR M
0
5
10
15
20
20212020201920182017
Earnings per share
euros
0.0
0.5
1.0
1.5
2.0
2.5
3.0
20212020201920182017
Dividend per share
euros
0.0
0.4
0.8
1.2
1.6
2.0
20212020201920182017
* Proposed by the Board of Directors for approval
by the Annual General Meeting.
Annual Report
Changes in share capital
Year Share capital, EUR Series A shares Series B shares
,,. ,, ,,
,,. ,, ,,
,,. ,, ,,
,,. ,, ,,
,,. ,, ,,
Trading in the Bank’s shares
During , the volume of trading in the Bank’s Series A shares on the Nasdaq Helsinki Oy (Helsinki
Stock Exchange) was EUR . M. Their average price was EUR .. The highest quotation per share
was EUR ., the lowest EUR .. Trading in Series B shares totalled EUR . M at an average
price of EUR .. The highest quotation was EUR ., the lowest EUR ..
On December , , the number of registered shareholders was , and they owned
,, shares. There were also a total of ,, shares registered in the names of nominees.
The number of directly registered shares increased by per cent during .
The ten largest shareholders
Shareholder Series A shares Series B shares Total of shares of votes
Wiklöf Anders and companies ,, ,, ,, . .
Citibank Europe PLC (nominee registered shares) , ,, ,, . .
Alandia Försäkring Abp (insurance company) , , ,, . .
Fennogens Investments S.A. , , , . .
Pensionsförsäkringsaktiebolaget Veritas
(pension insurance company) , , , . .
Chilla Capital , , . .
Lundqvist Ben , , . .
Oy Etra Invest Ab (investment company) , , . .
Svenska Litteratursällskapet i Finland rf (literary society) , , . .
Nordea Life Assurance Finland Ltd , , . .
The above list also includes the shareholder’s Group companies and shareholder-controlled companies.
Shareholders by size of holding
Number of shares
Number of
shareholders
Total number
of shares held
Average
holding
Voting power,
– , , .
–, , ,, .
,–, , ,, , .
,– ,, , .
of which nominee registered shares ,, .
Shareholders by category
Category Number of shares of shares
Private individuals ,, .
Companies ,, .
Financial institutions and insurance companies ,, .
Non-profit organisations , .
Government organisations , .
Foreign investors ,, .
Nominee registered shares ,, .
Total ,, .
Bank of Åland Plc
Bank of Åland shares traded, Helsinki Stock Exchange
Year Thousands of shares Volume as of shares Price paid, EUR: Highest/Lowest Average price, EUR
A . .–. .
B , . .–. .
A . .–. .
B , . .–. .
A . . –. .
B . .–. .
A . . –. .
B . .–. .
A . .–. .
B . .–. .
Bank of Åland share data
Number of shares, thousands
, , , , ,
Number of shares after dilution, thousands , , , , ,
Average number of shares, thousands , , , , ,
Earnings per share, EUR
. . . . .
Earnings per share after dilution, EUR . . . . .
Dividend per share, EUR .
. . . .
Extra dividend per share, EUR .
.
Dividend payout ratio
. . . . .
Extra dividend payout ratio
. .
Equity capital per share, EUR
. . . . .
Equity capital per share after dilution, EUR . . . . .
Market price per share, closing day, EUR
Series A . . . . .
Series B . . . . .
Price/earnings ratio
Series A . . . . .
Series B . . . . .
Eective dividend yield,
Series A . . . . .
Series B . . . . .
Market capitalisation, EUR M . . . . .
Number of registered
share minus own shares
on closing day
Dividend for the accounting period
Share price on
closing day
Shareholders’ interest in profit
for the accounting period
Earnings per share
Shareholders’ interest in profit
for the accounting period
Shareholders’ portion
of equity capital
Dividend
Average number of shares Number of shares on closing day Share price on closing day
Proposed by the Board of
Directors for approval by the Annual
General Meeting
Annual Report
Financial statements
Photographer: Anton Sucksdor
Bank of Åland Plc
Consolidated income statement
(EUR K)
Bank of Åland Group Jan –Dec , Jan –Dec ,
Note
Interest income 69,39 0 68,0 64
Interest expenses –7,1 6 1 –9 , 1 74
Net interest income G 62, 229 58,890
Commission income 110, 43 6 91, 290
Commission expenses –3 1, 3 91 –24, 9 77
Net commission income G 79,044 66 ,3 13
Net income from financial items carried at fair value G –4 4 2 1,836
IT income 24,40 7 2 1 ,9 2 9
Share of income in associated companies 531 89
Other operating income G 10, 25 4 1,09 0
Total income 176, 024 15 0,1 4 8
Sta costs G –7 1,1 15 –6 2 ,9 2 1
Other costs G –3 6,5 43 –30 ,3 48
Depreciation/amortisation and impairment losses
on tangible and intangible assets G, G –14, 262 –12, 304
Total expenses –12 1 ,9 2 0 –105,573
Profit before impairment losses 5 4 ,1 0 4 4 4 ,57 5
Net impairment loss on financial assets G –4, 906 –4 ,8 5 7
Net operating profit 49 ,1 9 8 3 9 ,7 17
Income taxes G –9,3 48 –8, 232
Net profit for the period 39,85 0 31,485
Attributable to:
Non-controlling interests 2 –1
Shareholders in Bank of Åland Plc 39 , 849 31,486
Earnings per share, EUR G 2 .55 2.02
Earnings per share after dilution, EUR G 2.5 5 2.02
Annual Report
Consolidated statement of comprehensive income
(EUR K)
Bank of Åland Group Jan –Dec , Jan –Dec ,
Note
Profit for the accounting period 39,85 0 31,485
Assets measured via other comprehensive income
Change in valuation at fair value –608 3 ,1 6 0
Realised change in value 90
Transferred to the income statement –55 1 –2,046
Translation dierences
Gains/losses arising during the period –2,2 40 3 , 479
Taxes on items that have been or may be reclassified
to the income statement G 232 –223
Items that have been or may be reclassified
to the income statement –3 , 0 7 7 4 ,37 1
Changes in value of equity instruments –265 214
Translation dierences –4 3
Re-measurements of defined benefit pension plans K 6,351 –2,80 1
Taxes on items that may not be reclassified
to the income statement K –1 ,03 8 517
Items that may not be reclassified
to the income statement 5,0 05 –2 , 0 6 9
Other comprehensive income 1,9 2 8 2,3 02
Total comprehensive income for the period 41,7 7 8 33,787
Attributable to:
Non-controlling interests 2 –1
Shareholders in Bank of Åland Plc 41,7 7 6 33 ,789
Bank of Åland Plc
Consolidated balance sheet
(EUR K)
Bank of Åland Group Dec , Dec ,
Note
Assets
Cash and deposits with central banks 893,719 665 ,07 2
Debt securities G 717,864 777 , 68 3
Lending to credit institutions G 64,35 3 5 1, 038
Lending to the public G 4 ,7 8 7,8 45 4 ,3 7 7,9 12
Shares and participations G 15 , 049 12 ,8 82
Shares and participations in associated companies G 14 ,6 03 1, 449
Derivative instruments
G 13 , 02 7 24,6 20
Intangible assets G 23 ,086 24,388
Tangible assets G 34,272 32, 861
Investment properties G 3 07 313
Current tax assets 141 139
Deferred tax assets G 4, 777 5, 421
Other assets G 3 4, 311 35 ,8 7 8
Accrued income and prepayments G 31, 285 25 , 4 00
Total assets 6, 63 4 , 63 9 6,035,058
Liabilities
Liabilities to credit institutions and central banks G 8 67, 49 1 509,491
Deposits from the public G 4 , 0 70 ,1 12 3,6 05 ,37 1
Debt securities issued G 1,1 9 6 , 5 35 1, 4 40 ,93 3
Derivative instruments G 6,82 4 14 ,96 8
Current tax liabilities 4,271 5 ,13 1
Deferred tax liabilities G 3 4 ,57 1 32, 23 1
Other liabilities G 49, 8 4 4 5 7, 3 7 2
Provisions G 363 409
Accrued expenses and prepaid income G 36,36 5 39, 872
Subordinated liabilities G 36,343 36 ,9 13
Total liabilities 6, 30 2,7 2 0 5 , 74 2 , 6 9 0
Equity capital and non-controlling interests G
Share capital 42,029 4 2,029
Share premium account 32 ,7 3 6 32 ,7 3 6
Reserve fund 25 ,12 9 25 ,1 2 9
Fair value reserve 2,9 9 0 4 ,12 9
Translation dierences –141 2,1 3 3
Unrestricted equity capital fund 27 ,994 2 7, 6 1 1
Retained earnings 171,744 158,58 9
Shareholders’ portion of equity capital 302, 481 292,357
Non-controlling interests’ portion of equity capital 13 11
Holders of additional Tier capital 29, 42 4
Total equity capital 33 1,9 1 8 292 ,36 8
Total liabilities and equity capital 6, 63 4 , 63 9 6,035,058
Annual Report
Statement of changes in equity capital
(EUR K)
Bank of Åland Group
Share
capital
Share
premium
account
Reserve
fund
Fair value
reserve
Translation
dierence
Un-
restricted
equity
capital
fund
Retained
earnings
Share-
holders’
portion of
equity
capital
Non-
controlling
interests’
portion of
equity capital
Holders of
additional
Tier
capital Total
Equity capital,
Dec , 4 2,02 9 32, 736 25 ,1 2 9 3,0 66 –1 ,3 47 2 7, 3 9 8 129,330 258 ,3 43 13 258,355
Profit for the period 31, 486 31, 48 6 –1 31, 4 85
Other comprehensive
income 1, 0 63 3 , 47 9 –2,2 41 2,302 2,302
Transactions with
the Group’s owners
Incentive programme 213 213 213
Share savings
programme 12 12 12
Equity capital,
Dec , 42 ,029 32,736 25 ,1 2 9 4 ,129 2,1 3 3 2 7,6 11 1 58,589 292,357 11 292,3 68
Profit for the period 39,849 39,849 2 39, 850
Other comprehensive
income –1 ,13 9 –2, 2 7 4 5 , 3 41 1,9 2 8 1,9 2 8
Transactions with
the Group’s owners
Issuance of additional
Tier capital 29, 42 4 29, 42 4
Interest paid on Tier
capital instruments –8 47 –8 47 –8 47
Dividends paid –3 1 ,18 8 –3 1 ,18 8 –3 1 ,18 8
Incentive programme 383 383 383
Equity capital,
Dec , 42 ,029 32,736 25 ,1 2 9 2 ,9 9 0 –1 41 2 7, 9 9 4 1 7 1 , 74 4 3 02, 4 81 13 29, 42 4 3 3 1 ,9 1 8
For further disclosures about changes in equity capital, see Note G.
Bank of Åland Plc
Consolidated cash flow statement
(EUR K)
Bank of Åland Group Jan –Dec , Jan –Dec ,
Cash flow from operating activities
Net operating profit
Adjustment for net operating profit items not aecting cash flow
Depreciation/amortisation and impairment losses
on intangible and tangible assets
Impairment losses on loans and other commitments
Unrealised changes in value
Accrued surpluses/deficits on debt securities and bonds issued
Defined benefit pension plan
Gains/losses from investment activity
–1,9 3 6 -
Income taxes paid
–8,227 –4 , 8 5 6
Increase () or decrease () in receivables from operating activities
Debt securities
Lending to credit institutions –12 ,1 6 4 21 ,7 88
Lending to the public –45 1 , 3 1 5 –216,527
Other assets
–2,043 1,2 29
Increase () or decrease (–) in liabilities from operating activities
Liabilities to credit institutions and central banks
Deposits from the public 48 6,5 1 1 199,380
Debt securities issued –232,783 –18 4 ,9 65
Other liabilities
–1 7, 4 5 6 19,09 4
Cash flow from operating activities
Cash flow from investing activities
Investment in shares and participations
–2, 432 –3,249
Divestment of shares and participations
Investment in shares of associated companies and subsidiaries
–1 1,5 43 –1 ,13 9
Divestment of shares in associated companies and subsidiaries
Investment in tangible assets
–2,87 2 –1,37 3
Divestment of tangible assets
Investment in intangible assets
–5 ,9 1 9 –3,7 5 7
Cash flow from investing activities
–2 1 ,7 30 –9, 45 7
Cash flow from financing activities
Share issue
Issuance of additional Tier capital
Payment of principal on lease liability
–4 , 0 3 8 –4 ,9 4 5
Increase in subordinated debentures
Decrease in subordinated debentures
–1 4 ,7 7 6 -
Dividend paid
–3 1 ,18 8 -
Interest paid on Tier capital instruments
–8 47 -
Cash flow from financing activities
–6 , 435 –4, 732
Exchange rate dierences in cash and cash equivalents
–1 ,79 6 2,5 3 6
Change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash flow from operating activities
Cash flow from investing activities
–2 1,7 3 0 –9, 457
Cash flow from financing activities
–6, 435 –4 , 7 3 2
Exchange rate dierences in cash and cash equivalents
–1 ,79 6 2,5 3 6
Cash and cash equivalents at end of year
Cash and cash equivalents consisted of the following items:
Cash and deposits with central banks
Lending to credit institutions that is repayable on demand
Total cash and cash equivalents
“Cash and cash equivalents” refers to cash, cheque account with the Bank of Finland, lending to credit institutions that is repayable on demand as well as other lending to
credit institutions and debt securities with an original remaining maturity of less than three months as well as claims on public sector entities that are not lending. “Invest-
ing activities” refers to payments related to tangible and intangible assets as well as holdings of shares and participations aside from shares intended for trading. “Financing
activities” refers to items among equity capital and liabilities that fund operating activities. The analysis was prepared according to the indirect method.
For further information regarding the consolidated cash flow statement, see Note G.
Annual Report
Table of contents,
notes to the consolidated financial statements
G. Corporate information .................................................................
G. Accounting principles...................................................................
G. The Group’s risk management ...................................................
G. Segment report .............................................................................
G. Product areas ................................................................................
G. Geographic distribution ...............................................................
G. Net interest income .....................................................................
G. Net commission income .............................................................
G. Net income from financial items carried at fair value ..........
G. Other income .................................................................................
G. Sta costs ........................................................................................
G. Other expenses .............................................................................
G. Expected credit (loan) losses .....................................................
G. Income taxes ..................................................................................
G. Earnings per share ........................................................................
G. Classification of financial assets and
liabilities ...............................................................................
G. Measurement of financial assets and liabilities
carried at fair value .......................................................................
G
. Assets and liabilities by currency .........................................
G. Holdings of debt securities .........................................................
G. Lending to credit institutions .....................................................
G. Lending to the public ...................................................................
G. Shares and participations............................................................
G. Shares in associated companies................................................
G. Derivative instruments ................................................................
G. Intangible assets ...........................................................................
G. Tangible assets ...............................................................................
G. Deferred tax assets and liabilities .............................................
G. Other assets ...................................................................................
G. Accrued income and prepayments ...........................................
G. Liabilities to credit institutions ...................................................
G. Deposits from the public .............................................................
G. Debt securities issued ..................................................................
G. Other liabilities ..............................................................................
G. Provisions ........................................................................................
G. Accrued expenses and prepaid income ..................................
G. Subordinated liabilities ................................................................
G. Specification of changes in equity capital ..............................
G. Reconciliation of liabilities attributable to
financing activities ........................................................................
G. Group structure .............................................................................
G. Actively managed assets .............................................................
G. Assets pledged ..............................................................................
G. O-balance sheet obligations ....................................................
K. Pension liabilities ..........................................................................
G. Lease liabilities ..........................................................................
G. Disclosures about related parties ...........................................
G. Osetting of financial assets and liabilities ..........................
G. Important events after the close of
the accounting period ................................................................
Bank of Åland Plc
G. Accounting principles
. Basis for the report
The consolidated financial statements have been prepared in com-
pliance with the International Financial Reporting Standards (IFRSs)
that have been adopted by the European Union. In addition, when
preparing the notes to the consolidated financial statements, Finnish
company and accounting legislation has also been applied. The con-
solidated financial statements are presented in thousands of euros
(EUR K) unless otherwise stated. The consolidated financial state-
ments have been prepared according to original cost, if not otherwise
stated in the accounting principles.
Tables show rounded-o figures on all individual lines, but this means
that the rounded-o figures do not always add up to the correct total.
. Changes in accounting principles
The essential accounting principles used in preparing the Interim
Report are the same as those used in preparing the financial state-
ments for the year ending December , .
The Bank of Åland has issued additional Tier (AT) capital. These
instruments are classified as equity capital, since the instruments
do not include any requirement that the Bank of Åland must pay the
principal amount or interest to the holders. The Bank of Åland treats
payments on financial instruments classified as equity capital (i.e.
AT capital) as distributions of profits, and such payments are thus
reported as dividends. Payment is made on a quarterly basis and the
interest rate is the -month Stibor plus . per cent.
During , the International Financial Reporting Interpretations
Committee (IFRIC) issued a new agenda decision on accounting for
development costs in cases where development involves software
systems that an entity does not exercise control over, but instead
buys as a service. In such cases, the entity is no longer allowed to
capitalise the costs. Instead such development costs need to be
expensed on a yearly basis. The decision is not expected to have any
major eect on the Bank of Åland’s financial position, earnings, cash
flow or disclosures.
Other changes in accounting rules adopted during have had
no major eect on the Group’s financial position, earnings, cash flow
or disclosures.
A number of new standards and interpretations take eect for
accounting years that begin after January , . These coming
regulatory changes are not expected to have any significant eect
on the Group’s financial position, earnings or disclosures.
. Presentation of financial reports
Financial statements consist of a balance sheet, an income state-
ment, a statement of comprehensive income, a statement of changes
in equity capital, a cash flow statement and notes. Their purpose is
to provide information about the position, financial performance and
cash flows of a company that is useful in making economic decisions.
Financial statements also present the results of the management
team’s administration of the resources entrusted to them.
The Group publishes an interim report for each quarter as well as
a complete annual report.
. Principles of consolidation
The consolidated financial statements are prepared in compliance
with IFRS , “Consolidated financial statements” and encompass
the Parent Company, the Bank of Åland Plc – including its Swedish
branch, Ålandsbanken Abp (Finland), svensk filial – and all subsidiar-
ies that the Parent Company controls. The Group controls a company
when it is exposed to, or has rights to, variable returns from its hold-
ing in the company and has the ability to aect those returns through
its influence on the company. When assessing whether a control-
ling interest exists, potential voting rights are considered as well as
whether de facto control exists. The consolidation of subsidiaries
occurs from the date when control is achieved to the divestment date.
In elimination, the acquisition method of accounting has been used.
The acquisition method means that the payment which is transferred,
the identifiable assets of the acquired company and liabilities assumed
plus any non-controlling interests are carried at fair value on the acqui-
sition date. Conditional consideration is recognised at fair value on the
acquisition date. In case contingent consideration is classified as an
equity instrument, no reassessment is made and settlement occurs as
Notes to the consolidated financial statements
(EUR K)
G. Corporate information
organised in compliance with Finnish legislation and with its Head
Oce in Mariehamn . The Bank of Åland Plc is a commercial bank with
a total of oces in Finland and Sweden . Through its subsidiary Cross-
key Banking Solutions Ab Ltd, the Bank of Åland Group is also a sup-
plier of modern banking computer systems for small and medium-sized
banks.
The Head Oce of the Parent Company has the following
registered address:
Åland, Finland
A copy of the consolidated financial statements can be obtained
from the Head Oce or from the Bank’s website www.alandsbanken.fi
The shares of the Bank of Åland Plc are traded on the Nasdaq Hel-
sinki Oy (Helsinki Stock Exchange).
The consolidated financial statements for the financial year ending
on December , were approved by the Board of Directors on
February , and will be submitted to the Annual General
Meeting for adoption. The Annual General Meeting has the opportu-
nity to adopt or abstain from adopting the financial statements.
Annual Report
part of equity capital. Other contingent consideration is reassessed on
each reporting date and the change is recognised in the year’s income
statement. Intangible assets that are not found in the balance sheet
of the acquired company, for example patents, brand names or cus-
tomer relationships, are identified and measured at the time of the
acquisition. In case of an acquisition where the payment which is trans-
ferred, any non-controlling interests and the fair value of any previ-
ously owned portion exceeds the fair value of the acquired assets and
the liabilities assumed, the dierence is recognised either as goodwill
or negative goodwill. If goodwill arises, it is tested at least in conjunc-
tion with the annual financial statements. If negative goodwill arises,
it is recognised as income in its entirety at the time of the acquisition.
For goodwill amounts in companies where the Group has a controlling
influence, or in subsidiaries where it has significant holdings without
decision-making rights, see Note G.
Transaction expenditures – except for those attributable to the
issuance of equity instruments or debt instruments – are recognised
directly in the income statement. The portions of equity capital and
profit for the accounting period in subsidiaries that are attributable to
non-controlling interests are split o and shown as separate items in
the consolidated income statement and balance sheet. Losses attrib-
utable to non-controlling interests are allocated even in those cases
where non-controlling interests will be negative.
Changes in percentages of ownership in a subsidiary where a con-
trolling influence is retained are recognised as a transaction in equity
capital. The dierence between payment received and non- control-
ling interests’ proportion of acquired net assets is recognised under
“Retained earnings”. Changes where a controlling influence ceases,
gains or losses as well as items in other comprehensive income – except
any re-measurements of defined benefit pension plans – are recognised
in the income statement. Remaining holdings are carried at fair value
and the change in value is recognised in the income statement.
The consolidated financial statements include those associated
companies in which the Bank of Åland Group owns – per cent of
the voting power or otherwise has significant influence. When consol-
idating associated companies, the equity method of accounting has
been used. The equity method means that the carrying amount of the
shares in the consolidated financial statements is equivalent to the
Group’s proportion of the associated company’s equity capital and
Group goodwill and any other remaining consolidated surplus and
deficit values, adjusted for any impairment losses. The Group’s pro-
portion of the income in associated companies and any proportion of
other comprehensive income are recognised on separate lines in the
consolidated income statement and the consolidated statement of
other comprehensive income, respectively. When the Group’s
proportion of an associated company’s losses equals or exceeds its
holding in the associated company, including any receivables without
collateral, the Group recognises no further losses, unless the Group
has assumed legal or informal obligations or made payments on
behalf of the associated company.
Joint operations and joint ventures are collaborative arrangements
in which the Bank of Åland and one or more business partners are
entitled to all economic benefits related to an operation’s assets and
obligations for its liabilities. Mutual property and housing companies
have been classified as joint operations. The Group recognises assets,
liabilities, income and expenses based on its proportion of these.
All intra-Group receivables, liabilities, income and expenses – including
dividends and unrealised intra-Group profits – have been eliminated in
the consolidated financial statements. Unrealised gains arising from
transactions with associated companies are eliminated to an extent
equivalent to the Group’s proportion of ownership in the company,
but only to the extent that there is no impairment.
. Items in foreign currencies
The consolidated financial statements are prepared in euros (EUR),
which is the reporting and functional currency of the Parent Company,
Bank of Åland Plc. The functional currency of an operation is deter-
mined on the basis of the economic environment where the operation
is carried out. The functional currency of the Group’s operations out-
side Finland may diverge from the Group’s reporting and functional
currency. A foreign currency is defined as a currency other than the
Group’s functional currency. Income and expenses in foreign curren-
cies are translated to the functional currency of Group companies and
branches on the transaction date. Monetary assets and liabilities in
foreign currencies are translated at the exchange rate prevailing on the
closing day. Translation dierences from equity instruments and debt
instruments measured at fair value via other comprehensive income
– as well as translation dierences from hedging of net assets in foreign
operations and fair value changes in related currency derivative instru-
ments after taxes, to the extent that the hedge is eective – are recog-
nised in “Other comprehensive income”. Non-monetary items that are
recognised at fair value are translated according to the exchange rate
when fair value was established. Other non-monetary items have been
translated at the exchange rate on the transaction date.
In the consolidated financial statements, the income statements,
other comprehensive income items and cash flow statements of opera-
tions outside Finland are translated to euros according to the average
exchange rates for the report period. The translation of balance sheet
items to euros is performed using the exchange rates on the balance
sheet date. The translation dierences that arise when translating oper-
ations outside Finland are recognised separately in “Other comprehen-
sive income” and are accumulated in a separate component in equity
capital known as the translation reserve. When controlling interest
ceases, the accumulated translation dierences attributable to these
operations are realised, at which time they are reclassified from the
translation reserve in equity capital to the income statement.
. Recognition of assets and liabilities
in the balance sheet
The purchase and sale of shares, money and capital market instru-
ments and derivatives in the spot market are recognised on the
transaction date. Other financial assets and liabilities are normally
recognised on the settlement date. Financial assets are removed
from the balance sheet when the contractual rights to the cash
flows that are attributable to the asset cease or when all risks and
rewards associated with the asset are transferred to another party.
A financial liability is removed from the balance sheet when the
obligation ceases or is cancelled.
In case of a business acquisition, the acquired business is recognised
in the consolidated accounts from the acquisition date. The acquisition
date is the date when control over the acquired unit begins. The acqui-
sition date may dier from the date when the transaction is legally
confirmed. Assets and liabilities are removed from the balance sheet
when controlling influence ceases.
Financial assets and liabilities are oset and recognised as a net
amount or to simultaneously sell the asset and settle the liability.
Further disclosures about osetting of financial assets and liabilities
are provided in Note G.
The principles for recognition of assets and liabilities in the bal-
ance sheet are of special importance, for example, in the recognition
of repurchase transactions, loans for the purchase of securities and
leases. See the separate sections on these items below.
. Classification of financial assets and liabilities
For purposes of measurement and recognition, in compliance with
the provisions of IFRS , all financial assets and liabilities are classi-
fied in the following categories:
Bank of Åland Plc
. Amortised cost
• Investments held to maturity
• Loans and other receivables
• Other financial assets and liabilities
. Fair value via income statement (“profit and loss”)
• Held for trading
. Fair value via other comprehensive income
• Investments held to collect cash flows and available for sale
• Equity instruments not held for trading
. Amortised cost
. Fair value via income statement (“profit and loss”)
• Derivative instruments not subject to hedge accounting
The allocation among the dierent categories is done on the basis
of the Bank of Åland’s business model for the various holdings and
the qualities of the cash flows that the assets create. The choice of
the Bank of Åland’s business model reflects how groups of financial
assets are jointly managed in order to achieve a certain purpose,
for example to obtain cash flows and sell assets. Dierent groups of
assets may have dierent business models. Classification in the bal-
ance sheet is independent of the measurement category. Dierent
measurement principles may thus be applied to assets and liabilities
that are recognised on the same line of the balance sheet. An allo-
cation of the categories of financial assets and liabilities that are
recognised in the balance sheet in terms of measurement category
is provided in Note G.
Most of the items in the consolidated balance sheet are finan-
cial instruments. A financial instrument is any form of contract that
gives rise to a financial asset in one company and a financial liability
or equity instrument in another company. Financial instruments are
classified in the balance sheet on dierent lines depending on who
the counterparty is, for example the public or a credit institution.
If the financial instrument has no specific counterparty, or when it
is quoted in a market, these financial instruments are classified in
the balance sheet as various types of securities. Financial liabilities
where the creditor has a lower priority than others are classified in
the balance sheet as “Subordinated liabilities”.
A derivative is a financial instrument characterised by changes in
its value due to changes in such variables as exchange rates, interest
rates or share prices in an underlying asset, while little or no initial
net investment is required. The contract is settled at a future date.
Derivatives are recognised on their own lines in the balance sheet,
together with contractually accrued interest, either as an asset or
a liability depending on whether the contract has a positive or
negative fair value.
Financial assets are recognised in the balance sheet on the trans-
action date when the purchase contract is signed, aside from con-
tracts in the “loan receivables” measurement category, which are
recognised on the payment date. The derecognition of financial
assets occurs when the right to receive cash flows has expired or has
essentially been transferred to another party. Financial liabilities are
derecognised from the balance sheet when the liability ends because
the contract has been fulfilled or cancelled.
On the first recognition date, all financial assets and liabilities are
recognised at fair value. For assets and liabilities at fair value via the
income statement, transaction costs are directly recognised in the
income statement on the acquisition date. For other financial instru-
ments, transaction expenses according to the eective interest
method are included in cost.
Recognised in the category “Financial assets and liabilities recognised
at amortised cost” are interest-bearing financial assets that the Group
holds as part of a business model whose aim is to hold financial
assets for the purpose of receiving contractual cash flows. On prede-
termined dates, the contractual terms for the financial asset give rise
to cash flows that are only payments of capital amounts and interest
on the capital amount outstanding. The decision to hold an invest-
ment to maturity is made on the purchase date. Investments recog-
nised at amortised cost are impairment tested according to the model
for expected loan losses.
Loans and accounts receivable are recognised at amortised cost,
that is, the discounted present value of all future payments attribut-
able to the instrument, where the discount rate consists of the eec-
tive interest rate of the asset on the purchase date. When interest
income is calculated, the eective interest rate for the recognised
gross amount of a financial asset is used, except for those financial
assets that have later been assigned poorer credit ratings. For these
financial assets, the eective interest rate of the financial asset’s
amortised cost is used during subsequent report periods (minus
credit reserves). Loans and receivables are impairment tested accord-
ing to the model for expected loan losses. Loans and accounts receiv-
able that are defined as belonging to Stage undergo impairment
testing regularly and individually for each receivable. Impairment
losses are recognised in the balance sheet at their net amounts,
after subtracting expected and actual loan losses. Lease liabilities are
reported as financial liabilities that are recognised at amortised cost.
A debt instrument is measured at fair value via other comprehen-
sive income if it meet both of the following conditions and is not
identified as carried at fair value via the income statement: it is held
according to a business model whose aim can be achieved both by
receiving contractual cash flows and selling financial assets, and on
predetermined dates its contractual terms give rise to cash flows
that are only payments of capital amounts and interest on capital
amounts outstanding. Recognised in this measurement category are
debt instruments that are initially recognised at amortised cost in the
balance sheet and are later measured at fair value. The change in
value is recognised under other comprehensive income, minus
deferred tax. Upon divestment or impairment loss, the portion of
accumulated income previously recognised under other comprehen-
sive income is transferred to the income statement. Impairment
testing of financial assets in this measurement category is performed
according to the model based on expected loan losses. Divestments
are recognised under “Net income from financial assets measured
via other comprehensive income” and impairment losses under
“Net income from financial items”. Interest attributable to this
measurement category is recognised in the income statement under
“Net interest income”.
The Bank of Åland has made an irrevocable choice to recognise
equity holdings in the measurement category “Financial assets rec-
ognised at fair value via other comprehensive income”. This choice is
made investment by investment. Equities are initially recognised at
cost and are then measured at fair value. The change in value is
recognised under other comprehensive income, minus deferred tax.
Upon divestment or de-recognition from the balance sheet, the portion
of accumulated income previously recognised under other comprehen-
sive income, fair value reserve, is transferred to retained earnings.
Dividends are recognised in the income statement.
Annual Report
All financial assets that are not classified as measured at amortised
cost or fair value via other comprehensive income are measured at
fair value via the income statement.
Financial liabilities are classified as measured at amortised cost or
fair value via the income statement. A financial liability is classified at
fair value via the income statement if it is classified as a holding for
trading purposes, as a derivative or has been identified as such on
the first recognition date. Financial liabilities measured at fair value
via the income statement are measured at fair value and net gains
and losses, including interest expenses, are recognised in the income
statement. Subsequent measurement of other financial liabilities
occurs at amortised cost using the eective interest method. Inter-
est expenses and exchange rate gains and losses are recognised in
the income statement. Gains or losses upon de-recognition from the
accounts are also recognised in the income statement.
The provisions of IFRS only allow reclassification of certain financial
assets and only when a change of business model occurs. Reclassifi-
cation of financial liabilities is not allowed.
An embedded derivative is a component of a combined financial
instrument that also includes a host contract that is not a derivative,
with the eect that some of the hybrid instrument’s cash flows vary
in a way similar to the cash flows from a stand-alone derivative.
An embedded derivative is separate from the host contract and is
recognised separately among “Derivative instruments” in the balance
sheet when its financial features are not closely related to those of
the host contract, provided that the combined financial instrument
is not recognised at fair value via the income statement.
. Principles for recognising financial assets
and liabilities at fair value
Fair value is defined as the price at which an asset could be sold or
a liability transferred in a normal transaction between independent
market players.
The fair value of financial instruments that are traded in an active
market is equal to the current market price. Such a market is regarded
as active when listed prices are easily and regularly available in a regu-
lated market, trading location, reliable news service or the equiva-
lent, and where the price information received can easily be verified
through regularly occurring transactions. As a rule, the current
market price is equivalent to the current purchase price of financial
assets or the current sale price of financial liabilities. The current
market price of groups of financial instruments that are managed on
the basis of the Bank’s net exposure to market risk equals the current
market price that would be received or paid if the net position
were divested.
In the case of financial assets for which reliable market price infor-
mation is not available, fair value is determined with the help of
valuation models. The valuation models that are used are based on
incoming data that in all essential respects can be verified through
market observations, for example market interest rates and share
prices. As needed, an adjustment is made for other variables that
a market player is expected to take into account in pricing.
The valuation techniques used are analysis of discounted cash
flows, measurement with reference to financial instruments that are
essentially similar and measurement with reference to recently com-
pleted transactions in the same financial instruments. When using
measurement techniques, market quotations are used to the great-
est possible extent, but in case this is not possible, estimates are
required in order to obtain fair value.
Day gains or losses, that is, dierences between transaction price
and value according to a measurement model that arise on the first
recognition date, are recognised in the income statement only in
cases where the measurement model is based only on observable
market data. Otherwise the dierence is accrued over the lifetime of
the financial instrument.
Debt securities issued by sovereigns, as well as covered bonds and
corporate bonds, are valued with the help of current market prices.
In exceptional cases, corporate bonds may be measured using valu-
ation techniques based on market yields for equivalent maturities,
adjusting for credit and liquidity risk.
Shares listed in an active market are valued at market price. When
measuring unlisted shares and participations, the choice of valuation
model is determined by what is deemed suitable for that particular
instrument. Holdings in unlisted shares mainly consist of shares with
a connection to the Bank’s business, such as strategic partnerships
and holdings in Åland companies. As a rule, such holdings are valued
at the Bank’s proportion of net asset value in the company, which
is regarded as constituting a reasonable estimate of fair value. In
companies that have recently carried out a new share issue without
preferential rights based on previous holdings, each share is valued
at this issue price, with a deduction for share illiquidity.
Derivatives that are traded in an active market are valued at market
price. Most of the Group’s derivative contracts, among them interest
rate swaps and various types of linear currency derivatives, are meas-
ured using valuation models based on market interest rates and other
market prices. Valuation of non-linear derivative contracts that are
not actively traded is also based on a reasonable estimate of market-
based incoming data, for example volatility.
. Impairment losses on loans and accounts receivable
Impairment losses on loans and accounts receivable are determined
according to a model based on “expected credit loss” (ECL). This is
based on changes in the credit risk of financial assets and consists of
a three-stage model. Stage consists of exposures that are perform-
ing without significantly higher credit risk being regarded as having
occurred. Those exposures that under-perform and are regarded as
having a significant change in credit risk are placed in Stage . In addi-
tion, exposures that have been granted forbearance measures are
always placed in Stage . Exposures in Stage fulfil the Group’s default
definition, in which an exposure is regarded as in default when a pay-
ment related to a significant amount is more than days late. Other
situations where the Group regards a credit exposure as in default is
when the Bank honours a bank guarantee, the counterparty files for
bankruptcy or it applies for debt restructuring. In addition, the Group
assesses whether a counterparty should be regarded for other reasons
as incapable of paying, which always includes cases where the Bank
expands its forbearance measures on behalf of the customer.
By definition, a loan loss provision for Stage or Stage is based
on lifetime loan losses, but they dier since Stage exposures always
undergo an individual impairment test. For backward transitions to
better stages, the Bank applies cooling o periods. For exposures in
Stage it applies a six month period and for loans in Stage it applies
a two month cooling o period. For exposures with forbearance, the
Bank applies a cooling o period of months before the exposure
Bank of Åland Plc
can revert to Stage , assuming that forbearance measures are no
longer in place. The impairment loss model requires reporting of one
year’s expected loss from the initial date of recognition, and in case
of a significant increase in credit risk, the impairment loss amount
must be equivalent to the credit losses that are expected to arise
during the remaining lifetime. A significant increase in credit risk is
defined as a significant increase in the probability of a suspension of
payment since the first reporting date. The Group assesses a signifi-
cantly increased credit risk on the basis of a calculation of a relative
change in probability of default (PD) for the remaining maturity of
three times and an absolute change of at least percentage points.
For all exposures, the Group applies a credit rating model for
calculating expected loan losses. These calculations are based on
internally developed models (probability of default PD, loss given
default LGD and expected exposure at default EAD), which take
into account both historical data and probability-weighted forward-
looking scenarios. The Bank of Åland uses a macro model with three
forecast scenarios a base scenario that has a per cent weighting,
a negative scenario that has a per cent weighting and a positive
scenario that has a per cent weighting. The forecast period in the
scenario is three year. These forecasts are revised at least yearly. A
-month probability of default (PD) indicates the probability that a
given commitment will default within months, while a lifetime PD
(for the remaining maturity) is equivalent to the probability that a
given commitment will default during the entire remaining maturity
of the financial asset. The PD model is based on historical data, the
conditions that exist on the reporting date and future economic con-
ditions that aect credit risk. Loss given default (LGD) is stated per
commitment and is an estimate of the expected loss that the Group
will incur assuming that the commitment defaults. The Group’s LGD
model is based on historical data. Exposure at default ((EAD) refers
to an estimated credit exposure at a future default date, taking into
account expected changes in the credit exposure on the balance
sheet date. The Group’s EAD model takes into account such factors
as current contractual terms, assumptions about the honouring of
guarantees, expected utilisation of credit limits and irrevocable o-
balance sheet obligations.
The level of provisions is based on a broad range of relevant infor-
mation from incoming data, assumptions and assessments by the
Executive Team. The following points may have an especially large
influence on the level of provisions: establishment of a significant
increase in credit risk, forecasts of future macroeconomic scenarios
and calculation methodology for both the expected loan loss within
the coming months and expected lifetime loan losses. Expected
credit losses for receivables in Stage and Stage are determined
by the Credit Committee of the Executive Team, based on data from
the Group’s model of expected credit losses. When making this deter-
mination, this Credit Committee may approve divergent treatment
if their assessment is that there are special circumstances that the
model does not take into account.
“Receivables with forbearance measures” refers to loan receiva-
bles for which the Bank has granted the borrower concessions
because of his/her obviously worsened financial situation, in order to
avoid problems with the borrower’s repayment capacity and thereby
maximise the repayment of the outstanding receivable. Concessions
may include adjusted loan conditions, such as postponed princi-
pal repayments, a reduced interest margin or an extended repay-
ment period, or refinancing, which may mean that a loan has been
fully repaid close to its original due date and in connection with this
has been replaced with a new loan. When granting a concession on
agreed loan conditions, the responsible decision maker shall assess
the customer’s financial situation. In case a concession is granted
to the customer due to his/her deteriorating financial situation, the
receivable shall always be transferred to Stage (as long as there
is no basis for divergent treatment due to statutory payment mora-
torium rules). When granting a concession, if it is deemed that full
repayment of the receivables is unlikely unless the Group resorts
to measures such as selling collateral or redeeming guarantees,
the receivable is regarded as in default and is transferred to Stage .
As long as it is only a matter of forbearance measures, i.e. the cus-
tomer is not regarded as unlikely to make payments, the measure
is individual for each loan. “Carrying amount” refers to gross expo-
sures and includes not only restructured loans but also other loans
in a customer entity.
The Group analyses the eects of forbearance measures as part
of its reporting of modification results. The original present value of
the loan based on discounted future cash flows is compared with
the adjusted present value after any changes in cash flows. When a
loan is modified but not removed from the balance sheet, significant
increases in credit risk compared to the original credit risk are still
assessed for impairment purposes. Modification results are recorded
in the income statement and refer to the dierence in the present
value of the original and the new contractual cash flows discounted
at the original eective interest rate and are accrued on a straight-line
basis over the remaining life of the loan.
The impairment model in compliance with IFRS requires the
Executive Team to make judgements and estimates and make
assumptions that aect the application of accounting principles.
The single largest uncertainty factor is still the global coronavirus
pandemic. In the prevailing situation, the Bank of Åland analysed
selected economic sectors and types of loans that it believed would
be aected most by the crisis. Customers who, under the prevailing
circumstances, apply for postponement of loan principal payments
are not automatically moved from Stage to Stage , since the post-
ponement of principal payments in itself does not represent a height-
ened risk of loss. For the Bank of Åland’s part, the loan volume that
has been granted postponement of principal payments amounts to
EUR M. This volume is recognised in Stage if there are no other
reasons besides the postponement of principal payments that justify
another stage. In the FSA allowed banks to grant general for-
bearance or a so-called moratorium to customers due to the corona-
virus pandemic. A moratorium means that loan mitigation measures,
such as deferred principal payments, are granted without the need
for individual assessment of whether the measure is a forbearance
measure. This led to an increase in the number of principal payment
deferrals granted by the Bank, but these moratoriums were reported
separately from principal repayment deferrals granted through for-
bearance measures. This procedure was in force until March , .
Provisions for loan losses on financial assets that are measured at
amortised cost are made in the balance sheet as a reduction in the rec-
ognised gross carrying amount of the asset. Provisions for guarantees
issued and unutilised credit lines are recognised as liabilities. Impair-
ment losses on loans and accounts receivable as well as realised loan
losses are recognised in the income statement under “Net impairment
loss on financial assets”. Financial assets are removed from the bal-
ance sheet when the right to receive cash flows from the asset has
expired or has been transferred and the Group has transferred in virtu-
ally all risks and rewards associated with ownership to another party.
An actual loss thus means that a loan or trade receivables is finally
recorded as an impairment loss when bankruptcy has been confirmed
or indigence has been determined as probable. Repayments of previ-
ously realised loan losses and recoveries of probable loan losses are
recognised as income under “Net impairment loss on financial assets”.
. Hedge accounting
Hedge accounting at fair value can be applied to individual assets and
liabilities as well as to portfolios of financial instruments in order to
protect the Group from undesirable eects on income due to changes
in the market prices of recognised assets or liabilities. When hedg-
ing fair value, both the hedging instrument – the derivative – and the
Annual Report
hedged risk in the hedged instrument at fair value are recognised in
the income statement under “Net gains and losses on financial items
at fair value”. One requirement to apply hedge accounting is that the
hedge has been formally identified and documented. The hedge’s
eectiveness must be measurable in a reliable way and is expected to
remain and prove to have been very eective in osetting changes in
value during the reported periods.
Cash flow hedging can be applied to individual assets and liabilities
for the purpose of protecting the Group against undesirable
eects on earnings due to changes in interest and exchange rates.
Derivatives that comprise hedging instruments in cash flow hedging
are recognised at fair value in the balance sheet. To the extent that
the change in the value of the hedging instrument is eective, it
is recognised in the hedging reserve under “Other comprehensive
income”. Any ineective portion is recognised in the income state-
ment under “Net gains and losses on financial items at fair value”.
The amount recognised in “Other comprehensive income” is trans-
ferred to the income statement upon the maturity of the issued debt
security issued that has been hedged by cash flow hedging. One pre-
requisite for applying hedge accounting is that the hedge is formally
identified and documented. Its eectiveness must be measurable in
a reliable way and is expected to remain and prove to have been very
eective in osetting changes in value during the reported periods.
Hedges of net investments in foreign operations are applied to pro-
tect the Group from translation dierences that arise when opera-
tions in a functional currency other than the presentation currency
are translated. Derivatives that comprise hedging instruments in
hedges of net investments in foreign operations are recognised in
“Other comprehensive income”.
Any ineective portion is recognised in the income statement
under “Net gains and losses on financial items at fair value”. If a for-
eign operation is divested, the gain or loss that arises on the hedging
instrument is reclassified from “Other comprehensive income” and
recognised in the income statement. One prerequisite for applying
hedge accounting is that the hedge is formally identified and docu-
mented. Its eectiveness must be measurable in a reliable way and is
expected to remain and prove to have been very eective in oset-
ting changes in value during the reported periods.
. Intangible assets
Intangible assets consist of IT systems produced for the Group’s own
use, externally procured systems, intangible assets from acquisitions
of companies and acquired contracts.
If the computer system that is produced will probably generate future
income or reduce expenses to an extent that exceeds its investment
costs, the development expenses for the computer system are capital-
ised. Computer systems developed in-house are capitalised at actual
cost. Development expenses that are not expected to yield a significant
economic benefit are recognised as an expense in the income state-
ment. Expenses for preliminary studies and research are recognised
as an expense in the income statement.
Capitalised development expenses are normally amortised on
a straight-line basis during years. Amortisation begins when
the computer system is ready for use.
Computer systems developed in-house .....................................– years
External computer systems ........................................................ – years
Acquired contract ............................................................................... years
Other intangible assets ...................................................................– years
External computer systems are recognised in the balance sheet at
cost minus accumulated amortisation and impairment losses.
“Acquired contracts” refers to expenditures for rights to future cash
flows and is recognised in the balance sheet at cost minus accumu-
lated amortisation and impairment losses.
Other intangible assets include acquired customer contracts.
Assets are reviewed yearly to determine if there is any indication
of impairment. If such an indication arises, the recoverable amount
is determined as the asset’s sale price or value in use, whichever
is higher. Not yet completed development work is tested yearly for
impairment, regardless of whether indications of loss of value have
occurred. An impairment loss is recognised in the income statement
if the carrying amount exceeds net realisable value. A previously rec-
ognised impairment loss is reversed only if a significant change has
occurred in the valuation basis for impairment testing. The carrying
amount after reversal may not exceed the carrying amount before
the impairment loss.
Goodwill corresponds to the share of cost that exceeds the fair value
of assets purchased and liabilities taken over. Goodwill is not amor-
tised but is tested yearly or more often if a need exists for impair-
ment by discounting expected future cash flows in cash-generating
units. Impairment losses are recognised in the income statement.
See Note G for Group goodwill amounts.
. Tangible assets
Investment properties are held in order to earn rental income or
value appreciation, or for both purposes. Investment properties con-
sist of direct holdings as well as indirect holdings via property and
housing companies. Investment properties are recognised separately
according to the cost method in the balance sheet under tangible
assets at cost less accumulated depreciation and impairment losses.
In the income statement, “Net income from investment properties” is
shown on a separate line under “Other income”. The properties have
been appraised by a licensed estate agent.
’
Properties for the Group’s own use consist of direct holdings as well
as indirect holdings via property and housing companies. Properties
for the Group’s own use are recognised in the balance sheet at cost
less accumulated depreciation and impairment losses.
Other tangible assets consist of machinery and equipment, vehicles,
renovations of rented premises and an art collection. Other tangible
assets are carried in the balance sheet at cost minus accumulated
depreciation and impairment losses. Any divestment gains/losses
and disposals are recognised in income/expenses.
Bank of Åland Plc
--
“Right-of-use assets” refers to rental contracts and leases where the
Group is the lessee and which are recognised as tangible assets in
compliance with IFRS . When it comes to properties for the Group’s
own use, these right-of-use assets primarily consist of bank and oce
premises. When it comes to other tangible assets, they primarily con-
sist of IT equipment and vehicles. The depreciation period is usually
a fixed period of between – years, with an average lease period of
years. For further information on lease management, see Point .
Depreciation or amortisation is based on the expected economic
service life of the assets. All depreciation/amortisation is on a
straight-line basis.
Buildings .............................................................................................. years
Technical equipment in buildings .................................................... years
Renovation in rented customer premises ...................................... years
Renovation in other rented premises…………………………….....……… years
Machinery and equipment .......................................... ............ – years
Other tangible assets ……………………………………………… ...........…….– years
Right-of-use assets ………………………………………………… ............. ……– years
Land is not depreciated.
Assets are reviewed yearly to determine if there is any indication
of impairment. If such an indication arises, the recoverable amount
is determined as the asset’s sale price or value in use, whichever is
higher. An impairment loss is recognised in the income statement if
the carrying amount exceeds net realisable value. With the exception
of goodwill, a previously recognised impairment loss is reversed only
if a significant change has occurred in the valuation basis for impair-
ment testing. The carrying amount after reversal may not exceed the
carrying amount before the impairment loss.
. Provisions
A provision is recognised when the Group has a present obliga-
tion as a result of a past event, when it is probable that an outflow
of resources embodying economic benefits will be required to set-
tle the obligation and when a reliable estimate of the amount can be
made. The provision is calculated at the present value of estimated
outflow. Provisions are tested on each closing day and adjusted as
needed, so that they correspond to the current estimate of the value
of obligations.
Provisions are recognised for restructurings. Restructuring refers
to extensive organisational changes, for example where employees
receive severance pay for early termination or oces are closed.
For a provision to be recognised, a restructuring plan must have
been adopted and announced, so that it has created a well-grounded
expectation among those aected that the company will implement
the restructuring.
Provisions to the restructuring reserve related to other expenses
are recognised in the balance sheet when the Group has adopted
a detailed formal restructuring plan and the restructuring has either
begun or been publicly announced.
Provisions related to litigation costs are recognised when the Group
has identified the existing obligation and determined the probable out-
flow of resources that will be required in the event of a settlement.
Onerous contracts are recognised when the expected economic
benefits received from a contract are lower than the unavoidable
costs of meeting the obligations of the contract.
A contingent liability is recognised when there is a possible obliga-
tion as a result of past events and whose existence will be confirmed
only by the occurrence of one or more uncertain future events not
wholly within the control of the Group, or when there is an obligation
that is not recognised as a liability or provision because it is unlikely
that an outflow of resources will be required or it cannot be estimated
in a suciently reliable way. A contingent liability is not recognised
as a provision in the balance sheet. Instead disclosures on contingent
liabilities are provided in the notes to the Group’s financial reports.
. Leases
IFRS removes the requirement that lessees must distinguish
between finance and operating leases and requires lessees to report
a “right-of-use” asset and a lease liability for most leases in the balance
sheet. A single discount rate has been applied to a portfolio of leases
with essentially similar characteristics. The Bank of Åland applies the
exemptions that the standard allows regarding leases running for
months or less (short-term leases) and leases where the underlying
asset is of low value. These leases are recognised as expenses in the
income statement.
When entering into a contract, the Bank determines whether the
contract is, or includes, a lease – which is defined as an agreement
that, during a certain period, transfers to right to control the use of an
identified asset, in exchange for compensation. Assets and liabilities
that arise from leases are initially recognised at the present value of
future lease payments, discounted by the incremental borrowing rate.
The Bank reassesses whether a contract is, or includes, a lease only
if the terms of the contract change. The Bank is exposed to possi-
ble future increases in variable lease payments based on an index or
interest rate, which are not included in lease liability before they go
into eect. When an adjustment in lease payments based on an index
or an interest rate goes into eect, the lease liability is re-evaluated
and adjusted in relation to right-of-use. Gains or losses attributable
to changes in leases are recognised in the income statement.
When a contract goes into eect, right-of-use assets are recog-
nised among tangible assets and the corresponding financial lease
liability among other liabilities. Assets are recognised at the begin-
ning of a lease at the amount corresponding to the fair value of the
asset or the lower present value of minimum lease charges. The lease
period is determined on the basis of the irrevocable lease period
together with an assessment of both periods including the option of
a lease extension (and the appropriateness of doing so) and an
assessment of periods that include an option to terminate the lease
if there is certainty that this option will not be used. Depreciation/
amortisation is carried out on the basis of service life or the shorter
lease period. Interest on for lease liabilities is recognised as an
interest expense according to the eective interest method.
Impairment losses are recognised on the basis of individual
judgements of the need.
When the Bank of Åland is the lessor, on the initial date of the lease
it determines whether the lease shall be classified as a finance or
operating lease. A finance lease transfers from the lessor to the lessee
substantially all the economic risks and rewards incidental to owner-
ship of an asset. As a lessor, the Bank of Åland’s leasing operations
consist of finance leases and are recognised as loan receivables.
The carrying amount is equivalent to the present value of future
lease payments. The dierence between future lease payments and
the present value of future lease payments is unearned income.
As a result, lease fees received are recognised both in the income
statement as interest income and in the balance sheet as
a principal payment.
Since lessors bear the economic risks and advantages, the lease
is classified as an operating lease. The Bank of Åland recognises fees
Annual Report
for operating leases as income on a straight-line basis over the lease
period under “Other income”. See Note G. The Bank of Åland
classifies subleases on the basis of the right-of-use that arises from
the main lease, not on the basis of the underlying asset.
. Revenue
IFRS , “Revenue from contracts with customers”, means that
the Group must recognise revenue in an amount that reflects the
compensation that the Group expects to be entitled to receive in
exchange for providing goods or services to a customer.
Interest income and expenses on financial instruments are calculated
according to the eective interest method. This method recognises
the income and expenses of the instruments evenly in relation to
amounts outstanding during the period until the maturity date.
This calculation includes fees paid or received by the contractual
parties that are part of eective interest, transaction costs and all
other surpluses and deficits.
Income and expenses for various types of services are recognised
in the income statement as “Commission income” and “Commission
expenses”, respectively. Commission income is recognised when
the service is performed, which occurs when control of the service
is transferred to the customer and the Group fulfils its performance
obligation. Reported as “Commission income” are brokerage commis-
sions, various forms of asset management fees, payment intermedia-
tion commissions and debit card fees. Foreign exchange commissions
connected to customers’ payments and securities trading are reported
as payment intermediation commissions and securities commissions.
Individual origination fees for loans and credit line commissions total-
ling substantial amounts are accrued over the life of the loan and are
included in net interest income. No information is provided about
remaining performance obligations that have an original expected
maturity of no more than one year, or if the Bank of Åland is entitled
to compensation from a customer in an amount directly equivalent to
the value for the customer of the Bank’s performance that has been
achieved to date, which is permitted according to IFRS . Commission
expenses are transaction-dependent and are directly related to com-
mission income. Income is invoiced regularly. For commissions that
apply for several years, only the portion related to services the
customer has received during the accounting period in question
is recognised.
Commission income and expenses are recognised when the ser-
vice is performed. For commissions that concern more than one year,
only the portion related to the accounting period is recognised.
Under “net income from financial items at fair value”, realised and
unrealised gains and losses from financial instruments carried at fair
value via the income statement (“profit and loss”) are recognised
via the income statement, along with the ineective portion in
hedge accounting.
Recognised under “Net income from foreign exchange dealing”
are gains and losses on exchange rate dierences that arise from
translation of assets and liabilities to euros.
Realised changes in the value of assets that are measured under
other comprehensive income are recognised as “Net income from
financial assets carried at fair value”. Unrealised changes in value
from assets measured under other comprehensive income include
expected credit losses and modification results.
The subsidiary Crosskey oers IT services that include design, imple-
mentation and support. Income is measured on the basis of the com-
pensation specified in the contract with the customer. Systems sales
with significant adaptations are administered as long-term projects.
Contracts may include several dierent performance obligations,
for example systems development and licences. If contracts include
several performance obligations, the transaction price is allocated
to each separate performance obligation based on their stand-alone
sales prices. In cases where the sales price is not directly observable,
the price is estimated based on expected cost plus a profit margin.
Systems licence income from long-term projects is recognised as rev-
enue based on degree of completion, when this can be reliably deter-
mined. The degree of completion is determined separately for each
project as the share of work completed on the balance sheet date,
compared to estimated total working hours for the project. Estimates
concerning project income, expenses or degree of completion are
revised if circumstances change. Increases and decreases in estimated
income or expenses based on a changed assessment are recognised in
the income statement during the period when the circumstances that
led to the revision became known. If total expenditures will probably
exceed total income for the project, the expected loss is immediately
recognised as an expense. If the contract is cost-plus and based on
price per hour, the income is recognised to the extent Crosskey is
entitled to invoice the customer.
Dividends on shares and participations as well as dividends on assets
measured at fair value via the income statement are among the items
recognised as “Other operating income”. Also recognised here are
capital gains from the divestment of non-current assets and rental
revenue from investment properties. Rental revenue is recognised on
a straight-line basis in the income statement in accordance with the
terms of the lease.
. Employee benefits
Post-retirement employee benefits consist of defined contribution
and defined benefit plans. The plans recognised as defined contribu-
tion are those benefit plans under which the Group pays agreed fees
to an external legal entity and then has no legal or informal obliga-
tion to pay additional fees if the legal entity lacks the assets to fulfil
its obligation to the employee. Premiums paid to defined contribution
plans are recognised continuously in the income statement as a sta
cost. Other plans for post-employment benefits are recognised as
defined benefit plans.
Pension coverage for employees in Finland has been arranged
through the Finnish national pension system (a defined contribution-
plan). There is also an older system via a pension fund (Ålandsbanken
Abps Pensionsstiftelse r.s., a so-called A Fund defined benefit plan),
which has been closed since . Pension coverage for employees in
Sweden follows the so-called BTP plan, which is defined contribution.
A few previously agreed defined benefit BTP plans still exist.
A defined benefit pension solution pays a pension based on sal-
ary and length of employment, which means that the employer bears
essentially all risks in fulfilling the pension obligation. For a majority
of its defined benefit pension plans, the Group has set aside man-
aged assets in pension funds or various kinds. Plan assets minus plan
obligations in defined benefit pension plans are recognised in the
balance sheet as a net asset. Actuarial gains and losses on pension
obligations as well as returns that exceed the estimated returns on
plan assets are recognised in “Other comprehensive income”.
Bank of Åland Plc
Recognised pension expense related to defined benefit plans
consists of the net amount of the following items, which are all
included in sta costs:
• Pension rights earned during the year, that is, the year’s portion of
the estimated final total pension disbursement. The calculation of
pension rights earned is based on an estimated final salary and is
subject to actuarial assumptions.
• Interest expense for the year, since the present value of the pen-
sion liability has increased as the period until its disbursement
has decreased. To calculate the year’s interest expense, the Bank
uses the current swap interest rate (interest rate on January ) for
a maturity equivalent to the remaining time until disbursement of
the pension liability.
• Estimated return (interest rate) on plan assets. Interest on plan
assets is recognised in the income statement by applying the same
interest rate used when setting the year’s interest expense.
• The calculation of expenses and obligations related to the Group’s
defined benefit plans involve a number of judgements and assump-
tions that may have a significant eect on the amounts recognised.
Changes or curtailments in a defined benefit plan are recognised at
the earlier of the following dates: when the change or curtailment in
the plan occurs or when the company recognises related restructur-
ing expenses and severance pay. Changes/curtailments are recog-
nised directly in profit for the year.
. Equity capital
1
The Bank of Åland has issued additional Tier (AT) capital. These
instruments are classified as equity capital, since the instruments
do not include any requirement that the Bank of Åland must pay the
principal amount or interest to the holders. If the instrument includes
an interest payment requirement, depending on whether a future
uncertain event beyond the control of both the issuer and the holder
occurs or does not occur, the instrument shall be classified as a finan-
cial liability. The Bank of Åland treats payments on financial instru-
ments classified as equity capital (i.e. AT capital) as distributions of
profits, and such payments are thus reported as dividends. Payment
is made on a quarterly basis and the interest rate is the -month
Stibor plus . per cent.
. Share-based payment
In its compensation policy document, the Group has made it pos-
sible for portions of its compensation to employees to be settled
through its own shares, which are recognised as share-based payment.
The fair value of the shares is calculated on the distribution date and
allocated over the vesting period, while the corresponding increase in
equity capital is recognised. The expense is based on the fair value of
the shares on the distribution date. The fair value of the shares is calcu-
lated on the distribution date on the basis of their quoted market price.
An assessment of how many shares employees will earn is carried out
when calculating the recognised expense of share-based payment in
accordance with the terms and conditions in the Group’s compensation
policy (for example continued employment). At the end of each report
period, the Executive Team re-assesses its judgements about how
many shares will be earned.
. Income tax
Income tax in the income statement includes current taxes for the
Group based on taxable income for the year, together with tax adjust-
ments for prior years plus changes in deferred (imputed) taxes.
Tax expense is recognised in the income statement as an expense,
except for items recognised in other comprehensive income, in which
case the tax eect is also recognised as part of other comprehensive
income. A deferred tax asset or liability has been established for tem-
porary dierences between the value of assets and liabilities for tax
purposes and their carrying amount, by using tax rates applicable to
future periods. Deferred tax liabilities and tax assets are calculated
according to the tax rates expected to apply when the tax mate-
rialises (a law has been adopted but has not yet gone into eect).
A deferred tax asset is recognised to the extent it is probable that
future taxable income will arise against which the temporary
dierence can be utilised.
. Non-current assets held for sale
and discontinued operations
A non-current asset or a disposal group is classified as held for sale if
its carrying amount will be largely recovered through a sale and not
through use. The asset or disposal group must be available for imme-
diate sale in its present condition and based on normal conditions.
It must be highly probable that the sale will occur. A completed sale is
expected to be recognised within one year. An independent business
unit or a significant operation within a geographic area, or a subsidi-
ary acquired exclusively with a view to resale, are also recognised as
discontinued operations.
Non-current assets or disposal groups held for sale are presented
on a separate line in the balance sheet and are measured at the lower
of carrying amount and fair value less expected costs to sell. Liabili-
ties that are related to these non-current assets are also presented
on a separate line in the balance sheet. There were no non-current
assets held for sale at the end of or .
. Operating segments
The Group reports operating segments in compliance with IFRS ,
which means that the segment report reflects the information that the
Group’s Executive Team receives. The Managing Director of the Group
has been identified as the chief operating decision maker. The Group
reports its various business areas as operating segments. A business
area is a group of departments and companies that provide products or
services that have risks and rewards that diverge from other business
areas. Intra-Group transactions take place at market prices.
. Cash and cash equivalents
“Cash and cash equivalents” refers to cash and deposits in the Finn-
ish and Swedish central banks that may be used freely. “Deposits”
refers to funds that are available at any time. This means that all cash
and cash equivalents are immediately usable. Cash and cash equiva-
lents in the cash flow statement are defined in compliance with
IAS and do not coincide with what the Group regards as cash and
cash equivalents.
. Significant judgements and estimation uncertainty
Preparation of financial statements in compliance with IFRSs requires
the Executive Team to make judgements and estimates that aect
the application of accounting principles and the recognised amounts
of assets and liabilities, income and expenses as well as disclosures
about commitments. Although these judgements and estimates are
based on the best knowledge of the Executive Team about current
events and measures at the time of the judgement, the actual out-
come may diverge from these judgements and estimates. Significant
accounting judgements that were made when applying the Group’s
accounting principles were primarily related to impairment losses on
loans and receivables. The sources of uncertainty which may lead to
substantial adjustments in the following year’s financial reports are
described below.
Annual Report
Loans and accounts receivable that are defined as belonging in
Stage undergo impairment testing regularly and individually for
each receivable. Exposures that are subject to individual testing are
identified on the basis of background data covering customers with
defaulting commitments or commitments that will probably default
during a given quarter. If necessary, the receivable is written down
to its estimated recoverable value. This estimated recoverable value
is based on an assessment of the counterparty’s financial repayment
ability and assumptions about the sale value of any collateral.
For those concentrations that do not need an impairment loss,
according to an individual assessment, impairment losses are recog-
nised using a model based on expected credit loss (ECL). The model,
which consists of three stages, focuses on changes in the credit risk
of financial assets. An assessment by the Executive Team may be
required, especially concerning information that aects the calcula-
tion of expected loan losses such as earlier events, current circum-
stances and reasonable, verifiable forecasts of future economic
conditions that may aect future expected cash flows. For further
information, see Note G.
Future pension liability is calculated using actuarial models. As a basis
for the calculation, there are estimates of the discount rate (swap rate
with maturity equivalent to the expected life of the pension liabil-
ity), pay increase (expected future increase for pensions), inflation,
employee turnover and expected return on assets. For further infor-
mation, see Note G.
Goodwill is tested yearly for impairment losses by calculating whether
the carrying amount exceeds the recoverable amount. Impairment
testing is done by discounting expected future cash flows in cash-
generating units. Expected future cash flows are based on cash
flows estimated by the Executive Team. A change in the estimate
of future cash flows, as a consequence of an economic downturn,
new competitors or price pressures, may lead to an impairment loss
on goodwill.
To determine the fair value of financial instruments, judgements are
made that may have a significant impact on the recognised amounts.
The judgements referred to include the choice of measurement
techniques, judgements on whether markets are active and on what
market parameters can be observed. When employing measure-
ment techniques, market quotations are used to the greatest possible
extent, but in case this is not possible the Executive Team is required
to make estimates in order to determine fair value.
If the fair value of financial instruments cannot be obtained from
quotations in an active market, they are calculated with the aid of
various measurement techniques, including mathematical models.
The Executive Team assesses what market quotations are most
suitable and what mathematical models shall be applied in the Group.
For further information, see Note G.
The Executive Team carries out a yearly review of the values of
investment properties and properties for the Group’s own use to
determine whether there is any indication of impairment. If such
an indication occurs, the recoverable amount is determined as the
higher of the sales price and the value in use of the asset. An impair-
ment loss is then recognised in the income statement if the carrying
amount exceeds the recoverable amount. Estimates of the values of
the assets are made by independent outside appraisers. For further
information, see Note G.
In assessing the present value of right-to-use assets and the related
lease liability, estimates are made about determining the lease period
and choice of discount rate. When the length of the lease is deter-
mined, the Executive Team takes into account all available informa-
tion that provides an economic incentive to take advantage of an
extension option or not to take advantage of an option to terminate
the lease.
A deferred tax asset is recognised for identified taxable losses to
the extent that it is probable that future taxable income will arise.
The Executive Team regularly assesses when deferred tax should
be recognised in the consolidated financial statements, based on
expected future earnings performance. On every closing day, an
assessment is made as to whether recognising a deferred tax is
justified, based on the size of expected future taxable income.
For further information, see Note G.
-
When calculating the recognised expense of share-based payment
in accordance with the Group’s compensation policy, the Executive
Team estimates how many shares will be allocated to employees.
The expense is based on the fair value of the shares at the moment
they are distributed. For further information, see Note G.
Bank of Åland Plc
G. The Group’s risk management
. General
Exposure to risk is a natural element of a bank’s operations. The Bank of
Åland has a low risk profile, with a conservative attitude towards risk and
with the aim that all risk shall derive from its normal business operations.
Consequently its main risks consist of business risk, credit risk, liquidity
risk, market risk and operational risk. The size of these risks is adapted to
the risk-bearing ability of the Bank. This means that the Bank shall be able
to cover losses related to these risks with its own funds (capital base) and
earnings. The Bank of Åland carries out no trading operations. The Bank’s
low risk profile is reflected in its low losses related to financial and opera-
tional risks that have arisen over the years.
Internal controls, risks and risk management including information
requirements according to the European Union’s Capital Requirements
Regulation, Chapter (Pillar ) at the Bank of Åland are described in
greater detail in the Group’s “Capital and risk management report”, which
is being published separately at the same time as this Annual Report.
. Internal controls and risk management
2.1
The Board of Directors has overall responsibility for risk management
and control. The Board defines the risk appetite of the Bank’s opera-
tions and adopts yearly policy documents that specify the overall
principles for risk management as well as restrictions in the form of
limits that operations shall stay within. The Bank’s compliance with
risk management principles and its risk positions are monitored regu-
larly. The Board also approves essential methods and models that are
used to measure the Bank’s risks. The Audit Committee of the Board
of Directors assists the Board in handling its tasks related to oversight
of risk management, methods and models for risk measurement, risk
reporting and internal controls.
The Managing Director shall ensure that risk management com-
plies with the principles and risk tolerances that the Board has
approved. The Managing Director does this by setting guidelines
based on the policy documents adopted by the Board. The Manag-
ing Director shall also ensure that business operations are adapted to
the Bank’s expertise and resources and that the Bank has sucient
resources and systems for oversight and monitoring.
The Board of Directors appoints the members of the Group-wide Exec-
utive Team. These members consist of the heads of the Bank’s business
areas and corporate units; they serve as advisors to the Managing Direc-
tor. The Managing Director and the other members of the Executive Team
regularly receive reports on the Bank’s limit positions and risk indicators.
Matters related to certain types of financial risks are handled by
committees consisting of Executive Team members and other per-
sons appointed by the Managing Director.
ALCO – the Asset and Liability Committee – is a decision-making
body reporting to the Managing Director that deals with issues con-
cerning financial risks, liquidity, funding and capitalisation. The Credit
Committee of the Executive Team makes lending decisions for the
Bank on large loan commitments according to approved credit limits.
In order to create a strong risk culture that permeates the entire
organisation, the risk organisation at the Bank is based on three lines
of defence, which have a clear allocation of responsibility between
risk-takers and oversight units.
The first line of defence consists of the Bank’s business areas, sub-
sidiaries and Treasury unit plus related support units. They are each
responsible for the risk that arises in their own day-to-day operations,
which means that risk-taking occurs within established limits and that
there are measurement and oversight processes.
The second line of defence consists of the independent Risk Con-
trol, Operational Risks and Security and Compliance departments,
which all report to the Bank’s Chief Risk Ocer (CRO).
Risk Control is responsible for continuously identifying, measur-
ing, analysing, overseeing and reporting the Bank’s financial risks.
This includes regular oversight to ensure that the Bank’s operations
remain within the established risk tolerances and regular reporting of
the Bank’s financial risks to the Executive Team, the Board and regu-
latory authorities. Risk Control is responsible for coordinating inter-
nal asset and liquidity evaluations and analyses the impact of stress
tests on capital adequacy and liquidity positions. Risk Control is also
responsible for coordinating and updating the Bank’s recovery plan
and for monitoring and reporting on the recovery plan’s indicators.
The Operational Risks and Security department is responsible for
analysing and reporting the Group’s operational risks as well as infor-
mation management, data protection and physical security.
The Compliance department is responsible for overseeing, control-
ling and ensuring that the Group maintains good regulatory compli-
ance. The department identifies risks related to deficiencies in com-
pliance, among other things by means of yearly risk analyses in the
fields of customer protection, market behaviour, combating money
laundering and the financing of terrorism, as well as permit and regu-
latory issues.
The second line of defence is responsible for promoting a sound risk
culture by providing back-up to business operations in their introduction
of processes for maintaining risk management that follows the principles
adopted by the Board of Directors and the Managing Director.
The third line of defence consists of the Internal Audit department,
which is directly subordinate to the Board of Directors. Internal Audit
is entrusted with evaluating the Group’s risk management through
independent reviews of processes, models and systems. The depart-
ment reports its observations to the Board.
2.2
The purpose of the Bank’s risk management model is to identify,
measure, control and report risks in the Group. The model is designed
to meet external regulatory requirements as well as internal require-
ments and needs, while living up to sound market practices.
The model consists of:
• Internal regulations, approved by the Board and the Managing
Director, that establish allocation of responsibilities as well as prin-
ciples and guidelines for management, measurement, control and
reporting of the Group’s risks.
• Clear, documented descriptions of processes.
• Systems for measuring, monitoring and controlling risks, adapted
to the complexity and scale of operations.
• Resources and expertise adapted to operations.
• Regular reporting to the Board and the Executive Team.
• Incident reporting.
The Bank’s Asset and Liability Management (ALM) process is
aimed at balancing the risks and the returns that arise in the Bank’s
operations in financial markets. A high risk may jeopardise future
income, create a liquidity shortage and threaten the survival of the
Bank. It is thus important that the Bank’s risk exposure matches its
risk appetite, as well as its capacity for managing unexpected losses
due to interest rate changes or other external events that are detri-
mental to the Bank.
The ALM process includes analysis of the structure of interest rate
repricing periods and maturities related to assets and liabilities, risk
hedging strategies, capital planning, funding needs and stress tests.
The process consists of both static and dynamic scenarios, predefined
as well as specific to separate business decisions.
Annual Report
. Capital management
The size of the Bank’s capital requirement is stipulated in the European
Union’s Capital Requirements Regulation (CRR) and Capital Require-
ments Directive (CRD). The capital needs of banks are formulated in the
regulations as capital requirements stating how much capital the banks
need to maintain in relation to the risks found in their operations.
These capital requirements are divided into Pillar requirements, Pillar
requirements, combined buer requirements. In addition to binding
capital requirements, there is Pillar guidance. Pillar requirements are
the same for all institutions, and Pillar requirements are set individu-
ally for each institution by a regulatory authority. The regulator has not
established Pillar guidance for the Bank.
According to the Pillar requirements in Article of the CRR,
institutions must have a capital base that always fulfils the following
requirements in relation to the risk exposure amount (REA):
• A common equity Tier (CET) capital ratio of at least . per cent
• A Tier capital ratio of at least per cent
• A total capital ratio of at least per cent
The Pillar capital requirements are calculated by evaluating other
risks that are not covered by Pillar regulations. In addition to these
requirements, institutions must also maintain capital in the form of
combined buer requirements against economic downturns. These
combined buer requirements are established in the CRD.
Table .
Capital adequacy
EUR M
Equity capital according to balance sheet . .
Foreseeable dividend –. –.
Common equity Tier capital before deductions . .
Intangible assets –. –.
Permission for buy-backs of own shares –. .
Non-controlling interests . .
Other items, net . ,
Additional adjustments in value –. –.
Expected losses according to IRB approach beyond recognised losses (deficit) –. –.
Adjustments due to transitional rules related to IFRS . .
Common equity Tier capital . .
Tier capital instruments . .
Additional Tier capital . .
Tier capital . .
Supplementary capital instruments . .
Expected losses according to IRB approach beyond recognised losses (surpluses) . .
Supplementary capital . .
Total own funds . .
Capital requirements for credit risks according to IRB approach . .
Additional capital requirements for risk weight floor for mortgage loans . .
Capital requirements for credit risks according to standardised approach . .
Capital requirement for credit value adjustment risk . .
Capital requirement for operational risk . .
Capital requirement . .
Risk exposure amount ,. ,.
of which comprising credit risk . .
of which comprising credit-worthiness adjustment risk . .
of which comprising operational risk . .
Capital ratios,
Common equity Tier capital ratio . .
Tier capital ratio . .
Total capital ratio . .
Requirements related to capital buers,
Total common equity Tier capital requirement including buer requirement . .
of which common equity Tier capital requirement under Pillar . .
of which common equity Tier capital requirement under Pillar . .
of which capital conservation buer requirement . .
of which countercyclical capital buer requirement . .
of which systemic risk buer requirement . .
Common equity Tier capital available to be used as a buer . .
Bank of Åland Plc
Table .
Leverage ratio
EUR M
Tier capital . .
Total exposure metric ,. ,.
of which balance sheet items ,. ,.
of which o-balance sheet items . .
Leverage ratio, . .
The leverage ratio is calculated according to the situation at year-end. Tier capital includes profit for the period.
Own funds (the capital base) are divided into two types: Tier capital
(T) and supplementary capital (T). Compared to , when the Bank’s
entire Tier capital consisted of common equity Tier (CET) capital,
the Bank restructured its own funds during . Own funds now also
include additional Tier (AT) capital instruments issued by the Bank.
Common equity Tier capital comprises the most permanent form
of capital and is equivalent to equity capital according to the balance
sheet after certain statutory adjustments.
The Bank of Åland’s capital requirement for credit risks is calcu-
lated according to the IRB approach in the Finnish retail lending port-
folio. For the corporate exposure class, the Bank applies the funda-
mental internal ratings based (F-IRB) approach. In Sweden and other
countries, the capital requirement is calculated entirely using the
standardised approach. For all other exposure categories, including
equity exposures, the Bank uses the standardised approach to calcu-
late the capital requirement for credit risk.
Table . shows the Group’s capital adequacy calculation according
to Pillar at the end of .
Leverage is a measure of bank solvency aimed at avoiding excessive
debt. The leverage ratio is calculated as the ratio of Tier capital to a
specially defined exposure metric according to CRR. Unlike the capi-
tal adequacy calculation, the exposures are not risk-weighted when
calculating the ratio.
Taking into account relief measures due to the COVID- pandemic
(Article a. n in CRR), which represent temporary exemptions for
certain exposures to central banks from the total exposure metric,
the Bank of Åland’s leverage ratio amounted to . per cent at the
end of , compared to . per cent at the end of . Without
taking these relief measures into account, the leverage ratio at the
end of would have been . per cent.
. Credit risk
Credit risk refers to the risk of loss due to the inability of a coun-
terparty to fulfil obligations towards the Group and the risk that
the collateral provided for the exposure will not cover the Group’s
receivables. Counterparties in this respect are all legal entities and
physical persons as well as the public sector. Credit exposure arises
through receivables and investments, including o-balance sheet
commitments.
Overall credit strategy is regulated in a credit policy document
adopted by the Board of Directors. The level of acceptable credit risk is
also established in a separate financial risk policy and in the individual
business strategies of Group companies. Credit risk management is
mainly based on formal credit or limit decisions. For credit risk in treas-
ury operations and counterparty risk, specific counterparty limits are
established and are applicable for a maximum of one year.
4.1
The Bank of Åland’s internal risk models are used for calculating pro-
visions for future expected credit losses (ECL) in compliance with the
IFRS regulation and for calculating regulatory capital requirements
in the form of unexpected losses (UL) and expected losses (EL) for
the Bank’s IRB-approved exposures. The parameters for the last-
mentioned purpose contain a higher degree of conservatism, since
they include various safety margins and are supposed to encompass a
whole economic cycle. Both risk classifications are based on statistics
derived from the Bank’s own internal data for estimating the probabil-
ity of default (PD) and loss given default (LGD) for the Bank’s loan cus-
tomers. For those exposures where the Bank lacks its own loss data
history, calculation of ECL employs market-based PD levels from an
outside supplier.
The internal risk classification system is the most important corner-
stone of the credit approval process and for pricing credit risks when
granting new loans. The Bank also relies on the internal system for
monthly risk monitoring, internal capital management, the calculation
of risk-adjusted returns and reporting of credit risk to the Executive
Team. The general risk management principles applied for managing
risks that have a bearing on both ECL and capital requirements are the
same in the Bank. Both ECL and regulatory capital requirements are
included in the Bank’s reporting to the Executive Team and the Board
of Directors and have a strong connection to risk control in the Bank’s
risk management system. The Bank’s operating units also monitor their
credit risk based on these key figures on a monthly basis. The degree of
loan loss provisions in relation to the volume of unsettled exposures is
based on this reporting and is analysed.
4.2
According to the IFRS regulation, credit risk exposures are divided
into three stages. Stage consists of exposures that are perform-
ing without any significant increase in credit risk regarded as hav-
ing occurred. Exposures that are underperforming and are regarded
as having undergone a significant change in credit risk are placed
in Stage . A significant increase in credit risk is regarded as hav-
ing occurred if the lifetime PD of the exposure has increased at least
times compared to initial lifetime PD and the absolute change is
at least percentage points. The Bank applies the presumption of
days’ delay as a back-stop, in keeping with the IFRS regulation.
Exposures with amounts that are delayed more than days, or that
meet the Bank’s definition of default in other respects, are moved to
Stage .
An exposure that is deemed to be included in forbearance meas-
ures is moved to Stage , since the credit risk has increased significantly
since initial recognition. Expanded forbearance measures imply that the
exposure is becoming unsettled, and it is thus recognised as in Stage .
For backward transitions to lower stages, the Bank applies waiting
periods. For exposures in Stage with at least a -day delay, it applies
a six month period and for loans in Stage it applies a two month wait-
ing period. For exposures with forbearance, the Bank applies a waiting
period of months before the exposure can revert to Stage , assum-
ing that forbearance measures are no longer in place.
Annual Report
Table ..
Lending to the public
EUR M Stage Stage Stage Total Total
Receivables without past-due amounts ,. . . ,. ,.
Receivables with past-due amounts days . . . . .
Receivables with past-due amounts days . . . . .
Gross carrying amount ,. . . ,. ,.
Table ..
Credit risk
EUR M Stage Stage Stage Total Total
Lending to the public
Low risk ,. . . ,. ,.
Medium risk . . . . .
High risk . . . . .
Ungraded¹ . . . . .
Defaulted . . . . .
Gross carrying amount ,. . . ,. ,.
Provision for expected credit loss –. –. –. –. –.
Net carrying amount ,. . . ,. ,.
Unutilised credit lines and guarantees
Low risk . . . . .
Medium risk . . . . .
High risk . . . . .
Ungraded¹ . . . . .
Defaulted . . . . .
Gross nominal amount ,. . . ,. .
Provision for expected loss –. . . –. –.
Net carrying amount (provision) –. . . –. –.
Debt securities recognised at amortised cost
Low risk . . .
Gross carrying amount . . . . .
Provision for expected credit loss –. –. –.
Net carrying amount . . . . .
Debt securities recognised at fair value via other
comprehensive income
Low risk . . .
Gross carrying amount . . . . .
Provision for expected credit loss . . –.
Net carrying amount . . . . .
¹ Instruments for which no probability of default has been established are reported as “ungraded”.
The model for calculating ECL is based on yearly future PD. LGD and
EAD values as well as the discount rate of the loan. When estimating
ECL, for each exposure the Bank calculates a -month ECL and a life-
time ECL that is applied when an exposure is deemed to have a signifi-
cant increase in credit risk. The loan loss provision for Stages and
are, by definition, based on lifetime ECL but diverge since certain Stage
exposures have individual impairment testing. In regulatory contexts,
impairment amounts are regarded as specific credit risk adjustments.
The table below shows how large a percentage of exposures were
found within each respective stage at the end of . Exposures with
lifetime PD of up to per cent are viewed as “low risk”, exposures
from up to and including per cent as “medium risk” and expo-
sures from up to per cent as “high risk”. Defaulted exposures
are always assigned a PD of per cent.
.. Collateral management and credit risk mitigation
Collateral eliminates or reduces the Bank’s loss if the borrower cannot
fulfil his or her payment obligations and the Bank terminates its loan
to the customer. As a main rule, loans to private individuals and com-
panies are thus made against collateral. This applies, for example, to
home mortgage financing to private individuals, loans to real estate
companies, loans to private individuals and companies for the pur-
Bank of Åland Plc
chase of securities as well as various other types of financing. Unse-
cured loans are primarily granted in the case of small loans to private
individuals and only in exceptional cases to companies. In the latter
case, as a rule special loan conditions are established that give the
Bank greater rights of renegotiation or loan termination.
Under “lending to the public”, a majority of all loans have been
granted to private individuals and businesses with a home or other
property as collateral. A large proportion of such lending also occurs in
exchange for the pledging of financial collateral that is largely assigned
a market value daily.
The Bank regularly monitors the market values of property and secu-
rities that serve as collateral for loans. A follow-up of the market value
of residential property used as collateral is performed quarterly, and
where a need is demonstrated the Bank engages an external appraiser
for re-appraisals.
By applying conservative loan-to-value (LTV) ratios on collateral,
the Bank makes allowances for a possible negative price trend for vari-
ous forms of collateral, for example housing prices and market price
changes for financial collateral. As a general rule, a loan may not exceed
– per cent of the market value of residential property used as col-
lateral. The LTV ratio on financial collateral is mainly determined on the
basis of the liquidity and credit quality of the financial instrument.
. Liquidity risk
Liquidity risk refers to the risk of not being able to fulfil payment
obligations on the maturity date due to a shortage of liquid assets,
or that these obligations can only be fulfilled by obtaining the
means of payment at a substantially higher cost or by selling posi-
tions at substantially lower market prices than expected.
5.1
In order to manage liquidity risks, the Bank has designed a framework
consisting of a number of components:
• Observance of limits that ensure compliance with the Bank’s risk
appetite and risk tolerance.
• Continuous follow-up and analysis of the Bank’s future liquidity
needs, both short- and long-term.
• A well-diversified funding structure, both from the standpoint of
financial instruments and maturity perspectives.
• A portfolio of home mortgage loans whose quality is of such a
nature as to maintain the Bank’s borrowing by means of covered
bonds even in a stressed scenario.
• A well-developed investor base.
• A liquidity reserve with high-quality assets that safeguard access to
liquidity during a lengthy period of limited access to capital market
borrowing.
Based on the Bank’s risk tolerance, the Board of Directors has
established limits for the Bank’s liquidity coverage ratio, net stable
funding ratio, survival horizon and how large the amount of cov-
ered bonds issued may be as a proportion of the available collateral.
Liquidity risk is managed by the Bank’s Treasury unit, which is respon-
sible for ensuring that risks respect the limits established by the
Board of Directors. Liquidity risks are monitored and analysed by the
Group’s Risk Control department, which reports directly to the Man-
aging Director on a monthly basis and to the Board of Directors on a
quarterly basis in conjunction with the Group’s risk report.
.. Liquidity reserve
In order to decrease its liquidity risk, the Bank maintains a liquidity
reserve containing high-quality assets that shall serve as an alternative
source of liquidity at times of limited or non-existent opportunities to
borrow money in the external capital market. The reserve may consist
of cash, accounts with central banks or other well-reputed banks that
have a good credit rating, deposits with short maturities, holdings of
debt securities issued by the Bank and securities of such credit quality
that they are eligible for refinancing with central banks. To safeguard
the good quality of the Bank of Åland’s liquidity reserve, these invest-
ments are regulated by the Board of Directors. The size of the liquidity
reserve must be sucient to maintain the targeted survival horizon as
well as the liquidity coverage ratio.
.. Funding
The Bank of Åland endeavours to achieve a well-diversified funding
structure, both from the perspective of instruments and maturities.
The Bank intends to be independent of individual depositors, inves-
tors, funding instruments or market segments.
Aside from equity capital, the Bank of Åland’s funding sources con-
sist mainly of deposits from the public, covered bonds, certificates of
deposit and short- and long-term borrowing from credit institutions.
One long-term goal is that deposits from the public shall account for
more than per cent of funding, excluding equity capital. At the end
of , deposits and covered bonds comprised more than per
cent of the Bank’s funding structure.
Table ...
Liquidity reserve
EUR M
Cash and deposits with central banks
Debt securities issued by sovereigns and public
authorities
Covered bonds (ratings of AA- or higher)
Accounts with other banks
Debt securities issued by financial companies
Debt securities issued by non-financial companies
Total , ,
of which LCR-qualified , ,
Annual Report
Table ..
Remaining maturity
Undiscounted contractual cash flows
EUR M
Repayable
on demand mo – mo – mo – yrs – yrs yrs
Not
classified
by maturity Total
Assets
Cash and receivable from
central banks . .
Debt securities eligible for refinancing
with central banks . . . . . .
Other debt securities . . . . . . .
Lending to credit institutions . . . . . . . . .
Lending to the public . . . . ,. . ,. . ,.
Shares and participations . .
Derivative instruments . . . . . . .
Intangible assets . .
Tangible assets . .
Investment properties . .
Other assets . .
Total . . . . ,. . ,. . ,.
Liabilities
Liabilities to credit institutions
and central banks . . . . . . . .
Deposits from the public ,. . . . . . . ,.
Debt securities issued . . . ,. . . ,.
Derivative instruments . . . . . . .
Other liabilities . .
Subordinated liabilities . . . . . . .
Equity capital . .
Total ,. . . . ,. . . . ,.
5.2
The balance sheet of the Bank and its maturity structure are an
important parameter when calculating and analysing the Bank’s
liquidity risk. Based on the balance sheet, future cash flows are
forecast. These are an important tool in managing and planning
liquidity risks and borrowing requirements.
.. Liquidity coverage ratio, net stable funding ratio
and core funding ratio
Regulatory authorities have adopted rules for liquidity risk that cover
both short-term and structural liquidity under stressed conditions.
The purpose of the liquidity coverage ratio (LCR) is to ensure that
banks have enough liquid assets to deal with short-term liquidity
stress. This means that banks must have liquid assets of very high
quality equivalent to at least the net cash outflow for days under
stressed conditions, that is, at least per cent.
The net stable funding ratio (NSFR), a structural liquidity metric,
requires that banks have enough stable funding to cover their fund-
ing needs in a one-year perspective, both under normal and stressed
conditions. The minimum NSFR requirement is per cent.
Table ...
Liquidity coverage ratio (LCR)
EUR M
Liquid assets, level , ,
Liquid assets, level
Liquid assets, total , ,
Deposits from the public
Capital market funding
Other cash flows
Cash outflows
Inflows from fully performing exposures
Other cash inflows
Total cash inflows
Net cash outflow
Liquidity coverage ratio (LCR),
LCR has been corrected compared to the Year-end Report.
Bank of Åland Plc
5.3
Encumbered assets predominantly consist of home mortgage loans
that are used as collateral for the Bank of Åland’s covered bond issues
outstanding.
The size of encumbered assets for covered bonds is based on the
level of over-collateralisation that the credit rating agency Standard
& Poor’s requires of the Bank of Åland to ensure that the bonds are
assigned a credit rating of AAA.
In addition to home mortgage loans, the Bank of Åland has pro-
vided collateral for its own liabilities, payment systems, brokerage
operations and clearing in the form of government securities and
bonds, mainly to central banks and credit institutions.
Table ..
Encumbered assets, carrying amount
EUR M Encumbered
assets
Unencumbered
assets Total assets
Encumbered
assets
Unencumbered
assets Total assets
Interest-bearing securities
Lending to the public , , , , , ,
Other assets ,
Non-encumberable assets
Total , , , , , ,
Per cent of total assets
Table ...
Net stable funding ratio (NSFR)
EUR M
Required stable funding (RSF) items
High-quality liquid assets (HQLA)
Other liquid assets
Other securities
Performing loans and other receivables , ,
Derivative assets
Other assets
O-balance sheet items
Total required stable funding , ,
Available stable funding (ASF) items
Own funds
Deposits from the public , ,
Stable deposits , ,
Less stable deposits ,
Deposits from other counterparties
Capital market funding , ,
Other liabilities
Total available stable funding , ,
Net stable funding ratio,
Annual Report
. Market risk
Market risk is the risk that earnings, equity capital or value will decrease
due to price changes and risk factors in financial markets. Market risk
includes interest rate risk, foreign exchange risk and equity risk.
6.1
The Bank of Åland’s Board of Directors decides on the Bank’s risk
appetite and establishes limits on interest rate risk, foreign exchange
risk and equity risk. The Bank’s market risks are low and primarily of a
structural nature. They are managed by the Bank’s Treasury unit. Posi-
tions are hedged when they enter the balance sheet and continuously
in compliance with the principles established by the Bank’s Board of
Directors and the processes established by the Treasury unit.
6.2
Interest rate risk refers both to the risk of decreased net inter-
est income (net interest income risk) and the risk of unfavourable
changes in the value of the Bank’s assets and liabilities when mar-
ket interest rates change (value change risk). Interest rate risks arise
mainly due to dierences in the interest rate repricing periods and
repricing dates between interest-bearing assets and liabilities.
Table .. shows assets and liabilities that fall due for a new inter-
est rate refixing during each respective time interval, assuming that
demand deposits fall due on Day .
The Bank measures interest rate risk by means of sensitivity analy-
ses of net interest income and the value of interest-bearing assets and
liabilities in scenarios where the yield curve is stressed in various ways.
Net interest income risk is measured as the sensitivity of net interest
income during the next twelve months, assuming a constant balance
sheet. Positions in the balance sheet undergo interest rate adjustments
on their contractual or assumed interest rate adjustment dates. In the
model, the interest rate repricing period of demand deposits is set at
one day. Value change risk is measured as the sensitivity of the esti-
mated present value of all existing interest-bearing items. When cal-
culating value change risk, the Bank uses two methods for the interest
rate repricing period of demand deposits. In the first model, demand
deposits are assigned a period of one day, while in the second model
their repricing period is based on European Banking Authority (EBA)
and Basel Committee regulations.
6.3
Foreign exchange risk refers to the risk of unfavourable results due to
changes in the exchange rates of currencies that the Bank is exposed
to. The Bank’s operations occur mainly in its two base currencies,
euros and Swedish kronor. A limited proportion of its lending and
deposits occurs in other currencies. The foreign exchange risk is pri-
marily managed by means of matching, and if the potential foreign
exchange risk remains at the end of day, th e Bank adjust s it .
The Group’s structural foreign exchange risk in Swedish kronor
arises because its financial accounts are prepared in euros while the
functional reporting currency of its Swedish branch is Swedish kronor.
The branch is capitalised with endowment capital and accrued earn-
ings that are reported in Swedish kronor. The purpose of this position
is to ensure that the ratio of CET capital in Swedish kronor and the risk
exposure amount in Swedish kronor is in balance with the Group’s CET
capital ratio. The structural foreign exchange position in Swedish kro-
nor implies volatility in other comprehensive income. The Bank has per-
mission from the FSA to exempt the structural foreign exchange posi-
tion from the capital adequacy calculation.
6.4
Equity risk is the risk of decrease in value due to price changes in the
stock market. Since the Bank does not carry out any trading in equi-
ties for its own account, equity risk is very limited.
The Bank is exposed to equity risk through its strategic investments
and other holdings. The Bank’s strategic and other equity holdings are
managed, in light of their purpose and nature, through separate Board
decisions for strategic holdings and decisions by the Managing Director
for other equity holdings.
Table ..
Interest rate refixing periods for assets
and liabilities
EUR M Up to mo – mo – mo – yrs Over yrs Total
Assets
Cash and deposits with central banks
Debt securities eligible for refinancing
with central banks
Lending to credit institutions
Lending to the public , , ,
Total interest-bearing assets , , ,
Liabilities
Liabilities to credit institutions and central banks
Deposits from the public , ,
Debt securities issued ,
Subordinated liabilities
Total interest-bearing liabilities , ,
O-balance sheet items – – –
Dierence between assets and liabilities –,
Bank of Åland Plc
. Operational risk
Operational risk refers to the risk of losses due to inappropriate or
faulty internal processes, human errors, systemic errors or external
events. Legal risks are included in operational risks. Operational risks
occur in all operations. It is thus neither possible nor optimal to elimi-
nate them entirely. The important thing is that risk-taking is deliberate
and suitable actions are taken when the risks that are identified are
too large. What risk level is considered optimal shall be established by
the B o ard of Direc tor s and cons titute s the B ank ’s risk a ppe tite.
7.1
The objective of operational risk management is to ensure that signifi-
cant operational risks are identified and managed at a sucient level
in relation to the nature and the scope of the operations. Adequate
procedures for computer protection and information security must be
in place and be further developed based on the threat situation. The
probability of significant unforeseen losses or threats to the Group’s
reputation must be minimised. The Executive Team and the Board
of Directors must be informed regularly about the operational risks
associated with Group operations. Adequate operational risk manage-
ment is important to ensure trust in the Bank’s operations, especially
from a customer standpoint.
The Operational Risks & Security unit is responsible for “second line
of defence” analyses of the Group’s operational risks and for reporting
these. The same is true of the Compliance department, which analy-
ses risk from a compliance standpoint. The “third line of defence” also
analyses the Group’s risks, including operational risks. To obtain a com-
pletely current picture of the Group’s risks, risk mapping and analyses
from all three lines of defence must be coordinated. The Compliance
and Operational Risk & Security units rely on risk analyses when devel-
oping focus areas for the work of the following year.
There are many ways to provide support to the Group’s operations.
Internal training courses are an important element of second defence
line support for operational risk management. Processes that support
a risk-based way of working as well as internal regulations and controls
are other means of support and of raising awareness. The new prod-
ucts approval process (NPAP) is one of the key processes for promoting
risk management as early as in the development phase. Internal regula-
tions relating to the operational risk management and compliance with
the rules also serve as operational aids and directives. The Group has
continuity plans for all business units, in order to maintain operations
and limit interruptions, losses and damage in the event of various oper-
ational disruptions. At the Group level, insurance policies have been
obtained to cover directors and ocers, professional liability and crime.
In addition to these insurance policies, Group companies have obtained
company-specific insurance coverage.
Group operational risks are mapped yearly by first defence line
operations through self-evaluation and other methods. Self-evaluations
assess the probability and consequences of operational risks. Risks
that are identified in the yearly self-evaluation and classified as risks
at a high or unacceptable level must be managed without delay and
be addressed as needed by the Group’s Executive Team to ensure that
sucient steps are taken in order not to exceed the Group’s risk appe-
tite. Operational Risks & Security and Compliance analyse risks based,
among other things, on the self-evaluations and risk mapping carried
out in the organisation, and they monitor and report the results to the
Executive Team. In addition, AML-CFT (Anti Money Laundering - Com-
bating the Financing of Terrorism) risk analysis is performed within
the bank at least once a year and reported to the Executive Team and
the Board in a corresponding manner. The second defence line also
carries out risk assessments, such as information security risk assess-
ments, the Compliance department’s yearly risk analysis in its field, and
Operational Risks & Security’s mapping of the Bank’s operational risks.
The most significant risks are referred to the Executive Team and the
Board. During project work, NPAP is applied. Risk mapping is an impor-
tant part of this process. The purpose of a comprehensive analysis that
highlights a variety of risks is to avoid inadvertent risk-taking. Products
and services that are new or have undergone significant changes must
be secure and functional when they are put into use.
Annual Report
G. Segment report
Private
Banking
Premium
Banking IT
Corporate
and other Eliminations Total
Net interest income , , – , – ,
Net commission income , , – , ,
Net income from financial items
carried at fair value – – – –
IT income , –, ,
Other income , –, ,
Total income , , , , –, ,
Sta costs –, –, –, –, –,
Other expenses –, –, –, –, , –,
Depreciation/amortisation and
impairment losses on intangible and
tangible assets –, – –, –, , –,
Internal allocation of expenses –, –, ,
Total expenses –, –, –, –, , –,
Profit before impairment losses , , , – ,
Impairment losses on loans
and other commitments –, – –,
Net operating profit , , , – ,
Income taxes –, –, – – –,
Non-controlling interests – –
Profit for the period attributable to
shareholders in Bank of ÅlandPlc , , , – ,
Net commission income
Deposits ,
Lending , – ,
Payment intermediation , , , ,
Mutual fund commissions , , –, ,
Asset management commissions , , – ,
Securities brokerage , , , ,
Other commissions , – ,
Total commission income , , , –, ,
Commission expenses –, –, – –, , –,
Total net commission income , , – , ,
Business volume, December
Lending to the public ,, ,, , – ,,
Deposits from the public ,, ,, , –, ,,
Actively managed assets ,, , , ,,
Risk exposure amount , , , , ,,
Equity capital , , , , ,
Financial ratios etc.
Return on equity (ROE), . . . . .
Expense/income ratio . . , . .
Bank of Åland Plc
Private
Banking
Premium
Banking IT
Corporate
and other Eliminations Total
Net interest income , , , – ,
Net commission income , , – , ,
Net income from financial items
carried at fair value – – , ,
IT income , , –, ,
Other income , –, ,
Total income , , , , –, ,
Sta costs –, –, –, –, –,
Other expenses –, –, –, –, , –,
Depreciation/amortisation and
impairment losses on intangible and
tangible assets – – –, –, , –,
Internal allocation of expenses –, –, ,
Total expenses –, –, –, –, , –,
Profit before impairment losses , , , ,
Impairment losses on loans
and other commitments – –, – –,
Net operating profit , , , ,
Income taxes –, –, – – –,
Non-controlling interests
Profit for the period attributable to
shareholders in Bank of ÅlandPlc , , , ,
Net commission income
Deposits
Lending , – ,
Payment intermediation , , , ,
Mutual fund commissions , , –, ,
Asset management commissions , – ,
Securities brokerage , , , ,
Other commissions , – ,
Total commission income , , , –, ,
Commission expenses –, –, – –, , –,
Total net commission income , , – , ,
Business volume, December
Lending to the public ,, ,, , –, ,,
Deposits from the public ,, ,, , –, ,,
Actively managed assets ,, , , ,,
Risk exposure amount , , , , ,,
Equity capital , , , , ,
Financial ratios etc.
Return on equity (ROE), . . . . .
Expense/income ratio . . . . .
The Bank of Åland Group reports operating segments in compliance with IFRS , which means that operating segments reflect the information that the Group’s Executive
Team receives.
“Private Banking” encompasses Private Banking operations in Åland, on the Finnish mainland and in Sweden, as well as asset management (Ålandsbanken Fondbolag Ab and
its six wholly owned subsidiaries). “Premium Banking” encompasses operations in all customer segments excluding Private Banking in Åland, on the Finnish mainland and in
Sweden, as well as asset management. “IT” encompasses the subsidiary Crosskey Banking Solutions Ab Ltd including S-Crosskey Ab. “Corporate and Other” encompasses all
central corporate units in the Group, including Treasury and partnerships.
Annual Report
G. Product areas
Daily banking
services
incl. deposits
Financing
services
Investment
services IT services Other Total
Net interest income , , - , ,
Net commission income , , , - ,
Net income from financial items carried at fair value - - -
IT income , ,
Other income , ,
Total income , , , , , ,
Daily banking
services
incl. deposits
Financing
services
Investment
services IT services Other Total
Net interest income , , – , ,
Net commission income , , , – – ,
Net income from financial items carried at fair value – , ,
IT income , ,
Other income , ,
Total income , , , , , ,
Daily banking services included net interest income from all deposit accounts, i.e. also savings accounts, time deposits and cash accounts connected to securities accounts,
net commission income from deposits, cashier and payment intermediate services, cards, the Premium concept, bank safety deposit boxes etc. plus income from
exchanging currencies.
Financing services consisted of net interest income from all lending products, i.e. also securities account loans, as well as lending commissions and guarantee commissions.
Investment services included income from discretionary asset management, advisory asset management, mutual fund management and securities brokerage. Income from
deposit accounts and loans that may be part of a customer’s asset management were reported under daily banking services and financing services, respectively.
IT services included the operations of Crosskey Banking Solutions Ab Ltd.
G. Geographic distribution
Finland Sweden Total Finland Sweden Total
Net interest income , , , , , ,
Net commission income , , , , , ,
Net income from financial items carried at fair value – – – , – ,
IT income , , , , , ,
Other income , , ,
Total income , , , , , ,
Sta costs –, –, –, –, –, –,
Other expenses –, –, –, –, –, –,
Depreciation/amortisation –, –, –, –, –, –,
Total expenses –, –, –, –, –, –,
Profit before impairment losses , , , , , ,
Impairment losses on loans
and other commitments –, –, –, –, – –,
Net operating profit
, , , , , ,
Income taxes
–, –, –, –, –, –,
Non-controlling interests
– –
Profit for the period attributable to
shareholders in Bank of Åland Plc
, , , , , ,
Business volume, December
Lending to the public ,, ,, ,, ,, ,, ,,
Deposits from the public ,, ,, ,, ,, ,, ,,
Actively managed assets ,, ,, ,, ,, ,, ,,
Risk exposure amount ,, , ,, ,, , ,,
Allocated equity capital , , , , , ,
Financial ratios etc.
Return on equity (ROE), . . . . . .
Expense/income ratio . . . . . .
Bank of Åland Plc
G. Net interest income
Average
balance Interest
Average
interest
rate,
Average
balance Interest
Average
interest
rate,
Lending to credit institutions and centralbanks , – –. , – –.
Lending to the public ,, , . ,, , .
Debt securities , . , .
Interest-bearing assets ,, , . ,, , .
Derivative instruments , , , ,
Other assets , ,
Total assets ,, , ,, ,
of which interest according to the eective
interest method , ,
Liabilities to credit institutions and central banks , –, –. , – –.
Deposits from the public ,, , . ,, , .
Debt securities issued ,, , . ,, , .
Subordinated liabilities , . , , .
Interest-bearing liabilities ,, . ,, , .
Derivative instruments , , , ,
Other liabilities , ,
Total liabilities ,, , ,, ,
Total equity capital , ,
Total liabilities and equity capital ,, ,,
of which interest according to the eective
interest method , ,
Net interest income , ,
Interest margin . .
Investment margin . .
Interest from derivative instruments is recognised together with the item that they hedge within the framework of hedge accounting (fair value hedging and cash flow hedging).
Interest margin is interest on interest-bearing assets divided by the average balance of assets, minus interest on interest-bearing liabilities divided by the average balance of
liabilities. Average balance is calculated as the average of end-of-month figures.
Investment margin is net interest income divided by the average balance sheet total.
G. Net commission income
Deposits ,
Lending , ,
Payment intermediation , ,
Mutual fund commissions , ,
Asset management commissions , ,
Securities brokerage , ,
Legal services
Guarantee commissions
Other commissions , ,
Total commission income , ,
Payment commission expenses –, –,
Mutual fund commission expenses –, –,
Asset management commission expenses –, –,
Securities brokerage commission expenses –, –,
Other commission expenses – –
Total commission expenses –, –,
Net commission income , ,
Notes to the consolidated income statement
Annual Report
G. Net income from financial items carried at fair value
Realised Unrealised Total Realised Unrealised Total
Valuation category fair value via the
income statement (“profit and loss”)
Derivative instruments – –
Valuation category fair value via the
income statement (“profit and loss”) – –
Hedge accounting
of which hedging instruments –, –, –, – –
of which hedged item , , , – –
Hedge accounting – – –
Net income from foreign currency revaluation – – – –
Modification results and ECL – –
Net income from financial assets –, –, , ,
Total –, – , – ,
G. Other income
Income from equity capital investments
Income in conjunction with transfer of assets ,
Net income from investment properties
Rental income on properties
Miscellaneous income , ,
Total , ,
Specification of net income
from investment properties
Rental income
Capital gains
Other expenses – –
Total
G. Sta costs
Salaries and fees , ,
Compensation in the form of shares
in Bank of Åland Plc
Pension expenses , ,
Other social security expenses , ,
Total , ,
of which variable sta costs , ,
of which sta outplacement expenses
Variable sta costs and sta outplacement expenses are reported including social insurance fees.
Salaries and fees
Boards of Directors
Senior executives , ,
Others , ,
Total
, ,
“Boards of Directors” refers to all Board members of Group companies. “Senior executives” refers to the Group’s Executive Team and to the Managing Director and Deputy
Managing Directors of subsidiaries.
Salaries and fees to senior executives
Salaries and fees , ,
Share-based payment
Total , ,
Bank of Åland Plc
Pension expenses
Managing Director
Senior executives
Others , ,
Total , ,
Pension expenses
Defined benefit plan ,
Defined contribution plan , ,
Total , ,
Men Women Total Men Women Total
Number of employees
Åland
Finnish Mainland
Sweden
Total
Hours worked, recalculated
to full-time equivalent positions
Bank of Åland Plc
Crosskey Banking Solutions Ab Ltd
Ålandsbanken Fondbolag Ab
Total number of positions,
recalculated from hours worked
Men Women Men Women
Gender breakdown,
Board of Directors
Senior executives
“Board of Directors” refers to the Board of the Bank of Åland Plc.
Managing
Director
Senior
executives
Other
risk-takers Others
Managing
Director
Senior
executives
Other
risk-takers Others
Total compensation
Fixed compensation earned , , , , , ,
Provisions for pensions , , , ,
Variable compensation earned , ,
Total , , , , , ,
of which postponed variable compensation
of which variable compensation paid , ,
Number of persons who received
only fixed compensation
Number of persons who received
both fixed and variable compensation
Total
Postponed variable compensation, January
Variable compensation postponed during the year
Disbursed during the year – – – – – –
Adjusted during the year – – – –
Postponed variable compensation, December
share savings programmes
Recognised expense related to payment in the
form of shares in the Bank of Åland Plc
Recognised expense for social security fees
related to share-based portion
Total recognised expense
Annual Report
General
The Bank’s compensation system shall be compatible with the
Group’s corporate strategy, goals and values, as well as being com-
patible with and promoting good, eective risk management. The
compensation system shall be constructed in such a way that it does
not counteract the long-term interests of the Group. An analysis is
carried out to determine how the compensation system aects the
financial risks that the Bank is subjected to and the management of
these risks. There shall be a suitable balance between fixed and vari-
able compensation. The Group’s total compensation for a single earn-
ing period shall not build up and reward risks that may jeopardise the
long-term interests of the Group.
The Bank has an earnings-based compensation system including the
Managing Director and the rest of the Executive Team. There are also
separate earnings-based compensation systems for employees in the
Group’s business areas. Earnings-based compensation for a single indi-
vidual may not exceed an amount equivalent to monthly salaries per
financial year.
Board of Directors
The fees of the Board members are established by the General Meet-
ing. During the period from the Annual General Meeting to the
end of the Annual General Meeting, the members of the Board
receive an annual fee as well as a fee for each Board and Committee
meeting attended. The Chairman of the Board receives an annual fee
of EUR ,, and the Deputy Chairman receives an annual fee of
EUR ,. Other Board members each receive an annual fee of EUR
,. In addition, Board members are paid a meeting fee for each
Board meeting they attend. The meeting fee amounts to EUR , for
the Chairman and EUR for other members per meeting attended.
Each member of a Board committee is paid EUR per commit-
tee meeting attended. The chairman of each respective committee
receives a meeting fee of EUR , per committee meeting attended.
The members of the Bank’s Board of Directors are not included in
share-based compensation systems.
Managing Director
The Managing Director receives a monthly salary of EUR ,. He
also receives free automobile benefits and is entitled to the employee
benefits that are generally applicable at the Bank. During , the
Managing Director was paid compensation totalling EUR ,
including fringe benefits and variable compensation. Of the variable
compensation paid in , EUR , was paid in cash and EUR
, in Bank shares, in compliance with external regulations.
The Managing Director’s minimum retirement age is and his
maximum retirement age is . He will receive a pension in accordance
with the Finnish national pension system. He is not entitled to a supple-
mentary pension in addition to the statutory public pension. The notice
period in case of resignation initiated by the Managing Director is nine
() months. During this notice period, he will receive a regular monthly
salary. According to his employment contract, the Managing Director
is entitled to severance pay totalling nine () months’ salary in case of
dismissal by the Bank. Upon resignation, the Managing Director is not
entitled to any other compensation.
Senior executives
Compensation to other members of the Executive Team is paid as a
fixed individual monthly salary plus generally applicable employment
benefits at the Bank. The other members of the Executive Team are not
covered by any supplementary pension arrangement. Due to a diver-
gent pension system in Sweden, the Bank has obtained defined con-
tribution-based supplementary pension insurance for members of the
Executive Team residing in Sweden, with a retirement age of .
Disclosures concerning earnings-based (variable) compensation
and share-based compensation systems
Earnings-based compensation for risk-takers is paid in its entirety
when the compensation is set, if the actual compensation sum for a
single individual amounts to a maximum of EUR ,. If the com-
pensation exceeds EUR ,, disbursal of at least per cent of
earnings-based compensation shall be postponed by at least three
years (vesting period). If the earnings-based compensation for an indi-
vidual amounts to an especially large percentage of total fixed and
earnings-based compensation, the disbursal of at least per cent
of the earnings-based compensation is postponed in a similar way.
Since the Bank of Åland Plc is a listed company, at least per cent of
the earnings-based compensation is paid in the Bank’s shares. Since
Ålandsbanken Fondbolag Ab is a fund management company, at least
per cent of variable compensation to risk-takers must be paid in
fund units. The allocated shares/fund units must be held for at least
months (deferral period) before the recipient of the compensation may
have access to them. The disbursement may be further postponed in
light of a comprehensive assessment based on the Group’s economic
cycle, the nature of its business operations and risks and the job duties
and responsibilities of the individual. The Bank is entitled to abstain
from disbursing postponed earning- based compensation if the Group’s
financial position has substantially deteriorated.
Share savings programmes
Since the Bank of Åland has had two ongoing share savings pro-
grammes that encompass all Group employees. The programmes
consist of share-based payment that is delayed by years. The share-
based payment is allocated in the form of performance rights (future
shares in the Bank of Åland Plc) for those participants who still have
their share savings in a specially designated custody account at the
close of the share savings programme. The objective of the programme
is to further strengthen employee motivation, participation and long-
term anity with the Group by oering all employees the opportunity
to obtain shares in the Bank on favourable terms. The first share sav-
ings programme, which began in , was closed down during .
In March the Bank of Åland issued new Series B shares to fulfil
its obligations as part of the first share savings programme that began
in . In conjunction with this, the share savings programme was
closed down.
“Risk-takers” in the Bank’s compensation policy documents refers to sta members who are regarded as having a significant impact on the Bank’s risk profile. During
the number of risk-takers decreased due to changes in current regulations. The number of risk-takers on December , totalled , while the corresponding figure on
December , was . The Bank has established qualitative and quantitative criteria for the purpose of identifying those employees who have a significant impact on the
Bank’s risk profile.
Bank of Åland Plc
G. Other expenses
IT expenses (excluding market data) , ,
Rents ,
Other costs of premises and property , ,
Marketing expenses , ,
Information services , ,
Sta-related expenses , ,
Travel expenses
Purchased services , ,
Guarantee fee
Stability fee , ,
Other expenses , ,
Production for own use –, –,
Total , ,
“Guarantee fee” includes the deposit guarantee fee and the fee for the investor compensation fund.
Fees to the Financial Stability Authority
Deposit guarantee fee
, ,
Paid by old deposit guarantee fund –, –,
Stability fee , ,
Administration fee
Total , ,
Based on the fee level, the Bank has prepaid deposit guarantee fees for about eight years.
Fees paid to auditors
Auditing fees paid
Fees according to the Auditing Act, Chapter ,
Section , Point
Consulting fees paid
Tax matters
Other
Total
These amounts include value-added tax (VAT).
Fees paid to KPMG OY Ab for expenses other than auditing totalled EUR K ().
Annual Report
G. Expected credit (loan) losses
New and
increased
individual
impairment
losses
Recovered
from earlier
provisions
Utilised for
actual losses Actual losses
Recovery of
actual losses Total
Expected losses from financial assets recognised at amortised
cost and from o-balance sheet obligations
Lending to the public , –, –, , – ,
O-balance sheet obligations – –
Debt securities – –
Total expected loan losses , –, –, , – ,
Expected loss from financial assets recognised at fair value via
other comprehensive income
Debt securities – –
Total expected loan losses via other comprehensive income – –
New and
increased
individual
impairment
losses
Recovered
from earlier
provisions
Utilised for
actual losses Actual losses
Recovery of
actual losses Total
Expected losses from financial assets recognised at amortised
cost and from o-balance sheet obligations
Lending to the public , –, –, , – ,
O-balance sheet obligations –
Debt securities –
Total expected loan losses , –, –, , – ,
Expected loss from financial assets recognised at fair value via
other comprehensive income
Debt securities –
Total expected loan losses via other comprehensive income –
Expected loan losses via other comprehensive income are recognised in the income statement under “Net income from financial items at fair value”.
Reserve for
individually
assessed
lending to
the public
Provision
for
expected
losses on
o-balance
sheet
obligations
Reserve for
expected
losses
on debt
securities
recognised
at
amortised
cost Total
Reserve for
individually
assessed
lending to
the public
Provision
for
expected
losses on
o-balance
sheet
obligations
Reserve for
expected
losses
on debt
securities
recognised
at
amortised
cost Total
Change in impairment loss reserve
Reserve on January , , , ,
New and increased individual impairment losses , , , ,
Net changes due to revisions in estimation
method , ,
Recovered from earlier provisions –, – – –, –, – – –,
Utilised for actual losses –, –, –, –,
Exchange rate dierences – – –
Reserve on December , , , ,
Receivables with forbearance measures
Lending to the public
Receivables without past-due amounts and
receivables with past-due amounts days , ,
Receivables with past-due amounts days
Defaulted receivables , ,
Gross carrying amount , ,
“Receivables with forbearance measures” refers to loan receivables for which the Bank has granted the borrower concessions because of his/her obviously worsened financial
situation, in order to avoid problems with the borrower’s repayment capacity and thereby maximise the repayment of the outstanding receivable. Concessions may include
adjusted loan conditions, such as postponed principal repayments, a reduced interest margin or an extended repayment period, or refinancing, which may mean that a loan
has been fully repaid close to its original due date and in connection with this has been replaced with a new loan. The carrying amount refers to gross exposures and includes
not only restructured loans but also other loans in a customer entity.
Bank of Åland Plc
G. Income taxes
Income statement
Taxes related to prior years
Current taxes , ,
Changes in deferred taxes , ,
Total , ,
Nominal tax rate in Finland, . .
Non-taxable income/deductible expenses, –. .
Swedish tax rate, . .
Taxes related to prior years, . .
Other, . .
Eective tax rate, . .
Other comprehensive income
Current taxes –
Changes in deferred taxes –
Total –
The tax rate in Sweden was . per cent, whereas in it was . per cent.
G. Earnings per share
Profit for the period attributable to shareholders , ,
Average number of shares before dilution ,, ,,
Average dilution eect
Average number of shares after dilution ,, ,,
Earnings per share, EUR , ,
Earnings per share after dilution, EUR , ,
When calculating earnings per share, the average number of shares is calculated as a weighted average of shares outstanding during the period.
Notes to the consolidated balance sheet
G. Classification of financial assets and liabilities
Carried at fair value via
income statement
Measurement via other
comprehensive income
Measurement at
amortised cost
Held for
trading
Hedge
accounting Other
Hedge
accounting
Other
Hedge
accounting
Other
Total
carrying
amount Fair value
Cash and deposits with
central banks , , ,
Debt securities , , , , ,
Lending to credit institutions , , ,
Lending to the public , ,, ,, ,,
Shares and participations , , ,
Shares and participations
in associated companies , , ,
Derivative instruments , , , ,
Accrued interest income , , ,
Receivables on mutual fund
settlement proceeds , , ,
Other assets , , ,
Total financial assets , , , , , ,, ,, ,,
Non-financial assets ,
Total assets ,,
The interest component in the contract is subject to hedge accounting.
Annual Report
Carried at fair value via
income statement
Measurement via other
comprehensive income
Measurement at
amortised cost
Held for
trading
Hedge
accounting Other
Hedge
accounting
Other
Hedge
accounting
Other
Total
carrying
amount Fair value
Liabilities to credit institutions
and central banks , , ,
Deposits from the public ,, ,, ,,
Debt securities issued , , ,, ,,
Derivative instruments , , , ,
Subordinated liabilities , , ,
Accrued interest expenses , , ,
Liabilities on mutual fund
settlement proceeds , , ,
Other liabilities , , ,
Total financial liabilities , , , ,, ,, ,,
Non-financial liabilities ,
Total liabilities ,,
The interest component in the contract is subject to hedge accounting.
Carried at fair value via
income statement
Measurement via other
comprehensive income
Measurement at
amortised cost
Held for
trading
Hedge
accounting
Hedge
accounting
Other
Hedge
accounting
Other
Total carrying
amount Fair value
Cash and deposits with central banks , , ,
Debt securities , , , , ,
Lending to credit institutions , , ,
Lending to the public , ,, ,, ,,
Shares and participations , , ,
Shares and participations
in associated companies , , ,
Derivative instruments , , , ,
Accrued interest income , , ,
Receivables on mutual fund
settlement proceeds , , ,
Total financial assets , , , , , ,, ,, ,,
Non-financial assets ,
Total assets ,,
Liabilities to credit institutions
and central banks , , ,
Deposits from the public ,, ,, ,,
Debt securities issued , , ,, ,,
Derivative instruments , , , ,
Subordinated liabilities , , ,
Accrued interest expenses , , ,
Liabilities on mutual fund
settlement proceeds , , ,
Other liabilities , , ,
Total financial liabilities , , , ,, ,, ,,
Non-financial liabilities ,
Total liabilities ,,
The interest component in the contract is subject to hedge accounting.
Bank of Åland Plc
G. Measurement of financial assets and liabilities carried at fair value
Level Level Level Total
Debt securities , ,
Lending to the public , ,
Shares and participations , , ,
Derivative instruments , ,
Other assets , ,
Total financial liabilities carried at fair value , , , ,
Debt securities issued , ,
Derivative instruments , ,
Total financial liabilities carried at fair value , ,
Carrying amount Level Level Level Total
Financial assets and liabilities recognised at amortised cost
Assets
Cash and deposits with central banks , , ,
Debt securities , , ,
Lending to credit institutions , , ,
Shares in associated companies , , ,
Lending to the public ,, ,, ,,
Total financial assets at amortised cost ,, , ,, , ,,
Liabilities
Liabilities to credit institutions , , ,
Deposits from the public ,, ,, ,,
Debt securities issued , , ,
Subordinated liabilities , , ,
Total financial liabilities at amortised cost ,, ,, ,,
Level Level Level Total
Debt securities , , ,
Lending to the public , ,
Shares and participations , ,
Derivative instruments , ,
Total financial liabilities carried at fair value , , , ,
Debt securities issued , ,
Derivative instruments , ,
Total financial liabilities carried at fair value , ,
Carrying amount Level Level Level Total
Financial assets and liabilities recognised at amortised cost
Assets
Cash and deposits with central banks , , ,
Debt securities , , , ,
Lending to credit institutions , , ,
Shares in associated companies , , ,
Lending to the public ,, ,, ,,
Total financial assets at amortised cost ,, , ,, , ,,
Liabilities
Liabilities to credit institutions , , ,
Deposits from the public ,, ,, ,,
Debt securities issued , , ,
Subordinated liabilities , , ,
Total financial liabilities at amortised cost ,, ,, ,,
Level Instruments with quoted market prices
Level Measurement techniques based on observable market data
Level Measurement techniques based on non-observable market data
Annual Report
Shares and
participations
Shares and
participations
Change in Level holdings
Carrying amount on January , ,
New purchases , ,
Divested/reached maturity during the year –
Realised change in value
Change in value recognised
in other comprehensive income –
Carrying amount on December , ,
No transfer between Level and has occurred.
Financial instruments for which there is price information that is easily
available and that represent actual and frequently occurring transactions
are measured at current market price. For financial assets, the current
purchase price is used. For financial liabilities, the current sale price is
used. The current market price of groups of financial instruments that
are managed on the basis of the Bank’s net exposure to market risk
equals the current market price that would be received or paid if the
net position were divested.
In the case of financial assets for which reliable market price
information is not available, fair value is determined with the help
of measurement models. Such models may, for example, be based
on price comparisons, present value estimates or option valuation
theory, depending on the nature of the instrument. The models use
incoming data in the form of market prices and other variables that
are deemed to influence pricing. The models and incoming data on
which the measure ments are based are validated regularly to ensure
that they are consistent with market practices and generally accepted
financial theory.
Financial instruments that are measured according to quoted prices
in an active market for identical assets/liabilities are categorised
as Level . Financial instruments that are measured using measure-
ment models that are, in all essential respects, based on market data
are categorised as Level . Financial instruments that are measured
with the help of models based on incoming data that cannot be veri-
fied with external market information are categorised in Level . These
assets essentially consist of unlisted shares. Such equity capital hold-
ings for which the Bank of Åland, on the initial recognition date or upon
transition to IFRS , has made an irrevocable choice to recognise sub-
sequent changes in fair value under other comprehensive income.
In the above tables, financial instruments measured at fair value
have been classified with regard to how they have been measured
and the degree of market data used in this measurement on closing
day. If the classification on closing day has changed, compared to the
classification at the end of the previous year, the instrument has been
moved between the levels in the table. No instruments were moved
between Levels and . Changes in Level are presented in a sepa-
rate table.
G. Assets and liabilities by currency
EUR SEK USD Others Total
Cash and cash equivalents , , ,
Debt securities , , , ,
Lending to credit institutions , , , , ,
Lending to the public ,, ,, , ,,
Derivative instruments , , ,
Other items not allocated by currency , ,
Total assets ,, ,, , , ,,
Liabilities to credit institutions and central banks , , ,
Deposits from the public ,, ,, , , ,,
Debt securities issued , , ,,
Derivative instruments , , ,
Subordinated liabilities , , ,
Other items not allocated by currency, including equity capital , ,
Total liabilities and equity capital ,, ,, , , ,,
Other assets and liabilities allocated
by currency as well as o-balance sheet items , , –,
Net position in currencies (EUR) , ,
The net position in Swedish kronor is mainly the structural position that arises because the consolidated accounts are prepared in euros
and the Swedish branch's accounts are in Swedish kronor.
Bank of Åland Plc
EUR SEK USD Others Total
Cash and cash equivalents , , ,
Debt securities , , , ,
Lending to credit institutions , , , , ,
Lending to the public ,, ,, , ,,
Derivative instruments , , ,
Other items not allocated by currency , ,
Total assets ,, ,, , , ,,
Liabilities to credit institutions and central banks , , ,
Deposits from the public ,, ,, , , ,,
Debt securities issued , , ,,
Derivative instruments , , ,
Subordinated liabilities , , ,
Other items not allocated by currency, including equity capital , ,
Total liabilities and equity capital ,, ,, , , ,,
Other assets and liabilities allocated by
currency as well as o-balance sheet items –, –, –,
Net position in currencies (EUR) , ,
G. Holdings of debt securities
Nominal
amount
Carrying
amount Loss reserve
Nominal
amount
Carrying
amount Loss reserve
Debt securities eligible for
refinancing with central banks
Holdings at fair value via other
comprehensive income
Government bonds , , , ,
Covered mortgage bonds , , , ,
Debt securities issued by credit institutions , , , ,
Other debt securities , ,
Holdings at amortised cost
Government bonds , , , ,
Covered mortgage bonds , , , ,
Debt securities issued by credit institutions , , , ,
Other debt securities , ,
Total debt securities eligible for
refinancing with central banks , , , ,
The entire holding consists of publicly listed debt securities.
Other debt securities
Holdings at fair value via other
comprehensive income
Municipal certificates , ,
Holdings at accrued cost
Corporate bonds , , , ,
Total other debt securities , , , ,
Total debt securities , , , ,
Annual Report
G. Lending to credit institutions
Repayable
on demand Other
Provision
for
expected
loss Total
Repayable
on demand Other
Provision
for
expected
loss Total
Finnish credit institutions , , , ,
Foreign banks and credit institutions , , , ,
Total , , , ,
G. Lending to the public
Gross carrying
amount
Provision for
expected loss
Net carrying
amount
Gross carrying
amount
Provision for
expected loss
Net carrying
amount
Companies , –, , , –, ,
Public sector entities , – , , – ,
Households ,, –, ,, ,, –, ,,
Household interest organisations , – , , – ,
Outside Finland ,, –, ,, ,, –, ,,
Total ,, –, ,, ,, –, ,,
of which subordinated receivables
Stage Stage Stage Total Stage Stage Stage Total
Gross lending to the public ,, , , ,, ,, , , ,,
Provisions for expected losses
Balance on January , , , , , ,
Increases due to issuance and acquisitions
Reduction due to removals from the balance
sheet – –, –, – –, –,
Reduction due to impairment losses –, –,
Transfer to Stage – – – –
Transfer to Stage – – – –
Transfer to Stage – – – –
Net changes due to change in credit risk – – , , – , ,
Net changes due to changes in estimation method , ,
Exchange rate dierences and other adjustments – – – –
Balance on December , , , , , , ,
Net lending to the public ,, , , ,, ,, , , ,,
Dec , Dec ,
Loan losses IFRS – Key ratios
Total coverage ratio, lending to the public . .
Coverage ratio, Stage , lending to the public . .
Coverage ratio, Stage , lending to the public . .
Coverage ratio, Stage , lending to the public . .
Share of lending to the public in Stage . .
Bank of Åland Plc
G. Shares and participations
Listed ,
Unlisted , ,
Total shares and participations , ,
The entire holding is classified as financial assets at fair value via other comprehensive income.
G. Shares in associated companies
Carrying amount on January ,
Share of profit for the year
Acquisitions ,
Divestments –
Shareholder contributions , ,
Dividends – –
Carrying amount on December , ,
The following associated companies and joint ventures were consolidated according to the equity method of accounting on December , :
Registered
oce Ownership,
Mäklarhuset Åland Ab Mariehamn
IISÅ Holdco AB Stockholm
Borgo AB Stockholm
Borgo AB Stockholm
Alandia Holding Ab Mariehamn
Combined financial information about these associated companies:
Assets , ,
Liabilities , ,
Sales , ,
Profit for the year , –
G. Derivative instruments
Nominal amount/maturity
Under yr – yrs over yrs
Nominal
amount
Positive
market
values
Negative
market
values
Nominal
amount
Positive
market
values
Negative
market
values
Derivatives for trading
Interest-related contracts
Interest rate swaps , , , , , , , ,
Currency-related contracts
Currency forward contracts , , , , , , ,
Total , , , , , , , ,
Derivatives for fair value hedges
Interest-related contracts
Interest rate swaps , , , , , , ,, , ,
Total , , , , , , ,, , ,
Total derivative instruments , , , ,, , , ,, , ,
of which cleared , , , ,
, ,
,,
, ,
Derivatives are recognised together with their associated accrued interest.
Annual Report
G. Intangible assets
Software
developed
in-house
Other
software
Goodwill
Other
intangible
assets Total
Cost on January , , , , ,
Cost of intangible assets added , ,
Impairment losses for the year – –
Divestments and disposals – –, –,
Exchange rate eect – – –
Cost on December , , , , ,
Accumulated amortisation and impairment losses on January –, –, – –, –,
Divestments and disposals , ,
Amortisation for the year –, –, –, –,
Impairment losses for the year – – –
Exchange rate eect
Accumulated amortisation and
impairment losses on December –, –, – –, –,
Residual value on December , , , , ,
“Other intangible assets” include acquired contracts.
Goodwill in acquired businesses was allocated to the lowest possible
cash-generating unit. The recovery amount for this was established
on the basis of value in use. This means that the present value of the
estimated future cash flows of the assets were calculated using a dis-
count factor.
Impairment testing for cash-generating operations was carried out.
A sensitivity analysis was performed, in which the variables included
in the value in use model were changed and the eect was analysed.
For the projected cash flow, important factors are growth, profit mar-
gin and investments. The discount factor is another important param-
eter for valuation. The profit margin assumed in the model is also at
the level of the final outcome. A negative per cent change in
growth, the profitability trend and the discount factor did not result in
any impairment losses.
Software
developed
in-house
Other
software
Goodwill
Other
intangible
assets Total
Cost on January , , , , ,
Cost of intangible assets added , ,
Divestments and disposals – –
Exchange rate eect
Cost on December , , , , ,
Accumulated amortisation and impairment losses on January –, –, – – –,
Divestments and disposals
Amortisation for the year –, –, – –,
Impairment losses for the year
Exchange rate eect – – –
Accumulated amortisation and
impairment losses on December –, –, – –, –,
Residual value on December , , , , ,
“Other intangible assets” include acquired contracts.
Bank of Åland Plc
G. Tangible assets
Investment properties
Properties for own use ,
Other tangible assets ,
Right-of-use assets ,
Total ,
Investment
properties
Properties
for own use
Other
tangible
assets
Investment
properties
Properties
for own use
Other
tangible
assets
Cost on January , , , ,
New acquisitions , ,
Divestments and disposals – – – – – –
Transfer between items – –
Exchange rate eect – –
Cost on December , , , ,
Accumulated depreciation on January – –, –, – –, –,
Depreciation for the year –, –, –, –,
Impairment losses for the year – –
Divestments and disposals
Exchange rate eects – –
Accumulated depreciation on December – –, –, – –, –,
Carrying amount , , , ,
of which buildings , ,
of which land and water , ,
of which shares in real estate companies
The carrying amount of investment properties was the same as their market value.
Properties
for own use
Other
tangible
assets
Properties
for own use
Other
tangible
assets
Right-of-use assets
Cost on January , , , ,
New acquisitions , , ,
Divestments and disposals –, –, – –
Assessments and modifications –, –
Exchange rate eects
Cost on December , , , ,
Accumulated depreciation on January –, –, –, –,
Depreciation for the year –, – –, –
Divestments and disposals , ,
Assessments and modifications ,
Exchange rate eects –
Accumulated depreciation on December –, – –, –,
Carrying amount , , ,
The table concerning right-of-use assets provides information about the leases where the Group is the lessee. The Group recognises right- of-use for properties for the Group’s
own use, primarily consisting of bank and oce premises, and for other tangible assets primarily consisting of IT equipment and vehicles. The average lease period is years.
In some cases, especially for IT equipment, the Group has options to buy the leased assets at the end of the lease period. Some of the leases related to bank and oce premises
include both options to extend the leases and index clauses.
A maturity analysis of lease liabilities is presented in Note G.
Amounts recognised in the income statement
Depreciation of right-to-use assets –, –,
Interest expenses for lease liabilities – –
Expenses attributable to short-term leases – –
Expenses attributable to low-value leases – –
Income from subleasing right-of-use assets
Total cash flow related to leases during was EUR , K (,).
Annual Report
G. Deferred tax assets and liabilities
Deferred tax assets
Provisions
Intangible assets , ,
Pension liabilities , ,
Impairment loss, financial liability
Income received in advance
Other
Financial assets measured via
other comprehensive income
Debt securities
Total deferred tax assets , ,
Deferred tax liabilities
Taxable temporary dierences
Untaxed reserves , ,
Intangible assets , ,
Tangible assets , ,
Financial assets measured via
other comprehensive income
Debt securities
Shares and participations
Total deferred tax liabilities , ,
Net deferred taxes –, –,
Dec ,
Recognised
in income
statement
Recognised
in other
comprehensive
income
Exchange
rate eects Dec ,
Changes in deferred taxes,
Provisions
Intangible assets – –
Pension liabilities , –, – ,
Impairment loss, financial liability
Income received in advance –
Untaxed reserves –, –, –,
Tangible assets –, – –,
Debt securities measured via
other comprehensive income –
Shares and participations measured
via other comprehensive income – –
Other
Total –, –, –, – –,
Dec ,
Acquisitions
of businesses
Recognised
in income
statement
Recognised
in other
comprehensive
income
Exchange
rate eects Dec ,
Changes in deferred taxes,
Provisions –
Intangible assets , –
Pension liabilities , ,
Income received in advance
Untaxed reserves –, –, –,
Tangible assets –, –,
Debt securities measured via
other comprehensive income – –
Shares and participations measured
via other comprehensive income – – –
Other
Total –, –, –,
Bank of Åland Plc
G. Other assets
Payment intermediation receivables , ,
Receivables on mutual fund settlement proceeds , ,
Accounts receivable , ,
Receivable in conjunction with transfer of assets ,
Other , ,
Total , ,
G. Accrued income and prepayments
Accrued interest income , ,
Commissions receivable , ,
Other accrued income , ,
Other prepaid expenses , ,
Total , ,
G. Liabilities to credit institutions
Repayable
on demand Other Total
Repayable
on demand Other Total
Central banks , , , ,
Finnish credit institutions , , ,
Foreign credit institutions , , , , , ,
Total , , , , , ,
G. Deposits from the public
Companies ,, ,,
Public sector entities , ,
Households ,, ,,
Household interest organisations , ,
Outside Finland ,, ,,
Total ,, ,,
G. Debt securities issued
Nominal
amount
Carrying
amount
Nominal
amount
Carrying
amount
Certificates of deposit , ,
of which at amortised cost , ,
Covered bonds , ,, , ,
of which at amortised cost , , , ,
of which for fair value hedge , , , ,
Unsecured bonds , ,
of which for fair value hedge , ,
Total , ,, ,, ,,
“Fair value hedge” refers to hedge accounting of the interest component in the debt security.
G. Other liabilities
Payment intermediation liabilities , ,
Liabilities on mutual fund settlement proceeds , ,
Trade payables , ,
Lease liabilities , ,
Other , ,
Total , ,
Lease liabilities
Short-term , ,
Long-term , ,
Total , ,
Annual Report
G. Provisions
Provisions
for restruc-
turing
reserves
Provision
for o-
balance
sheet
obligations
Other
provisions Total
Provisions
for restruc-
turing
reserves
Provision
for o-
balance
sheet
obligations
Other
provisions Total
Provisions on December of the previous year
Provisions made during the year
Amounts utilised – – – –
Unutilised amounts recovered – – – –
Exchange rate changes – –
Provisions on December
The provisions for restructuring reserves were related to both Finland and Sweden. These provisions included both sta costs and other expenses, but primarily consisted of
sta costs. ”Provision for o-balance sheet obligations” refers to expected credit losses related to guarantees issued and unutilised credit lines. ”Other provisions” consist of
severance pay.
Since the Bank of Åland has had a pending case with the Swedish Tax Agency concerning value-added tax (VAT) for the financial year . The Tax Agency has announced
a decision on the matter, in which it states that the Bank of Åland must pay about EUR . M in VAT. The Bank of Åland does not agree with the Tax Agency’s assessment and
will appeal the Administrative Court’s negative ruling of December . A provision for half the amount has been made as a tax expense in the financial accounts.
G. Accrued expenses and prepaid income
Accrued interest expenses , ,
Other accrued expenses , ,
Commission liabilities , ,
Pension liabilities , ,
Prepaid income ,
Total , ,
G. Subordinated liabilities
Nominal
amount
Carrying
amount
Amount in
own funds
Nominal
amount
Carrying
amount
Amount in
own funds
Debenture loan / , , ,
Debenture loan / , , ,
Debenture loan / , , , , , ,
Debenture loan / , , , , , ,
Green Floating Rate Tier Note , , ,
Total , , , , , ,
Interest rate: Repayment:
Debenture loan / . fixed interest August ,
Debenture loan / -month Stibor . May ,
Green Floating Rate Tier Note -month Stibor . December ,
The loans may be repurchased in advance, but this is possible only with the permission of the Finnish Financial Supervisory Authority. In case the Bank is dissolved, the loans
are subordinate to the Bank’s other obligations.
Debenture loans / and / were issued with write-down clauses. In the event that the Bank of Åland’s or the Group’s common equity Tier (CET) capital ratio falls below
per cent, the loan principal is written down by per cent.
G. Specification of changes in equity capital
Change in fair value reserve
Fair value reserve on January , ,
Divested or reached maturity during the year –
Unrealised change in market value
for remaining and new holdings –
Fair value reserve on December , ,
Change in translation dierences
Translation dierences on January , –,
Change in translation dierences
attributable to branches –, ,
Change in translation dierences
due to subsidiaries –
Change in translation dierences attributable to
additional Tier capital –
Other changes –
Translation dierences on December – ,
Bank of Åland Plc
Change in paid-up unrestricted equity capital fund
Paid-up unrestricted equity capital fund
on January , ,
Share-based payment, incentive programme
Paid-up unrestricted equity fund on December , ,
Retained earnings
Retained earnings on January , ,
Shareholders’ portion of profit for the
accounting period , ,
Dividend paid –,
Re-measurement of defined benefit pension plans , –,
Share savings programmes
Dividend on additional Tier capital incl. Tax
eect –
Other
Retained earnings on December , ,
Övrigt primärkapital
Övrigt primärkapital vid årets ingång
Emission av primärkapitaltillskott ,
Övrigt primärkapital vid årets utgång ,
Items under “Equity capital”
“Share premium account” includes amounts that were paid at the time of new share issues for shares in addition to their nominal value before
September , .
“Reserve fund” includes components transferred from equity capital in compliance with the Articles of Association or a decision of a General Meeting.
The fair value fund includes accumulated net change in fair value of debt instruments and equity instruments carried at fair value via other compre-
hensive income, until the asset is derecognised from the balance sheet. For debt instruments, the realised gain from a divestment is shown in the
income statement. When equity instruments are sold, the revaluation amount of the instrument is transferred to retained earnings without aect-
ing either income or other comprehensive income.
“Translation dierences” comprises all exchange rate dierences that arise when translating financial reports from foreign operations that have
drawn up their financial reports in a currency other than the currency in which the Group’s financial reports are presented.
“Unrestricted equity capital fund” comprises amounts that were paid at the time of new share issues for shares in addition to their nominal value
starting on September , .
Additional Tier capital consists of an additional Tier (AT) capital instrument totalling SEK M. This is a perpetual instrument, with a possibi-
lity of early redemption after five years. The interest rate is -month Stibor ..
Changes in number of shares
Series A shares Series B shares Series A shares Series B shares
Number of shares on January ,, ,, ,, ,,
Shares issued, share savings programme ,
Shares issued, incentive programme , ,
Number of shares on December ,, ,, ,, ,,
See the ”Facts on Bank of Åland shares” section for more detailed information.
Other notes
G. Reconciliation of liabilities attributable to financing activities
“Operating activities” included interest received of EUR , K (,), interest paid of EUR , K (,) and dividend income received
of EUR K ().
Reconciliation of liabilities attributable to funding activities:
Changes not aecting cash flows
Dec ,
Cash flow
from funding
activities
Eect of
exchange rate
changes
Accrual of
surplus/deficit
value Other Dec ,
Subordinated debenture loans , – – ,
Lease liabilities , –, , ,
Total liabilities attributable to
funding activities , –, – , ,
Annual Report
G. Group structure
The Bank of Åland has two subsidiaries whose operations are connected in various ways to banking.
The Bank holds a majority of the voting power in all subsidiaries.
Registered oce Field of operations Ownership,
Subsidiary
Ålandsbanken Fondbolag Ab Finland/Mariehamn Mutual fund management
Ålandsbanken Fonder Ab Finland/Helsingfors Mutual fund management
Ålandsbanken Fonder II Ab Finland/Helsingfors Mutual fund management
Ålandsbanken Fonder III Ab Finland/Helsingfors Mutual fund management
Ålandsbanken Fonder IV Ab Finland/Mariehamn Mutual fund management
Ålandsbanken Fonder V Ab Finland/Helsingfors Mutual fund management
Ålandsbanken Fonder VI Ab Finland/Helsingfors Mutual fund management
Crosskey Banking Solutions Ab Ltd Finland/Mariehamn IT
S-Crosskey Ab Finland/Mariehamn IT
The Bank of Åland has no holdings of structured entities. Ålandsbanken Fondbolag Ab manages mutual funds and alternate investment funds with
a total value of EUR . billion.
Changes in Group structure
The wholly owned subsidiary Kiinteistö Oy Espoon Koivurinne was sold during .
Model IT Oy, a wholly owned subsidiary of Crosskey Banking Solutions Ab, merged with Crosskey Banking Solutions.
The Bank of Åland sold its holding in the jointly owned Swedish company Åland Index Solutions AB.
Shares in associated companies and joint ventures
Registered oce Field of operations Ownership,
Mäklarhuset Åland Ab Finland/Mariehamn Estate agents
IISÅ Holdco AB Sweden/Stockholm Holding company
Borgo AB Sweden/Stockholm Home mortgage lending
Borgo AB Sverige/Stockholm Home mortgage lending
Alandia Holding Ab Finland/Mariehamn Holding company
Together with indirect ownership, the total ownership stake in Borgo AB is .
Holdings in real estate companies
The Group holds participations in one property for its own use and ten investment properties, of which some are consolidated as follows.
Business
identity code Consolidation Ownership,
Properties for own use
Fastighets Ab Godbycenter Finland/Finström Joint operation
Investment properties
Fastighets Ab Nymars Finland/Sottunga Joint operation
Fastighets Ab Västernäs City Finland/Mariehamn Joint operation
Fastighets Ab Horsklint Finland/Kökar Equity method
Fastighets Ab Godbycenter, Fastighets Ab Nymars and Fastighets Ab Västernäs City are mutual associations and, in compliance with IFRS ,
have thus been reported as ”joint operations”.
G. Actively managed assets
Mutual fund management ,, ,,
Discretionary asset management ,, ,,
Advisory asset management ,, ,,
External mutual funds ,
Total ,, ,,
of which own mutual funds in discretionary
and advisory asset management , ,
Bank of Åland Plc
G. Assets pledged
Collateral pledged for own liabilities
Lending to credit institutions , ,
Government securities and bonds , ,
Lending to the public ,, ,,
Other , ,
Total assets pledged for own liabilities ,, ,,
Assets pledged in the form of government securities and bonds were mainly provided as collateral to central banks. “Lending to the public” that was provided as collateral
consisted of the registered collateral pool on behalf of holders of covered bonds. “Other assets pledged for own liabilities” refers mainly to endowment insurance.
Other assets pledged
Government securities and bonds , ,
Other ,
Total other assets pledged , ,
Assets pledged in the form of government securities and bonds were mainly provided as collateral to central banks and credit institutions for payment systems,
securities trading and clearing.
Assets were not pledged for the liabilities or commitments of others.
Except for loan receivables comprising the collateral pool for covered bonds, where legislation regulates minimum requirements for over-collateralisation, collateral that
exceeds the nominal value of the liability is at the free disposal of the Bank.
G. O-balance sheet obligations
Guarantees , ,
Unutilised overdraft limits , ,
Unutilised credit card limits , ,
Unutilised credit facilities , ,
Other commitments , ,
Total ,, ,
Provision for expected loss
K. Pension liabilities
Pension coverage for employees in Finland has been arranged partly
through the Finnish national pension system (a defined contribu-
tion plan) and partly via the pension fund known as Ålandsbanken
Abps Pensionsstiftelse (a defined benefit plan). Ålandsbanken Abps
Pensionsstiftelse has been closed to new participants since June ,
. Persons covered by this fund are entitled to retire at age
depending on their year of birth. The full retirement pension com-
prises per cent of pensionable salary, which is calculated accord-
ing to the same principles as in the national pension system. A family
pension comprises – per cent depending on whether the surviv-
ing spouse is alone or has one or more children.
According to the Finnish collective bargaining agreement in the
financial services sector, employees are partially entitled to pensions at
a lower age than stipulated today by general legislation. The employer
is required to provide vested pension benefits in the collective agree-
ment for the financial services sector, which was confirmed during
by a Labour Court ruling.
Pension coverage for employees in Sweden follows the so-called
BTP multi-employer plan for banking employees and historically is
largely defined benefit. Starting on May , , new employees are
covered by a new defined contribution supplementary pension plan
known as BTP. The BTP plan is secured through the insurance com-
pany SPP. In Sweden, the retirement pension is payable from age
and the guaranteed amount consists of per cent of pensionable sal-
ary below . annually indexed “income base amounts” and per cent
of the portion of salary between and income base amounts. The
guaranteed amount of a family pension is . per cent of the portion
of salary between . and income base amounts and . per cent
of the portion of salary between and income base amounts.
The duration of defined benefit plans in Finland is years and in
Sweden years.
Annual Report
Carrying amount in the income statement
Current service costs
Eects of curtailments and settlements
Interest expenses
Administrative expenses
Expenses ()/revenue (–)
recognised in the income statement
Restatement of defined benefit pension plans in
“Other comprehensive income”
Actuarial gain ()/loss (–), demographic assumptions –
Actuarial gain ()/loss (), financial assumptions , –,
Actuarial gain ()/loss (), experience-based –,
Actuarial gain ()/loss () on plan assets ,
Other comprehensive income , –,
Total , –,
Carrying amount in the balance sheet
Pension obligations , ,
Fair value of plan assets , ,
Net pension assets ()/pension liabilities () –, –,
Net pension assets ()/pension liabilities () in Finland –, –,
Net pension assets ()/pension liabilities () in Sweden –, –,
–, –,
Net change in pension assets
January –, –,
Income – –
Other comprehensive income , –,
Premium payments
Exchange rate eects –
On December –, –,
Pension obligations
January , ,
Current service costs
Interest expenses
Benefits paid –, –
Exchange rate eect –
Actuarial gains ()/losses (–) –, ,
Pension obligations on December , ,
Plan assets
January , ,
Interest income
Premium payments
Benefits paid –, –
Actuarial gains ()/losses (–) ,
Exchange rate eects –
Administrative expenses – –
Plan assets on December , ,
Breakdown of plan assets
Listed shares and participations , ,
Listed mutual fund units , ,
Listed interest-bearing securities , ,
Properties , ,
Other plan assets , ,
Total plan assets , ,
Plan assets included shares in the Bank of Åland Plc with a market value of EUR K (), bonds worth EUR K () and bank accounts worth EUR K (,).
Bank of Åland Plc
Outcome, Forecast,
Future cash flows
Benefits paid
Finland, Sweden, Finland, Sweden,
Assumptions
Discount rate . . . .
Increase in salary expenses . . . .
Pension index increase . . . .
Sensitivity of defined benefit obligations to changes in significant assumptions
Change in
assumptions,
Increase in
assumption
Decrease in
assumption
Sensitivity analysis, net present value of pension
obligation: increase ()/decrease (–)
Discount rate . –, ,
Expected increase in salaries . –
Expected increase in pensions . , –,
The sensitivity analysis is based on a change in one assumption, while all other assumptions remain constant. In practice this is unlikely to occur, and changes in some of
the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method is used as when
calculating the pension liabilities recognised in the balance sheet. The sensitivity analysis for the defined benefit plan in Sweden has been calculated using a discount rate
and an expected pay increase.
The Bank is exposed to a number of risks because of its defined
benefit plans. The most significant risks are described below.
Pension liabilities are calculated with the help of a discount rate
based on corporate bonds with good credit ratings. If plan assets
generate returns worse than the discount rate, this will cause a
deficit. Plan assets include a sizeable percentage of equities, which
in the long term are expected to provide a higher return than the
discount rate, while providing higher volatility and risk in the short
term. Because of the long-term nature of pension liabilities, the Bank
believes that a continued high percentage of equities is suitable for
managing the plans in an eective way.
In case the yields on corporate bonds fall, this leads to an increase in
pension obligations. Partly osetting this is the fact that the value of
the bonds that are included in plan assets will increase.
Pension obligations are connected to inflation. Higher inflation will
lead to increased pension obligations. Plan assets are not aected by
inflation to any great extent, which means that if inflation increases,
this will lead to an increased deficit in pension plans.
Pension plans generate pensions that extend through the lifetimes of
employees. This means that if life expectancy increases, pension
obligations will increase.
G. Lease liabilities
Financial lease liabilities will be paid as follows: Minimum rents Interest Present value Minimum rents Interest Present value
Under year , , , ,
– years , , , ,
Over years , ,
Total , , , , , ,
Annual Report
G. Disclosures about related parties
Board and
Executive Team
Related
companies
Associated
companies
Board and
Executive Team
Related
companies
Associated
companies
Assets
Lending to the public , , , , , ,
Other assets
Accrued income and prepayments
Total , , , , , ,
Liabilities
Deposits from the public , , , , , ,
Subordinated liabilities
Accrued expenses and prepaid income
Total , , , , , ,
Income and expenses
Interest income
Interest expenses – – –
Commission income
Other income
Other expenses
Total
The Bank of Åland Group consists of the parent company, the Bank of Åland Plc (Ålandsbanken Abp), the subsidiaries that are consolidated in the Group, associated companies,
the Executive Team and other related companies. “Board and Executive Team” includes the Managing Director, individuals on the Board of Directors and other members
of the Executive Team, as well as their close family members. ”Related parties” includes companies or persons with significant influence. ”Related companies” also refers
to companies in which an individual belonging to the Executive Team or a close family member of such an individual has significant influence. ”Related parties” include the
pension fund Ålandsbanken Abp:s Pensionsstiftelse r.s.
Loans to employees are granted on commercial terms. ”On commercial terms” means that loans, guarantees, collateral or financing occur on the same terms and according
to the same assessments applied to the Bank of Åland’s customers in general. The employee interest rate is used for loans to employees in Finnish operations. The employee
interest rate is set by the Executive Team and amounted to . (.) per cent on December , .
All transactions with related parties have occurred on commercial terms, aside from loans to the Executive Team, which in Finland have been granted at the employee interest rate.
For disclosures on salaries and fees paid to the Board of Directors and the Executive Team, see Note P.
For disclosures on Group structure, see Note P.
Compensation to senior executives
Salaries and other short-term compensation
, ,
Share-based compensation
Total , ,
“Senior executives” refers to the Executive Team including the Managing Director.
Includes salary, benefits and variable compensation paid in cash.
G. Osetting of financial assets and liabilities
Assets Liabilities Assets Liabilities
Financial assets and liabilities that are subject to
osetting, netting agreements or similar agreements
Gross amount , , , ,
Oset amounts
Total , , , ,
Related amounts not oset
Financial instruments, netting agreements –, –, –, –,
Financial instruments, collateral –, –,
Cash, collateral –, –, –
Total amounts not oset –, –, –, –,
Net amount , , ,
The tables report financial instruments that were oset in the balance sheet in compliance with IAS and those that were covered by legally binding master netting
agreements or similar agreements not qualified for netting. The financial instruments consisted of derivatives, repurchase agreements (repos) and reverse repos, securities
deposits and securities loans. Collateral consisted of financial instruments or cash received or paid for transactions covered by legally binding netting agreements or similar
agreements, which allow netting of obligations to counterparties in case of default. The value of the collateral was limited to the related amount recognised in the balance
sheet, so the excess value of collateral is not included. Amounts not oset in the balance sheet are presented as a reduction in the carrying amount of financial assets or
liabilities in order to recognise the net exposure of the asset and liability.
Bank of Åland Plc
G. Important events after the close of the accounting period
POP Bank has chosen Crosskey as its central banking system partner.
On January , POP Bank signed a cooperation agreement with
Crosskey on the renewal of its core banking system. POP Bank antici-
pates that it will introduce the new core banking system during .
The cooperation agreement will have no immediate eect on the
daily banking services oered by POP Bank.
The POP Bank Group is a Finnish financial group consisting of
cooperative banks, the digitally operating non-life insurance service
Skadeförsäkring Ab, the central credit institution Bonum Bank Plc, and
the central institution POP Bank Centre coop.
On February , , most of the Bank of Åland’s Swedish mort-
gage loans and related previously issued covered bonds were trans-
ferred to Borgo. The nominal amount of the mortgage portfolio that
was transferred is EUR . billion. The nominal amount of the previ-
ously issued covered bonds, which now have Borgo as their issuer, is
EUR . billion. A smaller mortgage portfolio in the range of EUR bil-
lion in size will be transferred later in . After the transaction, the
Bank of Åland’s ownership stake in Borgo amounts to . per cent.
The transaction will increase the Bank of Åland’s net operating
income during the first quarter of , with a nonrecurring positive
eect in the EUR M range. At the same time, this will mean a smaller
loan portfolio in the Bank of Åland’s own balance sheet and thus a
lower current net interest income. In the future, the Bank of Åland will
instead receive distribution fees for brokered loans and platform reve-
nues for maintaining various services to Borgo. The total full-year eect
on earnings is expected to be positive.
Annual Report
Parent Company income statement
(EUR K)
Parent Company Jan –Dec , Jan –Dec ,
Note
Interest income , ,
Interest expenses –, –,
Net interest income P , ,
Commission income , ,
Commission expenses –, –,
Net commission income P , ,
Net income from financial items carried at fair value P ,
Income from equity capital investments P , ,
Other income P , ,
Total income , ,
Sta costs P –, –,
Other expenses P –, –,
Depreciation/amortisation and impairment losses
on tangible and intangible assets P, P –, –,
Total expenses –, –,
Profit before loan losses , ,
Expected loan losses from financial assets
recognised at amortised cost P –, –,
Expected loan losses from other financial assets and
impairment losses P –
Net operating profit , ,
Appropriations –, –,
Income taxes P –, –,
Net profit for the accounting period , ,
Bank of Åland Plc
Parent Company balance sheet
(EUR K)
Parent Company Dec , Dec ,
Note
Assets
Cash and deposits with central banks , ,
Debt securities eligible for refinancing
with central banks P , ,
Lending to credit institutions P , ,
Lending to the public P ,, ,,
Debt securities P , ,
Shares and participations P , ,
Shares and participations in associated companies P , ,
Shares and participations in Group companies P , ,
Derivative instruments
P , ,
Intangible assets P , ,
Tangible assets P , ,
Other assets P , ,
Accrued income and prepayments
P , ,
Deferred tax assets P ,
Total assets ,, ,,
Liabilities
Liabilities to credit institutions and central banks P , ,
Deposits from the public P ,, ,,
Debt securities issued P ,, ,,
Derivative instruments
P , ,
Other liabilities P , ,
Provisions P
Accrued expenses and prepaid income
P , ,
Subordinated liabilities P , ,
Deferred tax liabilities P
Total liabilities ,, ,,
Appropriations
General loan loss reserve¹ , ,
Total appropriations , ,
Equity capital
Share capital , ,
Share premium account , ,
Reserve fund , ,
Fair value reserve , ,
Translation dierences - ,
Unrestricted equity capital fund , ,
Retained earnings , ,
Total equity capital , ,
Total liabilities and equity capital ,, ,,
O–balance sheet obligations P
Obligations to a third party on behalf of customers
Guarantees , ,
Irrevocable commitments given on behalf of customers , ,
Loan loss provisions in compliance with Finland’s Business Income Tax Act, Section .
Annual Report
Parent Company statement of changes in equity capital
(EUR K)
Parent Company
Share capital
Share
premium
account
Reserve
fund
Fair value
reserve
Translation
dierence
Unrestricted
equity capital
fund
Retained
earnings
Total
Equity capital,
Dec ,
, , , , –, , , ,
Profit for the year , ,
Change in fair value , ,
Translation dierence , ,
Incentive programme
Equity capital,
Dec ,
, , , , , , , ,
Profit for the year , ,
Change in fair value –, –,
Translation dierence –, –,
Dividend payments –, –,
Incentive programme
Other – –
Equity capital,
Dec ,
, , , , – , , ,
For further data, see Note P and the section entitled “Facts on Bank of Åland shares”.
Bank of Åland Plc
Parent Company cash flow statement
(EUR K)
Parent Company Jan –Dec , Jan –Dec ,
Cash flow from operating activities
Net operating profit , ,
Adjustment for net operating profit items not aecting cash flow
Depreciation/amortisation and impairment losses
on intangible and tangible assets , ,
Impairment losses on loans and other commitments , ,
Unrealised changes in value ,
Accrued surpluses/deficits on debt securities and bonds issued , ,
Income from investing activities ,
Dividends from associated companies and subsidiaries , ,
Income taxes paid , ,
Increase () or decrease () in receivables from operating activities
Debt securities eligible for refinancing with central banks , ,
Lending to credit institutions , ,
Lending to the public , ,
Other assets , ,
Increase () or decrease (–) in liabilities from operating activities
Liabilities to credit institutions , ,
Deposits from the public , ,
Debt securities issued , ,
Other liabilities , ,
Total cash flow from operating activities , ,
Cash flow from investing activities
Investment in shares and participations , ,
Divestment of shares and participations
Investment in shares of associated companies and subsidiaries , ,
Divestment of shares in associated companies and subsidiaries
Dividends received from associated companies and subsidiaries , ,
Investment in tangible assets
Divestment of tangible assets
Investment in intangible assets , ,
Total cash flow from investing activities ,
Cash flow from financing activities
Share issue
Increase in subordinated debentures ,
Decrease in subordinated debentures ,
Dividend paid ,
Total cash flow from financing activities ,
Cash and cash equivalents at beginning of year , ,
Cash flow from operating activities , ,
Cash flow from investing activities ,
Cash flow from financing activities ,
Exchange rate dierences in cash and cash equivalents , ,
Cash and cash equivalents at end of year , ,
Cash and cash equivalents consisted of the following items:
Cash and deposits with central banks , ,
Lending to credit institutions that is repayable on demand , ,
Total , ,
“Cash and cash equivalents” refers to cash, cheque account with the Bank of Finland, lending to credit institutions that is repayable on demand, other lending to credit
institutions and debt securities with an original remaining maturity of less than three months as well as claims on public sector entities that are not lending. “Investing
activities” refers to payments related to tangible and intangible assets as well as holdings of shares and participations aside from shares intended for trading. “Financing
activities” refers toitems among equity capital and liabilities that fund operating activities. The analysis was prepared according to the indirect method.
“Operating activities” included interest received of EUR , K (,), interest paid of EUR , K (,) and dividend income received of EUR K ().
Annual Report
Table of contents,
notes to the Parent Company financial statements
P. Parent Company accounting principles .................................
P. Net interest income ....................................................................
P. Net commission income ............................................................
P. Net income from financial items carried at fair value ........
P. Income from equity instruments ............................................
P. Other income ...............................................................................
P. Sta costs ......................................................................................
P. Other expenses ...........................................................................
P. Expected credit (loan) losses ...................................................
P. Income taxes ................................................................................
P
. Assets and liabilities by currency .......................................
P. Holdings of debt securities .......................................................
P. Lending to credit institutions ...................................................
P. Lending to the public .................................................................
P. Shares and participations..........................................................
P. Derivative instruments ..............................................................
P. Intangible assets .........................................................................
P. Tangible assets .............................................................................
P. Other assets .................................................................................
P. Accrued income and prepayments .........................................
P. Deferred tax assets and liabilities ...........................................
P. Liabilities to credit institutions .................................................
P. Deposits from the public ...........................................................
P. Debt securities issued ................................................................
P. Other liabilities ............................................................................
P. Provisions ......................................................................................
P. Accrued expenses and prepaid income ................................
P. Subordinated debentures .........................................................
P. Maturity breakdown of assets and liabilities........................
P. Claims on Group companies ...................................................
P. Liabilities to Group companies ................................................
,
P. Salaries/fees paid to the Board of Directors and
Executive Team ............................................................................
P. Private shareholdings of the Board of Directors and
the Executive Team in Bank of Åland Plc .............................
P. Financial transactions with related parties ...........................
P. Assets pledged ............................................................................
P. O-balance sheet obligations ..................................................
P. Rental obligations ......................................................................
P. Subsidiaries and associated companies ...............................
P. Distributable profit .....................................................................
Bank of Åland Plc
Notes to the Parent Company financial statements
(EUR K)
P. Parent Company accounting principles
The financial statements of the Bank of Åland Plc have been drawn
up in accordance with the Finnish Credit Institutions Act, the Ministry
of Finance ordinance on annual accounts and consolidated annual
accounts of financial institutions and securities companies and the
regulations of the Financial Supervisory Authority. The financial
statements of the Bank of Åland Plc have been prepared in
compliance with Finnish accounting standards (FAS). The Parent
Company’s financial statements are presented in thousands of
euros (EUR K), unless otherwise stated.
Goodwill
Goodwill is amortised over years.
Appropriations
Voluntary provisions that the Bank of Åland has made based on
Section of the Finnish Business Income Tax Act are recognised
under “Appropriations”.
Otherwise, please see the consolidated accounting principles.
Annual Report
Notes to the income statement
P. Net interest income
Lending to credit institutions and central banks ,
Lending to the public , ,
Debt securities
Derivative instruments , ,
Other interest income
Total interest income , ,
of which interest according to the eective
interest method
, ,
Liabilities to credit institutions and central banks ,
Deposits from the public , ,
Debt securities ,
Subordinated liabilities , ,
Derivative instruments , ,
Other interest expenses
Total interest expenses , ,
of which interest according to the
eective interest method
, ,
Net interest income , ,
Interest income received from Group companies was EUR K ().
Interest expenses paid to Group companies were EUR K ().
Interest from derivative instruments is recognised together with the item that they hedge within the framework of hedge accounting (fair value hedge and cash flow hedge)
and the fair value option.
Negative interest income from investments is recognised as interest expenses, while negative interest received for liabilities is recognised as interest income.
P. Net commission income
Deposits ,
Lending , ,
Payment intermediation , ,
Mutual fund commissions
Asset management commissions , ,
Securities brokerage , ,
Legal services
Guarantee commissions
Other commissions , ,
Total commission income , ,
Payment intermediation commission expenses –, –,
Asset management commission expenses –, –,
Securities brokerage commission expenses –, –,
Other commission expenses – –
Total commission expenses –, –,
Net commission income , ,
Bank of Åland Plc
P. Net income from financial items carried at fair value
Realised Unrealised Total Realised Unrealised Total
Valuation category fair value via
the income statement (“profit and loss”)
Derivative instruments – –
Valuation category fair value via
the income statement (“profit and loss”) – –
Hedge accounting
of which hedging instruments –, –, –, – –
of which hedged item , , , – –
Hedge accounting – – –
Net income from foreign currency revaluation – – – –
Modification results and ECL – –
Net income from financial assets –, – , ,
Total , –, , – ,
P. Income from equity instruments
Holdings recognised at fair value via other
comprehensive income
Associated companies
Group companies, dividend paid , ,
Total , ,
P. Other income
Rental income on properties
Intra-Group services , ,
Income from acquired contracts , ,
Income in conjunction with transfer of assets ,
Platform service ,
Miscellaneous income , ,
Total , ,
Net income from investment properties
Rental income
Capital gains
Other expenses – –
Total
P. Sta costs
Salaries and fees , ,
Compensation in the form of shares
in Bank of Åland Plc
Pension expenses , ,
Other social security expenses , ,
Total , ,
Number of employees
Permanent full-time employees
Permanent part-time employees
Temporary employees
Total
Annual Report
P. Other expenses
IT expenses (excluding market data) , ,
Rents , ,
Other costs of premises and property , ,
Marketing expenses , ,
Market data , ,
Sta-related expenses , ,
Travel expenses
Purchased services , ,
Guarantee fee
Stability fee , ,
Other expenses , ,
Total , ,
“Guarantee fee” includes the deposit guarantee fee and the fee for the investor compensation fund.
Fees to the Financial Stability Authority
Deposit guarantee fee , ,
Paid by old deposit guarantee fund –, –,
Stability fee , ,
Administration fee
Total , ,
Based on the fee level, the Bank has prepaid deposit guarantee fees for about eight years.
Fees paid to auditors
Auditing fees paid
In compliance with Finnish Auditing Act,
Ch. , Sec. , Par.
Consulting fees paid
Tax matters
Other
Total
These amounts include value-added tax (VAT).
Fees paid to KPMG OY Ab for expenses other than auditing totalled EUR K ().
P. Expected credit (loan) losses
New and
increased individual
impairment losses
Recovered
from earlier
provisions
Utilised for
actual losses Actual losses
Recovery of
actual losses Total
Expected losses from financial assets recognised at
amortised cost and from o-balance sheet obligations
Lending to the public , –, –, , – ,
O-balance sheet obligations – –
Debt securities – –
Total expected loan losses , –, –, , – ,
Expected losses from financial assets recognised at
fair value via other comprehensive income
Debt securities – –
Total – –
New and
increased individual
impairment losses
Recovered
from earlier
provisions
Utilised for
actual losses Actual losses
Recovery of
actual losses Total
Expected losses from financial assets recognised at
amortised cost and from o-balance sheet obligations
Lending to the public , –, –, , – ,
O-balance sheet obligations –
Debt securities –
Total expected loan losses , –, –, , – ,
Expected losses from financial assets recognised at
fair value via other comprehensive income
Debt securities –
Total –
Expected loan losses via other comprehensive income are recognised in the income statement under “Net income from financial items at fair value”.
Bank of Åland Plc
Reserve for
individually
assessed
receivables
from the
public
sector
and public
sector
entities
Provision
for
expected
losses on
o-balance
sheet
obligations
Reserve for
expected
losses
on debt
securities
recognised
at
amortised
cost Total
Reserve for
individually
assessed
receivables
from the
public
sector
and public
sector
entities
Provision
for
expected
losses on
o-balance
sheet
obligations
Reserve for
expected
losses
on debt
securities
recognised
at
amortised
cost Total
Change in impairment loss reserve
Reserve on January
, , , ,
New and increased individual impairment losses
, , , ,
Net changes due to revisions in
estimation method
, ,
Recovered from earlier provisions
–, – – –, –, – – –,
Utilised for actual losses
–, –, –, –,
Exchange rate dierences
– – –
Reserve on December
, , , ,
P. Income taxes
Income statement
Taxes related to prior years
Current taxes , ,
Changes in deferred taxes – –
Total , ,
Nominal tax rate in Finland, . .
Non-taxable income/deductible expenses, –. –.
Swedish tax rate . .
Taxes related to prior years, . –.
Other, . .
Eective tax rate, . .
Deferred tax assets and liabilities were calculated according to a . per cent tax rate, which went into eect on January , .
The tax rate in Sweden is . per cent, whereas in it was . per cent.
Notes to the balance sheet
P. Fair values and carrying amounts of financial assets, liabilities and fair value levels
Total carrying
amount Fair value
Total carrying
amount Fair value
Cash and accounts with central banks , , , ,
Debt securities eligible for
refinancing with central banks , , , ,
Lending to credit institutions , , , ,
Lending to the public ,, ,, ,, ,,
Debt securities , , , ,
Shares and participations , , , ,
Shares and participations in associated companies , , , ,
Shares in subsidiaries , , , ,
Derivative instruments , , , ,
Total financial assets ,, ,, ,, ,,
Liabilities to credit institutions , , , ,
Deposits from the public ,, ,, ,, ,,
Debt securities issued ,, ,, ,, ,,
Derivative instruments , , , ,
Subordinated liabilities , , , ,
Subordinated liabilities ,, ,, ,, ,,
Annual Report
Level Level Level Total
Financial instruments carried at fair value in the balance sheet
Assets
Debt securities eligible for refinancing with central banks , ,
Lending to the public , ,
Shares and participations , , ,
Derivative instruments , ,
Total , , , ,
Liabilities
Debt securities issued , ,
Derivative instruments , ,
Total , ,
Level Level Level Total
Financial instruments carried at fair value in the balance sheet
Assets
Debt securities eligible for refinancing with central banks , ,
Lending to the public , ,
Debt securities , ,
Shares and participations , ,
Derivative instruments , ,
Total , , , ,
Liabilities
Debt securities issued , ,
Derivative instruments , ,
Total , ,
Level Instruments with quoted market prices
Level Measurement techniques based on observable market data
Level Measurement techniques based on non-observable market data
Shares and
participations
Shares and
participations
Change in Level holdings
Carrying amount on January , ,
New purchases , ,
Divested/reached maturity during the year –
Unrealised foreign exchange valuation
Realised change in value –
Carrying amount on December , ,
No transfer occurred between Level and Level .
Bank of Åland Plc
P. Assets and liabilities by currency
EUR SEK USD Others Total
Cash and cash equivalents , , ,
Debt securities eligible for
refinancing with central banks , , , ,
Lending to credit institutions , , , , ,
Lending to the public ,, ,, , ,,
Debt securities , ,
Derivative instruments , , ,
Other items not allocated by currency , ,
Total assets ,, ,, , , ,,
Liabilities to credit institutions and central banks , , ,
Deposits from the public ,, ,, , , ,,
Debt securities issued , , ,,
Derivative instruments , , ,
Subordinated liabilities , , ,
Other items not allocated by currency, including equity capital , ,
Total liabilities and equity capital ,, ,, , , ,,
Other assets and liabilities allocated by currency
as well as o-balance sheet items –, –, ,
Net position in currencies (EUR) , ,
The net position in Swedish kronor is mainly the structural position that arises because the Bank’s financial accounts are prepared in euros
and the Swedish branch’s financial accounts are in Swedish kronor.
EUR SEK USD Others Total
Cash and cash equivalents , , ,
Debt securities eligible for
refinancing with central banks , , , ,
Lending to credit institutions , , , , ,
Lending to the public ,, ,, , ,,
Debt securities , ,
Derivative instruments , , ,
Other items not allocated by currency , ,
Total assets ,, ,, , , ,,
Liabilities to credit institutions and central banks , , ,
Deposits from the public ,, ,, , , ,,
Debt securities issued , , ,,
Derivative instruments , , ,
Subordinated liabilities , , ,
Other items not allocated by currency, including equity capital , ,
Total liabilities and equity capital ,, ,, , , ,,
Other assets and liabilities allocated by currency
as well as o-balance sheet items , , ,
Net position in currencies (EUR) , ,
Annual Report
P. Holdings of debt securities
Nominal
amount
Carrying
amount Loss reserve
Nominal
amount
Carrying
amount Loss reserve
Debt securities eligible for refinancing
with central banks
Holdings at fair value via other
comprehensive income
Government bonds , , , ,
Covered mortgage bonds , , , ,
Debt securities issued by credit institutions , , , ,
Other debt securities , ,
Holdings at amortised cost
Government bonds , , , ,
Covered mortgage bonds , , , ,
Debt securities issued by credit institutions , , , ,
Other debt securities , ,
Total debt securities eligible for refinancing
with central banks
, , , ,
The entire holding consists of publicly listed debt securities.
Other debt securities
Holdings at fair value via other
comprehensive income
Municipal certificates , ,
Holdings at accrued cost
Corporate bonds , , , ,
Total other debt securities , , , ,
Total debt securities
, , , ,
P. Lending to credit institutions
Repayable
on demand Other
Provision
for
expected
loss Total
Repayable
on demand Other
Provision
for
expected
loss Total
Finnish credit institutions , ,
Foreign banks and credit institutions , , , ,
Total , , , ,
P. Lending to the public
Gross carrying
amount
Provision for
expected loss
Net carrying
amount
Gross carrying
amount
Provision for
expected loss
Net carrying
amount
Companies , –, , , –, ,
Public sector entities , – , , – ,
Households ,, –, ,, ,, –, ,,
Household interest organisations , – , , – ,
Outside Finland ,, –, ,, ,, –, ,,
Total ,, –, ,, ,, –, ,,
of which subordinated receivables
P. Shares and participations
Holdings recognised at fair value via
other comprehensive income
Listed ,
Unlisted , ,
Total , ,
Shares and participations in associated companies , ,
Shares and participations in Group companies , ,
Total shares and participations , ,
Bank of Åland Plc
P. Derivative instruments
Nominal amount/maturity
Under yr – yrs over yrs
Nominal
amount
Positive
market
values
Negative
market
values
Nominal
amount
Positive
market
values
Negative
market
values
Derivatives for trading
Interest-related contracts
Interest rate swaps , , , , , , , ,
Currency-related contracts
Currency forward contracts , , , , , , ,
Total , , , , , , , ,
Derivatives for fair value hedges
Interest-related contracts
Interest rate swaps , , , , , , ,, , ,
Total , , , , , , ,, , ,
Total derivative instruments , , , ,, , , ,, , ,
of which cleared
, , , , , , ,, , ,
Derivatives are recognised together with their associated accrued interest.
P. Intangible assets
Software
developed
in-house
Other
software Goodwill
Other
intangible
assets Total
Cost on January , , , , ,
Cost of intangible assets added , ,
Impairment losses for the year – –
Divestments and disposals –, –,
Exchange rate eects – – – –
Cost on December , , , , ,
Accumulated amortisation and impairment
losses on January – –, –, –, –,
Divestments and disposals , ,
Amortisation for the year – –, –, –, –,
Impairment losses for the year – – –
Exchange rate eects
Accumulated amortisation and
impairment losses on December – –, –, –, –,
Residual value on December , , ,
Software
developed
in-house
Other
software Goodwill
Other
intangible
assets Total
Cost on January
Cost of intangible assets added
Impairment losses for the year
Divestments and disposals
Exchange rate eects
Cost on December
Annual Report
Accumulated amortisation and impairment
losses on January – – – – –
Divestments and disposals
Amortisation for the year – – – – –
Impairment losses for the year
Exchange rate eects – – – –
Accumulated amortisation and
impairment losses on December – – – – –
Residual value on December
“Other intangible assets” include acquired contracts.
P. Tangible assets
Investment properties
Properties for own use , ,
Other tangible assets , ,
Total , ,
Investment
properties
Properties
for own use
Other
tangible
assets
Investment
properties
Properties
for own use
Other
tangible
assets
Cost on January , , , ,
New acquisitions
Divestments and disposals – – – –
Transfer between items – –
Exchange rate eects – –
Cost on December , , , ,
Accumulated depreciation on January – –, –, – –, –,
Depreciation for the year – – – –
Impairment losses for the year – –
Divestments and disposals
Exchange rate eects – –
Accumulated depreciation on December – –, –, – –, –,
Revaluations on January , ,
Accumulated revaluations on December , ,
Carrying amount , , , ,
of which buildings , ,
of which land and water
of which shares in property companies
The carrying amount for investment properties is the same as market value.
P. Other assets
Payment intermediation receivables , ,
Receivables on mutual fund settlement proceeds , ,
Accounts receivable , ,
Receivables in conjunction with transfer of assets ,
Other , ,
Total , ,
P. Accrued income and prepayments
Accrued interest income , ,
Other accrued income , ,
Other prepaid expenses , ,
Total , ,
Bank of Åland Plc
P. Deferred tax assets and liabilities
Deferred tax assets
Provisions
Unused tax depreciation
Impairment loss, financial liability
Income received in advance
Debt securities measured via other
comprehensive income
Other
Total deferred tax assets ,
Deferred tax liabilities
Financial assets measured via other
comprehensive income
Debt securities
Shares and participations
Total deferred tax liabilities
Net deferred taxes –
Accumulated appropriations included a deferred tax liability of EUR , K (,).
Dec ,
Recognised
in income
statement
Recognised
in other
comprehensive
income Dec ,
Changes in deferred taxes
Provisions
Unused tax depreciation
Measurement, financial liability
Income received in advance –
Debt securities measured via other comprehensive income –
Shares and participations measured via other
comprehensive income – –
Other
Total –
Dec ,
Recognised
in income
statement
Recognised
in other
comprehensive
income Dec ,
Changes in deferred taxes
Provisions –
Unused tax depreciation –
Income received in advance
Debt securities measured via other comprehensive income – –
Shares and participations measured via other
comprehensive income – – –
Other
Total – – –
P. Liabilities to credit institutions
Repayable
on demand Other Total
Repayable
on demand Other Total
Central banks , , , ,
Finnish credit institutions , , ,
Foreign banks and credit institutions , , , , , ,
Total , , , , , ,
Annual Report
P. Deposits from the public
Companies ,, , ,
Public sector entities , ,
Households ,, ,,
Household interest organisations , ,
Outside Finland ,, ,,
Total ,, ,,
P. Debt securities issued
Nominal
value
Carrying
amount
Nominal
value
Carrying
amount
Certificates of deposit , ,
of which at amortised cost , ,
Covered bonds , ,, , ,
of which at amortised cost , , , ,
of which fair value hedge , , , ,
Unsecured bonds , ,
of which fair value hedge , ,
Total , ,, ,, ,,
“Fair value hedge” refers to hedge accounting of the interest component in the debt security.
P. Other liabilities
Payment intermediation liabilities , ,
Fund settlement liabilities , ,
Trade payables , ,
Other , ,
Total , ,
P. Provisions
Provisions
for restruc-
turing
reserves
Provision
for o-
balance
sheet
obligations
Other
provisions Total
Provisions
for restruc-
turing
reserves
Provision
for o-
balance
sheet
obligations
Other
provisions Total
Provisions on December of the previous year
Provisions during the year
Amounts utilised – – – –
Unutilised amounts recovered – – – –
Exchange rate changes – –
Provisions on December
The provisions for restructuring reserves were related to both Finland and Sweden. These provisions included both sta costs and other expenses, but primarily consisted
of sta costs. “Provision for o-balance sheet obligations” refers to expected credit losses related to guarantees issued and unutilised credit lines. “Other provisions” consist
of severance pay.
Since the Bank of Åland has had a pending case with the Swedish Tax Agency concerning value-added tax (VAT) for the financial year . The Tax Agency has announced
a decision on the matter, in which it states that the Bank of Åland must pay about EUR . M in VAT. The Bank of Åland does not agree with the Tax Agency’s assessment and will
appeal the Administrative Court’s negative ruling of December . A provision for half the amount has been made as a tax expense in the financial accounts.
P. Accrued expenses and prepaid income
Accrued interest expenses , ,
Other accrued expenses , ,
Accrued taxes , ,
Prepaid income , ,
Total , ,
Bank of Åland Plc
P. Subordinated debentures
Nominal
amount
Carrying
amount
Amount in
own funds
Nominal
amount
Carrying
amount
Amount in
own funds
Debenture loan / , , ,
Debenture loan / , , ,
Debenture loan / , , , , , ,
Debenture loan / , , , , , ,
Green Floating Rate Tier Note , , ,
Additional Tier capital
Floating Rate Perpetual AT Note , , ,
Total , , , , , ,
Interest rate: Repayment:
Debenture loan / . fixed interest August ,
Debenture loan / -month Stibor . May ,
Green Floating Rate Tier Note -month Stibor . December ,
Floating Rate Perpetual AT Note -month Stibor . Perpetual
The loans may be repurchased in advance, but this is possible only with the permission of the Finnish Financial Supervisory Authority. In case the Bank is dissolved,
the loans are subordinate to the Bank’s other obligations.
Debenture loans / and / were issued with write-down clauses. In the event that the Bank of Åland’s or the Group’s common equity Tier (CET) capital ratio falls
below per cent, the loan principal is written down by per cent.
Annual Report
P. Maturity breakdown of assets and liabilities
Undiscounted contractual cash flows
Repayable
on demand mo – mo – mo – yrs – yrs yrs
Not classified
by maturity Total
Assets
Cash and receivable from central banks , ,
Debt securities eligible for refinancing
with central banks , , , , , ,
Lending to credit institutions , ,
Lending to the public , , , , ,, , ,, , ,,
Other debt securities , , ,
Shares and participations , ,
Derivative instruments , , , ,
Intangible assets , ,
Tangible assets , ,
Other assets , ,
Total , , , , ,, , ,, , ,,
Liabilities
Liabilities to credit institutions and central banks , , , , , ,
Deposits from the public ,, , , , , ,,
Debt securities issued ,, ,,
Derivative instruments , , , ,
Other liabilities , ,
Subordinated liabilities , , ,
Equity capital and appropriations , ,
Total ,, , , , ,, , , ,,
Bank of Åland Plc
Undiscounted contractual cash flows
Repayable
on demand mo – mo – mo – yrs – yrs yrs
Not classified
by maturity Total
Assets
Cash and receivable from central banks , ,
Debt securities eligible for refinancing
with central banks , , , , , ,
Lending to credit institutions , – , ,
Lending to the public , , , , ,, , ,, , ,,
Other debt securities , , ,
Shares and participations , ,
Derivative instruments , , , , ,
Intangible assets , ,
Tangible assets , ,
Other assets , ,
Total , , , , ,, , ,, , ,,
Liabilities
Liabilities to credit institutions and central banks , , , , , ,
Deposits from the public ,, , , , , ,,
Debt securities issued , , , , ,,
Derivative instruments , , , , , ,
Other liabilities , ,
Subordinated liabilities , , , , ,
Equity capital and appropriations , ,
Total ,, , , , ,, , , , ,,
Annual Report
P. Claims on Group companies
Lending to the public ,
Other assets
Accrued income and prepayments , ,
Total , ,
P. Liabilities to Group companies
Deposits from the public , ,
Other liabilities , ,
Accrued expenses and prepaid income , ,
Total , ,
Notes concerning sta, Board of Directors and Executive Team
P. Salaries/fees paid to the Board of Directors and Executive Team
Lampi, Nils
Taxell, Christoer
Ceder, Åsa
Karlsson, Anders Å
Valassi, Ulrika
Wiklöf, Anders
Board members
Managing Director
Other members of the Executive Team , ,
The amount includes the value of fringe benefits. There are no pension obligations to the members of the Board of Directors. The pension benefits of the Managing Director
are based on customary terms of employment.
P. Private shareholdings of the Board of Directors and the Executive Team in Bank of Åland Plc
See the Board of Directors and Executive Team sections.
P. Financial transactions with related parties
See Note G in the notes to the consolidated financial statements.
Notes concerning assets pledged and contingent liabilities
P. Assets pledged
Assets pledged for own liabilities
Lending to credit institutions , ,
Government securities and bonds , ,
Lending to the public ,, , ,
Other , ,
Total assets pledged for own liabilities ,, ,,
Assets pledged in the form of government securities and bonds were mainly provided as collateral to central banks. “Lending to the public” that was provided as collateral
consisted of the registered collateral pool on behalf of holders of covered bonds. “Other assets pledged for own liabilities” refers mainly to endowment insurance.
Other assets pledged
Government securities and bonds , ,
Other ,
Total other assets pledged , ,
Assets pledged in the form of government securities and bonds were mainly provided as collateral to central banks and credit institutions for payment systems,
securities trading and clearing.
Assets were not pledged for the liabilities or commitments of others.
Except for loan receivables comprising the collateral pool for covered bonds, where legislation regulates minimum requirements for over-collateralisation,
collateral that exceeds the nominal value of the liability are at the free disposal of the Bank.
Bank of Åland Plc
P. O-balance sheet obligations
Guarantees , ,
Unutilised overdraft limits , ,
Unutilised credit card limits , ,
Unutilised credit lines , ,
Other commitments , ,
Total ,, ,
Provision for expected loss
Guarantees for subsidiaries , ,
Unutilised overdraft limits for subsidiaries , ,
Unutilised credit facilities for subsidiaries
P. Rental obligations
Rental payments due
Under year , ,
More than and less than years , ,
More than years ,
Total , ,
Rental obligations were equivalent to the rental expenses that would arise upon termination of all rental agreements.
Other notes
P. Subsidiaries and associated companies
Registered oce Ownership, Carrying amount
Subsidiaries
Crosskey Banking Solutions Ab Ltd Mariehamn ,
S-Crosskey Ab Mariehamn
Ålandsbanken Fondbolag Ab Mariehamn
Ålandsbanken Fonder Ab Mariehamn
Ålandsbanken Fonder II Ab Mariehamn
Ålandsbanken Fonder III Ab Mariehamn
Ålandsbanken Fonder IV Ab Mariehamn
Ålandsbanken Fonder V Ab Helsinki
Ålandsbanken Fonder VI Ab Helsinki
Total ,
Associated companies
Mäklarhuset Åland Ab Mariehamn
IISÅ Holdco AB Stockholm
Borgo AB Stockholm
Borgo AB Stockholm ,
Åland Index Solutions AB Stockholm ,
Total ,
Housing and real estate companies
Properties for the Group’s own use
FAB Godby Center Finström
Total
Investment properties
FAB Horsklint Kökar
FAB Nymars Sottunga
FAB Västernäs City Mariehamn
Total
P. Distributable profit
Retained earnings , ,
Dividend paid in January –,
Unrestricted equity capital fund , ,
Capitalised development expenditures – –
Total , ,
Annual Report
According to the financial statements, distributable profit after subtracting capitalised development
expenses including the unrestricted equity capital fund is EUR ,,., of which the profit for the
financial year is EUR ,,.. No significant changes in the financial position of the Company have
occurred since the end of the financial year.
The Board of Directors proposes to the Annual General Meeting that the distributable profit of the
Bank of Åland Plc, EUR ,,. be allocated as follows:
For Series A and Series B shares outstanding, a dividend of EUR . per share plus an extra dividend of
EUR . per share from retained earnings,
tot a lling ,, .
To be carried forward as retained earnings ,,.
Mariehamn, February ,
Nils Lampi, Christoer Taxell, Åsa Ceder
Chairman Deputy Chairman
Anders Å Karlsson Ulrika Valassi Anders Wiklöf
Peter Wiklöf,
Managing Director
Auditors’ note
A report on the audit performed has been issued today.
Helsinki, February ,
Marcus Tötterman Fredrik Westerholm Henry Maarala
KHT KHT KHT
Proposed allocation of profit
Bank of Åland Plc
Auditors’ Report
To the Annual General Meeting of Ålandsbanken Abp
This document is an English translation of the auditors’ report in
the Swedish language. Only the auditors’ report in the Swedish
language is legally binding.
Opinion
We have audited the financial statements of Bank of Åland Plc
(business identity code -) for the accounting period
January – December , . The financial statements comprise
the consolidated balance sheet, income statement, statement of com-
prehensive income, statement of changes in equity capital, cash flow
statement and notes, including a summary of significant accounting
policies, as well as the parent company’s balance sheet, income state-
ment, statement of changes in equity capital, cash flow statement
and notes.
In our opinion
• the consolidated financial statements give a true and fair view
of the Group’s financial position, financial performance and cash
flows in accordance with International Financial Reporting Stand-
ards (IFRS) as adopted by the EU.
• the financial statements give a true and fair view of the parent
company’s financial performance and financial position in accord-
ance with the laws and regulations governing the preparation
of financial statements in Finland and comply with statutory
requirements.
Our opinion is consistent with the additional report submitted to
the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with good auditing practice in
Finland. Our responsibilities under good auditing practice, are further
described in the Auditors’ Responsibilities for the Audit of the Finan-
cial Statements section of our report.
We are independent of the parent company and of the Group com-
panies in accordance with the ethical requirements that are applicable
in Finland and are relevant to our audit, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
To the best of our knowledge and understanding, the non-audit
services that we have provided to the parent company and Group
companies are in compliance with laws and regulations applicable in
Finland regarding these services, and we have not provided any pro-
hibited non-audit services referred to in Article () of regulation (EU)
/. The non-audit services that we have provided have been
disclosed in note G to the consolidated financial statements.
We believe that the audit evidence we have obtained is sucient
and appropriate to provide a basis for our opinion.
Materiality
The scope of our audit was influenced by our application of mate-
riality. The materiality is determined based on our professional
judgement and is used to determine the nature, timing and extent
of our audit procedures and to evaluate the eect of identified
misstatements on the financial statements as a whole. The level of
materiality we set is based on our assessment of the magnitude of
misstatements that, individually or in aggregate, could reasonably
be expected to have influence on the economic decisions of the users
of the financial statements. We have also taken into account misstate-
ments and/or possible misstatements that in our opinion are material
for qualitative reasons for the users of the financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judg-
ment, were of most significance in our audit of the financial state-
ments of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opin-
ion on these matters. The significant risks of material misstatement
referred to in the EU Regulation No / point (c) of Article ()
are included in the description of key audit matters below.
We have also addressed the risk of management override of
internal controls. This includes consideration of whether there was
any evidence of management bias that represented a risk of material
misstatement due to fraud.
Key audit matters
Key audit matters
How these matters were
addressed in the audit
Valuation of lending to the public and public sector entities
(Accounting Principles and Notes G, G, G, P, P)
• Lending to the public amounted to EUR . billion. This comprises
approximately per cent of the Group’s total assets.
• IFRS Financial Instruments standard is applied in the calculation
of expected credit losses. Calculation of expected credit losses
involves assumptions, estimates and management judgment.
For example, in respect of the probability and amount of the
expected credit losses as well as determining the significant
increases in credit risk.
• Due to the significance of the carrying amount involved, complexity
of the accounting methods used for measurement purposes and
management judgement involved, lending to the public is addressed
as a key audit matter.
• We have reviewed the principles and controls attributable to
approval, recognition and monitoring of loans and have tested
controls attributable to the process of calculating expected credit
losses. Our audit included reviewing the most important single
impairment losses during the financial period.
• We assessed the models and the key assumptions for calculat-
ing expected credit losses as well as tested the controls related
to the calculation process for expected credit losses. Our audit
procedures included an analysis of the most significant individual
impairments recognised during the financial period.
• We considered the impacts of the COVID- pandemic on the
credit risk position and the accounting for expected credit losses.
Annual Report
• Our IFRS and financial instruments specialists were involved in
the audit.
• Furthermore, we considered the appropriateness of the notes
provided by the Bank of Åland in respect of loans and other
receivables and expected credit losses.
Net commission income and IT income (Accounting Principles
and Notes G and P)
• The assets managed by the Bank of Åland entitles to fee and com-
mission income on the grounds of the agreements entered into
with customers and the cooperation parties. The Group also derives
IT income based on customer agreements. Commissions and IT
income are a significant item in the Group’s income statement.
• The calculation of commissions and IT income comprises manual
phases and the determination of the commission amount and rev-
enue recognition may involve management judgement.
• Due to the significance of the income amount and the judgement
involved, net commission and IT income are considered a key
audit matter.
• We assessed the methods used by the Bank of Åland for calculation
of mutual fund and asset management commissions and IT income.
• Our review regarding the accounting of mutual fund and asset man-
agement commissions and IT income focused on controls in the bill-
ing and fee calculation processes. Our audit procedures involved an
assessment of the functionality and eectiveness of these controls.
• Our audit procedures included testing of commission calculations
on a sample basis, as well as an assessment of the underlying
related agreements and fund statutes where fees have been
defined. We utilised data analysis in our analysis of the charged fees.
Responsibilities of the Board of Directors and the
Managing Director for the Financial Statements
The Board of Directors and the Managing Director are responsible for
the preparation of consolidated financial statements that give a true
and fair view in accordance with International Financial Reporting
Standards (IFRS) as adopted by the EU, and of financial statements
that give a true and fair view in accordance with the laws and regula-
tions governing the preparation of financial statements in Finland
and comply with statutory requirements. The Board of Directors and
the Managing Director are also responsible for such internal control
as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Board of Directors
and the Managing Director are responsible for assessing the parent
company’s and the Group’s ability to continue as going concern,
disclosing, as applicable, matters relating to going concern and using
the going concern basis of accounting. The financial statements are
prepared using the going concern basis of accounting unless there is
an intention to liquidate the parent company or the Group or cease
operations, or there is no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit
of Financial Statements
Our objectives are to obtain reasonable assurance on whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditors’ report that
includes our opinion. Reasonable assurance is a high level of assur-
ance, but is not a guarantee that an audit conducted in accordance
with good auditing practice will always detect a material misstate-
ment when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of the financial statements.
As part of an audit in accordance with good auditing practice, we
exercise professional judgment and maintain professional scepticism
throughout the audit. We also:
• Identify and assess the risks of material misstatement of the finan-
cial statements, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit
evidence that is sucient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in
order to design audit procedures that are appropriate in the circum-
stances, but not for the purpose of expressing an opinion on the
eectiveness of the parent company’s or the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures
made by management.
• Conclude on the appropriateness of the Board of Directors’ and
the Managing Director’s use of the going concern basis of account-
ing and based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast
significant doubt on the parent company’s or the Group’s ability
to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our audi-
tors’ report to the related disclosures in the financial statements
or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the
date of our auditors’ report. However, future events or conditions
may cause the parent company or the Group to cease to continue
as a going concern.
• Evaluate the overall presentation, structure and content of the finan-
cial statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events so that
the financial statements give a true and fair view.
• Obtain sucient appropriate audit evidence regarding the financial
information of the entities or business activities within the Group to
express an opinion on the consolidated financial statements. We are
responsible for the direction, supervision and performance of the
Group audit. We remain solely responsible for our audit opinion.
Bank of Åland Plc
Helsinki, February ,
Marcus Tötterman
Authorised Public Accountant, KHT
KPMG Oy Ab
Töölönlahdenkatu A
Helsinki
Fredrik Westerholm
Authorised Public Accountant, KHT
KPMG Oy Ab
Töölönlahdenkatu A
Helsinki
Henry Maarala
Authorised Public Accountant, KHT
KPMG Oy Ab
Töölönlahdenkatu A
Helsinki
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement
that we have complied with relevant ethical requirements regarding
independence, and communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.
From the matters communicated with those charged with govern-
ance, we determine those matters that were of most significance in the
audit of the financial statements of the current period and are therefore
the key audit matters. We describe these matters in our auditors’ report
unless law or regulation precludes public disclosure about the matter
or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse con-
sequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.
Other Reporting Requirements
Information on our audit engagement
Employees of KPMG Oy Ab have served as auditors elected by the
Annual General Meeting since the spring of , representing an
uninterrupted engagement of years.
Other Information
The Board of Directors and the Managing Director are responsible for
the other information. The other information comprises the report of
the Board of Directors and the information included in in the Annual
Report. We have obtained the report of the Board of Directors and
the Annual Report prior to the date of this auditors’ report. Our opin-
ion on the financial statements does not cover the other information.
In connection with our audit of the financial statements, our
responsibility is to read the other information identified above and,
in doing so, consider whether the other information is materially incon-
sistent with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. With respect
to the report of the Board of Directors, our responsibility also includes
considering whether the report of the Board of Directors has been
prepared in accordance with the applicable laws and regulations.
In our opinion, the information in the report of the Board of Direc-
tors is consistent with the information in the financial statements and
the report of the Board of Directors has been prepared in accordance
with the applicable laws and regulations.
If, based on the work we have performed on the other information
that we obtained prior to the date of this auditors’ report, we conclude
that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Annual Report
Corporate Governance Statement
Photographer: Anton Sucksdor
Bank of Åland Plc
Corporate Governance Statement
Corporate Governance Statement for the Bank of Åland Plc, financial year
The Corporate Governance Statement is being
issued as a separate report in conjunction with
the Report of the Directors for and was
prepared by the Audit Committee of the Board
of Directors.
Legislation and recommendations on
corporate governance
The Finnish Corporate Governance Code
(“the Code”), which is available on the website
www.cgfinland.fi, is intended to be followed by
companies listed on the Nasdaq OMX Helsinki
(“Helsinki Stock Exchange”). The Code is applied
according to the “comply or explain” principle,
which means that departures from its recom-
mendations must be disclosed and explained.
A company is regarded as complying with the
Code even if it departs from an individual rec-
ommendation, provided that it discloses and
explains the departure.
The Bank of Åland Plc (“the Bank”), which
is listed on the Helsinki Stock Exchange, is
a public company domiciled in Mariehamn,
Finland. The Bank is subject to legislation
including the Finnish Companies Act, the
Credit Institutions Act and the Securities
Markets Act, as well as the Bank’s Articles
of Association and the Code. The Corporate
Governance Statement has been prepared in
compliance with the Code’s reporting instruc-
tions and according to the Finnish Securities
Market Act, Chapter , Section . In applying
the Code, the Bank departs from Recommen-
dation , “Appointment of members to com-
mittees”, since the Bank’s Compensation
Committee includes one co-opted member
who is not a member of the Bank’s Board of
Directors. The co-opted member is also Chair-
man of the Committee. The purpose of this
departure is to broaden the Compensation
Committee’s experience and expertise base
on compensation matters. The need for out-
side expertise is assessed separately before
each appointment date.
This Corporate Governance Statement, the
Articles of Association and other disclosures
required according to the Code are available at
the Company’s website, www.alandsbanken.fi.
Board of Directors
The members of the Board of Directors are elected by the shareholders at the Annual
General Meeting (AGM). The Board’s term of office ends at the closing of the next AGM
after the election. According to the Articles of Association, the Board shall consist of at
least five and at most eight members. During , the Board consisted of six members.
The Managing Director may not be a member of the Board.
Composition of the Board,
Name, main occupation and education
Year of birth
Board members since
what year
Place of residence
Board members’
shareholdings in the Bank
on December , (direct
ownership or via companies
which the Board member
controls). There are no
shareholdings in other Bank of
Åland Group companies.
Nils Lampi, Chairman
CEO, Wiklöf Holding Ab
Bachelor of Economic Sciences
Born
Member since
Mariehamn, Åland
Series A shares:
Series B shares: ,
Christoer Taxell,
Deputy Chairman
Master of Laws
Born
Member since
Turku, Finland
Series A shares:
Series B shares: ,
Åsa Ceder
Master of Science in Economics
Actuary
Born
Member since
Mariehamn, Åland
Series A shares:
Series B shares:
Anders Å Karlsson
Business owner
Bachelor of Commerce
Born
Member since
Lemland, Åland
Series A shares: ,
Series B shares: ,
Ulrika Valassi
Business owner
Master of Business Administration
Born
Member since
Stockholm, Sweden
Series A shares:
Series B shares:
Anders Wiklöf
Business owner
Doctor of Economics (honorary)
Commercial Counsellor
Born
Member since
Mariehamn, Åland
Series A shares: ,,
Series B shares: ,,
Annual Report
’
In the assessment of the Board of Directors,
the Chairman of the Board and all other
Board members are independent of the
Bank. Christoffer Taxell, Anders Å Karlsson
and Ulrika Valassi are also independent in
relation to major shareholders. Nils Lampi,
Chairman of the Board, is deemed to be
dependent in relation to a major shareholder
since he is CEO of Wiklöf Holding, which is
a major shareholder in the Bank. Anders
Wiklöf is regarded as dependent in relation
to a major shareholder due to his direct and
indirect shareholding in the Bank. Anders
Å Karlsson is deemed to be dependent in
relation to a major shareholder in the Bank
since he is a Board member of Alandia
Försäkring Abp, which has a major share-
holding in the Bank.
The Board of Directors oversees the admin-
istration of the Bank’s affairs and is responsi-
ble for ensuring that its operations are
appropriately organised. The Board is also
responsible for overall policy and strategy
issues and for ensuring that risk oversight is
sufficient and that management systems
are working. The duties of the Board also
include appointing and, if necessary, dis-
missing the Managing Director, his deputy
and other members of the Executive Team,
as well as deciding their salary benefits and
other employment conditions. The Board
shall constitute a quorum when more than
half its members are present.
The Board has established Group-wide
internal Rules of Procedure for its work.
These Rules of Procedure, which are evalu-
ated annually and revised as needed, mainly
regulate the division of labour between the
Board, the Managing Director and other
members of the Executive Team. The Rules
of Procedure also regulates meeting proce-
dures, minutes of meetings and reporting
procedures. The Board of Directors, which
meets after being convened by the Chair-
man of the Board, regularly discusses the
economic situation in the financial markets.
Supported by the Managing Director’s
recurrent reports on operational activities,
the Board monitors the strategy, financial
outcomes and overall long-term objectives
of the Bank’s operations. Beyond this, the
Board deals with other matters raised in
compliance with the Annual Accounts Act,
the Articles of Association and other regula-
tions that affect the Bank’s operations and
administration, as well as matters referred
by individual Board members and by the
Executive Team.
The Board of Directors conducts a yearly
internal evaluation of its performance and
its work. The evaluation includes a question-
naire in which each Board member assesses
the work of the Board during the year. The
Chairman of the Board also has individual
conversations with each Board member.
Led by the Chairman of the Board, the evalu-
ation is also discussed and dealt with at a
subsequent Board meeting, and decisions
are made on actions to be taken as a result
of the evaluation.
During , the Board held () meet-
ings. The Board members’ average attend-
ance was () per cent. During , each
Board member attended Board and commit-
tee meetings as follows:
Attendance at Board meetings,
Board member
Board meetings
Total number:
Nils Lampi /
Christoer Taxell /
Åsa Ceder /
Anders Å Karlsson /
Ulrika Valassi /
Anders Wiklöf /
According to the Credit Institutions Act and
the Code, the Board shall establish principles
for promoting diversity in the composition
of the Board and have as a goal of the credit
institution that both genders shall be equally
represented on the Board. The Bank of
Åland seeks a good balance in the composi-
tion of the Board, with the aim that the
Board as a whole shall possess the expertise
and experience required to monitor and
develop the Company. Achieving this goal
requires that as a group, the Board pos-
sesses a breadth in terms of education, per-
sonal qualities, experience, gender and age.
Allocation between genders shall be equal,
and both genders shall thus be represented
in the proposal that is presented on the
occasion of each nomination as a new Board
member. During the financial year, the
members of the Board have collectively
achieved the variation in education, experi-
ence and talents required for the task. Both
genders are represented on the Board, with
the allocation between the genders being
per cent women and per cent men.
Bank of Åland Plc
The committees of the Board
The main duty of the Nomination Commit-
tee is to prepare proposals before the AGM
regarding the election of Board members as
well as proposals concerning fees to the
Chairman, Vice Chairman and other Board
members.
Rules on how the Nomination Commit-
tee is appointed were established by the
AGM. The Nomination Committee con-
sists of four members: the Chairman of the
Board and representatives of the three larg-
est shareholders in the Bank in terms of vot-
ing power on November of each year. If the
Chairman of the Board represents any of the
above shareholders, or in case a shareholder
abstains from participating in the Nomina-
tion Committee, the right of membership is
transferred to the next largest shareholder.
The representative of the largest share-
holder in terms of voting power is Chairman
of the Nomination Committee.
The Nomination Committee consists of
Nils Lampi, Chairman of the Board; Board
member Anders Wiklöf, by virtue of direct
and indirect personal shareholdings; Jan
Hanses, representing the insurance com-
pany Alandia Försäkring Abp; and Georg
Ehrnrooth, representing Fennogens Invest-
ments S.A. Anders Wiklöf is Chairman of the
Nomination Committee.
During the Nomination Committee
met () times. The average attendance of
Committee members was () per cent.
Attendance at Nomination
Committee meetings,
Member
Nomination Committee
meetings
Total number:
Anders Wiklöf,
Chairman of the
Committee
/
Nils Lampi /
Jan Hanses /
Georg Ehrnrooth /
The Board of Directors, which appoints the
members of the Audit Committee, has
established its duties in Rules of Procedure.
The Audit Committee assists the Board,
among other things, in fulfilling its duties in
overseeing the internal control and risk
management systems, reporting, the audit
process and observance of laws and regula-
tions. In addition, before the AGM the Audit
Committee prepares proposals for the elec-
tion of auditors and their fees. The Chairman
of the Audit Committee reports regularly to
the Board about the work and observations
of the Committee.
The Audit Committee consists of Nils
Lampi, Chairman of the Board; and Board
members Anders Å Karlsson and Ulrika
Valassi, Chairman of the Audit Committee.
Board member Åsa Ceder was a member
of the Audit Committee until the AGM on
March , . During the Audit
Committee met () times.
The average attendance of Committee
members was () per cent.
Attendance at Audit Committee
meetings,
Member
Audit Committee
meetings
Total number:
Ulrika Valassi,
Chairman of the
Committee
/
Åsa Ceder
/
Anders Å Karlsson /
Nils Lampi /
Member of the Audit Committee until the AGM on
March , , attended out of meetings during
the period.
The duties of the Compensation Commit-
tee are to prepare key compensation-
related decisions and evaluate the Bank’s
compensation policy and the principles for
variable compensation. The Compensation
Committee decides on measures for moni-
toring the application of the principles for
the compensation system and assesses its
suitability and effect on the Group’s risks
and risk management.
The Compensation Committee consists
of Nils Lampi, Chairman of the Board; Board
member Christoffer Taxell and former Board
member Agneta Karlsson as a co-opted
member and Chairman of the Committee.
During the Compensation Commit-
tee met () times. The average attendance
of Committee members was ()
per cent.
Attendance at Compensation
Committee meetings,
Member
Audit Committee
meetings
Total number:
Agneta Karlsson,
Chairman of the
Committee
/
Nils Lampi /
Christoer Taxell /
Annual Report
Managing Director
The Managing Director of the Bank is Peter
Wiklöf, Master of Laws (born ). The
Managing Director’s shareholdings in the
Bank can be seen in the table to the right.
Among other things, the Managing
Director is responsible for the day-to-day
administration of the Bank and for ensuring
that this is managed in compliance with law,
the Articles of Association, other regulations
and the instructions and directions of the
Board. In addition, the Managing Director is
responsible for ensuring that the decisions
of the Board are implemented.
The Managing Director reports regularly
to the Board. The Managing Director is
appointed and dismissed by the Board of
Directors. His employment conditions are
established in a written contract that is
approved by the Board.
The Group’s Executive Team
– other members
The Board appoints the other members of
the Group-wide Executive Team. The other
members of the Executive Team advise the
Managing Director, and the Executive Team
deals with all major Bank-wide issues. The
Executive Team consists of the heads of the
Bank’s business areas and corporate units.
Their shareholdings in the Bank can see
seen in the table below.
During the Executive Team met on
() occasions.
,
,
The Group-wide Executive Team,
Composition of the Executive Team and
its members’ areas of responsibility
Education
Year of birth
Executive Team member
since what year
Shareholdings in the Bank
on December , (direct
ownership or via companies
which the person controls).
There are no shareholdings
in other Bank of Åland Group
companies.
Peter Wiklöf
Managing Director,
Chief Executive
Chairman of the Executive Team
Master of Laws
Born
Member since
Series A shares:
Series B shares: ,
Jan-Gunnar Eurell
Chief Financial Ocer
Deputy Managing Director
Bachelor of Science
(Economics)
Master of Business
Administration
Born
Member since
Series A shares:
Series B shares: ,
Tove Erikslund
Chief Administrative Ocer
Master of Business
Administration
Born
Member since
Series A shares:
Series B shares: ,
Sofie Holmström
Manager, Partnerships
Business Area
Master of Science, IT
Management
Bachelor of Commerce,
Business Administration
Born
Member since
Series A shares:
Series B shares:
Magnus Johansson
Director, Sweden Business Area
Bachelor of Science
(Economics)
Born
Member since
Series A shares:
Series B shares: ,
Mikael Mörn
Director, Åland Business Area
Associate of Arts in
Commerce
Born
Member since
Series A shares:
Series B shares: ,
Juhana Rauthovi
Chief Risk & Compliance Ocer
Licentiate in Laws, M.Sc.
(Econ.), M.Sc. (Tech.)
Master in International
Management
Born
Member since
Series A shares:
Series B shares: ,
Anne-Maria Salonius
Director, Finnish Mainland
Business Area
Master of Laws
Attorney at Law
Born
Member since
Series A shares:
Series B shares: ,
The Board of Directors, led by the Chairman of the Board, evaluates the work of the Managing
Director and the rest of the Executive Team yearly. The Managing Director and other mem-
bers of the Executive Team do not attend this evaluation.
Bank of Åland Plc
Internal controls and risk
management systems related to
thefinancial reporting process
Internal controls and risk management in
the financial reporting process are an inte-
gral element of operational systems and
daily routines. To achieve this integration,
the Group employs clear and easily accessi-
ble internal instructions. In developing new
systems, products, services and/or routines,
internal controls are taken into account. The
organisation has clearly defined responsibili-
ties and powers as well as clear reporting
mechanisms.
The fundamental principles of internal con-
trols in the financial reporting process are a
clear allocation of roles as well as instruc-
tions and an understanding of how financial
results are achieved.
The Group’s reporting is compiled cen-
trally by Group Finance. This department is
responsible for the consolidated accounts
and the consolidated financial statements,
accounting principles, policy documents and
instructions, financial control systems, tax
analysis, reporting to regulatory authorities
and publication of financial information.
The respective subsidiaries are responsible
for ensuring that their accounts meet the
Group’s standards, and they report monthly
to their company’s management and
Group Finance.
The Internal Auditing Department assists
the external auditors with the examination
of financial information in accordance with
an audit plan drawn up in advance. Internal
Auditing is an independent unit and works
on behalf of the Board of Directors.
External auditors examine the Group’s
interim reports, half-year financial report,
Annual Report and Corporate Governance
Statement and submit an auditors’ report to
the Audit Committee and to the Group’s
Board of Directors.
The Group’s Executive Team deals with
the Group’s internal financial reporting
every month and with the interim reports,
half-year financial report or the Annual
Report every quarter.
The Audit Committee assists the Board in
its continuous monitoring work by examin-
ing the quarterly financial reports, the half-
year financial report and the annual financial
statements, as well as dealing with the obser-
vations of the external and internal auditors.
The Board of Directors deals with interim
reports, the half-year financial report or the
Annual Report every quarter and receives
the Group’s internal financial reporting
every month. The Board also examines the
auditors’ reports, audit plans and conclu-
sions of the external auditors concerning
interim reports, the half-year financial report
and the Annual Report. The Board meets
with the external auditors at least quarterly.
The Group’s ambition is to pursue its opera-
tions with reasonable and carefully consid-
ered risks. Its profitability directly depends
on the ability of the organisation to identify,
manage and price risks. The purpose of risk
management is to reduce the probability of
unforeseen losses and/or threats to the
Group’s reputation as well as contribute to
higher profitability and shareholder value.
The Group is exposed to credit risk, coun-
terparty risk, market risk, liquidity risk, oper-
ational risk and business risk. The latter is a
consequence of the Group’s strategy, com-
petitiveness, ability to adapt to customer
expectations, unfavourable business deci-
sions and the environment and market the
Group works in. Business risk is managed in
conjunction with strategic planning. Credit
risk, which is the Group’s most significant
risk, encompasses receivables from private
individuals, companies, institutions and the
public sector. These receivables mainly con-
sist of loans, overdraft facilities and guaran-
tees issued by the Bank.
The Board of Directors has overall
responsibility for governance and monitor-
ing, that is, for ensuring that risk manage-
ment is sufficient and for establishing sys-
tems and regulations for monitoring and
limiting the Bank’s risk exposure. The Audit
Committee assists the Board in handling
these oversight tasks in internal control sys-
tems, risk management and reporting. The
Managing Director oversees and supervises
business operations in accordance with the
Board’s instructions, is responsible for day-
to-day administration and for ensuring that
the members of the Board receive sufficient
information regularly about the Group’s risk
positions and the regulations that affect its
operations.
The Bank works according to an alloca-
tion of responsibility between three differ-
ent lines of defence, in which each part of its
business operations within the first line of
defence bears responsibility for its business
and for managing its risks. Within the sec-
ond line of defence, the Risk Office Corpo-
rate Unit is responsible for independent risk
monitoring (financial risks) and operational
risks (among other things compliance with
regulations). The Risk Office Corporate Unit
is also responsible for the credit approval
process. This includes identifying, measur-
ing, analysing and reporting all of the
Group’s significant risks as well as examining
the loan matters presented to the Credit
Committee of the Executive Team. The Risk
Office is also responsible for data protection
as well as informational and corporate secu-
rity in the Group. The corporate unit also
ensures that risks and risk management live
up to the Bank’s risk appetite and risk toler-
ance and that the management of the Bank
regularly receives reports and analyses on
the current situation. Within the third line of
defence, the Risk Office is audited by the
Internal Auditing Department, which evalu-
ates risk management both in terms of suf-
ficiency and compliance.
In addition to the regulations and instruc-
tions of the Finnish Financial Supervisory
Authority and national legislation, the main
foundations of the Group’s risk management
are numerous directives and regulations at
the European Union level. For more detailed
information on the Group’s risk management,
capital management, evaluation of capital
requirements and capital adequacy informa-
tion, see the Capital and Risk Management
Report for . The report is posted on the
Bank’s website, www.alandsbanken.fi.
At the Bank, the Private Banking and Pre-
mium Banking units in Åland, on the Finnish
mainland and in Sweden bear responsibility
for lending via mandates. Those employees
who work with lending have personal loan
granting limits for the customers that they
are responsible for. In Åland there is also a
corporate lending unit. Responsibility for
Annual Report
lending rests with the management of each
respective unit along with those responsible
for customers according to the above-men-
tioned structure. If decisions regarding
larger loans are needed, there is a Credit
Committee for operations in Finland and
one for operations in Sweden. In addition,
there is a Credit Committee of the Executive
Team for credit matters that cannot be
decided by the country-specific units due to
their size. The largest commitments are
decided by the Bank’s Board of Directors.
During the Bank will transfer to the
mortgage company Borgo AB the mortgage
portfolio that has been built up via partner-
ships. Part of the Bank’s own mortgage
loans will also be transferred to Borgo AB.
As a result of this collaboration, part of the
new mortgage loans that the Bank provides
to its customers will be issued by Borgo AB.
Independent monitoring and assessment of
the Bank’s compliance with regulations is
managed by the Group’s Compliance
department, with a focus on customer pro-
tection, behaviour in the market, combating
money laundering and the financing of ter-
rorism as well as permitting and regulatory
matters. The Compliance department regu-
larly reports its observations to the Bank’s
Executive Team and Board of Directors.
Internal Auditing
The Internal Auditing department is an inde-
pendent department that reports directly to
the Board of Directors.
The purpose of internal auditing work is
to provide the Board and the Executive
Team with objective and independent
assessments of operational activities, opera-
tional business and management processes
and the Group’s risk management, govern-
ance and controls. Internal Auditing reports
regularly to the Board, the Audit Committee
and the Executive Team. The Board adopts a
yearly plan for internal auditing work.
Special decision making procedure
concerning related party transactions
Decisions on loans to related parties who
are entitled to the employee interest rate
are made by the Bank’s Board of Directors.
Insider administration
In their capacities as an investment firm and
a fund management company, respectively,
the Bank of Åland and its subsidiary Ålands-
banken Fondbolag maintain insider registers
in compliance with the Act on Investment
Services or the Act on Mutual Funds.
In its capacity as a listed company, the
Bank only maintains project-specific insider
lists. These project-specific insider lists are
established immediately when information
that the Bank, in compliance with applicable
regulations, deems to be insider information
arises. Persons included on project-specific
insider lists are prohibited from trading in
the Bank’s financial instruments as long as
they are included on such a list.
The Bank does not maintain any perma-
nent insider list, or any list of persons who
participate in the preparation of interim
reports and annual accounts. Persons dis-
charging managerial responsibilities at the
Bank and persons closely associated with
them are obligated to immediately report
their transactions in the Bank’s financial
instruments. The Bank publishes stock
exchange releases on these transactions.
In accordance with the EU’s Market
Abuse Regulation and the insider regula-
tions of the Nasdaq Helsinki Oy (the Helsinki
Stock Exchange), the Bank of Åland Group
has introduced a trading restriction, under
which persons in management positions as
well as all Group employees may not trade in
the Bank’s financial instruments during a
-day period before and including the pub-
lication date of the Bank’s financial reports.
The trading restriction also includes minors
for whom persons in management positions
or Group employees are guardians, as well
as organisations in which people in manage-
ment positions or Group employees have a
controlling influence.
The Bank observes a silent period of
three weeks prior to the publication of an
interim report, half-year financial report or
year-end report.
For employees who participate in pro-
viding investment services, the Bank also
applies Group-wide trading restrictions that
are based on the trading rules established
by such professional organisations as
Finance Finland, the Swedish Securities
Dealers Association and the Swedish Invest-
ment Fund Association.
The Bank’s Legal Affairs department reg-
ularly monitors information reported to the
insider register and insider lists, as well as
information about people in management
positions and their related parties. The
Bank’s Compliance department regularly
monitors employee compliance with the
trade restrictions in force.
Regulations for related
party transactions
The Bank has established internal regula-
tions for identification and decision making
concerning transactions with related parties.
The internal regulations govern such matters
as identification, reporting and oversight of
related party transactions as well as the
decision making process and management
of conflicts of interest.
Auditors
According to its Articles of Association, the
Bank shall have at least three auditors and
the necessary number of deputies for them.
An auditor is appointed yearly at the Annual
General Meeting (AGM) for the period up to
the end of the next Annual General Meeting.
The latest AGM in re-elected Marcus
Tötterman, CGR, and Fredrik Westerholm,
CGR. It also elected Henry Maarala, CGR, as
an auditor. The CGR-affiliated firm of KPMG
Oy Ab was re-elected as deputy auditor.
During , Group companies paid a
total of EUR , (,) including
value-added tax for auditing fees. In addi-
tion, they paid EUR , (,)
including VAT for consulting assignments
performed by KPMG Oy Ab.
Compensation to the Board,
Managing Director and other
Executive Team members
The Bank’s compensation statement, includ-
ing its compensation report for , has
been published in Swedish and Finnish on
the Bank’s website, www.alandsbanken.fi.
Bank of Åland Plc
Board of Directors
Anders Å Karlsson
Business owner
Bachelor of Commerce
Born
Board member since
Nils Lampi
CEO, Wiklöf Holding Ab
Bachelor of Economic Sciences
Born
Chairman of the Board since
Board member since
Christoffer Taxell
Master of Laws
Born
Deputy Chairman of the Board since
Board member since
Åsa Ceder
Business owner
Master of Science in Economics
Actuary
Born
Board member since
Annual Report
Anders Wiklöf
Business owner
Doctor of Economics (honorary), Commercial Counsellor
Born
Board member since
Ulrika Valassi
Business owner
Master of Business Administration
Born
Board member since
Further information in Swedish and Finnish about the members of the Board can be found on the Bank’s website www.alandsbanken.fi
Bank of Åland Plc
Executive Team
Jan-Gunnar Eurell
Chief Financial Officer. Deputy Managing Director
Master of Business Administration, Bachelor of Science (Economics)
Born
Member of the Executive Team since
Tove Erikslund
Chief Administrative Officer
Master of Business Administration
Born
Member of the Executive Team since
Peter Wiklöf
Managing Director. Chief Executive
Master of Laws
Born
Chairman and member of the Executive Team since
Magnus Johansson
Director, Sweden Business Area
Bachelor of Science (Economics)
Born
Member of the Executive Team since
Annual Report
Juhana Rauthovi
Chief Risk & Compliance Officer
Licentiate in Laws, MSc (Econ), MSc (Tech),
Master in International Management
Born
Member of the Executive Team since
Anne-Maria Salonius
Director, Finnish Mainland Business Area
Attorney at Law, Master of Laws
Born
Member of the Executive Team since
Further information in Swedish and Finnish about the members of the Executive Team can be found on the Bank’s website www.alandsbanken.fi
Mikael Mörn
Director, Åland Business Area
Associate of Arts in Commerce
Born
Member of the Executive Team since
Sofie Holmström
Manager, Partnerships Business Area
Master of Science, IT Management
Bachelor of Commerce, Business Administration
Born
Member of the Executive Team since
Bank of Åland Plc
Definitions
Managed assets in the Bank’s own mutual funds plus securities
custodial accounts with discretionary and advisory asset
management agreements.
Alternative performance measures are financial metrics of historical
or future earnings developments, financial position or cash flow that
have not been defined in applicable accounting regulations (IFRSs)
or capital requirements regulations (CRD/CRR).
The Bank of Åland uses alternative performance measures
when they are relevant in order to monitor and describe the Bank’s
financial situation, to facilitate comparability between periods and
to provide additional usable information to the readers of its
financial reports.
These measures are not necessarily comparable to similar
financial metrics that are presented by other companies.
Own funds divided by risk exposure amount.
()
Equity capital excluding proposed dividend, deferred tax and
intangible assets and certain other adjustments according to the
European Union’s Capital Requirements Regulation No. /
(CRR).
()
Common equity Tier (CET) capital divided by risk exposure
amount. Replaces “core Tier capital” concept.
Shareholders’ portion of earnings for the period divided by average
number of shares.
/
Equity capital as a percentage of balance sheet total.
Shareholders’ portion of equity capital divided by number of shares
less own shares on closing day.
()
The present value of expected future credit (loan) losses on finan-
cial assets. ECL is a product of PD, LGD and exposure at default.
/
Total expenses divided by total income.
/
Tier capital divided by balance sheet total plus certain off-balance
sheet items recalculated using conversion factors defined in the
standardised approach.
,
Gross lending to the public in Stage , divided by lending to
the public before provisions for impairment losses.
Net interest income as percentage of average* balance sheet total.
Provisions for impairment losses in Stage as a percentage of gross
lending to the public in Stage .
()
High-quality liquid assets as a percentage of estimated net liquidity
outflow during a -day period.
/
Lending to the public divided by deposits from the public.
Net impairment losses on loan portfolio and other commitments in
lending to the public divided by lending to the public at the begin-
ning of the period.
()
LGD specifies the percentage of loss in an exposure, in the event of
a default.
()
Available stable funding as a percentage of necessary stable funding.
( )
Total of Tier capital and Tier (supplementary) capital.
Dividend per share as a percentage of earnings per share.
()
The probability that a counterparty or a contract will default within
months.
()
Profit for the report period attributable to shareholders divided by
average shareholders’ portion of equity capital.
Assets and off-balance sheet commitments, risk-weighted according
to capital adequacy regulations for credit risk and market risk.
Operational risks are calculated and expressed as risk exposure.
Common equity Tier (CET) capital including certain loss-absorbing
subordinated debentures (“additional Tier capital”).
()
Mainly subordinated debentures that do not meet requirements to
be included as additional Tier capital.
*
Average of end-of-month figures.
Annual Report
January , Decision on dividend distribution for
February , Year-end Report for the period January–December
February , Managers’ Transactions ((Eurell)
February , Managers’ Transactions (Eurell)
February , Notification of an application for the admission of
a security to trading in a regulated market
February , The Annual Report of the Bank of Åland Plc
February , Bank of Åland Plc´s targeted share issues for imple-
mentation of the share savings programme for
employees and the variable compensation system for
members of the Executive Team and key individuals
March , Managers’ Transactions (Salonius)
March , Managers’ Transactions (Eurell)
March , Managers’ Transactions (Rauthovi)
March , Managers’ Transactions (Mörn)
March , Managers’ Transactions (Wiklöf)
March , Notice to convene the Annual General Meeting
March , Managers’ Transactions (Johansson)
March , Managers’ Transactions (Erikslund)
March , Notice of an application for the admission of a security
to trading in a regulated market
March , Decisions at the Annual General Meeting of the
Bank of Åland Plc
April , Bank of Åland Plc: Interim Report for the period
January–March
June , Managers’ Transactions (Johansson)
June , Managers’ Transactions (Johansson)
July , Bank of Åland’s net operating profit substantially
better than last year, and preliminary Q earnings
July , Bank of Åland Plc: Half-Year Financial Report for
the period January–June
July , Bank of Åland Plc: Financial information and Annual
General Meeting,
August , Ålandsbanken Abp announces a consent solicitation
for its up to SEK ,,, Covered Bond due
issued under Ålandsbanken Abp’s EUR
,,, Medium Term Note and Covered
Bond Programme and initiates a procedure in writing
August , Ålandsbanken starts consent solicitation process with
certain noteholders in order to be prepared for con-
templated transfer of its Swedish mortgage loans
to Borgo
August , Ålandsbanken Abp announces an increase in the Call
Price in the consent solicitation process for its Notes
due
August , Niclas Södergård new Managing Director of Bank
of Åland Plc’s subsidiary Crosskey Banking Solutions
Ab Ltd
August , Ålandsbanken Abp announces results of the consent
solicitation process for its Notes due
September , Ålandsbanken Abp announces conditional
exercise of the Call Option for its Notes due
September , Ålandsbanken Abp announces that the condition
precedent for the exercise of the Call Option for its
Notes due has been satisfied and further
announces the redemption date and the payment
date of the Consent Fee
September , Approval of the prospectus by the Finnish Financial
Supervision Authority and notification of an applica-
tion for the admission of a security to trading in a regu-
lated market
October , Bank of Åland Plc: Interim Report for the period
January–September
October , Bank of Åland updates its long-term financial targets
November , Bank of Åland begins acquisitions of its own shares
December , Bank of Åland Plc: Notification of an application for the
admission of a security to trading in a regulated market
December , Correction of capital adequacy disclosures published
during
Stock exchange releases,
The Bank of Åland Plc’s list of stock exchange releases in
Bank of Åland Plc
Address list
Bank of Åland Plc
Mariehamn
Street address: Nygatan
Postal address: PB
AX- Mariehamn
Åland, Finland
Telephone
city@alandsbanken.ax
Finström
Von Knorringsvägen
AX- Finström
Åland, Finland
Telephone
godby@alandsbanken.ax
Kumlinge
– cooperation with Åland Post
Kumlingeby
AX- Kumlingeby
Åland, Finland
Telephone
aland@alandsbanken.ax
Kökar
– cooperation with Åland Post
Karlby
AX- Karlby
Åland, Finland
Telephone
aland@alandsbanken.ax
info@alandsbanken.ax
www.alandsbanken.ax
Helsinki
Bulevardi
FI- Helsinki, Finland
Telephone
bulevarden@alandsbanken.fi
Yrjönkatu A, rd floor
FI- Helsinki, Finland
Telephone
private.banking@alandsbanken.fi
Tampere
Hämeenkatu
FI- Tampere, Finland
Telephone
tammerfors@alandsbanken.fi
Vaasa
Hovioikeudenpuistikko
FI- Vaasa, Finland
Telephone
vasa@alandsbanken.fi
Turku
Hansakortteli
Eerikinkatu
FI- Turku, Finland
Telephone
abo@alandsbanken.fi
Parainen
Kauppiaskatu
FI- Parainen, Finland
Telephone
pargas@alandsbanken.fi
Oulu
Kirkkokatu B, rd floor
FI- Oulu, Finland
Telephone
uleaborg@alandsbanken.fi
info@alandsbanken.fi
www.alandsbanken.fi
ÅLANDSBANKEN
FONDBOLAG AB
Mariehamn
PB
AX- Mariehamn
Åland, Finland
Telephone
fond@alandsbanken.fi
CROSSKEY BANKING
SOLUTIONS AB LTD
Mariehamn
Elverksgatan
AX- Mariehamn
Åland, Finland
Telephone
Helsinki
Unionin katu
FI- Helsinki
Telephone
Turku
Lemminkäisenkatu
FI- Turku, Finland
Telephone
information@crosskey.fi
www.crosskey.fi
Stockholm
Rådmansgatan
SE- Stockholm, Sweden
Telephone
information@crosskey.se
www.crosskey.se
Stockholm
Stureplan
SE- Stockholm, Sweden
Telephone
bankkontoret@alandsbanken.se
Gothenburg
Kungsportsavenyen
SE- Gothenburg, Sweden
Telephone
goteborg@alandsbanken.se
Malmö
Carlsgatan
SE- Malmö, Sweden
Telephone
malmo@alandsbanken.se
info@alandsbanken.se
www.alandsbanken.se