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Other Policies

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Other Policies

 

For the novobanco Group, the legal framework to which its activities are linked are decisive for its action, but also the assumption of a framework of values, principles and good practices, which guide its actions, and establish the standards that govern the way in which the Group conducts business and carries on its activity.

For this reason, throughout the novobanco Group, the existence and application of the Code of Conduct, the Policies for the Prevention of Conflicts of Interest, the Whistleblowing Policy, and the Anti-Bribery and Anti-Bribery Policy stand out. Corruption. Additionally, but no less relevant, the scrutiny and transparency requirements of the Related Party Transactions Policy, the strict application of the Law and Policies for the Prevention of Money Laundering and Terrorist Financing, and the care and transparency towards clients and investors that result from the Policies in the scope of Investor Protection and Market Transparency, and the guarantee of sound and prudent management that result from the Remuneration Policies for Management and Supervisory Bodies and for Employees, are all evidence of the importance that novobanco attaches to dimension of culture of greeting.

Novobanco Group's commitment is centered on the prevention, detection, communication and management of situations that entail risks of conduct or irregular conduct in accordance with the principles of integrity, honesty, diligence, competence, transparency and impartiality.

Policies

novobanco Group's Code of Conduct aims to disseminate the principles that should steer the companies and activities of the novobanco Group, promote an ethical conduct, aligned with novobanco Group's values, and foster respect for and compliance with all applicable laws and regulations and a transparent system of relations with the outside world.

It applies to the members of the management and supervisory bodies and the employees of the novobanco Group companies, as well as to all third parties, including certain subcontractors, that, at the request of the novobanco Group, have endorsed the Code.

Código de Conduta Código de Conduta
Code of Conduct Code of Conduct

Novobanco has a Conflicts of Interest Policy which establishes the set of principles to be observed by Novobanco and the Novobanco Group to prevent, identify and mitigate conflicts of interest in the development of their activities, and provides the specific procedures to be adopted within Novobanco to manage, remedy and log situations of conflict of interest that may arise.

To view the Conflicts of Interest Policy, click here.

Novobanco has a Policy on Related Party Transactions which: determines the procedures to be adopted to ensure that novobanco has at all times a complete and updated list of its Related Parties; establishes the internal rules and responsibilities relating to the identification of transactions proposed or envisaged by Novobanco that fall into the category of Related Party Transactions; and establishes the internal procedures and responsibilities for the review and prior approval of Related-Party Transactions.

To view the Related-Party Transactions Policy, click here .

novobanco remains strongly committed to the growing internalisation of a culture of compliance, namely entailing the reporting of undue or irregular behaviours or behaviours that go against the law, the regulations, good practices, and the Bank's internal policies.

The Whistleblowing Policy regulates the reporting of irregularities by the Bank's employees, as well as by service providers or any third parties, and its objectives are to preserve the Bank's reputation, effectively protect its assets and those of its clients, and prevent or detect in advance any irregularities that may be committed.

Examples of irregularities are any violations committed within novobanco in the fields of accounting, internal accounting controls, auditing, prevention of corruption and banking and financial crime, crimes against the market, or breaches of the Law and regulations that inform the internally defined policies, procedures and controls on the prevention of money laundering and terrorist financing.

The communication of irregularities - which may be anonymous but in any case guarantees at all times that the author is maintained confidential, providing he/she acts in good faith -, is made in writing and submitted through any of the following channels, at the choice of the author:

Addressed to the Compliance Committee of the General and Supervisory Board:

  • Avenida da Liberdade, 195, 14º andar, 1250-142 Lisbon; or
  • Through the form available at NBWeb; or 
  • By e-mail to the address: irregularidades@novobanco.pt.

The General and Supervisory Board is responsible for managing the irregularities communication system, ensuring the confidentiality of communications.

The Anti-Bribery and Anti-Corruption Policy is available at novobanco 's website, in Portuguese and English, at novobanco > Governance  > Compliance > here.

Corruption and bribery represent one of the key challenges in modern society and fighting them requires a joint effort by all sectors of society, including banking, which plays an important role in promoting a culture of public integrity. The fight against practices of corruption and bribery becomes everyone’s responsibility, requiring the development of a new set of preventive duties and methodologies across organisations and public and private entities. The Anti-Bribery and Anti-Corruption Policy approved by the Compliance Committee of the General and Supervisory Board, and by the Executive Board of Directors aims to prevent and mitigate the risk of corruption and bribery, and related practices, reaffirming novobanco's commitment to building up integrity in society.

The Anti-Bribery and Anti-Corruption Policy is available at novobanco 's website, in Portuguese and English, at Novo Banco > Governance  > Compliance > here.

A bank's ability to detect and prevent activities capable of constituting money laundering is directly linked to its knowledge of certain key elements relating to its counterparties and their transactions.

The novobanco Group, through its Compliance Department, sets up the conditions that enable the Bank to detect and prevent, through adequate policies and procedures, the possibility of the Bank and the Group being used as vehicles for money laundering or terrorist financing activities, such risks materialising to a significant extent within the financial system. 

Aware of the challenge that this control and preventive action represents, the novobanco Group maintains the ongoing reassessment of the risks it incurs, by virtue of its business, operations and the geographies where it operates, endeavouring to identify weaknesses and areas of greater exposure, in order to ensure it has in place adequate methods of control and mitigation of money laundering or terrorist financing risks. The ability to prevent and, if possible, detect activities capable of constituting such crimes is directly linked to the Bank's knowledge about its clients, their counterparties and the transactions they engage in, particularly at the following moments:

  • Opening of contract or change of a party in an existing contract, through what is known as KYC (Know Your Customer) - i.e., the identification of contract parties, representatives and beneficial owners must be effectively established;
  • Monitoring contracts' transactions - KYT (Know Your Transactions), spotting unusual situations, either beforehand or by contacting the client after the situation was detected;
  • Analysis of counterparties in investment and divestment transactions, and of transaction and source of funds circuits, under the terms of the Law.

To that end, novobanco Group, using software tools with internationally recognised results to complement the experience of its human capital, has created and developed assessment models that will ensure that greater scrutiny is applied where this proves more necessary.

novobanco Group, complying with its regulatory obligations, develops training exercises in preventing money laundering and terrorist financing for all its employees (commercial and central structures, including senior management). Training can be remote or face-to-face, the latter mainly directed to new employees, and the objective is to equip them with skills that enable them to collaborate with the control functions in mitigating the risks inherent to the execution of their functions.

In 2020, novobanco reinforced training on money laundering and terrorism financing prevention, having provided 23 634 hours of online training (including 955 hours for senior management) and 38 hours of face-to-face training (of which 4 hours for senior management), making a total of 23 672 hours.

Training is seen as a key tool for a correct flagging by the employees of potential situations of money laundering and terrorist financing. On the other hand, it is also useful for compliance with the legal and regulatory duties to which the Bank is subject.

The prevention of money laundering and terrorist financing is one of the foundations of confidence in the financial system and as such will continue to deserve permanent attention by the novobanco Group.

In 2020 the novobanco Group examined 3 362 new contracts, of which 99 were rejected. In addition, 1 068 other contracts were analysed, upon which their ownership was changed. It also analysed 13 186 transactions under existing contracts, of which 893 were reported to the competent authorities.

The Bank's Policies on the Management of the Risk of money laundering and terrorist financing are available at Novo Banco's website, in Portuguese and English, at Novo Banco > Governance  > Compliance > here.

The Markets in Financial Instruments Directive, no. 2014/65/EU, of 15 May 2014 (“MiFID II), and related regulations, which entered into force in January 2018, aim to reinforce investor protection and increase the transparency and quality of the financial market operation and services provided, and cover all persons and entities operating in the markets in financial instruments. In addition, the national legislation on financial intermediation activities (in particular the Securities Code) and life insurance mediation (in particular Law 7/2019 of 16 January) constitutes the basic framework for fair and transparent action by financial market operators and, as such, for the novobanco Group.

To address the international trend towards a tightening of the duties of financial intermediaries - of transparency, legality, completeness of information, diligence and protection of investors -, as well as changes in the rules for marketing financial instruments, novobanco has adopted the best practices in terms of the governance of products and services, ensuring the prior assessment and subsequent monitoring of its offer, with the Compliance Department having extended responsibilities in this area.

In compliance with the legal framework, novobanco has approved its standards and policies, and discloses them in a dedicated area of its website, at www.novobanco.pt > Produtos > Poupança e Investimento > Informação ao Investidor > here

The most salient aspects of these standards and policies are summarised below:

Recording and register of communications. novobanco is obliged to keep recordings and registers of all communications with Customers and potential Customers, with regard to all services, activities and operations carried out.

Customer classification. novobanco classifies its customers for the purpose of transactions in financial instruments into one of three categories: non-professional, professional and eligible counterparty. These classifications have implications on the level of protection allocated to the investor. The lower the knowledge and experience of the customer about markets and financial instruments the greater the level of protection.

Assessment of adequacy. In order to ensure that the financial instruments or investment services it provides suit its Customers’ investment profile, novobanco asks its Customers and potential Customers to complete investor profile questionnaires, in order to obtain a more comprehensive and detailed image of, inter alia, their experience and knowledge of investment, their financial situation, their investment objectives (including capacity to withstand losses) and their risk tolerance. This sharing of information and knowledge permits to assess whether a given investment product or service is adequate to the specific situation of the investing client.

Safeguard of Customer Assets. The Securities Code sets forth that in all acts performed, as well as in accounting and transactions records, the financial intermediary should adopt procedures and implement measures permitting to maintain a clear distinction between its assets and the assets of each of its clients to ensure that the opening of proceedings for the insolvency, recovery of the company or reorganisation of the financial intermediary does not have effects on actions carried out by the financial intermediary on behalf of its clients. The financial intermediary may not utilise, for its own or a third party’s benefit, the clients’ financial instruments or exercise the rights inherent thereto, unless the holders have agreed thereto. novobanco has in place procedures that ensure compliance with these rules.

Offer screening process. novobanco has established procedures that govern the design, approval, distribution and monitoring of the products and services offered. These procedures provide for the screening of new products and services offers, and the monitoring of the existing offer.

Under the terms and for the purposes of Regime Geral das Instituições de Crédito e Sociedades Financeiras (“RGICSF”), and Banco de Portugal Notice no. 3/2020, and for compliance with the disclosure duties related to the remuneration policies provided for therein, the Remuneration Committee has undertaken the annual review and assessment of these remuneration policies to be presented, discussed and reviewed by the General and Supervisory Board and the Executive Board of Directors. A report prepared by the Remuneration Committee regarding the annual review and assessment of the remuneration policy for the Management and Supervisory Bodies is to be submitted for approval at the General Shareholders’ Meeting of novobanco.

Prior to the closing of year end 2020, an assessment and review has been made by several novobanco departments (Human Capital, Legal, Compliance and Risk) with respect to the remuneration policies for the Management and Supervisory Bodies and for Staff and these remuneration policies have been amended accordingly. These amendments are mainly related with:

i. Update of current regulatory framework, for example, Notice 03/2020 of Banco de Portugal among others;

ii. Improvement of the internal governance process regarding the definition and approval of the total annual Variable Remuneration Budget and related matters;

These Policies have been prepared in accordance with the legislation in force on this date, in particular RGICSF, and the EBA Guidelines no. 2015/22 on sound remuneration policies and related legislation and reflect the Bank's objectives, strategy, structure and culture, steered by principles of meritocracy and transparency. Recently, these Policies have also been amended (subject to the approval of the General Shareholders’ Meeting regarding the Management and Supervisory Bodies policy) to reflect the changes in the legislation, including Banco de Portugal Notice no. 3/2020, Regulation (UE) No. 2019/2088, of 27 November 2019, on sustainability‐related disclosures in the financial services sector (SRDR), where gender neutrality guidance have also been introduced following the best practices and recommendations. Their implementation aims to foster adequate professional practices and conducts, namely in the sale of products and services, as well as in the prevention of conflicts of interest with clients.

The Remuneration Committee believes that the Remuneration Policies are appropriate to the current situation of novobanco, being in line with the objectives of the Restructuring Plan and respect the related limitations. Accordingly, the incentives defined for the members of the Executive Board of Directors and for the different categories of employees, as well as the structure of those incentives, are considered to support the long-term objectives of the institution and of the various stakeholders.

The Governance of the Remuneration Policy provides for the involvement of several internal bodies and structures, notably the Remuneration Committee, the Risk Committee of the General and Supervisory Board, and also several Departments of the Bank, including the Risk, Compliance, Audit, Legal, and Human Capital Departments, ensuring full alignment of the established practices with the applicable regulatory requirements and the higher interests of the institution.

i) Limits to remuneration in novobanco

Following the sale process of novobanco, and in the context of the State aid granted, the Portuguese State assumed certain commitments before the European Commission (State Aid no.SA.49275 (2017 / N)) up to the end of the Restructuring Period – currently 31 December 2021 (hereinafter the “Restructuring Period”).

This situation entails the following limitations to the Remuneration of the Management and Supervisory Bodies and the Employees of novobanco:

  • Up to 30 June 2020 the Bank could not pay any employee or Member of a Management or Supervisory Body a total annual salary (includes salary, pension contribution, premium/bonus) above 10 times the average annual salary of the employees of novobanco. In the period comprised between 30 June 2020 and the end of the Restructuring Period, this limit may be exceeded providing all the established viability commitments have been met. In any case, the Bank may attribute deferred bonuses for performance during the Restructuring Period, making the respective payment only at the end of this period;

In view of the fulfilment of the commitments for 2019, the above restriction ceased to be effective in July 2020. However, the Bank opted to maintain this cap, keeping its remuneration policy unchanged.

  • Up to the end of the Restructuring Period, the total remuneration and respective conditions of payment/attribution may be affected by non-compliance with the commitments referred to above. The aforementioned Remuneration Policies are thus subject to changes resulting from the said commitments;

ii) Description of the Remuneration Policy of the Management and Supervisory Bodies

Policy Approval Powers. The approval of the Remuneration Policy of the Management and Supervisory Bodies is the responsibility of the General Shareholders’ Meeting, upon proposal of the Remuneration Committee of the General and Supervisory Board, and this Committee is also responsible for, among others:

  • Decide on the remuneration to be attributed to the members of the Executive Board of Directors, as well as their KPIs, and set and approve, when applicable, the budget for the total variable remuneration of employees, based on, amongst other factors, the operating results in the period;
  • Verify if the existing remuneration policies are updated and if necessary, propose the appropriate changes;
  • Review the mechanisms and systems used to ensure that remuneration systems are consistent with sound and effective risk management and assess the criteria used to define remuneration and ex ante risk adjustment based on actual risk outcomes (Clawback or Malus).

General and Supervisory Board. Only the independent members of the General and Supervisory Board shall receive remuneration from novobanco, such remuneration being fixed only and paid 12 times per year. If applicable, the members of the General and Supervisory Board shall also be subject to the limitations referred to in i) above.

Executive Board of Directors. The remuneration of the Executive Board of Directors consists of a fixed component and a variable component. The fixed remuneration is established according to the complexity, level of responsibility and skills required for the function, and is paid 14 times per year. The variable component of the remuneration is awarded on a discretionary basis, according to individual and collective performance assessment that takes into account quantitative and qualitative criteria. These criteria are set by the Remuneration Committee and informed in due time to the members of the Executive Board of Directors..

The following criteria are also considered in the process of attribution of variable remuneration:

  • It may only be attributed if it does not jeopardise the Bank's ability to maintain a solid capital base, if the Bank has achieved a positive operational performance, and if its attribution is consistent with sound and effective risk management practices;
  • It is subject to a maximum cap of 100% of the annual fixed remuneration;
  • It is phased over a multi-year framework, being fully deferred proportionally over a minimum period of three years. However, during the Restructuring Period, the amounts attributed relative to 2019 and 2020 are 100% deferred and will only become a vested right and, consequently, will only be paid, at the end of that period, under the terms defined in the respective Policy.
  • 50% of the amounts attributed shall take the form of “Remuneration Units”, whose terms and conditions regarding the award, vesting and payment are defined in the Remuneration Units Regulation. The value of each “Remuneration Unit” is determined by the Remuneration Committee, according to financial indicators of the Bank, prior to any settlement of any deferred amount.

Besides any commitment agreed in the hiring process under the form of a sign-on bonus, no other Variable Remuneration shall be guaranteed in any way.

All amounts paid or deferred, regardless of whether they constitute vested rights, are subject to risk-based adjustments, Clawback and/or Malus, including those that are deferred as a result of the application of the limits established in point i) (Limitations on remuneration at novobanco).

In what concerns other benefits, such as Health Insurance or Mobile Phone, their attribution is aligned to the internal policies for the employees of the Bank.


iii)   Identified staff

Policy Approval Powers. The approval of the Remuneration Policy for Staff Members is the responsibility of the Executive Board of Directors, upon a proposal of the Remuneration Committee.

Selection of employees. The Bank's Staff Members Remuneration Policy includes specific chapters applicable to employees who have or may have a significant impact on novobanco 's risk profile and that are classified as Identified Staff in accordance with the criteria set out in the Policy.

The list of Identified Staff is shared every year with the Bank of Portugal, under Bank of Portugal Notice 3/2020.

Components of Remuneration The attribution of a Fixed Remuneration shall reflect the skills, experience and responsibility inherent to the function performed, and does not depend on performance. The attribution of Variable Remuneration to the Identified Staff, as well as its annual amount, depends on the discretionary decision of the Remuneration Committee. When a Variable Remuneration exists, it is calculated based on individual and collective performance, taking into account the following principles:

  • Performance must be assessed according to quantitative and qualitative criteria and through financial and non-financial variables;
  • The period of assessment of performance and attribution of variable remuneration must be multi-annual - which implies that a substantial part of the amount attributed be deferred so as to take into account economic cycles and the management of risk -, and promote the retention of Identified Employees;
  • The existence of risk adjustment mechanisms (Malus and Clawback), as described in the Remuneration Policy;
  • The amount attributed is limited to 100% of the annual Fixed Remuneration;
  • 50% of the amounts attributed shall take the form of “Remuneration Units”, whose terms and conditions regarding the award, vesting and payment are defined in the Remuneration Units Regulation. The value of each “Remuneration Unit” is determined by the Remuneration Committee, according to financial indicators of the Bank, prior to any settlement of any deferred amount; 
  • Guaranteed variable remuneration can only be established in the first year after hiring, under the form of a Sign-on bonus;
  • Limits to Remuneration set in i) above, also apply to these employees.

iv)   Disclosure of Remuneration

Further disclosure available on 2020 Annual Report - chapter 6.6 Remuneration of the members of the Corporate Bodies and Identified Staff.

novobanco approved in March 2021 a Policy for Selection and Assessment of the Management and Supervisory Bodies and Key Function Holders (the “Policy”), thus ensuring compliance with the regulations in force and the implementation of the required governance standards for Significant Financial Institutions. The Policy was approved by the Nomination Committee, the Executive Board of Directors, the General and Supervisory Board, and the General Meeting.

The Policy aims to ensure that the members of the Management and Supervisory Bodies and Key Function Holders (essentially the holders of the Risk, Audit, and Compliance Functions and the general managers of branches) meet all the fit and proper criteria to perform their functions, both at the time of appointment and throughout their mandates. This suitability to the function basically refers to the capacity to permanently ensure a sound and prudent management of the institution, which is assessed in accordance with the following requirements: i) Experience; ii) Repute; iii) Independence; iv) Availability; and v) Collective Suitability.

Recently, this Policy has been amended (subject to the approval of the General Shareholders’ Meeting) and includes the heads of Treasury and Marketing as Key Function Holders.

novobanco approved in 2018 and amended in 2020 its Policy for the Selection and Evaluation of Novo Banco' Statutory Auditor and for the contracting of non-prohibited non-audit services (the "Policy"), in compliance of the applicable regulations. This Policy was approved by the Financial Affairs (Audit) Committee of the General and Supervisory Board and by novobanco’s General Shareholders’ Meeting.

The Policy applies to the selection and assessment of the Statutory Auditor and aims to ensure that the Statutory Auditor fulfils the necessary requirements of suitability (“fit and proper”), professional experience, independence and availability, taking into account the nature, dimension and complexity of novobanco’ activity and the responsibilities inherent to the specific tasks to be performed. To achieve its purpose, the Policy defines the assessment criteria, the internal responsibilities and the procedures that must be followed.

In addition, the Policy defines the criteria and procedures to apply in case non-audit services are contracted with the Statutory Auditor and defines the ones which are allowed and the ones which are prohibited.

Documents

Selection and Evaluation Policy
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Non-discrimination and Equal Opportunities Policy
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Remuneration Policy for Staff Members
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Remuneration Policy for Management and Supervisory Bodies
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Documentos

Política de Seleção e Avaliação de Órgãos Sociais
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Política de Não Discriminação e Igualdade de Género
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Política de Remuneração Colaboradores do novobanco

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Política de Remuneração para os Órgãos de Administração e de Supervisão
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Princípios de Relacionamento com Fornecedores

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