Responsible corporate governance
To be able to continually and successfully apply our focused business model in cyclical and even slumping markets, it is crucial that we proactively identify all the risks that we are exposed to. We use different tools in Controlling, Risk Management and Compliance to ensure that all legal, regulatory and statutory requirements are being met.
In this context, Group Compliance is responsible for the prevention of money laundering, financing of terrorism and other criminal acts, as well as for implementing the requirements for investment services enterprises, as set out in the German Securities Trading Act and the Minimum Requirements for Risk Management in Banks (MaRisk). Moreover, Group Compliance ensures compliance with legal requirements for data protection.
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Fostering fair and transparent competition
Fostering fair and transparent competition is a cornerstone of our business philosophy, which is underpinned by clearly defined and strict compliance guidelines:
- Rules to promote fair and transparent competition (Conflict of Interest Policy) – this policy defines the fields of conflicts in our business, the roles of each department and their responsibilities to adequately protect confidential information. At the same time, it defines how to mitigate conflicts, communicate potential conflicts to clients, and document and track these processes internally.
- Rules to fight corruption (Anti-Corruption and Bribery Policy) – this Group-wide policy focuses on business partner hospitality, dealings with advisers, and specifications on awarding licences or contracts. Every member of staff receives training on warning signals and how to deal with them as part of the annual compliance programme. So far, no cases of corruption have been reported within DVB.
- Guidelines related to accepting gifts and benefits (Gifts and Gratuities Policy) – this policy includes clear-cut limits, warning signals, escalation processes and documentation obligations. Amongst others, our employees are prohibited from accepting cash.
- Procedure for reporting any irregularities (Whistleblowing Policy) – our Board of Managing Directors does not accept irregularities, and we have established a whistleblowing process that allows employees to report concerns about possible irregularities, using various channels.
Our Code of Conduct secures and deepens employee awareness, and understanding, of compliant and ethically faultless conduct. In the first quarter of 2017, it was revised to reflect sustainability issues to an even deeper degree. We are proud of our experienced and effective staff, who maintain exemplary standards of conduct towards clients, business partners, investors and colleagues.
Compliance and legal training
Our employees receive regular training on the following issues:
- Code of Conduct;
- Treating colleagues fairly;
- Handling conflicts of interest;
- Prevention of money laundering and fraud;
- Operational Risk Management;
- Data protection and data security.
Some of these trainings are required by law, others by our Code of Conduct. They are one way of raising employee awareness for issues that are important in our day-to-day operations and dealing with clients. They also alert all staff to their legal duties and explain the expectations held by the Board of Managing Directors. This is how we ensure a high level of service for our clients.
By the end of 2016, the training ratio amongst employees for whom participation was compulsory was 100%.
The Bank also offers voluntary legal and documentation training for its staff. These training sessions are aimed at fostering the Bank’s in-house expertise and cover general topics relevant to all Transport Finance divisions as well as subjects specific to shipping, aviation and land transport.
These training measures are developed by
- Group Legal in consultation with experts across the Transport Finance businesses,
- approved law firms, or
- the Loan Market Association, with whom DVB has a membership.
The training materials are available as videos, webinars and presentations via the intranet. New material is added frequently.
An important aspect of our compliance work is the emphasis on the fair conduct of senior managers in the Bank towards clients, as required by regulators. Specifically, regulators are looking for managers to ensure that any risk of treating clients unfairly has been identified, mitigated, and necessary enhancements implemented. This is driven by experience during the recent financial crisis where the clients of financial institutions may not have been sold adequate products, or may not have received information or disclosures. The expectation is that senior managers have full oversight of all activities of the respective units – not just the business unit that they may be directly responsible for.
DVB has recognised the importance of ensuring that senior managers accept this responsibility, and are accountable for their actions. In addition to existing policies and procedures – notably, our Code of Conduct – DVB has initiated a specific training programme for senior executives, established customised management training and information packages, and commenced assessing its business to identify any areas of concern. The Bank will be addressing these proactively. During 2016, the programme was implemented worldwide. In addition, we engage in a regular dialogue with other companies to share our experiences. This exchange has proven very valuable for our operational practice.
As a “Societas Europaea” registered in Germany, and as a credit institution, DVB is subject to various European and German rules and regulations. In addition, given our international scope of business and global locations, numerous local legislations apply. This legal framework is in constant flux.
DVB does not exert direct political influence. We are, however, an active member of various banking associations, holding committee representation in Germany at the National Association of German Cooperative Banks (BVR) and the Association of German Pfandbrief Banks (vdp), amongst others.
Banking associations regularly invite their members to provide input for legislative processes, and where the legislative process in question affects us, we will respond. Key topics during 2016 included banking law and banking supervision law, new provisions on data protection, and the discussions of the Basel Committee.
As donations to organisations with a political background are specifically excluded from the supportive funding we provide within our corporate citizenship concept, we made no political contributions in 2016.
Trusted and long-term cooperation with our clients
As at 31 December 2016, DVB's global client base comprised 607 clients or client groups (previous year: 608). Most of our clients are domiciled in Europe (50.4%), followed by North America (18.4%) and Asia (18.4%).
Our clients and client groups are distributed across our business divisions as follows:
- Shipping Finance accounts for 49.2% of clients (previous year: 47.8%);
- Aviation Finance accounts for 25.2% of clients (previous year: 24.5%);
- Offshore Finance accounts for 9.7% of clients (previous year: 8.1%);
- Land Transport Finance accounts for 7.1% of clients (previous year: 7.2%);
- ITF Suisse accounts for 4.8% of clients (previous year: 7.1%);
- Investment Management accounts for 2.0% of clients (previous year: 2.0%);
- portfolios no longer in line with the Bank's strategy (which are being phased out, or wound down) account for 2.0% of clients (previous year: 3.3%).
DVB pursues a cycle-neutral business model, providing financing and advice, and has remained a reliable partner to its clients – even in a market environment that continues to be challenging. This strengthens trust and deepens the intensity of our client relationships for the long term.
Accordingly, we support our Transport Finance and Investment Management clients with their financing projects on a long-term basis: as at 31 December 2016, 54.6% of our clients had been using our range of services for more than five years (previous year: 52.6%). Of our client relationships in the Transport Finance and Investment Management business divisions, we have maintained
- 8.1% for less than one year,
- 20.6% for between one to three years,
- 16.7% for between three to five years,
- 33.9% for between five to ten years,
- 14.0% for between ten to 15 years, and
- 6.7% for 15 years and longer.
Whilst the average length of client relationships differs between the business divisions, it is worth noting that Investment Management only commenced operations in 2001. Offshore Finance has only existed as an independent division since the beginning of 2013; the division covers the offshore financing activities previously handled by Shipping Finance.
Length of client relationship by business division
Since 2016, we have been awarded the following eleven accolades:
- Best client-oriented website in the German banking sector – Gold (DIE WELT, January 2016)
- Export Credit Agency – West; Deal of the Year 2015 (Marine Money Shipping, June 2016)
- Bank Debt – West; Deal of the Year 2015 (Marine Money Shipping, June 2016)
- Europe Deal of the Year (Airfinance Journal, May 2016)
- Used Aircraft Deal of the Year (Airfinance Journal, May 2016)
- Aircraft Finance Portfolio Acquisition (Global Transport Finance, January 2017)
- Aircraft Securitisation Deal of the Year – US (Global Transport Finance, January 2017)
- Rail Capital Markets Deal of the Year – Americas (Global Transport Finance, January 2017)
- Rail Finance Deal of the Year – Americas (Global Transport Finance, January 2017)
- Rail Finance Innovator of the Year (Global Transport Finance, January 2017)
- Best International Transport Finance Provider – Germany (Transport News, February 2017)