Compliance at LBBW Group

Anna Issel
Landesbank Baden-Württemberg
Am Hauptbahnhof 2
70173 Stuttgart (Germany)
Phone +49 711 127 0

The principles of independence and objectivity are the basis for an effective compliance function. Therefore, they must be applied by all Group Compliance employees.

Independence from Group Compliance

Group Compliance’s independence is a key pillar of corporate governance for a bank. The main element of independence is the organizational independence of Group Compliance.

The independence of Group Compliance is ensured by the fact that Group Compliance reports directly to the Board of Directors and has dotted-line reporting to the Group Risk Board, which is not responsible for the operating business of LBBW.

Group Compliance is entitled to present issues to the Board of Directors at any time via the Division Head. Furthermore, Group Compliance can contact the Supervisory Board directly, if needed, in agreement with sections 23 and 32 of the BCBS (Basel Committee for Banking Supervision) paper “Compliance and the Compliance Function in Banks” and MaComp BT 1.3.1.2.

Objectivity of Group Compliance

The Division Head and employees of Group Compliance cannot perform any professional activities that might compromise their objectivity in the areas they monitor. Therefore, professional consulting services in the context of the activities assigned to them and in connection with the close cooperation that is needed with the units to be monitored are expressly prohibited.

Compensation for the Division Head of Group Compliance and the employees of Group Compliance cannot include incentives that would interfere with arbitrary performance of the activities for the benefit of our stakeholders. Professional consulting services in the context of the activities assigned to them and with the close cooperation that is needed with the front office units monitored are therefore expressly prohibited.

Guiding principles of Group Compliance

When performing their compliance duties, the employees of Group Compliance must always follow these key guidelines:

1. Group Compliance is primarily a control function, but also provides advisory services where possible. Therefore, Group Compliance oversees not only compliance and monitoring of certain legal and regulatory provisions; it also advises and trains the market units, for instance on new regulatory requirements. Group Compliance regularly maintains close and proactive contact (especially) with the front offices.
2. Group Compliance is proactive and not reactive. Group Compliance encourages the divisions to involve the Compliance Management Team and the Key Account Managers as soon as possible when changes are planned. Otherwise, Group Compliance cannot provide compliance advice efficiently and effectively when changes are planned to the business model or the organizational structure.
3. Group Compliance always cooperates with the responsible regulators. Group Compliance maintains constructive partnerships with the responsible regulators on the basis of proactive, transparent and reliable action, as well as a quick response rate. Thus, the interaction between Group Compliance and the regulators is limited only by applicable laws (especially Data Protection Law (Datenschutzgesetz)).
4. Wherever indicated, Group Compliance adheres to the market standard as far as possible, taking LBBW’s specific risk profile and business model into account. For this purpose, Group Compliance communicates openly with other banks in order to keep track of market developments. If it is found that LBBW deviates from the market standards, the reasons are analyzed and – if needed and useful – optimizations are made to reinforce the Compliance Management System (CMS) or Data Protection Management System.
5. Group Compliance uses the highest level of fairness and transparency when handling conflicts. Group Compliance is honest and cooperative with the front offices. Group Compliance will attempt to resolve any differences of opinion in good faith. If this fails, Group Compliance will escalate the matter as soon as possible in order to achieve an appropriate (risk) decision if Group Compliance does not have adequate decision-making authority. Open, cooperative efforts with the front offices helps to identify possible conflicts as soon as possible and to always – where possible – find a solution that is acceptable for both sides.

The compliance standards and the implementation of the Compliance Management System (CMS) are key elements drawn up on the basis of legal and regulatory requirements. Banks are required to maintain a suitable and effective Group-wide CMS for existing risks (e.g. insider trading, market manipulation, money laundering, terrorism financing). The aim of this CMS is to prevent or considerably impede breaches of the law across the Group in order to avoid losses and liability risks for the company, its bodies and its employees.

The basic elements of an effective CMS were based on key standards in Germany and abroad. These standards chiefly comprise the German Audit Standard IDW PS 980, the OECD Good Practice Guidance on Internal Controls, Ethics, and Compliance, Chapter 8 of the United States Sentencing Guidelines, the guidance from the UK Ministry of Justice on the UK Bribery Act and the Austrian ONR 192050 on compliance management systems.

This international approach is taken firstly because LBBW operates internationally and thus cannot restrict itself to German standards only. Secondly, it reflects international expertise and experience and thus far broader practical knowledge. LBBW aims to ensure that all material Group companies implement a corresponding CMS.

A suitable, effective CMS must include certain core aspects. In accordance with the Audit Standard IDW PS 980, the LBBW Group’s CMS comprises the following elements:

• Compliance culture (“tone from the top“): The compliance culture provides the foundation for the appropriateness and effectiveness of the CMS. It is largely based on the general beliefs and conduct of management and the role of the supervisory body. The better they can demonstrate their responsibility at the company and act as a role model in how they conduct themselves and communicate, the more they can influence the actions of their employees in the long run.
• Compliance goals: The aim is to prevent or considerably impede both internal and external breaches of the law across the Group in order to avoid losses and liability risks for the company, its bodies and its employees. This should also be based on socially recognized behaviors and ethical aspects of the actions of LBBW and its employees.
• Compliance risks: Managing risks requires understanding these risks. As an instrument to manage risks, an effective CMS thus requires analyzing the risk situation on a regular basis.
• Compliance program: On the basis of compliance risk assessments, principles and measures are adopted with a view to limiting compliance risks and avoiding compliance violations.
• Compliance organization: The creation of specialist units and allocation of clear responsibilities are integral to an orderly organizational structure. An effective operational structure requires specific guidelines on abstract requirements and prohibitions in company directives and instructions. This guarantees compliance with the rules in everyday business conduct.
• Compliance training & communication: Employees must be informed of the expectations to which they are held in a way that allows them to fulfill these expectations in everyday business. Suitable training sessions and institutional opportunities for dialogue are essential to a successful CMS
• Compliance monitoring & improvement: As part of preventative measures, it is crucial that regular and ad Monitoring & improvement are set up and that Group Internal Audit’s audit plan features regular compliance checks. Necessary steps resulting from compliance matters must be taken. The reasons for these steps may include information from employees or the results of controls. Common examples of these steps, e.g. at staff level, include training and disciplinary measures.

The Code of Conduct is the code of conduct and ethics ("the Code") for the Landesbank Baden-Württemberg ("LBBW") and its subsidiaries. First and foremost, the Code of Conduct serves as a supportive guide and, as a written collection of self-imposed and regulatory prescribed behavioral instructions, takes on a role that can be described as the "basic law" of the company. It describes how LBBW puts integrity into practice on a daily basis. Honest and ethically exemplary conduct must be a matter of course for everyone.

Do you have questions about LBBW's Code of Conduct

Please get in touch with us:

Landesbank Baden-Württemberg
Am Hauptbahnhof 2
70173 Stuttgart

Phone +49 711 127 0
Fax +49 711 127 43544
kontakt@lbbw.de

Whistleblowing System

Employees, customers and business partners of LBBW and BW Bank can confidentially submit information on unlawful conduct, criminal offences (e.g. fraud, theft, embezzlement, money laundering, insider trading, market abuse) and violations of the Supply Chain Act (e.g. information on human rights and environmental risks and breaches of duty) to the Ombudsman.

LBBW's Ombudsman

The ombudsman accepts this information about suspicious facts, examines them and advises the whistleblower on how to proceed free of charge. He guarantees discretion and anonymity and only passes on information and the identity of the whistleblower to LBBW's compliance department (OE 21 Group Compliance) with the informant's express agreement.

Ombudsman contact details

Lawyer Arndt Brillinger
Schubertstr. 2
76185 Karlsruhe
Germany

Phone +49 721 91 54 65 65
(available 8am to 5pm)
lbbw@brillinger-rechtsanwaelte.eu

Know your customer (KYC)

Here you can find the KYC Documents of the LBBW Group.

Anti Money Laundering. USA Patriot Act

As an international bank, LBBW supports the US anti-money laundering policy.