Sparebanken Møre

Legal Proceedings Report • Nov 29, 2024

Order for correction from the Norwegian Financial Supervisory Authority (FSA), Sparebanken Møre decides not to appeal

Order for correction from the Norwegian Financial Supervisory Authority (FSA), Sparebanken Møre decides not to appeal

Sparebanken Møre refers to the stock exchange announcement published on 5 July 2024 regarding notice of order from the Norwegian FSA, and the stock exchange announcement published on 25 October 2024, i.a. regarding the order for correction from the FSA.

It is stated in the abovementioned order that the FSA believes that corrections should be made in the following way: 1. The Bank must recalculate the ownership fraction as it would have been at the end of the years 2014 to 2023. In the calculation, the structural fund and unpaid gifts that have not been decided must be included in the primary capital. 2. The primary capital's share of the surplus available for use in each year is calculated using the ownership fraction as calculated in item 1. 3. The sum of the difference between the actual allocation of surplus to the primary capital and the calculated allocation pursuant to item 2 for the period 2014 to 2023 shall be added to the primary capital before the result for 2024 is allocated in the ordinary manner.

The bank's calculations show that the effect of the order will involve a transfer from this year's profit to the primary capital of NOK 132.4 million. Based on the RWA and the bank's equity at the end of 2023, the CET1 capital will increase by approximately 0.35 p.p. and the ownership fraction will be reduced by almost 1.0 p.p.

After a thorough assessment, the Board of Directors in Sparebanken Møre has decided not to appeal the decision from the Norwegian FSA. Among other things, the reason for not appealing is to avoid uncertainty related to the valuation of the bank’s equity certificates during a long appeal process, as well as assessment related to likely outcome of an appeal.

Sparebanken Møre, however, maintains its view that the decision is unreasonable and incorrect. The bank believes that it has followed established practice in the industry. The auditor has approved the practice both at Sparebanken Møre and at other banks. Furthermore, the regulations regarding the length of time the bank has to distribute gifts approved by the General Meeting are unclear, which is emphasized by the fact that in the Norwegian Savings Bank Commission recommendation (NOU 2024:22) dated 19 November 2024, new rules were proposed on this point clarifying the regulations.

From 2010, Sparebanken Møre has sought to practice equal division of the capital classes and keep the ownership fraction unchanged. The change in the ownership fraction as a result of the order for correction is a one-off event. Sparebanken Møre will maintain its dividend policy in the future, including the bank's non-dilutive dividend practice.

From 2010, Sparebanken Møre has sought to practice profit allocation ensuring that equity owners are guaranteed equal treatment and keep the ownership fraction unchanged. The change in the ownership fraction as a result of the order for correction is a one-off event. Sparebanken Møre will maintain its dividend policy in the future, including the bank's non-dilutive dividend practice.

Contact persons:

• Trond Lars Nydal, CEO, mobile +47 951 79 977

• John Arne Winsnes, CFO, mobile +47 462 80 999

• Runar Sandanger, Senior Economist, mobile +47 950 43 660