Conflicts of interest policy

Policy for handling conflicts of interest

DNB Bank ASA, acting through DNB Carnegie, offers trading in financial instruments, including trading in shares, bonds/commercial paper, exchange traded products, equity, interest rate, foreign exchange and commodity derivatives, as well as spot foreign exchange. We also provide advisory services within equity and debt capital (investment banking services) and prepare investment research. We offer registrar services for investors and issuers and also provide custody services in respect of foreign securities.

As an investment firm under the supervision of the Norwegian Financial Supervisory Authority, DNB Carnegie endeavours to meet the requirements of good business practice, which involves protecting the interests of customers and the market’s integrity in the best manner.

As part of protecting the interests of customers DNB Carnegie has identified potential conflicts of interest and implemented measures to counter them. This document provides a summary of the most important areas with which you should be familiar as a customer. Examples are given below of potential conflicts of interest and measures to avoid these rising. We also briefly describe how DNB Carnegie handles any conflicts of interest that do arise.

Examples of conflicts of interest

Examples that may arise in relation to the above-mentioned services:

• DNB Carnegie, other units in DNB Bank ASA or a customer may obtain a financial gain or avoid a loss, at the expense of another customer.
• DNB Carnegie or other units in DNB Bank ASA may have an interest in the outcome of an assignment that differs from the customer’s interests.
• DNB Carnegie or an employee may carry on a business that competes with a customer’s business.
• DNB Carnegie may trade for the bank’s own account at the same time as a customer’s order is being executed in the market.
• Employees in DNB Carnegie may trade financial instruments for their own account, based on knowledge of an assignment or information about a customer’s situation.
• DNB Carnegie’s employees may have incentives that mean that certain customers are favoured at the expense of other customers.
• DNB Carnegie may receive remuneration from third parties that affects the treatment of customers.
• Conflicts of interest relating to research reports, such as for example the preparation of a positive report for an issuer for which we have an assignment.
• DNB Carnegie may support an issuer in raising capital at the same time as DNB Bank ASA is a lender to the same customer.

Measures to counter conflict of interest:

To prevent conflicts of interest arising a number of general measurements have been implemented.

Organisation

Investment firm activities in DNB Bank ASA are delivered by DNB Carnegie, organisationally separate from the bank business.

The organisation of DNB Carnegie has been established to ensure a good division of responsibility. Employees who give advice on transactions in the primary market are organised in units that have separate managers and are physically separated from units working on research reports or handling transactions in the secondary market. Employees handling customer orders are separated from employees who handle the bank’s own market risk.

Information barriers

Employees in DNB Carnegie have a duty of confidentiality with regard to all matters that relate to customers. Confidential information is only available to employees who have a need for it as part of their job. Routines have been established to maintain confidentiality and protect inside information:

• Guidelines as to which information can be shared between employees in the bank business and employees in DNB Carnegie.
• Handling of information in DNB Carnegie.
• Handling of confidential information and inside information

All employees in DNB Carnegie are familiar with these routines which form part of internal training programmes. Units in DNB Carnegie that regularly handle inside information receive specialised training on this.

Employees in DNB Carnegie should be able to carry out their work even if other units are holding confidential information. Employees in other parts of DNB Bank ASA do not normally have access to DNB Carnegie's premises. Also within DNB Carnegie there are access restrictions between the investment banking division and the sales divisions.

In addition to physical information barriers, the IT systems in DNB Carnegie are protected by access controls. The various organisational units have separate areas for storage of documents etc. Access to PCs and trading systems are password protected. Access must be approved by the immediate manager and is controlled regularly.

Other measures to counter conflicts of interest

Employees who become aware of matters that are in conflict with applicable regulations, constitute a material breach of internal rules or might otherwise attract significant criticism are to inform their immediate manager or the bank’s internal auditor.

Participation in commercial activities is regulated. As a general rule, employees must not hold board appointments in external companies. Any exceptions must, after a thorough evaluation, be approved by the head of DNB Carnegie. It is not permitted to hold board appointments in companies that have a credit engagement with DNB Bank ASA or in companies that have listed financial instruments.

Group anti-corruption guidelines have been established. Among other things, the guidelines set out rules on gifts and entertainment, and gifts with a value that exceeds a specified threshold must be registered in the bank’s gifts register.

Assignments to raise capital, provide advice on capital structure etc. must be approved by a separate engagement committee. As part of the approval process conflicts of interest are considered, including conflicts of interest related to a credit engagement in DNB Bank ASA. If there are damaging conflicts of interest DNB Carnegie may have to decline a specific assignment.

Employees in DNB Carnegie who prepare research reports are not permitted to own securities in companies that they cover themselves. Research reports must be based on independent evaluations. Research analysts must not allow themselves to be influenced by issuers or other units in DNB Carnegies. Routines have been established to restrict the contribution of analysts to confidential assignments. Analysts who obtain access to inside information are prohibited from publishing reports as long as the ongoing assignment is not publicly known.

All else being equal, customer orders will always be given priority ahead of orders from units in the DNB group.

Employees in DNB Carnegie do not receive salary connected to an individual assignment or distribution of individual products. The customer’s needs must determine what transactions are proposed, and any advice must be suited to the individual customer.

Employees who trade financial instruments for their own account must report the trades to their employer.

Securities cannot be sold before the expiry of a minimum holding period. Employees in certain functions must obtain prior approval before trading for their own account. Controls are undertaken to ensure that the rules are observed.

Handling of potential damaging conflicts:

DNB Carnegie seeks to manage inherent conflicts of interest so that the interests of the customer are protected in a secure manner. If a potentially damaging conflict of interest is identified, measures will be taken to protect the customer’s interests

One possible measure may be to withdraw from an assignment. An alternative may be to notify the relevant parties of the nature of the conflict of interest, so that the customer is given an opportunity to make an informed decision.

Information is given in accordance with market practice about any assignment that DNB Carnegie has had for the relevant issuer in the research reports that are published.