Avanza operates in an industry built on trust. Our customers expect a high level of availability and security on our digital platform. Clearly defined risk ownership and a sustainable risk culture are essential to our business.
Rapid technological developments and digital threats make IT and information security crucial to us. As a digital platform for savings and investments, we have to have a comprehensive IT security strategy. We continuously invest resources to develop our competencies and capabilities. We cooperate with other banks through the Swedish Bankers’ Association. We regularly test, challenge and analyse our technical and organisational safeguards, and our employees receive training in risk management and security.
Avanza is a platform for savings and investments, where we offer our own, and distribute others’, savings and mortgage products to customers. The majority of Avanza’s suppliers provide financial products and services. These suppliers are overseen by the Swedish Financial Supervisory Authority or similar foreign authorities, and/or are subject to the rules of various stock exchanges.
We do not offer consumer credit or engage in proprietary trading. Avanza is largely self-financed through shareholders’ equity and customer deposits. Deposits are spread across a very large number of households and the majority of deposits are covered by the government deposit guarantee. Only a small share of deposits is used for lending. Margin lending requires collateral in listed securities with good liquidity. The mortgages are offered to private banking customers with a loan to value (LTV) ratio not exceeding 50 per cent and at least SEK 3 million in savings.
Avanza has a surplus of liquidity due to significantly larger deposits from, than lending to the public. The surplus liquidity is mainly invested in covered bonds, Riksbank certificates and as deposits with the Riksbank and systemically important Nordic banks, plus to a lesser extent in interest-bearing securities issued by the Swedish government, municipalities and county councils. Avanza’s surplus liquidity is normally invested at a maximum average fixed interest rate duration of three months. Interest rate risk is also limited as Avanza intends, and normally has the capacity, to hold its bonds to maturity. The risk of having to sell bond holdings in advance at a modified market value is limited, which reduces the risk that negative price movements will lead to realised losses.
On the asset side, Avanza has exposure to municipalities in the form of the municipal bonds, which are included in the liquidity portfolio. The exposure through municipal bonds is limited in terms of both amount (max 20%) and rating (AAA/A1).
Sustainability and climate-related risks in Avanza’s credit portfolio are also considered very low – even if the underlying collateral for Avanza’s Superbolån mortgages happens to be in geographically vulnerable areas, which could affect the value of the collateral. If the underlying collateral decreases significantly in value, it is captured in the annual revaluation.
In Avanza’s margin lending, environmental and climate-related risks could have an impact on an issuer’s market value and share price. This would require the loan to value ratio to be reassessed and if necessary lowered for the individual issuer.
In the corporate finance business, environmental and climate-related risks are addressed by the bank’s investment committee when deciding whether to accept an advisory assignment or not.
Avanza Fonder has principles for sustainability work that are applied to the underlying funds.
Our corporate culture, modern platform and technology choices, coupled with the way we work and our values, are important to remain attractive as an employer. Avanza has a recruiting policy, diversity and gender equality policy, and occupational health and safety policy, which ensure that these issues and succession planning are addressed and that
we remain attractive as an employer.
Sustainability is incorporated in Avanza Fonder’s funds of funds based on the opt-out principle. The funds of funds exclude funds which invest in companies that violate international norms and conventions with respect to the environment, human rights, working conditions and business ethics. Beyond that, Avanza’s operations do not entail a material risk of violating human rights, whether directly or indirectly.
We work actively to prevent and combat money laundering and terrorist financing. Avanza works with Swedish customers, and to be a customer also requires an account in another Swedish bank.
Avanza’s operations are subject to the supervision of the SFSA, which requires strict application of various financial and ethical rules and guidelines based on European and Swedish law, the SFSA’s regulations and guidance from industry associations.
Avanza places the highest priority on lawful and ethical conduct and has a number of internal rules, routines and processes to ensure that Avanza is at all times in compliance with the regulations that apply to its licensed operations. All employees of the Avanza Group have a clearly stated responsibility to follow these rules and routines. A key element
of the compliance work is to ensure that Avanza embraces good internal governance, risk management and control, and has a sound risk culture.
An important part of our risk management is to evaluate and challenge our business model when it comes to earnings risks. Earnings risk is managed by continuously improving and broadening our offer to ensure high customer value and broader, more diversified earnings. Continued strong growth in the number of customers and savings capital, along with increased cost efficiency, improves economies of scale and makes Avanza more competitive. Avanza continuously monitors the market and its pricing in order to respond to changes in customer preferences and market developments through planned measures and adjustments to the business model.
