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THE PURPOSE OF BANKIA’S CORPORATE GOVERNANCE SYSTEM IS TO SERVE THE SOCIAL INTEREST, THE ORIENTATION TOWARDS SUSTAINABLE DEVELOPMENT AND VALUE CREATION.

The corporate governance system approved by the Board of Directors is based on the Bankia Group’s corporate values in matters of business ethics and Corporate Social Responsibility, namely, integrity, professionalism, commitment, proximity and achievement orientation.

In turn, the corporate governance system is founded on the good governance principles adopted and specified by the bank in the Bankia Group Corporate Governance and Organisational Structure Policy, which follows the recommendations of the CNMV’s Code of Good Governance of Listed Companies, issued in 2015.

Bankia’s corporate governance system thus comprises a set of internal rules and procedures in accordance with applicable law and the scope of corporate self-regulation under the law. Its essential purpose is to serve the corporate interest, understood as the interest common to all its shareholders, and to orient the company’s activity to the profitable and sustainable pursuit of its corporate purpose and long-term value creation.

Bankia’s corporate governance system is made up essentially of the Corporate Documents; the Internal Rules of Conduct and Procedures; and the Corporate Policies, as set out below.

The purpose of Bankia's corporate governance system us to serve the social interest and long-term value generation

CORPORATE DOCUMENTS

Bylaws

The Bylaws set out Bankia’s fundamental rules and principles of organisation and operation, which are implemented through the General Meeting Regulations, the Board of Directors Regulations and the Audit and Compliance Committee Regulations.

General Meeting Regulations

These set out the guiding principles of the shareholders’ supreme representative body and the rules for the conduct of meetings (notice, preparation, information, attendance, procedure and voting).

Board of Directors Regulations

These set out the principles governing the work of the Board, its basic rules of operation and the standards of conduct for its members, all this in line with corporate governance best practices.

Audit and Compliance Committee Regulations.

These were approved by the Board of Directors on 26 April 2018 to reflect the recommendations and guidelines of the CNMV’s Technical Guide 3/2017 on Audit Committees at Public Interest Entities. They lay down basic rules for the committee’s composition, operation and responsibilities.

INTERNAL RULES OF CONDUCT

The Bankia group also has other internal procedures and rules of conduct that comply with legal or regulatory requirements or implement good governance recommendations. They include the following basic texts:

  • Code of Ethics and Conduct: This sets out the commitments and guiding principles for Bankia Group directors, senior managers and other employees in their dealings with one another and with the various stakeholders.
  • Internal Rules of Conduct in the Securities Markets: These set out the obligations arising from the bank’s status as a listed company. Among other matters, they address the rules on market abuse and conflict of interest management.

Other supplementary internal provisions and procedures include the Customer Protection Rules, the Whistleblowing Channel Regulations and the rules on matters such as the prevention of money laundering and terrorist financing.

CORPORATE POLICIES

These policies set out the guidelines and general principles for the governing bodies and the functions, activities and processes of the company and its group, establishing an action framework that preserves legal certainty. They are general in scope, are intended to remain in place in the long term and have been approved by the Board of Directors, taking legal requirements and good governance recommendations into account.

In particular, Bankia’s corporate governance system includes the following policies, among others:

  • Bankia group Corporate Governance and Organisational Structure Policy: This sets out the main corporate governance issues and commitments of the Company and its Group, following good governance recommendations in this field, as well as general guidelines for the group’s organisational structure through its various subsidiaries and the setup of their governing bodies. The aim is to establish a suitable framework of coordination among the various companies that make up the Group and ensure they operate efficiently.
  • Policy on Information, Communication and Contacts with shareholders, institutional investors and proxy advisors: This sets out principles aimed at fostering ongoing communication and dialogue with each stakeholder group, especially shareholders, institutional investors and proxy advisors. The aim is to build strong and stable relationships of trust and promote transparency within the framework of the corporate interest.
  • Policy on the selection, diversity, suitability, integration and training of directors and managing directors or similar and other key post holders: This sets out the basic criteria and guidelines for assessing the suitability of directors and key post holders, with special attention to selection processes, diversity, integration and training.
  • Remuneration Policy for directors, managing directors and persons performing senior management functions who report directly to the Board, an executive committee or the CEO: This sets out the principles of the remuneration system and the items of remuneration applicable to persons covered by the policy, in accordance with the specific provisions of the capital adequacy and capital company regulations, as well as with good governance recommendations.
  • Risk Control and Risk Management Policies: These address, among other matters, the different types of risk, both financial and non-financial (including social, environmental, corporate governance, reputational and tax risks), facing Bankia and its group. They lay the foundations for the information and internal control systems that are used to control and manage those risks, the criteria for determining acceptable risk levels and corrective measures to limit their potential impact.
  • Investment and Financing Policy: This sets out general guidelines and rules for investment and financing, which are specified in more detail in the company’s Strategic Plan.
  • Responsible Management Policy: This promotes the integration of social, environmental and corporate governance criteria in the management of Bankia and its group, with the aim of orienting their activity towards creating value for the various stakeholders and the communities in which Bankia is present.
  • Dividend Policy: This sets out the principles that must govern the Board of Directors’ proposals and resolutions concerning shareholder remuneration. Those principles include aligning shareholder remuneration with the company’s profits and always seeking sustainable profitability and value creation for shareholders.
  • Treasury Shares Policy: This sets out the principles and rules of conduct that must govern transactions in the Company’s own shares, in accordance with the limits and other specific conditions resulting from the laws and regulations of the securities market.
  • Conflicts of Interest Policy: This specifies procedures to prevent conflicts of interest affecting shareholders, members of the Board of Directors and Senior Management, professionals, suppliers, customers and other parties directly or indirectly related to any of these groups.
  • Bankia group Corporate Governance and Organisational Structure Policy: This sets out the main corporate governance issues and commitments of the Company and its Group, following good governance recommendations in this field, as well as general guidelines for the group’s organisational structure through its various subsidiaries and the setup of their governing bodies. The aim is to establish a suitable framework of coordination among the various companies that make up the Group and ensure they operate efficiently.
  • Policy on Information, Communication and Contacts with shareholders, institutional investors and proxy advisors: This sets out principles aimed at fostering ongoing communication and dialogue with each stakeholder group, especially shareholders, institutional investors and proxy advisors. The aim is to build strong and stable relationships of trust and promote transparency within the framework of the corporate interest.
  • Policy on the selection, diversity, suitability, integration and training of directors and managing directors or similar and other key post holders: This sets out the basic criteria and guidelines for assessing the suitability of directors and key post holders, with special attention to selection processes, diversity, integration and training.
  • Remuneration Policy for directors, managing directors and persons performing senior management functions who report directly to the Board, an executive committee or the CEO: This sets out the principles of the remuneration system and the items of remuneration applicable to persons covered by the policy, in accordance with the specific provisions of the capital adequacy and capital company regulations, as well as with good governance recommendations.
  • Risk Control and Risk Management Policies: These address, among other matters, the different types of risk, both financial and non-financial (including social, environmental, corporate governance, reputational and tax risks), facing Bankia and its group. They lay the foundations for the information and internal control systems that are used to control and manage those risks, the criteria for determining acceptable risk levels and corrective measures to limit their potential impact.
  • Investment and Financing Policy: This sets out general guidelines and rules for investment and financing, which are specified in more detail in the company’s Strategic Plan.
  • Responsible Management Policy: This promotes the integration of social, environmental and corporate governance criteria in the management of Bankia and its group, with the aim of orienting their activity towards creating value for the various stakeholders and the communities in which Bankia is present.
  • Dividend Policy: This sets out the principles that must govern the Board of Directors’ proposals and resolutions concerning shareholder remuneration. Those principles include aligning shareholder remuneration with the company’s profits and always seeking sustainable profitability and value creation for shareholders.
  • Treasury Shares Policy: This sets out the principles and rules of conduct that must govern transactions in the Company’s own shares, in accordance with the limits and other specific conditions resulting from the laws and regulations of the securities market.
  • Conflicts of Interest Policy: This specifies procedures to prevent conflicts of interest affecting shareholders, members of the Board of Directors and Senior Management, professionals, suppliers, customers and other parties directly or indirectly related to any of these groups.

The Bankia group also has succession plans for the chairman, the CEO, the independent directors and senior managers.

Moreover, the Board of Directors may approve other corporate policies where appropriate for setting strategies and management criteria and for monitoring and supervising them.

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