seb annual report 2008

8/14/2019 SEB Annual Report 2008

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High customer activity in turbulent nancialmarkets and deteriorating real economy

Increased integration and ef ciency High rankings and increased market shares

in many areas Operating pro t SEK 12,471m (17,018) Earnings per share SEK 14.66 (19.97) Return on equity 13.1 (19.3)

Annual Report 2008


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SEBs financial information isavailable on www.sebgroup.com

Financial information during 2009

Publication of annual accounts 5 February

Publication of Annual Report on the Internet 20 February

Annual General Meeting 6 March

Interim report JanuaryMarch 6 MayInterim report JanuaryJune 20 July

Interim report JanuarySeptember 21 October

For further information please contact:

Jan Erik BackChief Financial OfficerTelephone +46 8 22 19 00E-mail: [email protected]

Ulf GrunnesjHead of Investor RelationsTelephone +46 8 763 85 01E-mail: [email protected]

Annika HalldinSenior Financial Information OfficerTelephone +46 8 763 85 60E-mail: [email protected]

Contents

2008 in brief 1

Chairmans statement 2Presidents statement 3

SEB today 4

Markets, competition and customers 8

SEBs employees 14

Corporate responsibility 16

The SEB share 20

Report of the Directors Financial Review of the Group 22Result and profitability 22Financial structure 25Divisions

Merchant Banking 28Retail Banking 30Wealth Management 32Life 34

Risk and Capital Management 36

Corporate Governancewithin SEB 52

Financial Statements 61SEB Group

Income statements 62Balance sheets 63Statement of changes in equity 64Cash flow statements 65

Skandinaviska Enskilda BankenIncome statements 66Balance sheets 67Statements of changes in equity 68Cash flow statements 69

Notes to the financial statements 70Five-year summary 129Definitions 131Proposal for the distribution of profit 132Auditors report 133

Board of Directors and Auditors 134

Group Executive Committee 136

Addresses


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seb ANNUAL RePORT 2008 1

2008 in briefR ult and propo d divid nd

Op rating proft d cr a d y 27 p r c nt,to seK 12,471m.

N t proft amount d to seK 10,050m, orseK 14.66 p r har .

Th cr dit lo l v l wa 0.30 p r c nt (0.11).

R turn on quity wa 13.1 p r c nt.

In conjunction with oth r capital m a ur ,th board propo no divid nd or 2008(seK 6.50 or 2007).

Th board o seb li v it to prud nt and in th tint r t o all tak hold r to proactiv ly tr ngth n sebcapital a . A a r ult, th board propo to tr nght nth capital a y seK 15 n and not to pay any divid nd

or th fnancial y ar 2008. Th m a ur will hav acom in d po itiv ct on th Group capital a oseK 19.5 n and giv seb a trong capital u r to m tth impact o an unc rtain conomic nvironm nt.

Th propo d capital m a ur hould n in th lighto today tur ul nt mark t . Th capital m a ur will pro-vid a com orta l u r w ll a ov th board incr a dlong-t rm Ti r 1 capital targ t ratio o 10 p r c nt, which i

ntial in th ort to maintain prud nt capital manag -m nt in th curr nt mark t nvironm nt. Calculat d on thaccount or 2008, th capital m a ur would incr aseb Ti r I capital ratio to 12.1 p r c nt and total capitalratio to 14.6 p r c nt.

Key fgures2008 2007

R turn on quity, % 13.1 19.3ba ic arning p r har , seK 14.66 19.97Co t/incom ratio 0.62 0.57Cr dit lo l v l, % 0.30 0.11

Total capital ratio, % 1) 10.62 11.04Cor capital ratio, % 1) 8.36 8.63Ri k-w ight d a t , seK n 1) 986 842

Num r o ull tim quival nt , av rag 21,291 19,506

A t und r manag m nt, seK n 1,201 1,370Total a t , seK n 2,511 2,344

1) ba l II (L gal r porting with tran itional oor).

For urth r in ormation on th seb har , pl a pag 20.

R tailbanking

W althManag m nt

Li

M rchantbanking

0 2,000 4,000 6,000 10,0008,000

Operating proft per divisionseKm

Earnings per SEB shareseK

20

15

10

5

0

2004 2005 2006 2007 2008

20072008

Capital m a ur to tr ngth n seb


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2 seb ANNUAL RePORT 2008

Our ability to manage todays challenges

lays the basis for tomorrows prosperity

Chairmans statement

Many dramatic headlines have been used to describe the nancialturbulence, its possible causes and conceivable consequences.At some point in time, this crisis, as other economic crises be oreit, will subside and be replaced by a more normal and stablephase. When this eventually happens it is also likely that, thecompetitive landscape, the regulatory conditions and the busi-ness model in many areas will be undamentally di erent.

Uncertainty and lack o trust in institutions and market par-ticipants are not only an e ect o the nancial crisis, but also to ahigh extent a cause o it. Not least when it comes to uncertaintiesregarding how banks and other nancial institutions can perse-vere in times o challenges and hardship.

During the accelerated turbulence o 2008 SEB has continuedto run a strong and pro table business. The Bank has workedclose to its customers and bene ted rom the strengthening o the balance sheet, which took place during the years leading up to theturmoil. In spite o that, SEB experienced the same uncertainty,including a sharply lower share price, as most participants in the banking industry.

Restoring trust in the marketsMany international nancial institutions have been hit by largelosses, subject to restructuring or taken over by their governments.Others have received considerable shareholder or governmental

capital injections and guarantees. These initiatives have startedthe process o restoring trust in capital markets, but have alsoraised the bar or what is considered a strong and sa e capital base.

It is in the light o this development that the Boards proposedcapital measures should be considered. The measures should pri-marily be seen as a precautionary step, aiming to enhance a capital base in excess o regulatory requirements by a com ortable margin.In the Boards view, the capital measures will substantially improveSEBs ability to resist even some extreme downturn scenarios. Butit has also an e ect on our ability to borrow at good terms andhence support our customers with sound credits.

Most o all, however, it is an important act o building trustand con dence in a nervous market. It is extremely importantthat all parties, including customers and governments, can relyon SEB as a bank to trust, even in the stormiest waters. It is alsothe best guarantee or continued long-term value creation or ourshareholders.

A strong risk cultureThe continuous monitoring o the Banks liquidity and capitalsituation remains a top priority or the Board. In addition, the

development o the Banks Risk Control and Compliance unc-tions has continued to be central to the Board. These areas togetherconstitute, in our opinion, the very core o sound banking, andtheir importance will be proven and tested in times like this.

Sound banking is also based on the pro essionalism o theBanks sta and its management. Jointly, they have achievedgood results during a di cult year. On behal o the Board, Iwould like to thank the President, the Group Executive Commit-tee and the SEB sta or their dedicated work to support ourcustomers and build our bank or the uture. We know or certain,that the nancial landscape o tomorrow will be ormed by thosewho are best equipped to ace the challenges o today.

Stockholm in February 2009

Marcus WallenbergChairman o the board

Th m a ur hould primarily n a apr cautionary t p, aiming to nhanc acapital a in xc o r gulatory r quir -m nt y a com orta l margin.


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Presidents statement

The past year was a year o unprecedented nancial turbulenceon a global scale, exacerbated by the downward spiral o alteringcon dence that ollowed on the Lehman Brothers de ault in Sep-tember. In this extremely di cult environment, SEB maintainedincome growth and reached an operating result o SEK 12.5bn.The rapid development o events and increased uncertainty, hascreated substantial challenges or the organisation. I am proud othe commitment o SEBs sta and the way in which we have in-teracted with our customers during a trying year.

A new fnancial landscapeA year ago there were still expectations that the world economywould be more resilient to a downturn, triggered by the U.S. sub-prime de ault. However, during 2008 the interdependencies o thenancial system, and towards the real economy, became evident.Hopes o a decoupling scenario were put down.

The unctioning o global credit markets has been severelyimpaired, the supply o credit has been reduced, unding costshave increased and asset prices have allen signi cantly. Theseactors have put signi cant strain on the banking sector. Severalmajor international banks have been rescued, in some casesthrough government interventions, resulting in a crisis o con -dence among market participants and customers.

Despite massive e orts rom central banks and governments

to remedy the e ects, the global economic outlook has turned intoa prolonged recessionary mode. We are entering uncharted terri-tories, where the divergence o opinion among experts on wherethe world economy is heading is unusually broad.

Northern Europe, SEBs core market, has also been a ected.GDP-growth in the Nordic countries has come to a halt. In theBaltic countries, the macro-economic outlook markedly worsenedtowards the end o the year. Latvia was granted support o EUR7.5bn in an IMF led bail-out. Our view is that there will be a pro-tracted period o declining GDP in Estonia, Latvia and Lithuaniaover the next ew years.

Strong customer relations generated income growthAll through the turbulent year SEBs underlying business wasrobust. Business activity was high overall despite partly dys unc-tional capital markets.

This was evident particularly within Merchant Banking. Withits diverse business-mix Merchant Banking could balance a sub-dued year within corporate nance and xed income with recordhigh customer activity in areas such as oreign exchange and cashmanagement.

Within Retail Banking, income held up well, especially inSweden. However, due to the sharply deteriorated economic out-look, we continued to increase provisions or credit losses in theBaltic countries. We have also continued to proactively addressasset quality through joint local and Group work-out teams.

In the long-term savings area business was a ected by lower

equity values, but activity remained high with net infows intoWealth Management and higher premium income in the Li edivision compared to last year.

Capital measures to urther enhance necessary bu ersSEB entered this downturn as a more integrated bank with a diver-si ed business mix. Maintaining a robust capital adequacy has beena principal priority or SEB.

In the new nancial landscape, it will be even more importantor a bank to be strong. The market standard or what is consideredan adequate capitalisation has been reset. The proposed capitalmeasures o SEK 19.5bn will give us the necessary bu er to copewith the severe downturn that lies ahead. The measures willurther enhance SEBs ability to be a strong long-term businesspartner or our customers and counterparties.

A robust plat orm and business modelI am con dent that we are well prepared or a more challengingeconomic environment.

We have a proven robust plat orm with a business mix basedon long-term customer relationships and product excellence. Ourstrategy to reach leadership in terms o customer satis action andnancial per ormance long-term remains. For the next ew years itwill imply increased e orts to enhance e ciency and to strengthenrelationships even more with our existing customer base.

Stockholm in February 2009

Annika FalkengrenPresident and Chie Executive O fcer

W ar w ll pr par d or a mor chall ngingconomic nvironm nt. In th n xt wy ar w will tr nght n r lation hip v nmor with our xi iting cu tom r .

Customer relationships key in new

financial landscape


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SEB today

A focused stategy in uncertain times

Thi i sebSEB is the leading bank or Nordic large companies and nancialinstitutions. This refects the Banks core areas o strength, whichare built upon long-term and solid relationships with large com-panies and nancially active private individuals. Thus, SEB has aleading position within wholesale and investment banking as wellas within private banking in the Nordic area. SEB is urthermore aleading Nordic unit-linked insurance company and card provider.

The Bank serves 2,500 large corporate and institutional cus-tomers, 400,000 small and medium-sized companies and morethan ve million private individuals. In Sweden, Estonia, Latvia,Lithuania and Germany SEB o ers universal banking services.In Denmark, Finland and Norway SEB ocuses on wholesale banking, investment banking and wealth management. Further-more, SEB o ers li e insurance services in Sweden, Denmark andthe Baltic countries. Through its international network in an addi-

tional ten countries, SEB has a strategic presence to support andservice its large corporate and institutional customers.

At year-end 2008, SEB had some 660 branch o ces: 172 inSweden, 61 in Estonia, 63 in Latvia, 77 in Lithuania, 174 in Germa-ny and 109 in Ukraine. More than hal o SEBs approximately21,000 employees are located outside Sweden.

SEBs business purposeSEB provides nancial services and manages nancial risks andtransactions in order to help its stakeholders to realise their ullpotential customers achieving their objectives, shareholdersearning a competitive return, employees per orming with pride and to make SEB a good corporate citizen o society.

SEBs vision and goalsSEBs long-term objective is to be the leading bank in NorthernEurope in terms o nancial per ormance and customer satis ac-tion within chosen segments. Leadership in nancial per ormanceis de ned as achieving a higher return on equity compared to rel-evant Nordic and European peers over the business cycle, whileattaining sustainable and pro table growth. It is SEBs target toachieve a AA rating.

The Board has decided on a new long-termTier I capital ratiotarget o 10 per cent or SEB, when the Basel II is ully implementedwithout transitional foors.

seb trat gyIn order to reach its long-term targets, SEB has laid out a roadmap Road to Excellence. Key priorities include a strong commit-ment to reach superior productivity and quality, increased inte-gration o SEB, intensi ed activity with its attractive customer base and ocused growth within core areas o strength; primarilycorporate and investment banking, wealth management andunit-linked insurance. SEB ocuses on such segments, productsand markets where it clearly can add value to its customers, suchas capital markets and corporate advisory service, cash manage-ment, oreign exchange, private banking and alternative invest-ment products. Retail Banking plays an important role throughits wide distribution network.

Given the current economic downturn in SEBs home marketsas well as internationally, the long-term strategy is complemented by a number o short-to-medium term priorities:

Grow revenue with existing customers through highinteraction and increased share o wallet.Continue to ocus on cost e ciency-enhancing measures andsavings in areas not directly related to customer interaction.Support customers long-term nancial needs whilemaintaining sound risk management.Take actions in order to maintain its strong capital andliquidity position.

Nevertheless, the long-term strategy continues to ollow the Roadto Excellence along its three major themes operational excellence,customer satis action and balanced growth.

Operational excellenceOne SEBSEB continues to work with the integration o the Group in orderto increase cross-selling and extract cost synergies through a moree cient use o common resources. This also includes creating agroup-common IT in rastructure. An integrated organisation iscrucial to enable SEB not only to increase productivity but also toleverage the knowledge and expertise throughout the Group orthe bene t o the customers.

The co-operation and knowledge-sharing between divisionshave improved since the introduction o the new organisation on1 January 2007. For example, by using Merchant Bankings exper-tise rom large companies, Retail Banking in Sweden can nowo er an improved service to small and medium sized enterprises.

seb provid fnancial rvic to corporat cu tom r , in titution and privat individual .Th long-t rm goal i to hav th mo t ati f d cu tom r and to l ading in t rm o fnan-cial p r ormanc among it p r in North rn europ . K y prioriti includ int n if d activitywith seb attractiv cu tom r a , o ring an xt n iv rang o top-rat d rvic a don seb incr a d ocu on productivity, quality and int gration.


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SEB today

Risk Management SEB has continuously developed its risk management practicesand pro essionals. Risk management is proactive and orms anintegral part o conducting business. Actions taken to urtherenhance risk management in 2008 include an increased match-unding liquidity requirement and the raising, early in the year, oSEK 160 bn in long-term unds (see urther pp 37). Measures toaddress asset quality also include rein orcement o experiencedworkout teams.

Cost Management In 2007, SEB initiated a cost improvement programme to reducecosts by SEK 1.52.0bn, excluding incremental investments, dur-ing 20072009. Cost synergies have been achieved through thecentralisation and consolidation o sta and support unctionsand through the guiding principle o one unction, one solu-tion. With realised savings o more than SEK 1bn in 20072008,SEB is on track to achieve this target. The e orts to streamlineprocesses and co-ordinate di erent unctions continue in order toachieve scale advantages and improve best practice sharing, thusurther enhancing cost e ciency. SEB will reduce the number oull time equivalents (FTE) in Sweden by 5 per cent during 2009,corresponding to a net reduction o 500 employees.

SEB Way SEB Way is a Group-wide programme, targeted to increase opera-tional e ciency by streamlining processes so that resources arereed-up and applied more productively to generate urther busi-ness. Thus this is a undamental change process in order to create aculture o continuous improvement, meeting increased quality de-mands rom customers and productivity pressure in the bankingindustry. The programme is now utilised within all parts o theGroup, with a proven track-record both or sales and support unc-tions. For example, the number o transactions increased by 30 percent - rom 1.75 million payment transactions a month to over 2.6million. At the same time SEB increased productivity (transaction

per FTE) by 34 per cent, while keeping sta number unchanged.By year-end 2008, more than 60 per cent o all o SEBs

employees have been included in the overall diagnosis and the

reed-up time to date was equivalent to around 7 per cent, or1,500 FTEs o the work orce.

Increasing customer satis actionIn order to realise its vision o being the leading bank in NorthernEurope, SEB strives to improve service levels and increase activi-ties with respect to customers. Customer o erings and customeracquisition are strengthened through joint product developmentin the divisions and better usage o best practice proceduresthroughout the Group.

In recent years SEB has strengthened its position in the seg-ment or large and medium-sized corporations in Denmark,Finland, Norway and Germany. SEB has top customer rankingswithin or example cash management, currency trading, invest-ment banking, custody and private banking, as shown in theranking list on page 6. During 2008, large companies and institu-tions accounted or approximately 40 per cent o SEBs income.

SEBs small and medium-sized corporate customers, mainlyin Sweden and the Baltic countries, can bene t rom the know-ledge and competence that SEB has built up in co-operation withlarge companies and adapted to the needs o small companies.In Sweden, SEB was awarded best SME-bank. During 2008, smalland medium-sized companies accounted or approximately

25 per cent o SEBs income.In Sweden, SEB has a leading position and high rankings

within private banking, mutual unds and unit-linked insurance.

Financial targ t and outcom

Return on equityP r c nt

2004 2005 2006 2007 2008

25

20

15

10

5

0

Targ t: High t among it p rP r av rag ( xcl. seb)

Net proft growthseK n

15

12

9

6

3

0

Targ t: su taina l pro it growth

Tier I capital ratioP r c nt

10

8

6

4

2

0

Targ t: At l a t 7 % until 2008

1) ba l II tran itional rul appli d.2) ba l I.

DividendP r c nt o arning p r har

50

40

30

20

10

0

Policy: 40 % o n t pro it p rhar ov r a u in cycl

1) No divid nd i propo d or 2008.

Share o income 2008P r c nt

Larg compani and in titution 40

small and m dium- iz d compani 25

Privat individual 35

2004 2005 2006 2007 2008 2004 2) 2005 2) 2006 2) 2007 1) 2008 1) 2004 2005 2006 2007 2008 1)


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SEB today

Within its retail business, SEB takes continuous steps to movecloser to its goal o being leading in terms o customer satis action.In the Baltic countries, SEB ranks No. 2 in the retail segment. InGermany, SEB has received higher marks rom the private cus-tomers than the market average over the last six years. During

2008, private individuals accounted or approximately 35 per cento SEBs income, o which the Swedish business represented 10per cent.

Balanced growthSEB prioritises balanced growth across the business areas in orderto increase resilience in times o uncertainty.

Merchant Banking sees urther opportunities to expand its coreranchise by selling additional products to existing customers andto increase its market share in its main markets outside Sweden,not least through intensi ed activities aimed at medium-sizedcorporations and nancial institutions in the Nordic countries.This will be achieved by pursuing the divisions proven strategyo providing internationally recognised high-quality productsand value-added nancial solutions. Outside its main markets,Merchant Banking integrates the operations in the Baltic countriesand makes selective investments in its operations outside itshome markets , targeting primarily Nordic and German clients.

Retail Banking will strengthen its sales culture and enhance itscustomer o erings with attractive and accessible products. Eachmarket has its own speci c priorities. In Sweden, ocus is on im-proving the overall customer experience and on urther strength-ening the position in customer segments such as mass a fuentand small and medium-sized enterprises. In Estonia, Latvia andLithuania, the near- to medium-term ocus is to ensure asset quali-ty and continued long-term sustainable growth in light o thechallenging macroeconomic development and to grow urther

within the savings market. The work to identi y potential creditlosses at an early stage and when necessary engage work-outteams continues. Long-term ocus is set on establishing marketleadership to capture the attractive structural growth opportunities

seb rankingAr a Rank 2008 Rank 2007 Organi ation / pu l icat ion tc

b t ank in sw d n 1 1 euromon y, Glo al Financ Magazinbank o th Y ar in e tonia and Lithuania 1 1 Th bank rb t ank in Latvia 1 1 euromon y, Glo al Financ Magazinb t ank in Lithuania 1 1 Glo al Financ Magazinb t stock rok r in th Nordic r gion 1 1 Pro p rab t ca h manag m nt in th Nordic and baltic r gion 1 1 euromon yOv rall Cu tom r ati action r garding ca h manag m nt, glo ally 1 1 euromon yb t Ov rall bank or Ca h Manag m nt 2009 in th Nordic r gion 1 1 Glo al Financ Magazinb t r al tat comm rcial ank in th Nordic and baltic r gion 1 1 euromon yb t r arch hou in th Nordic contri 1 1 ext l surv y, Thom on R ut r

b t ank or ri k manag m nt in th Nordic r gion 1 1 Glo al Financ Magazinb t in corporat fnanc in th Nordic r gion iannual 1 Pro p rab t M&A hou in sw d n and th baltic r gion 1 1 euromon yb t glo al comm rcial ank in r al tat 3 3 euromon yb t quity hou in th Nordic and baltic r gion 1 1 euromon yb t trad ank in North rn europ and scandinavia 1 Trad For aitingb t trad fnanc ank in th Nordic r gion 1 1 Glo al Financ Magazinb t d rivativ d al r in sw d n 1 1 Ri k MagazinCu todian o th Y ar in th Nordic r gion 1 1 Int rnational Cu tody and Fund Admini trationsu -cu todian o th Y ar in th Nordic r gion 1 1 Int rnational Cu tody and Fund Admini trationb t a t manag r in sw d n 1 N/a Thom on R ut rNordic a t manag m nt frm o th Y ar 1 1 Financial N wb t privat ank in sw d n 1 3 euromon yb t ag nt ank in th Nordic r gion and ea t rn europ 1 Glo al Cu todianb t quity r arch in th Nordic r gion 1 1 ext l surv y Thom on R ut r

FX-r arch, glo ally N/a 1 FX W k/R ut rsMe bank o th Y ar in sw d n 1 N/a Privata A r r

Customer satis action, Retail customersPrivat cu tom r and small and m dium- iz d corporat cu tom r(sMe ) KNIX ind x

SEB 2008Mark t

av rag seb 2007Mark t

av rag

SwedenPrivat 65 73 n/a n/asMe 63 72 n/a n/a

EstoniaPrivat 75 74 76 74sMe 78 64 80 82

LatviaPrivat 62 63 67 69sMe 65 64 56 65

LithuaniaPrivat 56 54 66 62sMe 59 64 61 64

GermanyPrivat 70 64 72 66

In sw d n, seb rank No 4 oth within privat and sMe- gm nt. In e tonia,seb rank No 1 oth within privat and sMe ctor. In Latvia and Lithuaniaseb i No. 2 within th privat cu tom r gm nt and No.3 in th sMe mark t.

In G rmany, seb ha r c iv d high r mark rom privat cu tom r than thmark t av rag ov r th la t ix y ar .

Th corr ponding cu tom r ati action urv y r ult or larg companiand in titution ar not o fcial.


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SEB today

in the region once the economies turn around. In Germany, ocuscontinues to be on improved pro tability. The Card business isocused on accelerating organic growth and product development

whilst reducing unit cost per transaction.Wealth Management strives to o er enhanced advisory servic-

es, a broader range o alternative and absolute return- ocusedproducts. The division aims to shorten time-to-market or new,value-added products as well as to improve investment manage-ment per ormance urther. In Sweden,SEB has a strong marketposition and leading customer o erings both within private

banking and asset management. Building on this ranchise andknowledge, the division continues to grow outside Sweden,primarily in the Nordic and Balticcountries and Germany.

Li es business concept is ocused on unit-linked insurance.In Swedenand Denmark, the main growth opportunities are within

the corporate pension and care areas. Maintaining quality leader-ship in Sweden and continuing the transition towards unit-linkedsolutions in Denmark are top priorities. Furthermore, the divisionis investing to establish a leading position in the emerging li e in-surance markets in the Baltic countries early on.


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The global credit crisis and rapid weakening o the real economyin SEBs core markets in Northern Europe during 2008 did ocourse take its toll, especially in the previously ast growing,overheated Baltic economies. However, within most areas SEBmaintained a high activity level and the underlying business wasstrong. During the year, SEB gained approximately 125,000 newcustomers, o which 107,000 were private individuals and 17,000corporate customers.

In the market or large corporations and nancial institutionsSEB traditionally meets tough competition, not only rom the largeNordic banks but also rom international nancial groups. During2008, however, many o those have withdrawn rom the Nordicscene as a consequence o the nancial turmoil. The changed nan-cial landscape acilitated the return to more lender-oriented cove-nant structures and a more realigned risk-based policy, a ter yearso liquidity-driven volume expansion in the nancial markets.

In the market or small and medium-sized companies, thecompetitors are mostly domestic or regional banks, like Swedbankin the Baltic countries and Nordea, Handelsbanken, Swedbank

and Danske Bank in the Nordic region.In the private market, local banks account or most o the

competition, but various niche players are also competing orinvestors and depositors.

SwedenThe economic situation in Sweden, SEBs single largest market withapproximately 1.9 million private and 200,000 corporate customers,deteriorated aster than expected in 2008. SEBs income droppedwithin equity-related markets, while volume development andsales were strong within oreign exchange, cash management,mutual unds and li e insurance, or example. With SEK 8,344m inoperating pro t, the Swedish market accounted or 65 per cent othe Groups pro t or 2008. SEB has approximately 8,400 employ-ees in Sweden.

In Sweden, SEB occupies a leading position among large cor-porations and private banking customers, with substantial mar-ket shares o oreign exchange trading, equities trading, cashmanagement, asset management, unit-linked insurance andcards, or example. For several years, SEB has been ranked the best oreign exchange bank in Swedish krona trading on a global basis. In 2008, SEB was once again the largest broker, not only onthe Stockholm stock exchange but also on the Nordic exchanges

In the household market or deposit and lending SEB is No. 4 ,

while it is No. 2 in volume on the corporate market. During 2008,SEBs market share o deposits rom the public increased to 20.7per cent, while its share o lending was virtually unchanged at14.9 per cent. SEBs market share o household lending (includingmortgages) was 12.2 per cent (12.6).

Customer segmentation, Nordic banksshar of total incom , p r c nt

Markets, competition and customers

Underlying strong businessIn pit of th nancial tur ul nc and th rapid d t rioration of th r al conomy in thNorth europ an mark t during 2008, seb con olidat d it po ition within mo t ar a .Activiti w r int n iv , volum incr a d and mark t har and ranking w r high.

seb commi ion incom traditionally w igh h avi r than that of oth rNordic ank du to th Group p ciali ation on advi ory rvic andmor tran action-int n iv activiti with larg compani and d mandingprivat cu tom r .

Income distribution, Nordic banksshar of total incom , p r c nt

N t int r t incom

N t f andcommi ion incom

N t financial incom

N t lif in urancincom

N t oth r Incom

100

80

60

40

20

0

s e b

s w d a

n k s H b N o r d a

D a n k

b a n k

D n b N O

R

R tail, Nordiccountri

R tail, G rmany

R tail, balticcountri

R tail, Gb/Ir land

M rchant banking

A t Manag m nt

Lif in uranc

sinc th Nordic ank diff r in t rm of u in tructur thi i anapproximat di tri ution of cu tom r gm nt .

seb

sw d ank

sHb

Nord a

Dnb NOR

Dan kbank

0 20 40 60 80 100


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In the total Swedish household savings market (excluding directlyowned shares), the Group was the largest player as per 30 Septem- ber 2008, with a share o 14.8 per cent (14.6).

SEB has a strong market position within the asset managementand private banking areas. In 2008, SEBs mutual unds had a netinfow o SEK 6.5bn, while the total Swedish market experiencedan outfow o SEK 17.5bn.

Within li e insurance, SEB is the second largest player inSweden , measured by premium income, with a market share o12.5 per cent in 2008. As regards new sales o unit-linked insur-ance, SEB is No 1, with a market share o 24.4 per cent.

Other Nordic countriesIn Denmark, Norway and Finland, SEBs operations are concen-trated on the Groups core areas o strength: wholesale and invest-ment banking as well as wealth management. SEBs position is alsostrong within unit-linked insurance in Denmark as well as withincard operations in all Nordic countries. In total, SEB has more than1.3 million customers in Denmark, Norway and Finland.

Denmark

In Denmark, SEBs customer o ering comprises wholesale and

investment banking, li e insurance, wealth management andcards (Eurocard, Diners Club and MasterCard). At year-end 2008,SEB Denmark had approximately 700 employees and more than600,000 customers, accounting or SEK 556m, or 4 per cent o theGroups operating pro t or 2008.

Denmark was the rst country within EU to all into recessionas early as in the late 2007. The continued downturn during 2008was largely related to lower domestic demand and the propertymarket.

SEB holds a market leading position within corporate nancein Denmark and ranked among the three top players within all

major equity and capital market products in 2008. The relation-ship-driven wholesale business, corporate banking and oreignexchange continued to broaden the penetration and improved theresults accordingly. The securities trading areas also improvedthe client acilitation, however in total showed lower income dueto negative mark-to-market evaluations on trading port olios.

Within the wealth management area, SEB partly managed to balance the negative market impact on assets under managementwith net new sales. At year-end, SEB held SEK 162bn in assets un-der management , de ending its position as one o the leading in-vestment managers in the Danish market. In the spring o 2008,


Assets under managementseK n

Market shares of total savings, Sweden 1)P r c nt

seb i num r on on th sw di h privat aving mark t.

1) A p r 30 s pt m r 2008.

seb 14.8 (14.3)sw d ank 14.8 (15.2)Al cta 9.7 (9.8)skandia 9.7 (9.9)Nord a 8.7 (8.5)sHb 7.6 (7.5)

AMF 7.4 (7.3)LF 4.6 (4.8)Folk am 4.3 (3.5)Gov rnm. 3.5 (3.5)sPP/stor r. 3.4 (3.6)Oth r 11.5 (12.0)

London

Paris

Geneva

Marbella

Luxembourg

St Petersburg

Moscow

Ukraine

Germany Poland

Latvia

Lithuania

SwedenNorway

Denmark

Estonia

Finlandseb mark t

seb mark t in North rn europ accountfor th dominating part of incom .

s e b

s w d a

n k s H b N o r d a

D a n k

b a n k

D n b N O

R

1,500

1,200

900

600

300

0

Gross incomeG ographical di tri ution, p r c nt

sw d n 49 (44)G rmany 18 (17)Norway 8 (7)D nmark 7 (7)Finland 2 (2)e tonia 2 (2)Latvia 2 (2)Lithuania 4 (3)R t of th world 8 (15)

seb i on of thlarg t a tmanag r in thNordic r gion.

2007

2008

N w Yorkb ijing

shanghai

so Paulo

singapor


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SEBs Danish Equity und won the Morningstar Fund Award2008 based on a fve year per ormance.

SEB Pension is Denmarks ourth-largest private pensioncompany (second largest within the unit-linked segment), with300,000 customers and assets o SEK 96bn. With corporate pen-sion sales as the main growth area, representing approximately80 per cent o total sales in 2008, SEB Pension continues to gainmarket share in this customer segment.

Norway SEB in Norway o ers wholesale and investment banking services,wealth management and cards (Eurocard, MasterCard and DinersClub). SEB has 550 employees and close to 600,000 customers inNorway. In 2008, Norway accounted or 9 per cent, or SEK1,172m, o SEBs operating proft.

In spite o the global fnancial turmoil the various units o SEBmanaged well in relative terms. Merchant Bankings business in-creased its income compared with 2007, simultaneously attractingnew customers and introducing additional fnancial solutions inthe market. SEB maintained its position as one o the our highest-

ranking banks or large and medium-sized corporations.SEB also secured its position as the market leader within in-

vestment banking and was No. 1 on the Oslo Stock Exchange or

the second consecutive year, with a market share o 8.1 per cent in2008. For the third consecutive year SEB was ranked clear numberone or private and institutional clients on the Norwegian marketin Prosperas annual survey or 2008.

SEBs Card business kept its position as a leading provider in

the corporate market.

Finland SEB in Finland comprises Merchant Banking, card operations(Diners Club, Eurocard and MasterCard) and wealth management(via the subsidiary SEB Gyllenberg). Close to 350 employees servemore than 100,000 customers in total.

In 2008, SEB in Finland accounted or SEK 554m, or 4 per cent,o SEBs operating proft. In addition, business volumes romFinnish customers with SEB units in other countries experienceddouble digit growth and accounted or substantial volumes.

In Finland, Merchant Banking reported a very strong year both in business volume and operating proft. In 2008, the entitysucceeded to take much better advantage o the strength o theentire Merchant Banking division than be ore in its relations withthe large corporate clients in Finland.

Growth areas include Trading and Capital Markets, with astrong advisory culture, structured leasing business, CommercialReal Estate, cash management, custody services and investment banking.

SEB Gyllenberg has a top position in the institutional assetmanagement market and is one o the leading providers o private banking services in Finland.

SEBs market share o the Finnish mutual und market, wherethe subsidiary SEB Gyllenberg is one o the largest players, was10 per cent in 2008.

The Card business are has success ully expanded its base. The

total growth or private cards was 13 per cent. In 2008, Cardlaunched Eurocard in Finland and Latvia with success.

Estonia, Latvia and LithuaniaSEBs operations in the Baltic countries include a network o around200 branch o fces, employing some 5,400 people servicing 2.8million customers, o whom 190,000 are corporate customers. Theuniversal banking o ering includes retail banking, wholesale andinvestment banking, private banking, leasing, venture capital, li einsurance and asset management.

During 2008 the economic situation in the Baltic countries

Market shares

P r c nt 2008 2007 2006

Deposits from general publicsw d n 20.7 20.2 20.5d po it from hou hold 11.7 12.4 12.2d po it from compani 27.8 26.1 25.8

e tonia 24.2 25.7 27.1Latvia1) 19.9 23.7 23.1Lithuania 27.0 27.4 29.2

Lending to general publicsw d n 14.9 15.0 14.4l nding to hou hold 12.2 12.6 12.5l nding to compani 16.9 16.8 16.0

e tonia 24.3 26.3 29.1Latvia 14.4 15.5 18.3Lithuania 30.1 31.3 34.4

Mutual funds, new businesssw d n N/a 2) 70.3 26.1Finland N/a 2) 11.2 4.4

Mutual funds, total volumes 3)

sw d n 19.5 17.9 16.6Finland 10.0 5.7 5.5e tonia 22.2 21.5 22.2G rmany 4) 8.5 9.1 8.2

Unit-linked insurance, new businesssw d n 24.4 22.1 29.1

Life insurance, premium incomesw d n 12.5 12.8 16.5D nmark N/a 10.0 10.0

Equity tradingstockholm 12.3 9.8 10.1O lo 8.1 8.5 7.6H l inki 4.4 4.3 3.5Cop nhag n 7.9 8.1 5.9

1) R id nt d po it mark t only.

2) In 2008, total n w u in in mutual fund mark t wa n gativ .

3) exc luding third-party fund .

4) R al tat fund .

Leading equity brokerMark t har , Nordic & baltic tock xchang ,JanD c 2008, p r c nt

10

8

6

4

2

0seb

en kildaCarn gisHb Dan k

bankGoldman

sachMorganstanl y


13/140



deteriorated very ast. In Estonia and Latvia, negative GDPgrowth is a certainty and is expected to last during the next years.Also Lithuania is experiencing a gradual domestic slowdown. Asa consequence, SEB has increased its provisions or credit losses inall three countries. The combined result or 2008 at SEK 1,417mcorresponded to 11 per cent o SEBs total operating pro t.

SEB has increasingly paid more attention to higher value addedservices, not least within the savings area. SEBs market shares aregenerally high within these product areas.

Despite the economic downturn, SEB maintains its long-termcommitment in the Baltic region.

Estonia

The economic slowdown in Estonia started in mid-2007, with agradual price deterioration in the real estate sector. In the secondquarter o 2008 the country slid into recession. The negative GDPgrowth is expected to continue in 2009.

SEB is the second largest bank in Estonia with a market shareo lending o 24 per cent compared with 34 per cent at the end o2005. In 2008, SEB in Estonia accounted or 2.9 per cent o the

Groups total credit exposure.In 2008, SEB success ully launched a packaged solution cov-

ering private individuals daily needs. The o ering attracted

more than 30,000 customers, o whom hal were new to the Bank.In terms o customer satis action, SEB was ranked No. 1 in the

private as well as the corporate market according to KNIX, SEBscustomer satis action survey.

LatviaA ter three years o double-digit GDP growth, Latvia now experi-ences plummeting domestic demand. GDP is certain to be nega-tive during the next years. Due to the global nancial turmoil andLatvias large oreign debt, the country will ace a tightened -nancing situation.

Due to the economic decline and the speci c problems in thelocal bank Parex, the Government o Latvia entered into discus-sions with the IMF and the European Union in order to securelong-term stability. The Latvian Government and Parliamenthave agreed on ar-reaching economic re orms in line with thesediscussions. This should be viewed as positive and as a stabilisingactor or the economy.

SEB is the second largest bank in Latvia. The continued con-trolled slowdown o credit growth has resulted in a decrease oSEBs market share or lending, to 14.4 per cent, compared with22 per cent at the end o 2005. SEBs Latvian operations accountedor 2.6 per cent o the Groups total credit exposure in 2008. Oper-ating income was virtually fat, while costs and provisions increasedsubstantially; the share o SEBs total operating pro t or the yearwas SEK 391m, or 3 per cent.

In 2008, SEB once again was awarded Best bank in Latvia by Euromoney. In terms o customer satis action, SEB was rankedNo. 3 in the private market and No. 2 in the corporate market,according to KNIX.

Lithuania

The Lithuanian economy was still growing in the rst hal o2008. However, growth plummeted in the second hal , mainly asa result o dampened domestic demand.

SEB is the largest bank in Lithuania and has a leading positionamong large corporations. SEBs market share or lending in Lith-uania decreased in 2008. Credit exposure related to Lithuania nowamounts to 5 per cent o SEBs total credit exposure. Operatingincome continued to grow, while provisions or lending losses in-creased; SEB in Lithuania accounted or SEK 717m or 6 per cent othe Groups operating pro t 2008.

SEBs has received a string o top rankings in 2007 and 2008,including Best bank by Global Finance Magazine, Bank o theyear by The Banker and Best consumer internet bank by Glob-al Finance Magazine. In terms o customer satis action, SEB wasranked No. 3 in the private market and No. 1 in the corporatemarket, according to KNIX.

GermanyIn Germany, SEB has a nation-wide network o branch o ces.The bank is ocused on wholesale banking activities, commercialreal estate nancing, asset management and retail banking (mainlyprivate customers). SEB has approximately 3,400 employees andclose to one million customers in Germany. SEBs operations inGermany accounted or SEK 754m, or 6 per cent, o the Groupsoperating pro t in 2008. Credit losses were lower than in 2007.

In September 2008, announced the organisational separationo Retail Banking rom its other operations in Germany in order

to create fexibility to bene t rom the changing banking market.The retail business operations were a ected by lower custom-

er activities, especially within the securities business, as result o

Market share, deposits, the Baltic countriesP r c nt

40

30

20

10

0

200620072008

Alr ady in th ginning of 2006, seb l nding policy cam morcautiou . A a con qu nc , th bank l nding mark t har havd cr a d in th thr countri .

1) excluding loan to nancial in titution . 2) R id nt d po it only.

Market share, lending, in the Baltic countriesP r c nt

40

30

20

10

0

200620072008

e tonia 1) Latvia Lithuania

e tonia Latvia 2) Lithuania


14/140



the nancial crisis. Despite all turbulence, the co-operation withAXA insurance group developed success ully; insurance salesincreased by 34 per cent between 2006 and 2008. Also mortgagesales and consumer loans developed avourably. SEBs customersatis action remained one o the highest in Germany, according to

KNIX .Merchant Banking in Germany continued to expand its busi-

ness, especially in the area o structured nance, trade nance andlarge corporate customers. Trading & Capital Markets reported asigni cant increase. SEBs wholesale banking services in Germanywere once again ranked at the very top, particularly or its cashmanagement o ering.

Despite the di cult and challenging market environment theCommercial Real Estate business remained stable. The businessarea once again asserted its strong position in the German com-mercial real estate market, remaining a strong and reliable part-ner or the clients.

Asset Management reported a solid result despite marketturbulences. Investment unds recorded a net capital infow o119.3 million euro.

Poland, Ukraine and RussiaIn Poland and Russia, SEBs operations are primarily supportingNordic corporate customers, while SEB in Ukraine is also a local bank.

SEBs operations in Poland comprise a branch, a wholly-ownedmutual und company, SEB TFI, a leasing subsidiary and the ac-toring company GMAC Commercial Finance, acquired in 2008.

In 2008, SEB continued to integrate its two banks in Ukraine SEB Bank and Factorial Bank acquired in 2007. In total, SEB serves

approximately 15,000 corporate and 90,000 private customersthroughout the country. In 2008 SEB opened 24 new brancho ces in Ukraine, increasing the total number to 109 at year-end2008.

SEB Bank in Russia ( ormerly PetroEnergoBank) has two branch o ces in S:t Petersburg. The Groups other operations inRussia include a representative o ce in Moscow and a leasingcompany in St Petersburg.

Other international locationsSEB has operations at strategically important locations in suchnancial centres as London, New York, Singapore and Shanghaito serve corporate customers with international operations.

Nordic and German private customers living outside theirhome countries make use o these o ces, too and are also servedvia private banking units in Luxembourg, Zurich and Marbella,or example.

At the beginning o 2008, SEB opened a representative o cein New Delhi in order to support corporate customers in their business with India.


15/140



seb di tri ution chann lSEBs ambition is to o er individual, active and rewarding rela-tions whenever and wherever the customers so desire.

SEBs customers can stay in contact with SEB via some 660

branch o ces, the Internet and personal telephone service. InSweden, the call centre is able to assist customers in 22 di erentlanguages. Approximately 90 per cent o the number o customercontacts takes place via the Internet and telephone. Over the pastthree years, SEBs retail customer contacts have increased by3035 per cent, not only in the Banks remote channels but alsoin the branch o ce network. The branches are particularly impor-tant or advisory services.

During 2008, the number o card transactions with card issued by SEB amounted to 526 million, o which around 70 per cent in theNordic region.

Large corporations and institutions are served internationally by 18 branches and representative o ces rom New York and SaoPaolo to Shanghai and Singapore.

Approximately 1,250 persons client executives and othersales teams assist the large corporations and nancial institu-tions. In addition, approximately 750 product experts, analysts,traders etc have requent interactions with the customers.

Private banking customers, mainly rom the Nordic area, livingoutside their home countries are served via branches in twelvecountries, or example Luxembourg, Spain and Switzerland.

Within the li e insurance area, SEB co-operates with approxi-mately 2,000 insurance intermediaries, brokers and agents in Swe-den, Denmark and the Baltic countries. The own sales orce countssome 350 persons, o which 150 in Sweden, 70 in Denmark and 120in the Baltic countries. In Germany, SEB has an agreement with theinsurance company AXA.

Number of users of the Banks Internet servicesThou and

Th balticr gionG rmanysw d n

Today, seb Int rn t ank ar u d y approximat ly 3.2 million privatcu tom r and mall compani in v n countri . In D nmark and Ukrainseb ha approximat ly 3,000 int rn t cu tom r in ach country.

In addition, th Group off r p ciali t rvic via th Int rn t ucha for ign xchang and int r t trading, mainly to larg compani .

Branch ofces

sinc th nd of th 1990 , sebha mor than dou l d it ranchofc n twork, mainly throughacqui ition in ea t rn europ .In 2008, 24 n w ranch w rop n d in Ukrain .

1,200

1,000

800

600

400

200

0

2006 2007 2008

Automatic ank rvic machininclud ATM , machin for ca hd po it , tran f r , for ignxchang and r charging card .

Automatic bank servicemachinesThou and

2.4

2.0

1.6

1.2

0.8

0.4

0

In sw d n, G rmany and th balticcountri , seb cu tom r aroff r d p r onal rvic , in sw d nand e tonia around th clock andin sw d n in 22 diff r nt languag .In addition to th 5.7 million phoncall , seb call c ntr an w r d635,000 -mail in 2008.

Personal telephone serviceCall and -mail to seb call c ntr

10.0

8.0

6.0

4.0

2.0

0.0

Million Million

1.0

0.8

0.6

0.4

0.2

0

In th la t two y ar th num r ofcard tran action hav incr a dy 60 p r c nt to 526 milliontran action .

Card transactionsMillion

600

500

400

300

200

100

0

2006 2007 2008 2006 2007 2008 2006 2007 2008

Call e-mail

3,500

3,000

2,500

2,000

1,500

1,000

500

0

-98 -99 -00 -01 -03-02 -04 -05 -06 -07 -08


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14 SEB ANNUAL REPORT 2008

SEBs employees

SEB aims to be the best employer in the nancial sector throughattracting and developing skilled people, and setting clear andinspiring goals that are measured, followed up and rewarded.A passion for performance in product development, customer in-teraction and execution is a key prerequisite for reaching SEBsvision of being the leading bank in Northern Europe. How wellSEB employees adhere to the Groups core values Commitment,Continuity, Mutual Respect and Professionalism is equallyimportant.

Performance ManagementIn SEB, every leader makes sure that the strategic goals are brokendown and communicated to the employees as individual targetsthat are clearly linked to SEBs business plan. The targets are fol-lowed up and evaluated through regular follow-up meetingswith each employee, where individual feedback and coaching isgiven. This creates employee commitment and ability to deliver both short and long-term value.

Talent Management

The right people with the right competence, in the right place, areprerequisites for SEBs ability to achieve its business goals. SEBproactively works with attracting, recruiting, identifying anddeveloping talented people. SEB shall be in the forefront, aheadof its competitors, when it comes to nding and making use oftalents that in the long run will contribute to successful businessresults and customer satisfaction.

During 2008 SEB conducted a Global Talent Review, assessinga large number of employees and leaders at all levels within theGroup. Talents are identi ed as people who have performed at avery high level and demonstrated a promising potential to go fur-ther. They constitute SEBs Global Talent Pool, which provides agood overview of the Groups leaders and their ability to take on

larger roles in different areas, allowing SEB to work actively withindividual career plans. The solid Global Talent Review ensuresthat the right competence is available, re ecting SEBs needs asidenti ed in the business plan. It also ensures that SEB invests inthe right development activities.

Leadership & Competence Development

In order to build a performance-driven culture, developing leader-ship and competence is crucial. During the year, much work has been devoted to clarifying the demands and expectations thatSEB has on its leaders. A total of SEK 245m (240) was invested incompetence development. Almost all employees participated insome form of training and 1,700 leaders took part in the Groupsvarious internal and external leadership programmes. Internaltraining comprises everything from professional competencecourses to the Groups own leadership programmes, like theWallenberg Institute and International Business Seminar. Besidesdeveloping leadership skills, the purpose of the leadership pro-grammes is, to encourage net-working across the divisions andcountries in order to leverage business opportunities and offerthe best solutions to the Banks customers.

A performance cultureSEB actively works to build a culture that measures and rewards performance, in order toreach the Banks strategic goals. At SEB, performance is not only a matter of the results thatare delivered but also of how results are achieved.

Educational levelPercent

University > 3 years 43

University < 3 years 11

Upper secondary school 31Compulsory school 8

Other/unspecied 7

WomenMen

No of employeesDistributed by age and gender

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

29 3039 4049 50

EmployeesGeographical distribution, per cent

Sweden 40 (39)

The Baltic countries 26 (26)

Germany 16 (16)

Rest of Europe 10 (10)

Rest of the Nordic countries 1) 7 (8)

Rest of the world 1 (1)

1) Denmark, Norway and Finland.


17/140

SEB ANNUAL REPORT 2008 15

SEBs employees

SEB an attractive employerSEBs goal is to be the most attractive employer within the nancialsector. The Bank works actively to attract young professionals young graduates with a couple of years work experience. SEBreaches this target group by participating in employer fairs ar-ranged by different universities and by positioning itself on vari-ous student and job sites.

In 2008 an employer branding survey showed that SEB was thepreferred bank among young business and nance graduates inSweden. Also within such other categories as IT, law, technology,graduate engineering and humanities SEB came up top on the listamong the banks. Among all companies, SEB was ranked numbersix as the most attractive employer. In Lithuania SEB has been inthe top three positions the last two years in the The most attrac-tive employer survey, organised by an established research rm.

SEB continues to run its international trainee programme. Theprogramme builds a broad platform for the 24 trainees graduatingevery year. In 2008, a Swedish leading business paper ranked theprogramme as one of the top trainee programmes in Sweden.

Performance in a long-term perspectiveSEB constantly strives towards an open and honest dialogue onkey issues. This is a matter of following up leadership, motivationand Group performance compared with the market benchmark.

Every second year, the employee survey Voice is carried out.The survey is a strategic tool to identify areas of improvementand to decide on appropriate actions. The latest survey, made in2007, showed that competence, motivation and accountabilitywere perceived as high by the Groups employees. Customerfocus is a prioritised area within SEB and the employee surveyshowed that this is an area for further improvement. Next surveywill be carried out in 2009.

Diversity is a success factorRegardless of sex, nationality, ethnic origin, age, sexual inclinationor faith, every SEB employee has the same opportunities to devel-op and make a career within the Group. According to the Groupsdiversity plan, the long-term goal is an equal distribution betweenmen and women so that each sex shall be represented by at least40 per cent at each level.

During 2008, 44 per cent (40) of the Groups managers werewomen. The share for group and customer service managers was54 per cent (46), while it was 36 per cent (36) for department and branch of ce heads. At higher levels, the share of women was25 per cent (25).

Salaries and compensationAlso in terms of remuneration, SEB targets a pay for performanceculture. The SEB Groups overall remuneration structure consistsof the following components: base salary, short-term compensa-tion, long-term incentive compensation to senior leaders and oth-er key employees, pension and bene ts.

Each employee has a base salary depending on job complexi-ty, experience, competence, work performance and individualresponsibility. Most SEB employees are eligible for short-termincentive compensation, which is based upon achievement ofpre-determined goals. In 2008, the total short-term incentivecompensation, including social charges, accounted for 16 per cent(21) of the Groups total staff costs.

During the year, a share savings programme was launched to

encourage the staff to become SEB shareholders, thus increasingemployee commitment and strengthening the alignment betweenSEBs staff and shareholders. According to this scheme, eachemployee can save maximum 5 per cent of his/her annual grosssalary to buy shares for the corresponding amount. After threeyears, employees will receive one share for each share purchasedfor the saved amount. 7,000, or 33 per cent of the SEB Groupsstaff, have started saving under this programme.

During 2008 approximately 500 senior of cers and other keyemployees were granted long-term incentive compensation in theform of so-called performance shares. The purpose of this form ofcompensation is to stimulate senior leaders and other key staff toincreased efforts by aligning their interests and perspectives withthose of the shareholders. (See further on page 60 and Note 9 forinformation about SEBs long-term incentive compensation pro-gramme.)

Short-term incentive (STI) compensationIn relation to staff costs (incl. social charges), per cent

Employee turnoverHeads

average Starters Leavers Retired

2003 19,411 643 3.3% 1,069 5.5% 108 0.6%2004 19,108 784 4.1% 789 4.1% 189 1.0%2005 19,862 2,029 10.2% 1,183 6.0% 109 0.5%2006 20,692 2,249 10.9% 2,012 9.7% 228 1.1%2007 21,523 3,124 14.5% 2,275 10.6% 335 1.6%2008 22,310 3,463 15.5% 2,948 13.2% 152 0.7%

25

20

15

10

5

0

2006 2007 2008


18/140


Corporate responsibility

SEBs core values Commitment, Continuity, Mutual Respectand Professionalism form the basis for the Groups approachto corporate responsibility. To be considered a good corporatecitizen is part of SEBs mission statement.

The Corporate Responsibility committee, comprising mem- bers from each division and key support functions, steers corpo-rate responsibility efforts and reports to the Group ExecutiveCommittee.

SEB has since 2007 implemented internationally agreed prin-ciples for corporate responsibility accounting and measurementand reports its results in accordance with the GRI G3 Guidelines.Priority areas include the establishment of a governance structurefor corporate responsibility that can be externally audited, andde ning the targets for corporate responsibility improvements.

SEBs ambition is to meet the foremost international standardswithin corporate responsibility. Reducing the Groups carbonfootprint is a major priority, through further reductions in energyconsumption, increased use of renewable sources and improvedprocesses.

SEBs role in societyAs a leading bank in the Nordic and Baltic countries, SEB plays animportant role for the development of enterprises, the fostering oftrade and the functioning of nancial systems in these countries.SEB is a universal bank that provides a wide range of nancial

services to corporate customers, institutions and households,with leading positions in areas including corporate and privatelending, equities trading, asset management and investment banking.

The Group has a particularly strong position as a facilitator ofinternational trade, providing among others cash managementservices to the majority of the largest Nordic companies and oper-ating one of the worlds largest foreign exchange desks.

Responsibilities and impactSEB is fully committed to the view that organisations must takeresponsibility for the long-term impact of their activities on itsvarious stakeholders.

The Groups foremost responsibility is to assist its customers 400,000 corporate and institutional clients and ve million privatecustomers in reaching their business objectives and nancialgoals. Building and maintaining strong customer relationships re-quires a long-term approach, a genuine understanding of custom-er needs and constant work to maintain and improve customersatisfaction. In its role as a provider of nancing and as investment

manager, the Groups indirect sustainability impact is important.Responsibility for SEB also entails being an employer that

provides equal opportunities for professional development andfamily-work life balance, and which actively encourages ethnicdiversity. The goal is to be the most attractive employer in the

A trusted partner and corporate citizenAs a major provider of credit, payment systems and other nancial services, SEB playsan important role in society. Corporate responsibility efforts are increasingly integrated in theGroups day-to-day business.

Commitment to ethicsPriorities:

Emphasising core values (Commitment, Continuity, MutualRespect, Professionalism).Ensuring a strong compliance framework.

Integrating ethics in management training.

Commitment to customersPriorities:

Achieving and maintaining top rank in customer satisfaction. Providing products and solutions adapted to our customers

different needs.

Commitment to employeesPriorities:

Having the most motivated employees in relation to our peer group. Achieving diversity in our workforce. Providing our employees with opportunities for career development,

learning and work-life balance.

Commitment to shareholdersPriorities:

Leading our peer group in terms of nancial performance. Maintaining our position as a leader in governance reporting.

Commitment to the environmentPriorities:

Ensuring compliance of SEBs environmental standards in all partsof our operations.

Engaging with our suppliers on environmental issues. Developing new products that live up to the environmental

preferences of our customers. Reducing SEBs carbon footprint.

Commitment to societyPriorities:

Contributing to economic development in the societies where weoperate.Engaging in projects to support entrepreneurship.

Promoting nancial and economic understanding.

Corporate Responsibility at SEB Commitments and Priorities


19/140

SEB ANNUAL REPORT 2008 17


nancial sector. Further information on SEBs employees is foundon pp 1415 and Note 9.

Providing a competitive return to shareholders and address-ing the challenges posed by climate change are other importantaspects of the Groups corporate responsibility efforts. Not least,

it is important that SEB ful ls its role as an active corporate citizen.SEB closely monitors its direct impact on sustainability and

further progress was made in 2008. The Groups total energy con-sumption in buildings was reduced by 14 per cent, while air trav-el decreased and train travel increased, the latter by 40 per cent.Indicators related to human resources also improved, as shown by the reduced sick leave rate and the improved health index.The share of female managers rose to 44 per cent.

The Groups indirect impact is addressed in a number of ways,and involves adherence to internal policies and guidelines as wellas international standards and principles for sustainability. Forexample, SEB is a member of the United Nations Global Compactand supports the OECD guidelines for Multinational Enterprises.As signatory to the UN Global Compact, SEB has made a commit-ment to human rights, anti-corruption and sustainable develop-ment, and is required to communicate its progress in corporateresponsibility on a yearly basis.

Achievements 2008SEB published its rst comprehensive Corporate ResponsibilityReport, in compliance with GRI G3 Guidelines.SEB adopted the United Nations Principles for ResponsibleInvestments (PRI) within the category Investment Manager.The Group views this commitment as an important step incontributing to the United Nations efforts to promote goodcorporate citizenship and to build a more stable, sustainableand inclusive global economy. The adoption of PRI means

additional emphasis on environmental, social, and corporategovernance issues in the Groups ownership policies andpractices.SEB assisted the World Bank in issuing its rst Green Bond(see box).

Code of Business ConductSEB believes that high ethical standards are of fundamentalimportance to sustainable banking.

The Groups ethical standards are expressed in its Code ofBusiness Conduct, which has been adopted by the Board of Direc-tors. The Code is a guideline that expresses the values that driveSEBs behaviour and how the Group conducts its business. Allemployees at SEB are expected to live by these values and eachindividual is personally accountable for acting ethically.

The Code, which has been developed through participation byemployees from across the Group, aims to achieve the followingmain objectives:

to describe to employees the responsibilities that come withemployment at SEB;to describe SEBs standards of business conduct;to guide employees on how to resolve potentially dif cultsituations;to set out procedures for reporting issues relating to the Code.

The Code is available in eleven languages and has also beendeveloped into a customised e-learning tool. It can be found on

www.sebgroup.com.

Responsibility in lendingAs a major provider of nancing to corporate clients, the Groupis continuously required to recognize sustainability aspects inlending. Environmental criteria have been included in the Groupscredit policy since 1997. In 2004, the perspective was broadenedto include other aspects of corporate responsibility such ashuman rights, international labour standards and reputationalrisk. A special section of the credit policy emphasizes SEBs socialresponsibility, beyond issues such as con dence in the customer,the credit purpose and environmental matters.

SEB was the rst Nordic bank to adopt the Equator Principles(EP) on project nancing, a framework for the nancial industry

to manage social and environmental issues in project nancing. AllSEB employees involved in transactions with existing or potentialEP implications have the training and understanding required toapply the Principles. SEBs project nance activities above the EPthreshold amounted to 5 transactions in 2008.

Responsibility in investmentsAs an investment manager, SEB seeks to promote sound princi-ples for corporate governance and corporate responsibility. TheGroup has adopted the United Nations Principles for ResponsibleInvestments (PRI) within the category Investment Manager.

The Groups view is that a well thought-out corporate respon-sibility strategy builds long-term competitiveness and enhances acompanys ability to deliver attractive investment returns. TheGroup expects each company in which SEB holds ownershipstakes to abide by local law and international conventions andagreements, placing particular emphasis on the following inter-national principles:

The United Nations Universal Declaration of Human Rights.The International Labour Organizations FundamentalConventions.The OECD guidelines for Multinational Enterprises.The United Nations Code of Global Compact.

If SEB discovers that a company may have violated these principles,this can potentially lead to a sale of the investment stake.

Ethical fundsSEB offers a broad range of asset management products that applyethical or social responsibility investment criterias. These products

In 2008, the World Bank issued its rst Green Bond to raise funds

for green projects, i.e. projects that seek to mitigate climatechange or help affected people adapt to it. With SEB as the solelead manager, the bond issue has raised SEK 2.7 billion from sev-eral key Scandinavian institutional investors as well as the UnitedNations Joint Staff Pension Fund. The bonds are denominated inSwedish kronor (SEK) with a maturity of six years.

The Green Bond offering is the rst time that the World Bank hasoffered bonds to raise funds targeted to a specic World Bank pro-gram. The bond issue is one example of the kind of innovation theWorld Bank is trying to encourage within its Strategic Framework forDevelopment and Climate Change, launched in 2008 to help stimu-late and coordinate public- and private-sector activity in this area.

SEB arranges rst Green Bondfor the World Bank


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have been designed to meet a variety of concerns and responsibleinvestment preferences among SEBs customers. Three categoriesof ethical funds are currently offered: funds that exclude companiesaccording to negative screening criteria (such as weapons andgambling), funds that apply the Global Ethical Standard screening

criteria (excludes companies that have violated international stan-dards for human rights and corruption, for example) and fundsthat only invest in companies that are leaders in corporate respon-sibility (positive screening). In total, SEB manages SEK 3.3bn inethical funds and SEK 2.8bn in institutional portfolios with anethical pro le.

Commitment to shareholdersSEBs overriding goal is to create long-term shareholder value,whilst also meeting the expectations of other stakeholders. Key toachieving this objective is a strong focus on nancial performanceand risk management/internal control, combined with excellencein corporate governance and reporting. The Groups risk manage-ment processes and internal audit, compliance and risk controlfunctions are presented in the sections on Corporate Governanceon pp 52 60 and Risk and Capital Management on pp 36 51.

Providing accurate and timely information to SEBs share-holders and the investor community at large is important. Allpress releases, nancial reports, presentations and other relevantinformation are published on the Groups website. Extensiveinvestor communication is performed at investor road-shows, inone-on-one meetings and through participation in nancial mar-ket conferences. The Groups communication policy, which isreviewed annually, is based on the disclosure rules of the OMXNordic Exchange and other relevant rules and recommendations.

Environmental impact

SEB strives to reduce the negative impact its operations may haveon the environment. This applies to the direct impact of theGroups daily business activities as well as to the indirect effectsof lending and asset management operations. SEB is a signatoryof the International Chamber of Commerce Business Charter forSustainable Development since 1996 and supports the UnitedNations Environment Programme Finance Initiative.

Direct impact SEBs environmental management system is governed by anEnvironmental Policy adopted by the President and CEO. Headsof all divisional and business areas are responsible for day-to-dayimplementation of the Policy. The SEB Corporate Responsibility

Committee oversees the work. This includes quarterly reportingand analysis of a range of environmental performance indicators.The Groups key performance indicators are presented on p. 19.

Indirect impact SEB strives to increase awareness of the indirect effects andresponsibilities that the Groups credit-granting activities haveon the environment and on sustainable development. Assessmentof environmental risks, and its potential impact on a customerscreditworthiness, is integrated into the Groups Credit Policy.Broader sustainability aspects also in uence the credit decision,such as possible negative environmental and social impact.

However, SEBs potential indirect impact on environmentalsustainability is larger on the positive side as a provider of -nancial solutions for environmentally-friendly development andinvestments than on the negative. The Green Car Loan, whichoffers attractive credit nancing for environmentally friendlycars, and a range of responsible investment funds, can illustrateSEBs ambition to offer products speci cally tailored for sustain-able investment.

Social commitmentSEB is dedicated to making a positive contribution to localcommunities. The Group is engaged in a number of selected socialpartnership activities, in addition to its contributions to programssuch as the United Nations Global Compact mentioned above.

Two types of projects are supported. The rst group include

projects that are tightly linked to SEBs business and whose pur-pose is to build and strengthen relationships with present andpotential customers. These projects mainly focus on entrepreneur-ship. Examples include SEBs support for the Founders Allianceand Entrepreneur of the Year award in Sweden and the BusinessPlan Tournament in Lithuania.

The second group is geared to the key themes of youth, edu-cation, gender equality, ethnic diversity, sports and culture. Ex-amples include the Mentor program in Sweden, Lithuania andGermany and the SEB Next Generation program in partnershipwith the Swedish Tennis Federation. The latter is an effort to sup-port young tennis talents and is the largest Swedish youth tennisprogram ever launched.

SEBs nancial support for social projects amounted to SEK18.3m in 2008. In addition, SEB employees are actively involvedin many of the projects, sharing their experience and knowledge.

Promoting economic understanding and nancial awarenessAs a large nancial institution, it is natural for SEB to share itsexpertise to enhance economic understanding and promotenancial awareness. The Groups economists and strategistsactively participate in the economic policy debate and regularlyappear in the media; other Group specialists provide advice andanalysis to assist entrepreneurs wishing to set up a business andhelp households make informed decisions. As part of SEBsefforts to inform customers and the general public on economicissues, the Group produces macroeconomic and nancial reviews

that are widely distributed and frequently referred to by media.

Equator Principles: social responsibilityin project nancingThe highly specialized eld of project nance plays an importantrole in nancing development throughout the world. Typically, proj-ect nancing is used for large, complex and expensive installationssuch as power plants, reneries, waste treatment plants and trans-portation infrastructure. The lender looks primarily to the revenuesgenerated by a single project both as the source of repayment andas security for the exposure.

To ensure that the projects SEB nances are developed in a so-cially responsible manner and reect sound environmental manage-ment practices, the Group has adopted the Equator Principles (EP),a voluntary set of nancial industry guidelines to determine, assessand manage environmental and social risks in project nancing.Approximately 70 nancial institutions from nearly 30 countrieshave signed the principles. As of 2008, all of the Groups project -nancings reported under EP had been undertaken in OECD countries.

For more information about corporate responsibility at SEB, pleaseconsult the Corporate Responsibility Report at www.sebgroup.com


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The SEB share

Share capitalThe SEB share is listed on the Nasdaq OMX Stockholm Stock Ex-change. The share capital amounts to SEK 6,872m, distributed on687.2 million shares. The Class A share entitles to one vote and theClass C share to 1/10 of a vote.

Stock Exchange trading2008 was the weakest year to date on the Nasdaq OMX StockholmStock Exchange and the Swedish OMX General Index went down by 42 per cent. The value of the SEB share decreased by 63 per cent,while the European Banking Index fell by 64 per cent. During theyear, the total turnover in SEB shares amounted to SEK 190bn.SEB thus remained one of the most traded companies on theStockholm Stock Exchange. Market capitalisation by year-endwas SEK 41.6bn.

Dividend policyThe size of the dividend in SEB is determined by the economic en-vironment as well as the nancial position and growth potentialof the Group. SEB strives to achieve a long-term growth basedupon the capital base for the nancial group of undertakings. SEBhas traditionally had the objective that the annual dividend per

share shall, over a business cycle, correspond to around 40 percent of earnings per share.

SEB maintains this long-term dividend policy, although futuredividends will be assessed in the light of prevailing economicconditions and the Banks earnings and capital position.

SEBs Class C sharesTo facilitate foreign ownership the Class C share was introducedat the end of the 1980s. The trading volumes of the Class C shareare very limited and the number of Class C shares only consti-tutes 3.5 per cent of the share capital of the Bank. Due to this, theprerequisites for creating only one class of shares, thus giving theClass C shares the same rights as the Class A shares, have beenexamined. The examination has shown that there are signi cantpractical dif culties to implement such a structure.

According to the Swedish Companies Act, a proposal that theClass C shares should carry the same rights as the Class A sharesrequires that the proposal is supported by shareholders repre-senting at least 2/3 of the votes cast and shares represented at aGeneral Meeting of Shareholders as well as by 9/10 of the Class Ashares represented at the General Meeting. Furthermore, approvalfrom a majority of all Class A shareholders is required. The reasonfor this is that a resolution to this effect would lead to a certaindilution for the Class A shareholders. Since the number of share-holders in SEB is large, obtaining such approval would be a drawn-out and complicated procedure.

The SEB share development in 2008In 2008 the SEB Class A share dropped by 63 per cent. Earnings per share wereSEK 14.66 (19.97). The Board proposes no dividend for 2008 (SEK 6.50 in 2007).

SEB Share Class ASEK

250

200,000

150,000

100,000

50,000

200

150

100

5020082004 2005 2006 2007

SEB A share, logarithmic scale.Price equals last closing pricepaid on last day of each month.OMX Stockholm.

European Bank Index (FTSE).Number of shares traded, inthousands, linear scale(incl. after-hours transactions).

Monthly share price 2008SEK

200

150

100

50

0Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Highest periodLowest period


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SEB ANNUAL REPORT 200821

The SEB share

Basic and diluted earningsPer SEB share, SEK

DividendPer SEB share, SEK

24

18

12

6

0

8

6

4

2

02004 2005 2006 20072004 2005 2006 2007 2008 20081)

Basic earningsper share

Diluted earningsper share1) The Board proposes no

dividend for 2008.

SEB shareData per share 2008 2007 2006 2005 2004

Basic earnings, SEK 14.66 19.97 18.72 12.58 10.83Diluted earnings, SEK 14.65 19.88 18.53 12.47 10.82Shareholders equity, SEK 121.96 111.97 98.98 84.84 77.31Adjusted shareholders equity134.10 127.24 112.66 96.44 85.66Net worth, SEK 135.00 127.44 115.90 102.19 89.50Cash ow, SEK 28.97 177.15 6.32 21.07 4.95Dividend per A andC share, SEK 0.00 6.50 6.00 4.75 4.35Year-end market price

per Class A share, SEK 60.75 165.50 217.50 163.50 128.50per Class C share, SEK 55.00 154.00 209.00 158.00 124.50

Highest price paid duringthe year


Lowest price paid duringthe year


Dividend as a percentage ofresult for the year, % 0.00 32.6 32.0 37.8 40.2Yield, % 0.00 3.9 2.8 2.9 3.4P/E 4.1 8.3 11.6 13.0 11.9Number of issuedshares, million

average 684.8 682.0 673.3 667.8 679.8at year-end 685.0 683.5 678.3 668.8 668.5

Share capital, December 31, 2008

Share seriesNumber

of sharesNumberof votes capital votes

A 663,004,123 663,004,123 96.5 99.6C 24,152,508 2,415,251 3.5 0.4

687,156,631 665,419,374 100 100

The SEB share on the Stockholm Stock Exchange

2008 2007 2006 2005 2004

Year-end marketcapitalisation, SEKm 41,606 113,447 149,251 115,026 90,382Volume of sharestraded, SEKm 190,011 252,303 162,707 104,372 86,293

Percentage of

Each Series A-share entitles to one vote and each Series C-share to 1/10 of a vote.

Change in share capitalSkandinaviska Enskilda Bankens share capital has changedas follows since the Bank was started in 1972:

Year Transaction SEKChange in no.

of sharesAccumulatedno. of shares

SharecapitalSEKm

1972 5,430,900 5431975 Rights issue 1:5 125 1,086,180 6,517,080 6521976 Rights issue 1:6 140 1,086,180 7,603,260 7601977 Split 2:1 7,603,260 15,206,520 7601981 Rights issue 1B:10 110 1,520,652 16,727,172 8371982 Bonus issue 1A:5 3,345,434 20,072,606 1,0041983 Rights issue 1A:5 160 4,014,521 24,087,127 1,2041984 Split 5:1 96,348,508 120,435,635 1,2041986 Rights issue 1A:15 90 8,029,042 128,464,677 1,2841)1989 Bonus issue 9A+1C:10 128,464,677 256,929,354 2,5691990 Directed issue2) 88.42 6,530,310 263,459,664 2,6351993 Rights issue 1:1 20 263,459,664 526,919,328 5,2691994 Conversion 59,001 526,978,329 5,2701997 Non-cash issue 91.30 61,267,733 588,246,062 5,8821999 Rights Issue3) 35 116,311,618 704,557,680 7,0462005 Reduction of

the share capital 17,401,049 687,156,631 6,872

1) The recorded share capital at 31 December, 1986 was still SEK 1,204m, since theproceeds from the rights issue were not paid in full until early 1987.

2) The issue was directed at the member-banks of Scandinavian Banking Partners. Through splits in 1977(2:1) and 1984 (5:1), the nominal value of the shares has been changed from SEK 100 to SEK 10.

3) According to the instructions of the Financial Supervisory Authority, subscribed shares that havebeen paid will not be registered as share capital in the balance sheet until the rights issue has beenregistered (which took place in January, 2000).

Distribution of shares by size of holding

Size of holdingNo. ofshares Per cent

No. ofshareholders

1 500 35,954,112 5.2 233,338501 1,000 18,800,773 2.7 25,3691,001 2000 18,404,405 2.7 12,8282,001 5,000 21,203,936 3.1 6,8025,001 10,000 11,720,197 1.7 1,64010,001 20,000 8,456,798 1.2 60120,001 50,000 11,110,797 1.6 35950,001 100,000 11,188,818 1.6 153100,001 550,316,795 80.1 311

687,156,631 100.0 281,401

Source: VPC / SiS garservice.


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Report of the Directors

Financial review of the GroupSEBs underlying performance remained strong throughout 2008,with intense customer activities, higher business volumes andincreased market shares. Operating income improved by 2 percent and the operating pro t was the third largest to date.

SEBs 2008 result was negatively affected by the extreme dis-ruption in the global nancial markets and the sharp deteriorationof the real economy in the second half of the year. The worsenedeconomic conditions in the countries where SEB operates led toincreased provisions for credit losses, especially in the Baltic coun-tries. Net nancial income decreased due to lower income fromcapital market-related debt instruments, including a loss of SEK0.5bn in connection with the bankruptcy of Lehman Holdings, Inc.Overall lower activities on the capital markets and falling values onequities led to a decrease in net commission income.

2008 was a year of few organisational changes:In January 2008, the acquisition of the KAM Group (Key AssetManagement) was nalised.In the summer of 2008, SEB acquired GMAC Commercial Fi-nance, the largest independent factoring company in Poland.During 2008 SEBs 24.8 per cent share of NSCD (VPC) and 41.5per cent share of PKK (Pankade Kaardikeskus) were divested.During the autumn of 2008 SEB initiated an organisationalchange in its German operations. Retail Banking is separatedfrom Merchant Banking within the legal entity SEB AG, there- by creating exibility and better opportunities for bene ting

from the changing German banking market.

Result and protabilitySEBs operating pro t for 2008 amounted to SEK 12,471m (17,018), adecrease of 27 per cent compared with 2007. Net pro t decreased by 26 per cent, to SEK 10,050m (13,642).

IncomeTotal operating income increased to SEK 41,140m (40,440). Aweaker Swedish krona affected income positively by SEK 509m.

Net interest income improved by 17 per cent, to SEK 18,710m(15,998). Higher volumes contributed SEK 1,699m, or 60 per cent,of the increase; average deposit volumes grew by 9 per cent and

average lending volumes to the public by 11 per cent comparedwith 2007. The net effect of lending and deposit margins was anincrease in net interest income by

seb annual report 2008

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