seb annual report 2001

8/14/2019 SEB Annual Report 2001

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Annual Report 2001 01

Increased customer satisfaction, intensified co-operation within

the Group and increased cost-efficiency are top priorities


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Contents

Important events in 2001 1

Chairmans statement 2

Presidents statement 3

Economic development 4

SEB in brief 6

SEB and the society 8

The SEB share 10

SEBs divisions

Nordic Retail & Private Banking 12

Corporate & Institutions 14

SEB Germany 19

SEB Asset Management 22

SEB Trygg Liv 24

SEB Baltic & Poland 27

Report of the Directors 29

Risk- and capital management 38

Accounting principles 44

Definitions 47

Profit and loss accounts 48

Balance sheets 50

Cash flow analysis 51

Notes 52

Five-year summary 82

Proposal for the distribution of profit 84

Auditors report 85

Board of Directors 86

Group executive Committee and auditors 87

Addresses 88

Financial information during 2002

Publication of annual accounts 21 February

Publication of Annual Report End of March

Annual General Meeting 10 April

Interim report JanuaryMarch 7 May

Interim report JanuaryJune 22 August

Interim report JanuarySeptember 7 November

For further information please contact:

Gunilla Wikman Per Anders Fasth

Head of Group Communications Head of Investor Relations

Telephone +46 8 763 81 25 Telephone +46 8 763 95 66

E-mail: [email protected]: [email protected]

Boo Ehlin Laurence Westerlund

Press Officer Investor Relations

Telephone +46 8 763 85 77 Telephone + 46 8 7638627

E-mail: [email protected] E-mail: [email protected]

Annika HalldinResponsible for financial information/

Shareholder contacts

Telephone + 46 8 763 85 60

E-mail: [email protected]

SEBs financial information

is found on www.seb.net

Cover picture: Anders Larsson, SEB in Trelleborg, Sweden


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Since 1999 SEB has changed frombeing a Nordic bank, with an over-whelming part of its employeesand customers in Sweden into aNorth European bank with morethan half of both staff and cus-tomers outside Sweden. Now-adays, our home market includesGermany and the Baltic countries.

The world picture changed on11 September. The world economyhad already weakened and a gen-

eral uncertainty after the terror attacks in New York rein-forced this negative trend. Economic growth dropped dra-matically in the U.S. Japan fell into yet another deep recessionand a currency crisis broke out in Argentina. Growth withinthe EU contracted, too. However, so far, it seems that GreatBritain has managed to fend off the unfavourable trend,while Germany continues to experience growth problems.

Nor has Sweden escaped the economic downturn. TheSwedish economy has been particularly pressured due to itshigh exposure on the crisis sectors telecommunications andIT and its extensive export industry.

It is unlikely that there will be any change in this sensitive

economic situation during the first six months this year. Poorcorporate profits, many new unemployed and high privateindebtedness in the U.S. and Great Britain, for example, willrestrain consumption. It will take some time before the posi-tive effects of the introduction of euro-notes and euro coinson 1 January 2002 will start to show. We will probably haveto live with economic uncertainty, even though there aresigns that the American recession is on its way out.

Following the recession, companies have abandoned theirmore ambitious expansion plans for more concentrated in-vestments. SEB has increasingly focused its activities onNorthern Europe, including Germany, in an effort to developits own potential within its home market operations. This

strategy has led to a satisfactory result for the past year, withthe exception of equity-related areas that were affected bythe general downturn.

Despite the tough economic climate the Bank has capacityfor consolidating its position further. We have started a rig-

orous cost-cutting programme. Our risk exposure is low in aworld where there have been spectacular credit losses andcorporate bankruptcies, like Enron. Our engagements in theworst hit countries like Argentina are very limited.

SEB has a unique position as the leading Nordic bankfor companies. This is one of the conclusions that we havedrawn from working on the proposed merger between SEBand FreningsSparbanken. Furthermore, we have concludedthat we must put more focus on customers and customerneeds and that our cost-efficiency needs to be improved.

SEB will face new and important challenges ahead. Rightnow we are living through times of extremely deep-goingand thorough change. Business life is continually exposedto fundamental change as a result of the deregulation andglobalisation that have characterised the last ten years. Oneexample of this can be seen in the increasing pressure oncompanies to assume a more comprehensive social responsi-bility. As far as SEB is concerned it is a matter of creatingshareholder value by weighing in a balanced social responsi-bility in our decisions, among other things.

Development and change go hand in hand. Change breedsnew opportunities. I look forward to these new, interestingopportunities that promise profitable years ahead for SEB.

The past year was an eventful year. Many people have

made outstanding contributions during a challenging peri-od. I have witnessed many fine examples of commitment,hard work and loyalty during the last year. Allow me, onbehalf of the Board, to convey my sincere thanks to theManagement and all employees of SEB for all that theyhave achieved during the past year.

In spite of a difficult market climate SEB stands strongthanks to these efforts.

Stockholm in February, 2002

Jacob WallenbergChairman of the Board

2 S E B A N N U A L R E P O R T 2 0 0 1

SEB strengthened through special measures

C H A I R M A N S ST A T E M E NT


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2001 was a turbulent year. The stock markets were weak andthe economies in most countries experienced a sharp down-turn, reinforced by the terror attacks in the U.S. on 11 Sep-tember.

SEB has a strong position within equity-related productsand services and was therefore worse hit by the sharp down-turn than many of its competitors.

In February last year we announced the proposed mergerwith FreningsSparbanken. We would have been able to cre-ate a strong Nordic bank that could actively participate inthe restructuring of the European financial industry.However, the demands that the EU merger task force posedto approve the merger were so tough that we mutuallydecided to withdraw our application.

We immediately made an analysis of our experiencesfrom the integration work and, after five weeks, welaunched a programme aiming at making better use ofour own potential. This means for example:

a renewal of our Management team a cost-savings programme in order to save SEK 2.5

billion, net, over the next 15 months a comprehensive change programme called 3 C

which stands for Customer satisfaction, Cross-servicingand Cost efficiency. The 3 C programme is a change

process involving the whole Group to ensure high prof-itability in the long term.

Customer satisfaction is an absolute prerequisite for long-termsuccess. In many parts of our Group, for example in SEBGermany and Merchant Banking, customer satisfaction ishigh in comparison with our competitors. However, at thesame time we can see that we have to increase customer sat-isfaction amongst our retail customers. This is an area thatwe now address, partly by focusing on our local branches,reinforcing their role and customer responsibility.

Cross-servicing customers across our various businessunits offers an important potential to enhance revenues and

to increase our market share among existing customers.Increased co-operation within the Group will give our cus-tomers better service at the same time.

The Cost-efficiency projects that are now under way withinSEB reflect the need for adapting to weaker markets but alsofor creating a culture of long-term cost-consciousness withinthe Group. The total cost reduction programme, which pri-marily involves support and administrative functions,amounts to SEK 3 billion, gross, and will give an annual neteffect of SEK 2.5 billion from the beginning of 2003, all elsebeing equal.

I am pleased that this turbulent year ended well, with abetter result for the fourth quarter than for the previous

quarters, which in part was due to the stronger stock mar-

kets. Our operating costsdecreased, although we havetaken an up-front charge forsome of the restructuring costsin connection with the presentcost-cutting programme. Mostof these have been taken dur-ing 2001, but will also have acertain effect on 2002.

A large part of the result ofthe Group came from Corporate& Institutions, where MerchantBanking reported strong income due to the good perfor-mance of the customer-driven business. Enskilda Securitiesresult was weaker, as for most investment banks, and costreduction measures have been taken.

SEB Germanys income decreased due to the weak Ger-man economy. However, this was largely offset throughadditional cost-savings under the current restructuring pro-gramme.

The Baltic banks show continued growth and good results.Nordic Retail & Private Banking suffered from the declining

stock markets but managed to reduce costs. In the interna-tional part of Private Banking some drastic steps were taken

to reduce costs and adapt the business to the market envi-ronment. At year-end the number of Internet bank customersin Sweden, Germany and the Baltic countries had increasedand reached 1,128,000 (800,000).

Our credit volumes remained largely unchanged. We sawexpansion primarily in the Baltic countries and within mort-gage lending to Swedish households. Credit losses were lowand doubtful claims, gross, declined somewhat. However, anumber of companies have been downgraded by the ratingagencies and it is not unreasonable to expect an increase inthe credit loss level generally in the banking industry.

All in all, we can conclude that 2001 was a tough year.However under the circumstances I still feel comfortable,

considering the measures that we have now taken. However,since there are no signs of a recovery of either the stock mar-ket or the general economic situation our cost-cutting pro-gramme is of utmost importance for our future. And the 3 C-programme has top priority within all parts of the Group!

Stockholm in February, 2002

Lars H Thunell

President and Group Chief Executive

3S E B A N N U A L R E P O R T 2 0 0 1

2001 a year of turbulence

P R E S I DE NT S ST A T E M E NT


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The year 2001 was an annus horribilis for the world econ-omy. The U.S. led the world down into the deepest globalrecession for more than 20 years. The stock markets wentdown. Also Germany and Sweden were pulled down fardeeper than foreseen by the forecasts in early 2001. Once thebottom finally could be expected the terror attacks occurredin September, pushing consumer confidence and corporatefaith in the future further down both in the U.S. and Europe.Only towards the end of the year a change for the betterstarted to become noticeable.

A series of concurrent factors made the economic slow-down unexpectedly sharp. The business community reducedits investment activities as a result of the burst of the IT bub-ble, which had a negative spreading effect on the wholeindustry. The U.S. faced a classic recession characterised byover-capacity and falling investments. Europe was negative-ly affected by diminishing foreign trade and declining stockmarkets. In Germany, the largest European economy, theproblems were aggravated by the foot-and-mouth diseaseand rising oil prices, which had a negative effect uponhousehold real wages, stopping growth. In all, the Germaneconomy only grew by 0.7 per cent during 2001.

At the same time the Japanese recession deepened, which

meant that the three largest world economies slowed downsimultaneously. This concurrent slump made the recessioneven deeper.

The Federal Reserve quickly changed its monetary policyand introduced a long series of interest rate cuts in January.However, due to falling stock markets and great over-capacity

these rate cuts did not have any effect upon industrial produc-tion to start with, even though consumption was kept up, notleast through cheaper housing loans. Since monetary policyefficiency was lower than expected, the Federal Reserve wasforced to lower rates far more than anyone had predicted. InEurope the comparatively high rate of inflation led to a moreprudent attitude on the part of the European Central Bank.

There was great nervousness in the financial markets.The bottom was reached on 21 September, with Standard &Poors 500 25 per cent below the opening of the year. Afterthat, a relatively quick recovery took place and the U.S. stockmarket closed the year 11 per cent down. The fact that themarket had discounted the recession of the next few monthsand started to price in an expected economic upturn during2002 explained this recovery. However, uncertainty remainsgreat and there are still risks for a backlash.

A pronounced monetary policy expansion characterisedthe international interest markets during 2001. Headed bythe Federal Reserve, all the major central banks loweredtheir key interest rates, which pushed down short-term rates.Bond rates were more stable, reflecting low inflation expec-tations. In the autumn, however, there was considerablevolatility when bond rates in the U.S. as well as in Europe

first fell strongly in the aftermath of the terror attacks andthen quickly rose again, when also the bond markets startedto price in a coming economic upturn.

Like the other Nordic countries Sweden was draggeddown by the international downturn. Swedish exports,particularly of telecommunication equipment and vehicles,

After the deepest recession in 20 years, an upturn is now in sight.

E C O N O M I C D E V E L O P M E N T

USD/SEK Euro/SEK

Jan Mar May July Sept Nov Jan Mar May July Sept Nov Dec

2000 2001

11.5

11.0

10.5

9.0

9.5

10.0

8.5

8.0

Currency trend

SEK against Euro and USD, current rates

10 year bonds

6 month STIBOR (Stockholm Inter Bank Offered Rate)

Jan Mar May July Sept Nov Jan Mar May July Sept Nov Dec

2000 2001

7

6

5

4

3

Interest rate movement in Sweden

Monthly averages, per cent

Economic development


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were hit hard by falling investments in the world around.However, the weakness of the Swedish krona supported theexport trade to a certain extent while purchasing power wasmaintained relatively well, due to tax cuts among otherthings. The Swedish slow-down was therefore not quite asstrong as in Germany and GDP growth was 1.2 per cent.Inflation rose significantly during the spring, mainly follow-ing rising oil and foodstuff prices but also due to increasingimport prices, partly as a result of the weak krona.

The Stockholm stock exchange dropped sharply, by 35per cent from the beginning of the year until it bottomed outin late September. At year-end the General Index was 16 percent below the level at the opening of the year.

Short-term interest rates dropped somewhat during 2001,although they were pushed up during the summer monthsfollowing an unexpected interest rate increase by theRiksbank, which both intervened in the foreign exchangemarket and raised its key interest rate in an attempt atstrengthening the krona. However, the Central Banks effortsin this respect must be described as rather unsuccessful.After the terror attacks, the Riksbank lowered its key interestrate again. Bond rates remained relatively stable, indicatingthat the market is confident that the long-term rate of infla-

tion will remain low, despite the temporary high inflation.In all, the economic development in SEBs most important

markets, particularly in Germany, gave rise for concern dur-ing 2001, with recession and falling stock markets. The BalticStates represent an exception. Due to increasing domesticdemand and trade with the East, growth rates in the Baltic

5

E C O N O M I C D E V E L O P M E N T

95 96 97 98 99 00 01 02

500

400

300

200

100

0

Sweden: Affrsvrldens General IndexGreat Britain: FTSE 100 Index

Germany: DAX 100 Index

USA: S&P 100 Index

Stock market development

Index 1995 = 100

region remained high, with GDP-increases of around 5 percent. Lithuania showed the highest growth. Polands eco-nomic growth has dropped, revealing financial imbalancesand structural weaknesses.

Just like Sweden the other Nordic countries have been hitby the international recession. Due to its great dependenceupon the telecommunication sector the Finnish economywas hard hit by the burst of the IT bubble. Weak domesticdemand hampered the Danish economy. Norway, on theother hand, has fared better, supported by high oil pricesamong other things.

The most important economic event in early 2002 was thetransition to common banknotes and coins in the euro-zone,which went quite smoothly. The common currency is animportant feature of the work on improving the conditionsfor long-term economic growth in Europe.

The beginning of 2002 has presented a diversified eco-nomic picture. Leading indicators in the U.S. and Europeshow that the economic situation has turned upwards again.Faith in the future is reappearing and decreasing stocks indi-cate that production will increase considerably during thecoming winter and spring. However, there is a risk that thestrong inflow to the stock markets towards the end of 2001

will not be met by matching profit increases in 2002. Thismeans that the situation is still delicate.

As regards the Nordic countries business indicators havestabilised in line with Europe, which points to a gradualrecovery during the year. The Baltic economies seem to con-tinue to grow at a steady pace.


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Strategy

SEBs strategy is to consolidate its market position with thehelp of the Groups traditional factors of strength as a finan-cial partner to companies and to financially active and de-manding private individuals.

The following areas are of top priority: Increased customer satisfactionThe key to long-term success is found in satisfied customers.It is true that the Group has high ratings within the corpo-rate sector, private banking and its German and Baltic opera-tions. However, within the Swedish retail business customersatisfaction has decreased during 2000 and 2001. Therefore,the role of the branch offices will now be strengthenedthrough increased authority and responsibility for service.

Improved cross-servicing and cross-selling within the Group

SEBs broad and strong range of products and services offersgood opportunities of meeting a great deal of customerneeds. By making better use of the opportunities existingwithin the various areas of activity of the Group, SEB canincrease the sales to its customers.

Increased cost efficiency

During the period of successful growth up to the end of theyear 2000, SEB had to increase its costs in order to handle thelarger business volume. The slackening of the economy andthe downturn of the stock market have forced SEB to adaptits growth strategy and, consequently, its level of costs.

During the autumn of 2001, a cost-reduction programmewas launched which will give an annual net effect of SEK 2,5billion, starting in 2003. This corresponds to a cost reductionfrom SEK 22.5 billion to SEK 20.0 billion and a reduction ofthe Cost/Income ratio from 0.75 to 0.65, all else being equal.

Customer-adapted organisationAs from the autumn of 2001 SEBs organisation has beenadapted to better meet the needs of the customers of theGroup. The purpose is to increase co-ordination between the

SEB in brief

Increased customer satisfaction, improved co-operation between the various parts ofthe Group and increased cost-efficiency these are the most important goals for SEB.

S E B I N B R I E F

SEB is a North European financial Group that is focused onlarge companies, institutions and private individuals, with675 branch offices around Sweden, Germany and the BalticStates. SEB has a total of 4 million customers, of whom a lit-tle over one million are e-banking customers. On 31 Decem-ber 2001, the Groups total assets amounted to SEK 1,163 bil-lion and its assets under management totalled SEK 871 bil-lion. The Group is represented in some 20 countries aroundthe world and has a staff of 20,700.

Business concept, vision and goal

SEBs business concept is to offer financial advice and tohandle financial risks and transactions for companies andprivate individuals in the European markets where it has apresence in order to: create real customer satisfaction give its shareholders a competitive return and be seen as good citizens of society.

It is SEBs vision to be a leading North European bank, basedupon long-term customer relations, competence ande-technology.

We will achieve our goals with the help of motivatedemployees, by co-operating with our interested parties andthrough increased co-operation between our various areasof activity.

The structural goals are: to increase customer satisfaction and loyalty to increase motivation among the employees to increase cost efficiency.

Thefinancial goals are to achieve: a long-term return on equity of 15 per cent after tax increased earning stability.

Nordic Retail

& PrivateBanking

SEB

Germany

Corporate &

Institutions

SEB

Trygg Liv

SEB Baltic

& Poland

Group Chief Executive

and President

SEBs organisation

In December 2001 SEBs organisation was changed in certain respects in order to

increase customer satisfaction, intensify internal co-operation and raise cost-efficiency.

Shared servicesincl. IT

Staff functions

SEB

AssetManagement

Geographical distribution of staff, 2001

Sweden 47%

Germany 23%

The Baltic 20%

Rest of Europe 5%

Rest ofNordic region 4%

Rest of world 1%


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various channels of distribution, to make the offers of theBank more attractive and to create a more efficient allocationof resources.

SEB in the market

In the retail market in Sweden, Germany and the Balticcountries SEBs main competitors are other large banks and,as far as Sweden is concerned, a number of niche players.In Sweden SEB increased its share of total deposits from thegeneral public (i.e. companies, private individuals, etc.) byone percentage unit (up to and including November 2001),while its share of total lending declined by half a percentageunit. SEBs three Baltic subsidiary banks have a high share ofdeposits/lending in the Baltic countries. SEBs market shareof household deposits and lending in Germany was one percent.

With SEK 871 billion in assets under management SEBis one of the largest private asset managers in the Nordicregion. In the Swedish household market for savings(excluding directly-owned shares) the SEB Group once againwas No. 1 in 2001, with a share of 16.5 per cent (17).

In the area of life insurance, SEB Trygg Liv is one of thethree largest players in the Swedish market.

Merchant Bankings competitors within for exampleexport/project finance, debt and capital market services andsecurities finance are mainly American and European invest-ments banks and global commercial banks. In the Swedishcorporate market SEB is the leader within foreign exchangetrading, cash management, export finance and internationalpayments, among other areas. Merchant Banking has alsobeen ranked the best foreign exchange bank in SEK on a

global basis.Enskilda Securities was the largest player on the Stock-

holm and Oslo Stock Exchanges and No. 2 in Helsinki in2001. It is also one of the best trusted investment banks asregards mergers and acquisitions involving Nordic compa-nies as buying or selling parties.


S E B I N B R I E F

During 2001 SEB Asset Manage-

ment had SEK 567 billion and

SEB Germany SEK 113 billion

in assets under management

and Private Banking the rest.

Assets under management within the SEB Group, SEK billion

1,000

800

600

400

200

0

200120001999

Market shares

Per cent 2001 2000 1999

Deposits from the general public, Sweden 21.7* 20.6 21.2

Households 13.6* 13.9 13.3

Companies 26.7 24.5 27.2

Lending to the general public, Sweden 13.8* 14.3 14.8

Households 11.1* 11.5 11.9

Companies 15.3* 15.9 16.7

Mutual Funds, Sweden 18.4 19.6 20.2

Traditional life-insurance, Sweden 18.8 18.3 20.2

Secondary equity commissions, Sweden 9.0 9.8 10.3

Secondary equity commissions, Norway 16.9 13.0 3.1

Secondary equity commissions, Finland 10.4 9.3 6.5

Deposits from the general public,the Baltic States 25.1 26.8

Lending to the general public,the Baltic States 34.5 32.5

* Information as per 30 November, 2001

Other

36,000

30,000

24,000

18,000

12,000

6,000

0

200120001999

Net result of financialtransactions

Net commission income

Net interest income

Distribution of income, 2001, SEK M

During 2001 net interest income accounted for

43 per cent of SEBs income. This was the first time

in many years that net interest income represented

the largest part of Group income. The share of net

commission income, which accounted for over

40 per cent in 1999 and 2000, dropped to 38 per

cent in 2001 due to lower securities commissions.

Key figures for the SEB Group

2001 2000 1999

Return on equity, % 11.9 16.9 14.6

Return on total assets, % 0.43 0.64 0.66

Return on risk-weighted assets, % 0.99 1.43 1.43

Earnings per share, SEK* 7.17 9.43 6.96

Cost/income ratio, SEB Group 0.75 0.68 0.74

Lending loss level, % 0.09 0.12 -0.09

Provision ratio for doubtful claims, % 44.6 49.1 59.6

Level of doubtful claims, % 1.37 1.35 0.82

Total capital ratio, % 10.84 10.76 14.62

Core capital ratio, % 7.71 7.37 10.80

* More information on the SEB share can be found on pages 1011.

Companies 36%

Households 23%

Banks 19%

Property management 12%

Public administration 10%

Credit portfolio, 2001

SEBs credit exposure increased from SEK 926 billion to SEK 955 billion during

2001. The increase was primarily related to the Baltic and mortgage lending to

Swedish households. The credit portfolio has become more international over the

last three years. The portion of non-Nordic loans has increased from 25 per cent

in 1999 to 56 per cent in 2001.

Sweden 43%

Germany 30%

Rest ofNordic region 11%

Rest of Europe 8%

The Baltic 4%

Rest of world 4%

Geographical distribution of gross income, 2001

The predominant part of income comes from SEBs home

markets in Nothern Europe.


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S E B A N D TH E S O C I E TY

SEBs staff

Diversity

SEB considers that variety enriches the business activitiesof the companies of the Group. Diversity is a resource thatshould be respected and treasured.

The SEB Group shall offer equal opportunities and equalrights to everybody regardless of sex, national or ethnicalorigin, age, sexual inclination or faith.

Equality

According to the equality plan that was established for SEB inSweden in 1998 the objective of an even distribution betweenwomen and men shall be achieved by 1 September, 2005. Thismeans that none of the sexes shall be represented by less than40 per cent at any level.

During 2001, 38 per cent of all SEB managers werewomen. As regards group and customer service managersthe distribution was 50-50, which means that the targets at

that level have already been reached.SEB endeavours to improve the balance between men and

women among the appointed staff also in Germany and theBaltic countries.

SEBs customers

SEBs business operations are based upon customers confi-dence. Confidence is built upon respect and protection ofcustomers personal integrity, which is something that weuphold by treating all the information that our customers en-trust us with in a careful and responsible way. Therefore, allreasonable and proper measures to protect such customer in-formation from unauthorised access, forwarding, change ordestruction are taken in all contexts where personal informa-tion or any other important information may be treated bySEB or by any other party on SEBs behalf.

Treatment of personal information

On 1 October 2001 the Act on personal information becameeffective in Sweden. The purpose of this Act, which is basedupon an EU-directive, is to protect individuals against in-fringements of their personal integrity when their personalinformation is treated. An important part of this integrity

protection is that the person concerned is informed about thetreatment of his/her personal information.

SEB has put in a great deal of work during 2001 to makesure that these legal requirements are met.

Bank secrecy

Information about individual customers can only be used bythe officer or unit of the Bank that has a justified need forsuch information to perform his/its work. Such needs mayexist in order for the Bank and the other SEB Group compa-nies to live up to legal requirements or to be able to offer cus-tomers correct and proper advice or customer service. Everyemployee has to sign a declaration of secrecy.

On-line issues

SEBs rigorous requirements with respect to the protectionof integrity and security are of course also applicable to thehandling of its web-site information. This is why we provideinformation about the purpose for which such informationmay be handled on all web-sites where we collect personalinformation.

SEB and the society

One of SEBs goals is that the Group should be seen as a good citizen of society it shall

be a company that both stands for good ethical standards and contributes to a tenable economic

development. In order to reach these goals SEB has worked out a number of guidelines

concerning employees, customers and the society at large.

100

80

60

40

0

OtherHeads ofdepartment/

branchoffices

Groupand customer

servicemanagers

20

Men

Women

Distribution according to sex,

managerial positions in Sweden 2001, %


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Other social contributions

SEB makes direct contributions to many different charityprojects in several countries, both at a central level andthrough its business areas. SEB is for example sponsoringseveral training programmes for children and youth inLatvia and has also donated a number of pcs to schools inthe Baltic countries. Instead of Christmas gifts the variousunits of the Bank sent contributions to All the WorldsChildren through the Aid Organisation of the SwedishBroadcasting Union. The Group has donated about SEK 2 Min co-operation with the Cancer Relief Fund and the WorldWildlife Fund, which equals the donations of the mutualfund unit-holders in these funds.

SEB contributes to, and participates actively in, Mentor,which is an organisation for drug prevention among theyouth. SEB employees participate in this project as mentorsfor young people.


Information security

The protection of financial and personal information repre-sents a great and important responsibility. SEB has thereforetaken, and takes on a regular basis, a number of protectivemeasures which together contribute to a very high degree ofIT security. Data virus protection detects virus and preventsit from entering SEBs data systems. So-called fire-walls andseveral other security components stop unauthorised inter-ference. Secure transmission of information means that noinformation is accessible to unauthorised individuals.

Advanced cryptographic technology, Secure Socket Layer(SSL) is used in web-sites via which sensitive informationcan be transmitted.

Society

Environmental policy

Compared with manufacturing and transportation compa-nies, for example, the financial sector does not have anyparticularly great direct influence on the external environ-ment. Indirectly, however, the banks can play an importantpart in their contacts with suppliers and customers, particu-larly in connection with lending.

According to the environmental policy that SEB adoptedin late 1995 the Group shall consider environmental aspectsin its credit-granting activities and in the design of products

and services.The Groups credit policy contains rules that the environ-

ment and environment-related risks shall be taken intoaccount in connection with all major credit decisions.Existing customers shall also be followed up.

SEB has signed the environmental documents of both theUnited Nations and the International Chamber of Commerceunder which the signatories commit themselves to payingdue regard to, and to acting for, a better environment withintheir respective activities.

S E B A N D TH E S O C I E TY


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TH E S E B S H A RE

Share capital

The SEB share is listed on the Stockholm Stock Exchange.The share capital amounts to SEK 7,046 M, distributed on704.6 million shares of a nominal value of SEK 10 each. TheSeries A share entitles to one vote and the Series C share to1/10 of a vote.

Stock Exchange trading

During 2001, the value of the SEB share dropped by 8 percent, while the All Share Index fell by 16 per cent and theindex for bank and insurance shares declined by 23 per cent.During the year, total turnover in SEB shares was approxi-mately SEK 75 billion.

Dividend policy

The size of the dividend of SEB is determined by the finan-cial position and growth possibilities of the Group. SEBstrives to achieve long-term growth based upon a capitalbase for the financial group of undertakings that must not beinferior to a core capital ratio of 7 per cent.

The dividend per share shall, over a business cycle, corre-

spond to around 40 per cent of earnings per share, calculatedon the basis of operating result after tax.

The SEB share

The SEB share dropped by 8 per cent during the year. Earnings per share were SEK 7.17 (9.43).

A dividend of SEK 4.00 (SEK 4.00) per share has been proposed.

SEB share, SEK

(c) SIX

SEB Share, logarithmic scale. Price equals last closingprice paid on last day of each month

Affrsvrldens General Index Affrsvrldens Index for Bank and Insurance SharesNumber of shares traded, in thousands, linearscale (incl. after-hours transactions)

20,000

40,000

60,000

80,000

100,000

60

80

100

120

140

160

180

200

97 98 99 00 01

Net profit for the year and dividend

per SEB share, SEK

Earnings per share in 2001 amounted to

SEK 7.17. An unchanged dividend of

SEK 4.00 is proposed.

10

8

6

4

0

1999 2000 200119981997

2

Net profit for the year

Dividend

The SEB share

Data per share 2001 2000 1999 1998 1997

Operating result, SEK1) 6.29 8.99 5.60 5.25 3.80

Net profit for the year, SEK1) 7.17 9.43 6.96 6.58 4.12

Adjusted shareholdersequity, SEK 2) 67.10 62.61 55.83 48.05 42.78

Dividend

per Series A share, SEK 4.00 4.00 3.50 3.13 2.68

per Series C share, SEK 4.00 4.00 3.50 3.13 2.68

Year-end market priceper Series A share, SEK 95.50 104.00 86.00 76.45 89.86


Highest price paid during the year



Lowest price paid during the year



Dividend per Series A share as apercentage of result for the yearper share, % 55.8 42.4 50.3 47.6 65.2

adjusted shareholders equityper share, % 6.0 6.4 6.3 6.5 6.3

market price per Series A share, % 4.2 3.8 4.1 4.1 3.0

Year-end market price per Series Ashare as a percentage ofearnings per share , P/E 13.3 11.0 12.4 11.6 21.8

adjusted shareholders equityper share, % 142.3 166.1 154.0 159.1 210.1

1) Calculated on an average number of shares in 1999 (rights issue) and 1997

(non-cash issue), taking the bonus issue element in the 1999 rights issue into

account.

2) Calculated for 1999, including rights issue and with actual number of shares

outstanding.


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TH E S E B S H A RE

Shareholder structurePercentage holdings of equity on 31 December 2001.

The majority of the Banks approximately 340,000 shareholders are privateindividuals with small holdings. Institutions and foundations account for the

majority holdings and foreign shareholders for 21 per cent.

Other companies and institutions 25%

Foreign shareholders 21%

Private individuals 18%

Foundations 14%

Mutual funds 11%

Insurance companies 11%

Number of sharesPercentage of

Share series Number of shares Number of votes capital votes

A 673,784,123 673,784,123 95.6 99.5

C 30,773,557 3,077,355 4.4 0.5

Total 704,557,680 676,861,478 100.0 100.0

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

vote. The nominal value of each share is SEK 10.

Distribution of shares by size of holding

Size of holding No. of shares Per cent No. of shareholders

1500 44,332,594 6.29 281,8355011 000 21,521,200 3.05 30,0631 0012 000 22,324,593 3.17 15,9492 0015 000 26,771,444 3.80 8,8055 00110 000 13,530,760 1.92 1,93410 00120 000 9,712,547 1.38 69720 00150 000 11,232,887 1.59 36750 001100 000 9,157,077 1.30 128100 001 545,960,668 77.49 278Other* 13,910

704,557,680 100.00 340,056

* Including possible pre-emptive shares, coupon shares, unknown holders and

unutilised bonus shares.

The SEB share on the Stockholm Stock Exchange

2001 2000 1999 1998 1997

Year-end marketcapitalisation, SEK M 66,900 73,120 60,592 50,128 58,939

Volume of shares traded,SEK M 75,424 57,049 51,054 55,831 38,188

The largest shareholders

Of which Per cent ofSeries number o f all

31 December 2001 No. of shares C shares shares votes

Investor 135,372,295 19.2 20.0

Trygg-Foundation 65,677,962 9.3 9.7

SEB/Trygg mutual funds 27,077,580 30,000 3.8 4.0

Alecta Pension Insurance 20,192,600 3,911,552 2.9 2.5

Skandia Liv 16,818,444 4,233,567 2.4 1.9

AMF Insurance 12,328,000 1.7 1.8

Andra AP-fonden 10,246,229 342,000 1.5 1.5

EB Foundation

Skandinaviska Enskilda Bankenspension fund 9,157,046 1,316,000 1.3 1.2

SHBs mutual funds 8,079,184 1.1 1.2AFA Insurance 7,627,880 530,400 1.1 1.1

SB Foundation

Skandinaviska Enskilda Bankenspension fund 6,680,000 2,000,000 0.9 0.7

Svenska Handelsbanken 6,415,088 20 0.9 0.9

Lnsfrskringar Liv 5,594,746 0.8 0.8Frsta AP-Fonden 5,193,693 342,000 0.7 0.7Marianne & Marcus

Wallenberg Foundation 4,873,389 73,389 0.7 0.7

Knut and AliceWallenberg Foundation 4,721,626 1,202,241 0.7 0.5

Foreign shareholders 144,321,426 1,553,038 20.5 21.1

Change in share capital

Skandinaviska Enskilda Bankenss share capital has changed as follows since theBank was started in 1972:

Share-

Price, Added no. Accumulated capitalYear Transaction SEK of shares no. of shares SEK M

1972 5,430,900 543

1975 Rights issue 1:5 125 1,086,180 6,517,080 652

1976 Rights issue 1:6 140 1,086,180 7,603,260 760

1977 Split 2:1 7,603,260 15,206,520 760

1981 Rights issue 1B:10 110 1,520,652 16,727,172 837

1982 Bonus issue 1A:5 3,345,434 20,072,606 1,004

1983 Rights issue 1A:5 160 4,014,521 24,087,127 1,204

1984 Split 5:1 96,348,508 120,435,635 1,204

1986 Rights issue 1A:15 90 8,029,042 128,464,677 1,284 1)

1989 Bonus i ssue 9A+1C:10 128,464,677 256,929,354 2,569

1990 Directed issue2) 88.42 6,530,310 263,459,664 2,635

1993 Rights issue 1:1 20 263,459,664 526,919,328 5,269

1994 Conversion 59,001 526,978,329 5,270

1997 Non-cash issue 91.30 61,267,733 588,246,062 5,8821999 Rights issue3) 1:5 35 116,311,618 704,557,680 7,046

1) The recorded share capital at 31 December, 1986 was still SEK 1,204 M,

since the proceeds 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 have been paid will not be registered as share capital in the balance

sheet until the rights issue has been registered (which took place in January, 2000).


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N O RD I C RE TA I L & P R I V A TE B A N K I N G

Business operations in 2001 Private Banking

The downturn of the stock markets had a negative effectupon the result of the Private Banking business area. How-ever, faced with this declining market situation Private Bank-ing has intensified its activities and been able to attract newcustomers and to increase its share of present customer as-sets. Assets under management within Private Bankingdropped by six per cent during the year, while the stockmarket index fell by 16 per cent.

Due to deteriorating market conditions SEB decided tostop several planned investments in e-banking outsideSweden during 2001. SEBs recently started e-bank in GreatBritain was closed last autumn. An Internet venture wasliquidated in Norway, where the division will now focuson asset management.

In early January 2002 the Swiss counterpart of SwedensFinancial Supervisory Authority granted SEB Private Bankpermission to open up for business in Zurich. This meansthat SEB which already is represented in Geneva increas-es its business operations in the Swiss market.

Alternative business proposals represent an importantcomplement to the traditional banking products and cus-

tomers are increasingly showing interest in hedge funds,insurance schemes and structured products, for example.The supply of SEB products has been complemented withthose of external suppliers. In Luxembourg, a new Internetservice was launched that was well received by customers.

In line with the ambition of actively working for increas-ed competence Enskilda Banken invested in advanced pri-vate banking-training for the third consecutive year. This isa tailor-made academic training programme, focusing onfinancial theory, which is run in co-operation with theStockholm School of Economics.

Business operations in 2001 Retail Banking

Despite the strong stock market fall and general recession ofthe Swedish economy the savings market is of decisive im-portance in the long term, not only for the private bankingbusiness but also for the retail area. Customer interest in, andneed for, competent advisory services rather increased as aresult of the stock market turmoil.

In the Swedish savings market SEB consolidated its posi-tion also in 2001. In terms of total savings SEB has the largestshare, or 16.5 per cent.

Among the large Swedish banks SEB was the first one tostart an Internet service in 1996 and has kept a leading posi-tion within e-banking since then. During 2001, a number ofnew functions and services were launched through SEBs

Internet Bank for private individuals, such as access throughhand-held computers, savings functions for monthly savingsin mutual funds and other securities as well as trading in war-

Nordic Retail & Private Banking

Increased activities could partly offset lower commission income.

2001 2000

Pecentage of SEBs total income, % 28 28Percentage of SEBs operating result, % 31 30Percentage of SEBs staff, % 26 26

Profit and loss account, SEK M

Net interest income 4,328 4,073

Net commission income 3,645 4,684

Net result of financial transactions 184 204

Other operating income 202 213

Total income 8,359 9,174

Staff costs -2,955 -3,180

Pension compensation 461 459

Other operating costs -3,239 -3,393

Merger and restructuring costs -184

Depreciation -83 -102

Total costs -6,000 -6,216

Net credit losses etc. -69 151

Net result from associated companies -64 -189

Operating result 2,226 2,920

Cost/Income ratio 0.72 0.68

Allocated capital, SEK M 7,000

Return on allocated capital, % 22.9

Number of full time equivalents (average) 5,033 5,187

The Nordic Retail & Private Banking division was formed in Dec-

ember 2001 by uniting the former divisions Personal Banking

Sweden, Personal Banking International and parts of the Mid

Corporate business area.

This was done in order to increase SEBs customer orientationfurther and to strengthen its local presence around Sweden. The

purpose was furthermore to keep and develop SEBs leadingposition in the private banking area and to improve co-operation

between the various units in Sweden and the Nordic region as

well as between the various sales and distribution channels.In Sweden, this division has 1.5 million private customers and

120,000 small and medium-sized corporate customers, of which

about 25,000 previously belonged to the Mid Corporate busi-

ness area. To this should be added 15,000 customers from the

international private banking business.

The business can be divided into three main business areas:

Private Bankingwith Enskilda Banken in Sweden and private

banking activities in Luxembourg, Norway, the U.K. and

Switzerland, among others; Retail Banking, including the network

of branch offices, the telephone and Internet bank in Sweden

and Denmark and the mortgage unit SEB BoLn; and SEB Kortwith business activities in the four Nordic countries.

Cards and payments 29%

Lending 25%

Securities incl. unit-linkedinsurance 23%

Deposits 22%

Other 1%

Distribution of income, 2001


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N O RD I C RE TA I L & P R I V A TE B A N K I N G

rants and convertible loans. The Internet Bank for companieswas equipped with additional payment-linked informationservices and a round-the-clock telephone service, an e-line.

The number of new Internet customers continued to growsteadily. By year-end 2001 SEB had about 660,000 Internetcustomers in Sweden and almost every other customer whopersonally states that SEB is his/her main bank is now alsoa user of the Internet bank.

SEBs automatic machines attracted attention in themedia on several occasions during the year for the ambitionof trying to make life easier for motor-handicapped andblind people, for example. The Bank has carried out thiswork in co-operation with various handicap organisations.

One example of the combination of modern technologywith personal service is found in the 7-eleven shop at Gt-gatan in Stockholm, where SEB opened a banking corner lastyear according to the staffed automatic lobby-concept.

The payment services of the banks received attention dur-

ing the year. When the Swedish banks concluded an agree-ment last summer to the effect that inter-bank transfers inSweden must not take more than one day, SEB went one stepfurther and promised that the money should be deliverednot later than 5 p.m. the same day, provided the moneytransfer was ordered before noon.

Customer satisfaction is measured on a regular basis.During 2001 the percentage of satisfied or very satisfied cus-tomers (in principle three out of four) increased as regardsInternet services. On the other hand, customer satisfactionwith the service offered by the branch offices and the tele-phone bank decreased. This was also confirmed throughexternal surveys. All efforts at improving customer satisfac-

tion are therefore now of top priority. An important part ofthis work consists of the handling of claims, which is an areato which both the press and the authorities paid positiveattention during 2001.

In order to strengthen co-operation across the borders inthe resund region in the south of Sweden, the 25,000 pri-vate banking customers of SEB Denmark A/S form part ofSEBs Swedish retail operations also from an organisationalpoint of view.

Business operations in 2001 SEB Kort

By the end of 2001 SEB Kort had issued a total of approxi-mately 2.7 million cards, of which a little over 2.1 million in

Sweden. In total, SEB Kort has entered into redemptionagreements with about 160,000 sales points around theNordic region. Turnover amounted to SEK 130 billion in 2001and outstanding credits totalled SEK 6.6 billion.

During the year SEB Kort continued to attract customers toCentral Acquiring, central redemption. Agreements have beenmade during the year with several large airline companieswhich, in turn, help selling the Central Acquiring service.

SEB Kort Finland launched extensive Internet servicesduring the year and implemented a euro-conversion of all itssystems. Diners Club Denmark was awarded the first prizein the Teleperformance Grand Prix competition for best call-centre also in 2001.

In Denmark co-operation with the Kastrup airport wasextended, above all as regards marketing and bonus points.

SEB Kort Norway has successfully sold the travel conceptPerago. It has also been successful in marketing thePurchasing Account, which is an administrative service.Diners Club Norway was awarded third prize in theTeleperformance Grand Prix competition.

2002

In order to strengthen SEBs local profile and presence, thebranch offices are now given strongly increased responsi-bilities and authority. The main task is to increase customersatisfaction with everything, from positive reception andservice to quality and bank product value.

Competence is a decisive factor when it comes to pickinga financial partner, not least within private banking. An illus-tration of SEBs efforts in this respect is that close to 800 ofthe new Swedish private adviser licenses were granted toEnskilda Banken alone. (In total, SEB has received close to1,000 licenses during 2001, which is clearly the largest shareof any bank in the Swedish market.)

SEB continues to develop its leading position within

Private Banking by investing in personal service, compe-tence for added value for customers and by offering the con-venience of having all banking and securities services at onesingle place. Enskilda Banken will therefore reinforce thetotal package concept and strengthen its advisory process.During 2002 an advanced customer report will be introducedfor which the customer him/herself will be able to pick thedegree of complexity.

SEB Kort Sweden, which among other things owns thetrademark Eurocard, foresees great opportunities of beingable to deliver an easier, faster and safer payment solutionthan the present one, based upon mobile technology. During2001 Eurocard has developed a solution for card payments

with the help of mobile telephones. It has been successfullytested.

Smart corporate solutions will include the central Nordicpurchasing card to be launched during 2002.

Result

The deterioration of the divisions result is mainly explainedby the 22 per cent-decline in commission income due tostock market developments.

Private Banking was particularly hard hit by the down-turn of the stock market and saw its result drop to SEK497 M (1,112). Retail Banking could partly compensate thenegative effects of the poor stock market trends through a

positive development for bank savings, among other things.Its result was SEK 1,266 M (1,338). SEB Korts resultdecreased marginally, to SEK 463 M (470).

More than 100 million customer contacts per year

Sweden, millions of contacts

0 10 15 20 355 25 30

Telemarketing

Automatic telephone bank

Account statements

Branch offices

Telephone contacts/branch offices

Staffed telephone bank

Direct marketing

E-banking

Cash dispensers and cards

Internet, open pages


16/91


Merchant Banking

Since December 2001, Merchant Banking comprises the oldMerchant Banking, Securities Services and Mid Corporate. Itsmain areas of activity and responsibility are as follows: Overall responsibility for the Groups large and medium

sized corporate customers, financial institutions and inter-national banks

Trading in currencies, interest-bearing instruments, deriva-tives and futures

Advisory services, brokerage and research within capitaland debt markets

Cash management- and payments services Project- and trade finance as well as corporate financing

in connection with acquisitions Venture capital markets Securities-related financing solutions Management of the Groups cash and liquidity portfolio Custody services.

Merchant Banking

Incl Mid Corporate and Securities Services 2001 2000Pecentage of SEBs total income, % 28 27Percentage of SEBs operating result, % 60 44Percentage of SEBs staff, % 14 13




Net result of financial transactions 1,941 2,049







Depreciation -91 -112Total costs -4,239 -4,087

Net credit losses 143 -357



Number of full-time equivalents (average) 2,714 2,655

C O RP O RA TE & I N S T I TU T I O N S

Corporate & Institutions

Merchant Banking reported a slightly higher result than in 2000, whilst Enskilda Securties and

Securities Services were negatively affected by the downturn on the stock markets.

The Corporate & Institutions division is responsible for all SEBsactivities relating to large and medium-sized companies and

institutions and for SEBs activities in the global financial mar-kets. The division consists of two main business areas:

Merchant Banking, which since December 2001 includes

Securities Services (custodial services), Mid Corporate, and

Enskilda Securities.

During 2001 the SEB Group restructured its activities in

Germany. Nordic Corporate Business within SkandinaviskaEnskilda Banken AG was merged with the former BfGs corpo-rate clients and trading business forming part of the Merchant

Banking business area. During 2001 the SEB credit risk classifi-

cation system has been fully implemented. The refocusing and

consolidation of the activities already initiated will be continued

and intensified during 2002.

The division operates in 12 countries.

Merchant Banking excluding Securities Services and Mid

Corporate reported a slightly higher result than in 2000, while

Enskilda Securities and Securities Services were negatively

affected by the downturn on the stock markets.

2001 2000

Pecentage of SEBs total income, % 36 38

Percentage of SEBs operating result, % 65 55Percentage of SEBs staff, % 17 16











Amortisation of goodwill -56 -51



Net credit losses etc. 149 -344



Allocated capital, SEK M 15,500

Return on allocated capital, % 21.7

Number of full-time equivalents, (average) 3,322 3,203


17/91


Merchant Banking excluding

Securities Services and Mid Corporate

Despite the gloomy macroeconomic development MerchantBanking excluding Securities Services and Mid Corporate,

reported a slightly improved operating result for 2001, SEK3,052 M (3,036) with more stable and higher quality of earn-ings, despite a volatile environment and continued costsavings.

Merchant Bankingexcl Mid Corporate and Securites Services 2001 2000






Other operating income 99 390Total income 6,044 6,264





Depreciation of fixed assets -82 -103


Net credit losses 279 -44



Al located capital, SEK M 9,820 10,300*

Return on allocated capital, % 22 21

Number of full-time equivalents (average) 2,012 1,986

* including Merchant Bankings parts of SEB AG.


Strategic orientation and activities

A number of key long-term trends are driving MerchantBankings strategy. These are continued deregulation of financial markets

long term growth in the savings markets new distribution technology increased cost pressures on administration and processes markets adapting to effects of one single currency, EMU.

The business area continued to invest in growth areas, main-ly investment banking related activities, whilst implement-ing efficiency measures in the more mature areas. During2001, Merchant Banking increased its focus on long-termclient relationships, in tandem with the changing bankingmarket. Partly as a result of the economic environment,corporations demand longer and more partner-like relation-ships and sometimes in parallel fewer banks. The clientearnings in relation to total earnings increased for the fifthyear in a row.

Diversification of business risk through increased activi-ties in Europe, specifically Germany, has also been part ofthe strategy.

A continuous efficiency programme relating to adminis-tration and processes is being carried out, where outsourc-ing and strategic alliances are created and evaluated in vari-ous business areas. Such examples are the alliances devel-oped with Bank of NewYork regarding payments, and withPNC Bank and Bank of Nova Scotia regarding trade financein the U.S. and Asia respectively.

The Centre of Excellence business model adopted dur-ing 2001 is being further developed and emphasised, meaning

among other things a continuous focusing of business activi-ties to areas where Merchant Banking can add value to clients,create shareholder value by increasing capital efficiency.

In the area of risk and capital management, MerchantBanking strives to strike a balance between risk and rewardin its lending operations, as well as in its market relatedactivities. Merchant Banking has developed and uses state-of-the-art risk models.

Profit level shift, SEK M

Merchant Banking excl. SecuritiesServices & Mid Corporate

7,000

6,000

5,000

4,000

0

1999 2000 200119981997

1,000

2,000

3,000

Income Costs

Profit before losses

Changed business mix, SEK M

3,500

3,000

2,500

2,000

1,000

0

500

1,500

Proprietary trading & Treasury

Trading & capital market products

Corporate banking products

2001200019991998

Nordic CorporateEurobonds 2001, EUR M

1,500

1,200

900

600

0

300

DKW

Goldm

anSac

hsUB

S

Nord

ea

JPMor

gan

HSBC

Deut

sche

Ban

k

ABN

Amro

SSSBSE

B


18/91


Continued investments in growth areas

The growth strategy adopted for the below mentioned in-vestment banking activities as well as certain e-related trans-action services have been successful overall. The growth

areas are Securities Finance, Debt Capital Markets, Acquisi-tion Finance, Fixed Income, Project Finance, Venture Capital(SEB Fretagsinvest) and integrated Internet based risk man-agement and transaction tools in the trading area, foreignexchange in particular. The earnings in this segment account-ed for 47 per cent of total income as compared to less than21 per cent four years ago.

The number of foreign exchange deals executed inTrading Station grew by close to 200 per cent. The numberof total foreign exchange deals now executed via TradingStation amounted to 60 per cent of the total number of dealswithin Sweden and 36 per cent globally. For 2002 MerchantBanking expects further growth in these segments and con-tinues its investment strategy.

Some of the most important loan financing arrangementsduring the year were made for Sony Ericsson, Skanska, V&SVin & Sprit, Billerud and Atlas Copco. In the corporate bondmarkets SEB acted as arranger for among others Assa Abloy,Securitas, Autoliv, Gambro, Framtiden and GMAC. SEB wasranked as the leading European arranger of Nordic Euro cor-porate bonds in 2001.

In the project financing area Merchant Banking continuedits successful advisory and financing work with Ericsson,arranging a portfolio financing of USD 1.5 billion, the largestfinancing of this kind in the world during 2001.

The Acquisition Finance business had a successful yearwith sustained good portfolio quality. 2001 was charac-

terised by lower senior debt volumes but saw increasedactivity in the mezzanine segment. Given the business cyclethis particular area of activities has had a more conservativerisk profile than in previous years.

Within the venture capital field (SEB Fretagsinvest),where SEB invests primarily in technology and health carerelated ventures, nine new investments were made in 2001.The income from exits in the portfolio was low during theyear due to the depressed market conditions. However, theinvestment climate was good with many opportunities. Theportfolio remains in good conditions and we expect someexits and good value growth in 2002.

Long term customer relationsAn increased focus on overall client relationship quality isdriving all activities. A Client Relationship Managementfunction was formed during 2001, expanded to also includea Financial Institutions industry team, to work in parallelwith the existing teams for Technology and Pulp & Paper.

SEB continues to uphold and strengthen its superiorSwedish client relationship rankings. It is MerchantBankings ambition to reach similar status in all the Nordiccountries. In the medium-sized corporate segment regardingtrading and capital market products, SEBs rating in Swedenwas outstanding according to a survey performed by Askus.

During the year Merchant Banking received mandates

from, among others, Renault VI for their domestic andEuropean payments and Deutsche Post/Danzas ASG in the

cash management area for unique and technically advancedNordic/Baltic solutions, showing SEBs ability to sourceinternational clients having acquired Nordic relations butalso serving large international groups with a presence in the

Nordic region. In the leasing area SEB closed a long-termSEK 3 billion deal with BT Industries.

Ranking Source

Client relationship management Sweden 1 Greenwich Associates FX market share and quality Sweden 1 Greenwich Associates Favourite FX bank globally 6 Corporate Finance Best FX dealer SEK globally 1 Euromoney Nordic Corporate Eurobond arranger 1 Bondware Nordic ECP issuance 1 Bondware Cash management operator Sweden 1 Greenwich Associates Best internet plat form for FX globally 10 Euromoney Best internet platform for FX globally 4 FX Week Best Sub-custody Sweden 1 Global Investor Best Trade Finance Bank Sweden 1 Corporate Finance

Prime Broker globally 11 Hedgeworld Institute Project Finance European Lead Arrangers 11 Project Finance Internat. Project Finance Global Lead Arrangers 16 Project Finance Internat.

IT & Internet

Merchant Banking continues to expand its e-offering as wellas to improve its existing Internet solutions for clients. Thisis particularly true for the TCM, Trade Finance and CashManagement areas. Empowering clients to execute transac-tions and analyse risks on their own terms through makingthe Banks product range accessible to all clients over the net,is a goal for Merchant Banking. During 2001 the Trading Sta-tion product was expanded to include, in addition to foreign

exchange offering, a fully web-enabled prime brokerage ser-vice targeted at the growing asset management sector. Fur-ther product inclusions are planned for 2002, including a panNordic e-based offering in the cash management area.

Competition

During 2001 the competitive situation within Europeanbanking has changed as the result of the more hostile eco-nomic environment and the increased volatility in the finan-cial markets. The banking community has become more fo-cused, selective and relationship oriented at the same time asthe clients are cutting down on the number of banks they dobusiness with. Traditional commercial banking activities on

one hand and investment banking activities on the other arenow converging into a more relationship-oriented task inorder to create holistic solutions for the clients.

Activities in the equity market

Interdependence between debt, derivatives and equity mar-kets has increased further and 2001 shows that stable earn-ings and volumes can be achieved if market opportunitiesare seized in a proper way.

Despite the downturn in stock market and M&A activityduring 2001, Merchant Bankings activities in this area grew.SEB increased its market share of equity linked bonds on theStockholm Stock Exchange and confirmed its role as a lead-

ing player in the field of structured products. Among otherthings Merchant Banking successfully launched a hedge



19/91


fund-linked bond to the public in co-operation with SEBsretail operations.

The Securities Finance area stroke a record in 2001, bothin terms of financial performance and number of new

accounts acquired. The development of the prime brokerageservices continues, as does a further build-up of equityderivative products.

Mid Corporate

Mid Corporate comprises the client relationship function for3,500 medium-sized company groups in Sweden and SEBsleasing company SEB Finans. Mid Corporate aims to be thenatural choice for medium-sized clients by offering a com-prehensive solution tailored to the clients needs. Mid Cor-porate increased its result to SEK 758 M (605). The increasestems primarily from improved interest income in combina-tion with lower credit losses. Commission income in thisarea was lower than in previous year both within Mid Cor-porate and SEB Finans. The latter reported an operating re-sult of SEK 237 M (325), due to a combination of lower com-mission income and higher credit losses.

SEB Securities Services

SEBs custody service unit is a dominant Swedish and lead-ing Nordic player in its field. SEB manages and keeps in cus-tody securities in Sweden, Denmark, Finland and Norwayunder the SEB name and has sub-contractors in a further55 countries. In the Baltic countries the services are offeredthrough the SEB subsidiary banks. The activities of SecuritiesServices clearing, settlement, custody and securities lend-ing are driven by the volumes and values in the stock mar-

ket, which were falling during 2001. SEB kept its dominantposition in Sweden and focus in 2002 is on building similarfranchises in the other Nordic countries. Assets under cus-tody amounted to approximately SEK 2,000 billion. The re-sult amounted to SEK 517 M (661), a decrease of 22 per centcompared with the record year 2000, but an increase of 7 percent compared with 1999.

Result

Merchant Banking reported a result of SEK 4,306 M for 2001,(Merchant Banking SEK 3,052 M, Mid Corporate SEK 758 Mand Securities Services SEK 517 M) with a 22 per cent returnon allocated capital. Income decreased by 4 per cent mainly

due to negative market conditions in 2001. Capital efficiencyremains in focus.

Continued efforts are made in order to increase cost effi-ciency. These will be further intensified during 2002. Oneexample is the project aiming at out-sourcing relevant busi-ness processes within Merchant Banking.

Merchant Banking, excluding Securities Services and MidCorporate, has during 2001 lowered its underlying cost levelby 4 per cent compared to 2000, i.e. costs excluding perfor-mance related remuneration and exchange rate effects. Thismeans that the underlying cost base has been reduced for thefourth consecutive year. Credit losses before recoveries wereat a low level and the net after recoveries was positive.

Enskilda Securities

Enskilda Securities, a subsidiary of SEB, is an independentinvestment bank with its own product and marketing re-

sponsibility for services in the area of financial advice, equitytrading and equity research. Enskilda Securities is one of theleading investment banks within corporate finance, equitytrading and equity research as far as Nordic-related businessis concerned. The business of Enskilda Securities is organ-ised in two business units, Equities and Corporate Finance,supported by the Research and Equity Capital Markets func-tions. The goal of Enskilda Securities is to be a leading Euro-pean niche investment bank, based upon absolute leadershipin the Nordic region.

Enskilda Securities is represented in Stockholm, London,Helsinki, Copenhagen, Oslo, Frankfurt, Paris, New York andSan Francisco. On an international scale Enskilda Securitiesco-operates with the U.S. investment bank BlackstoneLimited Partnership in the area of corporate finance.

Enskilda Securities is owned to 77.5 per cent by SEB andto 22.5 per cent by the Norwegian firm Orkla Finans ASA:

Enskilda Securities

2001 2000



Net interest income -16 -166


Net result of financial transactions 224 675

Other operating income 12 113Total income 2,369 3,598


Other operating costs -657 -580


Amortisation of godwill -56 -51



Net credit losses 6 13

Operating result 369 1,094


Number of full time equivalents (average) 608 548

ActivitiesThe Equities unit carries on research-driven brokerage ofequities and equity-related instruments. Its customer baseconsists of international clients all over the world. Non-Nordic customers accounted for 54 per cent of the broker-age commissions during 2001.

There are approximately 80 analysts within the Researchfunction, monitoring about 500 European companies ofwhich a little over 300 are Nordic companies. The objectiveis to be a full-fledged supplier of corporate analyses. Duringthe year Enskilda Securities consolidated its position withinequity research, which was confirmed by the No. 1 positionit was given in several Nordic and international research

rankings.



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Examples of transactions in which Enskilda Securities participated during 2001

Company Transaction Deal value, SEK M

Mergers & Acquisitions

Eltra and NESA (Denmark) Adviser to Eltra and NESA in connection with the sale of Danish Powercom to Telia 1,200

Sanitec (Finland) Adviser to Sanitec in connection with the public take-over bid from Finnish BC Partnersthrough its subsidiary Pool Acquisition 11,000 Segerstrm & Svensson (Sweden) Adviser to Segerstrm & Svensson in connection with the public take-over bid from U.S. Sanmina 4,900 Sveaskog (Sweden) Adviser to Sveaskog in connection with the public take-over bid to the shareholders of AssiDomn 15,800

Equity Capital Markets

Boliden (Canada, Sweden) Adviser to Canadian Boliden in connection with its rights issue and directed issue.Enskilda Securities also acted as adviser to Boliden in connection with the redomiciliation toSweden at the end of 2001 2,600

Kvaerner (Norway) Rights issue and directed issue 4,100 Sigma (Sweden) Adviser to Sigma in connection with the dividing-up into three separate companies

(Sigma, Epsilon and Teleca) and the listing of Epsilon and Teleca on the Stockholm Exchange Statoil (Norway) Adviser to Statoil in connection with its IPO on the Oslo SE 30,800 TietoEnator (Finland) Placement of existing shares for account of Finnish Sonera 3,900

Equity Capital Markets works as a link between the two busi-ness units Corporate Finance and Equities in connectionwith IPOs, new share issues and major share placements.

Corporate Finance provides financial advisory services,

mainly within mergers and acquisitions (M&A) and equitycapital markets, (new share issues, IPOs, etc.).

Total turnover on the Nordic stock exchanges during 2001declined by 10 per cent to SEK 7,200 billion compared withabout SEK 7,900 billion in 2000.

The number of IPOs on the Nordic stock exchanges wasconsiderably lower in 2001 than in 2000. The largest trans-

action was carried out in connection with the partial priva-tisation of Statoil, which was quoted on the Oslo StockExchange in June, 2001. The total value of new share issuesand IPOs on the Nordic stock exchanges amounted to SEK

65 billion in 2001 compared with SEK 320 billion in 2000.

Result

Enskilda Securities income during 2001 dropped by 34 percent due to lower trading income and lower earnings fromIPOs, new share issues, private placements and M&A.Brokerage income fell by 12 per cent, of which income fromtrading in IT, technology and telecom equities dropped bymore than 30 per cent. However, income from equity tradingwithin other sectors rose by 25 per cent.

Costs decreased by 20 per cent, which is mainly explainedby the fact that the bonus provision for the employees wasreduced in line with the lower result. Excluding bonus pay-ments, costs increased by 10 per cent following increased ITcosts and an average higher number of employees. A cost-cutting programme was carried out during the year.

The result of Enskilda Securities for 2001 was SEK 369 M a decrease of 66 per cent compared with the record year 2000.


Mergers and acquisition transactions in 2001

Acquired party a Nordic company

Deal value Number ofUSD M transactions

Carnegie 13,296 45

Morgan Stanley 12,970 23

Nordea Securities 10,187 30

Enskilda Securities 8,630 34

Merrill Lynch 8,273 11

Goldman Sachs 7,797 9

Deutsche Bank 6,295 18

UBS Warburg 4,604 9

Citigroup/Salomon Smith Barney 4,317 16

Svenska Handelsbanken 4,205 23

Source: Thomson Financial Securities

Market share of Nordic stock exchanges 20002001

Market share, % Position

Jan.Dec. Jan.Dec. Jan.Dec. Jan.Dec.2001 2000 2001 2000

Helsinki 10.44 9.27 2 4

Copenhagen1) 9.51 8.31 Oslo 16.88 12.99 1 1

Stockholm 8.95 9.81 1 1

1) The Copenhagen Stock Exchange does not publish the ranking of its members.

However, in its own opinion Enskilda Securities was the third largest player in

terms of market share during 2001, which is the same ranking that it had in

2000.

Equity capital market transactions in 2001

In the Nordic countries

Deal value Number ofUSD M transactions

Morgan Stanley 1,877 4

UBS Warburg 1,487 3

Enskilda Securities 1,301 20

Den norske Bank 644 1

Citigroup/Salomon Smith Barney 578 2

Carnegie 558 10

Merrill Lynch 470 1

Credit Agricole Indosuez Chevreux 462 1

Nordea Securities 235 8

ABN AMRO Rotschild 222 5

Source: Thomson Financial Securities


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S EB G E RM AN Y

Market

The year 2001 continued to see dramatic structural changes inthe German banking sector. Nearly all banks had to wrestlewith falls in income as a consequence of the negative econom-ic and capital market trends. Thus, most banks announcedcost cutting measures. The forthcoming reform of Germanysstate pension system resulted in numerous co-operationagreements between banks and insurance companies.

Reorientation taking shape

2001 also witnessed SEB Germanys focus on restructuringand further concentration on selected core areas of business.Changing the name from BfG Bank AG to SEB AG demon-strated its affiliation to the Swedish parent company. All op-erations in Germany will form part of an international mar-ket presence under the single SEB brand name. Thanks to asuccessful marketing campaign, SEB AG succeeded in in-creasing the degree to which it is known in Germany to closeto 30 per cent in eight months.

The restructuring measures already initiated by the banka year earlier continued to be implemented briskly. Thesemeasures included further reducing risk-weighted assets

and cutting costs. The reduction in total staff was largelycompleted. The number of staff in SEB Germany employedstabilised at around 3,850, in other words, approximately250 fewer than at the beginning of 2001.

The banks future growth will come from new clients andimproved cross selling. Important requirements for achiev-ing the latter were created by intensifying co-operation withthe Gerling insurance group. Expanding the multi-channelstrategy will continue to be a central part of market strategy.

Retail banking activities

During the year a number of new products were launched,several SEB funds in addition to third party funds. A port-

folio management product for private clients was introducedin November.

E-banking grew in 2001, too. The number of clients wentup during the course of the year from 147,000 to 236,000. Also,the activity among the Internet customers has increased.Today, 23 per cent of all payments, 38 per cent of the sharetransactions and 45 per cent of all account inquiries are takingplace over the Internet.

Difficulties persisted in the market environment foronline brokers in Germany. SEB Germany thus decided tointegrate the brokerage product into the overall Internetoffering.

SEB Germany

Having completed most of its restructuring programme, SEB Germany

is well prepared once the German economy recovers.

SEB AG is one of the largest privately owned banks in Germany

with 177 branch offices, 30 investment centres, one million pri-

vate customers and 4,100 employees. As from 2001 SEB AGslarger corporate customers as well as trading operations form

part of SEBs Merchant Banking business area within Corporate& Institutions, and are not included in the SEB Germany division.

2001 2000




Net commission income 1,365 1,705Net result of financial transactions 101 227







Net credit losses etc. -480 -781

Net result from associated companies 75 200

Operating result 895 787


Allocated capital, SEK M 10,800 13,105

Return on allocated capital, % 6.0 4.3

Number of full time equivalents (average) 3,916 4,294

Deposits 23%

Lending 38%

Other income 20%

Securities/Funds 14%

Payments 5%

Distribution of income, 2001


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S EB G E RM AN Y

The banks co-operation with Gerling has been successful.Attractive products and services were developed for privateand institutional clients ahead of the forthcoming reforms toGermanys state pension system.

According to a survey in the end of 2001, SEB Germany isstill the benchmark for customer satisfaction in the Germanbanking market. SEBs total index is down from 72 to 68,which is satisfactory in view of the restructuring of the organi-sation during the year. Top of the line is the InstitutionalClient unit with 83. The market average is down from 65 to 64.

Wholesale banking

The Institutional Client business area succeeded in gaining10 new mandates in special investment fund operations sothat the entire portfolio at the end of 2001 showed an in-crease to 66 mandates involving a total of EUR 3.0 billion.Besides traditional asset management business the banksrange of services has been increased with custodian func-tions for financial institutions.

In the Real Estate business area, a new credit policy wasimplemented. The core business is financing of medium-sized properties especially in Western Germany to commer-cial customers. Restructuring of loan portfolio, new process-es and cost cutting programme have been implemented suc-cessfully. Despite reduction of risk-weighted assets, incomeremained stable and return on equity increased.

SEB Hypothekenbank

SEB Hypothekenbank AG, SEBs German mortgage bank,has for many years been operating successfully in the mar-ket. In 2001 the mortgage bank was able to expand new

mortgage lending by 43 per cent to SEK 9 220 M despite adifficult market environment that featured a drop in build-ing permits and a downturn in orders received by the con-struction industry.

The mortgage lending portfolio was up 13 per cent to SEK45,141 M. Its municipal loan portfolio decreased by 2 percent to SEK 81,509 M.

Asset management

SEBs retail investment funds in Germany were well able tohold their own in a difficult market environment. Net salestotalled SEK 7,961 M. Of this amount, SEK 3,596 M alonewas accounted for by the SEB ImmoInvest open-end real

estate investment fund, which represented a new record

sales figure. Total assets under management rose to SEK 113billion, including assets managed by SEB ImmoInvest ex-ceeding SEK 23 billion.

BVI (federal association of German investment and port-

folio management companies) put SEB ImmoInvest in topplace in Germany in the three, five and ten-year compar-isons. Standard & Poors also awarded first place in the fiveand ten-year comparison as it did a year earlier. SEB con-tinued to enjoy success in issuing guarantee funds. The latestfund, with capital guarantee, was launched at the beginningof 2002.

Result

SEB Germanys operating result amounted to SEK 895 M(787). The weakened Swedish krona has affected the profitand loss account. Total income for SEB Germany fell by10 per cent in EUR and by 2 per cent in SEK. Total costsdeclined by 9 per cent in EUR and by 1 per cent in SEK.

Net interest income, SEK 4 119 M, has remained stableif one considers that the reduction in risk-weighted assetsfor 2001 has reduced net interest income on allocated capitalby over SEK 100 M as compared with 2000.

Commission income fell by 20 per cent to SEK 1,365 Mas a result of the weak market development.

During the first quarter SEB Germany sold its shares inDeutsche Brse, which resulted in a capital gain of aboutSEK 248 M (EUR 26.8 M).

Net credit losses developed in line with expectations.Since SEBs acquisition, risk-weighted assets have been

reduced by nearly 30 per cent to SEK 146 billion at year-end2001 and allocated capital to SEK 10,800 M.

The SEB Germany division does not include those units(corporate customers, trading and the old Skandi-naviska Enskilda Banken AG) which are internally in-cluded in the Merchant Banking business area. Supple-mentary information on the legal entity SEB AGGroups accounts stated in EUR is therefor provided.The figures for 2001, as for the SEB Germany division,were adjusted for internal purchases and sales of Skan-dinaviska Enskilda Banken in Germany and BfG in Lux-embourg. Adjustment was not made, however, for theexternal company sales completed by SEB AG. Reserves

used have also been taken into account.

Bank & Finance 21%

Households 27%

Property management 20%

Other 17%

Public administration 15%

SEB AGs doubtful claims gross amounted to SEK 10,065 M. Doubtful

claims net after deducting reserves amounted to SEK 5,120 M.

* SEB AG includes Merchant Banking in Germany

Credit portfolio*, SEK 355 billion


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S EB G E RM AN Y

SEB AG in the SEB Group, EUR

Profit &am

seb annual report 2001

Documents