SAMPO BANK PLC ANNUAL REPORT AND ACCOUNTS 2009
---------------------------------------------------------------------------------------------------------------------------------------------------Sampo Bank Plc is a Finnish bank which is part of the Danske Bank Group. Danske Bank Group is one of the largest financial enterprises in the Nordic region. This Annual Report includes Sampo Bank Plc and its subsidiaries. ----------------------------------------------------------------------------------------------------------------------------------------------------
Contents 3 8
Sampo Bank plc Board of Directors´ Report IFRS Financial Statements 8 Consolidated Income Statement 9 Statement of Comprehensive Income 10 Consolidated Balance Sheet 11 Statement of Changes in Equity 12 Cash Flow Statement 14 Notes to the Financial Statements 14 Summary of Significant Accounting Policies 28 Segment Information 29 Risk Management 39 Business Combinations 40 Other Notes 40 Discontinued operations 40 Net interest income 41 Net income from financial transactions 41 Fee and commission income and expenses 42 Impairment on loans and receivables 42 Net income from investments 42 Staff costs 43 Other operating expenses 44 Financial assets and liabilities 45 Fair value 46 Cash and balances at central banks 46 Financial assets and liabilities at fair value through p/l 48 Loans and receivables 49 Investments 49 Allowance account breakdown 49 Investments in associates 50 Intangible assets 50 Property, plan and equipment 51 Other assets 51 Deferred tax assets and liabilities 52 Taxes 52 Amounts owed to credit institutions and customers 52 Debt securities in issue 53 Other liabilities 53 Provisions 54 Contingent liabilities and commitments 55 Employee benefits 55 Related party disclosures 56 Equity and reserves 57 Dividends
58
Sampo Bank plc Financial Statements (FAS) 58 Income Statement 59 Balance Sheet 62 Notes to the Financial Statements 62 Accounting policies 63 Other Notes to the Financial Statements
79
Sampo Bank plc Board of Directors´ proposal to the annual general meeting for the distribution of the profits of the parent company
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SAMPO BANK PLC BOARD OF DIRECTORS´ REPORT 2009 Changes in Group structure 3C Asset Management Ltd was merged to Sampo Bank plc end of April 2009. Associated company, Arfin Oy, was liquidated in December 2009. A new subsidiary company, As Oy Leppävaaran Leppoisa , was founded in October 2009. Significant Accounting Policies Sampo Bank Group presents its consolidated accounts in accordance with International Financial Reporting Standards (IFRS). The Group has not changed its accounting policies from those followed in Annual Report 2008. Accounting policies are explained more detailed in Notes to the Financial Statements. Result Sampo Bank Group‟s profit before taxes for 2009 was EUR 32.7 million (181.6 million). The amount for 2008 contains the income from discontinued operations, altogether EUR 0.3 million. Main reason for decrease in profit was increase in net impairment losses. Return on equity after tax was 0.9 per cent (6.9 per cent). Cost-to-income-ratio was 57.4 per cent (63.7 per cent). Net interest income declined to EUR 458.9 million (480.0 million). Net fee and commission income decreased to EUR 181.7 million (186.6 million). Sampo Bank Group‟s total operating costs decreased to EUR 438.0 million (507.3 million). This was largely due to decline in integration costs. Net impairment losses on loans and receivables was EUR 227.3 million (52.3 million). The amount of collective impairments was EUR 13.8 million and individual impairments amounted to EUR 165.6 million. Final write-offs were EUR 54.5 million and recoveries EUR 6.6 million. Majority of the individual impairments are derived from a limited number of corporate cases. Balance sheet Loans and receivables dropped by EUR 3,432.7 million from year-end 2008 and totalled EUR 22,658.1 million (26,090.8 million). Deposits increased by EUR 426,7 million from last year end and totalled EUR 13,433.4 million (13,006.7 million). Capital adequacy Sampo Bank Group‟s capital adequacy ratio was 14.9 per cent (14.3 per cent) at the end of 2009 and the Tier 1 ratio was 13.7 per cent (12.4 per cent). The total capital included in capital adequacy calculations amounted to EUR 2,580.4 million at the end of December (2,713.5 million). The Group‟s risk-weighted assets totalled EUR 17,331.0 million (18,998.5 million). Most significant change in own funds from end of December 2008 was the redemption of EUR 150 million Tier 2 debenture loan in March 2009. Profit after taxes for 2009 is included in Tier 1 distributable capital.
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CAPITAL ADEQUACY Sampo Bank Group Own funds
Sampo Bank Plc
31.12.2009
31.12.2008
31.12.2009
31.12.2008
2 380,7 106,0 271,1 350,0 1 661,0 0,1 -7,5
2 363,5 106,0 271,1 350,0 1 643,0 1,2 -7,8
2 388,9 106,0 261,7 350,0 1 678,5 0,0 -7,3
2 379,0 106,0 261,7 350,0 1 668,8 0,0 -7,4
199,7 199,7 0,0
350,0 350,0 0,0
199,7 199,7 0,0
350,0 350,0 0,0
0,0
0,0
0,0
0,0
2 580,4
2 713,5
2 588,7
2 729,0
17 331,0
18 998,5
16 668,3
18 534,3
1 386,5 1 179,4 107,8 99,3
1 519,9 1 360,8 59,5 99,7
1 333,5 1 128,4 107,8 97,3
1 482,7 1 324,2 59,5 99,1
14,9 % 13,7 %
14,3 % 12,4 %
15,5 % 14,3 %
14,7 % 12,8 %
EURm Tier 1 ¹) Share capital Legal reserve Capital securities Distributable capital Minority interests Intangible assets Tier 2 Subordinated liabilities Other Deductions 2) Total capital Risk-weighted assets (on-balance sheet and off-balance sheet) Capital requirement ( 8% of risk-weighted assets) Credit and counterparty risk Market risk Operational risk Capital adequacy ratio, % - total capital/risk-weighted assets - Tier 1 capital/risk-weighted assets
Group capital adequacy ratio has been calculated in accordance with Credit Institutions Act Sect 5:44-48§ and 54-66§. For calculation of credit and operational risk's risk-weighted assets, Sampo Bank Group applies standard method. 1
) Sampo Bank Group Tier 1 includes capital securities 15 % (15 %). Sampo Bank Plc Tier 1 includes capital securities 15 % (15 %).
2)
On 16 March, 2007, the Financial Supervision Authority granted Sampo Bank an excemption, pursuant to the Act on Credit Institutions (48§,8), permitting the Bank not to deduct from its capital investments in companies whose main business area is investment activity. The redemption remains valid until 31 December, 2009.
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Risk management The main objective of risk management is to ensure that the capital base is adequate in relation to the risks arising from the business activities. In addition to the statutory capital adequacy calculation, risks in Sampo Bank Group are described and assessed internally through economic capital, which describes the amount of capital needed to bear different kind of risks. The capital requirement is well covered by equity, capital securities and debenture loans. The major risks associated with Sampo Bank Group‟s activities are credit risk, interest rate and liquidity risks of banking book, operational risks and various business risks such as changes in competition or customer behavior. Risk management is described in detail in the financial statements according to IFRS. Ratings Sampo Bank's credit ratings were downgraded in 2009. Standard & Poor's lowered its counterparty credit ratings to A+/A-1 (from AA-/A-1+) and maintained negative outlook on February 5, 2009. Moody's downgraded the long-term deposit rating to A1 (from Aa1) and changed outlook to stable on February 13, 2009. The Prime-1 short-term rating was affirmed. Standard & Poor's lowered second time the long-term counterparty credit rating to A (from A+) and maintained negative outlook on December 18, 2009. At the same time Standard & Poor's affirmed the A-1 short-term counterparty credit rating. The announcements were simultaneous with downgrade announcements for the parent company Danske Bank A/S. Administration Sampo Bank plc board members during 2009 have been Peter Straarup (Chairman), Sven Erik Lystbæk (Deputy chairman), Ilkka Hallavo, Teija Andersen, Tonny Thierry Andersen, Esko Mäkeläinen, Lars Stensgaard Mørch, Georg Schubiger and Risto Tornivaara. Ilkka Hallavo is the managing director of the Bank and Risto Tornivaara is his deputy. The firm of authorised public accountants, Ernst & Young Oy, has acted as Auditor for Sampo Bank plc with Kunto Pekkala, APA, as the responsible auditor. During 2009 Sampo Bank plc and Danske Bank A/S Helsinki Branch made arrangements and as a result Internal Audit, HR, Legal, Compliance, part of Finance department and rest of the Service Center‟s development unit were moved from Sampo Bank plc to Danske Bank A/S Helsinki Branch. According to Service Level Agreements Danske Bank A/S Helsinki Branch offers the services of above mentioned departments to Sampo Bank plc. Internal control and risk management systems used in the financial reporting process As laid down in the Finnish Limited Liability Companies Act, the Board of Directors is responsible for administration of the company and the appropriate organisation of its operations. The Board of Directors is also responsible for the appropriate arrangement of the control of the company accounts and finances. The same Act says that the Managing Director shall see to the executive management of the company in accordance with the instructions and orders given by the Board of Directors. The Managing Director shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner. In Sampo Bank the purpose of internal control systems is among other things to assure that the financial reporting and other information management receives for decision making purposes is correct obey the laws and regulations as well as decisions made by management and comply with company‟s internal policies. Management has implemented controls to eliminate financial reporting risks identified and regularly monitors compliance with financial reporting rules and regulations. The purpose of establishing Sampo Bank plc – Annual Report 2009
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controls is to prevent, detect and correct any reporting errors and irregularities, but they provide no guarantee against errors. In Sampo Bank the Board of Directors regularly assesses and adjusts the internal control and risk management systems used in the financial reporting process for the purpose of maintaining a high level. The assessment is based on findings made by Internal Audit. The Board of Directors also receives External Auditors opinion about the company‟s administration and internal control status. The Board of Directors and Managing Director receives accounting information, changes in rules and regulations and compliance with those on an ongoing basis. Internal audit, which reports directly to Board of Directors, regularly reviews internal management reporting and external reporting (interim and annual reports). Furthermore, Internal Audit performs an operational audit, focusing on key areas of the Group‟s risk management procedures, including reporting. Risk management principles are described more detailed in Annual Report page 29. Group Finance also regularly assesses financial reporting risks with particular focus on items where estimates and assessments may have a material impact on the value of assets and liabilities. The note on significant accounting estimates and assessments lists these items. The key elements for good accounting practices are well-defined authorisation procedures, segregation of duties, regular reporting requirements and considerable transparency of activities. Internal management reporting is based on the same principles as external reporting and same principles are applied in the whole Group. The shared IT platform helps provide the documentation of accounting data across the Group and reduce financial reporting risks. See www.danskebank/corporategovernance for more information about corporate governance at Danske Bank Group. Events after the reporting period There are no material events after the reporting period. Outlook for year 2010 The expected low interest rate environment will have a negative impact on Net Interest Income. Loan impairments are also expected to have a negative effect on profitability. This year we expect the level of loan impairment charges to remain lower than in 2009 if economic recovery continues as expected.
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FINANCIAL HIGHLIGHTS
EUR m
2009
2008
2007
2006
2005
Revenue Net interest income % of revenue Profit before taxes % of revenue Total income ¹)
1 177 459 39,0 33 2,8 698
1 803 481 26,7 182 10,1 742
2 189 460 21,0 776 35,4 1 330
1 426 447 31,3 354 24,8 817
993 398 40,1 252 25,4 643
438 57,4 24 868 2 038 0,1 0,9 8,2 14,9 227 4 949 3 291
508 63,7 29 592 2 022 0,5 6,9 6,8 14,3 52 4 369 3 466
492 37,0 28 152 1 902 2,6 44,8 6,8 15,1 63 6 157 3 443
461 56,5 26 627 1 197 1,1 24,5 4,5 11,9 2 6 746 4 429
394 61,2 23 207 1 018 0,9 18,5 4,4 10,6 -3 6 878 4 201
Total operating expenses ²) Cost to income ratio Total assets Equity Return on assets, % Return on equity, % ³) ⁴ Equity/assets ratio, % ³) ⁵ Capital adequacy ratio, % ) Impairment on loans and receivables ) Off-balance sheet items Average number of staff
The financial highlights have been calculated as referred to in the regulations of the Finnish Financial Supervision Authority, taking into account renamed income statement and balance sheet items due to changes in the accounting practice. ¹) Total income comprises the income in the formula for the cost to income ratio. ²) Total operating expenses comprise the cost in the formula for the cost to income ratio. ³) Capital securities have not been included in the equity. ⁴) Group capital adequacy ratio has been calculated in accordance with Credit Institutions Act Sect 5:4448§ and 54-66§. For calculation of credit and operational risk's risk-weighted assets, Sampo Bank Group applies standard method. Capital adequacy for 2005-2007 has been calculated in accordance with old Credit Institutions Act Sect 9:72-81§ and an interpretation of Financial Supervision Authority on calculation of own funds of credit institutions 3/125/2005 as enabled by transitional provision possibility in Credit Institutions Act Sect. 12. ⁵) Impairment on loans and receivables includes impairment losses, reversals of them, write-offs and recoveries. (-) net loss positive. Formulas used in calculating the financial highlights Revenues:
interest income, net income from investments, fee and commission income, net income from financial transactions and other operating income.
Cost to income ratio, %:
staff costs + other operating expenses net interest income + net income from financial transactions + net fee and commission income + net income from investments + other operating income
Return on equity (at fair values), %:
profit before taxes +/- change in fair value reserve - taxes equity + minority interests ( average)
Return on assets (at fair values), %:
profit before taxes +/- change in fair value reserve - taxes average total assets
Equity/assets ratio (at fair values), %:
equity + minority interests total assets
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IFRS Financial Statements CONSOLIDATED INCOME STATEMENT EURm
Note
1-12/2009 1-12/2008
Change
Continuing operations Interest income Interest expense Net trading income Fee income Fee expenses Net income from investments Other operating income Total operating income
2 2 3 4 4 6
881,7 -422,8 9,7 237,5 -55,8 2,1 45,6 698,0
1 476,0 -996,0 45,5 251,5 -64,9 -3,4 32,1 740,9
-594,4 573,2 -35,8 -14,0 9,1 5,5 13,5 -42,9
Staff costs Other operating expenses Total operating expenses
7 8
-181,9 -256,1 -438,0
-214,5 -292,8 -507,3
32,6 36,7 69,3
Impairment losses on loans and receivables
5
-227,3
-52,3
-175,0
Profit from continuing operations before taxes
32,7
181,3
-148,6
Taxes
-14,3
-46,4
32,1
Profit from continuing operations
18,4
134,9
-116,5
Profit from discontinued operations before taxes
0,0
0,3
-0,3
Taxes
0,0
-0,1
0,1
0,0
0,2
-0,2
18,4
135,1
-116,7
18,4 0,0
133,4 1,7
Discontinued operations
Profit from discontinued operations Profit for the period Attributable to Equity holders of parent company Minority interests
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1
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STATEMENT OF COMPREHENSIVE INCOME
EURm Net gains not recognised in the income statement Net profit for the period Total comprehensive income for the period Portion attributable to Shareholders of the Parent Company Minority interests Total comprehensive income for the period
1-12/2009
1-12/2008
0,0 18,4 18,4
0,0 135,1 135,1
18,4 0,0 18,4
133,4 1,7 135,1
Sampo Bank Group has no net gains that are not recognised in the income statement and should be stated under Statement of comprehensive income according to IAS 1.
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CONSOLIDATED BALANCE SHEET EURm
Assets Cash and balances at central banks Trading portfolio assets Financial assets at fair value through p/l Loans and receivables Investments Intangible assets Property, plant and equipment Other assets Tax assets Total assets Liabilities Financial liabilities at fair value through p/l Trading portfolio liabilities Amounts owed to credit institutions and customers Debt securities in issue Other liabilities Tax liabilities Total liabilities Equity Share capital Reserves Retained earnings Equity attributable to parent company's equityholders Minority interests Total equity Total equity and liabilities
Sampo Bank plc – Annual Report 2009
Note
12/2009
12/2008
11 12 12 13 15 17 18 19 20
148,7 1 347,5 0,0 22 658,1 7,5 7,5 112,9 554,0 31,8 24 867,9
127,2 2 830,7 0,0 26 090,8 7,4 7,8 100,1 404,4 23,7 29 592,1
12
1 254,4 896,9 15 824,4 4 388,3 465,1 0,2 22 829,4
3 771,6 1 243,6 16 093,8 5 895,1 564,2 2,2 27 570,5
106,0 271,1 1 661,2
106,0 271,1 1 643,2
2 038,4 0,1 2 038,4
2 020,4 1,2 2 021,6
24 867,9
29 592,1
22 23 24 20
29 29 29
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STATEMENT OF CHANGES IN EQUITY
EURm
Fair Share Legal value Retained capital reserve reserve earnings
Equity at 1 Jan. 2008
106,0
271,1
Minority Total interest
0,6 1 510,2 1 888,0
Total
14,4 1 902,4
Financial assets available-for-sale - change in fair value - recognised in p/l Exchange rate translation differences Total comprehensive income Total income and expenses recognised for the period Dividend distribution Share incentives Equity at 31 December 2008 106,0
271,1
0,0 1 643,2 2 020,4
1,2 2 021,6
Equity at 1 Jan. 2009
271,1
0,0 1 643,2 2 020,4
1,2 2 021,6
106,0
Exchange rate translation differences Total comprehensive income Total income and expenses recognised for the period Dividend distribution Share incentives Equity at 31 December 2009 106,0
Sampo Bank plc – Annual Report 2009
-0,6
-0,6
0,0
271,1
-0,6
-0,6
133,4
133,4
1,7
135,1
133,4
132,8
1,7 -14,9
134,5 -14,9
18,4
18,4
0,0
18,4
18,4
18,4
0,0 -1,1
18,4 -1,1
0,0 1 661,2 2 038,4
0,1 2 038,4
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CASH FLOW STATEMENT
EURm Cash flow from operations Profit before tax Adjustment for non-cash operating items Adjustment of income from associated undertakings Amortisation and impairment charges for intangible assets Depreciation and impairment charges for tangible assets Loan impairment charges Tax paid Other non-cash operating items Total
2009
2008
33
172
2 0 37 227 -43 -297 -40
3 2 33 52 -63 -325 -125
108 1 135 1 411 427 -3 904 -864
6 106 -191 -657 211 -1 498 3 845
-3 0 -50 13 -40
-3 -3 -43 11 -38
0 -150 1 -1 -150
8 0 1 -13 -5
Cash and cash equivalents, beginning of year Change in cash and cash equivalents Cash and cash equivalents, end of year
4 286 -1 054 3 232
483 3 803 4 285
Cash in hand and demand deposits with central banks Amounts due from credit institutions and central banks within 3 months Total
149 3 083 3 232
184 4 101 4 285
Changes in operating capital Cash in hand and demand deposits with central banks Trading portfolio Loans and advances Deposits Other assets/liabilities Cash flow from operations Cash flow from investing activities Acquisition of group undertakings and other business units Acquisition of intangible assets Acquisition of tangible assets Sale of tangible assets Cash flow from investing activities Cash flow from financing activities Increase in subordinated debt and hybrid core capital Redemption of subordinated debt and hybrid core capital Dividends Change in minority interests Cash flow from financing activities
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NOTE TO THE CASH FLOW STATEMENT
Acquisitions in 2009 New Real Estate company As Oy Leppävaaran Leppoisa was acquired on October 13, 2009.
Sales in 2009 No sales during 2009.
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Sampo Bank Group NOTES TO THE FINANCIAL STATEMENTS SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Sampo Bank Group is part of the Danske Bank Group. The Danske Bank Group presents its consolidated accounts in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and approved by the EU with relevant interpretations issued by the International Financial Reporting Interpretation Committee (IFRIC). Additional requirements in accordance with Finnish Accounting Act, Finnish Act on Credit Institutions and Finnish Financial Supervision standards have also been applied when preparing the Annual Report 2009 for Sampo Bank Group. In preparing the financial statements, Sampo Bank has applied all the new or amended standards and interpretations relating to its business and effective at 31 December 2009 as the parent company. The financial statements have been prepared under the historical cost convention, modified by changes in fair value, amortization, depreciation or impairment losses, depending on the accounting treatment of the respective items. The consolidated financial statements are presented in euro (EUR), in million euros with one decimal, unless otherwise stated. CHANGES IN ACCOUNTING POLICIES AND PRESENTATION Sampo Bank Group has not changed its significant accounting policies from those followed in Annual Report 2008 except in the instances mentioned below. IAS 1 ‘Presentation of Financial Statements‟ The Group has implemented amendments to IAS 1, Presentation of Financial Statements. This standard requires disclosure of a statement of comprehensive income that is displayed immediately after the income statement. Comprehensive income was previously included in the statement of changes in shareholders‟ equity. IFRS 8, ‘Operating Segments’ Sampo Bank Group has implemented the changes to IFRS 8, Operating Segments in 2009 reports. This standard regulates the segmentation of business units and the information to be disclosed about the individual business segments. In Sampo Bank Group the implementation results only in minor changes to the segment reporting in the financial statements. Changes in presentation Valuation of zero-coupon trading instruments is presented in Net trading income. Net interest income for 2008 included EUR 4.2 million of income that in 2009 is presented in Net trading income. The notes comply with IFRS 7‟s increased requirements for disclosures on the calculation of fair value and on liquidity. STANDARDS AND INTERPRETATIONS NOT YET IN FORCE The IASB has issued a number of amendments to international accounting standards that have not yet come into force. Similarly IFRIC has issued a number of interpretations that have not yet come into force. None of these is expected to materially affect the Group‟s future finan cial reporting. The paragraphs below list the standards and interpretations that are likely to affect the Group‟s financial reporting. In April 2009, Improvement 2009 was issued. The amendments, which will take effect on January 1, 2010, will not affect carrying amounts. Sampo Bank plc – Annual Report 2009
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In November 2009, IASB published IFRS 9, Financial Instruments. This version of the standard is the first step to replace the requirements of IAS 39. The first phase of IFRS 9 addresses only the classification and measurement of financial assets, while the next phases will include requirements for the measurement and recognition of financial liabilities, impairment methodology and guidelines for hedge accounting and derecognition. The EU has decided to postpone adoption of the standard until the details of the next phases are known. The standard is scheduled for implementation on 1 January 2013 at the latest. The Group does not expect IFRS 9 to materially affect the measurement of its financial assets . Meaningful classification and measurement of financial assets is not possible without information about the future content of IFRS 9 to clarify overall accounting effects of the standard and the time of implementation. ACCOUNTING ESTIMATES AND ASSESSMENTS The preparation of the consolidated financial statements is based on the management's estimates and assessments of future events that will significantly affect the carrying amounts of assets and liabilities. The amounts most influenced by critical estimates and assessments are the fair value of financial instruments impairment charges for loans and receivables impairment charges for goodwill. The estimates and assessments are based on assumptions that the management finds reasonable but that are inherently uncertain and unpredictable. The assumptions may be incomplete or inaccurate, and unexpected future events or situations may occur. Such estimates and assessments are therefore difficult to make and will always entail uncertainty, even under stable macroeconomic conditions, when they involve transactions with customers and other counterparties. Other people may make other estimates. FAIR VALUE OF FINANCIAL INSTRUMENTS Measurements of financial instruments for which prices are quoted in an active market or which are based on generally accepted models with observable market data are not subject to material estimates. Measurements of financial instruments that are only to a limited extent based on observable market data, such as unlisted shares and certain bonds for which there is not an active market, are subject to estimates. MEASUREMENT OF LOANS AND RECEIVABLES The Group makes impairment charges to account for impairment of loans and receivables that occur after initial recognition. Impairment charges consist of individual and collective impairment and are subject to a number of estimates, including assessments of the loans or portfolios of loans that are impaired, expected future cash flows and the value of collateral. MEASUREMENT OF GOODWILL Goodwill on acquisition is tested for impairment at least once a year. All impairment tests are done by Danske Bank A/S. Impairment testing requires that the management estimate future cash flows of acquired units. A number of factors affect the value of such cash flows, including discount rates and growth which depends on changes on the real economy, customer behavior, competition and other factors. Impairment charges for goodwill were not required in 2009.
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CONSOLIDATION SUBSIDIARIES The consolidated financial statements cover Sampo Bank plc and group undertakings in which the Group has control over financial and operating policy decisions. Control is said to exist if Sampo Bank plc, directly or indirectly, holds more than half of the voting rights in an undertaking or otherwise has power to control management and operating policy decisions, provided that most of the return on the undertaking accrues to the Group and that the Group assumes most of the risk. Operating policy control may be exercised through agreements about the und ertaking‟s activities. Potential voting rights that are exercisable on the balance sheet date are i ncluded in the assessment of whether Sampo Bank plc controls an undertaking. The consolidated financial statements are prepared by consolidating items of the same nature and eliminating intra-group transactions, balances and trading profits and losses. Undertakings acquired are included in the accounts at the time of acquisition. The net assets of such undertakings (assets, including identifiable intangible assets, less liabilities and contingent liabilities) are included in the financial statements at fair value on the date of acquisition according to the purchase method. If the cost of acquisition, including direct transaction costs, exceeds the fair v alue of the net assets acquired, the excess amount is recognised as goodwill. Goodwill is recognised in the functional currency of the undertaking acquired. If the fair value of the net assets exceeds the cost of acquisition (negative goodwill), the excess amount is recognised as income at the date of acquisition. The portion of the acquisition that is attributable to minority interests does not include goodwill. Divested undertakings are included in the accounts until the transfer date. ASSOCIATES Associated undertakings are businesses, other than subsidiaries, in which the Group has holdings and significant influence but not control. The Group generally classifies undertakings as associated undertakings if Sampo Bank plc, directly or indirectly, holds 20-50 % of the voting rights. Holdings are recognised at cost at the date of acquisition and are subsequently measured according to the equity method. The proportionate share of the net profit and loss of the individual undertaking is included under Income from associated undertakings. The share is calculated on the basis of data from financial statements with balance sheet dates that differ no more than three months from the Group‟s balance sheet date. The proportionate share of the profit and loss on transactions between associated undertakings and group undertakings is eliminated. SPECIAL PURPOSE ENTITIES (SPE) The Group applies synthetic securitisation, by which Sampo Bank plc uses credit derivatives to transfer the credit risk of a loan portfolio in its balance sheet to the market. The derivatives are treated in the consolidated financial statements like guarantees. Sea Fort Securities plc, a special purpose entity funding part of the credit risk, has been established for this purpose. The loans continue to be included in Sampo Bank plc‟s balance sheet. Sampo Bank plc has no controlling power or participation in the special purpose entity‟s net assets, and the special purpose entity has not been consolidated.
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SEGMENT REPORTING IASB issued in November 2006 IFRS 8 „Operating Segments‟ standard that became mandatory 1.1.2009. The implementation of this standard results only minor changes to the presentation of segment reporting in the financial statements. Markets was previously included in Banking in Finland and other functions but is now reported as individual business segment. Asset Management and Fund in Finland is named Capital according to Group policies, but consist of same business units as before. Other consists of business segments that don‟t exceed the limit values set in IFRS 8. Comparative figures are adjusted. The Group consists of number of business units and resource and support functions. Sampo Bank Group‟s activities are segmented into business units according to internal reporting and organizational structure in 2009. Inter-segment transactions are settled on an arm‟s-length basis. Expenses incurred centrally, including expenses incurred by support, administrative and back-office functions, are charged to the business units in according to consumption and activity at calculated unit prices or market prices, if available. Segment assets and liabilities are assets and liabilities that are used to maintain the operating activities of a segment or have come into existence as a result of such activities and that are either directly attributable to or may reasonably be allocated to a segment. A calculated share of shareholders‟ equity is allocated to each segment. In the consolidated financial statements the inter-segment transactions, assets and liabilities have been eliminated. FOREIGN CURRENCY TRANSLATION The presentation currency of the consolidated financial statements is euro. The functional currency of each of the Group‟s units is the currency of the country in which the unit is domiciled, as most income and expenses are recognised in the currency of that country. Transactions in foreign currency are translated at the exchange rate of the functional currency at the transaction date. Gains and losses on exchange rate differences arising between the transaction date and the settlement date are recognised in the income statement. Monetary assets and liabilities in foreign currency are translated at the exchange rates prevailing at the balance sheet date. Exchange rate adjustments of monetary assets and liabilities arising as a result of differences in the exchange rates applying at the transaction date and at the balance sheet date are recognised in the income statement. Non-monetary assets and liabilities in foreign currency that are subsequently revalued at fair value are translated at the exchange rates applying at the date of revaluation. Exchange rate adjustments are included in the revaluation of the fair value of an asset or liability. Other non-monetary items in foreign currency are translated at the exchange rates applying at the date of transaction. TRANSLATION OF FOREIGN UNITS Assets and liabilities of units outside Finland are translated into euro at the exchange rates applying at the balance sheet date. Income and expenses are translated at the exchange rates applying at the date of transaction. Exchange rate gains and losses arising at the translation of net investments in foreign units are recognised in other comprehensive income. Net investments include the net assets and goodwill of the units as well as holdings in foreign units in the form of subordinated loan capital. Exchange rate adjustments of financial liabilities used to hedge net investments in foreign units are also recognised in other comprehensive income.
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INCOME STATEMENT INTEREST INCOME AND EXPENSES Interest income and expenses arising from interest-bearing financial instruments measured at amortised cost are recognised in the income statement according to the effective yield method on the basis of the cost of the individual financial instrument. Interest includes amortised amounts of fees that are an integral part of the effective yield on a financial instrument, such as origination fees, and the amortised differences between cost and redemption price, if any. Interest income and expenses also includes interest on financial instruments carried at fair value. Interest on loans and receivables subject to individual impairment is recognised on the basis of the impaired value. FEE INCOME AND EXPENSES Fees and commissions which are an integral part of the effective interest rate of a financial instrument are deferred and treated as an adjustment to the effective interest rate. Such fees may be origination fees (including compensation for activities such as evaluating the borrower‟s financial condition, evaluating and registering guarantees, collateral and other securities and documentation) and commitment fees, for example. If a commitment fee expires without an entity making a loan, the fee is recognised as revenue upon expiry. The fees and transaction costs of financial instruments measured at fair value through profit and loss are recognised in profit and loss when the instrument is initially recognised. Fees for other financial services include fees recognised as revenue when services are provided (e.g. those charged for servicing a loan). Fees earned upon the execution of a significant act are recognised as revenue when the act is completed. Such fees are e.g. syndication fees which are recognised in profit and loss when the syndication has been completed. NET TRADING INCOME Net trading income includes realised and unrealised capital gains and losses on trading portfolio assets and other securities as well as exchange rate adjustments and dividends. The effect on profit and loss of fair value hedge accounting is also recognised under Net trading income. INCOME FROM ASSOCIATED UNDERTAKINGS Income from associated undertakings comprises the Group‟s proportionate share of the net profit or loss of the individual undertakings. Profit or loss on venture capital holdings is recognised as Net trading income, however. PROFIT ON SALE OF UNDERTAKINGS The profit on sale of associated and group undertakings is the difference between selling price and the carrying amount, including goodwill, if any. OTHER INCOME Other income includes rental income and lease payments under operating leases, amounts received on the sale of lease assets and gains and losses on the sale of other tangible and intangible assets.
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STAFF COSTS AND ADMINISTRATIVE EXPENSES STAFF COSTS Salaries and other remuneration that the Group expects to pay for work carried out during the year are expensed under Staff costs and administrative expenses. This item includes salaries, bonuses, expenses for share-based payments, holiday allowances, pension costs and other remuneration. BONUSES AND SHARE-BASED PAYMENTS Bonuses are expensed as they are earned. Until 2008, part of the bonuses for the year was paid in the form of share options and conditional shares. Danske Bank share options may not be exercised until three years after the grant date and are conditional on the employee‟s not having resigned from the Group. Conditional shares vest three years after the grand date, provided that the employee has not resigned from the Group. The fair value of share-based payments at the grant date is expensed over the service period that unconditionally entitles the employee to the payment. The intrinsic value of the options is expensed in the grant year, whereas the time value is accrued over the remaining service period. The strike price of the options is computed as the average price of Danske Bank shares for 20 stock exchange days after the release of the Annual Report plus 10%. The fair value of the share options at the time of allotment is calculated according to a dividendadjusted Black & Scholes formula based on the following assumptions at December 31, 2009: Share price: 118 (2008: 52). Dividend payout ratio: 0%. (2008: 0%). Rate of interest: 1.55-2.65% (2008: 3.40-4.80%), corresponding to the swap rate. Volatility: 52%. (2008: 25-39%). Average time of exercise: 1-3 years (2008: 1-4 years). The volatility is estimated on the basis of historical volatility. PENSION OBLIGATES Post-employment benefits include pensions and life insurance. Sampo Bank Group does not have arranged defined benefit plans. The most significant defined contribution plan is that arranged through the Employees‟ Pensions Act (TyEL) in Finland. In defined contribution plans, the Group pays fixed contributions to a pension insurance company and has no legal or constructive obligation to pay further contributions. The obligations arising from a defined contribution plan are recognised in the income statement as they are earned by the employees. TERMINATION BENEFITS An obligation based on termination of employment is recognised as a liability when Sampo Bank Group is verifiably committed to terminate the employment of one or more persons before the normal retirement date or to grant benefits payable upon termination as a result of an offer to promote voluntary redundancy. As no economic benefit is expected to flow to the employer from these benefits in the future, they are recognised immediately as an expense. Obligations maturing more than 12 months later than the balance sheet date are discounted. The benefits payable upon termination at Sampo Bank Group are the monetary and pension packages related to redundancy. AMORTISATION, DEPRECIATION AND IMPAIRMENT CHARGES In addition to amortization, depreciation and impairment charges for intangible and tangible assets, the Group expenses the carrying amount of assets sold at the expiry of a lease agreement.
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LOAN IMPAIRMENT CHARGES Loan impairment charges includes losses on and impairment charges for loans, advances, amounts due from credit institutions and off-balance sheet items, as well as fair value adjustments of the credit risk on loans and advances recognised at fair value. The item also includes impairment charges and realised gains and losses on tangible assets and businesses taken over by the Group under non-performing loan agreements if the assets qualify as held-for-sale assets. Similarly, subsequent value adjustments of assets that the Group has taken over and does not expect to sell within 12 months are recognised under loan impairment charges, provided that the Group has a right of recourse against the borrower. TAX Calculated current and deferred tax on the profit for the year and adjustments of tax charges for previous years are recognized in the income statement. Tax on items recognised in other comprehensive income is recognised in other comprehensive income. Similarly, tax on items recognized in shareholders‟ equity is recognized in shareholders‟ equity. Current tax is calculated based on the valid tax rate. COMPREHENSIVE INCOME Comprehensive income includes the net profit for the year and other comprehensive income from translation of units outside Finland, non-Finnish unit hedges and unrealised value adjustments of available-for-sale financial assets. CASH FLOW STETEMENT The Group has prepared its cash flow statement according to the indirect method. The statement is based on the pre-tax profit for the year and shows the cash flows from operating, investing and financing activities and the increase or decrease in cash and cash equivalents during the year. Cash and cash equivalents consists of cash in hand and demand deposits with central banks and amounts due from credit institutions and central banks with original maturities shorter than three months. BALANCE SHEET FINANCIAL ASSETS AND LIABILITIES GENERAL Purchases and sales of financial instruments are measured at their fair value at the settlement date. The fair value is usually the same as the transaction price. Changes in the value of financial instruments are recognised up to the settlement date. CLASSIFICATION At initial recognition, financial assets are divided into the following categories: trading portfolio measured at fair value loans and receivables measured at amortised cost. At initial recognition, financial liabilities are divided into the following categories: trading portfolio measured at fair value Sampo Bank plc – Annual Report 2009
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financial liabilities designated at fair value with value adjustment through profit and loss other financial liabilities measured at amortised cost. FINANCIAL ASSETS AND FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT AND LOSS Financial assets and liabilities at fair value through profit of loss comprise trading portfolio assets and liabilities and financial liabilities designated as at fair value through profit and loss. Trading portfolio The trading portfolio includes financial assets acquired and liabilities undertaken that the Group intends to sell or repurchase in the short term. The trading portfolio also contains financial assets and liabilities managed collectively for which a pattern of short-term profit taking exists. All derivatives, including separated embedded derivatives and derivatives designated as hedging derivatives, are part of the trading portfolio. Assets in the trading portfolio comprise the equities, bonds and derivatives with positive fair value held by the Group‟s trading department. Liabilities in the trading portfolio consist of derivatives with negative fair value and obligations to deliver securities. At initial recognition, the trading portfolio is measured at fair value, excluding transaction costs. Subsequently, the portfolio is measured at fair value with value adjustments through profit and loss. FAIR VALUE OPTION – FINANCIAL LIABILITIES DESIGNATED AS AT FAIR VALUE THROUGH PROFIT AND LOSS Financial liabilities at fair value through profit and loss includes issued CD's (see also section "Changes in accounting policies"). Financial liabilities at fair value through profit and loss are measured at fair value. Interest income and expenses on financial instruments carried at fair value are presented in Net interest income, realised and unrealised capital gains and losses are included in Net trading income. DUE FROM CREDIT INSTITUTIONS AND CENTRAL BANKS Amounts due from credit institutions and central banks comprise amounts due from other credit institutions and time deposits with central banks. Reverse transactions are recognised as amounts due from credit institutions and central banks. Amounts due from credit institutions and central banks are measured at amortised cost, as described under Loans and receivables. LOANS AND RECEIVABLES Loans and receivables consist of loans and receivables disbursed directly to borrowers and loans and receivables acquired after disbursement. Loans and receivables include conventional bank loans; finance leases; mortgages and pledges; reverse transactions, except for transactions with credit institutions and central banks. At initial recognition, loans and receivables are measured at fair value plus transaction costs and less origination fees, and other charges. Subsequently, they are measured at amortised cost, according to the effective interest method, with the deduction of any impairment charges. The difference between initial recognition and the nominal value is amortised over the term to maturity and carried under Interest income. If fixed-rate loans and receivables and amounts due are hedged efficiently by derivatives, the fair value of the hedged interest rate risk is added to the amortised cost of the assets.
Sampo Bank plc – Annual Report 2009
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AMOUNTS DUE TO CREDIT INSTITUTIONS AND CENTRAL BANKS / DEPOSITS Amounts Due to credit institutions and central banks and Deposits include amounts received under repurchase transactions. Amounts Due to credit institutions and central banks and Deposits are measured at amortised cost plus the fair value of the hedged interest rate risk. OTHER ISSUED BONDS / SUBORDINATED DEBT Other issued bonds and Subordinated debt comprise the bonds issued by the Group. Subordinated debt is liabilities in the form of subordinated loan capital and other capital investments which, in case of voluntary or compulsory winding-up, will not be repaid until after the claims of ordinary creditors have been met. Other issued bonds and Subordinated debt are measured at amortised cost plus the fair value of the hedged interest rate risk. The yield on some issued bonds depends on an index that is not closely linked to the financial characteristics of the bonds, for example an equity or commodity index. Such embedded derivatives are separated and carried at their fair value in the trading portfolio. OTHER LIABILITIES Other liabilities includes accrued interest, fees and commissions that do not form part of the amortised cost of a financial instrument. Other liabilities also includes pension obligations and provisions for other obligations, such as lawsuits and guarantees. If a lawsuit is likely to result in payment, a liability is recognized if it can be measured reliably. The liability is recognized at the present value of expected payments. FAIR VALUE The fair value of financial assets and liabilities is measured on the basis of quoted market prices of financial instruments traded in active markets. If an active market exists, fair value is based on the most recently observed market price at the balance sheet date. If a financial instrument is quoted in a market that is not active, the Group bases its valuation on the most recent transaction price. It adjusts the price for subsequent changes in market conditions, for instance by including transactions in similar financial instruments that are motivated by normal business considerations. If an active market does not exist, the fair value of standard and simple financial instruments, such as interest rate and currency swaps and unlisted bonds, is measured according to generally accepted measurement methods. Market-based parameters are used to measure fair value. The fair value of more complex financial instruments, such as swaptions, interest rate caps and floors, and other OTC products, is measured on the basis of internal models, many of which are based on valuation techniques generally accepted within the industry. The results of calculations made on the basis of valuation techniques are often estimates, because exact values cannot be determined from market observations. Consequently, additional parameters, such as liquidity and counterparty risk, are sometimes used to measure fair value. If, at the time of acquisition, a difference arises between the value of a financial instrument calculated on the basis of non-observable inputs and actual cost [day-one profit and loss] and the difference is not the result of transaction costs, the Group calibrates the model parameters to the actual cost. Sampo Bank plc – Annual Report 2009
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IMPAIRMENT OF FINANCIAL ASSETS If objective evidence of impairment of a loan, an advance or an amount due exists, and the effect of the impairment event or events on the expected cash flow from the asset is reliably measurable, the Group determines the impairment loss individually. The impairment charge equals the difference between the carrying amount and the present value of the most likely future cash flow from the asset, including the realisation value of collateral. The present value of fixed-rate loans and receivables is calculated at the original effective interest rate, whereas the present value of loans and receivables with a variable rate of interest is calculated at the current effective interest rate. Objective evidence of impairment of loans and receivables exists if at least one of the following events has occurred: the borrower is experiencing significant financial difficulty the borrower‟s actions, such as default on interest or principal payments, lead to a breach of contract the Group, for reasons relating to the borrower‟s financial difficulty, grants to the borrower a concession that the Group would not otherwise have granted it becomes probable that the borrower will enter bankruptcy or another type of financial reorganisation Loans and receivables without objective evidence of impairment are considered in an assessment of collective impairment at portfolio level. Collective impairment is calculated for groups of loans and receivables with similar credit characteristics when impairment of expected future cash flows from the group has occurred. The Group‟s models use downgrading of a customer‟s rating as an indicator of impairment. The facilities are divided into groups according to their current ratings. The cash flows are specified by means of parameters used for the calculation of solvency requirements and historical loss data adjusted for use in the financial statements, among other things. The adjustment covers a loss identification period that, according to the Group‟s empirical data, is the period from the first appearance of evidence of impairment to the determination of a loss at customer level. Collective impairment is calculated for each group as the net difference between the carrying amount of the loans and receivables of the portfolio and the present value of expected future cash flows. If the Group becomes aware that, at the balance sheet date, deteriorations or improvements have occurred that are not fully reflected in the assessments based on the models, it adjusts the impairment charge. Impairment charges are booked in an allowance account and set off against loans and receivables. Changes in the allowance account are recorded under Loan impairment charges in the income statement. If subsequent events show that impairment is not permanent, charges are reversed. Loans and receivables that are considered uncollectible are written off. Write-offs are debited to the allowance account. Loans and receivables are written off once the usual collection procedure has been completed and the loss on the individual loan or advance can be calculated. In accordance with the effective interest method, interest is recognised on the basis of the value of the loans and receivables less impairment charges. HEDGE ACCOUNTING The Group uses derivatives to hedge the interest rate risk on fixed-rate assets and fixed-rate liabilities carried at amortised cost. Hedged risks that meet specific criteria qualify for fair value hedge accounting and are treated accordingly. The interest rate risk on the hedged assets and liabilities is recognised at fair value as a value adjustment of the hedged items through profit and loss. Sampo Bank plc – Annual Report 2009
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If the hedge accounting criteria cease to be met, the accumulated value adjustments of the hedged items are amortised over the term to maturity. LEASES GROUP AS LESSOR Finance leases Leases in which assets are leased out and substantially all the risks and rewards of ownership are transferred to the lessee are classified as finance leases. Finance leases are recognised as receivables in the balance sheet at an amount equal to the net investment in the lease. The lease payment is allocated between the repayment of principal and interest income. The interest income is amortised over the lease period so as to achieve a constant periodic rate of return on the remaining net investment for the lease term. Finance leases are included in „Loans and receivables‟ and interest in „Interest income‟. Other leases Leases in which assets are leased out and the Group retains substantially all the risks and rewards of ownership are classified as operating leases. They are included in „Property, plant and equipment‟ in the balance sheet. They are depreciated over their expected useful lives on a basis consistent with similar owned property, plant and equipment, and the impairment losses are recognised on the same basis as for these items. Rental income on assets held as operating leases is recognised on a straight-line basis over the lease term in profit and loss. GROUP AS LESSEE Finance leases Leases of assets in which substantially all the risks and rewards of ownership are transferred to the Group are classified as finance leases. Finance leases are recognised at the lease‟s inception at the lower of the fair value of the leased asset and the present value of the minimum lease payments. The corresponding obligation is included in „Other liabilities‟ in the balance sheet. The assets acquired under finance leases are amortised or depreciated over the shorter of the asset‟s useful life and the lease term. Each lease payment is allocated between the liability and the interest expense. The interest expense is amortised over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Other leases Assets in which the lessor retains substantially all the risks and rewards of ownership are classified as operating leases and they are included in the lessor‟s balance sheet. Payments made on operating leases are recognised on a straight-line basis over the lease term as rental expenses in profit and loss. INTANGIBLE ASSETS GOODWILL Goodwill arises on the acquisition of undertakings and is calculated as the difference between the cost of the undertaking acquired and the fair value of its net assets, including contingent liabilities, at the time of acquisition. Goodwill on associated undertakings is recognised under Holdings in associated undertakings. Goodwill is allocated to cash-generating units at the level at which management monitors its investment. Goodwill is not amortised; instead each cash-generating unit is tested for impairment at Sampo Bank plc – Annual Report 2009
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least once a year. Goodwill is written down to its recoverable amount through profit and loss if the carrying amount of the net assets of the cash-generating unit exceeds the higher of the assets‟ fair value less costs to sell and their value in use, which equals the present value of the future cash flows expected from the unit. OTHER INTANGIBLE ASSETS Software acquired is measured at cost, including the expenses incurred to make each software application ready for use. Software acquired is amortised over its expected useful life, which is usually three years, according to the straight-line method. Software developed by the Group is recognised if the cost of development is reliably measurable and analyses show that the future profit from using the individual software applications exceeds cost. Cost is defined as development costs incurred to make each software application ready for use. Once the software has been developed, the cost is amortised over the expected useful life, which is usually three years, according to the straight-line method. Development costs consist primarily of direct remuneration and other development costs that may be attributed directly. Expenses incurred in the planning phase are not included; instead such expenses are booked when incurred. Identifiable intangible assets taken over on the acquisition of undertakings are recognised at the time of acquisition at their fair value and amortised over their expected useful lives, which are usually three years, according to the straight-line method. The value of intangible assets with indefinite useful lives is not amortised, but the assets are tested for impairment at least once a year according to the principles applicable to goodwill. Other intangible assets to be amortised are tested for impairment if indications suggest that impairment exists, and the assets are written down to their value in use. Costs attributable to the maintenance of intangible assets are expensed in the year of maintenance. TANGIBLE ASSETS Tangible assets includes domicile property, machinery, furniture and fixtures. Machinery, furniture and fixtures covers equipment, vehicles, furniture, fixtures, leasehold improvements and lease assets. DOMICILE PROPERTY Domicile property is real property occupied by the Group‟s administrative departments, branches and other service units. Real property with both domicile and investment property elements is allocated proportionally to the two categories if the elements are separately sellable. If that is not the case, such real property is classified as domicile property, unless the Group occupies less than 10% of the total floorage. Domicile property is measured at cost plus property improvement expenditure and less depreciation and impairment charges. The straight-line depreciation of the property is based on the expected scrap value and an estimated useful life of 20 to 50 years. Real property held under longterm leases is depreciated on a progressive scale. Investment property which becomes domicile property because the Group starts using it for its own activities is recognised at its fair value at the time of reclassification. Domicile property which becomes investment property is recognised at its fair value at the time of reclassification. Any revaluation of domicile property is recognised in other comprehensive income. Domicile property which, according to a publicly announced plan, the Group expects to sell within twelve months is recognised as an asset held for sale. Real property taken over as part of the settlement of debt is recognised under Other assets.
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MACHINERY, FURNITURE AND FIXTURES Equipment, vehicles, furniture, fixtures and property improvement expenditure are recognised at cost less depreciation and impairment. Assets are depreciated over their expected useful lives, which are usually three years, according to the straight-line method. Leasehold improvements are depreciated over the term of the lease, with a maximum of ten years. LEASE ASSETS Lease assets consist of assets, except real property, leased under operating leases with the Group as the lessor. Lease assets are measured using the same valuation technique as that applied by the Group to its other equipment, vehicles, furniture and fixtures. When, at the end of the lease period, lease assets are put up for sale, the assets are transferred to Other assets. IMPAIRMENT Tangible assets are tested for impairment if indications suggest that impairment exists. An impaired asset is written down to its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. OTHER ASSETS Other assets includes interest and commission due, prepayments and lease assets put up for sale at the expiry of the lease agreement. PROVISIONS A provision is recognised when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the Group can reliably estimate the amount of the obligation. If it is expected that some or all of the expenditure required to settle the provision will be reimbursed by another party, the reimbursement will be treated as a separate asset only when it is virtually certain that the Group will receive it. DEFERRED TAX ASSETS/DEFERRED TAX LIABILITIES Deferred tax on all temporary differences between the tax base of assets and liabilities and their carrying amounts is accounted for in accordance with the balance sheet liability method. Deferred tax is recognised under Deferred tax assets and Deferred tax liabilities. The Group does not recognise deferred tax on temporary differences between the tax base and the carrying amounts of goodwill not subject to amortisation for tax purposes and other items if temporary differences arose at the time of acquisition without effect on net profit or taxable income. If the tax base may be calculated according to several sets of tax regulations, deferred tax is measured in accordance with the regulations that apply to the use of the asset or settlement of the liability planned by the management. Tax assets arising from unused tax losses and unused tax credits are recognised to the extent that it is probable that the unused tax losses and unused tax credits can be used. Deferred tax is measured on the basis of the tax regulations and rates that, according to the rules in force at the balance sheet date, will apply in the relevant countries at the time the deferred tax is expected to crystallise as current tax. Changes in deferred tax as a result of changes in tax rates are recognised in the income statement
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CURRENT TAX ASSETS/CURRENT TAX LIABILITIES Current tax assets and liabilities are recognised on the balance sheet as the estimated tax charge on the profit for the year adjusted for prepaid tax and accrued and due tax payments for previous years. Tax assets and liabilities are netted if permitted by law and provided that the items are expected to be subject to net or simultaneous settlement. FIDUCIARY ACTIVITIES The fiduciary services supplied by Sampo Bank Group are discretionary asset management services, mutual fund services and securities custody services. In these activities, assets are held and placed on behalf of customers. These assets and the income arising thereon are excluded from these financial statements, as they are not asset of Sampo Bank Group.
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SEGMENT INFORMATION Operating Segments Banking Activities is divided into six regions: Helsinki, Greater Helsinki, Western Finland, Central Finland, Eastern Finland and Northern Finland. Banking activities also includes Corporate and Institutional Banking unit (CIB) and Public Institutions and Associations unit (PIA) as well as Sampo Finance (SF). The most specialised functions in the six regions such as Private Bank, cash management and investment services are concentrated in the finance centres whereas other functions operate in branches. Markets is responsible for operations in the financial markets and advisory services related to markets area. Capital is responsible for Sampo Bank's Asset Management operations and mutual funds. Other activities includes primarily Group's funding and Group's support functions such as IT services, Contact Centre, product development and logistics.
OPERATING SEGMENTS - tables JANUARY-DECEMBER 2009
EURm Net interest income Other income (net) Total operating income Total operating expenses Impairment losses on loans and receivables Profit before taxes
DECEMBER 31, 2009 TOTAL ASSETS of which loans and advances to credit inst. & customers TOTAL LIABILITIES AND EQUITY of which liabilities to credit inst. & customers
Banking Markets Activities 393,5 79,1 197,7 -1,9 591,2 77,3 -386,5 -21,2 -220,6 -6,7 -15,9 49,4
-0,5 42,4 41,9 -25,1 0,0 16,7
-13,2 0,9 -12,3 -5,3 0,0 -17,6
0,0 0,0 0,0 0,0 0,0 0,0
Sampo Bank Group 458,9 239,1 698,0 -438,0 -227,3 32,7
Capital
Other
Eliminations
31 356
5 374
55
7 146
-19 064
24 868
32 941 31 356 31 098
7 399 5 374 2 957
98 55 3
852 7 146 391
-18 633 -19 064 -18 625
22 658 24 868 15 824
JANUARY-DECEMBER 2008
EURm Net interest income Other income (net) Total operating income Total operating expenses Impairment losses on loans and receivables Profit before taxes DECEMBER 31, 2008 TOTAL ASSETS of which loans and advances to credit inst. & customers TOTAL LIABILITIES AND EQUITY of which liabilities to credit inst. & customers
Banking Markets Activities 435,9 26,8 176,0 47,9 611,9 74,7 -461,0 -18,3 -52,3 0,0 98,6 56,4
0,8 56,1 56,9 -24,7 0,0 32,2
17,7 -19,0 -1,3 -4,2 0,0 -5,5
0,0 0,0 0,0 0,0 0,0 0,0
Sampo Bank Group 481,2 261,0 742,2 -508,3 -52,3 181,6
Capital
Other
Eliminations
32 494
10 509
67
9 289
-22 766
29 592
34 275 32 494 32 104
12 225 10 509 5 142
75 67 0
1 820 9 289 1 135
-22 304 -22 766 -22 288
26 091 29 592 16 094
In accordance with IFRSs, Sampo Bank Group is required to disclose business with a single customer that generates 10% or more of the combined revenue. The Group has no such customers.
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SAMPO BANK RISK MANAGEMENT DISCLOSURES RISK MANAGEMENT GENERAL PRINCIPLES AND GOVERNANCE Risk is an essential part of Sampo Bank‟s operating environment and business activities. Clearly defined strategies and responsibilities, together with strong commitment to the risk management process, are our tools to manage risks. The main objectives of the risk management processes are to ensure that risks are properly identified, risk measurement is independent and the capital base is adequate in relation to the risks. The risks related to the Sampo Bank Group‟s activities and the sufficiency of the companies‟ capitalisation in relation to these risks is regularly evaluated. The Board of Directors of Sampo Bank plc, together with the Boards of Sampo Bank plc‟s subsidiaries, is responsible for ensuring that the Sampo Bank Group‟s risks are properly managed and controlled. The Sampo Bank plc‟s Board sets the principles of risk management and provides guidance on the organisation of risk management and internal control in the business areas. Sampo Bank Group‟s Risk Management and Market Risk, which are independent units outside the business areas, monitor Sampo Bank Group‟s risk position against principles and limits set by the Board of Sampo Bank plc. Risk management is also responsible for assessing the adequateness of the capital base of Sampo Bank Group against the risks taken. It is each business areas responsibility that all the principles and limits set by the Sampo Bank plc‟s Board of Directors, Committees set by the Board, Risk Management or Market Risk units are followed in the business processes and decision making. Principles and practices of risk management in Sampo Bank Group plc are carried out consistently with risk policies of Danske Bank Group and supported by corresponding Danske Bank Group functions. Additional information on Danske Bank Group level risks and Danske Bank Group‟s risk approaches can be found in Danske Bank Group‟s annual report and Risk Management report for 2009. CAPITAL REQUIREMENTS AND MANAGEMENT MINIMUM REGULATORY CAPITAL Banking is a highly regulated business. There are formal rules for minimum capital and capital structure in capital adequacy regulation. Also banks largest exposures are limited based on capital included in the capital adequacy own funds. Credit Institutions Act gives multiple options for methods institutions may use in capital adequacy calculation. Sampo Bank Group applies standard method for credit and operational risks. Market risks are calculated according to regulatory approaches; internal models are not used in regulatory reporting. Capital adequacy is reported quarterly to Financial Supervision Authority (FIN-FSA). All Sampo Bank Group companies fulfilled the regulatory minimum capital requirements during 2009. Minimum capital requirements set by capital adequacy regulation are presented in the Risk Table 1 below. Most significant change in own funds from end of December 2008 was the redemption of EUR 150 million Tier 2 debenture loan in March 2009. Total capital requirement has decreased mainly due to decreased corporate exposure and smaller capital demand on short term deposits in Danske Bank A/S due to Danish state guarantee on those deposits.
Sampo Bank plc – Annual Report 2009
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2009
2008
1 179 0 1 47 566 218 294 24 2 2 16 9
1 361 0 1 122 673 166 353 14 1 3 12 16
108 96 10 1
59 51 8 0
99
100
Total capital requirement
1 386
1 520
Total own funds
2 580
2 713
Capital requirements for credit and counterparty credit risk Central governments and central banks Administrative bodies and non-commercial undertakings Institutions Corporates Retail Real estate Past due items Items belonging to regulatory high-risk categories Covered bonds Other items Securitisations positions Capital requirement for market risk General and specific risk Commodity risk Settlement risk Capital requirement for operational risk
Risk Table 1. Pillar 1 regulatory capital requirements by portfolio, EURm CAPITAL MANAGEMENT PROCESS The basis of the Danske Bank Group‟s capital management practices is the regulatory framework in the Capital Requirements Directive (CRD) with the ICAAP (Internal Capital Adequacy Assessment Process) in Pillar 2. Sampo Bank Group‟s ICAAP consists of evaluating all relevant risks that the Sampo Group is exposed to. Besides the Pillar I risk types – credit, market and operational risks – the bank sets capital aside for interest rate risk of the banking book, business risk and business cycle volatility buffer defined based on stress tests. Liquidity risk is taken into account through stress testing. The latest Sampo Bank Group ICAAP report was prepared, approved by Sampo Bank plc Board and delivered to FIN-FSA in December 2009. The report includes assessment of all internal and external capital requirements Sampo Bank Group must fulfil. The requirements have been stressed to reflect severe negative development in economic environment over three years‟ time horizon. The report shows that Sampo Bank Group is well capitalized and has adequate capital buffers against possible negative changes in market environment. MAIN RISK TYPES The major risks associated with Sampo Bank Group‟s activities are the credit risk arising from banking, interest rate and liquidity risk. Operational and business risks are inherent in all business areas. Sampo Bank plc – Annual Report 2009
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The banking result mainly depends on loan and deposit margins, business volumes, the size and structure of the balance sheet, the general level of interest rates, impairment losses and cost efficiency. The margin between loans and deposits in banking, with a moderate interest rate and liquidity risk profile, changes slowly. Possible sources of result fluctuations are unexpected losses in the credit and operational risk areas. In banking and investment services, the fees gathered from customer business are also an important source of earnings. Because fees are exposed to changes in business volume, profitability is mostly exposed to changes in general economic activity and customer behaviour. CREDIT RISK Credit risk is the risk of losses arising because counterparties or debtors fail to meet all or part of their payment obligations to the Group. Credit risk includes country, dilution, settlement and counterparty credit risk. Sampo Bank Group‟s guidelines lay down uniform principles for credit risk taking, with the aim of ensuring good quality in the credit process. Sampo Bank‟s Board of Directors annually approves the credit risk policy, which sets the parameters to new lending and the decentralization of credit risk from different viewpoints. Lending is focused on customers operating in Finland. Limits are set for risk concentrations, measured by the ratio of a customer group‟s nominal exposures to the Bank‟s total capital. The risk concentration parameters are at a clearly lower level than official norms. Sampo Bank‟s Board of Directors has all credit decisions authority delegated to Danske Bank Group Credit Committee, which has further delegated authority to the Sampo Bank‟s CEO and the management of the Sampo Bank Credit department, and to the authorised credit officers in the business areas. The amount of the authorisation varies according to customer rating, total exposure and the collateral level. All credit applications are initiated and prepared in the business area. Credit decisions are primarily based on the rating, payback ability, collateral and other risk mitigates offered and acceptable return on risk-adjusted capital. CREDIT RISKS OF CORPORATE CUSTOMERS All major corporate customers have a customer account officer who is familiar with the customer‟s business and monitors its development. Customers with significant exposures are analyzed by credit analysts independent of the business area. Customers with smaller exposures are continuously assessed with scoring models. Credit risk monitoring consists of continuous monitoring of macro economy and business sector developments, on the one hand, and monitoring of customer creditworthiness, collateral values and covenants, on the other hand. Credit risks of business areas are reviewed systematically at least once a year. This credit review includes monitoring the appropriateness of credit decisions and implementation of action plans initiated in order to reduce the risks of the lowest rated customers. The evolution of new lending is monitored monthly against credit policy targets. Product limits are monitored daily as well as the delayed payments or arrears. CREDIT RISKS OF PERSONAL CUSTOMERS Personal customers are credit scored both by application scorecard and continuously monitored by behavioural scorecard. These scoring models utilize public and internal information on borrower payment behaviour e.g education, employment and other factors as influential variables in forecasting customer creditworthiness. As part of loan granting process the debt service capacity is assessed and stressed by using essentially higher interest levels compared to current levels. Long-term loans to personal customers are mainly collateralised by housing company shares or residential real estate. Pricing of
Sampo Bank plc – Annual Report 2009
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personal customer loans is risk sensitive, using probability of default, and loss given default estimates. The all incidents of excesses, overdrafts and past due payments are monitored continuously. CREDIT EXPOSURE The figures in Risk Tables 2 to 7 show the credit exposures of customers of Sampo Bank Group. The internal receivables between Sampo Bank Group companies have been eliminated from these figures. For 2009 annual report Sampo Bank has aligned the Group credit exposure definition with Danske Bank Group. Credit exposure relating to trading and investing activities is now also presented on separate tables. Comparison numbers for 2008 have been changed in line with the 2009 definitions to make evaluation of portfolio changes possible. Exposures are primarily categorised according to customers or counterparties. The reporting of credit exposure relating to lending activities covers used exposure, guarantees and irrevocable loan commitments. The reporting of credit exposure of trading and investing activities includes positive fair value of derivative contracts, fair value of trading book bonds as well as shares.
Credit exposure relating to lending activities Credit exposure relating to trading and investing activities Total
2009 30 067 1 347 31 414
2008 33 012 2 830 35 842
Risk Table 2. Total credit exposure, EURm CREDIT EXPOSURE RELATING TO LENDING ACTIVITIES Sampo Bank Group‟s credit exposure relating to lending activities totalled EUR 30.1 billion at end of 2009, of which personal customers cover 39 per cent and corporate customers 47 per cent. Compared to 2008, portfolio has decreased with EUR 2.9 billion. Largest changes are in exposure to financials which has decreased with EUR 1.7 billion and in exposure to corporate, which has decreased with EUR 1.4 billion. Decrease in financials is mainly due to lower level of short term deposits in Danske Bank A/S. Exposure to personal customers has remained stable. In terms of geographical area, 99 percent of exposures were in EU countries. New lending during 2009 was concentrated into Finland.
Personal Corporate Financials Public Total
2009 11 833 14 147 3 749 338 30 067
2008 11 769 15 542 5 407 294 33 012
Risk Table 3. Credit exposure relating to lending activities by segment , EURm Sampo Bank Group‟s credit exposure relating to lending is presented by industries in Risk Table 4. Portfolio is well diversified within industries, high share of private sector is mainly housing loans covered with real estate collateral. Industry class Financials includes EUR 3.0 billion exposure to Danske Bank Group, which is mainly short term deposits. Large increase in subsidised housing companies is explained by categorisation change where the exposure has been moved from commercial property class.
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Banks Commercial property Constructions and building products Consumer Div. financials Energy and Utilities Health care IT Materials Other Financials Other industrials Private Public Subsidised housing companies etc. Telecommunication Tranportation and Shipping Total
2009 3 249 2 423 945 2 708 441 1 163 496 308 1 718 60 1 597 11 833 338 1 651 330 807 30 067
2008 4 761 3 835 1 000 3 156 632 1 505 623 291 2 265 14 1 771 11 769 294 62 290 746 33 012
Risk Table 4. Credit exposure relating to lending activities by industries, EURm Sampo Bank Group‟s credit exposure by classification is presented in Risk Table 5. In line with Danske Bank Group‟s credit process, Sampo Bank Group‟s customers are classified according to risk and the classification is updated upon receipt of new information about them. The main objectives of risk classification are to rank the Sampo Bank Group‟s customer base according to risk and to estimate the probability of default (PD) of each customer.
Table 4-8. Credit exposure by rating (EUR m) 2009 1 176 2 4 112 3 3 560 4 4 333 5 4 946 6 4 901 7 4 293 8 2 512 9 677 10 184 11 373 Total 30 067
2008 182 6 125 3 382 5 623 6 258 4 733 4 269 1 777 336 83 242 33 012
Risk Table 5. Credit exposure relating to lending activities by rating, EURm Credit exposure is quite normally distributed over classification classes. Macroeconomic developments affected the credit quality of the Group‟s lending portfolio negatively during 2009. At the end of 2009, amount of customers rated to seven highest rating classes was 87,5 percent of the total when corresponding share for 2008 was 92,6 percent. Individual loan impairment charges increased during 2009 and amounted EUR 213.5 million at the end of year, against EUR 54.3 million at the end of 2008. Amount of net non-performing assets in the end of 2009 was EUR 192.3 million, EUR 65.5 million higher than end of 2008. Sampo Bank plc – Annual Report 2009
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Additional information on classification scales can be found in the Danske Bank Group risk management report for 2009. Mitigating risks in the credit portfolio is a key element of the Group‟s business strategy. Personal and small corporate customer exposure is mainly covered by collateral. In large corporate segment it is mainly market practise not to use collateral but covenants in risk mitigation. Collateral is also a key component in the Group‟s calculation of economic capital and RWA. All collateral is valued at the time it is pledged and regularly thereafter. Regional housing price indices are used to update latest trade prices, in calculating fair value estimates for these collateral types. Other collaterals are revaluated at least annually. The estimation of collateral fair value is done by competent valuator who is independent of credit process. The risk of changes in fair value is covered by similar haircut process all through Danske Bank Group. Risk Table 6 presents the amount of collateral which is allocated to agreements after haircuts.
Real property Bank accounts Custody accounts/securities Vehicles Equipment Vessels/aircraft Guarantees Dues Other assets Total
2009 12 568 80 343 8 45 143 873 27 14 14 100
2008 12 218 68 458 6 34 92 1 009 11 11 13 907
Risk Table 6. Types of collateral, EURm CREDIT EXPOSURE RELATING TOTRADING AND INVESTING ACTIVITIES At the end of 2009, Sampo Bank Group‟s credit exposure relating to trading and investing activities amounted to EUR 1.3 billion showing EUR 1.5 billion decrease compared to year 2008. Exposure consisted almost entirely of exposure to bonds and derivatives. Derivatives with positive fair value were the largest single class at EUR 0.9 billion. Main reason for decrease in credit exposure relating to trading and investing activities was EUR 1.1 billion decrease in financials bond portfolio. This is due to limitations on eligibility of financial bonds as collateral in central bank which were implemented 2009. 2009 Bonds Shares Derivatives Total
Private 0 0 0 0
Commercials 2 13 208 222
Financials 176 3 631 811
Public 254 0 60 314
Total 432 16 899 1 347
Private 0 0 0 0
Commercials 23 4 235 262
Financials 1 274 2 1 006 2 281
Public 270 0 16 286
Total 1 567 6 1 257 2 830
2008 Bonds Shares Derivatives Total
Risk Table 7. Credit exposure relating to trading and investing activities, EURm
Sampo Bank plc – Annual Report 2009
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MARKET RISK Market risk is defined as the risk of losses because the fair value of the Bank‟s assets and liabilities varies with changes in market conditions. Market risk consists of the following components: Interest rate risk: the risk of losses caused by changes in interest rates Exchange rate risk: the risk of losses on foreign currency positions caused by changes in exchange rates Equity market risk: the risk of losses caused by changes in equity prices Commodity risk: the risk of losses caused by changes in commodity prices Volatility risk: the risk of losses on option positions caused by changes in implied volatilities Furthermore interest rate risk can be divided into re-pricing risks, yield curve risks and margin risks including floor risk. Sampo Bank‟s Board of Directors sets out the risk policy and limits for market risks. The Board also decides on the general principles for managing and monitoring market risks based on the guidelines and allocated market risk limits provided by the Danske Bank Group. The managements of the individual business areas are responsible for the risks the areas incur and for actively managing these risks within the limits set. Development of market risks are reported to the Board of Directors regularly. The Board of Directors delegates the market risk limits to the Chief Executive Officer of Sampo Bank. Market risk limits are allocated for trading activities and for the ALCO position. The structural interest rate risk on demand deposits is included in the ALCO position. The ALCO position is decided at regular Sampo Bank Group‟s ALCO meetings and trades are executed by Danske Markets Finland, which is part of the Sampo Bank Group. The chart below illustrates the limit structure and hierarchy in Sampo Bank. Board of Directors
Chief Executive Officer
Trading Positions
ALCO Positions
Limits: Trading Limits for Sampo Bank
Limits: ALCO Limits for Sampo Bank
Responsible: Head of Danske Markets Finland
Responsible: Sampo Bank Group‟s ALCO
Measurement, monitoring and management reporting on market risks are carried out on a daily basis in a separate market risk unit in Sampo Bank. Market risk exposure is calculated using a database that is integrated with the trading systems. In addition, Sampo Bank conducts intra-day spot checks of the risks in the individual business areas. Trading risks are measured and limited by means of sensitivities, pre-defined scenarios of worst cases and/or exposure limits by risk types. Banking book‟s interest rate position is stress tested by 1 % parallel increase and decrease of yield curves by currencies. Limits are monitored systematically, and procedures in case of limit violations have been established for follow-up in the organization. Also a value-at-risk (VaR) figure is calculated for the interest rate and the foreign exchange rate risk positions in Sampo Bank‟s banking book and trading book. Sampo Bank plc – Annual Report 2009
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MARKET RISK EXPOSURE Market risk in Sampo Bank is constituted of trading activities and the interest rate risk in the banking book. Sampo Bank market risk management monitors all Sampo Bank‟s assets, liabilities and derivatives items, which are sensitive to movements in the interest rates, exchange rates, commodity and equity prices or market volatilities. The market risks most material for Sampo Bank is the interest rate risk arising from banking book and trading book positions. Sampo Bank‟s banking book interest rate risk arises primarily from retail and corporate based customer businesses and is hedged by derivatives. Interest rate risk in banking book related to demand deposits have been modeled and included on risk calculations and limits. Trading operations in Sampo Bank covers customer related businesses in interest rate, foreign exchange, commodity and credit products and their combinations. Risk arises mainly from the movements of interest rates in EUR, USD, RUB, SEK and the Baltic currencies, of which EUR is dominating the others. Foreign exchange positions are small and are denominated mainly in Baltic currencies along with relatively short-term positions in USD, RUB, GBP, SEK and JPY. Sampo Bank‟s commodity positions includes mainly deals related to energy, EU allowance (EUA) and certified emission reduction (CER). Commodity related business is at the end of 2009 mostly customer based trading and large own holdings have no longer generally been taken. Unlisted equity positions in Sampo Bank include equity holdings and funds. The Bank has no large direct positions in listed equities. Risk Table 8 shows Sampo Bank Group‟s market risk exposure as of year-end 2009 calculated according to conventional risk measures. 2009 2008 Interest Rate Risk ( 1 % yield curve shift up, net) -6 -21 Net Foreign Exchange Rate Position -23 -30 Commodity Risk (10 % change in prices, net) 0 -1 Listed Equity Position 1 0 Unlisted Equities and Shares 6 6 Interest Rate Volatility Risk ( 1 % -point change, net) 0 0 Foreign Exchange Volatility Risk ( 1 % -point change, net) 0 0 Risk Table 8. Market risk exposure, EURm LIQUIDITY RISK Liquidity risk is defined as the risk of losses because • The Bank‟s funding costs increase disproportionately • Lack of funding prevents the Bank from establishing new businesses • Lack of funding ultimately prevents the Bank from meeting its obligations Taking liquidity risk is an integral part of Sampo Bank‟s business strategy and it is managed in support of the cautious and conservative risk profile of the Bank. Sampo Bank‟s Board of Directors has approved a liquidity policy and a contingency funding plan for the Bank. The policy specifies the aims, limits, calculation and responsibilities of all parts of Sampo Bank‟s liquidity risk control and management. The purpose of the contingency funding plan is to ensure an efficient and co-ordinated action plan for situations where Sampo Bank or the banking system comes under pressure in terms of liquidity. Liquidity management is based on monitoring and management of the Bank‟s short-term and longterm liquidity risks. A liquidity buffer and operational liquidity risk management ensure sufficient short term liquidity. The management of the Bank‟s operational liquidity risk aims primarily at ensuring that Sampo Bank always has a liquidity buffer that is able, in the short term, to absorb the Sampo Bank plc – Annual Report 2009
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net effects of current transactions and expected changes in liquidity. Danske Markets Finland is responsible for ensuring that Sampo Bank observes the operational liquidity limits. Sampo Bank conducts stress tests to measure its immediate liquidity risk and to ensure that it has a certain amount of time to respond to crises. The stress tests estimate liquidity risk in scenarios covering Bank-specific and systemic crises, their combination and a capital market cut-off. Need for long term funding will be determined by structural liquidity risk, liquidity stress test scenarios and the maturity profile of long term funding. Structural liquidity risk is based on a breakdown by maturity of the Bank‟s assets, liabilities and off-balance-sheet items. The Bank bases these calculations on the contractual due dates of individual products but takes into account that some balance sheet items have maturities that make their actual due dates deviate materially from their contractual due dates. The maturities of such items are therefore modified to provide a more accurate view of the actual behaviour. The Bank also monitors its funding mix to make sure that it is well diversified in terms of financing sources. Risk Table 9 presents Sampo Bank‟s financial liabilities by maturity classes based on contractual maturities. Financial liabilities without contractual maturity are included in the maturity class „Less than 3 months‟.
2009 2008
Less than 3 months 3 - 12 months 1 - 5 years 5 - 10 years Over 10 years 14 890 1 523 3 799 503 236 19 387 1 963 3 767 585 242
Risk Table 9. Maturity profile of financial liabilities based on contractual maturities, EUR m OPERATIONAL RISK Operational risks are defined as the risks of losses attributable to inadequate or defective internal processes and systems, people or external events. Operational risks also include legal and reputational risks. Risks can be divided into seven main classes: Internal fraud External fraud Deficiencies in personnel management Deficiencies in practices concerning customers, products or business Damage to physical assets Business disruption and system failures Deficiencies in execution, delivery and process management Operational risks are reflected, for example, in costs, claims, loss of reputation, business disruptions or false information concerning positions, risks and results. The management of operational risks enhances the efficiency of the Group‟s internal processes and decreases fluctuations in returns. The business areas are responsible for organising and monitoring operational risk. The centralised functions support the business units in their own expert areas. The risk management organisation develops methods to manage operational risks and co-ordinates the risk management operations of the business units. Internal auditing assesses the adequacy and efficiency of internal control and risk management. The compliance function supports the business units in operating in compliance with regulations, and is responsible for the validity of the released financial information. With respect to operational risks, internal loss incident data is collected systematically. Incidents with direct costs exceeding a fixed sum are reported to Group risk management. Incidents are classified into risk classes, and the event, control points and cost structure are analysed. Sampo Bank applies Danske Bank Group approach for identification and management of operational risks as well as for key risk indicator processes. Key risk indicators are used to monitor identified operational risks in the Bank. In the key risk indicator process risk owners of specific operational Sampo Bank plc – Annual Report 2009
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risks are responsible for identifying the relevant operational risk indicators and developing action plans and regular reporting on the risk indicators. The action plans must be followed by more formal risk mitigation plans that will make it possible to compare various mitigation initiatives for individual risks and across risks.
Sampo Bank plc – Annual Report 2009
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BUSINESS COMBINATIONS
Acquisitions during the year 2009 New Real Estate company As Oy Leppävaaran Leppoisa was acquired on October 13, 2009.
Sales during the year 2009 No sales during 2009.
Sampo Bank plc – Annual Report 2009
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OTHER NOTES 1 DISCONTINUED OPERATIONS EURm
Income statement of ZAO Danske Bank
2009
2008
Net interest income Net income from financial transactions Net fee and commission income Net income from investments Other operating income Total operating income
0,0 0,0 0,0 0,0 0,0 0,0
1,1 0,1 0,1 0,0 0,0 1,2
Staff costs Other operating expenses Total operating expenses
0,0 0,0 0,0
-0,5 -0,5 -1,0
Impairment losses on loans and receivables
0,0
0,0
Sales profit
0,0
0,2
2009
2008
797,2 84,5 881,7
1 451,6 25,8 1 477,5
Interest expenses Amounts owed to credit institutions and customers Debt securities in issue Other interest expenses Total
-187,9 -232,8 -2,1 -422,8
-551,7 -442,4 -2,2 -996,2
Net interest income
458,9
481,2
2 NET INTEREST INCOME EURm
Interest income Loans and receivables Other interest income Total
Included within interest income is EURm 7.2 (EURm 1.1) interest income accrued on impaired financial assets.
Sampo Bank plc – Annual Report 2009
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3 NET INCOME FROM FINANCIAL TRANSACTIONS 2009
2008
0,0 -16,9
0,0 16,8
1,7 0,1
0,8 0,4
-12,7 -27,8
36,1 54,1
Financial assets/liabilities designated as at fair value through p/l Debt securities Interest income Gains/losses Total
0,0 21,3 21,3
0,0 -18,1 -18,1
Foreign exchange dealing Gains/losses
16,0
15,6
Gains/losses from hedge accounting Fair value hedging Change in fair value of hedging derivative instruments, net Hedging assets Hedging liabilities
24,5 0,4 24,1
107,2 -57,1 164,3
-24,3 -0,7 -23,6
-113,2 54,4 -167,6
0,2
-6,0
9,7
45,6
EURm
Trading assets/liabilities Debt securities and interest rate derivatives Interest income Gains/losses Equity securities and equity derivatives Gains/losses Dividend income Other Gains/losses Total
Change in fair value of hedged items, net Assets Liabilities Total Net income from financial transactions, total
4 FEE AND COMMISSION INCOME AND EXPENSES EURm
2009
2008
Fee and commission income Lending Borrowing Payment transactions Asset management Guarantees Other Total
39,4 13,5 47,2 94,9 13,6 28,8 237,5
31,9 8,8 41,6 123,9 9,9 35,4 251,6
-55,8
-64,9
181,7
186,7
Fee and commission expenses NET fee and commission income Fee and comission income from financial assets and liabilities EURm 103.5 (EURm 82.3) and fee and commission expenses EURm 15.8 (EURm 14.3).
Sampo Bank plc – Annual Report 2009
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5 IMPAIRMENT CHARGES ON LOANS AND RECEIVABLES EURm
From loans and advances to credit institutions From loans and advances to customers -impairment charges -write-offs -reversals From guarantees and other off-balance sheet items -impairment charges -write-offs -reversals Total 1-12/2009
From loans and advances to credit institutions From loans and advances to customers -impairment charges -write-offs -reversals From guarantees and other off-balance sheet items -reversals Total 1-12/2008
Individual Collective impairment impairment charges charges 0,9 381,6 48,3 -209,8 23,9 6,2 -30,9 220,1
63,2 6,6 -50,0 0,6
13,8
Individual Collective impairment impairment charges charges 0,0
171,9 24,5 -141,5 10,6 -1,5 63,9
Recoveries
6,6
Recoveries
9,2
Total 0,9 444,7 41,7 -259,8 24,5 6,2 -30,9 227,3
Total 0,0
9,6
181,0 14,8 -152,7 10,6 -1,5 52,3
2009
2008
0,0 0,0 0,0
0,0 0,0 0,0
Other assets Investment property Associates Total
0,0 2,1 2,1
0,0 -3,4 -3,4
Net income from investments, total
2,1
-3,4
EURm
2009
2008
Staff costs Wages and salaries Equity-settled share-based payments Cash-settled share-based payments Pension costs - defined contribution plans Other social security costs
-134,7 0,0 -6,4 -28,8 -12,0
-156,8 0,0 -8,7 -33,6 -15,9
-181,9
-215,0
9,6 -11,1 0,0 -2,0
6 NET INCOME FROM INVESTMENTS EURm Financial assets
Investment securities held-to-maturity Financial assets available for sale Total
7 STAFF COSTS
Staff costs, total
Sampo Bank plc – Annual Report 2009
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8 OTHER OPERATING EXPENSES 2009
2008
-73,8 -16,4 -15,1 -13,0 -37,4 -38,1 -62,2
-94,8 -22,0 -21,9 -13,9 -35,3 -42,8 -62,5
-256,1
-293,3
EURm
IT costs Other staff costs Marketing expenses Postage and telephone expenses Depreciation and amortisation Rental expenses Other Other operating expenses, total Other expenses includes auditing and supervision fees, insurance and memberships fees.
Sampo Bank plc – Annual Report 2009
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9
FINANCIAL ASSETS AND LIABILITIES Financial assets and liabilities have been categorised in accordance with IAS 39.9. In the table are also included interest income and expenses, realised and unrealised gains and losses, impairment losses and dividend income arising from those assets and liabilities
2009 Gains/ Impairment losses losses
Carrying amount
Interest inc./exp.
1 347,5
74,4
6,1
6,7
-
-
-
-
-
-
-
-
-
-
-
19 574,0
730,3
0,0
220,6
-
-
-
-
-
-
Other financial assets
3 240,3
66,9
-
-
-
Financial assets total
24 161,8
871,6
6,1
227,3
0,0
896,9 1 254,4
-59,8
21,3
-
-
Other financial liabilities
20 212,6
-288,9
-33,7
-
-
Financial liabilities, total
22 363,9
-348,7
-12,4
0,0
0,0
Carrying amount
Interest inc./exp.
2008 Gains/ Impairment losses losses
Dividend income
2 830,7
21,4
40,3
-
-
-
-
-
-
-
0,0
0,0
0,0
0,0
0,0
21 184,3
1 262,9
37,7
52,3
-
-
-
-
-
-
Other financial assets
5 041,1
179,5
-
-
-
Financial assets total
29 056,1
1 463,8
78,0
52,3
0,0
1 243,6 3 771,6
-124,2
-18,1
-
-
Other financial liabilities
21 988,9
-878,9
-29,9
-
-
Financial liabilities, total
27 004,1
-1 003,1
-48,0
0,0
0,0
EURm
Dividend income
FINANCIAL ASSETS Financial assets at fair value through p/l Trading assets and derivative financial instruments Financial assets designated as at fair value through p/l Investment securities held-to-maturity Loans and receivables Financial assets available-for-sale
FINANCIAL LIABILITIES Financial liabilities at fair value through p/l Trading liabilities and derivative financial instruments Debt securities at fair value
EURm
FINANCIAL ASSETS Financial assets at fair value through p/l Trading assets and derivative financial instruments Financial assets designated as at fair value through p/l Investment securities held-to-maturity Loans and receivables Financial assets available-for-sale
FINANCIAL LIABILITIES Financial liabilities at fair value through p/l Trading liabilities and derivative financial instruments Debt securities at fair value
Sampo Bank plc – Annual Report 2009
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10 FAIR VALUE INFORMATION Financial instruments are carried on the balance sheet at fair value or amortised cost. Summary of significant account policies describes classification of financial assets and liabilities by valuation type and detailed measurement bases of financial assets and liabilities. FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE The fair value is the amount for which a financial asset can be exchanged between knowledgeable, willing parties. If an active market exists, the Group uses a quoted price. If a financial instrument is quoted in a market that is not active, the Group bases its valuation on the most recent transaction price. Adjustment is made for subsequent changes in market conditions, for instance, by including transactions in similar financial instruments that are assumed to be motivated by normal business considerations. For a number of financial assets and liabilities, no market exists. In such cases, the Group uses recent transactions in similar instruments and discounted cash flows or other generally accepted estimation and valuation techniques based on market conditions at the balance sheet date to calculate an estimated value. Generally, the Group applies valuation techniques to OTC derivatives and unlisted trading portfolio assets and liabilities. The most frequently used valuation and estimation techniques include the pricing of transactions with future settlement and swap models that apply present value calculations, credit pricing models and options models, such as Black & Scholes models. In most cases, valuation is based substantially on observable input. The valuation of unlisted shares is based substantially on non-observable input. Financial instruments valued on the basis of quoted prices in an active market are recognised in the Quoted prices category (level 1). Financial instruments valued substantially on the basis of other observable input are recognised in the Observable input category (level 2). Other financial instruments are recognised in the Non-observable input category (level 3). This category covers unlisted shares. During the reporting period ending 31 December 2009, there were no transfers between Level 1 (Quoted prices) and Level 2 (Observable input) fair value measurements, and no transfers into and out of Level 3 (Non-observable input) fair value measurements.
EURm
Quoted prices
2009 Observable Non-observable input input
Total
Financial assets Assets held for trading Derivative financial instruments Total
384,3 108,4 492,7
57,8 791,1 848,9
5,9 0,0 5,9
448,0 899,5 1 347,5
Financial liabilities Derivative financial instruments Debt securities at fair value Total
114,3 0,0 114,3
782,6 1 254,4 2 037,0
0,0 0,0 0,0
896,9 1 254,4 2 151,3
FINANCIAL INSTRUMENTS AT AMORTISED COST For vast majority of amounts due to the Group, loans, advances and deposits, active market does not exist. Consequently, the Group bases its fair value estimates on data showing changes in market conditions after the initial recognition of the individual instrument and affecting the price that would have been fixed if the terms had been agreed at the balance sheet date. Other people may make other estimates. In the table below are presented fair values and carrying amounts of financial assets and liabilities at amortised costs, including the fair value adjustment of hedged interest rate risk.
Fair value
2009 Carrying amount
Fair value
2008 Carrying amount
Financial assets Cash and balances at central banks Loans and receivables Investments Other financial assets Total
148,7 19 517,4 7,5 3 084,1 22 757,7
148,7 19 574,0 7,5 3 084,1 22 814,3
127,2 21 105,4 7,4 4 906,5 26 146,5
127,2 21 184,3 7,4 4 906,5 26 225,4
Financial liabilities Amounts owed to credit institutions and customers Debt securities in issue Total
15 832,6 4 230,9 20 063,5
15 824,4 4 388,3 20 212,7
15 866,2 5 551,8 21 418,0
16 093,8 5 895,1 21 988,9
EURm
Sampo Bank plc – Annual Report 2009
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11 CASH AND BALANCES AT CENTRAL BANKS 2009
2008
23,9 124,9 148,7
25,2 102,0 127,2
EURm
Cash Balances with central banks Total
12 FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH P/L EURm
Assets/liabilities held for trading Derivative financial instruments Financial assets/liabilities designated as at fair value through p/l Total
2009 Assets Liabilities
2008 Assets Liabilities
448,0 899,5
0,0 896,9
1 572,8 1 257,9
0,0 1 243,6
0,0 1 347,5
1 254,4 2 151,3
0,0 2 830,7
3 771,6 5 015,2
2009
2008
234,5 197,3 19,3 5,7 13,6 0,0 178,0 431,8
1 187,8 378,6 26,4 6,1 20,3 15,4 336,8 1 566,4
ASSETS HELD FOR TRADING
Debt securities Treasury bills and other eligible bills Other debt securities Issued by public bodies Government bonds Other Certificates of deposit issued by banks Other debt securities Total debt securities
Exchange traded debt securities EURm 383.3 (EURm 1 529.1) and other EURm 48.5 (EURm 37.3). Equity securities - listed - unlisted Total equity securities Total assets held for trading
1,0 15,1 16,1
1,0 5,4 6,4
448,0
1 572,8
Assets pledged as collateral for liabilities or contingent liabilities presented in note 26.
Sampo Bank plc – Annual Report 2009
Page 46
DERIVATIVE FINANCIAL INSTRUMENTS 2009
EURm
Derivatives held for trading Interest rate derivatives OTC derivatives Interest rate swaps Cross-currency interest rate swaps Forward rate agreements Interest rate options, bought and sold Total OTC derivatives Exchange traded derivatives Interest rate futures Interest rate options, bought and sold Total exchange traded derivatives Total interest rate derivatives
Contract/ notional amount
2008
Fair value Assets Liabilities
Contract/ notional amount
Fair value Assets Liabilities
12 350,2 853,7 295,2 1 724,6 15 223,7
352,3 117,9 1,3 37,5 509,0
335,1 91,7 1,2 38,2 466,2
11 774,3 663,6 144,9 1 845,2 14 428,0
329,0 160,2 0,6 30,1 519,9
285,2 145,7 1,0 29,9 461,8
224,3
2,1 13,8 15,9 482,1
261,1
224,3 15 448,0
-0,5 9,3 8,8 517,8
261,1 14 689,1
7,5 37,8 45,3 565,2
12,0 40,2 52,2 514,0
5 935,3 133,8 6 069,1 6 069,1
161,6 7,8 169,4 169,4
169,1 7,8 176,9 176,9
5 248,1 198,2 5 446,3 5 446,3
338,1 17,7 355,8 355,8
336,0 17,7 353,7 353,7
116,7 116,7
13,3 13,3
18,6 18,6
1 243,0 1 243,0
58,2 58,2
61,0 61,0
0,0 0,0 116,7
0,0 0,0 13,3
0,0 0,0 18,6
0,0 0,0 1 243,0
0,0 0,0 58,2
0,0 0,0 61,0
121,6 121,6
25,0 25,0
25,6 25,6
208,2 208,2
41,7 41,7
32,5 32,5
116,7 116,7 238,3
99,6 99,6 124,6
98,4 98,4 124,0
1 008,8 1 008,8 1 217,0
175,9 175,9 217,6
176,5 176,5 209,0
21 872,1
825,1
801,6
22 595,4
1 196,8
1 137,7
3 614,1 289,7 3 903,8
73,6 0,8 74,4
47,1 48,2 95,3
4 480,0 320,0 4 800,0
61,0 0,0 61,0
71,0 35,0 106,0
Foreign exchange derivatives Currency options, bought and sold
0,0
0,0
0,0
0,0
0,0
0,0
Equity derivatives Equity and equity index options, bought and sold
0,0
0,0
0,0
0,0
0,0
0,0
Total derivatives designated as fair value hedges
3 903,8
74,4
95,3
4 800,0
61,0
106,0
Derivatives designated as cash flow hedges Interest rate derivatives Interest rate swaps
-
-
-
-
-
-
Total derivatives designated as cash flow hedges
0,0
0,0
0,0
0,0
0,0
0,0
3 903,8
74,4
95,3
4 800,0
61,0
106,0
25 775,9
899,5
896,9
27 395,4
1 257,8
1 243,7
Foreign exchange derivatives OTC derivatives Forward foreign exchange contracts Currency options, bought and sold Total OTC derivatives Total foreign exchange derivatives Equity derivatives OTC derivatives Equity and equity index options, bought and sold Total OTC derivatives Exchange traded derivatives Equity index futures Total exchange trade derivatives Total equity derivatives Other derivatives OTC derivatives Commodity forwards Total OTC derivatives Exchange traded derivatives Commodity futures Total exchange trade derivatives Total commodity derivatives Total derivatives held for trading Derivatives held for hedging Derivatives designated as fair value hedges Interest rate derivatives Interest rate swaps Cross-currency interest rate swaps Total interest rate derivatives
Total derivatives held for hedging Total derivative financial instruments
Sampo Bank plc – Annual Report 2009
Page 47
The Group uses derivative instruments for trading and for hedging purposes. The derivatives used are foreign exchange, interest rate, equity, commodity and credit derivatives. Derivatives held for trading relate primarily to customer business and, to a lesser degree to proprietary trading. Derivatives held for hedging purposes are used for hedging loans and liabilities. Interest rate and interest rate and cross currency interest rate swaps are designated as fair value hedges, using them as hedges against changes in market interest rates and foreign exchange rates.
13 LOANS AND RECEIVABLES 2009
2008
2 602,5 365,9 2 236,6 481,6 3 084,1
4 480,9 2 260,3 2 220,6 425,6 4 906,5
Loans and advances to customers By type of loan Home loans Consumer loans Other retail loans Finance lease assets 1) Money market loans Other commercial loans Total
9 834,4 1 497,4 1 097,5 717,5 0,0 6 427,3 19 574,0
9 584,8 1 525,3 1 269,6 775,7 0,0 8 029,0 21 184,4
Total loans and receivables
22 658,1
26 090,8
203,5 460,5 75,5 739,5
214,4 552,2 97,7 864,3
181,5 434,7 74,1
180,4 499,0 89,9
49,2
95,0
739,5
864,3
27,2
6,4
EURm
Loans and advances to credit institutions By type of loan Deposits Repayable on demand Other than repayable on demand Other loans Total
1) Finance lease assets included in loans Maturities for finance lease assets not later than one year later than one year and not later than five years later than five years Gross investments in the finance lease Present value of minimum lease payments receivable not later than one year later than one year and not later than five years later than five years Unearned finance income Gross investments in the finance lease Accumulated impairment losses
Finance lease assets comprise IT and office automation equipment, cars and transport equipment, manufacturing equipment and factory, office and business property.
Sampo Bank plc – Annual Report 2009
Page 48
14 ALLOWANCE ACCOUNT BREAKDOWN Individual
Collective
Total
15,6 64,5 -50,0 30,1
153,8 463,6 -248,6 -42,2 326,7
Collective
Total
17,5 9,2 -11,1 15,6
114,0 192,5 -143,6 -9,1 153,8
2009
2008
Investments held-to-maturity Securities available-for-sale Investment property Investments in associates (Note 16) Total
0,0 0,0 7,5 7,5
0,0 0,0 7,4 7,4
Total investments
7,5
7,4
2009
2008
7,4 0,1 0,0 7,5
11,1 -3,4 -0,3 7,4
At January 1, 2009 From balance sheet and off-balance items + New allowances - Reversals - Write-offs debited to allowance account At December 31,2009
138,2 399,1 -198,5 -42,2 296,6
Individual At January 1, 2008 From balance sheet and off-balance items + New allowances - Reversals - Write-offs debited to allowance account At December 31,2008
96,5 183,3 -132,5 -9,1 138,2
15 INVESTMENTS Investments comprise investments in associates.
EURm
16 INVESTMENTS IN ASSOCIATES EURm
At beginning of year Share of loss/profit Disposals At end of year Associates that have been accounted for by the equity method at 31 Dec. 2009
Name MB Equity Fund Ky Automatia Pankkiautomaatit Oy Tapio Technologies Oy
Carrying amount
Fair value*)
% Interest held
Assets/ liabilities
0 7 0
0 7 0
20,91 33,33 20,00
0/0 340/317 1/1
Revenue
Profit/loss
0 59 1
0 6 0 31.3.2009
*) If there is a published price quatation
Associates that have been accounted for by the equity method at 31 Dec. 2008
Name MB Equity Fund Ky Automatia Pankkiautomaatit Oy Arfin Oy Tapio Technologies Oy
Carrying amount
Fair value*)
% Interest held
Assets/ liabilities
0 7 0 0
0 7 0 0
20,91 33,33 33,33 20,00
0/0 386/363 39/39 2/1
Revenue
1 61 0,5 1
Profit/loss
1 3 0 0 31.3.2008
*) If there is a published price quatation
Sampo Bank plc – Annual Report 2009
Page 49
17 INTANGIBLE ASSETS 2009 Other intangible assets
Total
Goodwill
Other intangible assets
Total
7,4
0,4
7,8
4,9
7,4
0,4
7,8
4,9
169,3 -165,4 3,9
174,1 -165,4 8,7
7,4
0,4
7,8
4,9 7,4
3,9 0,4
-0,2
-0,2
-0,3
7,3
0,2
7,5
-4,9 7,4
-3,9 0,4
8,8 7,8 0,0 -8,8 7,8
7,3 0,0 7,3
0,2 0,0 0,2
7,5 0,0 7,5
12,3 -4,9 7,4
169,7 -169,3 0,4
182,0 -174,2 7,8
7,3
0,2
7,5
7,4
0,4
7,8
EURm
At 1 January Cost Accumulated amortisation Net carrying amount
Opening net carrying amount Additions Disposals Amortisation charge Closing net carrying amount At 31 December Cost Accumulated amortisation Net carrying amount at 31 December Total intangible assets
2008
Goodwill
Other intangible assets comprise mainly IT software. In 2009 goodwill is tested for impairment by Danske Bank A/S. Impairment testing conducted did not indicate that goodwill and rights to names should be written down. Sensitivity analyses involving separate changes in the required rate of return and growth estimates did not produce results that affected this conclusion. 18 PROPERTY, PLANT AND EQUIPMENT 2009 EURm
Land and buildings
Equipment
3,6 -1,6 -0,4 1,6
Opening net carrying amount Additions Disposals Impairment losses recognised Depreciations Closing net carrying amount At 31 December Cost Accumulated depreciation Accumulated impairment losses Net carrying amount
At 1 January Cost Accumulated depreciation Accumulated impairment losses Net carrying amount
2008 Total
Land and buildings
Equipment
Total
93,9 -72,0 0,0 21,9
97,5 -73,6 -0,4 23,5
3,6 -1,6 0,0 2,0
87,6 -64,5 0,0 23,1
91,2 -66,1 0,0 25,1
1,6 18,4 0,0 0,0 0,0 20,0
21,9 11,0 -1,8 0,0 -6,3 24,8
23,5 29,4 -1,8 0,0 -6,3 44,7
2,0 0,0 0,0 -0,4 0,0 1,6
23,1 6,9 -0,7 0,0 -7,5 21,9
25,1 6,9 -0,7 -0,4 -7,5 23,5
22,0 -1,6 -0,4 20,0
103,0 -78,3 0,0 24,8
125,0 -79,9 -0,4 44,7
3,6 -1,6 -0,4 1,6
93,9 -72,0 0,0 21,9
97,5 -73,6 -0,4 23,5
Assets provided under operating lease contracts
68,2
76,6
Minimum lease payments under non-cancellable operating leases not later than one year later than one year and not later than five years Total
17,8 12,3 30,1
18,8 19,4 38,2
Total property, plant and equipment
20,0
24,8
112,9
1,6
21,9
100,1
Equipment comprise IT equipment and furniture.
Sampo Bank plc – Annual Report 2009
Page 50
19 OTHER ASSETS EURm
2009
2008
Other assets Accrued interest Items in transit Other Total
45,1 0,0 508,9 554,0
133,5 0,0 270,8 404,4
Item Other includes i.e. sales and fee receivables and receivables from security transactions. 20 DEFERRED TAX ASSETS AND LIABILITIES Changes in deferred tax during the financial year 2009 EURm
Deferred tax assets Other deductible temporary differences Total deferred tax assets Deferred tax liabilities Depreciation differences and untexed reserves Changes in fair values Other taxable temporary differences Total deferred tax liabilities Deferred tax assets (-)/ tax liabilities (+), net
At 1 Jan. 2009
Recognised in Recognised in p/l account equity At 31 Dec. 2009
40,2 40,2
45,4 45,4
0,0
85,6 85,6
35,1
32,3 2,3 34,6
0,0
67,4 0,0 2,3 69,7
0,0 35,1 -5,1
-10,8
0,0
-15,9
If a deferred tax asset and a deferred tax liability relate to income taxes levied by the same taxation entity and the company has a legally enforceable right to set off current tax assets against current tax liabilities, deferred taxes have been offset. Other tax assets EURm 15.85. Other tax liabilities EURm 0.2.
Changes in deferred tax during the financial year 2008 EURm
Deferred tax assets Other deductible temporary differences Total deferred tax assets Deferred tax liabilities Depreciation differences and untexed reserves Changes in fair values Other taxable temporary differences Total deferred tax liabilities Deferred tax assets (-)/ tax liabilities (+), net
At 1 Jan. 2008
Recognised in Recognised in p/l account equity At 31 Dec. 2008
31,1 31,1
9,2 9,2
26,1 0,2
8,9
0,0
40,2 40,2
26,3
0,0 9,0
-0,2
35,1 0,0 0,0 35,1
-4,8
-0,2
-0,2
-5,1
-0,2
If a deferred tax asset and a deferred tax liability relate to income taxes levied by the same taxation entity and the company has a legally enforceable right to set off current tax assets against current tax liabilities, deferred taxes have been offset. Other tax assets EURm 16.37. Other tax liabilities EURm 0.
Sampo Bank plc – Annual Report 2009
Page 51
21 TAXES 2009
2008
27,5 5,7 -18,9 14,3
52,0 0,0 -5,5 46,5
32,7 8,5 0,0 -0,6 -0,6 1,3 5,7 14,3
181,6 47,2 0,0 -45,5 -0,9 45,7 0,0 46,5
2009
2008
0,7 732,3 1 658,1 2 391,1
350,8 2 564,9 171,4 3 087,1
2 446,1 2 823,5 5 309,3 693,8 2 160,7 13 433,4
2 081,3 2 375,4 4 616,6 930,7 3 002,7 13 006,7
0,0 13 433,4
0,0 13 006,7
15 824,5
16 093,8
2009
2008
1 254,4 3 831,6 130,0
3 771,6 5 195,1 122,3
5 086,0
8 966,7
350,0 206,6 350,0 556,6
350,0 350,0 350,0 700,0
5 642,6
9 666,7
EURm
Taxes on taxable income for the year Taxes arising from previous years Deferred taxes Taxes for the financial year total Reconciliation between income taxes in income statement and taxes calculated at Finnish tax rate (26%) Profit before taxes Taxes calculated at Finnish tax rate Different tax rates of foreign subsidiaries Tax-exempt income Net profit from associates Undeductible expenses Taxes arising from previous years Taxes in Income statement
22 AMOUNTS OWED TO CREDIT INSTITUTIONS AND CUSTOMERS EURm
Amounts owed to credit institutions Liabilities to central banks Deposits from credit insitutions Other liabilities owed to credit institutions Total Amounts owed to customers Deposits Demand deposits Savings accounts Current accounts Money market deposits Other time deposits Total deposits Other liabilities Other liabilities Total amounts owed to customers Total amounts owed to credit institutions and customers
23 DEBT SECURITIES IN ISSUE EURm
Debt securities in issue Certificates of deposit Bonds and notes of which in foreign currency Total debt securities in issue
Subordinated debt securities Capital securities Debentures of which perpetuals Total subordinated debt securities Total debt securities in issue
Sampo Bank plc – Annual Report 2009
Page 52
Sampo Bank issued on 18 March 2004 EUR 125 million preferred capital securities. The loan pays fixed interest rate for the first ten years and floating rate interest after that. The interest can be paid only from the distributable capital. The loan is perpetual and is repayable only with the consent of the Finnish Financial Supervision Authority at the earliest on 2014 and on any interest payment after that. Sampo Bank issued on 13 October 2004 EUR 100 million preferred capital securities. The loan pays fixed interest rate for the first year and floating rate interest after that, however capped to 8,5 per cent p.a. The interest can be paid only from the distributable capital. The loan is perpetual and is repayable only with the consent of the Finnish Financial Supervion Authority at the earliest on 2014 and on every interest payment date after that. Sampo Bank issued on 16 December 2005 EURm 125 capital securities. The loan was a floating rate perpetual and pays an interest at 3-month Euribor plus 1.6 per cent. The interest on the loan can be paid only from the distributable capital. Sampo Bank can repay the loan, with the consent of the Finnish Financial Supervision Authority, at the earliest on 16 December 2010 and thereafter on any interest payment date. Sampo Housing Loan Bank issued in 2005 a covered bond with a principal of EURm 1 000 and a maturity of 5 years. The loan pays fixed interest rate of 2.5 per cent, which was swapped to floating rate at 0.01 per cent below Euribor. Sampo Housing Loan Bank issued in September 2006 a covered bond with a principal of EURm 1 000 and a maturity of 5 years. The loan pays fixed interest rate of 3.75 per cent, which was swapped to floating rate at 0.03 per cent below Euribor. Sampo Bank Group had in issue on 31 December 2009 three capital securities included in Tier 1 capital, all of them repayable with the consent of the Finnish Financial Supervision Authority and in one of them a step-up clause at the earliest call. The amount included in the own funds of primary loans in Sampo Bank Group at 31 Dec. 2009 was EUR 350,0 (350,0).
24 OTHER LIABILITIES EURm
Other liabilities Deferred interest Items in transit Finance lease liabilities Other liabilities Total Total other liabilities
2009
2008
48,5 29,3
110,4 21,8
387,4 465,1
432,0 564,2
465,1
564,2
Item Other consists of liabilities arising i.e. from staff expenses and security transactions, and other accruals.
25 PROVISIONS From off-balance sheet items
Sampo Bank plc – Annual Report 2009
2009 5,2
2008 12,6
Page 53
26 CONTINGENT LIABILITIES AND COMMITMENTS EURm
Off-balance sheet items Guarantees and pledges Undrawn loans, overdraft facilities and other commitments to lend Other irrevocable commitments Total
2009
2008
1 492,2
1 660,5
3 456,3 0,0 4 948,5
2 708,1 0,0 4 368,6
Off-balance sheet items consist mainly of guarantees and commitments to extend credit. Guarantees including irrevocable letters of credit comprise commitments written on behalf of customers. Commitments to extend credit are irrevocable commitments and comprise undrawn loans, overdraft facilities and other commitments to lend. The commitments are stated to the amount that can be required to be paid on the basis of the commitment. For guarantees a provision is recognised when the Group considers it more likely than not that an obligation exists under its guarantees. Sampo Bank Group companies are party to various lawsuits. In view of its size, The Group does not expect the outcomes of these pending to have any material effect on its financial position.
Assets pledged as collateral for liabilities or contingent liabilities 2009
EURm
Assets pledged as collateral for liabilities Financial assets at fair value through p/l - Trading securities Loans and receivables - Loans and deposits
2008
Assets pledged
Liabilities/ commitments
629,1
553,0
1 072,6
753,0
2 210,4
2 129,4
2 538,1
2 108,6
Assets Liabilities/ pledged commit- ments
Sampo Bank plc has entered into long-term deposit contracts called Guaranteed Investment Contracts. In each contract the maximum amount permitted to be invested and the fixed interest rate to be paid for the investment are specified with the customer. This means that the amount to be invested varies during the term of the contract but the interest rate is fixed. The maximum amount permitted to be invested under these contracts was EURm 131.7 at the balance sheet date (138.6 EURm). Contracts mature in 2025 at the latest. Sampo Bank plc has no commitments concerning IT-equipments (EURm 2.0). EURm
2009
2008
Non-cancellable operating leases Minimum lease payments under non-cancellable operating leases not later than one year later than one year and not later than five years later than five years Total
26,8 81,3 48,8 156,9
27,9 82,6 57,9 168,3
Total of sublease payments expected to be received under non-cancellable operating sub-leases at 31 Dec EUR 5.5 million (7.3). Sublease payments recognised as an expense in the period EUR 2.8 million (2.8).
Sampo Bank plc – Annual Report 2009
Page 54
27 EMPLOYEE BENEFITS Pension benefits The basic and supplementary pension insurance of the staff is handled through insurances. Personnel fund Members of the Sampo Group‟s personnel fund comprise the staff of Sampo Bank plc and its subsidiaries, except for members of Board of Directors and Board of Management employed by the Group companies, Managing Directors of Group companies and other management personnel or executives and experts involved in the Group long-term incentive schemes. For Sampo Bank and its domestic subsidiaries the estimated amount of the profit-sharing bonuses to the personnel fund for 2009 is EURm 0 (EURm 0). Other short-term employee benefits There are other short-term staff incentive schemes in the Danske Bank Group, the terms of which vary according to country, business area or company. Benefits are recognised in the profit or loss for the year they arise from. An estimated amount of these profit-sharing bonuses for 2009 is EURm 5.6 (EURm 9.7). 28 RELATED PARTY DISCLOSURES KEY MANAGEMENT PERSONNEL The key management personnel in Sampo Bank Group consists of the members of the Board of Directors of Sampo Bank plc. KEY MANAGEMENT COMPENSATION 2009
2008
1,2 0,4 0,0 1,6
0,9 0,4 0,1 1,4
2009
2008
0,4
0,0
EUR m
Short-term employee benefits Post employment benefits Other long-term benefits Total Short-term employee benefits comprise salaries and fees, including profit-sharing bonuses accounted for the year, and social security costs. Post employment benefits include benefits under the Employees' Pensions Act (TyEL) in Finland and voluntary supplementary pension benefits. Other long-term benefits consists of the benefits under the long-term incentive schemes for executives accounted for the year. The benefits are determined by terms on Group level. Sampo Bank pays the benefits allocated to its key management. LOANS AND RECEIVABLES EUR m
Key management personnel with close family members and entities that are controlled or significantly influenced by these
The interest on loans to the key management personnel is at least as high as on the staff loans referred to in the Income and Capital Tax Act, section 67. Also other terms of the loans equal to the terms of the staff loans confirmed in the Group. The loans are secured. The terms of the loans to the entities controlled or significantly influenced by the above mentioned persons equal to those granted to other corporate customers. ASSOCIATES 2009
2008
89,4
98,3
EUR m
Loans and receivables
Sampo Bank plc – Annual Report 2009
Page 55
29 EQUITY AND RESERVES Equity At 1 January 2009 At 31 December 2009 Total amount of shares at 31 December 2009
Number of shares 106 106 106
Share capital 106,0 106,0 106,0
Each share has one vote. Danske Bank A/S owns all the share capital of Sampo Bank plc. Reserves and retained earnings EURm
Reserves at 31 December 2008 Legal reserve Fair value reserve Total
271,1 0,0 271,1
Reserves at 31 December 2009 Legal reserve Fair value reserve Total
271,1 0,0 271,1
Movements in reserves: Legal reserve The legal reserve comprises the amounts that shall be transferred from the distributable equity according to the articles of association or on the basis of the decision of the AGM. No change has been in the legal reserve during the financial years of 2008 or 2009. Fair value reserve At 1 January 2008 Cash flow hedge: Recognised in equity Transferred to profit or loss Financial asset available-for-sale Recognised in equity Transferred to profit or loss At 31 December 2008 Cash flow hedge: Recognised in equity Transferred to profit or loss Financial asset available-for-sale Recognised in equity Transferred to profit or loss At 31 December 2009
Retained earnings At 1 January 2008 Translation differences Profit for the financial year Merger difference Dividend distribution Share incentives At 31 December 2008 Translation differences Profit for the financial year Merger difference Dividend distribution Share incentives At 31 December 2009
Sampo Bank plc – Annual Report 2009
0,6
-0,6 0,0
0,0 0,0
1 510,2 133,4 0,0 0,0 1 643,2 18,4 0,0 0,0 0,0 1 661,2
Page 56
30 DIVIDENDS The proposal of the Board of Directors to the annual general meeting will be as follows: No dividends will be distributed for 2009. Retained earnings will be accounted for in equity.
Sampo Bank plc – Annual Report 2009
Page 57
SAMPO BANK PLC
FINANCIAL STATEMENTS (FAS) INCOME STATEMENT EURm Interest income Net income from leasing Interest expenses NET INTEREST INCOME Dividend income from Group companies from associates from other companies
5,0 2,1 0,1
Fee and commission income Fee and commission expenses
1-12.2009
1-12.2008
751,8
1 336,8
19,5
38,4
-354,7
-918,4
416,7
456,9
29,1 3,3 0,6
7,2
33,0
203,3
205,5
-37,2
-41,8
Net income from transactions in securities and foreign exchange dealing from transactions in securities from foreign exchange dealing
-61,1 16,0
53,8 15,6
-45,2
69,3
Net income from financial assets available-for-sale
0,0
0,0
Gains (losses) from hedge accounting
0,2
-7,0
Net income from investment property
0,0
0,0
Other operating income
3,7
4,9
Administrative expenses Staff costs Wages and salaries Social security costs Pension costs Other Other administrative expenses Depreciation and impairment on property, plant and equipment and intangible assets
-139,7 -28,6 -12,0
-163,9
-180,3 -154,6
-33,3 -15,7 -334,9
-212,9 -178,9
-391,7
-8,2
-15,0
-45,9
-60,0
-172,2
-36,8
0,0
0,0
-12,6
217,3
Appropriations
16,7
-34,4
Income taxes
25,5
-30,5
PROFIT FOR THE YEAR
29,6
152,4
Other operating expenses
Impairment on loans and advances Impairment on other financial assets OPERATING PROFIT
Sampo Bank plc – Annual Report 2009
Page 58
SAMPO BANK PLC BALANCE SHEET
EURm ASSETS
12/2009
12/2008
148,7
127,2
Cash and balances at central banks
Treasury bills and other eligible bills Treasury bills Other Loans and advances to credit institutions Repayable on demand Other
Loans and advances to customers Repayable on demand Other
0,0 234,5
234,5
0,0 1 187,8
1 187,8
356,3 2 782,8
3 139,1
2 524,4 2 644,2
5 168,6
16 820,5 16 820,5
18 319,6 18 319,6
758,8
847,3
Lease assets Debt securities Issued by public bodies Other
19,3 75,4
94,8
26,4 99,9
126,3
Shares and participations
15,5
6,1
Shares and participations in associates
5,2
5,2
Shares and participations in Group companies
85,8
87,0
899,9
1 214,1
0,0
0,0
Derivative financial instruments Intangible assets Property, plant and equipment Investment property and shares and participations in invesment property companies Other property and shares and participations in property companies Equipment
Other assets
0,0 2,0 24,7
0,0
26,7
1,4 20,4
21,8
519,7
265,8
Prepayments and accrued income
53,9
154,5
Deferred tax assets
85,6
40,2
22 888,5
27 571,4
Sampo Bank plc – Annual Report 2009
Page 59
EURm LIABILITIES LIABILITIES Liabilities to credit institutions Central banks Credit institutions Repayable on demand Other Liabilities to customers Deposits Repayable on demand Other Other liabilities Repayable on demand Other
12/2009
0,7 696,5 1 174,0
1 870,5
8,0 707,3
1 871,2
1 777,7 1 254,4
2 584,3
353,9 602,0
822,5 -
Accruals and deferred income
3 170,9 3 771,6
3 032,1
350,0 206,6
Deferred tax liabilities
455,2 -
822,5
70,9 47,3
350,0 350,0
556,6
0,0
700,0 -
87,6 47,3
118,2
106,0
106,0
261,7
261,7
0,0
455,2 234,9
-
ACCUMULATED APPROPRIATIONS Depreciation in excess or less than plan Untaxed reserves
6 942,5
1 227,7
138,9
Subordinated liabilities Capital securities Other
2 935,0
955,9 13 035,5
956,2
Other liabilities Other liabilities Provisions for liabilities and charges
134,9
0,0 0,0 43,8 1 494,0 29,6
0,0
1 935,1 22 888,5
Sampo Bank plc – Annual Report 2009
360,6 2 223,6
9 442,0 2 637,6 12 079,6
715,2 13 457,5
Derivative financial liabilities and other liabilities held for trading
Retained earnings Profit for the year
350,8
11 007,5 1 734,9 12 742,3
Debt securities in issue Bonds and notes Other
EQUITY Share capital Undistributable reserves Legal reserve Distributable reserves Fair value reserve Cash flow hedging Changes in fair value Deferred tax recognised in equity Other reserves
12/2008
0,0 43,8 1 341,6 152,4
1 905,5 27 571,4
Page 60
EURm OFF-BALANCE SHEET ITEMS
Contingent liabilities Guarantees and assets pledged Other
1 492,2 -
1 492,2
1 660,5 -
1 660,5
Commitments Sale and option to resell transactions Other
3 451,2
3 451,2
2 699,8
2 699,8
4 943,4
Sampo Bank plc – Annual Report 2009
4 360,3
Page 61
NOTES TO THE FINANCIAL STATEMENTS ACCOUNTING POLICIES The separate financial statements of Sampo Bank plc for 2009 have been prepared in accordance with the provisions of Chapter 9 of the Act on Credit Institutions (121/2007), the Decree of the Ministry of Finance (150/2007) concerning annual accounts an Group accounts of financial institutions and investment services companies, and Standard 3.1 Financial statements and Annual report issued by the Finnish Financial Supervision Authority. In addition, the provisions of the Accounting Act and Companies Act are followed, with the exceptions mentioned in the Act on Credit Institutions, 146 §. Accounting policies applied to the separate financial statements of Sampo Bank are practically the same as those applied to the consolidated financial statements of Sampo Bank. Sampo Bank Group has prepared the consolidated financial statements in compliance with the International Financial Reporting Standards (IFRSs) as adopted by the EU. Policies that differ are defined below. LEASE ASSETS Lease assets are recognised in the balance sheet at cost, less depreciation according to plan and possible additional depreciation. The depreciation is recognised at the amount of principal recovered from the lease payments. Prepayments of lease assets are also included in this item. In Income statement, Net income from leasing activities comprise lease payments les depreciation according to plan. The item includes also additional depreciation on lease assets, profits and losses on disposal of the assets, fee and commission income and other income and expenses directly attributable to the leasing activities. Other income and expenses attributable to leasing are included in items according to their nature. IMPAIRMENT OF INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT In the end of the financial year the Group assesses whether there is any indication that an intangible asset or an item of property, plant or equipment may be impaired. If any such indication exists, the Group will estimate the recoverable amount of the asset. APPROPRIATIONS In accordance with the Finnish regulations on accounting and taxation, companies are allowed to include in the accounts certain untaxed reserves and depreciation in excess or less than plan, which impact on the taxation of the companies. Companies use them in planning their accounts and taxation. The amount of those appropriations or changes in them does not reflect the risks of the companies. In the accounts the untaxed reserves and the difference between the depreciation according to plan and the amount deductible in the corporate taxation are shown as a separate item in the Income statement under “Appropriations” and in the Balance sheet under “Accumulated appropriations”. The appropriations shown in Income statement and Balance sheet are presented without deducting the deferred tax liability arising from them.
Sampo Bank plc – Annual Report 2009
Page 62
OTHER NOTES 1 INTEREST INCOME AND EXPENSES BY BALANCE SHEET ITEM EUR m
2009
2008
Interest income Loans and advances to credit institutions Loans and advances to customers Debt securities Derivative financial instruments Other interest income Total
67,0 624,5 44,9 5,3 10,1 751,8
175,9 1 118,0 47,3 -8,9 4,5 1 336,8
Interest expenses Liabilities to credit institutions Liabilities to customers Debt securities in issue Derivative financial instruments Subordinated liabilities Other interest expenses Total
40,5 145,3 154,6 0,0 12,2 2,0 354,7
175,7 381,3 368,9 0,0 0,0 -7,5 918,4
3,2 21,1
40,0 4,7
2009
2008
246,0 -208,8 -20,1 -0,2 2,2 7,4 -7,0 19,5
231,1 -186,8 -8,4 0,1 1,9 6,8 -6,3 38,4
of which due from/due to Group companies and associates Interest income Interest expenses
2 NET INCOME FROM LEASING ACTIVITIES EUR m
Lease payments receivable Depreciation on lease assets according to plan Impairment on lease assets Gains and losses on disposal of lease assets (net) Fee and commission income Other income Other expenses Total
3
DIVIDEND INCOME 2009
2008
0,1 0,0 5,0 2,1 7,2
0,6 0,0 29,1 3,3 33,0
EUR m
Financial assets designated as available for sale Financial assets held for trading Group companies Associates Total
4 FEE AND COMMISSION INCOME AND EXPENSES EUR m
2009
2008
Fee and commission income Lending Borrowing Payment transactions Asset management Transactions in securities Guarantees Other Total
36,7 13,5 47,2 48,5 4,4 13,6 39,3 203,3
30,8 8,8 41,6 60,8 3,9 9,9 49,7 205,5
16,5 20,7 37,2
16,0 25,8 41,8
Fee and commission expenses Service fees Other Total
Sampo Bank plc – Annual Report 2009
Page 63
5
NET INCOME FROM TRANSACTIONS IN SECURITIES EUR m
Debt securities Shares and participations Derivative financial instruments Financial liabilities designated as at fair value through p/l Others Net income from transactions in securities Net income from foreign exchange dealing Total
Gains/losses on sales
-34,6
-34,6 16,0 -18,6
Gains/losses on sales
Debt securities Shares and participations Derivative financial instruments Financial liabilities designated as at fair value through p/l Others Net income from transactions in securities Net income from foreign exchange dealing Total
1,4 -2,0 4,7 3,6
Change in fair value
-8,6 -9,8 -13,8 3,3 2,3 -26,6 -26,6
Change in fair value
2009 Total
-8,6 -44,4 -13,8 3,3 2,3 -61,2 16,0 -45,2
2008 Total
46,0
1,4 -2,0 -4,3 5,2 53,4 53,7 15,6 69,3
2009
2008
2,1 0,4 1,7
8,7 -57,1 65,8
Change in fair value of hedged items, net, of which Assets Liabilities
-1,8 -0,7 -1,2
-15,7 54,4 -70,1
Total
0,2
-7,0
2009
2008
3,7 3,7
4,9 4,9
37,7 0,0 8,2 45,9
42,1 0,0 17,9 60,0
2009
2008
8,2
15,0
7,7 15,6 23,3
0,0 -9,0 1,6 53,4 46,0
6 GAINS/LOSSES ON HEDGE ACCOUNTING EUR m
Fair value hedging Change in fair value of hedging instruments, net, of which Derivatives hedging assets Derivatives hedging liabilities
7
OTHER OPERATING INCOME AND EXPENSES EUR m
Other operating income Other Total Other operating expenses Rental expenses Expenses on properties and property companies Other Total
8 DEPRECIATION AND IMPAIRMENT ON PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS EUR m
Depreciation and amortisation according to plan
Sampo Bank plc – Annual Report 2009
Page 64
9
IMPAIRMENT ON LOANS, COMMITMENTS AND OTHER FINANCIAL ASSETS 2009 Recognised in profit or loss
Individually assessed impairment, gross 0,9 368,3 36,5
Collective impairment, charges
Reversals and recoveries
63,2 0,6
266,4 30,9
0,9 165,1 6,3
405,7
63,8
297,3
172,2
0,0 405,7
0,0 63,8
0,0 297,3
0,0 172,2
Individually assessed impairment, gross
Collective impairment, charges
Reversals and recoveries
189,9
9,2
162,2
36,8
189,9
9,2
162,2
36,8
0,0 189,9
0,0 9,2
0,0 162,2
0,0 36,8
Markets
Capital
Other
2009 Total
335,0 160,4 495,4 -350,7 -165,5 -20,9
79,1 -47,0 32,1 -21,2 -6,7 4,3
-0,2 28,0 27,8 -16,2 0,0 11,6
2,7 -9,3 -6,5 -0,9 0,0 -7,5
416,7 132,1 548,7 -389,0 -172,2 -12,5
Total assets of which loans and advances to credit institutions and customers
31 244 31 239
5 374 7 400
19 72
-13 748 -15 976
22 889 22 734
Total liabilities of wich liabilities to credit institutions and customers
31 244 31 038
5 374 2 956
19 0
-13 748 -16 432
22 889 17 562
2 244
64
59
521
2 888
EUR m
On loans and advances to credit institutions On loans and advances to customers
Guarantees and other off-balance sheet items Impairment on loans and advances and on off-balance sheet items total Shares and participations in Group companies Shares and participations in associated companies Impairment losses on other financial assets total Total
EUR m
2008 Recognised in profit or loss
On loans and advances to credit institutions On loans and advances to customers
Guarantees and other off-balance sheet items Impairment on loans and advances and on off-balance sheet items total Shares and participations in Group companies Shares and participations in associated companies Impairment losses on other financial assets total Total
10 INFORMATION ON BUSINESS AREAS
EUR m
Net interest income Other income, net Total income Total operating expenses Impairment losses Profit before taxes
Average staff number
Banking Activities
Markets
Capital
Other
2008 Total
419,8 175,8 595,6 -433,9 -37,8 123,9
26,7 51,3 78,0 -18,3 0,7 60,4
-0,2 34,9 34,6 -13,3 0,3 21,6
10,6 2,0 12,6 -1,2 0,0 11,4
456,9 263,9 720,8 -466,7 -36,8 217,3
Total assets of which loans and advances to credit institutions and customers
32 207 32 166
10 508 12 225
31 47
-15 174 -21 878
27 571 22 559
Total liabilities of which liabilities to credit institutions and customers
32 207 31 836
10 508 5 142
31 0
-15 174 -18 854
27 571 18 125
2 232
64
77
707
3 080
EUR m
Net interest income Other income, net Total income Total operating expenses Impairment losses Profit before taxes
Average staff number
Sampo Bank plc – Annual Report 2009
Banking Activities
Page 65
11 LOANS AND ADVANCES TO CREDIT INSTITUTIONS 2009 Total EUR m
Domestic credit institutions Foreign credit institutions Total
1 348,7 1 790,4 3 139,1
2008 Total
Domestic credit institutions Foreign credit institutions Total
1 988,8 3 179,7 5 168,5
Repeyable on demand
Other
63,6 292,6 356,3
1 285,0 1 497,8 2 782,8
Repeyable on demand
Other
584,2 1 940,2 2 524,4
1 404,6 1 239,5 2 644,1
2009
2008
5 760,8 156,1 136,6 10 171,4 169,8 425,8 0,0 16 820,5
7 193,1 167,7 132,4 10 077,3 156,5 592,5 0,0 18 319,6
141,1 416,8
110,4 183,4
-259,8 -5,7
-143,6 -9,1
292,4
141,1
12 LOANS AND ADVANCES TO CUSTOMERS EUR m
Corporates and housing companies Financial and insurance institutions Public sector entities Households Non-profit institutions serving households Foreign Repos's Total Impairment charges At January 1 + New and increased impairment charges Reversals of impairment charges Write-offs debited to allowance account At December 31
Sampo Bank plc – Annual Report 2009
Page 66
13 DEBT SECURITIES EUR m
Issued by public bodies Held for trading Treasury bills Local authority paper Government bonds Other bonds issued by public bodies
Debt securities issued by other borrowers* Debt securities total of which treasury bills and other eligible bills of which subordinated debt securities * broken down in the table below
Debt securities issued by other borrowers Held for trading Certificates of deposit Commercial paper Bonds issued by banks Other bonds Available-for-sale Other bonds Debt securities issued by other borrowers total
EUR m
Issued by public bodies Held for trading Treasury bills Local authority paper Government bonds Other bonds issued by public bodies Debt securities issued by other borrowers* Debt securities total
of which treasury bills and other eligible bills of which subordinated debt securities * broken down in the table below
Debt securities issued by other borrowers Held for trading Certificates of deposit Commercial paper Bonds issued by banks Other bonds Available-for-sale Other bonds Debt securities issued by other borrowers total
Listed
Other
2009 Total
240,3 5,6 0,1 234,6 0,0 0,0 240,3 234,5 0,0
13,6 13,1 0,0 0,4 75,4 89,0 0,0
253,9 5,6 13,2 234,6 0,4 75,4 329,3 234,5 0,0
Listed
Other
Total
0,0 0,0 0,0 0,0 0,0
75,4 0,0 5,3 19,3 50,8 0,0 75,4
75,4 0,0 5,3 19,3 50,8 0,0 0,0 75,4
Listed
Other
2008 Total
266,6 5,7 12,4 248,5
2,8 2,8 -
269,4 5,7 15,2 248,5
970,3 1 236,9 1 187,8 0,0
74,5 77,3 0,0
1 044,8 1 314,1 1 187,8 0,0
Listed
Other
Total
970,3 942,9 27,3 0,0 970,3
74,5 15,4 12,8 46,2 0,0 74,5
1 044,8 958,3 0,0 12,8 73,6 0,0 0,0 1 044,8
2009
2008
4,0 688,1 55,8 10,9 758,8
28,3 748,8 60,6 9,6 847,3
14 ASSETS HELD UNDER FINANCE LEASES EUR m
Prepayments Equipment Properties and building Other assets Total
15 SHARES AND PARTICIPATIONS EUR m
Shares and participations Held for trading Shares and participations in Group companies Shares and participations in associates Total
2009 Total
Listed
Others
1,0 0,0 0,0
14,5 85,8 5,2
15,5 15,5 85,8 5,2 106,5
1,7 1,7 76,1 0,0 77,8
Listed
Others
Total
of which in credit institutions
1,0 0,0 0,0
5,1 87 5,2
6,1 6,1 87,0 5,2 98,3
1,3 1,3 87,0 0,0 88,3
of which in credit institutions
2008
Shares and participations Held for trading Shares and participations in Group companies Shares and participations in associates Total
Sampo Bank plc – Annual Report 2009
Page 67
16 DERIVATIVE FINANCIAL INSTRUMENTS
EUR m
For hedging purposes Interest rate derivatives Interest rate swaps Exchange rate contracts Options Purchased Written Interest rate and cross currency swaps Equity contracts Options Purchased Written
For other purposes Interest rate contracts Futures and forward rate agreements Options Purchased Written Interest rate swaps Exchange rate contracts Futures and forward exchange Options Purchased Written Interest rate and cross currency swaps Equity contracts Options Purchased Written Other derivatives Futures and forwards Contracts with Group companies
EUR m
2009 Nominal value of the underlying instrument Remaining maturity Less than 1 year 1-5 years
Fair value Over 5 years
Positive
Negative
237,6 237,6
675,3 675,3
711,2 711,2
26,0 26,0
47,1 47,1
289,7
0,0
0,0
0,8
48,2
0,0 0,0 289,7
0,0 0,0 0,0
0,0 0,0 0,0
0,0 0,0 0,8
0,0 0,0 48,2
0,0 0,0 0,0 0,0
0,0 0,0 0,0 0,0
0,0 0,0 0,0 0,0
0,0 0,0 0,0 0,0
0,0 0,0 0,0 0,0
11 035,8 369,1 0,0 708,5 716,9 9 241,3
10 233,0 0,0 0,0 1 348,9 1 253,7 7 630,3
2 535,9 0,0 0,0 430,1 585,4 1 520,4
447,9 0,8 46,8 0,0 0,0 400,3
449,7 3,3 52,0 0,0 0,0 394,4
6 732,9 5 935,3 0,0 283,3 245,1 269,1
540,2 0,0 0,0 81,6 79,3 379,3
216,2 0,0 0,0 5,6 5,3 205,3
287,3 161,6 7,8 0,0 0,0 117,9
268,6 169,1 7,8 0,0 0,0 91,7
138,1 0,0 95,1 43,0
95,3 0,0 79,9 15,4
0,0 0,0 0,0 0,0
13,3 13,3 0,0 0,0
18,6 18,6 0,0 0,0
59,0 59,0
179,3 179,3
0,0 0,0
124,6 124,6
124,0 124,0
2 959,8
1 000,0
92,0
0,4
59,3
2008 Nominal value of the underlying instrument Remaining maturity Less than 1 year 1-5 years
Fair value Over 5 years
Positive
Negative
631,0 631,0
606,0 606,0
1 243,0 1 243,0
23,1 23,1
71,0 71,0
224,0
7,0
89,0
0,0
35,0
0,0 0,0 224,0
0,0 0,0 7,0
0,0 0,0 89,0
0,0 0,0 0,0
0,0 0,0 35,0
0,0 0,0 0,0 0,0
0,0 0,0 0,0 0,0
0,0 0,0 0,0 0,0
0,0 0,0 0,0 0,0
0,0 0,0 0,0 0,0
For other purposes Interest rate contracts Futures and forward rate agreements Options Purchased Written Interest rate swaps
10 900,4 371,3 0,0 202,9 230,4 10 095,8
16 598,5 0,0 0,0 1 218,8 1 146,0 14 233,6
1 674,4 0,0 0,0 509,2 452,5 712,7
440,3 2,2 67,9 0,0 0,0 370,2
394,1 13,0 70,1 0,0 0,0 311,0
Exchange rate contracts Futures and forward exchange Options Purchased Written Interest rate and cross currency swaps
11 994,4 10 135,5 0,0 196,7 198,0 1 464,2
881,6 343,3 0,0 9,1 0,0 529,2
107,5 0,0 0,0 5,8 0,0 101,8
516,0 338,1 17,7 0,0 0,0 160,2
499,4 336,0 17,7 0,0 0,0 145,7
2 486,0 0,0 1 243,0 1 243,0
0,0 0,0 0,0 0,0
0,0 0,0 0,0 0,0
17,0 17,0 0,0 0,0
19,3 19,3 0,0 0,0
278,4 278,4
485,0 485,0
202,4 202,4
217,6 217,6
209,0 209,0
1 892,1
2 015,5
114,4
0,0
0,0
For hedging purposes Interest rate derivatives Interest rate swaps Exchange rate contracts Options Purchased Written Interest rate and cross currency swaps Equity contracts Options Purchased Written
Equity contracts Options Purchased Written Other derivatives Futures and forwards Contracts with Group companies
Sampo Bank plc – Annual Report 2009
Page 68
17 PROPERTY, PLANT AND EQUIPMENT 2009 EUR m
Shares and participations in property companies Occupied for own activities Other Total
Carrying amount
2,0 0,0 2,0
2008
Capital employed
Carrying amount
Capital employed
2,0 0,0 2,0
1,4 0,0 1,4
1,4 0,0 1,4
18 MOVEMENTS IN PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS 2009 Intangible assets IT software
Other intangible assets
EUR m
Cost at beginning of year Additions Disposals Transfers to and from items Cost at the end of the year Accumulated depreciation and amortisation at beginning of year Accumulated depreciation and amortisation allocated to disposals and transfers at the beginnig of the year Depreciation and amortisation according to plan Accumulated depreciation and amortisation according to plan for the year Impairment losses for the year Accumulated depreciation and amortisation at end of year Impairment reversals for the year Carrying amount at end of year
0,0
0,0
0,0
0,0
1,4
100,9 12,2 -1,8
1,4
111,2
1,1
-7,2 0,6 0,0
0,0
0,0
0,6
-86,5
0,0
0,0
0,0
2,0
24,7
Other intangible assets
EUR m
Sampo Bank plc – Annual Report 2009
0,0
Equipment
-80,5
2008 Intangible assets IT software
Cost at beginning of year Additions Disposals Transfers to and from items Cost at end of year Accumulated depreciation and amortisation at beginning of year Accumulated depreciation and amortisation allocated to disposals and transfers at beginning of year Depreciation and amortisation according to plan for the year Impairment losses for the year Accumulated depreciation and amortisation at end of year Impairment reversals for the year Carrying amount at end of year
Property, plant and equipment Investment Other property property and and shares shares in property in property companies companies
Property, plant and equipment Investment Other property property and and shares shares in property in property companies companies
Equipment
155,8
0,0
0,0
2,0
90,1 11,5 -0,7
155,8
0,0
0,0
2,0
100,9
-153,5
-67,1
-1,6 -0,7
-13,4 -0,6
-155,8
0,0
0,0
-0,6
-80,5
0,0
0,0
0,0
1,4
20,4
Page 69
19 OTHER ASSETS 2009
2008
0,0 5,4 514,2 519,7
0,1 14,5 251,2 265,8
2009
2008
42,9 11,1 53,9
124,9 29,6 154,5
2009
2008
85,6 85,6
40,2 40,2
0,0 0,0 0,0 -85,6
0,0 0,0 0,0 -40,2
EUR m
Items in transit Margin accounts related to derivatives Other Total
20 PREPAYMENTS AND ACCRUED INCOME EUR m
Accrued interest Other Total
21 DEFERRED TAX EUR m
Deferred tax assets Timing differences Confirmed losses Deferred tax liabilities Timing differences Fair value reserve Deferred tax assets (-)/ liabilities (+), net
22 DEBT SECURITIES IN ISSUE 2009 EUR m
Certificates of Deposits Bonds and notes Total
2008
Carrying amount
Nominal amount
Carrying amount
Nominal amount
1 254,4 1 777,7 3 032,1
1 255,9 1 867,7 3 123,6
3 771,6 3 170,9 6 942,5
3 802,1 3 239,0 7 041,1
2009
2008
563,9 258,6 822,5
186,7 268,5 455,2
2009
2008
35,2 103,8 138,9
92,5 142,5 234,9
23 OTHER LIABILITIES EUR m
Items in transit Other Total
24 ACCRUALS AND DEFERRED INCOME EUR m
Deferred interest Other Total
Sampo Bank plc – Annual Report 2009
Page 70
25
SUBORDINATED LIABILITIES EUR m
2009
2008
Subordinated liabilities with a carrying amount more than 10% of the total amount of such liabilities Other subordinated liabilities Total of which perpetuals
556,6 0,0 556,6 350,0
700,0 0,0 700,0 350,0
-
-
Due to Group companies Due to associates
Issuer
Sampo Bank plc Sampo Bank plc Sampo Bank plc Sampo Bank plc Total
1) 2) 3) 4)
Carrying amount in EURm
Nominal amount in EURm
Currency
Interest %
Due date
206,6 125,0 125,0 100,0 556,6
200,0 125,0 125,0 100,0 550,0
EUR EUR EUR EUR
0,967 5,407 2,315 3,790
31.5.2016 perpetual perpetual perpetual
1) Repayable on interest payment date in May 2011. In capital adequacy calculation EURm 199,7 of the debenture is included in Tier 2 capital. 2) Repayable on interest payment date in March 2014. In capital adequacy calculation the capital securities are included in their entirety in Tier 1 capital. 3) Repayable on interest payment date in March 2014. In capital adequacy calculation the capital securities are included in their entirety in Tier 1 capital. 4) Repayable on interest payment date in March 2014. In capital adequacy calculation the capital securities are included in their entirety in Tier 1 capital.
Capital securities at 31 December 2009
350,0 (350,0)
Sampo Bank had on 31 December 2009 three capital securities in issue. The main terms of these loans are disclosed in IFRS consolidated financial statements/Note 23 Debt Securities in Issue.
Sampo Bank plc – Annual Report 2009
Page 71
26 MATURITY ANALYSIS OF ASSETS AND LIABILITIES, BY REMAINING MATURITY EUR m
Assets Less than 3 months Treasury bills and other eligible bills Loans and advances to credit institutions Loans and advances to customers Debt securities 3 - 12 months Treasury bills and other eligible bills Loans and advances to credit institutions Loans and advances to customers Debt securities 1 - 5 years Treasury bills and other eligible bills Loans and advances to credit institutions Loans and advances to customers Debt securities 5 - 10 years Treasury bills and other eligible bills Loans and advances to credit institutions Loans and advances to customers Debt securities Over 10 years Treasury bills and other eligible bills Loans and advances to credit institutions Loans and advances to customers Debt securities
2009
2008
5 039,4 0,0 2 875,6 2 143,8 20,0 1 718,3 181,5 85,7 1 424,9 26,2 6 172,4 52,9 177,8 5 893,1 48,6 3 914,4 0,1 0,0 3 914,4 0,0 3 444,2 0,0 0,0 3 444,2 0,0
7 519,9 397,9 4 361,7 2 727,9 32,4 2 988,1 545,0 661,1 1 763,5 18,5 6 229,0 242,9 145,8 5 770,7 69,6 3 985,5 2,0 0,0 3 978,2 5,3 4 079,7 0,0 0,0 4 079,3 0,4
14 905,7 747,7 13 145,8 1 012,2 0,0 522,7 3,5 46,4 472,8 0,0 2 749,8 1 000,0 233,7 1 391,1 125,0 503,1 120,0 30,7 145,8 206,6 236,1 0,0 0,9 10,2 225,0
19 120,6 2 934,9 12 766,4 3 269,3 150,0 1 962,9 0,2 38,6 1 924,1 0,0 1 703,1 0,0 190,5 1 512,6 0,0 584,9 0,0 38,9 221,0 325,0 241,6 0,0 1,1 15,5 225,0
EUR m
Liabilities Less than 3 months Liabilities to credit institutions Liabilities to customers Debt securities in issue Subordinated liabilities 3 - 12 months Liabilities to credit institutions Liabilities to customers Debt securities in issue Subordinated liabilities 1 - 5 years Liabilities to credit institutions Liabilities to customers Debt securities in issue Subordinated liabilities 5 - 10 years Liabilities to credit institutions Liabilities to customers Debt securities in issue Subordinated liabilities Over 10 years Liabilities to credit institutions Liabilities to customers Debt securities in issue Subordinated liabilities
Sampo Bank plc – Annual Report 2009
Page 72
27 ASSETS AND LIABILITIES DENOMINATED IN DOMESTIC CURRENCY (EURO) AND IN FOREIGN CURRENCIES (OTHER CURRENCIES) 2009
Assets Loans and advances to credit institutions Loans and advances to customers Debt securities Derivative financial assets Other assets Total Liabilities Liabilities to credit institutions Liabilities to customers Debt securities in issue Derivative financial liabilities and other liabilities held for trading Other liabilities Total
EUR m
Other currencies
Total
To or from Group companies
2 561,5 16 432,1 323,7 899,9 1 685,0 21 902,2
577,5 388,4 5,6 0,0 14,9 986,3
3 139,1 16 820,5 329,3 899,9 1 699,8 22 888,5
66,4 17,7 40,0 14,1 0,0 138,2
1 289,4 13 118,0 2 902,1
581,8 339,6 130,0
16,0 27,2
956,2 1 455,5 19 721,2
0,0 62,6 1 114,0
1 871,2 13 457,5 3 032,1 0,0 956,2 1 518,1 20 835,2
73,0 0,0 116,3
2008
Assets Loans and advances to credit institutions Loans and advances to customers Debt securities Derivative financial assets Other assets Total Liabilities Liabilities to credit institutions Liabilities to customers Debt securities in issue Derivative financial liabilities and other liabilities held for trading Other liabilities Total
EUR m
Other currencies
Total
To or from Group companies
4 964,0 17 732,4 1 308,2 1 214,1 1 532,6 26 751,3
204,6 587,2 5,9 0,0 22,3 820,0
5 168,6 18 319,6 1 314,1 1 214,1 1 555,0 27 571,3
266,1
2 144,4 12 790,2 6 820,2
790,7 245,3 122,3
2 935,0 13 035,5 6 942,5
16,0
1 227,7 1 334,1 24 316,6
0,0 56,1 1 214,4
1 227,7 1 390,2 25 531,0
43,9 0,2 60,1
40,0 16,4 0,2 322,6
28 CHANGES IN FAIR VALUES RECOGNISED IN INCOME STATEMENT
EUR m
Debt securities Shares and participations Derivative financial instruments Trading portfolio assets / positive market value Trading portfolio assets / negative market value Financial liabilities designated as at fair value through p/l Others Net income from transactions in securities Net income from foreign exchange dealing Total
Sampo Bank plc – Annual Report 2009
Carrying amount
329,3 15,5 899,9 956,2 1 254,4 16 820,5
2009 Change in fair value
-8,6 -9,8 -13,8
3,3 2,3 -26,6 -26,6
Carrying amount
1 314,1 6,1 1 214,1 1 227,7 3 771,6 18 319,6
2008 Change in fair value
0,0 -9,0
1,6 53,4 46,0 46,0
Page 73
29 FAIR VALUES AND CARRYING AMOUNTS OF FINANCIAL ASSETS AND LIABILITIES 2009
2008
Milj. €
Financial assets Cash in hand Treasury bills and other eligible bills Loans and advances to credit institutions Loans and advances to customers (1 Debt securities Shares and participations Shares and participations in associates Derivative financial instruments Financial liabilities Liabilities to credit institutions Liabilities to customers Debt securities in issue Derivative financial liabilities and other liabilities held for trading Subordinated liabilities
Carrying amount 148,7 234,5 3 139,1 17 579,2 94,8 15,5 5,2 899,9
Fair value 148,7 234,5 3 139,1 16 765,1 94,8 15,5 5,2 899,9
Carrying amount 127,2 1 187,8 5 168,6 18 319,6 126,3 6,1 5,2 1 214,1
Fair value 127,2 1 187,8 5 168,6 18 212,4 126,3 6,1 5,2 1 214,1
1 871,2 13 457,5 3 032,1 956,2
1 871,2 13 467,3 3 008,3 956,2
2 935,0 13 035,5 6 942,5 1 227,7
2 935,0 12 809,1 6 759,7 1 227,7
556,6
479,0
700,0
592,8
1) Includes lease assets Financial instruments are carried on the balance sheet at fair value or amortised cost. In IFRS consolidated financial statements, chapter Summary of significant account policies describes classification of financial assets and liabilities by valuation type and detailed measurement bases of financial assets and liabilities. IFRS note 10 Fair value information discloses additional information for used valuation and estimation techniques.
30 MOVEMENTS IN EQUITY 2009 EUR m
Share capital
Legal reserve
Fair value reserve
Other reserves
Retained earnings
Total
106,0
261,7
0,0
43,8
1 494,0
1 905,5 0,0 0,0 0,0 29,6 1 935,1
Carrying amount at 1 Jan. 2009 Additions Decreases Dividends Profit for the year Carrying amount at 31 Dec. 2009
0,0
261,7
0,0
43,8
29,6 1 523,6
Share capital
Legal reserve
Fair value reserve
Other reserves
Retained earnings
Total
106,0
261,7
0,6
43,8
1 341,6
43,8
152,4 1 494,0
1 753,6 0,0 -0,6 0,0 152,4 1 905,5
106,0
Fair value reserve at 1 Jan. 2009 Available for sale financial assets Cash flow hedging Deferred tax liability Total
0,0 0,0 0,0 0,0
Retained earnings at 1 Jan. 2009 Dividends Profit for the year Retained earnings at 31 Dec. 2009
1 494,0 0,0 29,6 1 523,6
Distributable equity at 31 December 2009 Parent company Other reserves Retained earnings Profit for the year Decreases Total
43,8 1 494,0 29,6 0,0 1 567,4 2008
EUR m
Carrying amount at 1 Jan. 2008 Additions Decreases Dividends Profit for the year Carrying amount at 31 Dec. 2008
-0,6
106,0
Fair value reserve at 1 Jan. 2008 Available for sale financial assets Cash flow hedging Deferred tax liability Total
0,8 0,0 -0,2 0,6
Retained earnings at 1 Jan. 2008 Dividends Profit for the year Retained earnings at 31 Dec. 2008
1 341,6 0,0 152,4 1 494,0
Distributable equity at 31 December 2008 Parent company Other reserves Retained earnings Profit for the year Decreases Total
Sampo Bank plc – Annual Report 2009
261,7
0,0
43,8 1 341,6 152,4 0,0 1 537,7
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31 SHARE CAPITAL Sampo The share capital of Sampo Bank plc amounts to EUR 106,000,000.00, comprising 106,000 shares. Each share has one vote.
32 SHARE ISSUES, OPTION RIGHTS AND ISSUE OF CONVERTIBLE BONDS Sampo Bank has not issued new shares, option rights nor convertible bonds during the year. The Bank has no valid authority granted by the annual general meeting to issue new shares, option rights or convertible bonds.
33 SHAREHOLDIGS AND PRINCIPAL SHAREHOLDERS Danske Leonia Bank OyjA/S omistaa ownsLeonia all the Corporate share capital Bank of Sampo Oyj:n sekä Bank Leonia plc. Pankki Oyj:n kaikki osakkeet.
34 ASSETS PLEDGED AS COLLATERAL SECURITY 2009 EUR m
Pledged for own liabilities Balance sheet item Liabilities to credit institutions Liabilities to the public and general government Debt securities in issue Derivative financial liabilities and other liabilities held for trading Other liabilities Subordinated liabilities Off-balance sheet commitments For own liabilities in total Pledged on behalf of others
Pledges
Other collaterals
Total
5,6
5,6
78,3
78,3
567,9 651,8 25,2
567,9 651,8 25,2 2008
EUR m
Pledged for own liabilities Balance sheet item Liabilities to credit institutions Liabilities to the public and general government Debt securities in issue Derivative financial liabilities and other liabilities held for trading Other liabilities Subordinated liabilities Off-balance sheet commitments For own liabilities in total Pledged on behalf of others
Pledges
Other collaterals
Total
5,6
5,6
65,0
65,0
1 365,8 1 430,8 78,9
1 365,8 1 430,8 78,9
35 PENSION LIABILITY The basic and supplemantery pension benefits of the staff in Sampo Bank plc and its Group companies are handled through insurance.
36 FUTURE RENTAL COMMITMENTS 2009
2008
26,8 81,3 48,8 156,9
27,9 82,6 57,9 168,3
EUR m
Not more than one year Over one year but not more than five years Over five years Total
Sampo Bank plc – Annual Report 2009
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37 OFF-BALANCE SHEET ITEMS 2009
2008
1 492,2 4,4
1 660,5 4,4 -
3 451,2 10,0 5,7
2 699,8 0,0 12,7
4 943,4 14,4 5,7
4 360,3 4,4 12,7
Average number
2009 Change during the year
2 702 89 97 2888
-189 17 -20 -192
EUR m
Guarantees and pledges of which on behalf of Group companies on behalf of associates Sale and option to resell transactions Undrawn loans, overdraft facilities and commitments to lend to Group companies to associates Underwriting commitments Other commitments to or on behalf of Group companies to or on behalf of associates Total off-balance sheet items to or on behalf of Group companies to or on behalf of associates
38 INFORMATION ON STAFF AND MANAGEMENT STAFF NUMBERS
Full-time staff Part-time staff Temporary staff Total The staff number by business area and geographical market area is disclosed in Note 10. MANAGEMENT'S REMUNERATION (EUR 1,000)
2009
Managing Director ja Deputy Managing Director Managing Director Deputy Managing Director
Ilkka Hallavo Risto Tornivaara
785,3 306,3
BOARD OF DIRECTORS The members of the Board of Directors of Sampo Bank are employees of the Group, to whom no fee is paid for the membership of the Board of Directors of Sampo Bank. PENSION BENEFITS The retirement age of the Managing Director and the Deputy Managing Director is 60 years. The pension benefit is 60% of the pensionable salary funded through payments to insurance company. LOANS EUR m
Balance at beginning of year Additions Repayments Balance at end of year
0,0 0,4 0,0 0,4
The interest on loans to the management is at least as high as on the staff loans referred to in the Income Tax Act, section 67. Also other terms of the loans correspond to the terms of staff loans comfirmed in the Group. The loans are secured.
Sampo Bank plc – Annual Report 2009
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39 RELATED PARTY TRANSACTIONS 2009 Basis for classification as a related party
Balance sheet item Loans and receivables
Ownership Management Management of the parent company Kinship Associated undertakings Pension fund Total Impairment losses 1.1.2009 Change in impairment losses Impairment losses 31.12.2009
Debt securities
Shares
Other assets
19,3
0,0
7,5
0,0
19,3
7,5
0,0
19,3 0,4 0,0 0,0 968,1 0,0 987,8
Debt securities
Shares
Other assets
Total
0,0
12,7 0,4 0,0 0,0 105,7 0,0 118,9
0,4 0,0 89,4 89,7 0,3 0,7 1,0
Total
RELATED PARTY TRANSACTIONS 2008 Basis for classification as a related party
Balance sheet item Loans and receivables
Ownership Management Management of the parent company Kinship Associated undertakings Pension fund Total Impairment losses 1.1.2008 Change in impairment losses Impairment losses 31.12.2008
12,7 0,4 0,0 98,3 98,7 0,0 0,3 0,3
7,4 12,7
7,4
40 SHARES HELD Company name, registered office, nature of business
Note
Percentage of Carrying amount equity capital of shares total held % EUR million
Subsidiaries of Sampo Bank plc MB Equity Partners Oy, Helsinki, mutual fund management MB Mezzanine Fund II Ky, Helsinki, mezzanine financing Realty World Ltd, Helsinki, estate agency Sampo Housing Loan Bank plc, Helsinki, mortgage lending Sampo Fund Management Ltd, Helsinki, investment services Kolarin Nilijänkkä Kiinteistö Oy As Oy Leppävaaran Leppoisa Danske DCR PLC, Helsinki
1 1 1 1 1 1 1 1
40,0 60,0 100,0 100,0 92,6 100,0 100,0 100,0
0,0 0,0 2,0 76,1 3,8 1,6 2,0 1,8
Associates of Sampo Bank plc Automatia Pankkiautomaatit Oy, Helsinki, electronic banking services MB Equity Fund Ky, Helsinki, investment Tapio Technologies Oy, Espoo, manufacturer of electrical equipments
2 2 2
33,3 20,9 20,0
5,1 0,1 0,0
1 2
Consolidated in full Accounted by the equity method
Sampo Bank plc – Annual Report 2009
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41 ASSET MANAGEMENT AND CUSTOMER ASSETS HELD Sampo Bank plc provides asset management services self and through subsidiaries. Eur m Assets under management Discretionary mandates Consultative mandates Total assets under management
486,0 1 518,3 2 004,3
42 AUDITING FEES Eur m Auditor fees Ernst & Young Ltd. Auditing Assignments acc. to auditing law Tax consulting Other services Auditor fees, total
0,2 0,0 0,0 0,5 0,7
43 INFORMATION ON A CREDIT INSTITUTION WHICH IS A GROUP COMPANY In 2009, Sampo Bank plc belonged to Danske Bank Group, whose parent company is Danske Bank A/S. Danske Bank A/S Annual Report 2009 is available at www.danskebank.com. The registered office of Sampo Bank plc is Helsinki
Sampo Bank plc – Annual Report 2009
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