Annual Repor! 1989

SWEDBANI(GROUP

SwedBank Group Total assets , SEK 284 ,388 million Equitv and reserves , SEK 7,714 million Op erating in come ; S E K 1 ,072 million Return on equity' after taxes, 14.70/0 Average number of emp loy e es, 1 ,311 Operating income per annualizeil employee, SEK 818,000

CONTENTS I

1989

l

S u mma rv of Kev Dat a

2

Th e C roups Busine ss Idea

3

Grou p Struc tu re

4

Pre sident" s Sta te me n t

17

Glo ba l Dev el opment s

20

Empl oyecs

22

Gro u p O pera tions

2:3

Swe d Ba nk

28

Spi ntub grou p

30

lndu strif'inans

32

Hohur

33

Int e rn at ional O pe rat io ns

:3~

He view of Opera tio ns

:38

Sta teme nts of Inc om e

39

Balan c e Shee ts

40

Princ -ipl es of Ac counting

41

Notes to th e Fin an cial State me n ts

48

Board of Dire ctors' Proposed Dispositi on of Income

49

Aud itors ' Report

50

T he Swe d Ba n k Share

51

M on e~'

5')

Five- Year Su m marv

54

Su mmury Sta te men ts of Inc om e a nd Bal un c e Sheets of th e

Market Program s

S uhs id ia ries 56

Board of Directo rs a nd Allditors

58

Swed Ba n k Ma na gem ent

60

Swed Ba n k' s Orga ni zati on Addres se s

A NN UAL ME ETI NG Th e Annuul Meeting of s toc khold e rs of Swed Ba n k will be held at th e Se a nd ie Crown Hote! . Guld gränd 8. Stoc k holm . a t 2:00 p .m . on Thursdav, March 29. 1990. Stock holders wishing to a lle nd th e Annu al Me eting are re q u ire d to noti fv th e Bank no lat er th an 3:00 p. m. on 'Iu esduv, March 2 7.

1990.

The origi na l Annual Report is signed by the Audi tors.

PROJ ECT MANAGEMENT: PETER RHEDIN AND ANNIKA WAENERLU ND , PR·PRODUKTIO N DESIGN : KARLERIK LINDGRE N AS TYPESETIING: DELTA PRINTING : STELLAN STALS TRYC KERIER AS PHOTOGRAPHY - KARL GASOR, NILS INGVA R SVENSSON , GUNNAR FURULID . STIG GÖ RAN NILSSON ENGLISH COPY - DAVID WEGWEISE R

In 1989 a proposal was presented to merge Sweden' s

1989

savings banks , th e SwedBank Group and the Savings Banks Assoc ia tion to a single banking group, th e Sav ings Bank Group AB. The merger, whi ch would es tablis h th e largest banking group in the ord ic countries, is expecte d to take place in 1990/9] . In ] 989 the SwedBank Group reported op erating income of SE K 1,072 million . SwedBank in creased its cap ital stock during th e year from SEK 360 million to SE K 2,440 million. Fol1owing th e remo val of Sweden' s forei gn ex change controls, th e Spintab group list ed its bonds on th e Cop enhagen stoc k exc hange. A total of SEK 3.6 billion was placed abroad in 1989. IndustriFinans acquired Gylling Säljfinans durin g the year and cons olida tecl its posi tion as Swede n' s largest issu er of cre dit cards . Robur Kapitalförva1tning AB stre ngthe ne d its position as th e country' s largest asset management firm , with year-end asset s of SEK 32.2 billion.

SWEDBANK GROUP1)

SUMMARY OF KEY DATA Total assets, SEK m. Equity and reserves, SEK m." Leverage , % 3) Operating inc om e, SEK m. Return on equity after taxes ,

% 4)

Operating inc ome as a percentage of average tota l assets Average number of employees l) The figu res for 1988 do not inci ude the earning s of BNE SwedB ank S.A. 2) lnclud ing reserves for bands. The bond portf olio is reported net in the balance sheet. 3) The sum total al equity, reserv es ( 100%) and hall of othe r untaxed rese rves as a pe rcentage of total assets at yea r-end . Total assets have been adjusted to include the rese rve for bands.

1989 284,388 7,714 2.7 1,072 14.7 0.4 1,311

1988 227 ,882 5,473 2.4

850 17.0 0.4 1,289

SWEDBANK

1989 104,299 5,028 4.8 438 9.2

1988 70,465

0.5

0.5 687

668

3,111

4.4 313 11.0

4 ) Ope rating income alte r 50% standard taxe s as a pe rce ntage of the opening equity balance, hall al the reserves and hall of other untaxed reserves, plus any new issue al stoc k duri ng the yea r (taking inta acco unt when d uring the yea r sucn new issues may have taken place), less dividends pai d du ring the yea r.

The Savings Bank Group is an independent banking alternative in the Swedish credit market, as weil as the largest affiliated banking group in the country. The Savings Bank Group offers a full range of services and is a powerful player in all market segments in which it operates. The SwedBank Group's role within the Savings Bank Group is to be active in areas that can improve effectiveness and provide competitive advantages through a) economies of sca le, and b) specialized business solutions. To fulfill these tasks, the SwedBank Group, together with the savings banks, focuses considerable effort on business development. All operations of the SwedBank Group carry profitability demands.

2

SWEDBANK SEK m. 104,299

Administration International & Trading Financing SwedBank Brokerage Service CAPITAL MARKET COMPANIES

FINANCE COMPANIES

INTERNATIONAL OPERATIONS

I

Robur Kapitallörvaltn ing AB 100% SEK m. 278

ABSPINTAB 100% SEK m. 175,033

IndustriFinans AB 100% SEK m. 5,713

Sparbankernas Intecknings AB 100% SEK m. 93,352

IndustriFinans Service AB RestaurangKupong 51% SEK m. 11 4

SPABO 100%

IndustriFinans International S.A. Luxembourg 100 %

Swedish -based interest-bearing lunds

Kommunkred it AB 94 % SEK m. 11,227

IndustriFinans Datainvest AB 100%

Robur International SICAV Luxembourg

Jordbruks kredit AB 100% SEK m. 2,683

Sparbankskort Administration AB 100%

Deposits

SEK m. 4,776

BABS Bankkortsadministrativ Butiksservice AB 50 %

Swedish-based mutual lunds

BNE Swed Bank S.A., Luxembourg 100% SEK m. 10,127

FennoScandia Bank, London 50 % SEK m. 5,378

Representative offices NEW YORK LONDON MOSCOW HELSINKI COPENHAGEN OSLO BEIJING MARBELLA

J

THE S IVEDBANK GROUP'S ORGANISATION Th e Gro up' s pare-ut co mpa ny is Swed Ban k (ope ruting domesti cally unde r the na me Sparba nke rnas Bank). Its su bsidiaries a re gro upe d in to fou r un its : cap ita l murke t compa nies . [ina nce com pan ies . mu tua l fu nds a nd other seeurities funds . and in ternationa l operations. " ' ithin the capi tal marke t companies. the wholly owned suhsidia ry A B Sp in tub [forme rlv S PA F I Sparban kernas Fasti gh et s fin a ns ierings A B) is the pa rent company of a subsid ia ry group consisti ng of Spa rha nke rnas lnt ec-k nin gsakti ebolag. SPA BO Spa rba nke rnas Bost ad sfin a ns ie ringsa ktie holag . Kommunkredit Aktie bolag. a nd Spa rba nke rnas .lordhruk skreditakt ie holag. AB Spintubs own s a 9 4 % int erest in Kommunkredit. with the renurin ing int erest s held hy the Swed ish Ass oc ia tion of Loca! Au thori ties (4 %) a nd th e Associ ati on of Swed ish County Counci ls (2%), Th e Gro up' s finan ce co mpa mes inc lude the whol iv

owne d su hs id ia rv Indust riFinan s AB. whi ch in turn owns IndustriFi nan s Serv ice AB (5 1 ge ). Ind us triFina ns Inte rn at iona l . A. . Ind ustriFinan s Da ta in vest AB . Sparban ks kort Ad min is tra tio n AB an d BAB Bankkort sad minis tra tiv Butiksse rvice AB (50%) . TllP remaini ng 49 ge in terest in Ind us triF ina ns Serv ice A B is owne d by the Fren ch co mpany ACCOR S. A.. and the rem a in ing 50 ge interest in BABS is owne d by IPS A B. Th e wholly owne d s ubs id ia ry Robur Kapit alförvaltnin g AB is respo ns ibl e fo r th e man agem ent of the sav ings banks' joint mutual fund s and oth er see uri ties fund s. Swed Ba n k' s internat ion al op erations co mprise two Io reign ba nk s and a numher of representative offices . The two bank s a re B TE Swed Ba nk S. A. in Luxemhourg (forme rly Banqu e No rde urope S. A.). which is who l ly own ed. a nd Fennoo can cl ia Ltd. in Lond on . wh ich IS owne d jo intly with S kop ba n k of Hel sink i. Finl and.

3

4

"I am satisfied with developments." President and CE G Göran Collert interviewed by Magnus Briggert of Publicistgruppen

Question : 1989 was the twelfth consecutive year that the SwedBank Group reported record earnings - SEK 1,072 million compared to SEK 850 million in 1988. This has to be a gratifying trend, but one that also raises expectations for the future . GÖRAN COLLEBT: Th e fa ct that we ha ve ex pe rie nce d se ve ra l years of s ta h le

growth in e a rn ings in m y opinion refl e ct s th e s uccess we hav e h ad in focu sing our o pe ra tio ns on th e a re as in whi ch we s pecial ize with in th e sa vings bank organizati on . I a ls o think it is a refl e ction of th e Grou p' s abilit y to adap t to th e market ' s d em and s a nd a gre a t willin gn es s to c ha nge. Thi s is why Robur, S p in ta b , Indu striFinan s and th e p arent co m pa ny, th e Bank - eac h und er its own c irc u ms ta nces - hav e had sta h le gro wth in both volum e and profit abilit y.

Vet your results are not comparable with those of Sweden's other major banks with respect to your volume of business and your base of capital, Why? Ou r o pera tio ns ha ve a lways he en mon e y marketbas ed, so we don ' t hav e access to th e rel ati vel y in expen si ve d epos it s fro m co ns u me r gro u ps th at othe r bank s d o. A nd th e se rvices we offe r large co rpo ra tio ns a re th e most co mpe titi vel y pri c ed in th e e ntire ind u s try. Our vo lu rne is large , but our margins are ti ght. For exa m ple , int erest margins on a s iza b le portion of our c us to me rs' a c count s are o nly a tenth of tho se on th e a ve rage banking c us torne r' s. Anoth er wa y of loo k ing at it is tha t our op era tion s are s im il a r to tho se of th e h ead offi c es of ot her major bank s . Thou gh unfortunately it c a n' t be do ne , it wou ld be in teresting to compare our e a rn ings with th ose gen e rat ed sole ly by th e h eacl offi c es of oth er bank s. The tou gh marker we are in has meant that we are be tter adap ted tha n any oth e r bank to th e c ompetitive c ond itio ns takin g s ha pe in th e Swe d is h c re d it market. It requires that we rat ionalize, a nd leaves u s no room for bu s in es s mi stakes . It is wh y ou r rat e of in vestment in new technology - pri mari ly com p u te r sys te ms - is ve ry hi gh . Wit h thi s in mind , I would still say we hav e re ason to b e s a tis fie d with ou r ea rn ings and co ns is te n t gro wth .

5

Why is it that you have spec ialized in such narrowly defined areas of the industry? It h a s to d o with th e h re a kdown of res pons ih ility be twee n ou rs el ve s a nd th e savings banks . Our goa l is nol lo ma xim ize our ow n profit s , hu t lo e ns u re the be st po ss ibl e se rvice to our ow ne rs . Swed e n' s savi ngs ban k s. so th at th ey ca n improve profit s a nd gro w. You ha ve lo renr emher th at we are part of a gre a te r whol e .

The SwedBank Group is mainly active in the commercial market, within very well-defined , specialized segments. That 's your role in the savings bank system , as you say. How many of your customers are given you "free" by the savings banks? No th ing is free, th aI goes witho u t say ing . Ye s. as I ex plu ined , we a re part of th e sav ings bank sys te m . Th e c ou n try' s savings bank s d epend on a s pec ia l is t bank like Swe d Ba n k a nd we d epend on th e savi ngs bank s for th eir co n tac ts a nd di stribution n erwork. By utilizin g th eir s tro ng Iocal pre sen c e a nd by s pec ia l iz ing, we ha ve be en able to c re a te s tro ng c orn p a n ies like Sp in ta h and Robur. Sparbank skortel , th e sav ings b ank s' c ha rge and c re d it ca rd, is al so praof of th e s tre ng th of ou r mI SSIOn. II is the large s t of it s kind in Swe de n, with over a million

ca rd holde rs. During th e ye a rs we s tre tigthe ned ou r foothold in th e marker to s uc h a n ex te n t that it ha s b ec om e seeon d nature for maj or pl ay ers to as k us to hid on new busine ss . II has be corn e a lm os t autorn at ic th at th e y do. In seve ra l ni che s , we hav e a s u bs ta n tia I m arker s h a re . Am on g major cor pora t io ns , for in stanc e , we hav e an a verage s ha re of up to 15 perc en t for our main produ ct s. We ca n be pl e a sed with thi s c ons ideri ng th a t th e savi ngs bank s' m a in market s a re hou se ho ld s and s m a ll to mid-s iz e busine sse s.

6

Are there any decisive ways in which the SwedBank Group diffe rs from competing commercial banks in its attitudes and in its relationships to its customers and markets? Ye s, I beli eve so. We are by no mean s high pri e st s , but we firmly believe in maintaining th e hi gh e st e th ic a l bu sin e ss s ta nda rds . We be gan thinkin g thi s wa y lon g before it be came ne c es sa ry or trendy to di s cu ss bu sine ss e th ics. We

are just a s hun gr y for bu sin e ss as oth er finan cial in stitutions, but we refrain from ce rta in type s of practi c es. We would rath er pa s s up a d e alth at ma y see m s pec tac u la r at th e tim e but pro ve ove rly ri sk y in th e lon g hau\. Thi s old-fashioned kind of moralit y is in grained in our e m p loyees ; it' s th e way th ey work - period. I have nothing a gain st es ta b lis h ing e th ics commi ss ions a nd the like, but unfortunat e ly th e y oft en be come little more than c os me tic measure s if th e sa me values are not app li ed by everyone c once r ne d. Our policy in th ese matt ers is partl y the reason for our low c re d it lo sse s, th e lowe st in th e indu st rv. . A nd I d on' t hou e stl v . think we h av e mi ss ed a nv import ant bus iness be c au s e of il.

1989 was a dramatic year in the Swedish bank ing industry. What we re the most pos itive things that happened to SwedBank and the Group? On th e who le , 1989 wa s a very go od ye a r for u s . E ve ry segme n t of th e Group ex pe rie nced po sitive gro wth - th e Bank , Sp inta b , Robur a nd IndustriFinans. [a tu ra lly, howe ver, mo st of thi s wa s ov ershad owed by th e work of th e Str uc tu ra l Committe e and th e unanimou s s u p port th at wa s s hown for th e plans to c ha nge th e c oopera tive s truc tu re of th e s a vings bank s phe re. \Ve hav e a gr e ed that th e goal s hou ld be jo int ownership and a s ingle, c ons olid a te d s ta te me nt of income and balanc e s hee t. We are a lso very pleased by the way

1I1

which the matter of capital was settled. We now me et the new international requirement s as propo sed by th e so-c a lle d Cooke Committee. I would a lso like to mention two of my fond est memories from 1989. On e wa s from Japan . E very ye a r I take a week-long trip to Tokyo to me et our old contact s and es ta b lis h new one s in th e Japanese c a p ita l market , among major banks , in suran c e c om pa n ies and so on, all of whom are be coming in creasingly important for our refinan cing. I wa s able to see firsthand that th e se institutions are fol1owing SwedBank' s and th e sa vings bank 7

s p here' s development with grea t int ere st and th at th eir con fidence in us has manife st ed it s elf throu gh a number of c onc re te effor ts to broaden busine s s ti e s . Th e other memory is from an e m p loyee c o nfe re nce held by th e Bank . With th e help of a group re spons e sys te m our e m p loyees were a sked wh ether th e y wou ld recommend th e Bank a s a plac e of work to relatives and fri ends. Ei ght y perc ent s a id yes . And n earl y 100 p erc ent bel iev e that th e c h a n ge in th e s truc tu re of th e Sa vings Bank Group is positive. Thi s whol ehearted s u p port wa s ve ry s a t is fy ing .

What negative things happened during the year? Gen erall v. th ere were not man v se tb a cks. But I will menti on thre e di sa p poi n tme n ts: Th e fa ct that th e sales tax on see u r ities tradin g wa s not aboli shed

IS

a

my st ery to us at th e S we d l3an k G ro u p , and to a ll of Swe d is h busine s s for that matt er. We had ex pec te d a se ns ib le re solution in 1989. Th e s a les tax ha s c rea te d a la ck of co nfide nce : it is tot all y gro u n d less a n d di st orts th e marker. And it cos t us S E K 2 5 milli on. But I h a ve b e en op t im is t ic th e e n tire tim e a n d ex pec t that th e gove rn me n t wil l co me to it s se nses in 19 90, thou gh probabl y not before April, wh en a n ew proposal is se t to go into e ffec t. We were not abl e to ke ep ou r cos ts in c hec k , e it he r. Even thou gh th e total numher of e m p loyees did not ri s e, our e xpe nses did by an una c c eptabl e margIll. I am di stre s s ed th at ou r co m p u te r ope ra t io ns are runnin g up s uc h hi gh ex penses . As a result , we were not a b le to ra ise ou r inco me/cos t rati o. O ur go a l is a n impro vement ove r last yea r' s figure of l. 7 ( 1989). La stly, th e grou p re spon s e exe rc ise I menti on ed did not tum up onl y p ositive re sult s . Alm ost h al f of o u r s taff fe Il th at th e b ank did n ot s u p po rt th em pro perl y, whi ch wa s a b it of a c hoc k . We a re workin g h ard to irn p ro ve.

What are the SwedBank Group 's greatest strengths, in you r opinion? Our murket po sition. Our s ki lled s ta ff. And our sys te m - our busin e s s c once p t - by whi ch I am referrin g to our tie s to Sw ed en" s 109 s a vings bank s . We hav e breadth and d epth in our ran ge of se rvices , ye t we maint ain a s ma ll, f1 exible organization . Ac cordin g to an int ernational s urvey co nd uc te d a co u p le of ye a rs a ga, we ranked s ix th in th e world in total a s s et s per e m p loyee .

Il is almost irnpossibl e to point to oth er areas wh ere we are s trong , s ince th ere are s o many of th em. I would say that we are quit e weil prepm- ed to me et th e d emands that will undoubt edl y fa c e th e banking industry in th e 1990s.

8

Capital a nd fin ancial re SOLUT e s a re iniport ant - a nd we have th em - hut ex per tise means e ve n more. It is a re sourc e wh ic h we ha ve a gre a t d e al of a nd whi ch ca n not be measured in mon et a ry terms .

What about weaknesses?

lt would h a ve to b e our federati ve sys te m , wh ich is go ing to be c ha nge d. Thi s s t ruc tu re , with it s divi s ion of rol e s, ha s be en an imped im ent. Th e new s truc tu re we a re d e velopin g will a d d tr emend ou s pot enti al. Our id entity in th e ma rk et is too we ak. Thi s is main ly an int e r na l probl em. Be caus e our Swe d is h nam e is s o diffu se a nd ou r re co gn it ion a lllo ng th e ge ne ra l publi c very we ak , th e Group a nd th e Bank do not ha ve th e attra cti on for prospe cti ve e mp loyees th at we wo u ld lik e. O u r ide n tity is not a p robl em for c us to mers a nd int ernation al mark et s . Th e y kn ow us a nd our s tre ng ths . With a new s truc tu re , th e qu e sti on of ide n t ity will a lso be eas ie r to re s ol ve .

In 1989 you raised your capital stock from SEK 360 million to SEK 2,440 million in part through a new share issue to the mutual pension insurance company SPP. Why this level and why SPP? Th e reason for the in crease in ca p ita l is that we want ed to s tre ngthe n our c a p ita l base we Il in ad van c e of th e new in ternation al c a p ita ] covera ge requirement s th a t will go inta e ffec t in Swe de n in 1990. As far a s th e s ize of th e in creas e is c once rned , we fel t th at thi s lev el would s uffice until th e new sav ings b ank organizati on ha s taken s h a pe ; th en we will hav e a c ons ide ra b ly b ro ad er ca p ita l b a se . Th e one- b illion - kro no r s ha re is sue to S P P co nsis te d of preferred s toc k . whi ch d oe sn't e n title S P P to a s ha re of ou r asse ts. hut do e s give th em a gua ra n tee d return. For Swe d Ba n k thi s wa s a ve ry benefi cial fin an cing a rran gement. Il help ed us to so lve th e problem of ou r low ca pita l b a se for se ve ra l yea rs to co me a n d to me et th e new ca p ita l requirement s b y a wid e margin .

9

\Ve are in c o m p le te a gn~ em enl in th e s a v i n gs hank organizalion that we s h o u ld remai n ind ep end ent of th e s p he res of int ere st that e x is l in Swed en' s cupital murket. By ind ep end ent we m ean havi n g no own ership li e s to any on e

s p he re or in a ll Y oth er way h elon gi n g lo i ndividual g ro u ps wit h in th e finauc iul es tab l ishm ent , ThaI is whv we s o u g h t oul an ind epend ent partn er like SPP. Both of us mad e a good deal .

How is the SwedBank Group branches by the two most striking trends in the financial market: globalization and deregulation? Co m pe t ition is in cre a sin g. of cou rs e, hullh al is not s o me th i n g we a re c o n «e rued a h o u t , On th e who] e , I lik e lo look a l l hese c h a nges a s opportu rriti e s. Bus ical lv, S we d Ba n k is th e s a vi ngs h ank s' int ern at io na l repre s entativ e. NO\r we c-un e x p a n d that ro l e e ve n more quick lv, Tnou gh to handle- g re a te r ri sk s. I wa s di sturhed by th e ra re to acc u m u la te we ulth t hut wa s so prev al ent in tlw e ig h t ies. Th e youn ger gc ne ra tio n ha s be en in grailwd with th e wron g s e t of vulu e s , and it' s not totul ly t he ir fallit. Man y youn g peopl e hav e b e en g ive n hi gh po sitions within ,-ery narrow ni eh e s of th e Iinanc -iul c o nun u n itv. I n record tim e th ey h ave lie com e ex pe rts without havin g th e maturitv to liandi e th e g re a t mat erial we a lth t hut goe:;; a lo ng with it. TllO:;;e who h av e fill ed th eir co ffe rs wi ll s oo n Iind t hat money a lo ne wi ll not make th em happy. Dollar s ig ns a re th eir onlv m en sure of s u r-cess , and thut s not con sol ution e no ugh . Thi s is tru e es pe c iu llv of the mana geriai rank s at many lev e ls. A mana ger who thi nk s too mu ch a ho u t hi s own wal let won"! make a good mana ger. We a re now ex p a nd in g our rc eruitment c r ite ri u . Th e e ig h t ies were th e d ecad e of th e hrain and th e calculator, The nin eli e s will he th e decad e of th e hra i n and t h e h eart. lndividua ls who can e o m h ine th e t wo wil l b e unh eatuh le person a Ily a nd in 1h e mark et.

14

c-

To get back to the very important topic of profitability and volumes. What kind of figures can we expect for SwedBank and the Group in 1990? I e x pec t our thirt e enth con s e cut ive year of record e a rn ings . a l th o ugh th e in creas e may not be that s u hs ta n t ia l. Thi s foreca st applies to th e Bank and th e Group as a whol e. I s a y thi s without taking inta c o ns ide ra t io n what th e bank s tr ike in Sw ed en in th e beginnin g of 1990 may hav e c os t us . Ri ght now intere st ra tes are ex tre me lv hi gh . Hi storically. that ha s c au s ecl u s bi g probl em s. I think. t hou gh. that thi s year could b e different th ank s to th e SllC'CeSS of our tr e a surv unit. I am a lso hopin g that th e in ve stmeut s we h ave made in re c ent years will hav e a po sitive e ffec t on our in com e s ta te me n t. Our abi l ity to ke ep up with a rapid rat e of elian ge a nd a cla p t to th e mark er

wi ll d et ennin e our future profit s . We hav e h e en s uc cess fu l at it s o far a ncl l am optimi sti c th at we c a n co n t iuu e to b e wh en yo u c o us ide r th e e xce lle n t c o rps of e m p loyees we h ave .

15

RELATIONS Customer relationships naturally should be distinguished first and foremost by professionai consideration . This can assume other dimensions, too. Quality, for one. Any why not fun? This applies to all of our customers: the savings banks, businesses, municipalities, county councils or organizations. We have felt that it is sometimes impo rt ant to show th is by sponsoring cuiturai events, like the theatre, opera and concerts.

16

GLOBALDEVELOPMENTS In 19 8 9 th e op erat ion s of the Bank a nd its s u bs id iari e s were aga in a ffec te d by th e rapid r-han g e s th at took pl a c e in th e Swe d is h and g lo ba l c-reclit murket s . Th e most imp or tan t c ha nge was th e rem oval of Swe de n' s for ei gn exc -ha nge con tro Is . Thi s in tum st re ng the ne d th e int eg ra t ion of th e S we d is h c re d it mark r-t with th e int ern ati on al market. OI W imme dia te e ffec t wa s th e o p po rtu n ity to float bonel s in Swe d is h kr on or to intemat ion al in vestors.

Rapid ch an g es Hapid chuu ge s in th e op eratin g e nv iro nme nt a nd Iwi ght elwd c o mpe titio n s peeded up a res tru et u ring of th e e nt ire No rd ie c re d it murk et. In Swecle n . PKban ke n merged with Nord ban ke n a nd H and el sbanke n took ovr-r S kåns ka Ba nke n. T he Go ta c-ouce rn c-ourd ina te d the ban king operations of its Go taban ken . S karu horgs ban ken and \Ye rml a nd s ba nk en suhsi di a ries . Fin an r-e rompa nie-s , s toc-k h rok era ge firms and i nte rmer liurv ins ti tutions a lso u ude rwen t a "pa tp of acquisitions and mergers . Maj or s truc tu ra l eli an ge s took pl a c e o r were initiat ed by our No rd ie ne ighhors as we ll . Denmark' s S pa re kasse n S DS . Andel sbank en and Privatbanken merged. a s d id Den Dan sk e Bank . Den Dan sk e Provins ba nk a nd Köpenhamn s Hand el sbank. In No rwa y an a gr e em ent wa s ren eh ed to c-omhi ne Bergen s Bank a nd Den norsk e Cre di tba nk . On C. and a merger is und er \\'a y hetwc en fiv e large savi ngs bank s in so u the rn No rwa v,

Dramalic elia nges Th e dramati c c ha nges in th e Swe d is h a nd glo ba l ned it murk et s in re c ent ye ars led th e sav ings bank s to rev iew th e ir op erat in g s tru etu re in th e be ginnin g of 19 8 9 . Th e goa l of thi s re view. whi c-h wa s mad e by a s per-ia llv a p po in te d c o m m ittee durin g th e months of Ma y to Au gu st. wa s to c rea re a c umpe titive , co m b ine d Sa vings Bank Group for th e 1990s. Th e c o rn m i t tee . whirh had th e s u p po rt of th e e nt ire sa vings bank or gani zation. un animou sl y proposed that th e lur gest sav ings bank s. th e S we d Ba n k Gr oup a nd th e Swe d is h Savi ngs Banks As so ciation AB i nit iul ly merge to fonn a s ing le bankin g g ro u p . th e " Sa vin gs Bank Group." und er a holding ('ompan y, Th e oth er savings bank s will th en j oin th e new g ro u p throu gh coo peru t ive ag reemen ts a nd as owners of th e holdin g co m pa ny.

5 alJings Bank Group Tl w propos al to nwrgp tlw sa \'ing,; bank s. th e Sw ed Bank Croup and th e S we d is h Sa vin gs Ba nks .-\s ::-o(' ia tion to th e Savings Ba n k Gro up ha s ne arl y un anim ou s s u p po rt amon g th e ('ountry' ,; 109 s av ings bank s . a ll of II'hich s u p p lie d c o m me nts to th e proposal by yeur' s PIHL TIIP s a vings bank s a ls o sho we r] th eir s u p po rt for t1](' proposal al a s pe-ri u l a n n ua l me eting held on .lanuary :3 1. 1990. Im p le me n ta tio n is in the hand s of a n or ganizat ion al ronuu itt e e (oo int erim board of d irectors 00) a s of Fehru ary I. Pro vieled th at th e ne c e s sary le gi sl ati ve c ha nges a re ma de in tim e . th e new Sa vi ngs Bank Group s ho u ld fa ll into plac e so me- time in 19 91. The le gal e n t ity in mo st lik elihood wil l e nro mpass th e 10-13 large st sa vin gs bank s. th e Swe d llank Group and th e Swe d is h Sav ings Bank s Asso ciation. Ba sed on c u rre nt figures. th e new banking gro u p will become the large st group in th e ordi c countri es. with to tal a ss et s of SE K 450 billion (19 8 9 figure s). In a d d itio n . oth er sav ings bank s will join th e gro u p o n a c o ntrac tua l ba s is.

17

MARKET STATISTICS THE SAVINGS BANKS ' SHARE OF LOANS TO HOUSEHOLDS AND BUSINESSES

% 40

% 30

'-..

Househo ld s

~

24

32

-

24

16

THE SAVINGS BANKS " SHARE OF LOANS TO THE PUBLIC IN FOREIGN CURRENCY

~

8u sin es ses

18

12

8

6

o

o 85

86

87

88

89 '

85

87

88

89

SPINTAB GROUP'S SHARE OF THE SWEDISH MORTGAGE LENDING MARKET

SAVINGS BANKS ' SHARE OF SHARES TRADED (based on c ornrnis sions. ) %

10

Mark et sh ares, ba nks

8

%

_

Sp intab mark et snare

50

_

Spintab market snare of bank owne d cre d it- marke t co mpanies

40

30

6

~

4

86

"l Savmqs b ank s. mcludmq S wed Ban k Group

" I M . lfk t ' \s h: lf C 1989;]s PPf Sppl JO

20 Tot al mark ets hares 10

2

o

o 85

86

87

88

1988

89

1989

Ma rku t. e xc lud mq Statens Bo s tad sfm an su -nu q AB Bank markel hqur es 1989 ar e cs tuna to d

SPARBANKSKORT' CREDIT AND CHARGE CARDS _ Sparbanks ko rt Number s -

10 0 0 0 00

_ 800000

_

VISA (excl . Sparbank sk ort l MasterC ard / Euroc. American Expr ess Diners

THE SAVINGS BANKS ' NATIONAL SAVINGS SYSTEM MUTUAL FUNDS / Market sh are of bank -aff iliat ed l unds 198 6 -1989

%

50 40

Köpkort 600 0 0 0

30

400000

20

200000

10

• 18

o 86

87

88

89

ENTHUSIASM Involvement and enthusiasm create enjoyable, stimulating workplaces. The more motivated we feel to express the se attributes, the better we work together and the more meaningful our relationship become. Regard less of whether it be dancing, music, chess or gymnastics, we provide the necessary support.

19

OUR EMPLOYEES Hapid c h a nges in ouroperat in g e n v i r o ru ne n t and competition ov er c us to rn e rs in th e hankin g i ndu s t ry ha ve made it n eoessarv th at we. as a g ro up . agg ress i \'e ly mu rke t ou rse lves un equi vo c ahl y as a ban k in com pe t it ion wit h o the r banks. Cus tome r demands and r-us tom e r wi sh e s c rea te th e co nditjo ns for o u r s u rviva l. Th e s e wishes a nd d em and s s hupe our mi s sion a nd our e rn p loye e pol ici e s . Th e G ro u p 's goa l is to mn intuin personn e l poli c ie s th at fa c ilit at e Fl e xibil it v in th e orga niza t ion in order to mee t th e d e ma nd s «us to mers make an d offer exr-i t ing joh oppo rtun it ies to ou r e m p loyees , Thi s rueu ns emp h as iz ing managenu -ut ' s rol e a nd it ni e an s d ev el opi n g new re spon sl hi l it ie s [r e e- from pre con ceiv ed notion s.

Competiti ue toorkplace 'I() «reare a co mpe t iti ve wo r k place. we have to as k

o urse lves wh o we ne ed. w hy pe opl e wo uld wa n t to work for us, a nd h ow we ca n J'('lTuit a nd ke ep qualifi ed e m p lovees . Peopl e wh o c ho ose to wo r k fo r th e G ro up lo day d o not wa n t to be face iess orga niza tion men. TlleY want to lIP h e a rd. They want responsi hi l itv, Th e v want jo hs wh ere th e y are co m inu al lv le arn in g an d d e- vel opin ~ . Quit e si rn plv, the y want their johs to he s t imul at in g and th ey want to h l' ahl e to cu rrv th em o u t in a n a e sth eti c ally pl e a sin g. comfortuhl r- eu vi ronm ent . Th is is th e ba s is for ou r goa ls re g a nlin g em p loyee d t>\'l' Iop men t .

FVCll s on lIlanag crs \X 'e to uk several m e usure s in 1989 in a n e ffo rt to offe r ou r e m p lo yees s uc h a plac e of e m p l o v me n t . Si nce our

[oc-us h a s be e n o n trai ni n g managt> rs . th e Gro u p co nt inu--d to inves t i n exec -u t ive d e ve lopm e n t. A round 50 e m p loyees a tte nde d tw o-t o- four we ek man a gelll ent ('o u rses in S we de n an d a h roa d. Th e p m p has is wa s on ho lis t ics . a na lysis o f o ur o pe ra t ing env iron me n t. Il' am\\·ork. bu sin e s s d e\'el opm ent. c us tu me r sa t is fac lion a nd . not le a st. th e person al in\'()l ve ment ne c e s sa ry to be c om e a s lll'cess fu l man a ger.

Basic trainin g in banking sk il ls Pl anning h a s b e gun on a new b a si c t rainin g program in b anking s k i lIs , o u r hope being that a ll e m p lo yees will und ergo thi s new program a s soon as pos sibl e a fter joi n ing th e G ro u p . Tra inin g will cove r o u r mi s si on a n d c o r po ra te c u h u re . bankin g teclllliqu e s and c us to me r se rv Ice .

20

l ntroduct ory c o u rs r-s h a ve he en rede si gn ed to plac e g re a te r s t ress on e t h ic s . S pec ia l " s enior" se- m i nars h av e be en c rea ter l for middl e-a ge wum e n w ith man y vears a t the ha nk. A s a re s ult o f an a tti tu de survev among emp lo yees , mor e e mp hasis h a s he en pl aced o n j ob re view s . A, program of s ys te ma t ic re vi ews ha s b e en es tu h l is h e d for t he Bank . l t s purpos e is lo c re a t r- ('OlIIIIlOn goa ls a nd a pl an o f ac t io n for m an u g ers a nd e m p luyees th at can he Io llo we d up pe r io diea ll y.

On g oing d ialog ue is ncccsswy Great e ff o r l wa s mad p durin g th e ye a r to improv e a nd innea s e int ern ai information as part of th e un goin g di al o gu e we mu st m aint ain if we a re to c-ont in ua l lv hu ilr] on ou r specia list s k i ll s an d profpss io na lism as wei l as ou r inte-mul Group nerwo rk. T h e first issue o f ou r new magazi ne , ;\1 åu ud s Rapport (t rans la t io n : Mont ldy Hl'port ). wa s is sued in De c pmber 1989 . It c unt uin s ind epth u rt ic lc s on ll w Croup. our operatin g e nv i ro n me u t an d g lo ba l d e vr-Io p me u ts . Our we ekly n e w s h-tt er, Ve ek oH a p po rt. was red e s ig ned. u p ~rad ed and expuu der] to ma ke run m fo r t lw rap id flo w o I' in fo rm ati o n th at alfec- ts Gro u p em p luvr-es ,

QIl a I i t y - impro rem cn t project itv -i proj el'l wa s a t the Ba nk . \X'o r k wi ll !»- carr ie d ou t by sma l l gro u ps a l t he di v i s jo n le\'pl an d hy t he E Xl' (' ut in c' S taffs. Part ic ip at ion is vo lu n ta rv, In 1989 work he gan on pl an s for a c oo pe ra tive duy-r-ur e Iuc-ilitv, wh ic-h hop efu l lv wi l l tak e s hu pe in s o me- Iorm in 1990 . Th e m ed ic-al an d heu lt h care s vs te ms olfe red to th e Bank' s emp loyees wer« e n la rge d a nd illl pro \-ed dUl'in g th e ye ar. :

\

q u

u l

r u p r o

vr-m

o n t

s

t

a

r t

e-r

]

Plca sanl. clc a n cnI:iron mcnt Th e personn el re st aurant wa s tot all y reno \'at ed la s l SUlll nler i n a n e fTo rt to illlpro \'e th e workin g e ll\ 'ironlllenl. A wid e \'a r ie ty o f food is now o ffe red in a pl e a s ant. e le a n e n \' iro n llle n l. A puh. whi ch is part o f th e re st aurant. is o pe n en.' ry sec o nd Thursd a y h etw e en 5 :00 p.1l1. a nd 7 :00 p .1l1. to a 110\\' inforlllal c o n tacts within the Group . llIu ch in lh e way th e J a p a n e s e clo. Addition ally. a "Holll e colllin g" ,ra s heJd for forIller e lllp loyees of th e Bank. wh o were in\'it ed in for a pre s e nt ation of th e G ro u p' s go a ls and s t ra tegies .

TOTAL NUMBER OF EMPLOYEES. % Swed Bank SwedBank Group 50 40 30 20 10 O% %0 10 20 ( 20

NUMBER OF YEARS OF EM PLOYMENT. % 30

40

50

•

M en

•

Wom en

50

40

Swed Bank Group 30 20 10 O%

Swed Ban k %O 10 20

30

40

50

- •0-2

21-30

3-4

II

31-40

41-50

5-6

I I

7-8

I

51-60

>61

9- 10

) 11

Age

Number of years

EMPLOYEE TURNOVER, %. SWEDBANK

STAFF vs NONSTAF F EMPLOYEES AND MANAGEMENT PERSONNEL . %

20 °

75°0

16

60

12

45

8

30

4

15

M an agem ent Sta ll

Non st all

o

O

85

86

87

88

89

M en

Women

Swed Bank G ro up

Men

Women

SwedBank

EDUCATIONAL BACKGROUND. %

ABSENTEEISM % OF AVERAGE WORKING HOURS . SWEDBAN K 19 89

75%

20%

60

16

- - Sick leave - - Compensation leave

Un iver sit y

45

12 - - Vacati on

8

30 High Sc hool

/

Education

15

4

O ff duty ___ Par ental leave

o

O

Ch ild ca re - - - Military se rvi c e

Men

Wom en

S we d Ba nk Gr oup

Men

Wom e n

Sw ed Bank

21

CONCERN Concern is an important recurring theme in the Group's employment policies. It has become standard practice that employees joining the Group as weil as those leaving it should be shown consideration. In 1989 we held a very well-received "homecoming" for former employees and friends. We feel that people who have worked for us in the past are important to our future. Flowers are also a symbol of our appreciation for the initiative each and every employee takes to further their professionai development. An expression of consideration and a way of showing our sense of pride. SkilIs are important, but without pride and enthusiasm for work and for one's associates, results will never be as good as they could be.

22

~~

=,

~

,

~

~~lIi;~~~ , ~. l

-

2.S

(J.:!

9 2 .9

S,S. I

:H. 5

27 .8

12 . .'>

5 :~ . 0

6.5

:34 . 6

88.9

5 7.3

3 7. 1

:J 7 . :~

He ve rsal of rese rva tio ns

for possi b le credi t lo s s e s .

..

. .. . .

He r-ove rv of previous ly rea lized credit losses T he year"s reserva tions for possible credit losses. ... Th e vea r' s real ized crerli t los ses

...

C HE DIT LOSSE S. i\'ET

10

9 .0 i . •")

EXTRAORDINARY EXPENSES

T he Group' s ex traordinary expen se s in 19 89 . SEK 63.9 million . refer to the s ta mp tax for the new s ha re and ho nu s issues . The Ban k' s ex tra ord ina ry expo nses in 19 88 re fe r to the writ edown of s toe khold ings in Spa rha nks ko rt AB in the a mou nt of S E K 4 . I milli on and sa les ta xe s ofS E K I . S milli on on th e ar-qui siti on of s iw res in I31\'E Swed Ba n k S. A.

43

NOTES TO THE FINANCIAL STATEMENTS

11

13

GROUP CONTRIBUTlON )IJHI) ~EK m .

S llEDHI. YJ.:

OTHER UNTAXED RESERVES

l'I llll SE t-: III .

(;1l0 1l1' SEt-: I,)ll')

29 .7

lnd u stri F in un s

.

Hobur AB S P Ii\ 'I ~\ B Sparbankemus Inlpc knin gsb ol ag Ko m m un k redi t

. . .

],')2. 2

.

:H .8

,\'').0

:~ O . O

I :~.;')

TO'I~\L

.39.7

Accu mu la tc d s u p p le me n turv deprec-ia tio u in: F uru iture. fi xtures and e qu ipme n t . . . . . . . Leasin g o hjec ts . . . . . . .

III .

S \·I 'ED B.\;\ K SEK

I'lllll

IlJlllJ

II

()

()

19 6

I'IR

201

I () I

III .

Il)llll

5 p" " ia l fund s: De velopm ent reser" e .. .

12

UNTAXED RESERVES

O th e r unt ax e d rr-se rve-s .

TOTAL For

I OIlIl S

Bal alll 'e a l th e I". ginni ng of th e vear Al lor-a tiun lo sta temen ts of ineorne . He va luat io n differt'lH'e . B.\ L\ ;,\CE AT YL\ R-E :\D

14 :~ . R()()

:~ . I R 7

I. 606

TAXES C IWI'I'SEt-:

1. :~27

19!!') :~2 :~

G79

27 9

29

Fe de ral income lax .. . . Profit-~haring

I

tax

. ....

Special profi l lax . .... . 4.190

:~. 866

I.G:~ .,)

1.606

For fore ign CllrrellCY

BA L \i\CE AT YEAB-END TOTAL BALAN CE AT YEAH-END

011'"

IB

IB

IR

IB

18

IB

IB

IR

4 .2013

:L B84

I .GS:\

1.()24

inte rest- beu ring seeuri ties (re po rted Ilel on th e asset sid e of th e

l'Ill'l

I!JHB

1.8 92 .2

8 7.6 - 21 .5 "

12.8 41.6

12,1.0

()6. 1

.')·1.'1

:~

i, uttri buta h k- lo th e reversa l uf a pre-vi-

A';';E TS SE t-: III .

111.

l 'lll B

1'18 ')

I')BH

:H 2 1

:\.: \76

2A S I

297

-:~. 188

- :\. 122 B..')S8 4. 90:~

10 5 . 707 7.4 18

2 10A.5S

..

12.0:-\2 7. 541

TOTAL

19 .806

n .7 1.5

1.5.S86

I:L! ,1 9

Bank of Swede n. wh ercof s av ings hank s ('as h rese rve fund s

Otl u-r.

I.L IH ILlTlF:'; SEt-:

l')!!')

i\ at ion a l Deht Offie e . Co nnnere ial hanks

2A %

al t h e

heginniug of t he "ear

Alloealion lo

298

29 8

27 9

27 9

16

FOREIGN BANKS

statr-me n t

of im -orne

ASSET'; ';Et-:

.

BALA i\ CE AT YEAH -END

Sll'ElJ/i.I\ /\

G8.5

279

29 8

S uedlton l:» bond portjolin at yea r-end .\Ia rket va lu e . Cost . Ne t book va lue" .\Ia rke l va lue in excess

of ne t boo k va lne . . . . Average interes t ,·al ue" .

7. 71 G 7.9 113 7 .3:.~ I

+

:38 5

7 .95:~

.5.0.39 ;') .() 12 4 . 76:3

+

296 ·1.95 1

" Of wh i('h ( ·t'rtifi ('ate~ at d ep o- it 19 und r-upit ul murket promisso rv notes I H.

It-.:-,:-, n ..s e rve .

:1, Tl u- a n 'rag ing 1JIt't1 lOd s t ipul uted iII th e Bank in g Ad i~ u ~ ed lo r-ak-ulute dit' a n' rage int e re st valu e of th e hOlld purt fol io. R a ~ i (' all y th is nu -un s tha t go vr-ru me-nt a lld hotIsin g l )()lId ~ . t' II' . • an' vulu ed Il a:-w d 0 11 th t' a verage ru t-- 0\' 1' 1' tln- p a st t en year~.

44

S \\'f:nHA"t-: SE t-: III .

SWEDISH FINANCIAL INSTITUTIONS

ba la uc-r- shee t]

CO:o' I

79 .0

III.

I'lll ll

re-...--rva tiun .

15

For lronds atu] oth er

21

- 20 .8" O.;')

TOTo\ L

S UF /JH t \ /\

Hal a u r-e

99 . :~

II Tlw Iwg ..H iH:' prufit-sh ariu g tax

Bal a n...· a l II... Iwg illll illg:: of t lu - year

()

l 'Ill'l

111.

L1AB ILlTIES SEt-:

l'Illll

111.

19119

l'I llll 6:~

Swedis h kron or . . . . . . .

2. :~01

Forei gn t' u r re lll' Y. . . ...

3. 341

4. 'U2

:~

3 54 1.492

18.4 I ()

TO'I~\L

5 .64 2

;') . 209

3 1.8 46

18.4 79

93 1.9

9 19.9

Ava il ahl e . u nutil ized i n rer na rio na l cred it

S D 150 mill ion (S ta nd hy He vol vin g ll nderwriti ng Fac il ity]

17

GOVERNMENT SECURITIES AND BONDS

20 \IA RK F.T \ A L l ' E SEK m .

PAll \ AI X E

SEl' S Il'f: IJ/U S /\

19l19

LEASING OBJECTS

GROI'f'

m.

19l19

191111

19118

I«JH9 SE I\ m.

Cos t

.

Acc umul a ted d eprer- iat ion

.

HES IDLJAL VALLJ E

Na tio na l governme nt

1.229

a nd muni c ipalit ies Housing fina nc ing in stitution s

... . ... .

,L 9,\ 1

:~ .

·\S7

1.177

US

4.704

47 S :L

1 6 :~

:\Iunie ipal fina nci ng

1:19

:H

I :~ S

:~ 4

45 7 1.2 91

74

O th e rs .. .. . . . .. . ... .

1. :~0 2

·132 1.2 68

1 . :~0 6

TOTAL

8 .05 7

.5 .002

7.71 6

5.0.59

i nstit ut ion s . . . . . . . .

191111"EK m.

1.4 .34 - 392

1.2 39 - ·\1 .3

1.0 62

824

Ar-cumul at ed s u p p le me n ta rv d epre ciati ou I I

.

- 196

- 148

Nel val ue

.

866

676

Corpo rale finan c ing ins ti tutions

........

81

21

OTHER ASSETS Gllot 'P "E K

111.

" " 'EIlB .' j\K "E K

111.

19119

1988

1989

191111

2 ..53 7 1·\

1.9:n 10

The Bank' s hold ings of seeu rilies (par va lue) . hy rem a in ing

Acr-ru e rl in terest . . . . . .

6 ..322

5 . 2 0:~

m atu rit ie s :

Stnr ks held for Irad ing 'la x refund . . . . . . . . . . . Olllt'r s .. . . ... . . . . ...

:~ 7 0

280

99 1.881

1.022

U 8S

89 1

TOTAL

8 .872

6 ..5 12

'I.lB 6

2.8 :H

19119 :,l:: K

Hemain ing life Less Iha n one y,-ar One lo five year s Si x lo le n years :\Ion ' than le n Yt'ars

"I .

. . . .

2. :{21 4.490 1.1 61 85

TOTAL

8. 0S 7

1.200 :~ .:~ 27

44 1 5 .002

The a"erage remaini ng life was :~ A years and the average ('ou pon in teres t ra te II . :~ I perc ent of c us t al ven r-e nd 1989 . Th e ('OITt's pond ing fignres for 1988 we re 2 .9 yea rs a nd 10 . 75 per. -eut. Cove rn me nt seeuri ties a nd hond s incl u d e cup ita l no te s al a hook valne of SE K 24 milli on ( 1988 : SEK :{2 mil lion},

18

CUSTOMER LOANS GllOl:P :,EK 19119

Loan s in Swed ish kron or Loa ns in foreig n

111.

:' \ \

EDB.':'>K :,E K

191111

22

REAL ESTATE AND FURNITURE, FIXTURES AND EQUIPMENT

:~ 4

19119

111.

1'Jll ll

Gllot 'P :'EK Rf:.Il. ES7:ITE

111.

" ,,'[IlIlA x l' "EK

111.

198')

191111

1989

19811

468 S70

266 .370

266 .370

- 74

- 67

762

769

Cosi \Vritt--u p ' l

. .

.3]4 S70

Ac r-u mul at ed de p rec iatio n

.

-89

HESID UAL VALUE

99.5

96 1

.

2 10

1 8 :~

92

82

.

- 11.5

- 107

- 48

- 48

76

4,\

:34

i,

F UI?NITURE. FI.\'TUI?ES .IND EQUlPJIENT

Cosi Accumu lated deprer -ia-

.3.1.3,\

.

C ll JTP IlC \ " . . . . . • . . . .

·\6 .880

44.78·\

:B .8 48

19 119 :,E K

Naliona l Sa vi ngs Ac c ou nt s, gross wh ere of du e fro m the Natio na l Oehl Offiee . . . . . . . . . . . . . . . . . . .

HES IOl;AL VAL LJ E

111.

I 'Jll ll 5E K m.

6,5

.38

-66

-56

9.5

Accumu lutes supp le me nta rv d e pr e r iatinn:!t

Net va lu e

19 NATIONAL SAVINGS SYSTEM ACCOUNTS S Il'EIJ H.~ ,\ K

tion

2 7.8.38

:~ 2 .6S6

TOTAL CUSTm l En LOANS 220.099 18:US9

.5.990

.

6

II

.

89

6S

:~ 8

27

1.090

l .m7

806

803

'B 3

776

776

TOTAL HESI DUAL VALUE. HEAL E S' I ~\T E . F UHNITLJHE F IXT CH ES .-\I\'O EQ U II'~IENT

He al es ta re lax val ur-s . .

NATIONAL SAVII\'GS ACCO NTS . NE'!'

-J

2

6

Il

The- write-up j:-; added to e quity;

:!l

H ep or tt>d unrl er unt u xed rese-rves

45

NOTES TO THE FINANCIAL STATEMENTS

23

26

DEPOSITS FROM SAVINGS BANKS

SWEDBA.YK

Dem and dcp osit s whereof sa vi ngs hank s' cas h re s erv e funds with the Bank of Sweden Interbank ce rtifica tes Ce rtifica tes of deposit

1989 SEl.: m.

1988 SEl.: m .

7.024

3. 344

. . . .

- 3 . 188 11.104

TOTAL

14 .940

-3. 122 7.2 10 1. 199

GHOU P SEl.:

1989 SEl.: m.

Depo sit s on s pec ia l term s Accoun ts in foreign c u rre ucv' Commerc ial pap er. US D~ ' Oth er de posit s

1989

1988

Oth er .. .. .... ..... ..

9 .90465 10.506

6 .626 67 :~.8 1 O

20461 61 ,5. ,58:3

1. 55 7 51 2. 677

TOTAL

2004 75

10. 50 3

8. 105

4 .2 85

Ac cru e rl int er est . ... .. 'lax l iuhi l ity ... . . .. . ..

.

26 :~ . 094

. .

,5.86 1 6.199

,5. 199

TOTAL

15. 180

15,401

193 4. 17 1 ,5 . 8 :~8

lnc lu din g Priv at e Placements . Eu ro Con une rr-ia l Pap e r i s reportc-d amo ng " O th e r d eht in s tru ment s

II

21

PROVISION FOR POSSIBLE CREDIT LOSSES

1988 SEl.: m.

.

(;HOUP SEl.:

LONG·TERM BORROWING CHO UP SEl.:

SII '[DIlA ii I.: SEl.: " "

III .

198')

1988

27.791 Bank hond s . .. ... . . .. 133. 56 6 Hefinanc ing loans . .... 9 Suhordinate d loans ' . . . 1.98 7 Subsc ription gua ra nty certificates 11 . . . .. . . 1.891 Sec uri tv resen'c " . ... . 123 Sa vings ce rt ifica tes . . . . 688 Other. ... . .. . .. . . . .. 155

33.933 IO :~. :~ 19 16 104,55

Capi ta ! mur ket no tes . . .

I'J88

9 . 52 5 9 1.,546

4 . 768 16 96 6

11.080

5 . 7,50

S u bon linated loau s , s u hs c r ipt ioJls gu urant y c e rfi fic at es a nd th e secu rity reserve ar e . in accordan c e with c e r ta in rul e s , equa l lo equ it y capit a I when det e rmining th e right to horrcw of e ach Gro u p e ntity,

~ I AT U H I T Y

1970/80 /90 1976/91 1988/98 198,5/97 1988/98

10.0 20 .0 100 .0 75 .0

S EK SEK SE K USD

25 .0 USD

HD I AI N ING PAR \ 'A L UE m.

0. 5 3 .1 100 .0 75.0

SE K SE K SEK USD

BOOI.: I'AI.UE SEl.: III .

0. 5 3. 1 100 .0 4-66.0

25 .0 USD

155. 3

1988/93 1988 /93 1988 /93 1988/99

soo.o LUr soo.o LUF 300.0 Lur soo.o Lur soo. o Lur 300.0 LUF

52 ,:\ 52 .:\

509 .0 SEK

509. 0 S EK

1989/19

1,54 . 7 SEK

1,54.7 SE K

TOTAL

46

111.

1989

1988

46 2 S:~

80 204

14 164

141,51

BALANCE

329

284

178

165

28

EQUITY CAPITAL GROUP SEl.: 111.

Cap ita! stock Ope ning ha la nr-e . .. . . . lnerease through ne\\' share issue

S\\'ED BAii l.: SEl.:

111.

1989

1988

1989

1988

:~6 0

:\60

:~ 60

:~ 60

1. ~~60

1.360

720

i ssu e

C10si ng ha lnuce . . . . . . . Leg a l rese rres Opening ha lan ce Åppropriation to re vuluat iun reser ve . . Transferred to ca pita ] stoc k Tran sf erred from un rest t ic te rl rese rveS.. .

5 2 .:~

509. 0 1,54.7 I. ,545 .5

I NT EHIS r HATE '7r

7 3/49 1/2 I l 6/10 :~ mont h L1BOH 6 month L1 BOR 7 1/47 1/4 7 :~ /8 :~ monrh L1BOH II

Unrest ricte d reser res Opening ba lan ce . . . . . . Prior year' s net income . Divid end paid . . . . .. .. Transferred lo capi ta ] stoc k Approp riat iou to legal

720

2,440

;\60

20440

:~ 6 0

80 7

2;17

750

180

,5 70 - 650

570 - 65 0

5 162

807

100

7,50

73 51 -20

,57 36 -20

63 3,5 -20

48

Clos ing ba lan ce. ...... Th e Bank ' s Sub ordinal ed loa ns as of Decemb er 3 1. 1989 were as follows: OH IC I NAL PAH I'AI.UE m .

S\\'EDBAiil.: SEl.:

1988

Inere ase through bonus

1.908 157 ,5,58 145

TOTAL 166.210 14-1,491 Il

1989

111.

1989

Count ry risk s. . ... .... Loan s . . . . . . . . . . . . . .

iss ued out side Sweden. ··

25

SI\ 'E D B.\ ii I.: SEl.: m.

1988

DEPOSITS FROM THE PUBLIC

SWEDRI SK

III.

1989

27 24

OTHER L1ABILlTIES

- 70

:~ 5

- 20

-70

Hevaluation di ffer en ce .

,5 14

Clos ing balan ce.... ...

43

73

8

63

Net iucorne for the year.

176

,51

17:)

3,5

TOTAL EQ UITY CAPITA L

2 . 821

1.2 91

2.721

1.208

reser\'es . ... .. . . . ..

-

NOTES TO THE FINANCIAL STATEMENTS

29

THE BANK'S CAPITAL BASE AS OF DECEMBER 31, 1989* CA PITAL HEQUI HE-

RI SKC.'TF: GOR Y "

A

~I E;\T

SWEDB A;\ K

. 85 .30 7 . 1:~ . 8.t 2 82 ,1 .. . :N .293 .. 115

B

C

D L.

85 . I:B 9.694 824 :30 , .:3M

5.022

SL:HI' LLS

1.93.t

1.855

TOTAL

139. :ml

30

CAPITAL COVERAGE ITEMS NOT REPORTED IN THE BALANCE SHEET OR AS IN·LlNE ITEMS f )

S II'E [)fl..I.\ };

1989 SEK m .

Completed Iran sacl ion s not delivered , He purchase ag rceme nts . Op en- end positions in sec uri ties futures . Heceiv ahl e du e to see u ritics not deliv ered (de live ry obli gat ion s) Opti on s is su ed on behalf of r-ust om ers

1988 SEK m .

2.284 O

2.242 4. 32 5

- sen

- 8 17

730 O

236 7

" These- item, fall out side the ,i,ihle ba lnuce sh eet , for whic h capi tal C' o\"t'rage i~ re qui red in accordan c e w i th new direr-rives issued hy the Bank lI"pe r-tio n Boar d 0 11 J ul )' I. 1988. Am o unt s in this i\'ote are inrI ud e d in ~ ot e 29 .

* 1 A mo u n t- after a p p rop r ia tio n - a nd p ro po~ t"d di~po~itio lJ :oO of in t-ome . " Il i-k r- a leg ol')

:\ ) Cu verunu-n t se-r-urit ies , d O I1l t' ~ti e

) lOtI ~ ill g I )(JIHI ~ .

.Iue- Irum Ior-ul govcm me n t«.

h au k - a nd iu - uram -« (·om pa nit':--.

B) Other hund s,

fo n 'igll

hank... loan -

s e r-ur...d

hy

fi r~l

mortguge s Oll

resi de ru ial prope-rti e-s , e) Oth e r 10 :

Sparbank en Skane 113 %

Spa rban ken

väst

8.1%

Sparbanke n No rrl and

~""::;::::::~:2!!!E;:;~ /

/

»>:

väst

Sparbanke n~

Spar banke n / Norr land

10.1%

Nya Sparb ank en

/ Spa rbanken Kronan

SPP/ AMF

-t tn accordance w it h th e Banks ov-ta ws. no single ow ne r can e xercise mo re than 1/10 of the votmq nq bts o f th e sna res repr e senl ed at the Ann ual M eetm q

"lt n accordance w ith th e Banks bv-taws. no sing le owner can oxorcrse mo re than 1/10 o f th e vctmq right S o f the sna res re pr e se nl ed at the A nnu al Meetm q

SWEDBANK EQUITY CAPITAL (SEK m.)" AND LEVERAGE (0J0) SEK m.

_

Leverage

5000

_

Equity ca pita l

L Nya Sparbanken

Spa rban ken Kronan

EARNINGS PER SHARE SWEDBANK GROUP ' SEK

5 300

4000

4

3 00 0

3

2 000

2

20 0

100 1 000

o 86

87

88

0) Eq urt y capitat and reserves . mc lud inq re serves for band s

50

o

o 85

89

85

86

87

88

89

") Opera tmq mcome arter ex truo rrnna r y rtems. 50 0.'0 standard la ...and an adi us tmen t tor the rnvrdend on th e pre te rred sna rea / t he nu mber 01 common s nares adtus ted for the vears new rssues

oa.o

DOMESTIC COMMERCIAL PAPER PROGRAMS issued via S wedBank as of Decem ber 31, 1989 AMOUJYT. SEK m .

BORROII'ER

CC P: Corporatc COllllllcrcial Papcr ABB Kupital förval tning AB Alfa-L ava l AB AB Sta te ns Skogsi ud us trie r; ASS I Atlas Copeo AB BPA AB Elect rolux AB FH Fas tighets Rent ing AB For s mark s Kra ftgru pp AB Gota ICA Ha kon IKEA Svens ka AB Inle r Innovation AB Koopera tiva Förbundet ek foren . KF Kinnevik Krå ngede AB \10 oc h Domsjö AB \ Iunksjö AB i\'obel Ind ustrie r Fina nsförvaltni ng i\'ordstje rna n AB i\'orrlands Skogsägares Ce llulosa AB. i\'CB Näringslivskredi t i\'LK AB OKG AB OK Petroleum Ovuko Steel AB Pa triciu Treasurv AB I' roconl ia Heinhold Hiks hyggen e k förening Sand vik AB SAS Skundi nuviska Fasti ghetsre nting AB. Ska ndre nting AB SKF Stora Finan sföryaltn ing AB Syd gas AB Svdkra ft AB

'Irellehorg AB Vo lvo Group Finans Sweden Alll Volvo Group Fina nce Europe BV Il

4.000/5 6001:~

500 /3 5001:~

:~ 00/3

1.000/5 23 .000/7 500/5

4.000 /7 6001:~

.500/4 200 /3 500/5

800 ;,1 300 /4 50014 300 /3 :~ . 500/6

500/4 :~ 00/3

1.000/4 8001:~

40014 300 /3 5.000 /7 " 700/4 600/2 :~ OO/:~

500/4 1.000/4

900 1.000/4

2.000/3 150 /2 600/2

MCP:

~ Inll.icipal

3.000/5

COlll lllcrc ia l Papcr

Fvrisk raft AB \I un ic ipa lity of Gotla nd Mun ic ipal ily of Cävle ,'h lll i c i p a l i t ~· of Ha lmstad Han ingeh em

'\Iun ic ipal ity of Helsi ngborg Hälsingsborgsh em AB County Counc il of J ämtla nd ,\I unic ipality of Jönköp ing County Cou nc il of Jönköping Co unt v Counc il of Ka lma r \I unic ipal ity of Karlskoga '\Iuni c ipality of Karlskrona '\Iun ic ipa lity of Karlstad County Counc il of Koppar ber g Municip alit y of Krist ian stad Co u n tv Counc il of Kronoberg Munic ipal ity of Lindesb erg Municipal ity of Lund \I unicipai ity of \ Ialmö County Council of \ Ia lmöhus \ Iime r \ Iunicipal it\· of i\'ässjö '\lu nic ipa lity of Oska rsh am n .\ Iunic ipa lity of Sa ndvi ken Countv Counci l of Skarnborg \ Iunic ipal ity of Sundsvall Countv Coun cil of Södennansland \I unicipal ity of Trelleborg \I unic ipai ity of Trollh ättan 'I~Te s ö Bostäder \I unic ipal ity of Umeå '\I unic ipal ity of Uppsa la Co u n tv Cou nc il of Värm lan d Cou n t v Council of Väste rnorrland ;\Iuni cipai ity of Väste rv ik \I unic ipality of Vä sterås \I unic ipality of Växjö Cou nty Counci l of Alvsborg Co u n tv Counci l of Öreb ro Ör ebro En er gi AB

AMOUJYT. SEK III. 500/2 200 /2 2()()/:i

100 :~25/3

30013 400/2 .500/4

400/4 .5001:i

1001:i 400 100/3

100 50014 5001:i 300 I:i 17.-='/2

10012 200/2 ·lO0/4

500/4 100/2 1001:i

150/:i 2S0/2 .500/4 :~ OO/4 :~ OO/:~

ISO/2 2001:~

250 /2 :~00/3

5001:~

,HlO/2 :~ ()()m

:U )()0/4

5w~d i~h and foreign curre ncy

(.l1l1 n icipalilies. county councils, mun icipal guaranties } \I un ic ipal ity of Alingsås \I u n i c i pa l i t ~, of A ve sta Bast usels Kraft AB Coun ty Counci l of Blek inge Edsbyns Hyreshus ;\Iun ic ipa lity of Eskils tuna

BORROIT'ER

Othcr Commerciul Papcr PKföretagskred it AB PKkredit AB SP Ii\'T\B

10.000/5 10 .000/4 7.00015

S tudshypotekskassun S tar ens Bostadfinan sierings AB. SBAB

28. 00011 0 1.000/8

100/2 2001:~

150 :~ 00/2

10012 100/2

100 250/2 20013 2 00/:~ :~ OO/3

FCP: Financ c Compuny Paper Finans AB Nvckeln Fina nser AB F örvaltn ings AB Gamles tad en Ge neral ;\Iotors Acce pt a nce Corporatio n. G\ IAC

Indepe ndent Finan s IndustriFinan s AB. IFAB 'n'ygg Fin uns/Finan s Ve nrior I) Swedish

3 .000/6 2 .00 0/6 3.50017"

100 5.000/4

4.000 1,.50012

and foreign ('urrellc y

51

SWEDBANI( FIVE-YEAR GROUP SUMMARY, SEI( millions 1989

1988

198 7

1986

198 5

Inte re s t income

1,8 4 1

1.463

1.2 19

1. 188

841

Other operating rev enu c

1,533

1.231

1,266

767

653

Op crating cx pcnses

2 ,302

1,844

1, 720

1,264

963

1,072

85 0

765

691

53 1

Operating reuenu e

OP ERAT ING INCOME E xtraordin ary ite ms. net

-

Reserves and othe r a p prop ria tio ns

-753

-6 73

- 575

- 50 5

-465

l tlXes

-

79

-124

-1 46

-172

-

176

51

36

13

15

18,060

13. 9 74

13.948

8 . 706

12.01 1

6 ,979

4 .830

5 .344

9 .92 1

9 .575

17 ,957

7.732

4 .406

3 .284

220,099

18:3.7 59

146,276

134,302

101,26 7

54,625 14 ,9 /10

40.405

28.415

29.106

16,901

8.703

5,056

5.639

9.307

NET INCOM E FOR THE YEAR

64

-

2

-

8

-

I

-

2 49

Certain assets De posits with Swed is h fina nc ia l in stituti on s Gm"er nme nt see m-ities a nd bonds Deposit s with sa vings banks C us to me r loa ns

-

Certain liabilities and stockho lde rs. equit y Deposit s from Swe d is h finan cial ins ti tutions Dcposits from sa vings banks Deposits from th e publ ic Long-t erm borrowin g Unta xe d res erves Equ it v c a p ita! TOTAL ASSETS

52

17,371

19 ,0 82

20, 496

16. 720

8. 748

166,210

141.491

120.104

109.09 7

8 7. 24 6

4",412

4.045

3.3 72

2.796

2.291

2,82 1

1.291

690

6 74

66 7

284 ,388

227 ,882

18 7.376

172.1 56

131.338

SWEDBANI( FIVE-YEAR SUMMARY, SEI( millions 1989

1988

1987

1986

1985

Inte rest in com e

38 2

354

3 15

412

174

Ot her operating reve nue

560

396

433

256

26 1

Opera ting expe nses

504

437

42 1

369

306

438

3 13

32 7

299

129

6

-

50

100

- 223

- 128

-201

-

69

- 10 1

-

Operating recenu e

OPE RAT INC INCOM E Ex traordinary it e ms . net

-

He se rves and other app ropria tion s

-157

-2 18

Ta xcs

-

-

42 66

-

54

-

8

173

35

35

20

20

19,806

13. 715

13.421

8.248

5,622

7 ,331

4 .763

5.487

10.987

9 .973

Deposit s with sa vings ba nks

1 7 ,950

7.594

4,245

2 .917

191

Cus to me r loans

'1- Hvd in Ewcuti\'p Vicp P re ~ i d e n l and De p u ly to the Chier Exer -urive Orfir 'pr: J o ha n En g~ lriilll Executive Vie e Pre sident: Sören And ersson Securitv and Bu~illP~~ Elhic~: La rs Eklund Chief of tllP Finam -ing [)ivi~ion: ll u ns Karlander Ch ief Credi t Office r: La rs- Erik Kvis t Pe rs o n n r-l Chief: Ann a C. Pe-rsson :k ting C h ie r of the In te rn a tio na l ~'\' ''''a d in)r Di vision: Rol lPrt S te n ra m

Arnl 1i\'ISTHATIn: Co\D l IT r H : [ohun En g striim, .. hui rma n l.a rs r,Ok/lIIId . vi«.. «hu innun SII!!/illl f) lI h /bl'ck

Annika lVik/lllll/

CHEDIT

C () ,\L\ I I' IT E I'~

Ctiran CU//I'rl . c hu i ru uu r l.ars-Eril: I\l'i.II. vicr- .. huinuun LlIr.I Eklund H lI II.I Karl an der

THEA SCH) Cm l.\l J'lT EE On ' R vdin , .. hu innan Siir l'1l Andersson. j Jer : \sjJl'!! rC/I

l.a rs-Ctim n [ an sso n

7 iU lJfI .'\ G U .'\I 11I'SSOIl

:)llIlldillt!.frolll lef: :)i;rell Andersson , Nu /,er l Stenram. l.a rs Eklund, Lars -Erik 1\6 .11 11111/ [ ohu n r,'IIt! sl ri illl . Si l l i ll t! . /rUIII lej] H lI IIS Ka rla nder. I lI lI lI

58

\ ' j (' p

Nu /", r l :)11'111"11111

C l'ersso«,

C i;ra ll CO//I'rl tuu]

On' R vdi n .

chuinuan

PROFESSIONALISM Resolute, ambitious. Professionalism must permeate everything we do. The quality of the work we do. Our ambition to improve. For this reason , we have spent SEK 1 million in quality bonuses. To us , development means a realization that change is constantly close at hand. And that change can be stimulating. It is what pushes us to new heights. But we have to have the strength to move forward . And be stimulated enough to keep pushing with enjoyment and enthusiasm. People in our organization are our on ly major competitive edge in the future , which is why we intend to take good care of them and help them to develop.

59

GROUP ORGANIZATION SWEDBANK Manag enH~nt

_

Göran Collert . Pre s id e nt and C hief

Ad m in is tra tio n Johan Eng str()m

Int ernational & Tr ading O ve R ydin

Exe c ut ive Officer

Ex e cuti v e

Con tro ller. CuryX lathenv

Robert Stenram, Act ing Chief

Ore R vdin. E xecu tive Vie ,' I' n ' s id e n t

Accounting . Er« Heid end ah l

Corresponden t Bank in g . l.enna rt Lind.

and D,' put y to the Presid.. ut

C leari ng . .\f a rlill Nvlander

Fo re ig n Excha nge. Oler Tryg g

O ff ic e Admin istrat ion . l.a rry [ o nasso n

Co r po rate De sk , Rika rd Lundgr en

[ ohu n En g st riim. E xecut iv.. Vice Pr es irlent a n d Depu ty to th e C h ief Exe--urive Offi ..er

Siiren Andersson , [x" "ut in' Vie t· Pr esid ent

Lar s Eklund, Se n io r Vi c e Pr e sid ent. Le ga l ~ I all, 'rs . Ac countin g ,,