KUTT RYGG 11 mm RYGG 11 mm Rill/FALS Rill/FALS KUTT SIDE 211 mm SIDE 211 MM FLIPP 85 MM FLIPP

SWIFT: SPVNOBB Contents COMPANY NUMBER: 832554332 Annual Report 2008 Annual Report 2008

spv.no Being local - makes a difference.

– Focusing on Western Norway – Focusing on Western Norway

KUTT RYGG 11 mm Rill/FALS Rill/FALS KUTT SIDE 2110 mm RYGG 11 mm SIDE 211 MM FLIPP 85 MM FLIPP KUTT Rill/FALS Rill/FALS KUTT FLIPP 85 mm FLIPP 85 mm SIDE 211 mm RYGG 11 mm RYGG 11 mm SIDE 211 MM

Contents

1. MAIN FEATURES 1.1 Important local events...... 4 1.2 Highlights 2008-2009...... 6 1.3 Financial highlights...... 7

2. ABOUT THE BANK 2.1 Facts about Sparebanken Vest...... 10 Bergen city centre Haugesund 2.2 CEO Stein Klakegg...... 12 Vaskerelven 16, NO-5014 Bergen Haraldsgata 162, NO-5501 Haugesund 2.3 Management Group...... 14 Tel.: +47 55 21 77 00 – fax: +47 55 21 77 14 Tel.: +47 52 70 46 50 - Fax: +47 52 70 46 59

Xhibition Shopping mall, Småstrandgaten 3, NO-5014 Sandnes - Ottesen & Dreyer 3. MARKET Bergen Langgata 1 E, NO-4306 Sandnes 3.1 Retail Market...... 18 Tel.: +47 55 21 77 00 – Fax: +47 55 21 77 01 Tel.: +47 51 53 20 20 – Fax: +47 51 53 20 21 3.2 Corporate Market...... 20 Askøy Stavanger - Ottesen & Dreyer 3.3 Capital Market...... 22 Kleppestø Shopping mall, P.O.B. 54, NO-5321 Kleppestø Kirkegt. 20, NO-4004 Stavanger 3.4 Regions...... 24 Tel.: +47 56 15 11 98 – Fax: +47 56 15 11 96 Tel.: +47 51 53 20 20 – Fax: +47 51 53 20 21 3.5 Subsidiaries...... 28 Åsane Hinnasvingene 53, NO-4020 Stavanger 3.6 Frende and Norne...... 30 Åsane Shopping mall 40, P.O.B. 160, Ulset, NO-5873 Tel.: +47 51 53 20 20 – Fax: +47 51 53 20 21 3.7 Risk and capital management & Bergen internal control...... 32 Tel.: +47 55 19 74 50 – Fax: +47 55 19 74 51 Solakrossvågen 29 (Giljagården), NO-4050 Stavanger Tel.: +47 51 53 20 20 – Fax: +47 51 53 20 21 Nesttun 4. CORPORATE SOCIAL RESPONSIBILITY REPORT Nesttunvegen 98, NO-5221 Nesttun Kyte Næringsmegling Contents...... 40 Tel.: +47 55 11 61 20 – Fax: +47 55 11 61 21 Office address: Bankgaten 8, Lagunen Post address: P.O.B. 7999, NO-5020 Bergen 4.1 Introduction...... 40 Tel.: +47 55 55 33 50 – Fax: +47 55 55 33 54 4.2 Economic responsibility...... 44 Lagunen 4.3 Social responsibility...... 52 Shopping mall, NO-5239 Rådal Tel.: +47 55 11 29 34 – Fax: +47 55 11 29 31 AS Filialbygg 4.4 Climatic and environmental Bent Helge Aardal, CEO responsibility...... 64 Os Brugården, NO-5200 Os Office address: Nedre Korskirkeallm. 1 A 5. ANNUAL REPORT Tel.: +47 56 57 00 13 – Fax: +47 56 57 0016 Post address: P.O.B. 7999, NO-5020 Bergen Tel.: +47 55 21 75 11 – Fax: +47 55 21 76 80 5.1 Board of Directors...... 72 Fyllingsdalen 5.2 Directors’ Report...... 74 Oasen Shopping mall, P.O.B. 3520, NO-5147 Fyllingsdalen Sparebanken Vest Boligkreditt AS Tel.: +47 55 21 70 00 - Fax: +47 55 17 54 29 Egil Mokleiv, Director 6. ACCOUNTS AND NOTES Contents...... 86 Sotra Office address: Kaigaten 4 6.1 Accounts...... 86 Sartor Shopping mall, P.O.B. 152, NO-5342 Straume Post address: P.O.B. 7999, NO-5020 Bergen. Tel.: +47 56 32 34 80 – Fax: +47 56 32 34 81 Tel.: 05555 Fax: +47 55 21 74 10 6.2 Statement of cash flows...... 89 6.3 Equity movements...... 90 Annual Report 2008 The environment Knarvik For the first time, the Annual Report includes Sparebanken Vest strives to be proactive and 6.4 Notes 1-35...... 91 Knarvik Shopping mall, P.O.B. 140, NO-5903 Isdalstø a Social Report which presents the bank’s forward-looking in its approach to both the Tel.: +47 56 34 28 78 – Fax: +47 56 34 28 75 6.5 Auditor’s Report...... 142 perception of the links between economic, internal and the external environment. This social and environmental responsibility. year only a limited number of the Annual 6.6 Control Committee’s Report...... 145 Førde Report is printed, since most recipients have Storhaugen 9, P.O.B. 229, NO-6800 Førde 6.7 Declaration Board of Directors & informed us that they wish to read it online at Tel.: +47 57 82 81 70 – Fax: +47 57 82 81 61 Managing Director...... 146 . www.spv.no The Annual Report is printed on 6.8 Key figures...... 147 swan watermark paper. Stord Borggaten 8, P.O.B. 404, Leirvik, NO-5403 Stord Tel.: 53 45 68 80 – Fax: 53 45 68 85 7. OVERVIEWS 7.1 Organisational structure...... 158 7.2 Regional map...... 159 7.3 Elected officers and administration.....160

7.4 Branch overview...... 162 PAGE 2 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 163

KUTT FLIPP 85 MM Rill/FALS RYGG 11 MM RYGG 11 mm KUTT Every day of the year the wind, weather and nature of Western Norway combine to present a variety of fantastic images.

Published by Other contributors Sparebanken Vest, Information Design / layout: Reaktor The cover photo is one of a number of Department, P.O. Box 7999, Printing: Grafisk Trykk snapshots of everyday life that typify NO-5020 Bergen. Tel.: +47 05555 Photos: Knut Egil Wang, Jens Inge Sparebanken Vest’s contact with Fax: +47 55 21 72 89 Ringstad, Tor Yttri, Anne Lise Urdal, society and the market. E-mail: [email protected] Marit Hommedal, Bent René Synnevåg, www.spv.no Vegard Breie, Berit Steffensen, David Project management at Sparebanken Zadig, Helge Skodvin, Svein Bringsdal, Vest: Jørn Lekve and Anne Lise Urdal Odd Mehus and NHH.

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 3 1.1 MAIN FEATURES

A prize-winning branch Important local events concept in Stavanger.

Design prize to Stavanger branch

The Norwegian Design Council awarded Sparebanken Vest the Design Prize for 2008. The prize was awarded to Sparebanken Vest’s new branch in Stavanger.

The jury said that the bank had developed «The solution creates a pleasant environ­ an exciting and innovative branch concept ment characterised by a feeling of with no counters and where the entire area abundance and positivity. The result is was used as both a meeting and work area. quite different from the cool functionalism The jury drew attention to the fact that traditionally associated with bank premises. banking and insurance services are often The design borrows features from the considered to be generic, with the banks private home environment to create an offering largely identical products in the atmosphere of calmness and security. same way. At the same time the dramatic nature of Western Norway has been a source of But here Sparebanken Vest was different, and inspiration, as reflected in strong lines and positively so, by employing a branch concept a varied use of materials», in the words of «… which gives a convincingly aggressive the jury. impression that distinguishes it from the traditionally conservative bank interior.»

PAGE 4 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Best retail bank

In a survey carried out by Norwegian Family Economy in 2008, Sparebanken Vest was declared to be the best retail bank among Norway’s largest banks for the second year in a row.

Each year, Norwegian Family Economy Norwegian Family Economy explained the draws up an annual ranking list of all good results by referring to the fact that the Norwegian banks. In the 2008 Sparebanken Vest, in line with all of the competition Sparebanken Vest took first large banks, had dropped the transaction place among the largest banks and was fee on the use of cards in Norway, as 28th of a total of 123 banks. The bank’s well as online banking fees and monthly customers thus received confirmation charges. that they had made the right decision in choosing Sparebanken Vest as their bank.

Design prize for the bank’s card

Sparebanken Vest’s new card design won one of the most prestigious international design prizes in 2008. The prize for GOOD DESIGN™ in 2008 is awarded in Chicago in June 2009.

Although Sparebanken Vest is a regional Norway. The jury found that this was bank in Norway, it is important for the reflected in the card design, with its use of bank to have a profile and market material cultural elements from Western Norway. that can compete at a high international level. The prize is confirmation of this level. Sparebanken Vest’s new card design In arriving at the design, it was important in 2008 was developed by the to ensure that the card was adapted to communication agency Miksmaster. the bank’s values and vision: Sparebanken GOOD DESIGN™ was established by Vest shall be a driving force in the social Chicago Athenaeum in 1950. and commercial development of Western

Environmental Lighthouse certification

Sparebanken Vest received certification as an Environmental Lighthouse Enterprise for its buildings in Kaigaten and Korskirkeallmenningen in Bergen.

The certification process took place in 2008 activities and in relation to customers. The and the award was made early in 2009. environmental steps taken in our everyday This process marked the start of extremely work, whether large or small, make an important work aimed at influencing important contribution to the process of attitudes. When making the award, Lisbeth establishing a better environment. The Iversen, chairman of the City Government bank’s focus on the environment will be and the commissioner responsible for linked to a broad range of initiatives, from Bergen’s climate, environment and urban a reduction in the consumption of paper development, said it was important that to preventive health initiatives for the someone took the initiative and showed employees. commitment. Sparebanken Vest will use the Environmental Lighthouse as a tool to put its own house in order and in its external

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 5 1.2 MAIN FEATURES Highlights 2008–2009

2008

• Turbulence in the financial markets and an economic downturn. • Strengthened market position in Western Norway. • Net inflow of 12 000 new customers in 2008, the retail market accounting for 11 500 and the corporate market 500. • Further progress in Rogaland and Sogn & Fjordane. • Active involvement in the establishment of Frende Forsikring AS, Norne Securities AS and Sparebanken Vest Boligkreditt AS, all based in Bergen. • Good funding structure and liquidity. • Good growth in net interest income due to both volume and margin growth. • Group profits of NOK 411m (865m) before tax. • Change in profits compared with 2007 mainly due to change in value of financial instruments and higher loss provisions. • Group’s return on equity was 4.85% (16.24), reflecting negative effect of high effective rate of tax in 2008. • Earnings of NOK 5.34 (18.95) per PCC. • Parent bank profits of NOK 249m (657m) after tax. Dividend of NOK 3.75 per PCC for 2008. • Group’s capital ratio was 9.06% (9.67) (Basel I transitional scheme). • NOK 30m allocated for gift purposes.

2009

• 2009 is expected to be a year of great uncertainty influenced by international financial crisis and downturn in real economy. • Sparebanken Vest is well equipped for the challenging market conditions. • A decline in consumption and investments is expected, along with an increase in unemployment. • Sparebanken Vest is proactive in relation to customers with incipient payment difficulties, with the aim of helping to maintain healthy corporate and household economies. • The bank is prepared to provide credit to the retail and corporate markets on the basis of appropriate risk assessment and acceptable margins. • Further strengthen the Group’s market position and implementation of the adopted strategy. • Sale of insurance and securities products from Frende Forsikring and Norne Securities. • Reinforce position in Rogaland and Sogn & Fjordane. • Build on competence and presentation culture. • Implementation of authorisation scheme for financial advisers. • Develop the process of establishing a new financial centre in the Jonsvoll part of central Bergen. • Proactive and forward-looking focus on climate and environment, both internal and external. • Strategic application of Visjon Vest.

PAGE 6 1 main features 2 about the bank 3 market 4 social report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 1.3 MAIN FEATURES Financial highlights

(NOK million) 2008 2007 2006 2005 2004 Profit and Loss Account Net interest income and credit commissions 1 308 1 126 1 042 972 960 Net other operating income 375 678 624 471 406 Total operating expenses 1 068 973 921 875 819

Profit before write-downs and tax 615 831 745 568 547 Loan write-downs and losses on guarantees 204 (34) (48) (75) 60

Profit before tax 411 865 793 643 487

Balance Sheet Total assets 94 893 75 048 60 232 54 680 47 475

Net lendings 76 235 64 683 53 451 46 672 41 469 Securities 11 463 6 876 4 418 4 383 3 732

Deposits 40 521 37 611 31 119 27 390 24 762 Subordinated loan capital 1 437 1 042 724 942 1 094 Equity 4 372 4 293 3 798 3 272 2 875

Key ratios (%) Ratio of net interest income and credit commissions to average total assets 1.60 1.69 1.85 1.93 2.19 Ratio of profit before tax to average total assets 0.50 1.30 1.41 1.28 1.11

Return on equity after tax 4.85 16.24 17.86 15.44 11.54

Loan loss ratio 0.27 (0.06) (0.09) (0.16) 0.14

Change in net lendings 17.86 21.01 14.52 12.55 13.43 Change in deposits 7.74 20.86 13.61 10.61 11.35

Net capital base (NOK) 4 858 4 624 4 048 3 909 3 477 Capital ratio 9.06 9.67 10.21 11.36 11.28 Core capital ratio 7.73 8.33 9.44 9.95 9.56 Basel II, fully implemented 11.21 14.72 17.49

Dividend per primary capital certificate P( CC) (NOK) 3.75 19.00 18.25 17.10 12.60 PCC price at year-end (NOK) 86.50 190.00 213.00 206.00 187.50 Effective return per PCC (44.47) (2.23) 11.70 16.59 23.52 PCC percentage of capital base, calculated in accordance with NRS 7 6.63 6.34 7.30 8.36 9.48

Further information appears in the summary of main figures and definitions on page 150.

ANNUAL REPORT 2008 1 HOVEmainD featuresTREKK 2 OM 2 about BANKEN the 3 bank MAR k E 3D market 4 SAMFUNNSRAPPORT 4 social report 5 Å RSBERETNIN5 annual reportG 6 NOTER 6 notes 7 OVERSIKTER 7 overviews PASIDGE 7 2 | About the bank 2.1 FACTS ABOUT SPAREBANKEN VEST 2.2 CEO STEIN KLAKEGG 2.3 MANAGEMENT GROUP

Sparebanken Vest is an amalgamation of many banks in the counties of Hordaland, Rogaland and Sogn & Fjordane. The largest bank, Bergens Sparebank was established in 1823, making Sparebanken Vest the second- oldest bank in Norway.

Sparebanken Vest has always been actively involved in the corporate social development of Western Norway, providing financial services to both the private and corporate sectors. The bank currently has 59 branches and around 850 employees, from Sandnes in the south to Selje in the north. 2.1 FACTS ABOUT SPAREBANKEN VEST The regional bank

Sparebanken Vest strengthened its market shares in both the retail and the corporate markets in 2008. Sparebanken Vest is the third-largest savings bank in Norway, with total assets of NOK 94.9bn (75bn).

With continuous banking operations for 185 years, AS (38%) and in the insurance company Frende Sparebanken Vest is well established in Western Norway. Holding AS (44.3%). These companies are jointly owned by Sparebanken Vest and 14 other savings Sparebanken Vest is an independent, listed financial banks. Norne Securities is also owned by Fondsfinans. services group engaged in banking and financing activities in the counties of Hordaland, Rogaland, Sogn Sparebanken Vest and society & Fjordane and parts of Møre & Romsdal. The bank’s business concept is two-fold, with the emphasis on banking operations, but also taking account The bank is based in Bergen and has 59 branches. At of the bank’s social involvement. The vision underlines year-end 2008 the Group had employer responsibility that through professional banking operations the bank for the equivalent of 843 full-time positions, an increase will be a driving force in development of the social and of 40 from 2007. commercial life of Western Norway. The overriding goal is for Sparebanken Vest to take position as the leading Satisfied customers and most preferred financial services group in Western With a further good increase in customers in 2008 Norway. To this end, the bank has defined four key Sparebanken Vest strengthened its position as the strategic themes: the establishment of Sparebanken Vest largest retail bank in Western Norway. There was net as a financial services group, strengthening of the bank’s inflow of 11 500 new retail customers and more than cultural and professional development, establishing better 500 new corporate customers in 2008. The active and more efficient distribution, and further development customer portfolio at year-end totalled 219 000. of the Sparebanken Vest brand. Surveys show a high level of customer satisfaction. The bank wishes to be a good and attractive employer, Subsidiaries with a workforce that is customer-oriented, highly The Group provides estate agency services through competent and strong. Eiendomsmegler Vest AS, real estate management services through AS Filialbygg and home loan As an independent organisation, Sparebanken Vest financing through Sparebanken Vest Boligkreditt AS. believes it has an important role to play in enriching The three limited companies are wholly owned by the society. The bank seeks to support and promote all positive parent bank. Sparebanken Vest also has the largest elements involved in the development of Western Norway. shareholding in the securities company Norne Securities The bank distributed grants totalling NOK 100m in 2008.

PAGE 10 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Development of net interest income Development of operating expenses Resultat før skatt Development of capital ratio 1 300 Utvikling egenkapitalavkastning Development of lendings (NOK billion) Development of deposits (NOK billion) DevelopmentDevelopment of liquidity of indicator liquidity indicator(quarterly (quarterly figures) figures) 1 200 17.9% 1 100 3.0% 18.0% 16.3% 25.0% 40 24.0% 110% 104,0% 104,3% 103,5% 104,5% 900 2,0% 13.0% 1 000 2.5% 70 106% 102,7% 103,4%101,7% 1 000 15.4% 100% 800 900 16.0% 35 21.0% 105%101,9% 104.3% 100,7% 102,3% 104.5% 11.0% 900 2.5% 60 20.0% 90% 104.0% 99,3% 98,9% 700 800 2.0% 14.0% 11.5% 104% 103.5% 1,5% 800 30 18.0% 80% 9.0% 700 50 103% 102.7% 103.4% 600 700 2.0% 12.0% 25 15.0% 600 1.5% 15.0% 70%102% 101.7% 500 7.0% 600 10.0% 40 102.3% 1,0% 1.5% 500 20 12.0% 60%101% 101.9% 400 5.0% 500 8.0% 30 10.0% 50% 100.7% 400 400 1.0% 15 9.0% 100% 300 1.0% 6.0% 4.85% 40% 3.0% 300 300 20 10 6.0% 99% 99.3% 200 0,5% 200 0.5% 4.0% 5.0% 30% 98% 98.9% 1.0% 200 0.5% 10 5 3.0% 100 100 100 2.0% 20% 97% 0 0% -1.0% 0 0% 0 0% 0.0% 0 0.0% 0 0 10% 96% 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 0% 2006 2007 2008 Resultat 487 643 793 865 411 Core capital 9.56% 9.95% 9.44% 8.33% 7.73% Net interest income 960 972 1 042 1 126 1 308 Operating expenses 819 875 921 973 1 068 Net lendings 41.5 46.7 53.5 64.7 76.2 Deposits 24.8 27.4 31.4 37.6 40.5 2006 2007 2008 Percentage of Percentage of Percentage change % av GFK 1,11% 1,28% 1,41% 1,30% 0,5% Total capital ratio 11.28% 11.36% 10.21% 9.67% 9.06% average total assets 2.19% 1.93% 1.85% 1.69% 1.60% average total assets 1.87% 1.73% 1.64% 1.46% 1.31% Percentage change 13.4% 12.5% 14.5% 21.0% 17.9% 11.4% 10.6% 13.6% 20.9% 7.7%

DevelopmentDevelopment of net of interest net interest income income DevelopmentDevelopment of operating of operating expenses expenses ResultatResultat før skatt før skatt DevelopmentDevelopment of capital of capital ratio ratio 1 3001 300 UtviklingUtvikling egenkapitalavkastning egenkapitalavkastning DevelopmentDevelopment of lendings of lendings (NOK (NOK billion) billion) DevelopmentDevelopment of deposits of deposits (NOK (NOK billion) billion) DevelopmentDevelopment of liquidity of liquidity indicator indicator (quarterly (quarterly figures) figures) 1 2001 200 17.9%17.9% 900 900 2,0%2,0% 13.0%13.0% 1 1001 100 3.0%3.0% 1 0001 000 2.5%2.5% 18.0%18.0% 16.3%16.3% 70 70 25.0%25.0% 40 40 24.0%24.0% 106%106% 1 0001 000 15.4%15.4% 800 800 900 900 16.0%16.0% 35 35 21.0%21.0% 105%105% 104.3%104.3% 104.5%104.5% 11.0%11.0% 900 900 2.5%2.5% 60 60 104.0%104.0% 800 800 2.0%2.0% 14.0%14.0%11.5%11.5% 20.0%20.0% 104%104% 700 700 1,5%1,5% 800 800 30 30 18.0%18.0% 103.5%103.5% 9.0%9.0% 700 700 50 50 103%103% 102.7%102.7%103.4%103.4% 600 600 700 700 2.0%2.0% 12.0%12.0% 25 25 15.0%15.0% 600 600 1.5%1.5% 15.0%15.0% 102%102% 101.7%101.7% 500 500 7.0%7.0% 600 600 10.0%10.0% 40 40 102.3%102.3% 1,0%1,0% 1.5%1.5% 500 500 20 20 12.0%12.0% 101%101%101.9%101.9% 400 400 500 500 8.0%8.0% 100.7%100.7% 5.0%5.0% 400 400 1.0%1.0% 30 30 10.0%10.0% 15 15 9.0%9.0% 100%100% 300 300 400 400 1.0%1.0% 6.0%6.0% 4.85%4.85% 3.0%3.0% 300 300 300 300 20 20 10 10 6.0%6.0% 99%99% 99.3% 99.3% 200 200 0,5%0,5% 200 200 0.5%0.5% 4.0%4.0% 5.0%5.0% 98%98% 98.9% 98.9% 1.0%1.0% 200 200 0.5%0.5% 10 10 5 5 3.0%3.0% 100 100 100 100 100 100 2.0%2.0% 97%97% 0 0 0% 0% -1.0%-1.0% 0 0 0% 0% 0 0 0% 0% 0.0%0.0% 0 0 0.0%0.0% 0 0 0 0 96%96% 2004200420052005200620062007200720082008 2004200420052005200620062007200720082008 2004200420052005200620062007200720082008 2004200420052005200620062007200720082008 2004200420052005200620062007200720082008 2004200420052005200620062007200720082008 2004200420052005200620062007200720082008 2006 2006 2007 2007 2008 2008 ResultatResultat 487 487 643 643 793 793 865 865 411 411 Core capitalCore capital 9.56%9.56%9.95%9.95%9.44%9.44%8.33%8.33%7.73%7.73% Net interestNet interestincome income960 960 972 9721 0421 0421 1261 1261 3081 308 OperatingOperating expenses expenses819 819 875 875 921 921 973 9731 0681 068 Net lendingsNet lendings 41.5 41.5 46.7 46.7 53.5 53.5 64.7 64.7 76.2 76.2 DepositsDeposits 24.8 24.8 27.4 27.4 31.4 31.4 37.6 37.6 40.5 40.5 PercentagePercentage of of PercentagePercentage of of PercentagePercentage change change % av GFK% av GFK 1,11%1,11%1,28%1,28%1,41%1,41%1,30%1,30%0,5%0,5% Total capitalTotal ratiocapital ratio11.28% 11.28%11.36%11.36%10.21%10.21%9.67%9.67%9.06%9.06% average totalaverage assets total assets2.19%2.19%1.93%1.93%1.85%1.85%1.69%1.69%1.60%1.60% average totalaverage assets total assets1.87%1.87%1.73%1.73%1.64%1.64%1.46%1.46%1.31%1.31% PercentagePercentage change change13.4%13.4%12.5%12.5%14.5%14.5%21.0%21.0%17.9%17.9% 11.4%11.4%10.6%10.6%13.6%13.6%20.9%20.9%7.7%7.7% Development of net interest income Development of operating expenses Development of net interest income Development of operating expenses Resultat før skatt Development of capital ratio 1 300 Resultat før skatt Development of capitalUtvikling ratio egenkapitalavkastning 1 300Development of lendings (NOK billion) Development of deposits (NOK billion) Utvikling egenkapitalavkastningDevelopment of liquidity indicator (quarterlyDevelopment figures) of lendings (NOK billion) Development of deposits (NOK billion) Development of liquidity indicator (quarterly figures) 1 200 1 200 17.9% 17.9% 900 2,0% 13.0% 1 100 3.0% 9001 000 2,0%2.5% 13.0% 18.0% 16.3% 1 100 70 3.0% 25.0% 1 000 40 2.5% 24.0% 18.0% 106% 16.3% 70 25.0% 40 24.0% 106% 1 000 15.4% 1 000 15.4% 800 800900 16.0% 900 35 21.0% 16.0% 105% 104.3% 104.5% 35 21.0% 105% 104.3% 104.5% 11.0% 900 2.5% 11.0% 900 60 2.5% 104.0% 60 104.0% 800 2.0% 14.0% 11.5% 20.0% 800 2.0% 14.0% 11.5% 104% 20.0% 104% 700 1,5% 800 700 1,5% 800 30 18.0% 103.5% 30 18.0% 103.5% 9.0% 700 9.0% 50 700 103% 102.7% 103.4% 50 103% 102.7% 103.4% 600 700 2.0% 600 12.0% 700 2.0% 25 15.0% 12.0% 25 15.0% 600 1.5% 15.0% 600 1.5% 102% 101.7% 15.0% 102% 101.7% 500 7.0% 600 500 7.0% 10.0% 600 40 10.0% 102.3%40 102.3% 1,0% 1.5% 500 1,0% 1.5% 500 20 12.0% 101% 101.9% 20 12.0% 101% 101.9% 400 500 400 8.0% 500 8.0% 100.7% 100.7% 5.0% 400 1.0% 5.0% 30 10.0% 400 15 1.0% 9.0% 100% 30 10.0% 15 9.0% 100% 300 400 1.0% 300 6.0% 4.85% 400 1.0% 6.0% 4.85% 3.0% 300 300 3.0% 300 20 300 10 6.0% 99% 99.3% 20 10 6.0% 99% 99.3% 200 0,5% 200200 0,5%0.5% 4.0% 5.0% 200 0.5% 4.0% 98% 98.9% 5.0% 98% 98.9% 1.0% 200 0.5% 1.0% 200 10 0.5% 5 3.0% 10 5 3.0% 100 100 100100 2.0% 100 100 2.0% 97% 97% 0 0% -1.0% 0 0% 0 0 0%0% -1.0% 0.0% 0 0 0% 0.0% 0 0 0% 0 0.0% 96% 0 0.0% 0 0 96% 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 20042004 20052005 20062006 20072007 20082008 2004 20052004 20062005 20072006 20082007 2008 2004 20052004 20062005 20072006 20082007 2008 2004 2005 20042006 20052007 20062008 2007 2008 2004 2005 2006 20062007 20082007 2008 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 2006 2007 2008 Resultat 487 643 793 865 411 Core capital 9.56% 9.95% 9.44% 8.33% 7.73% Net interest income 960 972 1 042 1 126 1 308 ResultatOperating expenses487819 643875 793921 865973 4111 068 Core capital 9.56% 9.95% 9.44% 8.33% 7.73% Net interest incomeNet lendings960 97241.5 1 04246.7 1 12653.5 1 30864.7 76.2 Operating expenses 819Deposits 875 24.8921 27.4973 31.41 068 37.6 40.5 Net lendings 41.5 46.7 53.5 64.7 76.2 Deposits 24.8 27.4 31.4 37.6 40.5 Percentage of Percentage of Percentage of Percentage of Percentage change Percentage change % av GFK 1,11% 1,28% 1,41% 1,30% 0,5% Total capital ratio 11.28% 11.36% 10.21% 9.67% 9.06% average total assets 2.19% 1.93% 1.85% 1.69% 1.60% % avaverage GFK total assets1,11%1.87%1,28%1.73%1,41%1.64%1,30%1.46%0,5%1.31% Total capital ratio 11.28% 11.36% 10.21% 9.67% 9.06% average total assets Percentage2.19% change1.93%13.4% 1.85%12.5% 1.69%14.5%1.60%21.0% 17.9% average total assets 1.87% 1.73% 11.4%1.64% 10.6%1.46% 13.6%1.31% 20.9% 7.7% Percentage change 13.4% 12.5% 14.5% 21.0% 17.9% 11.4% 10.6% 13.6% 20.9% 7.7%

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 11 2.2 CEO STEIN KLAKEGG The leading financial services group in Western Norway

- Through professional banking operations and close interaction with the customers, Sparebanken Vest will be the leading financial services group in Western Norway. Sparebanken Vest is founded on customer-oriented renewal, based on sound banking expertise and good risk management.

The main thing to be learned from this They are also keen to benefit more from Annual Report is that the bank’s core our competence, and would like us to be business is sound. In a year characterised more proactive in contacting them. Our by the international financial crisis most satisfied customers are those who and considerable market turmoil, have most products or the broadest range Sparebanken Vest can report satisfactory of products from Sparebanken Vest, and it’s results and a sound financial position. related companies. The customer portfolio has grown by an impressive 12 000 new customers, with Developing the Financial Services Group the retail market accounting for 11 500 and We hope that our customers appreciate the corporate market 500. This gratifying and will take advantage of the fact that development is also reflected in a survey Sparebanken Vest – in cooperation with 14 conducted by Norwegian Family Economy other savings banks has established Frende which, for the second year in a row, Forsikring and the securities company declared Sparebanken Vest to be the best Norne Securities. As estate agents, we retail bank among the large Norwegian are market leaders in Western Norway banks. through Eiendomsmegler Vest, Kyte Næringsmegling and Ottesen & Dreyer. Well positioned in challenging times Both internationally and nationally We have been here for more than 185 the finance industry is in a demanding years, and our vision is to continue to situation. The financial turmoil is also be a driving force in the development of affecting our corporate and retail clients Western Norway, based on sound banking – and the path of economic development operations. itself. International developments are also important for the financial development of The bank’s strategic foundations are solid the Norwegian economy and Norwegian and we have a strong market position in banks. 2009 is likely to be a year not only of Western Norway. In 2009 we will continue great challenges, but also of opportunities to develop as a financial services group in both the commercial and the retail for the benefit of our customers. We will markets. Sparebanken Vest is well prepared work hard to achieve even higher levels to respond to both. of customer satisfaction. As part of this process, there will be a strong emphasis on Making contact, the giving of advice developing the competency of our staff. and our wide range of products Sparebanken Vest regularly asks its customers how satisfied they are with the bank, and surveys show that, on the whole, our customers are satisfied.

PAGE 12 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 – Our contribution to society shall be founded on a vibrant commitment to the region that is our home. Stein Klakegg, CEO of Sparebanken Vest 2.3 ABOUT THE BANK Management Group

Sparebanken Vest’s Management Group has ultimate responsibility for the administration of the bank. In exercising this function, it is primarily focused on the market and the bank’s performance. It is determined to make the bank the leading and most preferred financial services group inW estern Norway. The following is a brief presentation of the Management Group:

Stein Klakegg (b. 1957) experience from Sparebanken Sogn & CEO since 2006. Graduate of the Fjordane. Holding of Sparebanken Vest Norwegian School of Economics and PCCs: 542 Business Administration (NHH) (1982). Formerly with Rieber & Søn ASA and A/S Benedicte Schilbred Fasmer (b. 1965) Nevi, lastly as Group Director with Rieber Director - Capital Market since 2007. & Søn ASA. He has also held various BoD Graduate of the Norwegian School of positions with Norwegian and foreign Economics and Business Administration companies. Holding of Sparebanken Vest (NHH). Broad professional background from PCCs: 1 357 shipping, Citibank, Pareto Securities and, most recently, Rieber & Søn ASA in Bergen. Jan Erik Kjerpeseth (b. 1971) Holding of Sparebanken Vest PCCs: 214 Deputy CEO since 2006. Joined the bank in 1999. As well as being deputy CEO, he Kate Henriksen (b. 1960) is responsible for business development, Director - Retail Market since 2006. products, the market and accounting. Gra- Joined the bank in 2003 as general duated in civil marketing at the Norwegian manager responsible for Retail Division. School of Marketing, MBA from Herriot Graduate engineer from Bergen College of Watt University, and Executive MBA in Engineering and graduate of Norwegian brand management from NHH. Previous School of Economics and Business

PAGE 14 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 From the left: Arne Selle, Pål Pedersen, Stein Klakegg, Jørn Lekve, Benedicte Schilbred Fasmer, Henning Nordgulen, Jan Erik Kjerpeseth and Kate Henriksen, Bjørn Carlsen was not present when this photo was taken.

Administration (NHH). Broad professional Joined the bank as head of Information experience, also from DnB, Statoil, Vesta Services & PR in 1996. Graduate of and Ementor. Holding of Sparebanken Vest Norwegian School of Economics and PCCs: 100 Business Administration (NHH). Previously editor of Horda Tidend and business Arne Selle (b. 1953) journalist with Bergens Tidende. Holding of Director - Business Support. Director - Sparebanken Vest PCCs: 528 Service from 1994. Joined the bank in 1992. Graduate civil engineer from Norwegian Pål Pedersen (b. 1954) University of Science and Technology Director - Legal since 1994. Joined the bank (NTH). Previously with Frank Mohn AS in 1990. Law graduate from the University and Framo Engineering AS. Holding of of Bergen. Formerly assistant judge and Sparebanken Vest PCCs: 300 lawyer in private practice. Holding of Sparebanken Vest PCCs: 214 Henning Nordgulen (b. 1965) Director - Corporate Market since 2006. Bjørn Carlsen (b. 1958) Joined the bank in 2003 as general Director - HR (personnel and competence) manager responsible for Marine Shipping in since 01.03.09. Graduate of the Royal the Corporate Division. Bachelor of Business Norwegian Army NCO School, business Administration from the Institute of economist and participant in management Management, with additional training from programme in the area of personal IMD in Lausanne. Broad experience from interaction and leadership. Previously head industry, shipping and finance, including of EDP for the division working with the employment with Gearbulk and Rikett. public sector and head of the IT operations Holding of Sparebanken Vest PCCs: 214 company – EDB Teamco. Also worked in leader recruitment with Korn/Ferry Jørn Lekve (b. 1961) Futurestep. Holding of Sparebanken Vest Director - Corporate Communications. PCCs: 0

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 15 3 | Market 3.1 RETAIL MARKET 3.5 SUBSIDIARIES 3.2 CORPORATE MARKET 3.6 FRENDE AND NORNE 3.3 CAPITAL MARKET 3.7 RISK AND CAPITAL MANAGEMENT 3.4 REGIONS & INTERNAL CONTROL

Sparebanken Vest’s core activities are carried out through the three following divisions: Retail Market, the Corporate Market and the Capital Market.

The bank’s focus is regional. This means we are able to make the important local decisions. Our online banking facilities, phone banking and customers service means that we are accessible 24/7, 365. When it comes to important discussions and the decisive financial choices, a lot of our customers prefer to have a personal contact.

Sparebanken Vest has a committed staff of 850 working in 59 different branches in Hordaland, Rogaland and Sogn & Fjordane. Several of our branches are also able to provide corporate advisers with considerable branch knowledge and valuable experience. 3.1 MARKET | RETAIL MARKET Building competence for the benefit of our customers

- In 2009 Sparebanken Vest will be placing strong emphasis on the building of competence, primarily with a view to strengthen the quality of financial advice available to our customers.T his is being done under an authorisation scheme designed to promote the required competence, attitudes and skills among financial advisers, says director Kate Henriksen, who heads the Retail Market Division.

Financial advisers need to have a thorough managers who assess their competency. knowledge of the bank’s savings and Among other things, this will lead to a investment products. This calls for greater focus on management development major focus on skill enhancement in a in light of our managers’ role as mentors complete financial services group such as and examiners, says Kate Henriksen. Sparebanken Vest. The bank is also intent on ensuring that its advisers have an even The authorisation scheme for financial greater understanding of each customer’s advisers was established 1 January requirements. The financial services 2009 and replaces a number of internal industry has therefore itself established an company certification schemes within authorisation scheme for all employees. the finance industry. The new scheme, which is backed by the Financial Services Management development Authority, the Savings Banks’ Association, Our front line staff are now receiving the Securities Funds’ Association and the specialised training to qualify them as Finance Sector Union of Norway, will build authorised financial advisers. In order on and is a continuation of the minimum Kate Henriksen, to sign them off as authorised financial competence requirements which financial Director - Retail Market advisers we have selected 30 of our advisers must meet.

PAGE 18 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 3.1 MARKET | RETAIL MARKET

- Our front line staff will now receive specialised training to authorise them as financial advisers. Snapped here: Adviser Leif Rune Building competence for the benefit of our customers Svendsen and Randi Espedal Halvorsen.

Loyal and satisfied customers we therefore took far-reaching and specific In times when the markets weaken steps to boost competence and protect to the extent that was experienced in investors. This has been done on the basis the second half of 2008, it is of great of the EU directive MiFID which is intended importance that the bank puts its entire to introduce safeguards to and regulate range of expertise at the disposal of the advisory services related to financial customers. - We have established a good services. This work will be continued in relationship between customers and 2009.

«We shall promote the required competence, Long-term presence attitudes and skills among our financial advisers.» - Through its branch network the bank’s advisory function plays an important role for many customers who for generations advisers. Although the finance industry have seen their relationship with the bank as a whole has been criticised for some in a «from cradle to grave» perspective. of the advice it has given, Sparebanken With such close proximity to the Vest has experienced that regular surveys customers, the bank can boast long and of customer satisfaction have shown very very valuable experience. One of our main good results. The large net inflow of 11 500 tasks in 2009 will be to ensure that the new customer in 2008 is very gratifying. We initiatives we make in respect of retail can justifiably claim to have very stable and customers are sufficient and good enough, satisfied customers, but naturally we take a says Kate Henriksen. very serious view of the criticism levelled at the industry in general. In 2007 and 2008

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 19 3.2 MARKET | CORPORATE MARKET Important close encounter

The high level of activity following the economic upturn continued right up to the third quarter of 2008. We then experienced a sudden change in the mindset of industry leaders and politicians. These are challenging times which require us to engage in solving the problems facing the commercial sector in cooperation with our customers, says director Henning Nordgulen, who heads the Corporate Market Division.

The level of new business start-ups fell 110 at 18 of the bank’s 59 branches meet sharply in the second half of the year. business leaders every day, and this close This was noticed as we experienced lower contact enables them to take the region’s demand for financing of investments commercial pulse. and housing projects. At the same time we noticed an increase in demand for - During the last quarter it has become operational financing and credit facilities. particularly clear to us how important it is to be close to the decision making process The flow of capital in the commercial sector in order to make good and rapid decisions has changed. Corporate working capital in critical situations. Sparebanken Vest is being strained and companies need to can always be relied upon to be a good use more of their liquidity for their own partner in discussions and supporter of the operations. This is reflected in the more commercial sector in Western Norway. It moderate level of deposit growth in the is in economic downturns that a long-term course of 2008 compared with the strong perspective and predictability are most deposit growth that accompanied the important, not least in terms of the ability economic upswing. to make decisions.

Taking the commercial pulse Stronger focus on competence The bank is planning a high level of contact Sparebanken Vest is responding to the with its customers in 2009 and expects to challenges in 2009 by systematically gain first-hand knowledge of the challenges enhancing competence. In order to be Henning Nordgulen, facing the commercial sector. – Our staff of even better equipped to assist trade and Director - Corporate Market

PAGE 20 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 3.2 MARKET | CORPORATE MARKET The bank is planning a high level of contact with its customers and will gain first-hand knowledge of the challenges in the coming year. Photo: Company Important close encounter adviser Arne Tårup (on right) and Terje Harald Hoven from M-Reel AS.

industry in the counties of Western Norway New product areas in insurance and the in periods of difficulty, the bank must be capital market able to offer expertise of the highest level. In In the commercial sector we intend to build 2008 the bank established the Corporate on the successful establishment of our new Market School, a systematic programme insurance company. Frende Forsikring has of training that is compulsory for all of developed good life insurance products for the bank’s employees dealing with the companies as well as a steadily increasing commercial sector. Using highly competent range of non-life products. - We have internal and external instructors, and strengthened the organisation with the modern technology, all staff are involved appointment of new insurance advisers in simultaneous monthly training. The in the regional network and we are very objective is continuous reinforcement of confident of increased insurance sales to our adviser competence. The key areas includes corporate clients. advisory services related to finance, investment, insurance, capital market The bank’s capital market activities were products, industry-specific knowledge and strengthened in 2008 in terms of both an understanding of the local commercial capacity and the expertise available to sector. Other important topics included are the customers, most recently through macro-economic issues, local effects of the the establishment of Norne Securities. financial crisis and taxation issues. New capital market products and Norne complement our range of offers to trade The bank’s focus on enhanced competency and industry in Western Norway, which is also reinforced by a greater emphasis in turn is supplemented by our detailed on following up and identifying local knowledge of the business climate in customer needs through personal visits. Western Norway. This is necessary in order to gain an understanding of all aspects of our –I see great scope for further developing customers’ activities. We are also taking this area in 2009 in collaboration with our steps to boost our internal capacity to deal customers, says Henning Nordgulen. with particularly difficult cases.

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 21 3.3 MARKET | CAPITAL MARKET Locally rooted market view

- Customer and financial activity form the basis of our operations. In 2008 we doubled our earnings from both customers and foreign exchange activities, says director Benedicte Schilbred Fasmer, who heads the Capital Market Division.

- The turbulent financial market clearly NOK 8.2bn was transferred from the bank to shows how important it is to have control the new company. mechanisms in place as well as adequate reserve funds. Many of our employees have A short-term funding strategy provides been with us for a long time, and their cheaper capital for a period, but if one relies accumulated wisdom has been instrumental solely on a strategy of this kind, considerable in our success at dealing with the financial problems arise when there is a dramatic crisis. We learnt a lot in 2008, and we change in the market. The financial crisis achieved satisfactory results, says Fasmer. has provided several examples of this. In - Nevertheless, there was a considerable order to safeguard the bank’s stability, drop in the value of our shareholdings, we have a diversified funding strategy. and some decline in bond values. The Oslo Although funding costs increased in 2008, Stock Exchange Main Index fell by 54% in we have succeeded in arranging satisfactory 2008, while the value of our share portfolio funding, with NOK 19bn raised during the decreased by around 40%. The bank’s year. Sparebanken Vest is a major savings management of interest-rate activities also bank and the funding conditions are not so gave a satisfactory result. different from those that apply to the large commercial banks. Long-term funding prudent - The autumn of 2008 was a challenging Robust competency for good results period, especially in the international - In addition to Norne Securities which capital market. The government’s swap represents useful expansion of our product scheme became an alternative for many range, we have taken considerable steps financial institutions.F or Sparebanken Vest, to be able to offer further expertise to the establishment of a home mortgage our customers. The bank is now very company was an important and sound well equipped to provide an even higher

initiative in 2008 which made a positive level of qualified advice and service to its Benedicte Schilbred Fasmer, contribution to diversified funding. A total of customers. Director - Capital Market

PAGE 22 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 3.3 MARKET | CAPITAL MARKET Local security – global turbulence. - We believe we have a major role to play as a local alternative to the large commercial banks, and we know that our customers benefit greatly from receiving a market assessment Locally rooted market view which is also made on the basis of our strong local presence.

The Capital Market Division also deals with Regional corrective international payment services for the - We believe we have a major role to bank’s customers. In 2008 the volume of play as a local alternative to the large transactions increased by 20%, illustrating commercial banks, and we know that our that there is still a high level of economic customers benefit greatly from receiving activity in Western Norway. With a a market assessment which is also made doubling of earnings from customer- on the basis of our strong local presence. related activities and, not least, the Yet another example of the importance of opportunities which the volatile markets the combination of a local presence and offer for foreign exchange trading, we strong funding capability is the investment look forward to an interesting - albeit fund Fjord Invest in Sogn & Fjordane. challenging - 2009. Here, the bank has joined forces with other parties and represent an important source Head economist Hallgeir Isdahl is of equity for the local commercial sector. responsible for the bank’s professional market assessment and for daily market updates distributed to the branch network, and thus to our customers.

Sparebanken Vest Boligkreditt AS

Sparebanken Vest Boligkreditt AS is a wholly owned In the autumn of 2008 Sparebanken Vest Boligkreditt subsidiary of Sparebanken Vest which was established to AS took over home mortgage loans worth NOK 8.3bn enable the Sparebanken Vest Group to arrange funding from Sparebanken Vest. All of the loans are secured by through the issue of covered bonds. In February 2008 the a mortgage on residential properties within 75% of the company received a concession to operate as a financing property’s value. The company has two employees and enterprise. Favourable funding costs are achieved by most of its production is undertaken by employees of providing purchasers of bonds with security in the form of Sparebanken Vest based on agreements between the the company’s home mortgage loans. The bonds issued company and the bank. The result for 2008 was a profit have been accorded the best rating from Moody’s and of NOK 2m after tax and allocations. Fitch Ratings (AAA-rating or the equivalent).

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 23 3.4 REGIONS The pearls of Western Norway

REGION ROGALAND New presence attracted new customers Sparebanken Vest was given a positive reception when its new branch opened in the centre of Stavanger. The bank quickly established a very visible presence in both the retail and the corporate markets, each of which has provided the bank with many new customers.

In their coverage of the new branch, the low price of oil is maintained this could media focus was on the interaction of have serious repercussions in a region functions, between real estate activities, where 40 000 people work in oil-related the retail market and the corporate business. An economic downturn will thus market. There was also positive media result in less activity in 2009. coverage of gifts from the bank to GladMat AS, Kreftomsorg Rogaland and Although the housing market has Stavanger Oilers, among others. flattened out, the decline in property prices has nevertheless been less dramatic Region Rogaland is highly dependent on than in the rest of Norway. At the start of the petroleum industry. This accounted 2009, Ottesen & Dreyer (estate agents) for a lot of the high level of activity in the took over two previous Notar offices at first half of the year, while the second Sola and Hinna, and in the course of 2009 half reflected more moderate activity. these will be located in the same premises From left: Regional Director - Retail Market Bjørn The region is nonetheless characterised as Sparebanken Vest. Tjensvold, Regional Director - by a robust commercial sector, but if the Corporate Market Njål Skår

PAGE 24 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 REGION VEST Strong population growth The six municipalities Os, Austevoll, Askøy, Sund, Fjell and Øygarden constitute the part of Hordaland with the strongest population growth.

Partly as a result of this, the regional centre Framo Engineering and Bergen Group have Straume, headed by Sartor Shopping Centre, established themselves on Askøy which will has experienced enormous development in also lead to a high level of activity in the the last few years, making this region one period ahead. A new transportation link of the most exciting parts of Norway. In with Sotra and a new highway southwards terms of industrial development, the subsea towards Os will play an important role in the environment is especially strong. The oil commercial development of the region. The and gas terminals at Sture and Kollsnes, island municipality of Austevoll is well known From left: Øystein respectively, and the environment in and for its fisheries and aquaculture activities. Bredholt, Regional Bank around the supply base at Ågotnes and the It has a strong entrepreneurial spirit and Manager - Corporate Straume business park are key components Sparebanken Vest intends to continue Market, Trygve Wåge, Regional Bank Manager - which drive the regional economy. playing a key role here too. Retail Market

REGION NORDHORDLAND Mongstad - the driving force The planned gas power plant at Mongstad and the technological development taking place in the area will strengthen the competency in the region making it a more attractive place to live and work in the coming years.

Sparebanken Vest is the market leader in Meland the branch at Frekhaug has shown both the retail and the corporate markets very satisfactory growth. in the regions Osterøy, Meland, Lindås, Masfjorden, Radøy, Austrheim and Fedje. The regional centre is the shopping centre at Knarvik. The centre is developing well and All branches can report an increase in the further expansion is planned in 2009, with number of customers, with most growth more shops and a new multi-storey car park.

experienced by the branches in Meland, the The commercial sector is advancing the From left: Margunn southern part of Lindås and in Osterøy. In funds needed to solve traffic problems which Bjørnestad, Regional Bank 2008 the Osterøy branches were merged will help to attract even more customers to Manager - Corporate Market, Jan-Tore Thunestvedt to form one branch in Lonevåg. As a Knarvik Centre. Regional Bank Manager - consequence of the population growth in Retail Market

REGION HARDANGER / MIDTHORDLAND Market leader in a vast region This region stretches from Modalen in the north to Odda in the south. In the municipalities where Sparebanken Vest has a branch, it is the market leader. Surveys show that the region’s customers are very satisfied with the bank.

Although there has been a high level of Sparebanken Vest plays an active commercial activity in the region in the role both in the local community and last few years, the fluctuations seem to commercial sector. Many associations be less than in other areas and it may be and organisations receive much help that the region will be less affected by and financial support from the bank, and the general economic problems. A good there is no doubt that the region itself level of activity is expected in building and lives up to the bank’s strategy which is to From left: Lars Audun Torvik, Regional Bank Manager - Corporate Market, construction when work on the Hardanger actively promote commercial and social Tom Rasmussen, Regional Bank Bridge and the Jondal Tunnel starts. development. Manager - Retail Market

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 25 REGION SUNNHORDLAND / HAUGALANDET The activity in the oil industry will be decisive Industry in Sunnhordland and Haugalandet is linked to the oil industry above all else. Until now, the large oil-related companies have had plenty of orders and full employment.

It will be interesting to see how new for further growth, and the lines of assignments within the oil industry will communication are being constantly be allocated in the time ahead, and how extended. In 2008 a tunnel link was great the demand will be for products opened between Halsnøy and the from the energy-intensive industry. mainland municipality. Several large companies have been bought by national and international The primary aim for 2009 will be to companies focused on product consolidate our position and continue development and further expansion in to serve the needs of our existing the region. commercial customers in the region. From left: Jan Arild Nesse, Regional Bank Population growth is still a feature of the Sparebanken Vest will continue to be a Manager - Corporate largest municipalities in the region. An partner committed to social development Market, Arnt Sortland, Regional Bank Manager effective infrastructure is a prerequisite and a supporter of cultural initiatives. - Retail Market

REGION SOGN & FJORDANE Consistent activity and a varied commercial sector

Sogn & Fjordane is different from the neighbouring counties because of its more fragmented commercial structure and decentralised population. Sogn & Fjordane has no urban area which acts as a driver of commercial development and local population growth, such as Bergen in Hordaland and Ålesund in Møre & Romsdal.

Sogn & Fjordane has traditionally had a also been well received in both the stable economy, focused mainly on the commercial and retail markets. 2008 saw primary industries, fish farming, energy, the establishment of Sparebanken Vest tourism, and the metal and mechanical Næringsstifting (the Sparebanken Vest industry as the most important ones. The Commercial Foundation), which allocated level of unemployment has been among funds to many innovative projects in the the lowest in Norway in recent years. county in the course of the year.

The outlook for 2009 is more uncertain, The bank has also given financial support with several companies preparing for a to many promising local projects through decline in sales, profits and investment, but its support programme for initiatives that the level of employment is expected to are for the benefit of the public. One of the remain relatively stable. projects is a cooperation agreement with Førde Internasjonale Folkemusikkfestival In 2008, Sparebanken Vest again (Førde International Folk Music Festival) increased its share of the market in the which plays a leading role in international From left: Atle Stalheim, county and was able to report good folk music. During the year the bank’s Regional Bank Manager - Retail Market, Olav Hjelle, growth. The bank’s new insurance profile has also become more visible Regional Bank Manager company - Frende Forsikring - has through local media coverage. - Corporate Market

PAGE 26 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 REGION BERGEN Growth in both the retail and corporate markets

2008 was a good year for Region Bergen, with many new customers in both the corporate and the retail markets and very satisfactory capital growth in both segments.

Sparebanken Vest has taken a structured associations and organisations. These and systematic approach to increasing do a great deal of voluntary work in the personnel competency. The main focus local community – and it is important for has been on developing our customers’ the bank to be an active supporter of this view of us as a reliable and solution- work. oriented partner. Sparebanken Vest continues to have Our branches in Region Bergen have considerable involvement as a sponsor, From left: Frank H. Bjørndal, – together with Visjon Vest - worked and this strategic focus serves to give the Regional Bank Manager - continuously on maintaining extensive bank a high profile in the region. Retail Market, Audun Rebnor, Regional Bank Manager - involvement with small and large Corporate Market

ANNUAL REPORT 2008 3.5 MARKET | SUBSIDIARIES Growth for Eiendomsmegler Vest

Eiendomsmegler Vest has reinforced its position as the leading player in the housing market in Western Norway. Eiendomsmegler Vest conducts its estate agency activities through the branded companies Eiendomsmegler Vest AS, Meglerhuset Ottesen & Dreyer AS and Kyte Næringsmegling AS. The chain is the market leader in the areas of Nordhordland, Sotra, Askøy and Stord, as well as being one of the two largest in Bergen, Førde, Haugesund and Stavanger.

The company has a strong position in all 2008 and in the fourth quarter the market its locations with a successful distribution stagnated, with a decline of more than strategy and focus on having a strong 40% in the number of properties which local presence. Despite the downturn in changed hands. The sudden downturn the housing market, Eiendomsmegler Vest came much faster than the industry had recorded a satisfactory inflow of new sales expected. How the situation will develop assignments. High interest rates, great is a matter of great uncertainty, and uncertainty among home buyers and although it is expected that the housing stricter credit assessment by the banks led market will become stable, it will be to a lower turnover rate for properties. below the levels recorded in the last few years. Eiendomsmegler Vest has adjusted A sudden and swift downturn in 2008 its capacity to the expected decline in As a result, Eiendomsmegler Vest turnover and staff levels were reduced by channelled the sale of 2334 residential the equivalent of 6.9 full-time positions in properties in 2008, which was 17% down 2008. The cut-back was effected through on 2007. For some time the property the use of termination packages. market has been buoyant, maintaining good growth since 1993 until the market Further expansion started to show signs of weakness in 2007. In line with its aim to be an estate agency The pace of decline accelerated greatly in with wide distribution, Eiendomsmegler

PAGE 28 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Vest opened a new branch in Os in January company had 92 employees in 2008. Of 2008, manned by two estate agents. The their 65 estate agents, 30 are members office is located in the same premises as of MNEF (the Norwegian Association of Sparebanken Vest. Estate Agents). Because the company attaches great importance to high industry Through the course of the year knowledge and standards, the remaining Eiendomsmegler Vest decorated and estate agents took part in a training refurbished its premises at Vaskerelven programme at the Norwegian School of 16. This is the company’s main office Management (BI) under a transitional in the centre of Bergen and through scheme pursuant to the new Estate Agency this sales office Eiendomsmegler Vest Act. Nine estate agents took the exam will be engaged in brand building to held by BI under the transitional scheme establish a more visible profile in the local in 2008 and can apply for the Professional environment. This is expected to reinforce Certificate of Competence which will make the company’s position in Bergen. The them authorised estate agents. office has nine estate agents and two financial advisers from Sparebanken Vest. Market surveys carried out in 2008 show that Eiendomsmegler Vest scores The bank’s expansion in Sogn & Fjordane highly in terms of public awareness and provides a basis for further growth in this attractiveness. Eiendomsmegler Vest is the region. The company believes the benefits estate agency most people wish to use, and of close interaction with the bank will enable the number of people who consider using them to make use of mutual synergies and Eiendomsmegler Vest has increased greatly. at the same time provide added value for the customers. Price development In Bergen, the average house price fell Through the acquisition of Ottesen by 9% in 2008. In Hordaland, excluding & Dreyer, Eiendomsmegler Vest has Bergen, the price dropped by 7%. The expanded into Rogaland. At the end of average turnover rate was 37 days in the year Ottesen & Dreyer acquired two Bergen, while for the rest of Hordaland it estate agencies from the Notar chain was 41 days. In Stavanger, the average located at Hinna and Sola, respectively, in price rose by 2% in 2008, while in Rogaland, the Stavanger region, thereby enabling the excluding Stavanger, the increase was 3%. Eiendomsmegler Vest chain to expand its The average turnover rate in Stavanger distribution in the region. was 36 days, and 38 days in the rest of Rogaland. Taking Norway as a whole, prices Competence and customer satisfaction are 165% higher than the last “top year” High quality services, and satisfied which was 1987. Adjusted for inflation, customers are crucial for further growth prices are 59% higher. and success of Eiendomsmegler Vest. The

AS Filialbygg

AS Filialbygg is a wholly owned subsidiary Hordaland, Rogaland and Sogn & Fjordane. of Sparebanken Vest which manages the The company has 21 employees. Sparebanken Vest Group’s commercial properties and leases. In 2008, eight In 2008, the Group’s property companies properties were demerged and organised recorded aggregate profits of NOK 1.9m as separate companies. The Group’s after tax. property portfolio comprises buildings located in the bank’s area of activity in

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 29 3.6 MARKET | FRENDE AND NORNE Frende – challenging the market

The companies Frende Liv and Frende Skade received a positive reception by the customers in 2008. The customers appreciate a new insurance alternative.

The company is run from two office The management of facilities in Fyllingsdalen in Bergen, but is Frende Livsforsikring and Frende Skadeforsikring, The new insurance companies represent a based on distribution through the owner from left: Ole Tom considerable strengthening of competence in banks’ extensive branch network in their Pettersen, Rita Myklebust, Vegard Styve, Trude the financial sector in Bergen. Frende Liv and respective geographical areas of operations. Husevåg, Bjørn Olafsson, Skade will provide financial security in support The owners have considerable distribution Bjørn Thømt, Arne Bakke, of their owners’ vision; to be full-range capability, customers and competence. Anne Vikne Hellevang, Henning Hauso, Elin suppliers within the financial services industry. Sparebanken Vest and Fana Sparebank are Sture Næss and Eyvind focused on Western Norway and Bergen, Norderud. Owners with great distribution Sparebanken Øst on Eastern Norway, and capability Helgeland Sparebank on Northern Norway. Frende Livsforsikring and its sister company Frende Skadeforsikring AS are wholly The new companies cover all of Norway, but owned by Frende Holding AS. The owner in the establishment phase it will be natural company was established by Sparebanken to have the main distribution focus on the Vest (49.99%), Sparebanken Øst (26%), West, East and North of Norway. The new Fana Sparebank (14.01%) and Helgeland enterprise will strengthen the owner banks’ Sparebank (10%). Based on the company’s position and long-term earnings. ambition to cover all parts of Norway, the scope of ownership and distribution were Challenger broadened to include a further 11 savings Frende’s vision is to be «the industry banks on 1 July 2008. At the same time, challenger – the customer’s first choice, the shareholder agreement between the time after time». The customer should owners was changed so that the link between experience receiving good advice from a ownership and distribution no longer applied. wise friend. The Frende staff also wish to In line with this change, the company has be perceived as a good provider at «the entered into a distribution agreement with moment of truth» – in other words, when Voss Veksel- og Landmandsbank ASA. dealing with claims.

PAGE 30 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 3.6 MARKET | FRENDE AND NORNE 3.6 MARKET | FRENDE AND NORNE Frende – challenging the market Norne – strategic presence

Norne Securities is the only full-scale securities company in Norway with its head office outside Oslo. It was established in 2008 and became operative in the first quarter of 2009.

Norne Securities is backed by Sparebanken Fondsfinans and the 14 Vest, Fondsfinans and 14 independent independent savings banks have launched a savings banks with considerable distribution new securities company capability, a significant customer base and - Norne Securities. From left: Nils Erling Ødegaard, Norne Securities offers corporate financial broad expertise. CEO - Fondsfinans, services and analysis, as well as share and Benedicte Schilbred bond broking. With expertise in industry Together, the independent savings Fasmer, Chairman - Norne Securities and areas that the owner banks focus on, the banks from the Oslo Fjord to the coast Director - Capital Market, company is able to give competitive offers to of Helgeland have total assets of around Sparebanken Vest, Gunnar customers. This is because Norne specialises NOK 95bn, 170 branches and 650 000 Gullaksen, CEO - Norne Securities and Morten in sectors which account for much of the customers. Fondsfinans is one of Norway’s Kraft - CEO - Sparebanken value creation in Norway. With this special most reputable independent securities Sør. insight and proximity to the value creation companies. process, the company’s aim is to be a source of added value for its customers. The head office is inB ergen, but the company’s services will be established in A new company with sound owners close cooperation with the owner banks Despite the current turbulence in the and Fondsfinans. Initially, Norne Securities market, the owners believe that the will provide about 20 new permanent establishment of the company is important positions. and will be profitable for the owners in the long-term. It will be good for the securities industry to have a new player backed by financially sound owners.

The company name comes from Norne, one of the three goddesses of fate in Norse mythology.

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 31 3.7 MARKET Risk and capital management & internal control

Good risk and capital management is a key strategic tool in Sparebanken Vest’s approach to the creation of value. Sparebanken Vest wants to ensure that it has a moderate risk profile. The bank’s ability to balance ambition against ability and willingness to take risk will have both quantitative and qualitative effects.

A strong risk culture is characterised by an and the bank’s operations. The BoD shall also organisation with a keen focus on risk and ensure that the bank is sufficiently capitalised profitability. This will reinforce the bank’s in relation to regulatory requirements. It also profitability and rating, and ensure good sets the objectives and framework structure access to the capital market. Responsibility for all risk areas, including guidelines for for the bank’s risk and capital management the bank’s risk and capital management. is split between the BoD, the management Reporting in relation to objectives and and the operative units. parameters takes place on a quarterly basis.

Sparebanken Vest’s BoD is responsible for The Credit Committee deals with credit ensuring that the bank’s capital base is matters within the scope of authorisations sufficient in relation to the desired level of risk approved by the BoD.

PAGE 32 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 3.7 MARKET Risk and capital management & internal control

The Audit Committee shall ensure that management is also responsible for the bank’s Sparebanken Vest is subject to independent model tools for risk and capital management. and effective external and internal audits, The manager of the risk management and that accounting and risk reporting are department reports to the CEO. in accordance with laws and regulations. The Validation Committee is headed by The CEO is responsible for the bank’s the CEO and deals with validation of both overall risk management, including the models and application of the bank’s development of appropriate models and credit systems. The bank applies internal parameters for management and control. measurement methods (IRB1) to calculate All decisions related to risk and capital the capital related to credit risk. Validation Develop management are normally taken by the CEO is a cornerstone of IRB which is intended to in consultation with other members of the ensure that the IRB system is adapted to the The model’s Validate Implement bank’s management, unless the matter is portfolios to which it is applied. Each year a life cycle considered by the BoD. validation report is submitted to the BoD.

The risk management department covers The Credit Committee is headed by the Apply important functions such as management, CEO and deals with major commitments The credit model’s life cycle control, reporting and analysis. Risk and matters of a special nature. Major

1) Internal Rating Based

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 33 risk-exposed commitments are reviewed by the Credit credit facilities, guarantees and the like. Committee every quarter. • The market risk is defined as the risk of losses on open positions in different financial instruments All managers of Sparebanken Vest have a responsibility as a result of changes in market variables and/or to manage risk and ensure that there is good internal market conditions within a specified time period. This control within their respective areas in line with the bank’s includes the interest rate risk, the stockmarket risk adopted risk profile. In order to ensure good financial and the foreign exchange risk. The risk may be of a and administrative control, each manager shall have the linear or non-linear nature (options etc.). necessary knowledge about major areas of risk within his/ • The liquidity risk consists of two elements that may her sphere of activity. be called the refinancing risk and the price risk.T he refinancing risk is the risk of an inability to refinance The role of the internal audit department is to monitor debt and the inability to finance an increase in assets. the bank’s overall risk and capital management, as well The price risk is the risk of an inability to refinance as performing the internal audit function on behalf of obligations without incurring considerable additional the BoD. The department also tests whether adopted costs in the form of additional expensive financing or procedures and guidelines are complied with, and a drop in the value of assets that have to be realised. considers whether the bank’s model tools related to risk • The operational risk refers to unexpected and capital management give a correct picture of the fluctuations in results due to an insufficiency or bank’s overall risk and capital situation. failure of employees or internal processes, or due to external events. The internal audit department puts together an annual internal audit report which also contains assessments of Sparebanken Vest has established separate risk the bank’s IRB system and capital analyses (ICAAP1). strategies and specific control targets and parameters for each risk area. These strategies are revised at Rules for capital adequacy least once a year as part of revising the bank’s other The rules for capital adequacy rest on three pillars. plans. Control targets and parameters are designed • Pillar 1 deals with the minimum capital adequacy to contribute to safeguarding the bank’s profitability requirements, including steps aimed at bringing the in both the short and the long term by ensuring that capital requirement into line with the actual financial the bank avoids excessive concentrations of risk in risk for individual institutions. its operations - concentrations which as a result of • Pillar 2 deals with the authorities’ supervisory unfavourable developments could be instrumental in function and the banks’ own capital assessment. threatening the bank’s profitability and capital base. • Pillar 3 deals with market discipline, which for institutions entails further requirements concerning The BoD delegates authorisation to the CEO in each external reporting of risk and capital matters2. risk area. All authorisations within the organisation are personal. Decision-making support systems and portfolio In the autumn of 2005 Sparebanken Vest applied management systems have been established in the to the Financial Services Authority of Norway for retail, corporate and capital markets. permission to apply basic IRB methods to manage and calculate its credit exposure and capital requirements. Credit risk Permission to do so was granted at the start of 2007. The bank’s credit exposure is managed on the basis of This permission is an important quality stamp of several key elements including the probability of default, approval in relation to Sparebanken Vest’s risk and expected losses, risk-adjusted capital and the risk-adjusted capital management rate of return. Concentration parameters have also been established for industries and individual commitments, The BoD shall ensure that the bank is sufficiently as well as the overall volume for major commitments. In capitalised. Capital assessments (ICAAP) are carried addition, Sparebanken Vest’s risk models are subject to out at least once a year, and the bank’s strategy constant development and testing. is based on the real risk attached to its operations, supplemented by the effects of different risk scenarios. A key consideration in quantifying the bank’s risk profile is the calculated probability of default for each customer Risk management and portfolio. The customers are grouped in 10 risk classes The bank’s risk management relates to four risk areas: based on the probability of default. The bank also has a • The credit risk is the risk of loss if the bank’s customers separate class (class K) for commitments with defaults. are unable to meet their commitments related to loans, In line with the capital requirement regulations and in

1) Internal Capital Adequacy Process 2) Further details of risk and capital matters can be found on the bank’s website, www.spv.no

PAGE 34 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 order to ensure that the quality of the credit portfolio rolling average) including the unutilised framework for is satisfactory, the bank carries out ongoing qualitative committed drawdown rights, while the target figure for and quantitative validation of the portfolio. the funding ratio is currently 55%. Quantitative validation includes the bank’s models for PD (probability of default), LGD (loss given default) and As part of the process of ensuring that the bank meets CF/EAD (exposure at default). Validation is designed to its overriding goals, and in order to maintain access to ensure that the models are sufficiently calibrated to take international funding, Sparebanken Vest has established account of the actual development of the portfolio. an EMTN (EuroMediumTermNote) programme. This Qualitative validation focuses on the data quality, funding programme makes it possible to reach more reporting and divergence management, as well as potential lenders/investors while at the same time application of the bank’s framework and model tools, making the process related to each loan issue simpler which is closely related to the bank’s credit control. and less demanding. The programme is renewed each year and currently has a framework of EUR 2 billion. Market risk The bank’s market risk is managed and controlled In managing the bank’s liquidity risk exposure, limits through defined position parameters for each risk area. have also been set for the bank’s dependence on The bank’s investments shall be justified on the basis of short-term funding from the money and capital market. its requirements and its aim to increase other income. This ensures that the bank has an acceptable liquidity However, the bank’s exposure shall be such that any situation when there is short-term market fluctuations negative effects on results do not the affect the bank’s due to general market conditions or specific conditions capital base to any significant extent. pertaining to the bank. At year-end 2008 the bank had structural liquidity for a period of 13 months, which The bank’s parameters for and exposure to market risk means that the bank can maintain its operations for 13 are acceptable in the light of its overall activity. The months without the need for funding from the capital framework for interest rate risk is based on a parallel shift market. This is more than the bank’s target figure. in the interest rate curve. Nominal position parameters are set for foreign exchange risk and equity risk. Different In 2008 Sparebanken Vest developed and established the concentration limits are also set for the equity risk. subsidiary Sparebanken Vest Boligkreditt AS. The company is regulated by Norwegian legislation governing covered In 2007 the bank started VaR reporting of positions with bonds and provides the bank with another source of ongoing price-setting in the market. The control targets funding. Through the home mortgage company investors/ and limits based on a VaR regime are currently being lenders receive direct loan security in the form of residential assessed. Management of the bank’s foreign exchange property given as mortgage security for loans given by and interest rate risk is centralised, with coverage of all of Sparebanken Vest. Most of the first loan tranche was the bank’s position as part of capital market activities. issued in the second half of 2008 and has been swapped for government bonds issued by Norges Bank. The bank Liquidity risk uses stress tests to assess its liquidity situation in response Sparebanken Vest strives to maintain a low liquidity to market disturbances and/or operational disturbances risk. Customer deposits are the bank’s main source within the bank. The results of stress tests are submitted of funding. In addition to reducing the liquidity risk, to the BoD for consideration. The bank has contingency a high level of deposits is also of significance for the plans which describe processes, responsibility and possible bank’s commercial risk. As regards other funding responses in connection with stress situations related to sources, Sparebanken Vest emphasises a high level of the bank’s liquidity management. diversification, including geographical areas, lenders, funding maturity periods, instruments etc. The bank is rated by Moody’s and Fitch Ratings as part of the Operational risk process of ensuring funding at acceptable prices from Sparebanken Vest’s management and control of the money and capital market. operational risk can be described in terms of three dimensions: The liquidity risk is managed at normative level based • Operative management and control. on the liquidity indicator and funding ratio. The liquidity • Normative risk management and control. indicator measures the ratio of the bank’s stable • Internal audit control. funding and its illiquid assets, while the funding ratio is the ratio of deposits to lending. The target figure for the liquidity indicator is currently 100% (6-month

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 35 Operative responsibility for the management and to major losses if they arose. The quantitative analyses control of operational risk, and thus also for the quality are supplemented with qualitative assessments. of the bank’s operations, rests with the individual line managers. This responsibility follows from job Sparebanken Vest uses internal systems to quantify the instructions and various guidelines and procedures. level of tied up capital for the credit risk. Sparebanken Vest’s credit portfolio is divided into 10 risk classes where Central to the banks normative management and the customers are classified according to quality in the control of operational risk are processes linked to risk form of the probability of default. The time period is identification. Expert assessments and management one year, and a default arises when the customer is confirmation surveys, including questions relating to overdrawn or has had a balance payable for more than whether necessary controls have been carried out in line 90 days, and/or other specific events have occurred which with instructions, procedures etc. are used as a basis for affect the customer’s ability to service his or her loans. identifying major risks. The bank’s events database contributes to ensuring that major events are reported The expected exposure on default is also calculated, to the BoD as they arise. In 2008, in line with public including the amount of the loan and a proportion of requirements, the bank also started reporting major ICT the committed framework. Loss given default is the events to the Financial Services Authority of Norway. proportion of this exposure that is likely to be lost when defaults arise. The security given and realisation values The bank’s management of operational risk is seen in are key elements in determining this amount. Based on conjunction with internal control as provided for in the the three components - probability of default, exposure internal control regulations. The basis and content of on default and loss given default - the expected loss is risk management and internal control follow from the calculated and the capital related to unexpected losses. Strategy for Operational Risk and the bank’s internal control policy which is adopted by the bank’s BoD. In respect of the market risk, «Value at risk» models In addition, the bank’s policy for contingency and are used to calculate the risk-adjusted capital related continuity plans is integrated as part of this process. to that part of exposure where current market prices Risk Management attends to tasks related to normative are available. In respect of less liquid shareholdings, a management of operational risk on behalf of the CEO. simpler method is used for capital calculation purposes. The risk-adjusted capital for market risk is calculated on The internal audit department reports directly and the basis of full utilisation of parameters adopted by independently to the BoD, and through its annual the BoD. Internal Audit Report it submits its assessment of the bank’s management and control activities in the area The liquidity risk relates mainly to the ability to of operational risk. The internal audit department also refinance debt on maturity. The bank’s risk in this carries out corresponding assessments of other risk connection is mainly managed on the basis of targets areas. and the structure of the bank’s funding. Risk-adjusted capital related to the liquidity risk is calculated using a Capital management model comprising four weighted variables. Although Sparebanken Vest’s pricing includes the expected cost of losses, the bank must also have capital In respect of operational risk, the regulatory level of tied reserves to cover variations and unexpected losses. up capital is calculated applying the standard method This reserve consists of the bank’s risk-adjusted capital, for calculating capital. The strategic risk is calculated on calculated for all risk areas. The reserve shall correspond the basis of a comparison with other companies, and to the amount needed to conduct the bank’s activities incorporating certain adjustment factors. at an acceptable and appropriate risk. The risk-adjusted capital and the statutory minimum requirement are Sparebanken Vest carried out risk and capital compared with the bank’s actual equity. Capital is assessments (ICAAP) in 2008 based on the capital defined as losses given a confidence level of 99.9% in adequacy rules and requirements issued by the the distribution of losses to each risk factor. Financial Services Authority of Norway, which also received the results of the assessments. The results The bank’s processes related to capital assessment showed that the bank is sufficiently capitalised based (ICAAP) are based on quantification of the capital on the risk attached to its activities and expectations requirement for each risk area. Stress tests are carried for the period ahead. The bank’s guidelines for capital out to show the effects of situations that are not assessment were amended to some extent in 2008 expected to arise, but which are possible and could lead and were approved by the BoD in December 2008.

PAGE 36 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Further details of the internal process are contained Sparebanken Vest’s main objective is to cover the future in the article on corporate governance in the Annual capital requirement through the results of ongoing Report. The article shows the connection between operations (after allocations). In addition, the main strategic and commercial processes and risk and capital sources of equity are the issue of new PCC capital management. and subordinated loans (perpetual and/or dated). Sparebanken Vest’s equity strategy is currently being The bank’s capital base may consist of both core assessed in the light of the bank’s strategic ambitions capital and subordinated loan capital. For regulatory and the alternatives made possible in recommendations purposes, subordinated loan capital including the proposed by the Banking Law Commission. capital base is required to meet criteria regulated by laws and regulations. Due consideration must also be given to the reduction factors in force at any given time for the calculation of the regulatory capital base. The composition of the capital base shall take account of the following: • Regulatory requirements. • Result effects. • Diversification of capital sources. • Market initiatives.

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 37 4 | Corporate social responsibility report Corporate social responsibility report - Contents

4.1 INTRODUCTION 4.3 SOCIAL RESPONSIBILITY 4 | Corporate social responsibility report 4.2 ECONOMIC RESPONSIBILITY 4.4 CLIMATIC AND ENVIRONMENTAL RESPONSIBILITY

Sparebanken Vest shall contribute to value creation through good and profitable projects. We believe that future profitability lies in developing products and services which unite social and environmental challenges with the bank’s own profitable growth.

For the first time, Sparebanken Vest is presenting a corporate social responsibility report as part of the Annual Report. The introduction presents the bank’s vision, core values, objectives and strategy. This is followed by three chapters based on the triple bottom line. Through the three dimensions represented by financial responsibility, social responsibility and environmental responsibility, the bank’s activities in 2008 are described, as well as initiatives to be implemented in the coming years. Corporate social responsibility report - Contents

4.1 INTRODUCTION Corporate social responsibility since 1823... 40 Goals, vision and core values...... 41 The bank’s corporate social responsibility 1823-2009...... 42

4.2 ECONOMIC RESPONSIBILITY When the tide of prosperity turned...... 44 Corporate governance...... 46 Key policies...... 50 4.1 INTRODUCTION 4.3 SOCIAL RESPONSIBILITY Corporate social responsibility since 1823 Taking the customers’ pulse...... 52 An attractive employer...... 54 A vibrant bank...... 56 Making demands of suppliers...... 57 Sparebanken Vest’s main function is to contribute to the creation of value in society through professional banking Value creation in a broader perspective.....58 operations and sound profitability. Value creation shall be achieved through motivated employees, good products Creating wealth in Sogn & Fjordane...... 60 and satisfied customers. But how these values are created and shared cannot be left to chance. Knowledge is our main currency...... 61 Part of the news picture...... 62 In many ways, Sparebanken Vest has been exercising Triple bottom line corporate social responsibility since it was established. For Sparebanken Vest, corporate social responsibility The fight against poverty was one of the factors which means making a positive contribution to society. 4.4 CLIMATIC AND ENVIRONMENTAL led to the opening of Norway’s second-oldest bank, Sparebanken Vest’s starting point is the bank’s vision. RESPONSIBILITY Bergens Sparebank. It started with the establishment Undertaking corporate social responsibility means Targeted on a better environment...... 64 of Bergens Sparebank in 1823 and continued in having a business strategy which contributes to 1982 with Sparebanken Vest as an amalgamation open and transparent business conduct, an ethical Green power for the world from the of a number of local banks in Hordaland, along with perspective and respect for the bank’s stakeholders. It West of Norway...... 66 Bergens Sparebank. Later, local banks from Sogn & also means having an obligation to add financial, social Prepared for climate change...... 68 Fjordane also joined. Now, the bank has reinforced its and environmental value to the business content. position as a regional bank for the whole of Western The bank’s contribution to society is described here. Norway through the establishment of several branches The report shows that we are about to embrace an in Rogaland and a broader presence in Sogn & extended reporting form, supplementing the financial Fjordane. Sparebanken Vest is therefore seen as the and market information that it is intended to provide. bank of Western Norway. From daily operations to possibilities Sparebanken Vest wishes to make a positive Sparebanken Vest’s contribution to sustainable contribution to society. We shall contribute to the development is based on the bank’s daily operations. development of Western Norway. We shall be an Corporate social responsibility is exercised through attractive place of work with employees who are advisory services, investments and lendings, and in customer-oriented, focused on forging relationships the bank’s dialogue with customers, suppliers, owners and have sound professional competence. They shall and society. Sparebanken Vest’s corporate social also be responsive to climatic challenges and take responsibility involves all parts of the bank. action to contribute to sustainable development.

SIDE 40 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 4.1 INTRODUCTION Goals, vision and core values

The bank’s overriding objective is for Sparebanken Vest to be the leading and most preferred financial services group in Western Norway.

The bank’s business concept is two-fold. It places driving force for social and commercial development in emphasis on banking operations, but within the Western Norway. The bank’s primary purpose is to be an framework of corporate social responsibility. independent savings bank and be the leading regional bank and the most preferred financial services group. «Based on satisfactory profitability and acceptable risk, Sparebanken Vest shall meet the customers’ need for As a self-owning organisation, Sparebanken Vest financial services through sales and advisory services. believes it has an important role to play in enriching The bank’s commercial operations shall contribute society. The bank seeks to support and promote all to the development of Western Norway by providing positive elements involved in the development of the added value to the bank’s stakeholders. Financial region, and in so doing the bank is active in allocating support for the benefit of the public are a supplement to grants for the benefit of the public. business operations.» This is further described on page 58 onwards. Sparebanken Vest is focused on Western Norway. We build on the traits that characterise the region; The bank’s core values are a description of the attitudes commitment, thoroughness and the outward-looking and driving forces that shall characterise the employees mentality. Most of all, Sparebanken Vest is a financial of Sparebanken Vest. The bank’s core values are services group with a local presence where competence summed up in the words « local, friendly, competent and and structure are combined with innovation and committed». The extent to which the bank’s core values commitment. The employees are skilled professionals are recognised by the customers is measured each year who are driven by development, cooperation and in customer satisfaction and position surveys. Internally, initiative to ensure that the customers are able to cover the bank’s core values are measured through surveys of their needs for financial advice and services in each employee satisfaction. phase of life. Sparebanken Vest is a proactive financial services group. A regional partner where commercial Sparebanken Vest and society interests, capital and society converge and meet to give Sparebanken Vest’s vision emphasizes that through the impulses that drive Western Norway. professional banking operations the bank shall be a

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 41 4.1 INTRODUCTION The bank’s corporate social responsibility 1823 – 2009

1823 1880 Fighting poverty Economic growth and social development

Bergens Sparebank opened its doors on Monday 3 March 1823 and joined the struggle led by the elite to put an end to the

scourge of poverty. It was belie- ved that saving would help to reduce the problem of poverty and at the same time raise the At the end of the 1800s, Bergen was experiencing strong moral standards of the lower economic growth, with a broadening of the commercial classes. In 1823, Bishop Jacob base. While exports of fish were falling, the shipping industry Neumann’s pastoral letter was experienced unbelievable growth and the manufacturing in- a very strong appeal to support dustry began to expand. Large factory projects were started, the establishment of the bank. such as Dale Fabrikker.

1823

1830 1900 Sjur Gabriel’s savings The bank as a benefactor bank book

The first description of a sav- ings bank book in Norwegian literature is to be found in the first volume of Amalie Skram’s tales of the Hellemyr people. From the start of the 1900s there was a marked change in Here, we find descriptions the perception of the role of the bank. The bank’s role as from author Sjur Gabriel and a benefactor was still considered to be important, but no his savings bank book from longer more important than commercial considerations. War around 1830. economies, economic crises and later the post-war boom were instrumental in determining the bank’s priorities for many decades. The photo from 1925 shows Skuteviken in the process of great change.

PAGE 42 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 4.1 INTRODUCTION The bank’s corporate social responsibility 1823 – 2009

1946 2002–2008 Builder of industry Social development in a new millennium

Sparebanken Vest’s funds shall be used to contribute to areas of im- Bergens Sparebank financed, wholly or in part, the constructi- portance for Western Norway. Since 2002 the department in the bank on of a number of power stations in Western Norway after responsible for grants for the benefit of the public - Visjon Vest - has nur- the War. From 1946 to 1959 the bank lent around NOK 15m tured and supported the recipients of the bank’s support. In this way, the to 26 power stations, the vast bulk of them in Hordaland and bank is partly responsible for the development of Western Norway, and Sogn & Fjordane. Vaksdal Mill and Dale Fabrikker also received it is the main way that the bank exercises its corporate social responsibi- considerable financing from the bank in the 1950s. lity. In 2008, the bank allocated grants totalling NOK 100m.

2009

1960 2009 Major changes in the savings bank industry Sparebanken Vest – an Environmental Lighthouse Enterprise

In the 60s, 70s and 80s more than 20 savings banks amalga- We have become an Environmental Lighthouse Enterprise. The bank will use the mated and Sparebanken Vest was founded in 1982. From being Environmental Lighthouse as a tool when it has to put its own house in order. The «savings banks» in the narrow sense, the different banks were environmental steps taken in our everyday work, whether large or small, make gradually able to provide just as broad a range of services as the an important contribution to the process of establishing a better environment. commercial banks. An overriding goal was to ensure a flow of The bank’s focus on the environment will be linked to a broad range of initiatives, capital to the districts. The Sotra Bridge - a project of great social from a reduction in the consumption of paper to preventive health initiatives for significance - was completed in 1971. the employees. In March 2009 Lisbeth Iversen, chairman of the City Government, and special adviser Ane Margrethe Lyng, presented the Environmental Light- house certificate to CEO Stein Klakegg and Environment Manager Britta H. Myhra as visible evidence of the bank’s ongoing environmental work.

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 43 4.2 ECONOMIC RESPONSIBILITY When the economic tide turned

Last year was one of the blackest stockmarket years in living memory. The economic upswing that had lasted for several years suddenly turned into recession in 2008, and the value of primary capital certificates listed on the Oslo Stock Exchange fell by about 51%, in line with the general decline in stock exchange values. However, Sparebanken Vest’s primary capital certificates outperformed the Index, falling by 44%.

The profit for the year provided a basis concerning an injection of new capital. The for a dividend of NOK 3.75 per PCC, scheme will be given further consideration. corresponding to the PCC share of the profit. The Banking Law Commission and the Developments in 2008 confirm that value primary capital certificate (PCC) creation in the banking sector is closely In the recommendation submitted by correlated with GNP growth and the the Banking Law Commission at the start business cycles in society, and the banks’ of 2009 a number of amendments are total earnings and the level of losses are proposed to laws and regulations in order greatly affected by general developments. to strengthen the position of PCCs, with the aim of establishing greater equality Robust capital ratio between shares and the savings banks’ It is therefore especially important for the equity instrument. The most visible changes bank to have robust capital ratio in periods is the proposed change of name to ”equity of economic downturn. Sparebanken Vest certificate”.I t is still too early to say what the has a good core capital ratio with a low final decision will be on the Commission’s proportion of hybrid capital. It is likely that recommendation. It has been distributed the limit for hybrid capital will be raised. It as a consultation document, a bill is being is therefore possible that Sparebanken Vest drawn up, and the Storting is expected to will take advantage of the authorities’ offer make a decision in the spring of 2009.

PAGE 44 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 4.2 ECONOMIC RESPONSIBILITY When the economic tide turned

In the proposals from the Commission we have made particular note of steps proposed SVEG outperformed the Index with a fall of 44%. to remove the dilution effect, which has been a strong argument put forward by investors PriceSVEG GrunnfondsindeksPCC index against PCCs as an investment alternative. The Commission’s recommendation will help to 200 800

make the equity certificate a better and more 700 durable equity instrument for savings banks in 160 the future. 600

500 Dividend policy 120 The economic goal of Sparebanken Vest’s Kurs Kurs 400 activity is to achieve results which give a 80 satisfactory return on total equity. The 300 return on PCC capital shall reflect the bank’s 200 economic results. The BoD emphasises the 40 importance of a competitive cash dividend. 100 An overview of the 20 largest owners can be found as note 28. 0 0 2/08 4/08 6/08 8/08 10/08 12/08

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 45 4.2 ECONOMIC RESPONSIBILITY Corporate Governance

Based on its vision, object and core values summarised of European Banking Supervisors2 principles of corporate in the words ” local, friendly, competent and committed” governance. Sparebanken Vest strives to comply with Sparebanken Vest has defined the bank’s value base as the recommendations in the said documents as much as follows: possible.

«In Sparebanken Vest we are genuinely interested in our The Policy on Corporate Governance is available on the bank’s website www.spv.no. In line with clause 1 of the customers, employees, society and investors. This is evident following is an account of the bank’s compliance with through our attitudes, knowledge and actions». the provisions of the Recommendation.

Corporate Governance Policy Activity The bank’s Policy on Corporate Governance shall ensure Sparebanken Vest is a financial services group that its corporate governance is in accordance with comprising the parent company and the subsidiaries generally accepted perceptions and standards, and with Eiendomsmegler Vest AS, Sparebanken Vest Boligkreditt laws and regulations. The Policy describes the normative AS and AS Filialbygg. guidelines, and its aim is to ensure that there is good interaction between the bank’s various stakeholders such The references to the bank and/or Sparebanken Vest in as PCC owners, lenders, customers, employees, control this article relate to the Sparebanken Vest Group. bodies and the management on the one hand, and the rest of society on the other. The Policy thus describes Under its Articles of Association, the objective of how the bank is to be managed and audited in order to Sparebanken Vest is to provide financial services to the provide value for the bank and its stakeholders. public at large and to the commercial and public sectors in Western Norway. The bank’s activities shall provide The bank’s Policy is specified in various control documents satisfactory profitability at an acceptable risk. governing Sparebanken Vest’s activity. This includes the The Directors’ Report gives a description of the bank’s Articles of Association, strategies, BoD instructions, bank’s objectives and strategies. The strategic base parameters for management and control, Code of is evaluated by the BoD and the management at Ethics and procedures related to appropriateness, insider least once a year, and the bank’s plans are subject to trading and enacting personal transactions. The control continuous amendment and adjustment. Through its 1 www.nues.no documentation is partly based on The Norwegian Code interim reports the market is kept updated on the bank’s 2 www.c-ebs.org of Practice for Corporate Governance1 and the Committee strategic agenda.

PAGE 46 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Sparebanken Vest’s extensive corporate social The BoD’s instructions include provisions related to responsibility is exercised in several ways, for instance ethics and impartiality. The bank’s Code of Ethics through allocating grants and participating in and helping cover both elected officers and bank officers and to arrange meetings where society and the commercial provide guidance on customer-related initiatives, sector can engage in an exchange of views. The bank also benefits/grants, duty of confidentiality, participation has an interest in companies/funds whose object is to in other commercial activity and transactions with promote growth and development. Sparebanken Vest is closely related parties. As a general rule, transactions, customer-oriented with focus on the retail, corporate and including the purchase and sale of assets and services capital markets as business areas. This is supplemented by shall not take place between Sparebanken Vest and its administrative support and staff functions. The bank has a employees, PCC owners and elected officers, or their dynamic organisational structure which is assessed in light closely related parties. of changes in requirements and operating conditions. The BoD’s instructions include provisions which Company capital and dividend underline the BoD members’ duty to exercise caution Sparebanken Vest is largely a self-owning organisation. in relation to their ethical conduct, impartiality and External equity is raised through the issue of integrity. BoD members also have a duty to inform primary capital certificates (PCC) and capital bonds. the Chairman of the BoD if they believe that their Sparebanken Vest currently has PCC capital of NOK impartiality can be questioned. 266.5m divided into 2.66 million PCCs. Owners of PCCs shall be assured of predictable conditions in terms of Free negotiability equal treatment, return on investment and controlling Sparebanken Vest’s PCCs are listed on the Oslo Stock influence. The stock exchange listing of the bank’s Exchange and can be freely negotiated. PCCs ensures that the bank accepts and complies with the market conditions in force at any given time in the Supervisory board equity market for PCCs, and that the bank establishes The Supervisory Board is the bank’s highest authority. a historical record to help maintain a stock exchange It comprises PCC owners, customers, employees and market as a possible source of equity, if the need arises. representatives from the public sector. The Supervisory Board shall ensure that the bank conducts its activities The bank’s capital situation is assessed by the BoD at in accordance with its object and in conformity with least once a year. This was last done at the end of 2008. legislation, Articles of Association and resolutions of the The principles, basis etc. of the capital assessment are set Supervisory Board. out in a separate article in the Annual Report (Risk and capital management & internal control). The Supervisory Board has 48 members and 24 deputy members. Resolutions are adopted by an ordinary Sparebanken Vest’s aim is to achieve results which majority. Amendments to the Articles of Association provide a satisfactory return on total equity. The return require the support of two thirds of those in attendance to the owners of PCCs shall reflect the bank’s economic and the support of at least 24 members. Proposals to result and be shared between the owners of PCCs and amend the Articles of Association must be submitted to the bank’s reserves on the basis of their share of the the Supervisory Board at an earlier meeting. Ordinary bank’s equity. Sparebanken Vest attaches importance meetings of the Supervisory Board shall be convened to the payment of a competitive cash dividend. in accordance with the provisions of the Savings Banks Act, and the Notice of Meeting shall be sent with at The BoD has authorised the management to purchase least eight days’ notice. The Notice of Meeting and the the bank’s own PCCs for a nominal amount not Minutes of Meeting from meetings of the Supervisory exceeding NOK 75m within the limits set by laws and Board shall be sent to the Oslo Stock Exchange and shall regulations. The authorisation is based on commercial be available on the bank’s website. considerations and is one of the steps taken to increase the marketability of the bank’s PCCs. The exposure at Under the Articles of Association an ordinary meeting year-end 2008 was NOK 3.4m. of the Supervisory Board shall be convened each year before the end of March to consider the annual Equal treatment of PCC owners and transactions accounts, annual report, auditor’s report and Control with closely related parties Committee’s report. This meeting also considers Sparebanken Vest has one PCC class. PCC owners the proposed dividend per PCC. A meeting of the are assured of equal treatment and have the same Supervisory Board shall be held each year before the possibility to exercise influence in Sparebanken Vest. At end of April to elect members of the BoD and the year-end 2008 PCC capital accounted for approximately Control Committee etc. Separate elections shall be held 6.60% of the parent bank’s total equity. The largest among employees, PCC owners and customers to elect owner of PCCs was Frank Mohn AS which represented members of the Supervisory Board. 4.90% of the PCC capital. The bank’s 10 largest PCC owners represent 22.5% of the bank’s PCC capital. The Supervisory Board has elected a Nomination

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 47 Committee to propose members of the Supervisory BoD work Board, BoD and Control Committee. There is separate The BoD shall convene 12-14 times a year and also election of the chairman and deputy chairman of the meet with regards to strategy work. In addition, Supervisory Board. The Control Committee which is meetings are also held to develop the professional also elected by the Supervisory Board shall exercise competence of BoD members. Instructions have been supervision and control of the work of the BoD and drawn up and adopted for the BoD with related annual the management. Under the Article of Association, the plans for the BoD’s own work. The BoD attaches Control Committee shall have four members and two particular importance to the annual revision of the deputy members. strategy plan. The BoD also considers whether the bank’s capital situation and risk profile are economically Meetings of the Supervisory Board shall also sound and within statutory limits. be attended by the BoD , CEO and parts of the management and specialists in professional areas, as The CEO is responsible for preparing matters to required. be considered by the BoD , in collaboration with the Chairman of the BoD. The BoD has drawn up Governing bodies Control bodies instructions for the work of the CEO. Board of Directors External auditor The BoD has overall responsibility for the management Nomination Control Committee Committee of Sparebanken Vest and for supervising the daily Board-appointed management and the bank’s activities. The BoD’s committees management responsibility is also understood to Corporate Internal auditor Assembly mean the appropriate organisation of the bank, Managing responsibility for drawing up the bank’s plans and Director budgets, responsibility for keeping updated on the bank’s economic position and activities, and responsibility Election committee for ensuring that the bank’s asset management and Under the Articles of Association the Election committee accounts are subject to satisfactory controls. shall have seven members and have representatives from all of the groups represented in the Supervisory Board, The BoD shall ensure that the objects of the bank’s as well as one independent member elected among activity are observed, as provided for in the Articles of previous BoD members (preferably a previous chairman Association, and shall follow guidelines and framework or deputy chairman). The grounds for the Election conditions set by the authorities, the Financial Services committee’s recommendations shall be given, and the Authority of Norway, the Supervisory Board and recommendation shall contain relevant information the Control Committee. The BoD has appointed the about the candidates, including their competence, following three committees as part of its work: capacity and independence. The recommendation shall • The Audit Committee which shall ensure that also give an account of the Committee’s work. The sparebanken Vest has independent and effective Election committee shall participate at meetings of the external and internal audit functions as well as Supervisory Board and submit its recommendations. accounting and risk reports as required by legislation Separate instructions have been drawn up for the Election and regulations. committee. • The Credit Committee which considers credit matters within the scope of authorisations approved The Election committee proposes the remuneration by the BoD. for the elected officers. No BoD members or members • The Remuneration Committee which shall ensure of the management are part of the Election that the bank has a competitive but not leading Committee. salary policy which is regarded as motivating for the bank’s management in terms of promoting BoD, composition and independence the implementation of adopted strategy and the The BoD shall have nine members and four deputy achievement of stipulated targets. members who are elected for a period of one year and two years, respectively. The Chairman and Deputy Risk management and internal control Chairman are elected by the Supervisory Board. At The bank’s high level objectives follow from the present, four of the BoD’s members are women. strategic basis of its activities. The target rate of Important criteria for the BoD’s membership and return plays a guiding role in determining the bank’s composition are qualifications, gender, capacity and activities and specification of partial objectives. There independence. A majority of the BoD members shall is a focus on safeguarding the bank’s short and long be independent of the bank’s management and the term competitive ability. Sparebanken Vest’s market bank’s main business partners. The bank’s overall and commercial objectives must be balanced against competence is assessed regularly in the light of the its risk-bearing capability and willingness. Risk and bank’s challenges, and the result of this assessment is capital assessments are an integrated part of the bank’s reported to the Election committee. strategic and commercial processes.

PAGE 48 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 A further description of the bank’s risk and capital business partners, lenders and investors. The bank is also manage­ment and internal control can be found in the rated by two international rating agencies. Directors’ Report and in a separate article in the Annual Report. Sparebanken Vest shall have an open information practice in accordance with the bank’s Code of Ethics In addition to the Annual Report, financial reports and section 21 of the Savings Banks Act, subject to for the Sparebanken Vest Group are prepared on a the limitations imposed by the duty of confidentiality quarterly basis. The annual accounts are audited by an and stock exchange regulations at any given time. external auditor. Sparebanken Vest shall be perceived as being committed, open, professional, accessible and proactive in its outward Sparebanken Vest is subject to supervision by the communications, and as a source of reference in the field Financial Services Authority of Norway (the Authority). As of financial activity for the media in Western Norway well as supervision in situ, the Authority also reviews the with a regional focus. The bank’s information shall be bank’s annual and interim accounts and risk reports. The characterised by openness and honesty. BoD and the management strive to have an open and constructive dialogue with the Authority. Sparebanken Vest’s information activities shall be instrumental in ensuring that correct and timely BoD remuneration information is provided, and that it is received by the BoD remuneration is set by the Supervisory Board based right target groups. In 2008 there were 2 023 significant on a recommendation from the Election Committee. articles about Sparebanken Vest, against 1 315 in 2007. The remuneration is not linked to results and no In other words, 2008 exceeded the record year 2007 by options are issued to BoD members. As a general 698 articles. rule, BoD members or companies to which they are linked shall not undertake special assignments for the In all its advertising activities, Sparebanken Vest bank in addition to BoD membership. Any additional complies with the Marketing Act. remuneration shall be approved by the Supervisory Board. However, in cases of urgency, the respective Takeover chairmen of the Supervisory Board and the Election Sparebanken Vest is a self-owning organisation which Committee may together make decisions concerning cannot be taken over by others through acquisition. In the additional remuneration. The notes to annual accounts event of an acquisition on the part of the bank, the bank contain an overview of remuneration to the BoD and shall ensure that the interest of all stakeholders are taken senior employees. into account in a satisfactory way. Good information and the equal treatment of shareholders/owners are central Remuneration to senior employees in this. It is an objective to ensure that an acquisition has Remuneration to the CEO, Deputy CEO and the Internal minimal consequences for ongoing operations. Auditor is set by the BoD, while remuneration to senior employees is set by the CEO based on principles Auditor adopted by the BoD after prior discussion by the The external auditor has an annual meeting with the Remuneration Committee. BoD where a Management Letter is presented and commented upon. The letter considers the bank’s The CEO may give additional remuneration to internal control, including areas where internal control employees based on results achieved and work should be improved. The external auditor has an annual performance. Payments of this kind shall also serve to meeting with the Control Committee at which the maintain the bank’s attractiveness in the market, but at auditor’s report is reviewed, and the Directors’ Report and the same time they shall not be risk driving. There are the Annual Report are commented upon. no options schemes for the CEO or senior employees. The internal auditor reports to the BoD. An annual report Salaries and benefits to senior employees appear in a is submitted to the BoD which considers the internal note to the accounts. control, IRB regulations and the new Securities Trading Act. The BoD approves the internal auditor’s plan for Information and communication the year and resource requirement. In relation to the The BoD of Sparebanken Vest has drawn up guidelines Control Committee the Internal Audit department has a for financial information to ensure that information coordinating function. of this kind which is channelled to the financial markets is correct, relevant, timely and pertinent to the The external and the internal auditor have quarterly bank’s development and results. Market information meetings with the Audit Committee without the CEO is channelled through our quarterly open investor in attendance. The Minutes of Meetings of the Audit presentations, stock exchange announcement and press Committee are submitted to the BoD. releases, the bank’s website, and quarterly reports. The bank also holds regular presentations for international

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 49 4.2 ECONOMIC RESPONSIBILITY Main policies

Sparebanken Vest must have the confidence of the environment in which it operates. Customers, public authorities, financial institutions and others must have confidence in our professionalism and integrity.

Our Code of Ethics gives a description of of conduct which include the following the way Sparebanken Vest conducts its main areas: activities, and we expect our employees and others acting on our behalf to comply • Our meeting with the customers and what with the code. we attach importance to in our advice • Conflicts of interest The Code of Ethics is also a part of our • Impartiality contract of employment and an important • Representation part of the employee-manager one-to-one • Grants which takes place each year. At these talks • Economic benefits the Code of Ethics is reviewed and ethical • Serving ourselves and closely related parties dilemmas are discussed. • Duty of confidentiality • Obtaining and using information about Code of Ethics customers The bank’s Code of Ethics has several rules • Use of the Internet and e-mail

PAGE 50 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Sparebanken Vest’s Code of Ethics describes and permeates all aspects of the bank’s activity.

• Matters relating to our own financial with legislation and regulations aimed situation at preventing and combating money • Private commercial activity and laundering and counteracting the positions of trust outside Sparebanken financing of terror. vest • Trading in financial instruments The initiatives taken to meet these • Duty to provide information in the requirements include rules concerning event of breaches. identity checks, as well as rules pertaining to the investigation and reporting Ethics are also a separate topic dealt with of suspicious transactions and the under the forthcoming authorisation establishment of procedures and training scheme for our financial advisers. for the employees.

Money laundering and terror Sparebanken Vest always aims to comply

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 51 4.3 SOCIAL RESPONSIBILITY | CUSTOMERS Taking the customers’ pulse

Sparebanken Vest carried out two major surveys in 2008: A position survey to measure Sparebanken Vest against its competitors, and a customer satisfaction survey.

Position Customers The survey confirms that Sparebanken Our customers are satisfied.T hey are most Pupils of Årdal Upper Secondary School. From left: Vest is the largest retail bank in the three satisfied in the regions outside Bergen and Trond-Ole Moen, Reidun Elise counties of Western Norway, and we are they are more satisfied in the retail than the Dalheim, Eirik Natvik and the second-largest bank (measured by corporate market. We have scope for scoring Marte Brekke. number of customers) in the corporate higher on initiative and competence. The market. Our position is strongest in main explanation of customer satisfaction Hordaland outside Bergen, but we are is that they feel they have a designated also the market leader in Bergen in the contact person, and that this person is retail market. In Sogn & Fjordane we a competent adviser. Sparebanken Vest are challenging the market leader in the has been measuring the level of customer retail market. We do not yet have a major satisfaction since 1998. The results presence in Rogaland, but we have got off are important indicators, since it is the to a good start in both segments. customers who justify the bank’s existence.

PAGE 52 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Each year, the bank is in touch with 6000 - Charges dropped in 2008 The girls at Frekhaug taking 7000 retail customers and 2000 corporate Sparebanken Vest dropped its charges the customers’ pulse. Frekhaug, Sandnes and Husnes had the customers. Sparebanken Vest has had very on purchases of goods as well as the best «Customer Satisfaction satisfied customers for several years. programme charge on all the Customer Indicator – Retail Market Branch». From left: Kari Bjørg Programmes with effect from 1 June Øvreås Rød, Marita Kleiveland, On occasions the bank needs some more 2008. This was a long-term investment in Liv Erstad and Maibel Karin information. In these instances, we have satisfied and loyal customers and reflects Borgen. an in-depth interview with the customer our wish to give further benefits to our in order to gain a greater insight, for customers with Customer Programmes. example with customers who have left us. Intense competition characterises the The results are analysed for each region finance industry, and customers are and each branch making it easier looking for greater transparency. For this to identify where there is room for reason, the cost of a Visa card linked to improvement. The departments, regions a current account with Sparebanken Vest and branches use the surveys in their was set at NOK 250 per year, effective action plans with a view to ensuring that from 1 June, while free use of the card was the customers stay satisfied or become admitted from the same date. even more satisfied. Sparebanken Vest thereby dropped the Each year, the bank’s call centre - charges on the services which customers Customer Service - carries out a survey to with Customer Programmes use the most. measure customer satisfaction. The survey There is no longer any charge on the in 2008 showed that across the board the purchase of goods. In addition, the bank customers were very satisfied. This has has dropped its monthly charge under the been the case for a long time. Customer Programme. Sparebanken Vest has for a long time had a no-fee policy on Best of the major banks in 2008 purchases of goods in excess of NOK 300. Sparebanken Vest aims to have Effective from 1 June 2008 this policy was competitive terms. In 2008 Sparebanken applied to all purchases, regardless of the Vest had a net inflow of 12 000 new cost of the goods, and also including goods customers, and for the second successive purchased abroad using the bank’s Visa year Norwegian Family Economy voted card. The Customer Programme is still an us the best retail bank among the major offer to the best customers who choose to Norwegian banks. use Sparebanken Vest as their main bank.

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 53 4.3. SOCIAL RESPONSIBILITY | EMPLOYEES An attractive employer

2008 was a period when Sparebanken Vest recruited relatively more employees than previously.

It is challenging, but it also presents new utilises the resources which the senior possibilities. When people leave and employees represent in the workplace, and sound competence disappears out of which takes the steps necessary to allow the organisation it is positive that new them to work for a long time. Our senior competence comes in with fresh eyes and policy comprises a number of initiatives continues the process of development. which are adapted to the individual, and which both the employer and the In order to attract new employees and employees utilise as required. retain those we have, it is important to highlight the qualities we represent. In Promoting competence 2008 the bank underwent a process to Sparebanken Vest attaches importance draw attention to itself as an attractive to development of the organisation, the employer. We believe strongly that employees and the managers. being an independent bank, having a varied working environment and being This shall be achieved by committed to Western Norway are • ensuring that Sparebanken Vest is factors which contribute positively to this perceived as an attractive employer perception. This is also clear from the enabling us to attract and retain the annual survey of the organisation. desired competence • ensuring that we have a good working Younger employees environment characterised by job The bank’s trainee programme continued satisfaction and commitment, to enable in 2008. There were many applicants, us to achieve even better results enabling us to recruit high-quality • offer effective payroll and personal- candidates to the programme. Several of administrative services of high quality to the younger employees would like to have a employees, managers and elective officers different kind of working environment and in Sparebanken Vest, subsidiaries and in the period ahead we will be taking steps associated companies to cover this requirement. • ensure that the financial services group’s competence planning, development Senior employees initiatives and competence evaluation Our senior employees have valuable are characterised by high quality and competence which is sought after. A good effectiveness senior policy at company level is one that • ensure that Sparebanken Vest’s market

PAGE 54 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 and performance culture is strengthened, • Communication training enabling us to realise our strategic • Media training course ambitions The bank has also made use of e-learning In Sparebanken Vest, competence courses covering various legal and other encompasses knowledge, attitudes, skills professional subjects. and abilities. These attributes are important in our competence activities. In 2008 Sparebanken Vest set its sights on establishing a new and more ambitious Our aim is to be known for having talented learning culture. A separate learning employees who believe that development, facility aiming to provide comprehensive cooperation and initiative are important, so competence building within the organisation that the customers are able to cover their will soon be a reality. Important areas of focus need for financial advice and services in are the development and implementation different phases of life. of different learning tools which to a greater extent than today support learning as an 4 100 days of training in 2008 integrated part of the employee’s everyday RNIN I 2008 the bank provided 4 100 days activities. A new competence control system LEA G

C

of training using internal and external is being implemented, which will support O

N

N

O T

I RESOURCES

resources: employees and managers. R T

I A

B

V

U

O

• Management development courses T

N I

N N I

• Training in products and systems for Frende An authorisation scheme for financial G liv and Frende Skade advisers in the area of savings and • Training related to the new Securities investment calls for strong professional and A new learning culture has trading Act communicative skills. The bank will therefore been established • Professional and systems training in the be focusing on training and certification Main areas of focus are the development and area of credit activities in the next couple of years. implementation of learning • Introductory programme for new tools which to a greater employees In 2008 a good course portfolio was extent than today support learning as an integrated • Training programme designed specially for established and external resources part of each employee’s daily trainees assisted the bank in its major focus on the activities. • Monthly course for all corporate market development of competence. employees, focusing on relevant areas

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 55 4.3 SOCIAL RESPONSIBILITY | EMPLOYEES A fit bank

Sparebanken Vest wishes to encourage employees to keep in good physical condition. A number of different activities are planned in 2009 to promote the focus on health.

All Sparebanken Vest employees are now 2007 and 2008 it stood at 4.7%. This is Sporty girls at Sparebanken Vest covered by health insurance. This ensures considered to be good, and is lower than get warm at the bonfire on Mount Fløyen; Inger Cecilie Borsheim, that those who fall ill or are injured will the average for the finance industry. As Silje Rylandsholm Trettenes and receive treatment more quickly. an inclusive company, Sparebanken Vest Hildegunn Lønningdal. collaborates with the Norwegian Labour One of the health-promoting initiatives and Welfare Administration to provide introduced by the bank in 2008 is free employees with close follow-up. fruit to all employees. The bank has an active company sports team offering a Sparebanken Vest believes that employees variety of activities, as well as employee should be able to adapt their working hours discount agreements with the biggest to correspond with their phase of life and training centres. The level of sick leave has work situation. been stable in the last few years. In both

PAGE 56 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 On the road again Guntveit who has been involved since the Rasmus Sognnes idolizes Erik Huseklepp After a short period of inactivity, the start. during Sparebanken mountain walking group found its feet Vest’s family day at again in 2008. The programme for 2009 Among last year’s trainee group the Brann Stadium. offers a variety of stimulating outings in outdoor life was a topic of conversation wonderful scenery. from day one, and in no time a group had decided to carry on the good work that The mountain walking group was started by had been started. Then things began to keen walkers from Sparebanken Vest more happen. than ten years ago. The aim was to get people active and combine physical activity – We decided to take charge and revitalise with social interaction, while enjoying more the mountain walking group. Full of of the wonderful scenery that surrounds enthusiasm, good ideas and a tempting us. Over the years there have been many programme we hope both old and new memorable day and weekend trips, both walkers will join us in the great outdoors, walking and skiing. says Pål Kristian Haugetun, one of the new trainees. – I’ve been on these trips, and I have seen places that I otherwise never would, with countless memories, says Anny Hordvik

Supplier-demands

Sparebanken Vest aims to have an and Korskirkealmenningen in Bergen has environmentally friendly purchasing policy ISO 14001 certification. which is in agreement with the suppliers. Adapting products and services to the Rather than creating guidelines for environment suppliers, the bank has started making Sparebanken Vest is in the starting block demands on the suppliers through when it comes to adapting products and environmentally friendly agreements and services to the environment. I 2008 we purchases. The bank has also written to focused on reducing the use of paper in around 10 of the largest suppliers asking payment transfer services. them to report on their environmental activities. It is a question of getting more customers to use electronic services such as e-invoices, Sparebanken Vest’s writing and copy while reducing the use of paper-based giros paper has the swan mark. The provider of at the same time. This work will continue cleaning and canteen services at Kaigaten in 2009.

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 57 4.3 SOCIAL RESPONSIBILITY | SOCIETY Value creation on a higher level

Sparebanken Vest has a mutually close relationship with the private, public and voluntary sector in Western Norway. By virtue of being a savings bank we are able to allocate up to 25% of profits in the form of grants for the benefit of the public. In 2008, Sparebanken Vest distributed NOK 100m to good causes in Western Norway.

For many years the bank has honoured its social Figures that speak for themselves responsibility by allocating grants for the benefit of the Sparebanken Vest is one of the Norwegian savings public. For this, the bank has a designated department banks that each year allocates a large part of its profits - Visjon Vest - which manages the funds used for grants to grants for the benefit of the public. Through Visjon and follows up all who are recipients of the bank’s Vest the bank channels up to 25% of its profit after tax support. and dividends to projects for the benefit of the public in Western Norway. Each year, Visjon Vest receives several thousand applications from voluntary associations and In 2008 the bank allocated NOK 150m of its profits organisations. As well as assessing these applications, to projects for the public benefit. Of this, NOK 50m Visjon Vest also initiates many projects which the was credited to the bank’s gift fund. Visjon Vest thus bank believes are important for Western Norway. The had NOK 100m at its disposal in 2008. Based on following pages give a brief insight into some of the Sparebanken Vest’s vision, its activities for the benefit many inspiring projects in which Sparebanken Vest had of the public represent a very specific contribution in the pleasure of participating in 2008. terms of its desire to «be a driving force for social and

PAGE 58 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 commercial development in Western Norway». Visjon must agree on the projects that should be prioritised. Vest has defined four key focus areas under each of the By highlighting transportation and communications two categories social development and commercial projects we wish to place emphasis on transportation and development, as shown in the model below. communications in a labour market perspective.

Humanitarian activities Social development Commercial development These funds are largely related to projects outside our primary area of activity. We live in the richest region in Formative years Research and competence one of the richest countries in the world. This gives a clear responsibility to cast our eyes towards far less privileged Culture Innovation parts of the world.

Transportation & Climate communications Research and competence Humanitarian activities Culture-based commerce The commercial sector in Western Norway is internationally oriented, and largely linked to energy. Globalisation and climate changes will therefore greatly Demanding capital affect our region. The changes facing us call for new The eight areas of focus are in many ways important knowledge and innovation. Universities and university prerequisites for the further growth of our region. colleges are important institutions at every level of a Although our grants for the benefit of the public do not commerce-oriented focus in a knowledge-based society, call for any reciprocity on the part of the recipients, the and we cooperate well with the university colleges and funds from Visjon Vest must be regarded as demanding universities in Western Norway. capital. This means that we continuously seek to maximise the return of the projects we support. The Innovation return is the increase in, and sharing of, competence. We know that, to a great extent, trade and industry in the future will be based on knowledge-based companies, Formative years and the regional innovation capacity will therefore be Through focusing on children and young people, Visjon a decisive factor in determining how attractive Western Vest has been involved in promoting a number of projects Norway will be in 20 years. If the region is to retain that have contributed to favourable conditions for young the important position it holds in the creation of value 4.3 SOCIAL RESPONSIBILITY | SOCIETY people in their formative years in Western Norway. in Norway, there must be a clear focus on innovation. Working in this area is investing in the future, since Through a number of collaboration projects and various the region is completely dependent on the creativity fellowship schemes, we wish to promote innovation and Value creation on a higher level and competence of the coming generations. We know creativity in Western Norway. how important the childhood and adolescent years are for the ability of the individual to cope later in life, Culture-based commerce and in Western Norway there is an army of voluntary The adventure industry is growing strongly throughout associations and organisations which do a tremendous the world, and culture-based commerce is also very amount of work for children and young people. relevant for Sparebanken Vest. Film, music and tourism Sparebanken Vest is glad to be an active participant on are three important areas for us. For several years we this team. have played a key role in the development of film in Western Norway. Through cooperation with several music Culture festivals we have seen that culture-based commerce and A rich cultural life is one of the main factors involved in local development often go hand in hand. Tourism is an making a place attractive, and attractive places attract industry with long traditions in our region and we wish to new people. Western Norway needs many new people contribute to greater competence in this area as well. in order to meet the recruitment challenges now facing us. We need the important environments where cultural abilities can thrive and develop, and we need the unifying Culture-based and not least creative work that is provided by cultural 14,4% commerce 19,9% artists in Western Norway. Research and Transport and competence 3,1% communications 8,7% Innovation 4,8% Bank funds distri- Humanitarian Transportation and communications buted by category activities as a percentage Naturally, infrastructure, transportation and Climate Culture 12,8% 18,8% communications are of central importance to Western Sundry 2,8% Formative years Norway. Sparebanken Vest wishes to play a part in allocations 14,98% putting major transportation and communications projects on the agenda. If our counties are to grow and develop, the commercial sector and the politicians

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 59 4.3 SOCIAL RESPONSIBILITY | SOCIETY Business Foundation in Sogn & Fjordane

In January 2008 Sparebanken Vest made a provision of NOK 3m to set up a Business Foundation in Sogn & Fjordane. Initially, the bank’s initiative is aimed at the establishment of new enterprises and good commercial concepts in the early phase of development.

The Foundation can also support other good initiatives funds have been used as stipulated. The Foundation that can contribute to commercial development in the can support commercial development in all industries, county. For example, building on existing commercial but preferably in the traditional industries of Western activity or developing spin-off effects. Norway. For example, relevant areas would be; • maritime enterprises The aim is to give good ideas a chance to develop • manufacturing through; • aquaculture • the establishment of new businesses • tourism • new production methods and/or organisation • knowledge-based industry • placing tasks and work operations in a new context • commercial services and separating independent units • activities which have potential in relation to other The Board of the Foundation believes that there are many business areas or new markets good initiatives in the county. In 2008, project support • synergies through activity based on human interaction totalling NOK 1.1m was approved, and of this NOK 0.5m has been paid out. The Foundation uses The Board of the Foundation can issue guidelines on external assistance to manage the Foundation and to deal the areas that qualify for support and shall ensure that with applications before they receive Board consideration.

Mountain Sports Festival in Sogndal

The Mountain Sports Festival invited both young and old early to say that the Festival’s sponsors are well on the to a packed programme of events including know-how, way to achieving the project’s goals: snow-based activities and creative competitions. During the day, Sogndalsdalen and Jostedalen were the arena • The Mountain Sports Festival has put Sogn on the map for skiing and snowboard competitions, mountaintop as a winter destination. hikes, ice-climbing, powder-snow skiing, shows and • The Mountain Sports Festival strengthens the competitions. Visitors to the Mounting Sports Festival recruitment of new students to the University College left with a rucksack full of advice and know-how about in Sogn & Fjordane. mountains, snow and safety on steep slopes. • The Mountain Sports Festival is a boost to adventure tourism in the region. An important festival for the region • The Mountain Sports Festival attracts new visitors to The Mountain Sports Festival is all about fun and games, the region. transfer of information and development work. But most • The Mountain Sports Festival creates great enthusiasm of all it is about bringing Sogn’s mountain sports experts locally, not least thanks to broad coverage by NRK. together and pooling expertise to create something • The slogan «Steep fun» has become a concept in Sogn new. Visjon Vest has been a key business partner for the & Fjordane. Mountain Sports Festival since the start, and it is not too

PAGE 60 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 4.3 SOCIAL RESPONSIBILITY | SOCIETY Knowledge is our main currency

Knowledge and competency are key resources for the development of Western Norway. In order to ensure the quality and legitimacy of projects and processes, Visjon Vest seeks advice from different professional environments through brainstorming, juries and other networks.

Many of the projects are developed at the meeting point Visjon Vest contributes with more than purely financial between different knowledge-based environments. By support. In projects which we define as strategic drawing on resource persons, externally and internally, in cooperation we contribute actively with competence the project development stage, Visjon Vest forges many and networks in our meetings with project partners. valuable links, and often this enables us to establish links that disregard professional borderlines. We can also help to give the projects a clearer profile, which can be useful in getting projects started. «I think that Visjon Vest is to be congratulated on the way it has entered the scene actively, quickly and clearly, and taken Naturally, involvement of this kind requires resources, decisions concerning the two projects that we have collaborated but it is our experience that this is the best way to on.» (Hauge Tveit Anniversary 2008 and Litteraturhuset i Bergen, achieve project development. editorial note.) Kristin Helle-Valle

From sea and land to the table

Rogaland occupies the position of the leading food There is a high level of regional involvement when it county in Norway. An important part of business comes to food and food quality. And with the Good development in the years ahead will be promoted and Food Festival, a new and important arena has opened driven by experiences, and in this context good raw up for innovation in agriculture and developments in materials, good food and good health will be important. the food industry.

The aim of the Good Food Festival is to promote Visjon Vest, which is a key partner for the Good Food interest in food by arranging a festival for the public at Festival, realises how important competence is behind large based on food and culture. The festival presents the festival scenes in creating a new display window the breadth of food in the county of Rogaland; from for the modern food industry in Western Norway. sea and land to the table. In the years since it started, several hundred thousand people have visited the festival.

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 61 4.3 SOCIAL RESPONSIBILITY | SOCIETY Part of the news picture

A good reputation is important for long-term profitability, and media coverage has an impact on reputation. Media coverage increased more than 50% in 2008 when compared with 2007.

The number of times when Sparebanken newspaper columns. Vest has been written about by the media Among other matters of interest during has increased from 260 in 2003 to more 2008 was the bank’s involvement as than 2000 times annually. a resource and competence centre in connection with the transportation Sparebanken Vest has clear views on the and communications focus at Ryfast in development of Western Norway, and when Rogaland. Sparebanken Vest’s ranking as important regional matters are on the agenda Norway’s best major bank, for the second our contribution to the debate is heard. successive year, received good coverage by several of Norway’s media houses. «It is our experience that Sparebanken Vest makes a difference» Hilde Bjørkum, Director of the Førde Festival Naturally, the bank has been most visible in Bergens Tidende and Bergensavisen (BA), followed by Sogn Avis, bt.no, dn.no, The bank has established itself both as ba.no. Firda, and then NRK, Dagens a point of reference and as a source of Næringsliv, Fjordenes Tidende, Aftenposten, consultation when opinions are challenged, Aftenbladet.no, Strilen, Haugesund Avis, matters are to be investigated or a Stavanger Aftenblad and Rogalands Avis competence environment is to give advice. with roughly the same volume.

Sparebanken Vest was in 2008 part of the The months of June and October top the news picture in different media. The bank’s statistics, but throughout the last quarter of official view on finance, monetary policy 2008 there was a steady stream of articles and the national budget is often reported which placed Sparebanken Vest in the news on, and its role as a financial adviser is picture. becoming increasingly apparent in the

PAGE 62 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Sparebanken Vest has clear views on the development of Western Norway. Sparebanken Vest was in 2008 part of the news picture in different media.

The Business Barometer takes the business pulse

The Business Barometer for Hordaland and Sogn & presents business expectations Fjordane reflects lines of development and expectations for the coming period. for the coming year in the commercial and public sectors. The Business Barometer was The Business Barometer comes out twice a year – in originally a Sparebanken Vest January and May. It is based on a survey sent to around project, but in the last few years it has turned into a 2000 companies in Hordaland and Sogn & Fjordane. broad partnership. Today, it is a cooperation between The Barometer has around 40 pages, with summaries, Sparebanken Vest, Innovation Norway, Hordaland features and industry analyses. The surveys are County Council, Sogn & Fjordane County Council, the conducted by Asplan Viak, partly in cooperation with the Norwegian Labour and Welfare Administration in both business barometer published by the Confederation of counties and the Confederation of Norwegian Business Norwegian Business and Industry. and Industry. This cooperation is regulated under a separate agreement. The industry analyses focus mainly on key industries such as energy, the marine and maritime sectors and The Business Barometer is distributed to 5000 subscribers tourism. There are also reports on industries experiencing in the private and public sectors. The January issue was changes. Also included are cases and in-depth interviews. presented at separate events in each of the bank’s The cases relate to the findings of the survey.T he regions. In Bergen this takes place in cooperation with Business Barometer is an important document for Bergen Chamber of Commerce and Industry. managers and politicians in Western Norway since it

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 63 4.4 CLIMATIC AND ENVIRONMENTAL RESPONSIBILITY Targetting a better environment

Sparebanken Vest has an active and forward-looking focus on the environment, both internally and externally. As a major player in the commercial sector in Western Norway, the bank wishes to make a contribution to ensure that environmental issues are dealt with and developed.

In February 2008 the BoD therefore decided an individual level, it is difficult to know how to raise Sparebanken Vest’s environmental to contribute to stopping global warming. ambitions to a higher, yet achievable, level. This is why channelling of information is important. Knowledge and involvement are A designated programme for climate and effective ways of preventing helplessness the environment was established for the from taking over. The issues of climate is thus purpose of defining and highlighting the a key part of the bank’s work in the area of bank’s level of ambition, and to identify, research and education, as are innovation specify and implement necessary initiatives and creativity, and they will continue to be so within the bank itself. in the coming years.

Plans have been approved for a number of Environmental Lighthouse internal steps to be taken by Sparebanken One of the main environmental initiatives for Vest in 2009. These are measures aimed at Sparebanken Vest in 2008 was certification reducing energy and paper consumption, of the bank’s head office in Kaigaten recycling of electronic waste, environment- and the office inK orskirkeallmenningen aware travel activity, and the need to as Environmental Lighthouses, as well as manage the bank’s properties taking targeted work relating to purchasing policy, account of the effect on the internal and product development and credit and risk. external environment. Certification helps to give positive attention to the reductions in energy consumption, We already have a good understanding CO2 emissions and waste. The bank has of the way global warming can have fatal already implemented: consequences, also for Western Norway. Part of Sparebanken Vest’s approach to Green IT the enormous environmental challenges As a major administrative company, the facing us is to contribute with resources for bank has a considerable computer park in research and channelling of information. At respect of which a number of environmental the same time we see how important it is to initiatives have been implemented. Green IT disseminate scientific information to as many has been established and put on the agenda people as possible. Global warming is the as part of the bank’s new IT strategy. In 2008 greatest threat to our time, and many people it was decided, among other things, that IT feel powerless to do anything about it. At equipment which is replaced is to be sent for

PAGE 64 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 recycling. In addition, IT equipment is now The bank’s new head office delivered in large cabinets and the amount of The bank’s new head office is due for waste packaging has been greatly reduced. completion in 2012 and to ensure that So-called thin clients are used which lead it meets already established targets, to reduced energy consumption, a longer the building process is subject to strict product lifetime and fewer servers. environmental requirements.

Transport It is intended that the building will receive Sparebanken Vest has many branches, environmental certification and that there from Rogaland in the South to Sogn & shall be compliance with an environment Fjordane in the North, which require some plan for environment targets, main targets of the employees to travel long distances. and sub-targets. In order to reduce travel, and thus also CO2 emissions, new electronic meeting The internal environment shall promote job equipment is being installed in 2009. satisfaction and the health of all users of the Reduced travel also has positive effects for building. The energy consumption shall be the employees as it means more efficient as low as possible and not more than 100 use of working time and less strain of travel. kWh/m2years, the materials used shall aim to reduce the environmental strain on both «There is a very positive perception of the bank here, the external and the internal environment, and the projects which you have supported have and as far as possible shall be recyclable. been good for both the bank and the region.» The management of waste shall also aim to reduce further the overall level of bank waste. Andreas Lien, Partner, Melvær & Lien Idé-entreprenør (Stavanger) Reports, learning facility, initiatives and Waste management and energy Chair of Climate Economics consumption In addition to internal activities, Sparebanken The bank is taking major steps to Vest - through Visjon Vest - is active in reduce waste and energy consumption. contributing financially to environmental In 2009 the bank’s own recycling initiatives in its area of operations. points will be placed in Kaigaten and Korskirkeallmenningen, while double-sided All of the initiatives mentioned below are printouts and multi-printers will be installed funding of a survey to provide information as standard throughout the bank. The bank on how changed operating conditions affect has also introduced the use of electronic main industries such as fisheries, aquaculture, account statements and the customers shipping, energy, offshore and tourism, as are encouraged to make active use of well as support for a research report from electronic payment services (autogiro etc.). IRIS which identifies business potential in our In order to reduce its energy consumption, region in the area of green energy. The bank the bank has taken active steps in the last has also provided teaching material on the few years to install energy-saving solutions environment to upper secondary schools, and in all its buildings. In addition, an energy- has established a Chair of Climate Economics saving analysis was carried out in 2008 at the Norwegian School of Economics and along with thermal photography of the Business Administration in Bergen. bank’s two large buildings in Bergen as part of the banks determination to reduce energy consumption. Important climate projects in 2008

• Vestlandskonferansen (Western Norway Conference) NOK 2 000 000 • Norsk Bremuseum (Norwegian Glacier Museum), Fjærland NOK 2 000 000 • VilVite (Bergen Science Centre) NOK 2 000 000 • Norges Vitenskapsakademi for polarforskning (Norwegian Academy of Science for Polar Research) NOK 1 000 000 • Beskyttelse av Bergensområdets sjøfront (Protection of the seafront area in Bergen) NOK 750 000 • Klimaprosjekt (Climate Project), Bergen College of Architecture NOK 500 000 • Nordhordland Bioenergi (Nordhordland Bioenergy) NOK 500 000

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 65 4.4 CLIMATIC AND ENVIRONMENTAL RESPONSIBILITY Green power for the world from Western Norway

The 9th Western Norway Conference, Vestlandskonferansen, to be arranged by Sparebanken Vest since 2002, had “Green power to the world from Western Norway” as its theme.

Sparebanken Vest arranged the Western IRIS Research in Stavanger presented Norway Conference 2008 together with a report which showed the potential of Stavanger Aftenblad, Bergens Tidende, Western Norway as an internationally Firda and Sunnmørsposten. The conference leading environment-friendly energy region. was attended by 200 people from Western Norway. The conference considered energy - Norway and Western Norway are Europe’s forms and competence in areas where the major powers in terms of energy. Climate region was especially strong: wind power, changes give Western Norway the biggest water power, oil/gas and solar energy. industrial opportunity of our time, said

PAGE 66 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 4.4 CLIMATIC AND ENVIRONMENTAL RESPONSIBILITY

Vestlandskonferansen, The Western Norway Conference has become an important institution which seeks to set the agenda for critical lines of Green power for the world from Western Norway development in the area of social economics.

Professor Torger Reve from the Norwegian Gunnar Eskeland, the recently appointed School of Management (BI). professor of Climate Economics at the Norwegian School of Economics and One of the attractions at the conference Business Administration (NHH) pointed was solar energy pioneer Alf Bjørseth, who out that the challenges facing us can be started NorSun in Årdal. His message was exploited positively if we have politicians, a that energy competence is just as important commercial sector and a population who for the region as natural resources. A are capable of change. Gunnar Eskeland was pamphlet was presented at the conference awarded the professorship, which is funded dealing with green energy. The pamphlet by Sparebanken Vest, last autumn. was produced in collaboration with science teachers, and has been distributed to a number of schools in Western Norway.

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 67 4.4 CLIMATIC AND ENVIRONMENTAL RESPONSIBILITY Prepared for climate change

- Climatic changes will come, regardless of what we do today. Knowing how we can prepare for change will be more important than the changes themselves, says Gunnar Eskeland, Professor of Climate Economics at the Norwegian School of Economics and Business Administration (NHH).

- Climatic changes will come, regardless of disappear. But it managed to readjust, what we do today. Knowing how we can becoming especially competent at covering prepare for change will be more important the requirements of the offshore industry than the changes themselves, says Gunnar and entering other technically advanced Eskeland, Professor of Climate Economics markets. The people, the companies and at the Norwegian School of Economics and the local communities responded to the Business Administration (NHH). requirements of the market, and the coming decades will also require the same - What are the prospects for Western Norway willingness to change. Important elements as a producer of green energy for the world? of change are knowledge and a sense of reality, and we may well be positively - They are good. Norway and Western surprised again by the commercial sector in Norway are rich in renewable resources, Western Norway in the years ahead. and the region has experience in adjusting and identifying new opportunities. The - What subjects should young people be The Chair of Climate Economics shipyard industry is a case in point. A few studying who want to work in the green held by Professor Gunnar Eskeland at NHH is funded by Sparebanken years ago it was virtually condemned to energy sector? Vest.

PAGE 68 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 4.4 CLIMATIC AND ENVIRONMENTAL RESPONSIBILITY Prepared for climate change

- The challenges call for more comprehensive often produced by polluting coal-fired competence than has been sought by the power stations. This will change over time, oil and gas sector. Naturally, there is a need partly through the use of technology to for engineers and mathematicians, but there remove C02. When that happens, it is very will also be a need for people who speak likely that we will see the electrification of languages, who understand politics and transportation and the new plug-in hybrid society as well as other cultures, and who car will want to join in the competition. have an understanding of international law. Almost all of Norway’s electricity is Someone has to take the lead produced using water power. If a town in Changes mean that someone has to take the Western Norway, such as Stavanger, Bergen lead. Gunnar Eskeland believes that Western or Ålesund, decided to encourage the use Norway should exploit its unique position as of electric cars we would be able to set an a major producer of environmentally friendly example for the rest of the world. If we hydroelectric power to set an example as a take it seriously, we can help to promote region for electric cars. technological development that will be part of our response to the climate challenge, - The positive environmental effect says Gunnar Eskeland. of electric and hybrid cars globally is insignificant because the electricity is

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 69 5 | Annual Report 5.1 BOARD OF DIRECTORS 5.2 DIRECTORS’ REPORT

Developments in the global economy and in Norway led to a decline in stockmarket values, higher provisions for loan write-downs and an increase in financial costs. This is also reflected in the results for Sparebanken Vest.

The bank’s strategic foundation is nevertheless solid and our market position in Western Norway is strong. The BoD is satisfied with market development and the results achieved in a demanding year. A number of steps were taken to prepare for future progress. The BoD is pleased with Sparebanken Vest’s strengthened position and increase in customer- numbers. 5.1 ANNUAL REPORT The Board of Directors of Spare banken Vest

The BoD governs the activities of Sparebanken Vest and shall ensure that the bank’s funds are managed in a safe and appropriate manner. The BoD is responsible for the satisfactory organisation of the bank’s activities and has a duty to ensure that accounting functions and asset management are subject to appropriate controls.

The BoD comprises nine members and four deputy Deputy chairman members elected by the Corporate Assembly. The Anne Kverneland Bogsnes. Partner /senior adviser with chairman and deputy chairman are elected under ASI Management Consultants. Deputy Chairman and separate elections by the Corporate Assembly. Two member of the BoD since May 2007. Previously member members and two personal deputies are elected from and chairman of the bank’s Control Committee. among the bank’s employees. Only members of the Graduate of the Norwegian School of Management Supervisory Board who are elected by the employees followed by further relevant management training. are entitled to propose candidates to be members and Previously CEO of Helse Bergen HF, Haukeland deputy members of the BoD. Following the elections in University Hospital 2002-2006. Also experience as CEO April 2008 the composition of the BoD is as follows: of Rolls-Royce Marine AS, Foundry – Bergen, where she also held other management positions. Currently Chairman chairman of the BoD of the Harmonien Foundation and Trygve Bruvik. Chairman and BoD member since of Inventas Produktdesign AS, and deputy chairman of 2008. Previously CEO of Vesta in the period 1994 the National Institute of Technology. Also a member of - 2002. Currently holds BoD positions with several the BoD of Mantena AS, Ålvik Vekst, Kvam KF and Den companies in Western Norway including DNO ASA, Nationale Scene. Holding of Sparebanken Vest PCCs: 0. Marine Farms ASA, G.C. Rieber AS and It`s Learning AS. Previously chairman of the Executive BoDs of both BoD members the Norwegian Financial Services Association and Jan O. Yttredal. BoD member since 1998. Previously the Norwegian Insurance Association. Graduate of CEO of Sør-Norge Aluminium until May 1998. Previously the Norwegian School of Management and Bergen many years’ experience as director at various levels with College of Engineering. Holding of Sparebanken Vest Norsk Hydro. Graduate engineer (NTH). Currently runs his PCCs: 1 000 own consultancy. Holding of Sparebanken Vest PCCs: 0

PAGE 72 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 5.1 ANNUAL REPORT

From left: Trygve Bruvik, Marit Solberg. Richard Rettedal, Gerd Kjellaug Berge, Jan O. Yttredal, Øyvind Atle Langedal, Anne The Board of Directors of Spare banken Vest Kverneland Bogsnes, Tone Mattsson and Arve Havnerås.

Øyvind Atle Langedal. Deputy CEO of Coast Center Richard Rettedal. CFO at Skanem AS. BoD member Base AS, Ågotnes. Member of the BoD since May since April 2008. Previously head of finance/adm. at 2007. Graduate of the Bank Academy and studies Roxar. Previous employment includes long periods in economics and management from NHHK. Head in Dubai. Graduate of the University of Wisconsin of management accounting/deputy CEO of Coast – Madison, Florida International University and the Center Base AS since 1998. Previous experience with University of Stavanger. Holding of Sparebanken Vest Økonomipartner Bergen AS, Rieber Skinn AS and PCCs: 0 Jebsens Rederi AS. Currently chairman of the BoD of Kirkenes Agency AS and Maritime Waste Management Arve Havnerås. Corporate Market Adviser - ass. AS and member of the BoD of Sambygg AS, manager. Employee representative. BoD member since Kirkenesbase AS and Helgelandsbase AS. 2003. Joined Sparebanken Vest in 1983. Bachelor of Holding of Sparebanken Vest PCCs: 0. Business Administration. Holding of Sparebanken Vest PCCs: 385 Gerd Kjellaug Berge. Director of Selje Hotel since 1976. BoD member since May 2007. Graduate of the Tone Mattsson. Main elected representative, the Norwegian Hotel School. Previous experience as flight Finance Sector Union of Norway. BoD member since attendant/instructor with SAS. Currently member of 2003 as employee representative. Joined Sparebanken the BoD of NHO Sogn & Fjordane, chairman of NHO’s Vest in 1986. Graduate of the Norwegian School of steering group for IA and a member of the BoD of Entra Management (Banking and Finance) and Bachelor of Eiendom AS. Holding of Sparebanken Vest PCCs: 0. Management. Holding of Sparebanken Vest PCCs: 200

Marit Solberg. CEO of Marine Harvest Norway AS. BoD member since April 2008. Graduate of the University of Bergen, Master’s Degree (microbiology). Currently member of the BoD of Norway Pelagic AS, Business Region Bergen AS, Eksportutvalget for fisk AS and NHO’s branch association for Fisheries and Aquaculture. Holding of Sparebanken Vest PCCs: 0

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 73 5.2 ANNUAL REPORT Directors’ report

Sparebanken Vest attracted 12 000 new customers and achieved satisfactory results and a good financial position, despite the economic downturn and turbulence in the financial markets in 2008.

Developments in the global economy and in Norway led BoD proposes a dividend of NOK 3.75 per PCC for 2008, to a decline in stockmarket values, higher provisions for in accordance with the bank’s dividend policy. The loan write-downs and an increase in financial costs. This BoD also proposes an allocation of NOK 30m as grants is also reflected in the results for Sparebanken Vest . for the benefit of the public. The Group has a capital ratio of 9.06% (9.67%), calculated after allocation of The BoD is satisfied with market development and the the profit for the year, and 11.21% when calculated in results achieved in a demanding year. 2008 was a good accordance with Basel II. and active year for Sparebanken Vest and a number of steps were taken to prepare for future progress. Business operations Sparebanken Vest is an independent listed banking The BoD is pleased with Sparebanken Vest’s and financial services group with branches in the strengthened position and the increase in customer- counties of Hordaland, Rogaland, Sogn & Fjordane numbers. The bank has continued to expand in and parts of Møre & Romsdal. The bank’s head Rogaland and Sogn & Fjordane, while at the same time office is located in Bergen. The bank has a total of 59 playing an active role in establishing the companies branches. The Group is also engaged in estate agency Frende Forsikring AS, Norne Securities AS and activities through Eiendomsmegler Vest AS, property Sparebanken Vest Boligkreditt AS, all based in Bergen. management through AS Filialbygg, and home loan activities through Sparebanken Vest Boligkreditt AS. The consolidated accounts for 2008 show a profit of All three limited companies are wholly owned by the NOK 615m (831m) before write-downs and tax. The parent bank. Sparebanken Vest is also the largest owner reduction in profits from financial instruments and of the securities company Norne Securities AS with a the increase in loan write-downs resulted in a pre-tax shareholding of 38%, and the largest owner of the profit of NOK 411m (865m), and a profit of NOK insurance company Frende Holding AS with 44.3%. The 207m (650m). The parent bank’s accounts show a companies are co-owned with 14 other savings banks. profit of NOK 249m (657m) after tax. After adjusting for changes in the reserve for valuation variances, the Strategic direction amount available for dividends is NOK 153m and the The bank’s vision is as follows:

PAGE 74 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 ”Through professional banking operations Sparebanken targeted yet obliging, and exhibit a genuine interest Vest shall be a driving force in the social and commercial in its customers’ requirements, wishes, ideas and local development of Western Norway.” environment.

Sparebanken Vest’s strategic direction remains Corporate Governance unchanged and the overriding objective for the next The Norwegian Recommendation on Corporate few years is for Sparebanken Vest to establish itself as Governance was unchanged in 2008. Insuring the leading and most preferred financial services group. compliance with the Recommendation is a matter of There are four key strategic themes: the realisation importance for the BoD. It is the view of the BoD that of Sparebanken Vest as a financial services group, the bank’s corporate governance is satisfactory and in strengthening cultural development and competence, accordance with the Norwegian Recommendation. greater efficiency of distribution and operations, and further development of the Sparebanken Vest brand. Under amendments to the Articles of Association in 2008 the chairman of the Control Committee is now Sparebanken Vest is engaged in targeted activities to directly elected by the Supervisory Board and the strengthen the bank’s competitive position in both the number of members of the Election Committee has short and the long term. This includes development of been reduced from nine to seven. In order to give it a the workforce and products, as well as management better understanding of the work of the BoD and the and control systems. bank, the membership of the Nomination Committee has been extended to include a previous chairman or Sparebanken Vest has chosen to be independent in a deputy chairman. social sector characterised by increasing centralisation and greater distance from the customers as a result Changes in both the market and the regulatory of resource-consuming amalgamations, alliances and environment mean that the bank’s elected acquisitions. Thanks to its independence, Sparebanken representatives are required to meet increasingly stricter Vest is dynamic and able to maintain proximity to the requirements, in terms of the resources and competence market and allow decisions to be taken at local level. they represent. There have been considerable changes Sparebanken Vest shall help its customers to succeed by in the composition of the BoD in the last two years, with maintaining an active presence and by demonstrating six new members. The BoD is particularly concerned its ability to find solutions adapted to individual to ensure that it has sufficient professional skills and customer requirements. Sparebanken Vest shall be competence. The work of the BoD is carried out in

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 75 accordance with an annual plan. In 2008 the BoD as grants for the benefit of the public. At year-end the carried out an assessment of its own work methods, Group capital ratio was 9.06% (9.67%), calculated competence and priorities, and of the cooperation on the basis of the proposed allocation of the parent between the BoD and the management. bank’s profit for the year. The BoD has set up three committees as part of its work. The Audit Committee shall ensure that Revenue items Sparebanken Vest has independent and effective Net interest income and credit commissions external and internal audit functions as well as Great volatility characterised the level of interest rates accounting and risk reports as required by legislation in 2008 and the key policy rate which at the start of the and regulations. The Credit Committee which considers year stood at 5.25% was reduced to 3.0% by year-end. credit matters within the scope of authorisations The financial turmoil that was a feature of the year approved by the BoD. The Remuneration Committee resulted in less access to long-term funding in the capital which shall ensure that the bank has a competitive market, and both interbank margins and credit margins but not leading salary policy which is regarded as were unusually high in 2008. During the year the bank motivating for the bank’s management in terms of changed its interest rates six times, with two further promoting the implementation of adopted strategy and changes in January 2009. Net interest income was also the achievement of stipulated targets. affected by intense competition for customer deposits and also by steps taken to build up structural liquidity. Annual Accounts Net interest income accounted for 77.7% (62.4%) of The annual accounts are submitted on the assumption operating income in 2008, and corresponded to 1.60% that the bank will continue as a going concern. This is (1.69%) of average total assets. based on operational forecasts for 2009 and projections with a time horizon extending for a further three Net other operating income years. Sparebanken Vest’s consolidated and company Net other operating income amounted to NOK 375m accounts for 2008 are presented in accordance with IFRS (678m) in 2008. This was NOK 303m down on the regulations as well as the regulations for annual accounts previous year, and of this NOK 301 was attributable and the accounting treatment of loans and guarantees to financial instruments, while net banking services as laid down by the Financial Services Authority of accounted for NOK 30m. Other income increased by Norway. The company accounts have been prepared on NOK 28m. Since 2005, Sparebanken Vest has been the basis of the scope given to apply simplified IFRS. As a applying the Fair Value Option (FVO) to determine the consequence of this, the profits returned by subsidiaries value of fixed interest lendings and fixed interest debt. are included in the basis used by the parent bank for the This means that in addition to value changes due to determination of dividends in the same year they arose. changes in the level of interests rates, the accounts The Group has thus not reclassified parts of the asset side also reflect value changes due to changes in the credit - from fair value assessment to amortised cost - which spread. In 2008 the net credit spread effect related to was permitted from mid-October. In the view of the BoD, the FVO portfolio amounted to NOK 182m (24m). The the annual accounts prepared in accordance with the consolidated accounts include the bank’s share of the principles described above give a correct picture of the losses recorded by associated companies in 2008 in the financial position of the Group. sum of NOK 37m (4m). The bank’s participation in a guarantee given to Eksportfinans represents a charge of Results NOK 27m in the accounts for 2008. The consolidated profit before tax was NOK 411m (865m). The decline from 2007 was mainly due to Net earnings on banking services were NOK 30m down financial instruments and the write-down of loans and on 2007. This was as expected and was due to the guarantees. The trend in net interest income has been change of insurance supplier combined with scaling down positive due to both volume and margin growth. The of commissions from the previous supplier. However, Group return on equity was 4.85% (16.24%), reflecting sales of insurance products from Frende Forsikring are the high effective rate of tax in 2008. Earnings per PCC developing very well. In the fourth quarter the bank stood at NOK 5.34 (18.95), also on a diluted basis. The reached a settlement with previous suppliers relating parent bank recorded profits of NOK 249m (657m) to disagreement concerning insurance distribution after tax. After adjusting for changes in the reserve for agreements. No structured savings products were offered valuation variances the amount available for dividends by the bank in 2008, and in accordance with the bank’s was NOK 153m. The BoD proposes a dividend of NOK accounting principles the income from previous sales is 3.75 per PCC for 2008 and an allocation of NOK 30m amortised over the product lifetime.

PAGE 76 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 As part of its market positioning strategy, the bank Volume development dropped bank charges for its customers with Customer The Group has total assets of NOK 94.9bn (75bn), Programmes with effect from June 2008, and at the and Sparebanken Vest can report good growth in both same time the interest terms for current accounts lendings and deposits, and is strengthening its market were adjusted. It is estimated that the overall effect shares in both the retail and the corporate markets. of these market adjustments will be a net reduction Lending growth in the last 12 months stands at NOK in earnings of around NOK 10m annually. Other 11.6bn or 17.9% (21%). Of this, corporate loans account operating income amounted to NOK 151m (123m), for NOK 6.4bn (43.6%) and retail loans NOK 5.2bn which includes the final settlement of commissions (10.4%). Corporate loans account for 27.7% (22.5%) receivable from previous insurance suppliers. of the bank’s total lending. The increase in the corporate market was also affected by drawdowns under previously Operating expenses approved credit lines and project financing, as well as the Operating expenses increased by NOK 95m. Of this, lower exchange rate for the Norwegian krone. Deposits in NOK 57m was attributable to higher pension costs. the last 12 months have risen by NOK 2.9bn (7.7%), with The increase should be viewed in relation to the corporate deposits rising by NOK 0.8bn (5.9%) and retail pension costs being lower in 2007 due to a change deposits by NOK 2.1bn (8.9%). in the pension plan. In 2007 the accounts included bonus costs of NOK 47.4m for the parent bank. The Dividends and allocation of profits - Parent Bank results for 2008 do not provide a basis for payment The BoD proposes that the profit for the year for the of a bonus. The accounts include a charge of NOK parent bank be allocated as follows: (NOK million) 2.5m posted by Eiendomsmegler Vest AS related to staff reductions. The cost level has also been Parent bank profit for the year before tax 455,7 affected by one-off costs of NOK 6m related to the Taxes -207,1 establishment of Sparebanken Vest Boligkreditt AS Profit after tax 248,5 and the amortisation of goodwill and shareholdings in the group Eiendomsmegler Vest AS to the sum of Change in reserve for valuation variances -95,6 NOK 4m. The increase in costs was also affected by Proposed dividend of NOK 3.75 per PCC 10,0 a good inflow of customers, higher business volumes Proposed allocation to grants 30,0 and the many changes in interest rates throughout Allocation to Sparebanken capital fund 113,0 the year. Risk and capital management Ratio of costs to income Risk and capital management procedures, as well The Group ratio of costs to income stands at 63.5% as control methods, are key focus areas of the BoD. (53.9%). Adjusted for capital gains/losses the ratio is Through quarterly reports the bank’s risk situation is 60.1% (61%). assessed in relation to the adopted control parameters, and the BoD believes that the bank’s overall Write-down of loans and guarantees exposure is largely within the risk profile parameters Net realised losses, including losses on guarantees, set for the bank. It is the view of the BoD that the amounted to NOK 23m (21m). Losses in 2008 totalled bank’s guidelines and processes for risk and capital NOK 204m (-34m). The aggregate write-down of management are satisfactory. loan groups at year-end totalled NOK 233m (104m), corresponding to 0.31% (0.16%) of the loans. The Sparebanken Vest’s risk management is concerned ratio for the corporate market was 0.86% (0.49%) with the bank’s exposure relating to strategy, financial and for the retail market 0.09% (0.06%). activities and operations. The strategic risk reflects the adopted strategy in light of developments in both the The increase in write-downs relates to volume growth, market and the competitive situation. The financial risk an increased likelihood of defaults and the poorer embraces credit risk, market risk (interest and foreign outlook for the real economy. exchange rates and share prices) and the liquidity risk, while the operational risk relates to unforeseen Effective rate of tax fluctuations in performance due to the inadequacy or Under the exemption model, gains/losses on securities failure of internal processes, systems or external events. are not deductible when calculating the tax charge. This resulted in a high effective rate of tax in 2008. The credit risk is managed according to the risk profile, defaults and losses, growth and the concentration of

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 77 exposure. In the view of the BoD, the overall credit risk is the bank and issue covered bonds for funding purposes. acceptable. Volume growth in the retail market declined The company became operative in the fourth quarter in 2008, while the corporate market showed strong and the portfolio has been accorded a rating of AAA. growth. Through the home mortgage company Sparebanken Vest will be able to achieve diversified funding on more The development of the retail market is strongly attractive terms. To date, the company, through the correlated to macro-economic developments, sales of bank, has exchanged covered bonds for government residential property and house prises. The bank had a bonds from Norges Bank for around NOK 4bn. The strategic ambition to grow in the corporate market in government bonds have been sold in the market, thus 2008, and the growth achieved was ahead of target. providing the bank with long-term funding.

The macro-economic repercussions of financial turmoil Interest rate exposure relates to the bank’s holding appear to be considerable, and there has been an of interest-earning securities, fixed-rate lending and ongoing downscaling of forecasts for the period ahead. fixed-rate deposits. The market turmoil in 2008 led to This revision is an indication of prolonged economic high interbank and credit spreads which is reflected in downturn. The consensus among forecasters is an the bank’s valuation of interest-earning securities with expectation of global recession in 2009. Due to market considerable effect on the accounting results in 2008. developments, the risk profile attached to the bank’s Norges Bank’s foreign exchange regulations determine credit portfolio increased in 2008. the maximum permitted foreign exchange risk. The bank’s aggregate foreign exchange exposure is moderate There has been some increase in actual defaults and and corresponded to NOK 36m at year-end 2008. write-downs of existing commitments, and this trend is likely to continue in the period ahead. At year-end 2008 the bank’s share portfolio had a market value of around NOK 530m. The parameters The BoD keeps abreast of developments and has taken and exposure are defined on the basis of commercial steps to maintain satisfactory quality and to monitor considerations and taking account of the bank’s wish the portfolio. to be an active contributor to social and commercial development in Western Norway. In relation to The crisis in the capital market underlines the importance the bank’s other activities, the BoD regards the risk of a liquidity strategy which ensures access to long-term attached to the share portfolio as balanced. funding and diversified funding sources. Over time, the BoD has been focused on a strategy which makes the The bank’s internal control procedures based on relevant bank less vulnerable in situations where the market Regulations have been established as an integrated has ceased to function, or where the bank enjoys less part of strategic management. Through its work on confidence in the marketplace. Developments in 2008 risk strategies and ongoing monitoring and controls have shown that the bank’s funding strategy has been the bank ensures that the regulatory requirements robust under difficult operating conditions. relating to overall risk assessment and confirmations are implemented. The identification of operational risk is The bank’s liquidity risk is managed on the basis of the based on expert opinions and management confirm­ liquidity indicator, the funding ratio and parameters ations, as well as events recorded in the bank’s event for unutilised, committed credit facilities and the database. Major events are reported to the BoD. The bank’s borrowing facility with Norges Bank. The bank’s actual operational losses in 2008 were small. liquidity indicator (including credit facilities) and the funding ratio should be 100% and 55%, respectively, In the autumn of 2008 the BoD considered the bank’s and throughout 2008 the bank was well within these risk and capital assessments together with proposed risk parameters, despite the considerable turmoil in the targets for 2009. As part of this, the BoD adopted new capital markets. At year-end 2008 Sparebanken Vest capital adequacy targets for Sparebanken Vest. Based had satisfactory liquidity and was in a position to on full implementation of Basel II from 2010, the bank’s operate without access to funding in the capital market target capital ratio has been set at 12% and the core for 12 months (structural liquidity). capital ratio at 9%. The figures for 2009 are 10% and 7%.

In 2008 Sparebanken Vest established the subsidiary Equity and capital base company Sparebanken Vest Boligkreditt AS. The At year-end, the Group had equity of NOK 4 372m company will take over well secured home loans from (4 293m). The qualifying capital base totals

PAGE 78 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 NOK 4 858m (4 597m), with core capital accounting the bank received from its customers. Raising the level for NOK 4 144m (3 963m). Core capital includes a of competence is central to the bank’s strategy and subordinated loan of NOK 421m (326m). The capital throughout the year various competence initiatives ratio stands at 9.06% (9.67%), of which core capital were implemented. In 2009 and 2010, 388 employees represents 7.73 percentage points (8.33). The bank in the retail market division will take part in a training has IRB approval in accordance with the Basel II programme in order to receive authorisation as financial regulations. Based on transitional regulations issued by advisers. the Financial Services Authority of Norway, the Basel II regulations will not have full effect until 2010. With full An important market-related initiative was implemented implementation of the Basel II regulations the Group’s in June when Sparebanken Vest abolished charges for the capital ratio at 31 December 2008 would be 11.21% bank’s customers with Customer Programmes. Sales of (14.72%), with core capital accounting for 9.56 (12.69) insurance products from Frende Forsikring have been very percentage points. At year-end 2008 the bank owned positive, exceeding the budgeted figures from the very 39 342 (33 450) of its own PCCs. start in 2008.

The decline in the capital ratio in 2008 is a reflection of Corporate market balance sheet growth, lower profits and application of The bank’s corporate market segment recorded an the grant fund. To a great extent, the bank’s activities inflow of more than 500 new customers in 2008, while in the period ahead will be determined by the bank’s net lending within the same segment increased by NOK capital adequacy. The BoD is constantly assessing the 6.4bn, or 43.6%. Deposits rose by 5.9% during the year need for adjustments to ensure that Sparebanken Vest and the funding ratio for the corporate segment ended is capitalised in line with the bank’s objectives. the year at 72.2%.

Retail market The bank has increased its focus on trade and industry The number of retail customers continued to grow in the last few years, paying particular attention to in 2008, confirming that Sparebanken Vest is still the the segment represented by small and middle-sized largest retail bank in the region. The net inflow of new companies. Steps are therefore being taken to strengthen customers during the year totalled 11 500 bringing distribution and manpower in the corporate segment, not the number of active customers to 219 000 at year- least in Bergen and the surrounding area. At the same end, and the level of customer satisfaction is good, time, the credit approval regulations have been adjusted as reflected in the stable and high marks scored in to enable swifter decision-making closer to the customer. customer surveys. The bank provides corporate market services at 18 of its 59 branches. In addition, much use is made of the In a survey conducted by Norwegian Family Economy in consultation services provided on designated days. The 2008, Sparebanken Vest was voted the best retail bank bank’s expansion in Rogaland has been a great success, among Norway’s largest banks for the second year in as reflected in the inflow of both corporate customers a row. and capital, both of which have exceeded expectations. At year-end, the bank’s corporate team in Rogaland Sparebanken Vest has 59 branches. Last summer, the consisted of eight experienced personnel centrally branches in Valestrand and Haus were closed, while a located in Stavanger and Sandnes. In total, the number new branch was opened in Stavanger in May 2008. of bank employees engaged in the corporate sector at 31 The retail segment recorded good results in 2008. December 2008 equalled 108 full-time positions. Lending increased by NOK 5.2bn, or 10.4%, compared with 2007, while customer deposits grew by 8.9%. Corporate clients are making increasing use of The number of customers with Customer Programmes electronic banking services. This led to a 14% reduction increased by 18%, while 7% more customers held a in over-the-counter transactions in 2008, despite Visa card, and the number of online banking customers an increasing number of total payment transfer was 8% higher. At year-end 2008, 121 000 retail transactions. The bank has also invested in raising customers were users of the online banking facility. competence standards, and this will continue in 2009. The number of over-the-counter transactions fell by Frende Forsikring is now offering a broad range of 9%. This resulted in a high level of activity for the products to the commercial sector and a high level Customer Centre which can also report a very high of activity is planned in this area. Based on the real sustained level of customer satisfaction. This makes an economy challenges facing the commercial sector in important contribution to the overall good score which 2009, there will be special focus on following up loan

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 79 customers and providing a good advisory service to For the first time, this year’s Annual Report contains companies facing challenges. The continuous process a separate «Social Report» describing the bank’s of developing competence among the bank’s corporate perception of its corporate social responsibility. client personnel will continue in 2009. Equity investments Capital market Sparebanken Vest wishes to contribute to growth and A number of major, future-oriented initiatives were development in its market area. Investments of this kind carried out by the Capital Market Division in 2008, call for considerable insight, a willingness to take risk related to both the organisation and the market. and patience on the part of the investors before a return can be expected. The long-term aim is to provide the Two new companies have been established within bank with a return on capital employed. In the period the Division’s area of activity: the wholly owned from the establishment of the scheme until the end of Sparebanken Vest Boligkreditt AS and the securities 2008 the funds invested have provided the bank with a company Norne Securities AS in which the bank has a good return, especially in the area of energy and marine 38% holding. Among steps taken by the bank and the activities and biotechnology. Division to reinforce competence and create a more visible profile was the establishment of the position of Grants for the benefit of the public Head Economist in 2008. A primary concern in 2008 was Under section 28 of the Savings Banks Act, and strengthening our focus on customers and customer- provided that the capital base is satisfactory, savings related activities within the Division. The customer-side banks may allocate up to 25% of the profit for the was strengthened with the addition of two full-time year, after tax and dividends, to grants for the benefit positions. This has already made a positive contribution of the public. Sparebanken Vest wishes to employ to the development of corporate sector activities. these funds strategically in line with the bank’s The Capital Market Division has also broadened its overriding vision; to be a driving force in social and collaboration with the bank’s other divisions in terms of commercial development in Western Norway. The product deliveries and professional support. bank’s activities in this area carried out under the name “Visjon Vest”. The funds are allocated partly to One of the Division’s main activities is covering the projects initiated by the bank, and partly to activities bank’s funding requirements. The bank has total assets based on applications. of around NOK 95 billion, and of this approximately 45% is funded in the national and the international In 2008, Sparebanken Vest distributed NOK 100m in money and capital markets. The bank’s bond portfolio the form of grants for the benefit of the public, and has been invested mainly in municipal, government and NOK 50m was allocated to strengthen the grant fund. government-guaranteed securities, and in Norwegian Based on the accounts for 2008, the BoD proposes banks. At year-end, the bank’s equity investments an allocation of NOK 30m of the profit for the year to consisted of shareholdings worth NOK 530 million, as grants for the benefit of the public. The balance of the well as shareholdings in subsidiaries and associated grant fund stands at NOK 175m. companies. For several years, Sparebanken Vest has defined Corporate social responsibility, Sparebanken Vest’s its work in the area of grants for the benefit of the «Social Report» public as strategic. Activities in this area differ from In the last few years the commercial sector has shown sponsoring in a number of ways. Most importantly, an increasing awareness that companies have a grants for the benefit of the public do not require any corporate social responsibility which extends beyond kind of commercial payback. But Sparebanken Vest their responsibility to show an accounting profit. still regards the funds managed through Visjon Vest as demanding capital. Our aim is to create lasting Both internationally and in Norway there is a tendency value for the region and ensure that funds which we for companies to develop their own strategies for provide for initiatives for the benefit of the public are corporate social responsibility (CSR). Sparebanken Vest’s instrumental in promoting and distributing knowledge corporate social responsibility is reflected in its vision and understanding. Further information about Visjon which seeks to ensure that through sound banking Vest is presented in the «Social Report» in this Annual operations the bank will be a driving force in the social Report. and economic development of Western Norway. Employees Sparebanken Vest wishes to exercise corporate social At year-end 2008 the Group provided the equivalent of responsibility in all aspects of its activity. The Directors’ 843 full-time positions, which were 40 more than the Report gives a brief description of the bank’s equity previous year-end figure. The increase was partly due to investments and activities related to initiatives for the the establishment of new branches and a higher level benefit of the public. of activity.

PAGE 80 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 BoD Ethics At the elections in 2008 three new members were elected The bank constantly underlines the importance of ethics to the BoD: Trygve Bruvik, Marit Solberg and Richard and rules of conduct. This is done through the introduction Rettedal were elected for a period of two years. Trygve programme for new employees and in the one-to-one Bruvik was elected chairman. Arve Havnerås (employee conversation on objectives and development which the representative) was re-elected for a period of two bank has with each employee every year. No infringements years. The following members left the BoD at the 2008 of the bank’s Code of Ethics were reported in 2008. It is the elections: Pål W. Lorentzen, Anne Gine Hestetun and view of the BoD that the bank has a high ethical standard Inger Karin Larsen. internally and in its contact with the customers.

Working environment HES - sick leave The bank has continuous focus on the working Sparebanken Vest is a signatory to the Inclusive Working environment. This is important for the achievement Environment Agreement. The level of sick leave within the of good results and in order to be an attractive bank has developed positively in the last few years and is and competitive place of work for employees and now well within the target limits set when the agreement managers in a tight labour market. The bank carries out was signed. One of the bank’s strategic objectives has been organisational surveys each year, and the survey in 2008 to bring the overall level of sick leave below the average for showed a very high level of employee-satisfaction. the industry, and this objective has now been met.

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 81 The percentage of sick leave in 2008 was 4.7% (4.7%). The full effects of the international financial crisis which For short- and long-term sick leave it was 2.2% and arose in the wake of the sub-prime crisis in the USA were 2.5%, respectively. The level of long-term sick leave felt in Norway in the third quarter. The financial crisis has is falling, while short-term sick leave is increasing. The contributed directly to the economic downturn in Norway low level of sick leave is largely attributed to the good by increasing the cost of capital, reducing liquidity and dialogue and follow-up that has been established increasing risk premiums in the money market. Indirectly, between the employees and their managers. In 2008 the financial crisis has contributed to greater uncertainty there were no injuries or accidents related to the bank’s about the future course of development. This in turn has activities. led to shelving of investments and lower consumption. Rising unemployment and falling prices underline the Equality need for economic stimulus, while providing scope for The BoD comprises nine elected members. Four of the a further decline in interest rates. The outlook will be nine elected members are women (45%). Women affected by the weak development of the real economy make up 24 (50%) of the members of the Supervisory internationally. The prospects for Norway will be Board and men 24 (50%), while the Control Committee determined by international operating conditions, with consists of two women and two men. Women make particular reference to the price of oil and developments up 57% of the bank’s total workforce and men 43%. in the main export markets. The Management Group consists of three women and six men. At other levels within the organisation men Norway’s strong national economy provides scope continue to be over-represented in managerial positions for economic stimulus. The course of economic and the BoD will continue to aim for a more equal development in 2009 will reflect the trend in gender distribution at these levels. unemployment and the development of the banks’ ability and willingness to take risk. The development External environment and climate changes of unemployment is of direct importance for private Sparebanken Vest uses no input factors or production consumption and housing-related investments. methods which directly pollute the external Indirectly, it will affect the prospects of the consumers. environment. The bank encourages environmental A high level of debt could result in a higher level of awareness in relation to the use of paper, the saving, which in turn could be instrumental in slowing management of waste and recycling. The bank has down economic development a broadly differentiated commercial portfolio and a number of companies with loans from the bank Positive economic development in Norway depends on a are engaged in activities that affect the external well-functioning banking system. The banks’ risk-bearing environment. Thus, through its business processes capacity has been reduced, partly because of lending related to the assessment of creditworthiness, growth, increasing uncertainty and write-downs and Sparebanken Vest is indirectly able to influence the losses on securities. In the absence of a supply of capital external environment, and it is a factor in the bank’s to the banking system and related strengthening of the assessment of creditworthiness. In 2008 a number of capital base, the banking system will be unable to play its steps were taken to increase the level of awareness of rightful role as a driving force in economic development. sustainable development and how Sparebanken Vest can contribute to counteracting the negative effects of Summary and prospects climate changes. Further information about the bank’s The bank’s strategy rests on solid foundations and its initiatives and objectives related to its focus on the market position in Western Norway is strong. The BoD environment can be found in the Social Report. will continue to focus on the Group’s market position and implementation of the adopted strategy. Macro-economy and operating conditions Macro-economic developments in 2008 were The bank’s funding structure and liquidity are good, and characterised by turmoil in the financial markets, structural liquidity was strengthened in 2008. Liquidity where the market capitalisation of the companies has been further strengthened with the commencement listed on the Oslo Stock Exchange was more than of operations by Sparebanken Vest Boligkreditt AS. halved, as a well as great uncertainty and liquidity Interbank margins at year-end were slightly down on the problems in the money and capital markets. The autumn margins, but the credit margins for long-term period since economic expansion peaked towards the funding in the money market are far higher than normal. end of 2007 has seen the pace of growth of GNP in The outlook for the real economy has worsened, Norway slow down. and as 2009 starts there is an expectation that both

PAGE 82 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 consumption and investment will decline. The forecasts The bank is prepared to provide both the retail and the also indicate a rise in unemployment. In the fourth corporate markets with credit based on appropriate risk quarter the Norwegian authorities took steps aimed at assessments and acceptable margins. As the new year improving liquidity and the cash flow in the interbank starts, the BoD believes there is little likelihood that, in the market. Further action is needed to curb the decline in short term, it will be possible to recoup the loss in value of the real economy and this is expected early in 2009. the securities portfolio that took place in 2008. However, it is expected that, despite the steps that have been taken, there will be major challenges in the real 2009 is likely to be a year of great challenges and economy, both internationally and in Norway, for the possibilities in both the commercial and the private next couple of years. markets. Sparebanken Vest is well equipped to respond to this. The bank expects a further decline in interest rates in the first half of 2009.T his should stimulate the demand for Vote of thanks to customers, business both consumer and investment products. The uncertainty associates, elected representatives, management ahead will also have significance for Sparebanken Vest’s and employees primary market area – Western Norway. 2008 was a demanding and active year for the bank, calling for flexibility and great efforts throughout the Sparebanken Vest has already taken a proactive approach organisation. The BoD wishes to thank all customers, to customers showing the initial signs of an inability to business associates, elected representatives, meet their loan obligations. The bank’s response has management and employees for their cooperation and above all else been to contribute to the maintenance of satisfactory results. healthy corporate and household economies.

Bergen, 31 December 2008 / 24. February 2009 The Board of Directors of Sparebanken Vest

Trygve Bruvik Anne Kverneland Bogsnes Richard Rettedal Chairman Deputy chairman

Jan O. Yttredal Marit Solberg Øyvind A. Langedal

Gerd Kjellaug Berge Arve Havnerås Tone Mattsson

Stein Klakegg Managing Director

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 83 6 | Accounts and Notes Account and Notes - contents

6.1 PROFIT AND LOSS ACCOUNT AND BALANCE SHEET 6.5 AUDITOR’S REPORT 6.2 STATEMENT OF CASH FLOWS 6.6 CONTROL COMMITTEE’S REPORT 6.3 EQUITY MOVEMENTS 6.7 DECLARATION FROM THE BoD AND CEO 6.4 NOTES 1-35 6.8 KEY FIGURES

The Sparebanken Vest Group comprises Sparebanken Vest, Sparebanken Vest Boligkreditt AS, Eiendomsmegler Vest AS and AS Filialbygg. Sparebanken Vest was founded in 1823 as Bergens Sparebank. The bank is an issuer of primary capital certificates which have been listed on the Oslo Stock Exchange since 4 January 1995.

The bank is located in Hordaland, Sogn & Fjordane and Rogaland, and is based in Bergen. The head office address is: Kaigaten 4, NO-5016 Bergen. The consolidated accounts for 2008 were considered and approved by the Corporate Assembly on 12 March 2009. Accounts and Notes - Contents

Profit & Loss Account and Balance Sheet...... 86 Profit and Loss Account Statement of cash flows...... 89 Equity movements...... 90 Parent Bank Group

Note 1 Accounting principles...... 91 1/1-31/12 1/1-31/12 Note 2 Segment information...... 95 2007 2008 Notes 2008 2007 3 654 5 576 Interest income etc. 5 548 3 642 Note 3 Net interest income and credit commissions...... 97 2 521 4 266 Interest expenses etc. 4 240 2 516 Note 4 Interest on individual balance sheet items...... 97 Note 5 Net other operating income...... 98 1 133 1 310 Net interest income and credit commissions 3 1 308 1 126 422 393 Commissions receivable and income from banking services 393 422 Note 6 Salaries and general administration expenses... 99 75 76 Commissions payable and cost of banking services 76 75 Note 7 Other operating expenses...... 102 233 (54) Net gain on financial instruments (93) 208 2 52 Other operating income 151 123 Note 8 Taxes...... 103 582 315 Net other operating income 5 375 678 Note 9 Classification of financial instruments...... 105 1 715 1 625 Net operating income 1 683 1 804 Note 10 Fair value of financial instruments...... 106 677 748 Salaries and general administration expenses 6 844 767 Note 11 Loans...... 109 56 69 Depreciation 19/20 86 68 144 149 Other operating expenses 7 138 138 ...... Note 12 Defaulted commitments 116 877 966 Total operating expenses 1 068 973 Note 13 Renegotiated loans...... 116 838 659 Profit before write-downs and tax 615 831 Note 14 Loans to and receivables from credit institutions.117 (34) 203 Write-downs and losses on loans and guarantees 11 204 (34) Note 15 Shares...... 118 Note 16 Shares recognised at fair value through 872 456 Profit before tax 411 865 215 207 Taxes 8 204 215 profit or loss...... 119 Note 17 Commercial paper and bonds recognised at 657 249 Profit after tax 207 650 fair value through profit or loss...... 120 Majority interests 206 649 Minority interests 1 1 Note 18 Shares in subsidiaries and associated companies.121 Note 19 Intangible assets...... 122 Allocation of profit (48) (10) Dividend on primary capital certificates Note 20 Fixed assets...... 124 3 (96) Transferred to reserve for valuation variances Note 21 Financial assets and insurance liabilities (462) (113) Transferred to Sparebanken capital fund (150) (30) Transferred to gift fund and/or gifts for the public benefit - customers bearing the risk...... 124 (657) (249) Total allocations Note 22 Debt to credit institutions...... 125 19.19 6.45 Profit per PCC (based on the PCC proportion of capital base ) 28 5.34 18.95 Note 23 Deposits...... 126 19.19 6.45 Diluted profit per PCC 5.34 18.95 Note 24 Securitised debt...... 128 Note 25 Pension commitments...... 129 Note 26 Subordinated loan capital...... 133 Note 27 Capital adequacy...... 134 Note 28 Primary capital certificates...... 137 Note 29 Guarantees and mortgages...... 139 Note 30 Liquidity risk/residual maturity of balance sheet items...... 140 Note 31 Sensitivity analysis - market risk...... 141 Note 32 Interest rate sensitivity...... 142 Note 33 Foreign currency positions...... 142 Note 34 Transactions with associated companies...... 143 Note 35 Disputes...... 143 Auditor’s report...... 144 Control Committee’s report...... 145 Declaration from BoD & CEO...... 146 Key figures 5 years - Group...... 147

Key quarterly figures - 2 years ...... 151 SIDE 86 1 main features 2 about the bank 3 market 4 social report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Balance Sheet

Parent Bank Group

31/12-07 31/12-08 Notes 31/12-08 31/12-07 Assets 1 810 4 753 Cash and deposits with central banks 4 753 1 810 555 4 913 Loans to and deposits with credit institutions 14 1 291 558 64 946 68 365 Net lendings 11 76 235 64 683 560 463 Shares at fair value through profit or loss 15/16 463 560 5 109 12 760 Commercial paper and bonds 17 8 565 5 109 67 67 Shares available for sale 15 67 67 1 140 2 368 Financial derivatives 10 2 368 1 140 22 510 Shareholdings in group companies 18 0 0 156 160 Shareholdings in associated companies 18 121 151 92 0 Deferred tax assets 8 0 81 247 252 Other intangible assets 19 266 263 113 117 Fixed assets 20 466 461 56 34 Prepaid expenses 26 11 33 43 Customer funds - contribution-based pension agreements 21 43 33 99 215 Other assets 229 121 75 005 95 020 Total assets 94 893 75 048

Liabilities and equity 2 781 12 140 Loans to and deposits with credit institutions 22 12 140 2 781 37 656 40 997 Deposits 23 40 521 37 611 27 142 33 949 Securitised debt 24 34 249 27 142 1 419 1 338 Financial derivatives 10 1 338 1 419 141 103 Accrued expenses and prepaid income 102 141 179 137 Pension commitments 25 144 186 0 160 Deferred tax 8 162 0 10 12 Other provisions for commitments 14 10 187 13 Tax provision 8 15 189 1 042 1 437 Subordinated loan capital 26 1 437 1 042 341 399 Other liabilities 399 234 70 898 90 685 Total liabilities 90 521 70 755

250 267 Primary capital certificates 28 267 250 (3) (4) Holdings of own primary capital certificates (4) (3) 2 7 PCC premium reserve 9 4 249 270 Total paid-up equity 272 251

104 200 Reserve for valuation variances 60 60 175 175 Gift fund 175 175 6 6 Equalisation reserve 6 6 3 573 3 684 Other equity 3 858 3 800 Minority interests 1 1 3 858 4 065 Total retained earnings 4 100 4 042

4 107 4 335 Total equity 4 372 4 293

75 005 95 020 Total liabilities and equity 94 893 75 048

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 87 Bergen, 31 December 2008 / 24. February 2009 The BoD of Sparebanken Vest

Chairman Deputy chairman

CEO

PAGE 88 1 main features 2 about the bank 3 market 4 social report 5 annual report 6 notes 7 overviews ÅRSRAPPORT 2008 Statement of cash flows

Parent Bank Group

1/1-31/12 1/1-31/12 2007 2008 2008 2007 Cash flows from operations 3 743 5 302 Interest, commission and fee income 5 312 3 884 1 422 2 152 Interest, commissions and fees paid 2 029 1 434 17 17 Receivables from commitments previously written off 17 17 (3 486) (1 885) Net increase/decrease in instalment loans (6 862) (3 354) (7 832) (1 698) Change in utilised overdraft facilities (4 755) (7 832) 6 469 3 208 Net increase/decrease in customer deposits 2 777 6 456 360 454 Payments for goods and services 510 402 477 513 Payments to employees, pension schemes, national insurance, tax deductions etc. 581 581 273 129 Payment of taxes and public dues 135 273 305 102 Income from sale of securities for short-term trading purposes 93 305 305 252 Payments on purchase of securities for short-term trading purposes 252 305 (3 621) 1 546 Net cash flow from operations (6 925) (3 519)

Cash flows from investment activities 151 21 Sale of shareholdings and investments in other companies 21 151 10 2 Purchase of shareholdings and investments in other companies 0 10 8 331 23 182 Purchase of other short-term securities 23 182 8 331 6 108 15 979 Revenues from other short-term securities 20 079 6 108 25 19 Revenues from sale of securities, real estate etc. 9 25 199 528 Purchase of securities, real estate etc. 41 292 1 Revenues from sale of fixed assets etc. 1 202 77 Purchase of fixed assets etc. 88 209 (2 457) (7 770) Net cash flow from investment activities (3 202) (2 557)

Cash flows from financing activities 744 (4 216) Net payments/revenues on loans to and receivables from other financial institutions (613) 744 1 490 9 205 Net revenues/payments on deposits from Norges Bank and other financial institutions 9 205 1 490 700 0 Income from sale of securities for short-term trading purposes 0 700 338 50 Payments on purchase of securities for short-term trading purposes 50 338 10 856 12 928 Income related to bond debt 13 228 10 854 6 019 8 579 Payments related to bond debt 8 579 6 019 108 121 Dividends paid / Gifts for the public benefit 121 108 7 325 9 167 Net cash flow from financing activities 13 070 7 323

1 247 2 943 Net cash flow in period 2 943 1 247

1 247 2 943 Net change in cash and cash equivalents 2 943 1 247 563 1 810 Liquid assets at 1 January 1 810 563 1 810 4 753 Liquid assets at 31 December 4 753 1 810

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 89 Equity movements

Group Own PCC Reserve for PCC holdings premium valuation Gift Equalisa- Other Minority capital of PCC reserve variances 1) fund tion reserve equity interests Total Equity at 31 December 2006 250 (3) 4 60 148 6 3 331 0 3 796 Correction - gift fund (23) (23) Sale of own PCCs 6 3 9 Purchase of own PCCs (6) (7) (13) Payment of dividends and gifts (121) (121) Acquisitions (10) (10) Minority's share of profit for the year 1 1 Intra-group dividends 3 3 Balance sheet correction IFRS 2 2 Allocation of profit for the year 50 599 649 Equity at 31 December 2007 250 (3) 4 60 175 6 3 800 1 4 293

Sale of own PCCs 4 (1) 3 Purchase of own PCCs (5) (1) (6) Dividend issue 2) 17 5 22 Payment of dividends and gifts (148) (1) (149) Minority's share of profit for the year 1 1 Dividend from holdings of own PCCs 1 1 Allocation of profit for the year 206 206 Equity at 31 December 2008 267 (4) 9 60 175 6 3 858 1 4 372

Parent Bank Own PCC Reserve for PCC holdings premium valuation Gift Equalisa- Other capitals of PCCs reserve variances 1) fund tion reserve equity Total Equity at 31 December 2006 250 (3) 2 107 148 6 3 115 3 625 Correction - gift fund (23) (23) Sale of own PCCs 6 3 9 Purchase of own PCCs (6) (7) (13) Allocation of profit for the year (3) 50 462 509 Equity at 31 December 2007 250 (3) 2 104 175 6 3 573 4 107

Sale of own PCCs 4 (1) 3 Purchase of own PCCs (5) (1) (6) Dividend issue 2) 17 5 22 Dividend from holdings of own PCCs 1 1 Allocation of profit for the year 96 113 209 Equity at 31 December 2008 267 (4) 7 200 175 6 3 684 4 335

1) Of this, unrealised gains on shares available for sale not posted in accounts amounted to NOK 60m at 31/12-08.

2) On 13 March 2008 the Corporate Assembly resolved to give the owners of PCCs the opportunity to subscribed for new PCCs for an amount corresponding to the dividend for 2007. The subscription price for the new PCCs was set at NOK 133 per PCC, such that the dividend for 7 old PCCs gave the right to subscribe for and be allocated 1 new PCC, with settlement on 6 May 2008. Under the issue, approximately 46% of the dividend for 2007 was applied to subscribe for new PCCs. The issue increased the bank’s core capital by NOK 22m, of which NOK 5m was credited to the PCC premium reserve. Issue costs of NOK 0.3m were debited to the PCC premium reserve.

PAGE 90 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 1 Accounting principles

GENERAL The Group has chosen to give early application of the following The Sparebanken Vest Group comprises Sparebanken Vest, Sparebanken standards and amendments Vest Boligkreditt AS, Eiendomsmegler Vest AS and Filialbygg AS, with all subsidiaries and associated companies. • IFRS 8 Operating segments replaces IAS 14 Segment reporting. The new standard requires the participation of a chief operating decision Sparebanken Vest was established in 1823 as Bergens Sparebank. With maker to ensure that the segment information is presented in the founding capital in the form of tradable primary capital certificates, the same way as internal reporting. This has resulted in an increase in the bank has been listed on the Oslo Stock Exchange since 4 January 1995. number of segments presented. The bank is located in the counties of Hordaland, Sogn & Fjordane and Rogaland, and the head office is in Bergen. The head office address is: Standards, interpretations and amendments which took effect in Kaigaten 4, NO-5016 Bergen. 2008 which are not relevant for the Group • IFRIC 12, Service concession arrangements The consolidated accounts for Sparebanken Vest 2008 were considered and adopted by the Corporate Assembly on 12 March 2009. Standards, amendments and interpretations of existing standards which have not taken effect and where the Group has not chosen All amounts in the accounts and the notes to the accounts are stated in early application NOK million, unless stated otherwise. The individual notes refer to both the parent bank and the Group, unless stated otherwise. • IFRS 2 (amended), Share-based payment • IFRS 3 (revised), Business combination ACCOUNTING PRINCIPLES • IFRS 5 (amended), Non-current assets held-for sale and discontinued The consolidated accounts are prepared in accordance with operations International Financial Reporting Standards (IFRS) adopted by the EU • IAS 1 (revised), Presentation of financial statements and published by the International Accounting Standards BoD (IASB), • IAS 19 (amended), Employee benefits and which were compulsory at 31 December 2008. With effect from • IAS 23 (amended), Borrowing costs and including 2007 the company accounts have been prepared in • IAS 27 (revised), Consolidated and separate financial statements accordance with simplified IFRS, except for the posting of dividends, • IAS 28 (amended), Investments in associates group contributions and other allocations related to the accounting • IAS 32 (amended), Financial instruments: Presentation and IAS 1 result for the year. (amended), Presentation of financial statements – Puttable financial instruments and obligations arising on liquidation The company accounts the proposed dividend and gifts for allocation • IAS 36 (amended), Impairment of assets are posted in they year which provides the basis for the allocation. • IAS 38 (amended), Intangible assets • IAS 39 (amended), Financial instruments: Recognition and measurement With the implementation of IFRS, the bank has applied assumptions which affect estimates of assets, liabilities, income, costs and information Interpretations and amendments of existing standards which have related to contingent liabilities. Future events may lead to changes in not taken effect and which are not relevant for the Group these assumptions. The effect of these changes will be reflected in the accounts when the new estimates can be determined with sufficient • IAS 16 (amended), Property, plant and equipment certainty. • IAS 20 (amended), Accounting for government grants and disclosure of government assistance Changes to published standards effective in 2008 • IAS 27 (amended), Consolidated and separate financial statements • IAS 28 (amended), Investments in associates • IAS 39 Financial instruments: Recognition and measurement and • IAS 29 (amended), Financial reporting in hyperinflationary ifrs 7 Financial instruments – disclosures, permits an entity to economies reclassify financial assets out of the target categories “at fair value • IAS 31 (amended), Interests in joint ventures with value change through profit or loss” and “available for sate” to • IAS 38 (amended), Intangible assets other target categories for financial assets. Sparebanken Vest has not • IAS 40 (amended), Investment property availed itself of this scope for reclassification. • IAS 41, (amended), Agriculture • IFRIC 14, IAS 19 – The limit on a defined benefit asset, minimum • IFRIC 13, Customer loalty programmes funding requirements and their interaction – gives guidance on • IFRIC 15, Agreements for construction of real estates the valuation of the amount of a pension plan surplus that can be recognised as an asset in the balance sheet in conformity with IAS 19. RECORDING OF INTEREST AND FEES it also explains how pension fund assets or pension fund liabilities can Interest is included in the profit and loss account applying the effective be affected by statutory or contractual minimum funding interest rate method. This entails ongoing recognition of nominal interest requirements. This interpretation has no effect on the consolidated income and amortisation of establishment fees less direct establishment accounts as the Group has a net pension liability and is not subject to costs. The recording of interest based on the effective interest rate method a minimum funding requirement. is used for balance sheet items valued at amortised cost as well as balance • IFRIC 11, IFRS 2 – Group and treasury share transactions – gives sheet items valued at fair value through profit or loss. guidance as to whether share-based transactions involving an entity’s own shares or shares in group companies are to be recognised as Fees that are direct payment for services rendered are taken to income having been settled with equity instruments or cash in the company when paid. Loan establishment fees which exceed the direct external accounts of the parent company and in each group company. This cost of establishing the loan are amortised over the expected lifetime of interpretation has no effect on the consolidated accounts. the loan.

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 91 CONSOLIDATION Financial assets available for sale are initially recognised in the balance The consolidated accounts comprise the parent bank and subsidiaries sheet at fair value plus transaction costs. where the parent bank is able to control the company’s operations. This is normally the case where the parent bank directly or indirectly owns Financial assets available for sale and financial assets recognised at fair more than 50% of the shares. The consolidated accounts are prepared value through profit or loss are recognised at fair value after the first-time applying uniform accounting principles. Subsidiaries are incorporated entry in the balance sheet. The fair value of listed investments is based based on IFRS and all internal transactions and intercompany accounts on the market price at year-end. In the case of unlisted securities where payable and receivable are eliminated. there is no active market, the Group applies assessment techniques to determine fair value. These techniques are based on the last issue On the acquisition of subsidiaries the cost price of the shareholding in price, traded prices known to us and discounted cash flows. In the case the parent company is eliminated against the equity of the subsidiary of securities where there is no turnover, the value is based on available at the date of acquisition. The difference between the cost price and the accounting information, mainly in order to assess the need to write down net book value is added to the assets/liabilities to which the surplus value the item or write up its value because of any obvious value appreciation. relates. Any part of the cost price that cannot be added to identifiable assets and liabilities represents goodwill. Investments in subsidiaries are Financial assets are removed from the balance sheet when the right to recorded in the company accounts applying the cost method. receive cash flows from the investment terminates or is transferred on realisation. ASSOCIATED COMPANIES An associated company is a unit in the Group that has considerable Realised gains/losses and changes in assessed values of financial assets influence, but not control. A considerable influence is deemed to exist in stated at fair value through profit or loss, including dividends, are posted relation to investments when the Group owns between 20% and 50% in the accounts under “Net gain/loss(-) on financial instruments” in the of the voting capital. For accounting purposes, investments in associated period when they arise. Changes in the value of equity instruments companies are recorded in the consolidated accounts applying the classified as available for sale are posted directly against equity. equity method and in the company accounts applying the cost method. At the date of purchase the investment is posted at acquisition cost. When securities classified as available for sale are sold or written down, the aggregate value regulation that has been posted against equity is posted in the profit and loss account as a profit or loss on investments SEGMENT INFORMATION in securities. Dividends from shares classified as available for sale are The Group’s activities are divided into segments: banking activities in the posted in the profit and loss account when the Group’s right to the Retail Market (RM), the Corporate Market (CM), and the Capital Market dividend has been established. (Cap. M) as well as estate agency activities within the Group. The bank’s investments and related depreciation charges are not divided by segment Loans and accounts receivable but are part of the figure described as U” nallocated by segment”. Loans and accounts receivable are non-derivative financial assets with fixed or determinable payments and which are not traded in an active FINANCIAL ASSETS market. Loans and receivables in the balance sheet comprise floating- Financial assets are valued in accordance with IAS 39, and the rate loans, fixed-rate loans and loans with a built-in derivative. presentation is in accordance with IFRS 7. Value changes in the period are posted in the profit and loss account, except for value changes Floating rate loans related to financial assets that are available for sale which are posted Loans are initially recognised at fair value plus direct transaction costs. against the reserve for unrealised valuation variances (equity). The date In periods after the initial valuation assessment, loans are recognised of the agreement has been chosen as the accounting date. at amortised cost based on the effective interest rate method, as an expression of the fair value of the loan. If there is objective evidence of Financial assets stated at fair value through profit or loss a decline in the value of an individual loan or groups of loans, the loans This category has two subcategories: financial assets held for trading are written down. The amount of the write-down is calculated as the purposes and financial assets initially classified at fair value through difference between the balance sheet value and the present value of profit or loss. This is where we have classified shares and interest rate future cash flows, based on the expected lifetime of the loan. Write- securities purchased for profit-taking, or of such a nature that a sale downs are classified as a chargeable cost. would be considered if a good offer was received. Financial assets which are stated at fair value through profit or loss are posted at fair value on Interest income is taken to income on the basis of the effective interest acquisition and the transaction costs are charge against profits. rate method. In respect of commitments with individually determined Financial assets initially classified at fair value through profit or loss are write-downs, the effective interest rate is locked in cases where a) the recognised in the balance sheet at fair value as this method of valuation loan is not in default, or b) the changed rate is regardless of the fact that eliminates or to a large extent reduces inconsistent measurement and the loan is in default and the interest rate change affects the expected calculation that would otherwise have arisen with the measurement cash flow. of assets or the calculation of capital gains/losses based on different assumptions. Accordingly, the effect of value changes on financial Fixed rate loans and loans with a built-in derivative instruments which are managed as a single item is at the same time Fixed rate loans and loans with a built-in derivative are stated at fair reflected in the accounts. value. The fair value of fixed-rate loans is calculated by discounting the loan cash flow using the required rate of return derived from the zero Financial assets initially classified at fair value through profit or loss coupon curve, including the effect of the credit spread. includes fixed-interest loans as well as commercial paper and bonds at fixed rates. Derivatives A derivative is a financial instrument with all of the following Financial assets available for sale characteristics: Financial assets available for sale are non-derivative financial assets which are assigned to this category or which are not classified in any • The value of the instrument changes as a result of a change in the other category. The Group has shareholdings classified in this category. interest rate, the exchange rate or the price of the underlying object

PAGE 92 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 • The instrument requires no or little initial investment FINANCIAL LIABILITIES • The profit or loss on the instrument is determined at a future date. Financial liabilities at a floating rate are stated at amortised cost. Amortised cost is defined as the initial amount of the instrument Derivatives are recognised in the balance sheet at fair value when the recognised in the accounts (cost price) less repayments of principal, with derivative contract is made, and thereafter on a fair value basis. Derivatives an addition or deduction for accumulated amortisation of all differences in the balance sheet include forward foreign exchange transactions, between cost price and the nominal amount, less all write-downs. forward rate agreements, interest rate swaps, foreign currency interest rate Amortisation is based on the effective interest rate method. swaps, interest rate options and share options (linked to bank deposits with a stock exchange return). Realised and unrealised gains/profits on changes Financial liabilities at a fixed rate of interest are recognised in the in the assessed value of derivatives are posted under “Net gain on financial balance sheet at fair value. This applies to debt to credit institutions, instruments” in the period when they arise. securitised debt bond debt and perpetual subordinated loans. In the case of indexed bonds and deposits, the derivative is separated from the FOREIGN EXCHANGE main contract and posted separately. Bonds and deposits are recognised Receivables and accounts payable denominated in foreign currency are at fair value and the option is classified and posted in the balance sheet translated at the middle rate on the Oslo Stock Exchange at year-end. among other derivatives. Income and expenses denominated in foreign currency are translated into Norwegian kroner at the rates prevailing on the date of the Financial liabilities at a fixed rate of interest are recognised in the transaction. Foreign exchange items are mainly hedged by matching balance sheet at fair value as this method of valuation eliminates or to them against corresponding items on the other side of the balance a large extent reduces inconsistent measurement and calculation that sheet, or through off-balance sheet hedging items. would otherwise have arisen with the measurement of the liability or the calculation of capital gains/losses based on different assumptions. FIXED ASSETS Accordingly, the effect of value changes on financial instruments which All of the Group’s properties are considered to be operating assets for own are managed as a single item is at the same time reflected in the accounts. use and the accounting treatment is in accordance with IAS 16. Group properties are initially stated at historical cost less depreciation over their Fair value is calculated by discounting the loan cash flow using the expected lifetime. We have used the fair value option as the new cost price required rate of return derived from the zero coupon curve. The credit on implementation of IAS 16. As a result, new prices for separated items spread on interest-earning securities is changed on the basis of an overall such as lifts, equipment and ventilation plant have been used along with assessment which takes account of observed turnover in the market, external valuations of the buildings. Surplus values on the aforementioned credit margin reports from various brokers, and internal evaluations. A basis are included in the acquisition cost. Where there has been a decline change in the credit spread will affect the required rate of return as the in the market value, the item in question is required to be written down supplement attached to the zero coupon curve will be changed. and the effect is posted in the profit and loss account.F ixed assets are When the bank buys back its own securities, the difference between the stated at acquisition cost less accumulated ordinary depreciation. balance sheet value and the consideration paid is posted as “Net gain/ (loss) on financial instruments”. The buy-back of securities issued by the Ordinary depreciation is based on the cost price and depreciation is on a bank is netted against securities debt in the balance sheet. straight line basis over the lifetime of the asset. The depreciation period and method is assessed each year to ensure that the method and the IMPORTANT ASSESSMENTS MADE IN RELATION TO THE GROUP’S period used are in line with the economic reality pertaining to the asset ACCOUNTING PRINCIPLES in question. In applying accounting principles related to certain IFRS accounting standards, the Group makes evaluations based on its own judgement. The ordinary depreciation charge for the year is included in operating expenses for the year Estimates and assumptions represent a considerable risk of major changes in the balance sheet value of assets and liabilities, the most INTANGIBLE ASSETS important of which are discussed below. Developed software Software that has been developed is posted in the balance sheet Impairment of goodwill under intangible assets when the amounts involved are deemed to Goodwill in the balance sheet is not amortised. On reporting dates be material and the items are expected to have lasting value. In the it is considered whether there is objective evidence to indicate any development of software, costs related to use of own resources, pre- impairment of goodwill. If such evidence exists, a write-down test is planning, implementation and training are charged in the profit and carried out. All assessment units are tested annually to verify that values loss account. Software that has been developed by the bank and posted are still intact. The choice of assessment unit is made on the basis of in the balance sheet is depreciated over its expected lifetime. There is whether it is possible to identify and separate cash flows related to the continuous assessment of the need for write-downs where the expected activity in question. Future cash flows are determined on the basis of economic benefits are less than the balance sheet value. historical results and budgets. The required rate of return / discount rate is based on an assessment of what the required rate of return is in the Goodwill market for the type of activity that is included in the assessment unit. Goodwill is the difference between the cost price of an acquisition The required rate of return reflects the risk attached to the activity. and the fair value of the Group’s share of net identifiable assets of the business on the date of acquisition. Each year goodwill is tested Fair value of financial instruments, including derivatives for possible value depreciation and is posted in the balance sheet at The fair value of financial instruments that are not traded in an active market acquisition cost less write-downs. is determined by using various valuation techniques. Reference is made to the note on financial assets and commitments, and to the statement on Customer portfolio accounting principles and the description of techniques used. The value of the customer portfolio is part of the cost price of acquisitions. The value is set as the future cash flow and disregarding the Loan write-downs customer’s right to renewal. The customer portfolio is depreciated on a All commitments which are subject to an individual valuation shall be straight -line basis over the expected remaining contract period. assessed to determine whether there is objective evidence showing

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 93 that a loss event has occurred and that the loss event has reduced the insurance contributions, appears in the balance sheet. estimated future cash flows from the loan. The pension charge for the year is stated net in the profit and loss If there is objective evidence of loan impairment, the loan loss is account under «Salaries and general administration expenses». calculated as the difference between the balance sheet value (loan principal + accrued interest at the date of valuation) and the present COMMITMENTS / PROVISIONS value of future cash flows discounted taking account of the effective A provision for commitments has been made in accordance with IAS rate of interest and the expected lifetime of the loan. In estimating 37. The provision meets the requirement that a commitment exists future cash flows, account is only taken of the credit loss caused by the as a result of a previous event, and there is a high probability that the loss events which have arisen. The estimation of future cash flows from commitment will have to be met. The provision has been calculated as a loan also takes account of loan security which is taken over and sold, the present value of future payments required to meet the commitment. including costs in this connection. The proposed dividend and gifts for distribution had not been formally The need to write down the loan (the loss being booked against the decided at year-end and thus do not meet the criteria for what customer’s loan) is determined when all security has been realised and constitutes a commitment under IAS 37. it is certain that no further payments will be received on the loan. The claim on the customer remains and will be followed up, unless it has been In the company accounts, dividends and gifts are posted in the financial agreed with the customer that the loan is to be waived. year which provides the basis for the allocation.

Pension commitments POST BALANCE-SHEET EVENTS The net present value of pension commitments depends on current Events after the balance sheet date are disclosed in accordance with economic and actuarial assumptions. Any change made to these IAS 10. The information relates to events which are not included in the assumptions affects the pension commitment amount recorded in the consolidated financial accounts, but which are of such a kind that they balance sheet and the pension expense. are material for an assessment of the business. The calculation is based on guidelines on assumptions issued by the Norwegian Accounting Foundation. STATEMENT OF CASH FLOWS The statement of cash flows is prepared on the basis of gross cash flows TAXATION from operations, investment and financing activities. Deferred tax and deferred tax assets are stated in the balance sheet in accordance with IAS 12 Deferred Tax. Cash flows from operations are defined as ongoing interest related to customer borrowings and deposits, net receipts/payments related The tax charge in the profit and loss account includes both the tax to lending and deposit activities, and payments related to the cost of payable for the period and the change in deferred tax. Deferred tax/ ordinary operations. deferred tax assets are calculated at a tax rate of 28% on the basis of timing differences between values for accounting and taxation purposes Investment activities are defined as cash flows from securities at year-end. Taxable and tax-deductible timing differences which are transactions apart from the trading portfolio, as well as purchases of reversed or can be reversed within the same time interval are neted fixed assets and real estate. against each other and entered net. Cash flows from other securities transactions, as well as the issue and Deferred tax assets are posted in the balance sheet on the basis of repayment of subordinated loans, bond debt and equity are defined as expectations of taxable income through earnings in future years. financing activities.

Tax payable in the balance sheet relates to the tax on the profit for EQUITY the year, tax payable on capital assets, and tax linked to the group Equity consists of paid up PCC capital, the PCC premium reserve, own contribution received. holdings of PCCs, the equalisation reserve, the Sparebanken capital fund, the gift fund and the reserve for valuation variances. PENSION COMMITMENTS Pension commitments are calculated in accordance with IAS 19. When the bank purchases its own PCCs, the purchase price, including Economic assumptions used to calculate the pension commitments direct costs, is posted as a reduction of equity. The nominal value of the are updated at year-end, including the discount rate which is based bank’s own holdings of PCCs is posted as a reduction of paid up equity, on year-end market rates. IAS 19 permits the effect of divergence while the remainder is posted as a reduction of retained earnings. between estimated and actual assumptions to be entered in a “corridor”. Deviations from estimates and assumptions are measured against the The reserve for valuation variances relates to changes in the value of larger of gross pension commitments and total pension fund assets. If financial assets classified as available for sale. In the parent bank, the the deviations exceed 10% of the basis of measurement, the difference reserve for valuation variances also includes changes in the value of is amortised over the average remaining period of service. financial assets where the principles used for value determination in IFRS diverge from the principles set out in Good Accounting Practice. The bank’s net pension commitments are calculated and posted as a long-term liability in the accounts. Net pension commitments are the In accordance with the regulations governing primary capital certificates, the difference between gross pension commitments (the present value of basis for payment of dividends and gifts is limited to the profit for the year. expected future pensions) and the balance on pension funds assets in the insurance fund and the pension premium fund. The figure for In the consolidated accounts, the proposed dividend and gifts for net pension commitments corrected for deviations from estimates distribution are classified as part of equity until the final resolutions have and changes in pension assumptions, including employer’s national been adopted by the Corporate Assembly

PAGE 94 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 2 Segment information

Profit and Loss Account Banking activity Corporate Retail Capital Estate Agency Unallocated Group Market Market Market Activities by segment Total

G roup

2008 Net interest income 366 767 74 4 97 1 308 Operating income 88 289 (108) 100 6 375 Operating expenses (122) (350) (32) (110) (454) (1 068) Losses (170) (34) 0 (204) Pre-tax profit 162 672 (66) (6) (351) 411 Taxes (204) (204) Profit after tax 162 672 (66) (6) (555) 207

2007 Net interest income 314 649 141 4 18 1 126 Operating income 63 315 188 104 8 678 Operating expenses (86) (318) (30) (88) (451) (973) Loss 9 23 0 2 34 Pre-tax profit 300 669 299 20 (423) 865 Taxes (215) Profit after tax 300 669 299 20 (423) 650

Operating income and expenses are allocated directly, with the exception of staff-related costs and depreciation. Net interest is allocated on the basis of internationally calculated intra-group interest based on 3-month NIBOR.

Parent Bank

2008 Net interest income 366 727 74 143 1 310 Operating income 88 279 (108) 56 315 Operating expenses (122) (341) (32) (471) (966) Loss (170) (33) 0 (203) Pre-tax profit 162 632 (66) (272) 456 Taxes (207) Profit after tax 162 632 (66) (272) 249

2007 Net interest income 314 649 141 29 1 133 Operating income 63 315 188 16 582 Operating expenses (86) (318) (30) (443) (877) Loss 9 23 0 2 34 Pre-tax profit 300 669 299 (396) 872 Taxes (215) Profit after tax 300 669 299 (396) 657

Operating income and expenses are allocated directly, with the exception of staff-related costs and depreciation. Net interest is allocated on the basis of internationally calculated intra-group interest based on 3-month NIBOR.

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 95 Note 2 Segment information (continued)

Balance Sheet Banking activity Corporate Retail Capital Estate agency Unallocated Group Market Market Market activities by segment Total

GROUP

31/12-08 Net lendings 20 652 55 532 331 (280) 76 235 Other assets 18 404 81 175 18 660 Deposits 13 562 26 281 677 1 40 521 Other liabilities and equity 48 445 81 5 848 54 374

31/12-07 Net lendings 14 653 50 202 90 (262) 64 683 Other assets 9 261 86 1 018 10 365 Deposits 11 610 24 378 1 612 11 37 611 Other liabilities and equity 32 357 70 5 010 37 437

Parent Bank

31/12-08 Net lendings 20 652 47 381 331 1 68 365 Other assets 25 899 756 26 655 Deposits 13 562 26 707 677 51 40 997 Other liabilities and equity 48 445 5 578 54 023

31/12-07 Net lendings 14 653 50 202 90 1 64 946 Other assets 9 261 798 10 059 Deposits 11 655 24 378 1 612 11 37 656 Other liabilities and equity 32 357 4 992 37 349

PAGE 96 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 3 Net interest income and credit commissions

Parent Bank GROUP

2007 2008 2008 2007 74 142 Interest etc. on loans to and deposits with credit institutions 121 74 Interest etc. on loans to and receivables from customers: 3 147 4 424 - stated at amortised cost 4 442 3 135 270 579 - stated at fair value 580 270 163 431 Interest etc. on commercial paper, bonds and other interest-earning securities 405 163 3 654 5 576 Total 5 548 3 642

72 154 Interest etc. on loans from credit institutions 152 75 Interest. etc. on deposits and loans from customers 1 099 1 890 - stated at amortised cost 1 864 1 091 Interest etc. on securities issued 696 1 030 - stated at amortised cost 1 032 696 374 665 - stated at fair value 374 Interest payable on subordinated loan capital 27 38 - stated at amortised cost 38 27 26 27 - stated at fair value 26 227 448 Other interest and similar costs 1) 448 227 14 Fee payable the Savings Banks' Guarantee Fund 14 2 521 4 266 Total 4 240 2 516 1 133 1 310 Net interest income and credit commissions 1 308 1 126

1) Interest from derivative contracts made to manage the interest rate risk attached to the bank’s ordinary portfolios is classified as interest income and posted as an adjustment of the bank’s other interest income/interest expenses.

Note 4 Interest on individual balance sheet items

Parent Bank Average rate of interest as a percentage 1) Average volume 2008 2007 2008 2007 Assets Loans to and deposits with credit institutions 5.48 4.31 2 583 1 709 Loans to customers 7.15 5.71 69 994 59 866 Commercial paper and bonds 6.27 4.81 6 876 3 391

Liabilities Debt to credit institutions 4.47 4.58 3 436 1 575 Customer deposits 4.76 3.20 39 751 34 326 Securitised debt 5.49 4.45 30 909 24 061

1) The average rate of interest is calculated as the interest as a percentage of average volume.

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 97 Note 5 Net other operating income

PARENT BANK GROUP

2007 2008 2008 2007 19 25 Guarantee commissions 25 19 210 214 Payment transfer charges/interbank credit charges 214 210 193 154 Other commissions and fees receivable 154 193 422 393 Commission income receivable and income from banking services 393 422

40 40 Payment charges/BBS/EFTPOS 40 40 22 23 Payment transfer charges/interbank debit charges 23 22 13 13 Other commissions and fees payable 13 13 75 76 Commission income payable and cost of banking services 76 75

26 21 Dividends 21 26 25 10 Income from owner interests in group companies Income from owner interests in associated companies (37) (4) (6) (47) Gain/loss(-) on commercial paper and bonds (41) (6) 94 (270) Gain/loss(-) on shares and securities (268) 98 87 543 Gain/loss(-) on financial derivatives 543 87 23 43 Gain/loss(-) on foreign exchange 43 23 Net gain/loss(-) on financial instruments voluntarily stated at fair value through profit or loss 1) (37) 78 - lendings 78 (37) (82) (99) - deposits (99) (82) 11 7 - debt to credit institutions 7 11 44 (249) - securitised debt (249) 44 (5) (133) - subordinated loan capital (133) (5) 53 42 Product margin, amortised 42 53 233 (54) Net gain/loss(-) on financial instruments1) (93) 208

Brokerage fees 74 97 2 52 Other operating income 2) 77 26 2 52 Other operating income 151 123 582 315 Net other operating income 375 678

1) Of which trading portfolio: 4 3 Dividends 3 4 10 (60) Gain/loss(-) on shares (60) 10 7 (57) Gain/loss(-) on financial derivatives (57) 7 8 19 Gain on foreign exchange 19 8

2) Of which the final settlement from previous insurance suppliers amounting to NOK 51m

3) See notes 11, 22, 23, 24 og 26

PAGE 98 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 6 Salaries and general administration expenses

Parent Bank GROUP

2007 2008 2008 2007 358 341 Salaries 406 421 21 71 Pensions 1) 75 22 57 71 Social security contributions 72 68 120 132 IT costs 132 120 121 133 Administration expenses 159 136 677 748 Total 844 767

1) See note 25

The average number of employees in 2008 was 729 (701) for the Parent Bank and 828 (784) for the Group.

Salaries and other benefits received by senior employees

Senior employees are defined as members of the Group Management.

The information relates to the annual salary at 31/12-08, total taxable benefits charged and paid in 2008 and calculated earned pension rights in 2008 ( figures in brackets are for 2007).

The earned pension includes the pension rights for the year earned under the bank’s company pension scheme as well as the pension accruing as a member of the top hat scheme. Please refer to note note 25 “Pension Commitments” for details of the pension schemes.

Bonuses accrued/charged in 2007 were paid in 2008 and are not included in this information. No bonus was earned in 2008 by the CEO, the deputy CEO or other senior employees.

At 31/12-08 the CEO, Stein Klakegg, had an annual salary of NOK 2 166 000 and in 2008 received aggregate taxable benefits of NOK 2 298 000 (2 173 000). Pension rights earned in 2008 are calculated at NOK 1 418 000 (896 000).

At 31/12-08 the deputy CEO, Jan Erik Kjerpeseth, had an annual salary of NOK 1 485 000 and received aggregate taxable benefits ofNOK 1 613 000 (1 614 000) in 2008. pension rights earned in 2008 are calculated at NOK 331 000 (306 000). The corresponding information, in the same order, for other senior employees is as follows: Director of Corporate Market Division NOK 1 272 000, NOK 1 466 000 (1 288 000), NOK 397 000 (376 000); Director of Retail Market Division NOK 1 204 000, NOK 1 342 000 (1 136 000) and NOK 477 000 (418 000); Director of Legal Division NOK 1 113 000, NOK 1 274 000 (1 236 000) and NOK 504 000 (497 000); Director of Business Support NOK 1 065 000, NOK 1 191 000 (1 133 000) and NOK 343 000 (441 000); Direktør of Corporate Communications NOK 1 048 000, NOK 1 192 000 (1 144 000), and NOK 329 000 (379 000); Director of Capital Market NOK 1 347 000, NOK 1 495 000 (992 000) and NOK 505 000 (342 000); Personnel Director NOK 1 177 000, NOK 1 355 000 (1 309 000) and NOK 573 000 (447 000).

The salary paid to the CEO, the deputy CEO and the chief internal auditor is set by the BoD based on a recommendation from the Remuneration Committee, while the CEO determines the salary of the other senior management after consultation with the Remuneration Committee.

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 99 Note 6 Salaries and general administration expenses (continued I)

ELECTED OFICERS (NOK) 2008 2007 BoD Additional Total Total BoD fees fees remuneration remuneration Trygve Bruvik, chairman From May 2008 240 000 18 000 258 000 Pål W Lorentzen, deputy chairman Until May 2008 106 666 106 666 330 500 Anne Kverneland Bogsnes, deputy chairman 173 333 16 500 189 833 106 666 Jan O Yttredal 140 000 3 000 143 000 120 000 Øyvind A Langedal 140 000 12 000 152 000 80 000 Gerd Kjellaug Berge 140 000 3 000 143 000 80 000 Arne Havnerås 140 000 140 000 120 000 Tone Mattsson 140 000 140 000 120 000 Richard Rettedal From May 2008 100 000 12 000 112 000 Marit Solberg From May 2008 100 000 6 000 106 000 Anne Gine Hestetun Until May 2008 40 000 40 000 127 000 Inger Karin Larsen Until May 2008 40 000 40 000 120 000 Erik Bøckmann Until May 2007 53 333 Erling Mjelde Until May 2007 40 000 Geir Navarsete Until May 2007 40 000 Total 1 499 999 70 500 1 570 499 1 337 499

BoD fees and additional fees for participation in committees is pursuant to a resolution of the Corporate Assembly.

2008 2007 Additional Total Total Control Committee Remuneration fees remuneration remuneration Kjell Steinsbø 93 333 93 333 90 000 Liv Henjum 83 333 83 333 80 000 Roald Korsøen 83 333 5 000 88 333 53 333 Anne Marit Steen Until Aug. 2008 71 250 7 500 78 750 106 666 Karin Margrethe Vedø Deputy member 10 000 10 000 Lillian Torsvik Until May 2007 26 666 Anne Kverneland Bogsnes Until May 2007 40 000 Total 341 249 12 500 353 749 396 665

Remuneration to the Corporate Assembly of the parent bank totalled NOK 116 666 (NOK 105 000). Additional to this are attendance fees of NOK 762 500 (NOK 643 500).

PAGE 100 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 6 Salaries and general administration expenses (continued II)

Parent Bank GROUP

31/12-07 31/12-08 Loans and guarantees to the CEO and deputy CEO (NOK 1 000) 31/12-08 31/12-07 2 752 11 CEO Stein Klakegg 2 711 2 752 5 570 6 304 Deputy CEO Jan Erik Kjerpeseth 6 304 5 570 The loans are on standard terms for employees

Loans and guarantees to elected officers (NOK 1 000), Parent Bank Chairman of the BoD 0 4 Trygve Bruvik 4 0 The loans are on standard customer terms

Loans to members of the BoD 2 186 2 281 Øyvind A. Langedal 2 281 2 186 0 0 Marit Solberg 2 645 0 The loans are on standard customer terms

Employee representatives 1 360 773 Arve Havnerås 773 1 360 1 405 0 Tone Mattsson 1 390 1 405 The loans are on standard terms for employees

Chairman of the Corporate Assembly 46 0 Arne Buanes 0 46 The loans are on standard customer terms

745 622 633 974 Total loans and guarantees to employees (NOK 1 000) 2) 1 005 011 868 200

Total loans and guarantees to other members of the Corporate Assembly and Control Committee (NOK 1 000) 6 998 394 456 Corporate Assembly 3) 398 008 6 998 0 0 Control Committee 0 0

2) Excluding the CEO, deputy CEO and employee representatives. 3) Excluding the chairman of the Corporate Assembly, members of the BoD, Control Committee and employee representatives.

The cost of subsidising the interest rate on loans to the employees is not booked as an operating expense and affects the bank’s net interest income. Loans to employees are subsidised in the form of a 25% rebate on standard customer terms.

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 101 Note 7 Other operating expenses

Parent Bank GROUP

2007 2008 2008 2007 1 0 Real estate operating expenses 2 14 80 89 Office rental and other running costs 59 39 7 8 Fixed assets charged against income 10 27 46 38 Other operating expenses 53 48 10 14 Capital taxes 14 10 144 149 Total 138 138

2007 2008 Fee to elected auditor (NOK 1 000) 2008 2007 963 1 218 Audit fee 1 570 1 326 291 207 Letters of confirmation 265 291 15 16 Taxation advisory services 38 15 761 112 Other services 717 1 004 2 030 1 553 Total 2 590 2 636

Fees are inclusive of value added tax. Other services in 2008 relates to the work of separating subsidiaries of AS Filialbygg in the sum of NOK 439 000 and other assistance totalling NOK 278 000. In 2007 this item related mainly to Basel II / ICAAP and the implementation of IFRS.

PAGE 102 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 8 Taxes

PARENT BANK GROUP

2007 2008 Tax charge for the year 2008 2007 181 (45) Tax payable (43) 179 34 252 Change in deferred tax 247 36 215 207 Tax charge for the year 204 215

872 456 Pre-tax profit 411 865

244 128 28% tax on pre-tax profits 115 242 Share of profit of associated companies 10 Amortisation of goodwill 1 0 3 4 Tax on capital assets charged against profits, non-deductible 4 3 (34) (7) Non-taxable income (8) (33) 2 82 Non-deductable costs 82 3 (4) 45 Correction for deferred tax 45 (4) 4 (45) Insufficient/excess(-) tax provision (45) 4

215 207 Tax charge 204 215

25% 45% Effective rate of tax 50% 25%

2007 2008 Change in deferred tax assets in the balance sheet: 2008 2007 (126) (92) Balance sheet value (deferred tax assets) at 1 January (81) (112) (4) 0 Correction for deferred tax assets 0 (4) 38 252 Posted in profit and loss account 243 35 Changes posted against equity (92) 160 Balance sheet value (deferred tax assets) at 31 December 162 (81)

The calculation of deferred tax /deferred tax assets is based on the timing differences between accounting and taxation values at year-end and the tax loss to be carried forward.

Deferred tax and deferred tax assets relates to the following timing differences:

31/12-07 31/12-08 Deferred tax assets 31/12-08 31/12-07 1 1 Profit and loss account 0 0 9 8 Fixed assets 0 0 150 115 Financial instruments 115 150 50 38 Pension commitments 40 51 20 10 Other liabilities 11 21 0 10 Tax loss carried forward 16 0 229 182 Total deferred tax assets 182 222

31/12-07 31/12-08 Deferred tax 31/12-08 31/12-07 0 0 Profit and loss account 1 4 0 0 Fixed assets 1 0 5 8 Goodwill 8 4 125 305 Financial instruments 305 125 8 14 Valuation rules for loans to customers 14 8 0 15 Valuation rules for customer deposits 15 0 0 0 Revaluation account 0 0 137 342 Total deferred tax 344 141

(92) 160 Net deferred tax /deferred tax assets(-) 162 (81)

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 103 Note 8 Taxes (continued)

Deferred tax assets in the profit and loss account relates the following timing differences:

PARENT BANK GROUP

2007 2008 Deferred tax in the profit and loss account 2008 2007 0 0 Profit and loss account (3) 0 0 1 Fixed assets 0 0 5 3 Goodwill 4 3 19 215 Financial instruments 215 32 (7) 6 Valuation rules for loans to customers 6 (7) 0 15 Valuation rules for customer deposits 15 0 13 12 Pension commitments 11 13 (2) 0 Revaluation account 0 (2) (2) 10 Other liabilities 10 (4) 0 (10) Tax loss carried forward (16) 0 0 0 Deferred tax assets from subsidiaries have not been recognised in the balance sheet previously 4 0 13 0 Implementation effect posted against equity 0 0 38 252 Total change in deferred tax 247 36

Of the change in deferred tax for the parent bank amounting to NOK 38m in 2007, NOK 3.5m was posted in the profit and loss account as a change related to 2006.

Posted in the balance sheet of the parent company are the deferred tax assets related to an intra-group transfer of real estate in 2002. At 31/12-2008 these tax assets amounted to NOK 4m.

In accordance with the exception provided for in IAS 12, the deferred tax liability relating to the takeover of value added tax on the property in Jonsvollskvartalet AS has not been posted in the profit and loss account. This amounts to NOK 33m.

PAGE 104 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 9 Classification of financial instruments

GROUP

31/12-2008 Financial instruments recognised at fair value through profit or loss Trading Recognised Valued at Available portfolio at fair value amortised cost for sale Total Assets Cash and deposits with central banks 4 753 4 753 Loans to and deposits with credit institutions 1 291 1 291 Lendings 9 983 66 252 76 235 Shares 51 412 67 530 Commercial paper and bonds 8 565 8 565 Financial derivatives 2 368 2 368 Total 2 419 18 960 72 296 67 93 742

Liabilities Debt to credit institutions 1 182 10 958 12 140 Deposits 3 034 37 487 40 521 Securitised debt 13 014 21 235 34 249 Financial derivatives 1 338 1 338 Subordinated loan capital 589 848 1 437 Total 1 338 17 819 70 528 0 89 685

The bank has no financial instruments classified as hold-to-maturity or hedging items.

31/12-2007 Financial instruments recognised at fair value through profit or loss Trading Recognised at Valued at Available portfolio fair value amortised cost for sale Total Assets Cash and deposits with central banks 1 810 1 810 Loans to and deposits with credit institutions 558 558 Lendings 7 068 57 615 64 683 Shares 109 451 67 627 Commercial paper and bonds 26 5 083 5 109 Financial derivatives 1 140 1 140 Total 1 275 12 602 59 983 67 73 927

Liabilities Debt to credit institutions 150 2 631 2 781 Deposits 2 820 34 791 37 611 Securitised debt 8 983 18 159 27 142 Financial derivatives 1 419 1 419 Subordinated loan capital 359 683 1 042 Total 1 419 12 312 56 264 0 69 995

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 105 Note 10 Fair value of financial instruments

group 31/12-08 31/12-07 Balance Adjustment Balance Adjustment Notes sheet value to fair value sheet value to fair value Assets Cash and deposits with central banks 4 753 1 810

Loans to and deposits with credit institutions 14 1 291 558

Customer loans at fair value 9 983 7 068 Customer loans at amortised cost 66 252 57 615 Loans 11 76 235 64 683

Shares at fair value through profit or loss 15/16 463 560

Shares available for sale 15 67 67

Commercial paper and bonds 17 8 565 5 109

Financial derivatives 2 368 1 140 Total 93 742 0 73 927 0

Liabilities Debt to credit institutions at fair value 1 182 150 Debt to credit institutions at amortised cost 10 958 (49) 2 631 (2) Debt to credit institutions 22 12 140 (49) 2 781 (2)

Customer deposits at fair value 3 034 2 820 Customer deposits at amortised cost 37 487 34 791 Deposits 23 40 521 37 611

Securitised debt at fair value 13 014 8 983 Securitised debt at amortised cost 21 235 (570) 18 159 (55) Securitised debt 24 34 249 (570) 27 142 (55)

Financial derivatives 1 338 1 419

Subordinated loan capital at fair value 589 359 Subordinated loan capital at amortised cost 848 (229) 683 (34) Subordinated loan capital 26 1 437 (229) 1 042 (34) Total 89 685 (848) 69 995 (91)

Off-balance sheet commitments and guarantee liability Guarantees etc. 1 617 1 732 Mortgages etc. 4 151 4 506

PAGE 106 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 10 Fair value of financial instruments (continued I)

PARENT BANK 31/12-08 31/12-07 Balance Adjustment Balance sheet Adjustment to Notes sheet value to fair value value fair value Assets Cash and deposits with central banks 4 753 1 810

Loans to and deposits with credit institutions 14 4 913 555

Customer loans at fair value 9 666 7 068 Customer loans at amortised cost 58 699 57 878 Loans 11 68 365 64 946

Shares at fair value through profit or loss 15/16 463 560

Shares available for sale 15 67 67

Commercial paper and bonds 17 12 760 5 109

Financial derivatives 2 368 1 140 Total 93 689 0 74 187 0

Liabilities Debt to credit institutions at fair value 1 182 150 Debt to credit institutions at amortised cost 10 958 (49) 2 631 (2) Debt to credit institutions 22 12 140 (49) 2 781 (2)

Customer deposits at fair value 3 034 2 820 Customer deposits at amortised cost 37 963 34 836 Deposits 23 40 997 37 656

Securitised debt at fair value 13 014 8 983 Securitised debt at amortised cost 20 935 (570) 18 159 (55) Securitised debt 24 33 949 (570) 27 142 (55)

Financial derivatives 1 338 1 419

Subordinated loan capital at fair value 589 359 Subordinated loan capital at amortised cost 848 (229) 683 (34) Subordinated loan capital 26 1 437 (229) 1 042 (34) Total 89 861 (848) 70 040 (91)

Off-balance sheet commitments and guarantee liability Guarantees etc. 1 637 1 772 Mortgages etc. 4 151 4 506

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 107 Note 10 Fair value of financial instruments (continued II)

Financial derivatives

Financial derivatives are agreements entered into with financial institutions and customers in order to set interest rates, foreign exchange rates and the value of equity instruments for specific periods.

Valuation method and accounting principles All derivatives are stated at fair value and any transaction gain/loss is classified as a net gain/loss on financial instruments. Interest from derivatives established in order to manage the interest rate exposure attached to the bank’s ordinary portfolios is classified as interest and posted as an adjustment of the bank’s other interest income/expenses.

Sparebanken Vest has used the following financial derivatives in the course of the year:

Forward foreign exchange transactions These are agreements to purchase or sell a specific amount of foreign currency at an agreed exchange rate.

Interest rate contracts comprise: - Forward Rate Agreements (FRA) which stipulate a certain rate of interest on a nominal amount for a future period of time. interest rate swaps which are agreements to exchange interest rates (fixed for floating) for a specific amount over a given period of time. - Interest rate (call) options which give the buyer the right to receive from the seller the difference between the market rate and an agreed rate of interest for a specific amount over a given period. - Interest rate (put) options which give the buyer the right to receive from the seller the difference between the market rate and an agreed rate of interest, if the market rate is lower than the agreed rate, for a specific amount over a given period.

Portfolio guarantee The bank participates in a guarantee as a guarantor of risk related to the volatily of the value of Eksportfinans' liquidity portfolio. The bank's share is NOK 50m.

Options The bank’s holdings of options relates to bank deposits with an indexed return. All indexed products sold to customers are secured against corresponding holdings in the market, and the bank’s open positions related to these options is very limited.

Financial derivatives 31/12-08 31/12-07 Credit Nominal Positive Negative Nominal Positive Negative equivalent value market value market value value market value market value FRA 92 500 362 401 57 000 7 7 Interest rate swaps 116 24 485 784 422 22 070 181 554 Options/Cap/Floor/Collar/Swaption 5 139 21 24 5 639 30 31 Total interest rate instruments 122 124 1 167 847 84 709 218 592

Portfolio guarantee 50 27

Options 161 4 575 93 89 6 249 775 761 Other Total equity-related contracts 4 575 93 89 6 249 775 761

Forward exchange transactions 158 14 189 1 108 376 12 756 147 66 Other Total currency-related contracts 14 189 1 108 376 12 756 147 66 Total listed contracts Total OTC derivatives 140 938 2 368 1 338 103 714 1 140 1 419

For a description of the bank's control of market risk please refer to note 31 For a further description of the bank's management of interest rate and foreign exchange management please refer to notes 32 and 33

PAGE 108 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 10 Fair value of financial instruments (continued II) Note 11 Loans

Financial derivatives PARENT BANK GROUP

Financial derivatives are agreements entered into with financial institutions and customers in order to set interest rates, foreign 31/12-07 31/12-08 31/12-08 31/12-07 exchange rates and the value of equity instruments for specific periods. Distribution of loans by sector - nominal amount of loan principal 13 073 14 668 Overdraft facilities 17 725 13 073 Valuation method and accounting principles 1 319 1 412 Building loans 1 412 1 319 All derivatives are stated at fair value and any transaction gain/loss is classified as a net gain/loss on financial instruments. Interest 43 472 42 732 Instalment loans 47 229 43 209 from derivatives established in order to manage the interest rate exposure attached to the bank’s ordinary portfolios is classified as 57 864 58 812 Gross loans to customers 66 366 57 601 interest and posted as an adjustment of the bank’s other interest income/expenses. (40) (94) Individual loan write-downs (94) (40) 57 824 58 718 Loans to customers after individual write-downs 66 272 57 561 Sparebanken Vest has used the following financial derivatives in the course of the year: 179 228 Accrued interest 228 179 (21) (15) Amortisation (fees etc.) (15) (21) Forward foreign exchange transactions (104) (232) Write-down of loan groups (233) (104) These are agreements to purchase or sell a specific amount of foreign currency at an agreed exchange rate. 57 878 58 699 Loans to and receivables from customers at amortised cost 66 252 57 615

Interest rate contracts comprise: 7 085 9 597 Loans to and receivables from customers - nominal amount of loan principal 9 914 7 085 - Forward Rate Agreements (FRA) which stipulate a certain rate of interest on a nominal amount for a future period of time. 21 28 Accrued interest 28 21 interest rate swaps which are agreements to exchange interest rates (fixed for floating) for a specific amount over (38) 42 Adjustment to fair value 42 (38) a given period of time. 7 068 9 666 Loans to and receivables from customers at fair value 9 983 7 068 - Interest rate (call) options which give the buyer the right to receive from the seller the difference between 64 946 68 365 Loans to and receivables from customers 76 235 64 683 the market rate and an agreed rate of interest for a specific amount over a given period. - Interest rate (put) options which give the buyer the right to receive from the seller the difference between the market rate Customer loans recognised at fair value and an agreed rate of interest, if the market rate is lower than the agreed rate, for a specific amount over a given period. 3 581 7 068 Book value at 1 January 7 068 3 581 3 525 2 556 Net addition/reduction 2 873 3 525 Portfolio guarantee (38) 110 Value change in period 110 (38) The bank participates in a guarantee as a guarantor of risk related to the volatily of the value of Eksportfinans' liquidity portfolio. (68) Value change in credit spread in period 1) (68) The bank's share is NOK 50m. 7 068 9 666 Book value at 31 December 9 983 7 068

Options Market distribution of loans The bank’s holdings of options relates to bank deposits with an indexed return. All indexed products sold to customers are secured 50 085 47 129 Wage earners 55 185 50 085 against corresponding holdings in the market, and the bank’s open positions related to these options is very limited. 14 741 21 255 Commercial activity 21 070 14 478 123 24 Public sector 24 123 64 949 68 409 Gross loans and receivables 76 280 64 686 200 256 Accrued interest 256 200 (21) (15) Amortisation (fees etc.) (15) (21) (38) 42 Adjustment to fair value 42 (38) (40) (94) Individual loan write-downs (94) (40) (104) (232) Write-down of loan groups (233) (104) 64 946 68 365 Loans to and receivables from customers 76 235 64 683

Of which subordinated loan capital 43 43 Subordinated loans to other financial institutions 43 43 43 43 Subordinated loans booked under lendings 43 43

The net gain/loss(-) on loans recognised at fair value is included in the gain/loss(-) of financial instruments voluntarily recognised at fair value through profit or loss (note 5).

1) The change in the credit spread represents the increase in the credit spread in the market in general.

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 109 Note 11 Loans (continued I)

Credit risk

The credit risk is the risk of loss if the bank’s customers are unable to meet their obligations related to loans, credit facitlites, guarantees and the like. The credit risk is managed on the basis of targets set for risk profile, rate of return and growth. A key element in quantification of the bank’s risk profile is calculation of the default probability for individual customers and portfolios, - see below. The target rate of return is based on the Return on Risk-Adjusted Capital (RORAC). The concentration risk is managed on the basis of the targets set for the proportion for each sector, the largest individual commitments and the overall figure set for major commitments.

Risk classification of loans and guarantees

Sparebanken Vest’s credit portfolio is split into 11 risk classes from A to K based on debt-servicing ability (default probability).The default probability is defined as the likelihood that the customer will default on the loan within the next 12 months. A default may relate to a failure to service debt and 90 days have elapsed or other specific circumstances (“unlikely to pay”, cf. Basel II), affecting the customer’s ability to service the debt. The default probability is calculated using statistical models (score cards) based on logical regression. The models combine internal and external data to establish statistical relationships. The results are interpreted and form the basis of logical key figures. Risk classification of all commitments is carried out each month using the automatic collection of data from internal and external sources. There is also manual monitoring of corporate commitments. The frequency of risk classification assessment depends on the size of the commitmment and the nature of the risk.

Commitments are priced to reflect the level of exposure. Those with the highest exposure therefore have the highest price.

Distribution of loans by risk group Likelihood of default Risk class Starting at Until A 0.00 0.15 B 0.15 0.30 C 0.30 0.45 D 0.45 0.62 E 0.62 0.78 F 0.78 1.01 G 1.01 1.41 H 1.41 2.59 I 2.59 4.48 J 4.48 100.00 K 100.00

PAGE 110 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 11 Loans (continued II)

PARENT BANK GROUP Commitment Individual Commitment Individual Distribution of loans by risk class 31/12-08 31/12-07 31/12-08 31/12-07 31/12-08 31/12-07 31/12-08 31/12-07 Corporate Market A-D 6 297 5 074 0 0 6 578 5 422 0 0 E-H 14 793 10 661 0 0 14 793 10 661 0 0 I-J 4 671 3 299 0 0 4 671 3 299 0 0 K 397 208 94 49 397 208 94 49 Total - Corporate Market 26 158 19 241 94 49 26 439 19 589 94 49

Retail Market A-D 34 539 46 840 0 0 42 128 46 840 0 0 E-H 11 596 4 662 0 0 12 761 4 662 0 0 I-J 5 374 2 861 0 0 5 446 2 861 0 0 K 217 169 0 0 217 169 0 0 Total - Retail Market 51 726 54 533 0 0 60 551 54 533 0 0 Total 77 884 73 774 94 49 86 990 74 122 94 49

(All individual write-downs are allocated to the highest risk group)

The bank’s net losses in 2008 corresponded to 0.27% of total gross lendings of NOK 76 562m.

The expected annual average net loss has been calculated for the next 12 months and is within the parameters for expected losses set by the BoD.

31/12-08 31/12-07 Parent Bank GROUP Parent Bank GROUP Distribution of loans Pro- Write- Pro- Write- Pro- Write- Pro- Write- by geographical area portion Loans down portion Loans down. portion Loans down. portion Loans down. Hordaland 76.7 52 432 69 77.7 59 223 69 79.5 51 613 39 79.4 51 350 39 Sogn & Fjordane 10.7 7 343 12 10.1 7 705 12 10.6 6 876 10.6 6 876 Rogaland 6.3 4 281 12 6.0 4 575 12 3.5 2 247 3.5 2 247 Other parts of Norway 5.9 4 063 1 5.9 4 473 1 5.9 3 804 1 5.9 3 804 1 Total - Norway 99.6 68 119 94 99.7 75 976 94 99.4 64 540 40 99.4 64 277 40 Foreign 0.4 246 0.3 259 0.6 406 0.6 406 Total - geographical areas 100.0 68 365 94 100.0 76 235 94 100.0 64 946 40 100.0 64 683 40

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 111 Note 11 Loans (continued III)

31/12-08 Defaults and Write-downs Net loans and guarantees distributed by Unapplied other potential on loans and Write-down of main industries and retail market Net loans Guarantees limits bad debts guarantees loan groups

GROUP

Retail customers 55 158 167 5 220 197 0 53 Foreign (retail clients) 113 0 12 4 0 Total - retail clients 55 271 167 5 232 201 0 53 Primary industries 1 661 24 145 5 3 Manufacturing and mining 1 600 689 838 41 14 Building and construction, power and water supply 1 424 225 444 13 9 Commerce, hotels and restaurant operations 1 295 120 378 179 38 International shipping and pipe transportation 3 790 193 94 3 0 Transportation, post and telecommunications 1 029 64 50 5 2 Real estate operations 7 945 135 355 149 21 Insurance and finance 43 0 0 19 0 Services 2 007 0 250 12 11 Municipal/public sector 24 0 120 0 0 Foreign 146 0 0 0 8 Group write-downs, commercial sector 180 Total - commercial sector 20 964 1 450 2 674 426 106 180 Total 76 235 1 617 7 906 627 106 233

PARENT BANK

Retail clients 47 104 167 5 220 197 0 52 Foreign (retail clients) 100 0 12 4 0 Total - retail clients 47 204 167 5 232 201 0 52 Primary industries 1 658 24 145 5 3 Manufacturing and mining 1 597 689 838 41 14 Building and construction, power and water supply 1 404 225 444 13 9 Commerce, hotels and restaurant operations 1 286 120 378 179 38 International shipping and pipe transportation 3 805 193 94 3 0 Transportation, post and telecommunications 1 012 64 50 5 2 Real estate operations 8 203 155 355 149 21 Insurance and finance 43 0 0 19 0 Services 1 983 0 250 12 11 Municipal/public sector 24 0 120 0 0 Foreign 146 0 0 0 8 Group write-downs, commercial sector 180 Total - commercial sector 21 161 1 470 2 674 426 106 180 Total 68 365 1 637 7 906 627 106 232

PAGE 112 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 11 Loans (continued IV)

31/12-07 Defaults and Write-downs Net loans and guarantees distributed by Unapplied other potential on loans and Write-down of main industries and retail market Net loans Guarantees limits bad debts guarantees loan groups

GROUP

Retail clients 49 990 103 4 480 105 32 Foreign (retail clients) 92 11 Total - retail clients 50 082 103 4 491 105 0 32 Primary industries 1 319 38 201 Manufacturing and mining 1 099 664 536 35 6 Building and construction, power and water supply 1 241 243 359 3 Commerce, hotels and restaurant operations 1 069 106 334 58 21 International shipping and pipe transportation 1 617 296 96 Transportation, post and telecommunications 862 79 136 5 1 Real estate operations 5 420 160 330 5 1 Insurance and finance 194 Services 1 343 43 244 140 10 Municipal/public sector 123 120 Foreign 314 5 10 Group write-downs, commercial sector 72 Total - commercial sector 14 601 1 629 2 356 251 49 72 Total 64 683 1 732 6 847 356 49 104

PARENT BANK

Retail clients 49 990 103 4 480 105 32 Foreign (retail clients) 92 11 Total 50 082 103 4 491 105 0 32 Primary industries 1 319 38 201 Manufacturing and mining 1 099 664 536 35 6 Building and construction, power and water supply 1 241 243 359 3 Commerce, hotels and restaurant operations 1 069 106 334 58 21 International shipping and pipe transportation 1 617 296 96 Transportation, post and telecommunications 862 79 136 5 1 Real estate operations 5 683 200 330 5 1 Insurance and finance 194 Services 1 343 43 244 140 10 Municipal/public sector 123 120 Foreign 314 5 10 Group write-downs, commercial sector 72 Total - commercial sector 14 864 1 669 2 356 251 49 72 Total 64 946 1 772 6 847 356 49 104

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 113 Note 11 Loans (continued V)

Losses on loans and guarantees

PARENT BANK GROUP 31/12-07 31/12-08 31/12-08 31/12-07 (26) 52 Change in individual write-downs in period 52 (26) (29) 128 Change in loan group write-downs in period 129 (29) 29 37 Realised losses not covered by previous write-downs 37 29 (16) (17) Recoveries on losses realised previously (17) (16) (42) 200 Write-downs and loan losses 201 (42) Realised losses on guarantees not covered by previous loss provisions 8 3 Change in loss provisions for guarantees in period 3 8 8 3 Loss on guarantees 3 8 (34) 203 Total losses on loans and guarantees 204 (34)

(9) (1) Realised losses on loans covered by previous write-downs (1) (9) Realised losses on guarantees not covered by previous loss provisions 29 37 Realised losses on loans not covered by previous write-downs 37 29 20 36 Realised losses 36 20

Write-downs for impaired commitments. Individually assessed.

31/12-07 31/12-08 31/12-08 31/12-07 Non-performing commitments 133 299 Gross non-performing commitments 299 133 (6) (23) Write-down (23) (6) 127 276 Net non-performing commitments 276 127 5% 8% Percentage provided for 8% 5%

The above table shows potential bad debts and defaults (in excess of 90 days) where the balance in default on one of the commitments is more than NOK 1 000.

31/12-07 31/12-08 31/12-08 31/12-07 Performing commitments which are potential bad debts 223 328 Gross commitments subject to impairment assessment 328 223 (33) (71) Write-down (71) (33) 190 257 Net commitments subject to impairment assessment 257 190 15% 22% Percentage provided for 22% 15%

PAGE 114 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 11 Loans (continued VI)

Loan write-downs posted in the balance sheet

Changes in write-downs of individual commitments and loan groups, and loss provisions for guarantees

PARENT BANK GROUP

31/12-07 31/12-08 31/12-08 31/12-07 Individual write-downs 74 40 Loan write-downs at 1 January (nominal values) 40 74 (9) (1) Realised losses on loans covered by previous write-downs (1) (9) 0 0 Increase in write-down of loans written down previously 0 0 23 60 Write-down of loans not written down previously 60 23 (49) (5) Reduction in previous years' write-downs of individually assessed loans (5) (49) 40 94 Individual write-downs 94 40

Write-down of loan groups 133 104 Write-down of loan groups at 1 January (nominal values) 104 133 0 128 Increase in write-down of loan groups 129 0 (29) 0 Reduction in write-down of loan groups 0 (29) 104 232 Write-down of loan groups 233 104 144 326 Total write-downs of commitments 327 144

Provisions for losses on guarantees 2 10 Provisions to cover losses on guarantees at 1 January 10 2 9 12 Provisions for losses on guarantees not provided for previously 12 9 (1) (10) Reduction in previous years' loss provisions (write-back) (10) (1) 0 0 Realised loss on guarantees covered by previous loss provisions 0 0 10 12 Specified provisions to cover losses on guarantees 12 10

All commitments which are to be individually assessed shall be considered to determine if there is objective evidence that a loss has arisen and that the loss event will reduce the loan’s estimated future cash flows.

If objective evidence of impairment is found, the loss on the loan is calculated as the difference between the balance sheet value (balance + accrued interest at date of assessment) and the present value of future cash flows. In estimating future cash flows only the credit loss caused by the loss event that has occurred shall be taken into account. The estimation of future cash flows from a loan shall also take account of the takeover and sale of related loan collateral, including the transaction costs.

When the best estimate of the future cash flow is estimated and recorded, the system will calculate the new value of the loan (amortised cost) and the difference will be the amount of the write-down.

The write-down of the loss (against the customer’s commitment) shall be carried out when the entire loan collateral has been realised and it is certain that no further payments will be received on the commitment. The claim on the customers remains and will be followed up, unless an agreement has been made with the customer to waive the claim.

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 115 Note 12 Defaulted commitments

PARENT BANK GROUP

31/12-07 31/12-08 31/12-08 31/12-07 Retail Market 178 214 31 - 60 days 218 178 46 42 61 - 90 days 42 46 105 195 Over 90 days 195 105 329 451 Total 1) 455 329

Corporate Market 43 111 31 - 60 days 111 43 3 12 61 - 90 days 12 3 23 98 Over 90 days 98 23 69 221 Total 221 69

221 325 31 - 60 days 329 221 49 54 61 - 90 days 54 49 128 293 Over 90 days 293 128 398 672 Sum 676 398

The table shows defaults older than 30 days where the amount in default is more than NOK 1 000 on one of the commitment accounts. 1) The expected loss on defaulted commitments in the Retail market is included in the write-down on loan groups.

Note 13 Renegotiated loans

Retail Market

31/12-08 31/12-07 Balance Commitment Balance Commitment 174 280 158 244

Loans which in the fourth quarter (2008 and 2007) received an extension of the instalment repayment period and which have already received at least a third reminder.

Corporate Market (CM)

Renegotiated CM loans Balance on at 31/12-08 Commitment Credit limit instalment loans Risk class I 290 6 227 Risk class J 217 59 65 Total 507 65 292

Credit facilities and loans which in the fourth quarter received a temporary increase in the limit or deferral of instalment repayment.

Comparative figures for 2007 are not available as this information was presented for the first time in 2008.

PAGE 116 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 14 Loans to and receivables from credit institutions parent bank group

31/12-07 31/12-08 31/12-08 31/12-07 62 4 742 Loans to and deposits with credit institutions with no agreed term or period of notice 1 120 65 493 171 Loans to and deposits with credit institutions with an agreed term or period of notice 171 493 555 4 913 Net loans to and deposits with credit institutions 1 291 558

Geographical areas 123 3 696 Hordaland 74 123 30 30 Rogaland 30 30 15 Sogn & Fjordane 15 359 55 Other parts of Norway 55 362 43 1 117 Foreign 1 117 43 555 4 913 Total 1 291 558

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 117 Note 15 Shares

Shares are classified at fair value through profit or loss or as available for sale.

Book value 31/12-08 31/12-07 Shares stated at fair value through profit or loss are divided into the following portfolios: trading portfolio - listed shares 77 51 109 recognised at fair value 489 412 451 Total shares recognised at fair value through profit or loss 463 560 Valuation method listed shares 184 211 shares valued on the basis of the OTC list 96 162 fund investments as valued by the investment management company 7 13 venture shares valued on the basis of EVCA 1) 57 55 shares valued on the basis of other evaluation techniques 2) 119 119 Shares recognised at fair value through profit or loss 463 560

No. of shares Ownership (%) Book value 31/12-08 31/12-07 NORDITO AS 364 205 3.59 7 67 67 Shares classified as available for sale 2) 67 67

1) The venture portfolio relates mainly to fund investments (or participation in investment companies). Some of funds/companies prepare price assessments based on the underlying portfolio value, which we use for valuation purposes.

2) Value assements are based on the last issue price, traded price of which we are aware and/or the value recognised in the accounts taking account of any need for a write-down of our cost price where the share has not been traded. Obvious value appreciation is accounted for through a value adjustment, while smaller holdings are written down where necessary.

The Group has a commitment to pay in further equity related to the following ordinary share limits and venture investments in 2008

Committed amount Paid in Ordinary share limits: HitecVision Private Equity IV 11 6 Borea Opportunity II AS 50 6 61 12 Venture portfolio: Sarsia Life Science Fund 20 9 Fjord Invest Sør Vest AS (Seed corn) 12 2 Vekstfondet 5 2 Sarsia Seed 20 5 Norgesinvestor Opportunity AS 5 2 Incitia Ventures II AS 4 2 Marin Vekst II AS 30 15 Pareto Growth AS 10 6 106 43

Committed amount related to share investments 166 55

PAGE 118 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 16 Shares recognised at fair value through profit or loss

Specification of shares, mutual funds and PCCs at 31 December 2008

Book value (NOK 1 000) No. of shares Ownership (%) Book value

Norwegian companies BERGENS TIDENDE 75 220 4.82 49 043 BERGENSAVISEN KONSERN AS 315 840 9.84 8 528 BOREA NOTERTE 111 AS 100 000 2.12 4 338 BOREA OPPORTUNITY II AS 6 500 4.20 14 313 CARBONTECH HOLDING AS 110 18.33 4 400 DNB NOR ASA 95 000 0.01 2 565 EIDESVIK OFFSHORE ASA 300 000 1.00 5 490 EIENDOMSKREDITT AS 123 000 7.69 6 150 EKSPORTFINANS AS 2 638 1.00 28 227 EPSIS AS 13 202 4.95 3 961 FJORD LINE AS 150 000 2.00 2 250 FJORDINVEST AS 10 000 9.69 9 000 FJORDINVEST SØRVEST AS 2 380 415 14.80 2 380 HELGELAND SPAREBANK 38 350 1.90 3 854 KREDITTFOR. FOR SPAREBANKER 2 760 5.52 2 760 MARIN VEKST II AS 151 622 15.00 7 581 NETWORK NORWAY AS 1 500 000 0.70 4 500 NORSK HYDRO ASA 150 000 0.06 4 170 NORSK TILLITSMANN ASA 4 000 3.71 8 000 NORSUN AS 22 500 0.73 9 000 NORWAY PELAGIC AS 75 400 0.52 2 413 NYGÅRDSTANGEN AS 760 20.27 6 080 ORKLA 120 000 0.06 5 454 OSLO BØRS VPS HOLDING ASA 550 505 1.28 41 288 OSMOLIFE AS 13 400 000 7.83 3 350 PARETO GROWTH AS 28 816 1.93 4 611 RENEWABLE ENERGY CORP. 55 000 0.01 3 548 RIEBER & SØN 450 000 0.57 15 975 SAGAFJORD SEA FARM AS 8 900 10.00 4 681 SARSIA INNOVATION AS 12 200 4.91 3 050 SARSIA LIFE SCIENCE FUND 2 907 630 6.51 4 652 STATOILHYDRO ASA 40 000 0.00 4 556 TELENOR ASA 120 000 0.01 5 556 TIDE ASA 2 173 950 9.64 80 871 VESTKANTEN AS 3 112 1.22 3 112 VOSS VEKSEL- OG LANDMANDSBK. 9 499 10.00 19 948 YARA INTERNATIONAL ASA 40 000 0.01 5 950 Other Norwegian companies 43 161 438 765

Foreign companies HITECVISION PRIV. EQ. IV L.P. 1 009 828 0.36 9 903 SEADRILL LIMITED 70 000 0.03 3 857 SIEM OFFSHORE INC. 200 000 0.12 1 640 VIZRT 40 000 0.32 800 Other foreign companies 1 064 17 265

Holdings in share funds HOLBERG NORGE 11 758 0.32 2 058 HOLBERG NORDEN 38 624 0.34 4 635 6 692

Total investment in shares and mutual funds 462 722

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 119 Note 17 Commercial paper and bonds recognised at fair value through profit or loss

Parent Bank GROUP

31/12-07 31/12-08 31/12-08 31/12-07 26 0 Trading portfolio 0 26 5 083 12 760 Recognised at fair value 8 565 5 083 5 109 12 760 8 565 5 109

334 934 of which foreign 934 334

GROUP

Average rate Cost 31/12-08 31/12-07 Listed 1) 5.72% 2 494 2 621 3 400 Unlisted 4.50% 5 889 5 897 1 689 8 518 5 089

Accrued interest 47 20 Commercial paper and bonds 8 565 5 109

The Sparebanken Vest Group’s investments in commercial paper and bonds total around NOK 8.6bn. Of this, about 43.6% is invested in public sector issues (state, local and county authority securities). Around 48% is invested in securities issed by financial institutions. The remainder, around 8.4%, is invested in securities issued by publicly owned enterprises or industrial concerns.

Parent Bank Average rate Cost 31/12-08 31/12-07 Listed 1) 5.06% 6 694 6 815 3 400 Unlisted 4.50% 5 889 5 897 1 689 12 712 5 089

Accrued interest 48 20 Commercial paper and bonds 12 760 5 109

The Sparebanken Vest Group’s investments in commercial paper and bonds total around NOK 12.8bn. Of this, about 29.3% is invested in public sector issues (state, local and county authority securities). Around 65.3% is invested in securities issed by financial institutions. The remainder, around 5.4%, is invested in securities issued by publicly owned enterprises or industrial concerns.

The average rate of return is calculated by identifying the discount rate which gives a calculated value equal to the market value.

1) Including subordinated loan of NOK 9.7m (7.3m).

PAGE 120 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 18 Shares in subsidiaries and associated companies

Book value Book value in the sub-group in the parent bank Subsidiaries (book value in parent bank accounts) No. of shares Ownership (%) 31/12-08 31/12-07 31/12-08 31/12-07 Sparebanken Vest Boligkreditt AS 450 000 100 450 0 AS Filialbygg 4 150 100 2 7 Jonsvollskvartalet AS 100 100 107 107 Filialbygg Dale AS 1 100 Filialbygg Kaigaten AS 1 100 3 Filialbygg Lonevåg AS 1 100 Filialbygg Nedre Korskirkealmenning AS 1 100 1 Filialbygg Nordfjordeid AS 1 100 Filialbygg Norheimsund AS 1 100 Filialbygg Sogndal AS 1 100 1 Filialbygg Stord AS 1 100 1 Eiendomsmegler Vest AS 1 200 100 53 15 ottesen & Dreyer AS 1 470 70 5 5 kyte Næringsmegling AS 1 050 70 5 8 eiendomsmegler Vest Haugalandet AS 200 100 0 5 eiendomssenteret AS 100 100 Vestlandskonferansen AS 100 100 Total 510 22

Eiendomsmegler Vest AS received additional equity of NOK 38m in 2008.

Eiendomsmegler Vest Haugalandet AS was merged with Eiendomsmegler Vest AS in 2008.

No. of Owner- Associated companies (at book value in parent bank accounts) shares ship (%) 31/12-08 31/12-07 Frende Holding AS 1 329 098 44.30 138 156 Norne Eierselskap AS 7 402 597 49.35 22 0 Total 160 156

31/12-08 31/12-07 Associated companies Frende Norne Eier- Frende (at book value in consolidated accounts) Holding AS selskap AS Sum Holding AS Book value at start of period 151 0 151 156 Addition 0 22 22 Disposal through reduction of ownership (15) 0 (15) Share of loss (35) (2) (37) (5) Book value at end of period 101 20 121 151

Surplus values at end of period 0 0 0 0

Frende Holding AS is a holding company which owns the entire share capital of Frende Livsforsikring AS and Frende Skadeforsikring AS. The company was established in June 2007. In July 2008 Sparebanken Vest sold 170 602 shares in Frende Holding AS, reducing its ownership from 49.99% to 44.30%. The accounting gain through the reduction of ownership was NOK 2.7m for the parent bank and NOK 5m for the Group.

In 2008 Sparebanken Vest established the securities company Norne Securities AS in cooperation with Fondsfinans and 13 independent savings banks. The securities company was established through the holding company Norne Eierselskap AS, of which Sparebanken Vest owns 49.35%. Norne Eierselskap AS owns 77% of Norne Securities AS, while Fondsfinans owns 23%.

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 121 Note 19 Intangible assets

PARENT BANK GROUP

Excess value Excess value Software on customer Software on customer and licences portfolio Goodwill Total and licences portfolio Goodwill Total At 31 December 2006 63 63 Cost 63 13 76 39 39 Accumulated depreciation and write-downs 39 39 24 0 0 24 Book value at 31/12-06 24 0 13 37

Accounting year 2007 24 24 Book value at 31/12-06 24 13 37 24 140 82 246 Additions 24 140 85 249 15 8 23 Depreciation 2007 15 8 23 33 132 82 247 Book value at 31/12-07 33 132 98 263

At 31 December 2007 87 140 82 309 Cost 87 140 98 325 54 8 62 Accumulated depreciation 54 8 62 33 132 82 247 Book value at 31/12-07 33 132 98 263

Accounting year 2008 33 132 82 247 Book value at 1/1-08 33 132 98 263 39 0 0 39 Additions 42 0 42 23 11 34 Depreciation 2008 24 11 35 Write-down of goodwill 4 4 49 121 82 252 Book value at 31/12-08 51 121 94 266

At 31 December 2008 126 140 82 348 Cost 129 140 98 367 77 19 0 96 Accumulated depreciation 78 19 0 97 Depreciation 2008 4 4 49 121 82 252 Book value at 31/12-08 51 121 94 266

Software/licences are depreciated on a straight line basis over their expected economic lifetime which is estimated at 3 years.

Excess value on the customer portfolio is amortised over the remaining contract period which is estimated at 12 years.

PAGE 122 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 19 Intangible assets (continued)

Goodwill The individual items comprising goodwill in the balance sheet of Sparebanken Vest’s parent bank and Group are allocated to cash flow-generating units which benefit from the purchased asset. The choice of the valuation unit is made on the basis of where it is possible to identify and separate cash flows related to the activity. The table below shows the different valuation units and the book value of the goodwill of each unit.

PARENT BANK GROUP Goodwill Goodwill

31/12-07 31/12-08 Valuation unit Grounds for choice of valuation unit 31/12-08 31/12-07 Retail and Corporate Market This item consists of goodwill fron the acquisi- 82 82 Region Sogn & Fjordane tion of Fokus Bank in Sogn & Fjordane 82 82 Kyte Næringsmegling AS Commercial property broking in Hordaland 7 7 Ottesen & Dreyer AS Estate agency activities in Rogaland 5 5 Eiendomsmegler Vest Haugalandet AS Estate agency activities in Haugesund 0 4 82 82 Total goodwill 94 98

Value impairment test for goodwill Goodwill is tested for value impairment at year-end by discounting expected future cash flows from the valuation units in question. The cash flows are based on the historical figures from each unit. The discount rate is based on an assessment of what the required rate of return is in the market for the kind of activity pertaining to the valuation unit. The required rate of return reflects the risk attached to the activity. The value impairment test is carried out on cash flows after tax. On completion of the test, the value of goodwill from the acquisition of Eiendomsmegler Vest Haugalandet was written down by NOK 4m. Apart from this write-down, no further need has been found to write down goodwill in the accounts of the parent bank or the Group at 31/12-08.

Key elements of the value impairment test for goodwill Valuation unit Required rate of return after tax Retail and Corporate Market Region Sogn & Fjordane 8.80% Kyte Næringsmegling AS 11.40% Ottesen & Dreyer AS 11.40% Eiendomsmegler Vest Haugalandet AS 11.40%

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 123 Note 20 Fixed assets

PARENT BANK GROUP

Machinery, equip- Buildings and Machinery, equip- Buildings and ment and vehicles other real estate Total ment and vehicles other real estate Total

At 31 December 2006 400 400 Cost 412 281 693 291 291 Accumulated depreciation 298 77 375 109 0 109 Book value at 31/12-06 114 204 318

Accounting year 2007 109 109 Book value at 31/12-06 114 204 318 31 7 38 Additions 33 156 189 1 1 Disposals 1 1 33 33 Depreciation 2007 35 10 45 106 7 113 Book value at 31/12-07 111 350 461

At 31 December 2007 431 7 438 Cost 444 437 881 325 325 Accumulated depreciation 333 87 420 106 7 113 Book value at 31/12-07 111 350 461

Accounting year 2008 106 7 113 Book value at 1/1-08 111 350 461 39 39 Additions 46 6 52 0 0 Disposals 0 0 0 35 35 Depreciation 2008 37 10 47 110 7 117 Book value at 31/12-08 120 346 466

At 31 December 2008 469 7 476 Cost 490 443 933 359 359 Accumulated depreciation 370 97 467 110 7 117 Book value at 31/12-08 120 346 466

10-33% 0-10% Percentage rate for accounting depreciation 10-33% 0-10%

Note 21 Financial assets and insurance liabilities - customers bearing the risk

PARENT BANK GROUP

31/12-07 31/12-08 31/12-08 31/12-07 33 43 Mutual funds 43 33 29 54 Bank deposits 54 29 62 97 Total financial liabilities, customers bearing the risk 1) 97 62 62 97 Total insurance liabilities, customers bearing the risk 97 62

1) The figures show the breakdown of customer assets invested in mutual funds and deposits linked to compulsory occupational pensions.

PAGE 124 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 22 Debt to credit institutions

Debt to credit institutions is classified at amortised cost after voluntary assessment at fair value through profit or loss.

PARENT BANK GROUP

31/12-07 31/12-08 31/12-08 31/12-07 104 1 641 No agreed term or period of notice 1 641 104 2 527 9 317 With an agreed term or period of notice 1) 9 317 2 527 2 631 10 958 Recognised at amortised cost 10 958 2 631

150 1 182 With an agreed term or period of notice 1 182 150 150 1 182 Recognised at fair value through profit or loss 1 182 150

2 781 12 140 Debt to credit institutions 12 140 2 781

31/12-08 1/1 - 31/12-08 31/12-07 Book Addition/ Value Book Debt recognised at fair value through profit or loss Nominal amount value disposal change value NOK 1 000 1 000 1 000 0 Value adjustment 10 10 Value regulation credit spread 2) (9) (9) 1 001 1 0

EUR 20 165 165 Change in exchange rate 32 38 (6) Value adjustment 12 22 (10) Value regulation credit spread 2) (33) (33) 176 27 149

Accrued interest 5 4 1 Recognised at fair value 1 182 150

The net gain/loss(-) on debt recognised at fair value through profit or loss is included in the accounting item net gain/loss(-) of financial instruments recognised at fair value through profit or loss (note 5).

1) Including repo (scheme providing for swap of government securities against covered bonds) with nominal value NOK 4 063m. A repo entails a transfer of assets whereby the bank retains the risk and the return, and therefore does not meet the requirements for derecognition. The transferred asset is included entirely in the opposite item of a financial commitment for the consideration received.

2) The changed credit spread represents the increase in the credit spread that has been a feature of the market in general.

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 125 Note 23 Deposit

Customer deposits are classified as valued at amortised cost or recognised at fair value through profit or loss.

PARENT BANK GROUP

31/12-07 31/12-08 31/12-08 31/12-07 34 836 37 963 Recognised at amortised cost 37 487 34 791 2 820 3 034 Recognised at fair value through profit or loss 3 034 2 820 37 656 40 997 Total 40 521 37 611

31/12-08 1/1 - 31/12-08 31/12-07 Book Additions/ Value Book Recognised at fair value through profit or loss Nominal amount value disposals change value Fixed interest deposits NOK 880 880 880 Value adjustment 13 13 0 893 0

Indexed deposits 1) NOK 2 191 1 899 (796) 2 695 Value adjustment 226 101 125 2 125 2 820

Accrued interest 16 16 0 Recognised at fair value through profit or loss 3 034 2 820

The net gain/loss(-) on deposits recognised at fair value through profit or loss is included in the accounting item net gain/loss(-) of financial instruments recognised at fair value through profit or loss (note 5).

1) These are savings products comprising a deposit part and a derivative part, and where the return to the customer depends on the development of defined market variables. Each part of the product is treated separately for accounting purposes.

PAGE 126 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 23 Deposit (continued)

Distribution of deposits from and debt to customers

PARENT BANK GROUP

31/12-07 31/12-08 31/12-08 31/12-07 NOK % NOK % Distribution by sector NOK % NOK % 559 1.48 993 2.42 Primary industries 993 2.45 559 1.49 709 1.88 810 1.98 Manufacturing and mining 810 2.00 709 1.89 992 2.63 1 506 3.67 Plant and construction, power and water supply 1 506 3.72 992 2.64 1 198 3.18 1 333 3.25 Wholesale and retail trade, hotels and restaurants 1 333 3.29 1 198 3.19 1 365 3.62 1 079 2.63 International shipping and pipe transportation 1 079 2.66 1 365 3.63 854 2.27 486 1.19 Transport ation, post and telecommunications 486 1.20 854 2.27 1 714 4.55 1 713 4.18 Real estate operations 1 713 4.23 1 714 4.56 1 217 3.23 1 398 3.41 Insurance and finance 1 398 3.45 1 217 3.24 4 301 11.42 4 531 11.05 Services 4 055 10.01 4 256 11.32 1 204 3.20 1 364 3.33 Municipal / public sector 1 364 3.37 1 204 3.20 210 0.56 387 0.94 Foreign 387 0.96 210 0.56 14 323 38.04 15 600 38.05 Total - commercial sector 15 124 37.32 14 278 37.96 23 333 61.96 25 397 61.95 Retail customers 25 397 62.68 23 333 62.04 37 656 100.00 40 997 100.00 Total 40 521 100.00 37 611 100.00

Geographical distribution 31 389 83.36 32 831 80.08 Hordaland 32 355 79.85 31 344 83.34 4 283 11.37 4 534 11.06 Sogn & Fjordane 4 534 11.19 4 283 11.39 493 1.31 930 2.27 Rogaland 930 2.30 493 1.31 1 281 3.40 2 315 5.65 Other parts of Norway 2 315 5.71 1 281 3.41 37 446 99.44 40 610 99.06 Total - Norway 40 134 99.04 37 401 99.44 210 0.56 387 0.94 Foreign 387 0.96 210 0.56 37 656 100.00 40 997 100.00 Total 40 521 100.00 37 611 100.00

Under the Guarantee Act for banks and the public administration etc. of financial institutions, all savings banks are required to be members of the Savings Banks’ Guarantee Fund. The Fund guarantees to cover losses incurred by a depositor on deposits with a member institution for an amount not exceeding NOK 2m of the depositor’s total deposits. By deposit is meant any credit balance with the bank on an account registered by name, as well as commitments under certificates of deposit registered by name. The fee payable to the Savings Banks’ Guarantee Fund is determined in accordance with the provisions of the Guarantee Act.

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 127 Note 24 Securitised debt

Securitised debt is classified as being valued at amortised cost or recognised at fair value through profit or loss.

GROUP 31/12-08 31/12-07 Nominal Book Book Valued at amortised cost amount value value NOK 10 360 10 336 10 102 EUR 1 090 10 758 7 890 Total valued at amortised cost 21 094 17 992

1/1 - 31/12-08 Additions/ Value Recognised at fair value through profit or loss disposals change Indexed bonds NOK 0 (923) 923 Value adjustment - interest rates (64) 64 987

Commercial paper and bonds NOK 12 566 12 564 4 538 8 026 Value adjustment - interest rates 292 520 (228) Value adjustment - credit spread 1) (193) (185) (8) 12 663 7 790

Total - recognised at fair value through profit or loss 12 663 8 777

Accrued interest 492 373 Securitised debt 34 249 27 142

Book value at Issued Matured/ Exchange rate Other Book value Change in securitied debt 31/12-08 2008 repaid 2008 change 2008 changes 2008 at 31/12-07 Commercial paper at cost 2 764 3 463 (3 964) 3 265 Bonds at cost 29 000 9 559 (4 409) 23 850 Value adjustments 2 486 2 069 390 27 Total - securities 34 249 13 022 (8 373) 2 069 390 27 142

The net gain/loss(-) on securitised debt established through the issue of securities recognised at fair value is included in the accounting item net gain/loss(-) of financial instruments recognised at fair value through profit or loss (note 5).

PAGE 128 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 24 Securitised debt (continued)

Recognised Recognised at fair value at amortised cost through profit or loss Date of maturity of securitised debt: NOK Currency NOK Currency Total 2009 1 385 99 4 706 6 190 2010 4 249 988 2 400 7 637 2011 2 054 4 936 2 100 9 090 2012 1 500 3 208 400 5 108 2013 965 987 1 950 3 902 2014 205 543 1 010 1 758 Total securitised debt, nominal amount 33 685

PARENT BANK 31/12-08 31/12-07 Recognised at amortised cost Nominal amount Book Value Book Value NOK 10 060 10 036 10 102 EUR 1 090 10 758 7 890 Total recognised at amortised cost 20 794 17 992 Total recognised at fair value 12 663 8 777 Accrued interest 492 373 Securitised debt 33 949 27 142

1) The changed credit spread represents the increase in the credit spread that has been a feature of the market in general.

Note 25 Pension commitments

Under the Compulsory Occupational Pension Act, the Sparebanken Vest Group is required to have an occupational pension scheme, and the Group’s scheme meets the requirements of the Act. The pension scheme consists of the following:

1. A group pension scheme with a life insurance company which provides all the bank’s employees with a pension equal to 70% of the final salary, based on the present level of national insurance but limited to 12 times the national insurance base rate (G). At year-end 2008 the scheme covered 997 persons in employment (parent bank: 679), of whom 260 persons (parent bank: 259) currently receive pensions under the scheme. Under the scheme, disability benefit is covered. Spouse’s pension and children’s pension were terminated from 1/1-08. The scheme covered all employees until 30/4-07. The benefits-based scheme was closed to new members in 2007 with a voluntary transfer to the defined contribution scheme. .

2. A contribution-based scheme covering 193 employees (parent bank: 161). All persons employed after 1/5-07 are covered by the contribution-based scheme.

3. Early retirement pension with supplementary benefits from 62 to 67 years of age. Pensions are currently being paid to 99 persons (parent bank: 98) under the scheme. The scheme is uninsured and is covered through operations.

4. A top hat scheme covering 14 employees, with the option of a retirement pension at the age of 64 (CEO at 60). The pension benefits correspond to 70% of the final salary up to the age of 67, at which point these persons become members of the group pension scheme. Under any other early retirement scheme than a Contractual Pension Agreement (CPA) the person in question will be withdrawn from the occupational pension scheme but will be compensated from the ordinary pension age for the reduction in pension entitlements. The CEO also has an agreement which provides him with 70% of salary in excess of 12G from 67 years of age.

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 129 Note 25 Pension commitments (continued I)

Economic assumptions used to calculate pension costs and commitments:

Costs Commitments Percentage 2008 2007 31/12-08 31/12-07 Discount rate 4.70 4.35 3.80 4.70 Expected return on pension fund assets: 5.75 5.40 5.80 5.75 Annual salary growth: 4.50 4.50 4.00 4.50 Annual pension regulation: 3.38 4.25 3.75 3.38 Change in national insurance base rate: 4.25 4.25 3.25 4.25 Voluntary withdrawals (over/under 40 years of age) 0-8.00 0-8.00 0-8.00 0-8.00 CPA acceptance rate: 50.00 50.00 50.00 50.00

Sparebanken Vest uses the special “corridor” equalisation method for the accounting treatment of changes in estimates and the difference between the expected and the actual return on pension fund assets, and changes in economic assumptions used to calculate pension commitments.

Investment of pension fund assets Percentage 2008 2007 Bonds 61 50 Shares 6 30 Money market and similar 16 7 Real estate 17 13

The value-adjusted return on pension fund assets at 30/9-08 was -1.6%. The corresponding figure in 2007 was 9.5%.

GROUP 2008 2007 Pension costs Insured Uninsured Total Insured Uninsured Total Accumulated pension rights for year 33 11 44 39 9 48 Interest charge on accrued pension commitments 40 8 48 44 7 51 Expected return on pension fund assets (37) (37) (31) (31) Administration costs 5 5 0 Plan changes posted in the profit and loss account 1) and 2) (39) 5 (34) (128) (128) Changes in plan estimates posted in the profit and loss account 1) and 2) 16 0 16 41 0 41 Changes in other estimates posted in the profit and loss account 17 8 25 27 5 32 Net pension cost 35 32 67 (8) 21 13 Employer's national insurance contributions 5 3 8 7 2 9 Pension cost posted in profit and loss account *) 40 35 75 (1) 23 22 Premium paid in to defined benefits pension scheme 4 1

*) Total included in salaries and general administration expenses (note 6)

31/12-08 31/12-07 Pension commintments Insured Uninsured Total Insured Uninsured Total Present value of accrued pension commitment 1 043 202 1 245 910 181 1 091 Pension fund assets stated at fair value (670) (670) (619) (619) Net pension commitment 373 202 575 291 181 472 Employer's national insurance contributions 53 28 81 41 25 67 Unposted effect of changed estimates (410) (102) (512) (268) (89) (353) Net pension commitment in balance sheet 16 128 144 65 117 186

PAGE 130 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 25 Pension commitments (continued II)

Change in pension commitment in year 2008 2007 Accumulated pension rights for the year 1 091 1 185 Interest charge on accrued pension commitments 44 47 Plan change 1) and 2) 48 51 Estimate divergences (54) (113) Other balance sheet changes 147 (45) Pension payments 5 0 Pension commitment at 31 December (36) (34) Pension commitment at 31 December 1 245 1 091

Change in pension fund assets in year Pension fund assets (fair value) at 1 January 619 559 Return on pension fund assets 37 31 Plan change 1) and 2) (24) 0 Estimate divergences (23) 2 Premium paid / paid in to premium fund 78 43 Administration costs (4) Pension payments (13) (17) Pension fund assets (fair value) at 31 December 670 619

Historical development 31/12-08 31/12-07 31/12-06 31/12-05 31/12-04 Gross pension commitments 3) 1 326 1 158 1 273 935 736 Gross pension fund assets (670) (619) (559) (507) (497) Unposted estimate deviation (512) (353) (484) (205) (59) Net pension commitments in balance sheet 144 186 230 223 180

1) Cover of spouse’s pension and children’s pension under the group occupational pension scheme was terminated with effect from 1/1-08. The net effect of the plan change, taking account of the reduction in the unposted estimate divernence, totalled NOK 22m for the Group. The plan change has been taken to income in the profit and loss account for 2008.

2) Effective from 1/5-07 there was a change from G-regulation of current pensions to regulation based on averag wage and price growth. The reduction led to a reduction in the pension commitment which was posted in the profit and loss account during the period.

3) Gross pension commitments incl. national insurance contributions .

Parent Bank

2008 2007 Pension costs Insured Uninsured Total Insured Uninsured Total Accumulated pension rights for year 31 10 41 36 8 44 Interest charge on accrued pension commitments 38 8 46 43 7 50 Expected return on pension fund assets (35) (35) (30) (30) Administration costs 4 4 0 0 Plan changes posted in profit and loss account1) and 2) (36) 5 (31) (123) (123) Changes in plan estimates posted in the profit and loss account 1) and 2) 15 15 40 40 Other estimate divergences posted in the profit and loss account 16 7 23 26 5 31 Net pension cost 33 30 63 (8) 20 12 Employer's national insurance contributions 5 3 8 7 2 9 Pension cost posted in profit and loss account *) 38 33 71 (1) 22 21 Premium paid in to defined benefits pension scheme 3 1

*) Total included in salaries and general administration expenses (note 6)

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 131 Note 25 Pension commitments (continued III)

31/12-08 31/12-07 Pension commitment Insured Uninsured Total Insured Uninsured Total Present value of accumulated pension commitments 1 007 194 1 201 881 175 1 056 Pension fund assets stated at fair value (648) 0 (648) (598) 0 (598) Net pension commitment 359 194 553 283 175 458 Employer's national insurance contributions 51 27 78 40 25 65 Estimate divergences not posted in profit and loss account (392) (102) (494) (257) (86) (343) Pension commitment posted in balance sheet 18 119 137 66 114 180

Change in pension commitment in year 2008 2007 Pension commitment at 1 January 1 056 1 149 Accumulated pension rights for year 41 44 Interest charge on accrued pension commitments 46 49 Plan changes 1) og 2) (50) (108) Estimate divergences 139 (44) Other balance sheet changes 5 0 Pension payments (36) (34) Pension commitment at 31 December 1 201 1 056

Change in pension fund assets in year 2008 2007 Pension fund assets (fair value) at 1 January 598 541 Return on pension fund assets 35 30 Plan changes 1) and 2) (22) 0 Estimate divergences (22) 2 Premium paid / paid in to premium fund 75 41 Administration costs (4) 0 Pension payments (12) (17) Pension fund assets (fair value) at 31 December 648 598

Historical development 31/12-08 31/12-07 31/12-06 31/12-05 31/12-04 Gross pension commitments 3) 1 279 1 121 1 235 903 727 Gross pension fund assets (648) (598) (542) (498) (490) Unposted estimate deviation (494) (343) (468) (193) (62) Net pension commitments in balance sheet 137 180 226 212 175

1) Cover of spouse’s pension and children’s pension under the group occupational pension scheme was terminated with effect from 1/1-08. The net effect of the plan change, taking account of the reduction in the unposted estimate divernence, totalled NOK 20m for the parent bank. The plan change has been taken to income in the profit and loss account for 2008.

2) Effective from 1/5-07 the parent bank changed from G-regulation of current pensions to regulation based on average wage and price growth. The reduction led to a reduction in the pension commitment which was posted in the profit and loss account during the period.

3) Gross pension commitments incl. national insurance contributions.

PAGE 132 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 26 Subordinated loan capital

Book value Issued Nominal amount Interest rate Redemption right 31/12-08 31/12-07 2004 Capital bond loan 1) USD 60 Fixed rate 7.30% call option 30/4-14 589 359 2007 Subordinated loan EUR 85 3-mth EURIBOR + 0.375% call option 12/7-12 848 683 Due/redeemed Subordinated loan capital 1 437 1 042

Subordinated loans are stated at amortised cost or classified at fair value through profit or loss.

Accumlated at 31/12-07 1/1 - 31/12-08 31/12-08 Original book Exchange Value Exchange Value Book Stated at amortised cost value NOK rate change change rate change change value Subordinated loan EUR 85 mill 677 (2) i.a. 162 837 Amortised interest and costs 11 848

Stated at fair value through profit or loss Capital bond loan at nominal amount USD 60m 429 (104) 95 420 Accrued interest 5 Value regulation 2 153 155 Value regulation of credit spread 2) 29 (20) 9 589

Total 1 106 (106) 31 257 133 1 437

Effective rate of interest for the subordinated loan stated at fair value in 2008: 4.79% (2007: 6.66%)

Net gain/loss(-) on subordinated loan capital stated at fair value is included in “Net gain/loss(-) on financial instruments voluntarily classified at fair value through profit or loss” (note 5).

1) The loan interest rate is fixed until 2034. Thereafter it will run at a floating rate. 2) The change in the credit spread reflects the increase in the credit spread for the market generally.

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 133 Note 27 Capital adequacy

Banking activity entails risk in many areas. Good risk and capital management is a key strategic element of Sparebanken Vest’s value creation process. The BoD of Sparebanken Vest is targeted on the establishment of a moderate risk profile for the bank. The bank’s ability to balance ambitions against its ability and willingness to take risks will have both quantitative and qualitative effects. A strong risk culture characterises an organisation with a keen focus on risk and profitability. This will strengthen the bank’s rating and ensure good access to the capital market. Risk-adjusted capital is used as an expression of the bank’s risk measurement and risk tolerance.

Although expected losses are taking into account in its pricing, Sparebanken Vest must have capital reserves in order to meet unforeseen losses. Risk-adjusted capital is calculated for all risk areas. This capital shall correspond to the capital needed to engage in banking operations. The risk-adjusted capital and the statutory minimum requirement shall be set against the bank’s actual equity.

The bank’s processes related to capital assessment are based on quantification of the capital requirement for the individual risk areas. Stress tests are carried out in order to simulate the effects of situations that are unlikely to arise, but which could result in large, unexpected losses for the bank. At the same time, the quantitative assessments are supplemented by qualitative analyses.

At the start of 2007 the Financial Supervisory Authority of Norway gave Sparebanken Vest approval to use basic IRB methods. The approval was subject to certain conditions, all of which were met by Sparebanken Vest in 2008. Status as an IRB bank entails monitoring activities which are part of the Authority’s supervision of the bank. For regulatory capital purposes there are transitional regulations for the calculation of capital up to 2010.

All of the bank’s customers who are covered by the IRB system are given a score based on the bank’s internal score models. The bank also calculates values for Loss Given Default (LGD) for retail market customers and small corporate clients. In the case of corporate clients, LGD rates are used pursuant to the capital adequacy regulations. No external rating is used by the bank, nor does it have self-determined risk parameters beyond those which are used to set the basis of calculation and the amount of expected losses. Any values used for commitment security purposes are taken into account when setting LGD and in the score given to retail market customers.

The framework used by the bank to manage and control the IRB system follows from its credit strategy, policy and procedures. Sparebanken Vest has also drawn up a validation mandate to ensure that there is monitoring of both model tools (PD, LGD, EAD) and application. Each year, a validation report is drawn up for the BoD.

All commitments covered by the IRB system are classified by the bank each month. Quantification of the risk parameters takes place in the same operation and they are also updated each month. In the retail market the commitment security values are updated each year or when a new commitment arises. In the corporate market the updating of commitment security values is part of the procedure of monitoring commitments. The bank applies the definition of defaults used in the capital adequacy regulations, i.e. where an account is overdrawn for more than 90 days in respect of amounts of NOK 500 or more. A default may also be deemed to exist based on an “unlikeliness to pay” criterion, such as insolvency, where information to this effect is received.

Validation is carried out annually for PD, EAD and LGD. The bank has outcome data for 6 years.

Definitions:

EAD (exposure at default): risk parameters representing the commitment amount on default.

LGD (loss given default): risk parameter representing a commitment's loss percentage on default.

PD (probability of default): risk parameter representing likelihood of default within a period of one year.

PAGE 134 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 27 Capital adequacy (continued I)

PARENT BANK GROUP Basis of calculation Basis of calculation

31/12-07 31/12-08 (NOK 1 000) 31/12-08 31/12-07 LGD LGD Credit risk

0 0 Sovereign states 0 0 0 1 922 Central banks 1 922 0 24 703 707 734 Regional / local government 707 734 24 703 826 596 2 904 795 Institutions 1 324 266 800 777 421 321 501 022 Other commitments 766 373 872 672 825 236 558 702 Off-balance sheet items / non-trading items 558 702 825 236 2 097 856 4 674 175 Total introductory / exceptional commitments under IRB 3 358 997 2 523 388

10 739 613 16 341 982 41.84 Company S=50, no SL/Company S<50, without SL 41.84 16 341 982 10 739 613 3 722 298 5 376 577 43.04 Company SL 43.04 5 376 577 3 722 298 6 205 311 7 406 026 13.70 Real estate, private market 13.28 7 406 026 6 205 311 276 336 279 989 20.66 SME 20.14 279 989 276 336 2 253 841 2 191 217 64.78 Other 64.78 2 191 217 2 253 841 23 197 399 31 595 791 Total 31 595 791 23 197 399

Real estate/SME 2 853 011 0 Standard method 2 853 011 0

296 341 1 172 410 Unlisted low-risk / well diversified portfolios 262 629 296 341 Traded on stock exchange or in authorised 0 0 marketplace or similar 0 1 914 598 1 849 171 Other equity positions 1 769 988 1 914 598 2 210 939 3 021 581 Total 2 032 617 2 210 939 27 506 194 39 291 547 Total credit risk 39 840 416 27 931 727

Market risk 155 574 316 357 Position risk, instruments of debt 316 357 155 574 163 958 76 439 Position risk, equity instruments 76 439 163 958 131 360 118 225 Currency risk 118 225 131 360 450 892 511 021 Total market risk 511 021 450 892

Operational risk 577 617 581 137 Trading and intermediary portfolio 800 916 813 665 621 844 714 075 Banking services for corporate clients (Corporate Market) 714 075 621 844 1 417 209 1 487 181 Banking services for retail market clients (Retail Market) 1 487 181 1 417 209 2 616 670 2 782 393 Total operational risk 3 002 172 2 852 718

30 573 756 42 584 961 Basis of calculation, Basel II 43 353 609 31 235 337

49 899 930 57 232 008 IRB reporting of basis 59 569 016 50 048 525 95% 47 404 934 51 508 807 90% Basis of calculation under transitional scheme, Basel I 90% 53 612 114 47 546 099 95%

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 135 Note 27 Capital adequacy (continued II)

PARENT BANK GROUP Basis of calculation Basis of calculation

31/12-07 31/12-08 (NOK 1 000) 31/12-08 31/12-07

3 792 395 8% 4 120 705 8% Capital requirement under transitional scheme 4 288 969 8% 3 803 688 8%

Capital adequacy / Net capital base 1 042 476 1 176 536 Subordinated loan capital 1 176 536 1 042 476 4 131 149 4 334 249 Equity 4 331 165 4 318 173 (615 921) (652 628) Deductions (649 585) (763 429) 4 557 704 9.61% 4 858 157 9.43% Net capital base 4 858 116 9.06% 4 597 219 9.67%

3 925 344 8.28% 4 152 651 8.06% Net core capital 4 144 047 7.73% 3 962 700 8.33% 3 884 494 4 064 782 Reserves 4 059 700 3 924 018 246 655 269 467 PCCs 271 465 246 655 Capital loans USD 60 fixed rate 325 508 420 758 interest of 7.3% call option 30/4-14 420 758 325 508 (531 313) (602 356) Deductions (607 876) (533 481)

632 360 1.33% 705 506 1.37% Net supplementary capital 714 069 1.33% 634 519 1.33% 675 421 755 778 Subordinated loan capital EUR 85m 755 778 675 421 (43 061) (50 272) Deductions (41 709) (40 902) 765 309 737 452 Calculated regulatory surplus, Basel I 569 147 793 531

On completion of the de-escalation period, capital adequacy with current figures will be as follows: 4 557 704 14 .91% 4 858 157 11.41% Net capital base 4 858 116 11. 21% 4 597 219 14.72% 3 925 344 12.84% 4 152 651 9.75% Net core capital 4 144 047 9.56% 3 962 700 12.69% 632 360 2.07% 705 506 1.66% Net supplementary capital 714 069 1.65% 634 519 2.03%

2 445 900 3 406 797 Capital requirement, Basel II 3 468 289 2 498 827

2 111 804 1 451 360 Calculated regulatory surplus, Basel II 1 389 827 2 098 392

PAGE 136 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 28 Primary Capital Certificates

The PCC capital at 31 December 2008 consisted of 2 665 887 PCCs of nominal value NOK 100.

Dividend per Primary Capital Certificate The PCC fraction used to calculate the maximum dividend is derived as the proportion of the capital base which the PCC capital, PCC premium reserve and the equalisation reserve represent, after deducting the reserve for valuation variances, capital bonds and subordinated loans. The PCC share of the profit is calculated as the profit after tax and minority interests divided on the basis of the PCC share of the parent bank’s capital base as at 1 January in the accounting year. The PCC fraction in 2008 is weighted to take account of the dividend issue.

PCC fraction (A / B) Calculation Issue Parent Bank (NOK 1 000) 1/1-09 6/5-08 1/1-08 PCC capital 266 589 266 589 250 000 Holding of own PCCs (3 934) PCC premium reserve 6 812 6 696 1 500 Equalisation reserve 5 324 5 324 5 324 Total - numerator (A) 274 791 278 609 256 824

Equity at 31 December 4 334 248 4 127 979 4 106 195 Reserve for variation variances (200 519) (104 963) (104 893) Total - denominator (B) 4 133 729 4 023 016 4 001 302

PCC fraction (A / B) as % 6.65 6.93 6.42

2008 2007 PCC fraction used for dividend (weighted, as provided for in the PCC Regulations) 6.74 7.30

Dividend per PCC 3.75 19.00

Total dividend for 2 500 000 PCCs (thousands) 47 500 Total dividend for 2 665 887 PCCs (thousands) 9 997

Holdings of own PCCs Where the bank purchases its own PCCs, the purchase price including direct costs is debited to equity. The nominal amount of the bank’s holdings of its own PCCs is posted to reduce the amount of paid-in capital and the remainder as a reduction of retained earnings. 2008 2007 Holding of own PCCs at 1 January 33 450 25 000 PCCs purchased 44 191 65 200 PCCs sold 38 299 56 750

Holding of own PCCs at 31 December 39 342 33 450

Effective return per PCC 2008 2007 Listed price at 31 December 86.50 190.00 Dividend paid in year 19.00 18.25 Listed price at 1 January 190.00 213.00 Effective return in NOK (84.50) (4.75) Effective return as a percentage (44.47) (2.23)

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 137 Note 28 Primary Capital Certificates (continued I)

Proportion of PCC 20 largest owners No. of PCCs capital (%) Frank Mohn AS 131 428 4.93 Bergen Kommunale Pensjonskasse 128 000 4.80 ABG Sundal Collier 80 000 3.00 MP Pensjon 52 771 1.98 Kaare Holmefjord AS 44 000 1.65 Solvang ASA 40 000 1.50 Sparebanken Vest 39 342 1.48 Goldman Sachs & Co 35 000 1.31 Aske Investering AS 30 650 1.15 Per Gunnar Sælemyr 30 057 1.13 Citibank N.A. 29 000 1.09 Forsvarets personellservice 27 200 1.02 Terra utbytte 27 064 1.02 DnB NOR, Luxembourg 23 150 0.87 Aristar AS 22 914 0.86 Jan H. Freuchen 22 150 0.83 Flyfisk AS 21 000 0.79 Albrecht Halvor Paul Eika 18 571 0.70 Torbertra kapital AS 18 000 0.68 Neumann invest AS 17 142 0.64 Total 837 439 31.43

PCCs owned by the CEO, senior employees, members of the BoD, Corporate Assembly and Control Committee, and closely related persons as defined in Section 7-26 of the Accounting Act and Section 8-20 of the Supplementary Regulations pursuant to the Act:

No. of PCCs Arne Buanes, chairman, Corporate Assembly 22 Trond Mohn, member, Corporate Assembly 11 428 Siri Birkeland, member, Corporate Assembly 114 Jan S. Aske, member, Corporate Assembly 7 542 Widar Slemdal Andersen, member, Corporate Assembly 428 Kjell Sævdal, member, Corporate Assembly 300 Bodil Digranes, member, Corporate Assembly 214 Inger Finne, member, Corporate Assembly 300 Lisbeth Ormevik, member, Corporate Assembly 385 Rune Pedersen, member, Corporate Assembly 300 Linda K. Nordeide, member, Corporate Assembly 428 Liv Erstad, member, Corporate Assembly 125 Morten Monsen, member, Corporate Assembly 214 Johnny Iden, member, Corporate Assembly 500 Karen Dahle, member, Corporate Assembly 400 Marianne Ringen, member, Corporate Assembly 214 Roald Korsøen, member, Control Committee 100 Trygve Bruvik, chairman, BoD of Directors 1 000 Tone Mattsson, BoD member 200 Arve Havnerås, BoD member 385 Stein Klakegg, CEO 1 357 Jan Erik Kjerpeseth, Deputy CEO 542 Jørn Lekve, Director of Corporate Communications 528 Arne Selle, Divisional Director, Business Support 300 Benedicte Schilbred Fasmer, Divisional Director, Capital Market 214 Henning Nordgulen, Director, Corporate Market 214 Kate Henriksen, director, Retail Market 100 Pål Pedersen, Legal Director 214 Frank Johannesen, director, Risk Management 114 Bernt R. Petersen, Head Internal Auditor 785

PAGE 138 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 28 Primary Capital Certificates (continued II)

Distribution by number No. of PCCs No. of PCCs Proportion (%) No. of owners Proportion (%) 1 - 100 51 329 1.93 704 27.71 101 - 1 000 511 316 19.18 1 424 56.04 1 001 - 5 000 701 880 26.33 331 13.03 5 001 - 10 000 314 333 11.79 43 1.69 10 001 - 250 000 1 087 029 40.78 39 1.53 Total 2 665 887 100.00 2 541 100.00

Note 29 Guarantees and mortgages

PARENT BANK GROUP

31/12-07 31/12-08 Guarantees Note 31/12-08 31/12-07 Guarantee specification: 862 861 Payment guarantees 861 862 565 549 Contract guarantees 549 565 30 37 Loan guarantees 37 30 2 1 Guarantees for taxes 1 2 314 189 Other guarantee liabilities 169 274 1 772 1 637 Total customer guarantees 11 1 617 1 732 0 0 Guarantees on behalf of Savings Banks' Guarantee Fund 0 0 1 772 1 637 Total guarantee liability 1 617 1 732

Mortgages 4 506 4 151 Bonds and commercial paper - as security for overnight loans from Norges Bank, valued at 4 151 4 506 4 506 4 151 Total mortgages 4 151 4 506

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 139 Note 30 Liquidity risk / Residual maturity of balance sheet items

Liquidity risk means the risk that the bank is unable to refinance its debt as it matures, or is unable to fund increases in assets.T he liquidity risk is reduced by adjusting the balance sheet structure, including the bank’s dependence on funding from sources other than its customers, and the extra costs involved in raising long-term funding in the money market. In 2008, Sparebanken Vest increased its internal structural liquidity requirement (time without access to funding from the capital market) and further developed its strategy and parameters for liquidity management activities. The current strategy takes account of the recommendations of the Basel Committee concerning good liquidity management for banks.

Most of the bank’s long-term funding which matures in more than one year is linked to agreements where the interest rate is tied up to fixed short- term interest rates. This is done in order to reduce the interest rate risk involved in raising long-term funding.

In the following table debt and deposits are stated at nominal value and placed in the time band for final maturity. T he earliest time band (0-1 month) includes call deposits, loan approvals and unutilised credit lines. Interest due extending over 1 month is specified in order to distinguish between the loan principal and future interest payments.

0 - 1 1 - 3 3 - 1 2 1 - 5 Over 5 Residual maturity of balance sheet items at 31/12-08 month months months years years Total Debt to credit institutions 2) 4 251 3 624 489 3 521 197 12 082 Interest payments 17 69 214 748 119 1 167

Customer deposits 36 789 987 1 820 782 182 40 560 Interest payments 604 1 209 1 813

Securitised debt 450 2 314 3 426 25 737 1 758 33 685 Interest payments 219 308 1 283 3 012 82 4 904

Loan approvals and unutilised credit lines 7 238 7 238

Subordinated loan capital 1 259 1 259 Interest payments 12 67 316 827 1 222

Financial derivatives, gross settlement (outflows) 1) 10 174 3 886 1 762 2 897 1 276 19 995

Total payments 59 150 11 792 10 270 37 013 5 700 123 925

1) Financial derivatives, gross settlement (inflows) 10 565 4 157 1 601 2 727 1 480 20 530

2) Scheme providing for exchange of government securities for covered bonds The bank has received government securities in exchange for covered bonds. When the government securities mature within the period covered by the exchange agreement, the bank must purchase new government securities with a term of six months, and this roll-over continues thoughout the entire period of the agreement. In practice, this means that the bank has debt which matures every sixth month which is replaced by government securities which, in turn, the bank can sell in order to provide liquidity.

In the table, the loan principal is included in the first due date. The Bank’s interest commitment for participating in the scheme is included in each period when interest falls due.

Allocated volum of govern- ment securities (fair value): First due date: Final due date: 3 370 18/03-09 21/09-11 489 17/06-09 21/12-11

PAGE 140 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 30 Liquidity risk / Residual maturity of balance sheet items (continued)

0 - 1 1 - 3 3 - 1 2 1 - 5 Over 5 Residual maturity of balance sheet items at 31/12-07 month months months years years Total Debt to credit institutions 1 513 1 1 114 159 2 787 Interest payments 7 11 47 231 103 399

Customer deposits 34 589 558 518 2 197 0 37 862 Interest payments 403 808 1 211

Securitised debt 313 2 100 5 017 17 230 2 325 26 985 Interest payments 71 223 975 2 392 175 3 836

Loan approvals and unutilised credit lines 7 925 7 925

Subordinated loan capital 1 003 1 003 Interest payments 9 50 234 689 982

Financial derivatives, gross settlement (outflows) 1) 7 476 4 445 2 087 2 295 1 081 17 384

Total payments 51 903 7 741 9 502 25 693 5 535 100 374

1) Financial derivatives, gross settlement (inflows) 7 513 4 356 1 962 2 073 1 109 17 013

Note 31 Sensitivity analysis - market risk

Conditions for calculating market risk

The market risk due to trading activities is limited by using risk parameters set by the BoD. The risk is reported regularly to the BoD. The parameters for foreign exchange positions are those set by the BoD. The parameters for the interest rate risk, the share risk and the foreign exchange risk are set at a level which limits the risk so that the bank’s core activities do not suffer.

Market risk arises as a consequence of open positions in the foreign exchange, interest rate and capital markets. The risk is related to variations in financial results due to fluctuations in market prices and exchange rates.

The risk-adjusted capital requirement for market risk, at a confidence level of 99%, should cover all potential losses related to market risk on the balance sheet date over a period of one year. Calculations of risk-adjusted capital are based on statistical methods based on a normal distribution and constant volatility for the year. Calculations of risk-adjusted capital also require a certain level of discretion and estimation, especially in relation to positions where little price data is available.

The model has a one-year time horizon and takes account of the correlation between the defined portfolios.

The Group’s overall market risk is estimated at NOK 601m (567m).

The overall capital requirement related to market risk may be summarised as follows: 31/12-08 31/12-07 Trading portfolio 229 190 Other equity positions 372 377 Total 601 567

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 141 Note 32 Interest rate sensitivity

Interest rate sensitivity by period of maturity

Throughout 2008 Sparebanken Vest had holdings of bonds and commercial paper, mainly for the purpose of meeting statutory requirements relating to liquidity reserves and deposits required as security for payment settlements and loans from Norges Bank.

In managing its interest rate exposure, the bank takes account of the fact that different maturities can develop differently.

Bond loans at a fixed rate of interest account for part of the bank’s funding in the bond market. In order to reduce the interest rate risk the bank has entered into interest rate swap agreements. These agreements are recognised at fair value in the consolidated accounts. In order to give a balanced picture of the consolidated balance seet, bond funding at a fixed rate of interest is classified as being recognised at fair value through profit or loss. In connection with the lower market risk associated with indexed products, derivative agreements have been made with other financial institutions. The derivative agreements are recognised at fair value and as the opposite entry the bank has chosen to classify the indexed products as recognised at fair value through profit or loss. The interest rate risk associated with the bank’s fixed interest rate loans to customers is partly reduced through interest rate swap agreements. In order to give a balanced picture of the the consolidated balance sheet, fixed-rate loans to customers are classified as being recognised at fair value through profit or loss.

The table shows the interest rate risk in the event of a parallel rise in the interest rate of 1 percentage point for the bank’s overall positions.

0 - 1 1 - 3 3 - 12 1 - 5 Over 5 GROUP month months months years years Total 31/12-2008 NOK (4.7) 22.8 (11.5) (13.8) 11.6 4.4 Foreign currency (3.4) 31/12-2007 NOK (3.5) 13 (4.6) 13.1 (18.9) (0.9) Foreign currency (0.1)

0 - 1 1 - 3 3 - 12 1 - 5 Over 5 PARENT BANK month months months years years Total 31/12-2008 NOK (4.8) 20.1 (11.5) (13.9) 11.6 1.5 Foreign currency (3.4) 31/12-2007 NOK (3.5) 13 (4.6) 13.1 (18.9) (0.9) Foreign currency (0.1)

Note 33 Foreign currency positions

The figures showS parebanken Vest’s net foreign currency exposure at 31 December including financial derivatives as defined byN orges Bank. Net positions in each currency cannot exceed 2.5% of the bank’s equity and the aggregate foreign exchange position cannot exceed 5% of the bank’s equity.

Foreign Of which: : currency USD EUR GBP SEK DKK JPY Other Net foreign currency exposure at 31/12-2008 118 13 82 1 (5) 10 (2) 19 Net foreign currency exposure at 31/12-2007 90 1 103 4 (41) 11 1 11

PAGE 142 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Note 34 Transactions with associated companies

This information is provided in accordance with the provisions of IAS 24 concerning "Information about associated companies". Transactions involving senior employees and elected officers appear in note 6. Sparebanken Vest has defined its subsidiaries and affiliates as associated companies in relation to the accounting standard.

All intra-group transactions and transactions with associated companies are conducted in conformity with normal commercial terms and principles.

Total intra-group transactions (NOK 1 000) 2008 2007 Profit and Loss Account Interest and credit commissions received from subsidiaries 77 497 12 524 Interest paid on deposits from subsidiaries 26 227 8 533 Office rental costs 32 082 25 322 Refund of operating expenses 56 539 56 111

Balance Sheet Loans to subsidiaries at 31 December 3 901 987 280 515 Covered bonds 4 201 565 0 Deposits from subsidiaries 476 673 45 442 Group contributions receivable (gross) 16 250 44 385

Sparebanken Vest Boligkreditt AS was established by Sparebanken Vest in 2008. During the period to 31/12-08 gross customer loans totalling ​ NOK 8 135m were transferred to the company, and of this NOK 4 500m was funded through the issue of covered bonds and NOK 3 622m through short-term funding. All covered bonds issued by Sparebanken Vest Boligkreditt AS have been purchased by Sparebanken Vest. During the period, Sparebanken Vest received interest income of NOK 26.6m on covered bonds and interest income of NOK 20.9m under the credit framework. During the same period, Sparebanken Vest paid interest of NOK 11.7m to Sparebanken Vest Boligkreditt AS related to the home mortgage company’s current account. Management fees totalling NOK 1.1m for the transfer of customer loans have been debited to Sparebanken Vest Boligkreditt AS.

As at 31 December 2008 Sparebanken Vest had a 44.30% holding in Frende Holding AS. The ownership percentage of Frende Holding AS is incorporated in the consolidated accounts applying the equity method. The bank’s share of the loss in 2008 was NOK 35.3m and the book value of the holding at 31 December 2008 was NOK 100.7m.

As at 31 december 2008 Sparebanken Vest had received commissions of NOK 7m from Frende for the distribution of life insurance and non-life insurance policies. The transactions are based on normal market terms as if they had been conducted between independent parties.

In July 2008 Sparebanken Vest sold 170 602 shares in Frende Holding AS, reducing the bank's ownership from 49.99% to 44.30%. The accounting gain on the transaction amounted to NOK 2.7m for the parent bank and NOK 5m for the Group.

In 2007 the bank paid NOK 2.1m to the law firm ofT hommessen, Krefting, Greve, Lund AS - of which the chairman of the BoD is a partner - in connection with the establishment of the Frende companies and also relating to a dispute with SpareBank 1.

Note 35 Disputes

At year-end 2008 the Sparebanken Vest Group was not involved in any litigation or legal disputes of material economic significance for the Group. The bank is otherwise subject to various claims related to its normal activities. Loss provisions have been made where considered appropriate.

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 143 To the Supervisory BoD of Sparebanken Vest

Auditor’s report for 2008

We have audited the annual financial statements of Sparebanken Vest as of December 31, 2008, showing a profit of NOK 249 for the parent company and a profit ofNOK 207 for the group. We have also audited the information in the directors’ report concerning the financial statements, the going concern assumption, and the proposal for the allocation of the profit. The annual financial statements comprise the financial statements of the parent company and the group. The financial statements of the parent company comprise the balance sheet, the statements of income and cash flows, the statement of changes in equity and the accompanying notes. The financial statements of the group comprise the balance sheet, the statements of income and cash flows, the statement of changes in equity and the accompanying notes. Simplified IFRS according to the Norwegian accounting act § 3-9 have been applied in the preparation of the financial statements of the parent company. International Financial Reporting Standards as adopted by the EU have been applied in the preparation of the financial statements of the group. These financial statements are the responsibility of the Company’s BoD and CEO. Our responsibility is to express an opinion on these financial statements and on other information according to the requirements of the Norwegian Act on Auditing and Auditors.

We conducted our audit in accordance with the laws, regulations and auditing standards and practices generally accepted in Norway, including standards on auditing adopted by The Norwegian Institute of Public Accountants. These auditing standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. To the extent required by law and auditing standards an audit also comprises a review of the management of the Company’s financial affairs and its accounting and internal control systems. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, • the financial statements of the parent company have been prepared in accordance with the law and regulations and give a true and fair view of the financial position of the Company as of December 31, 2008, and the results of its operations and its cash flows and the changes in equity for the year then ended, in accordance with simplified ifrs according to the Norwegian accounting act § 3-9 • the financial statements of the group have been prepared in accordance with the law and regulations and give a true and fair view of the financial position of the Group as of December 31, 2008,and the results of its operations and its cash flows and the changes in equity for the year then ended, in accordance with International Financial reporting Standards as adopted by the EU • the company’s management has fulfilled its duty to produce a proper and clearly set out registration and documentation of accounting information in accordance with the law and good bookkeeping practice in Norway • the information in the directors’ report concerning the financial statements, the going concern assumption, and the proposal for the allocation of the profit are consistent with the financial statements and comply with the law and regulations

Bergen, February 24, 2009 PricewaterhouseCoopers AS

Jon Haugervåg State Authorised Public Accountant (Norway)

Note: This translation from Norwegian has been prepared for information purposes only.

Alta Arendal Bergen Bodø Drammen Egersund Florø Fredrikstad Førde Gardermoen Gol Hamar Hammerfest Hardanger Harstad Haugesund Kongsberg KongsvingerKristiansand Lyngseidet Mandal Mo i Rana Molde Mosjøen Måløy Namsos Oslo Sandefjord Sogndal Stavanger Stryn Tromsø Trondheim Tønsberg Ulsteinvik Ålesund. PricewaterhouseCoopers navnet refererer til individuelle medlemsfirmaer tilknyttet den verdensomspennende PricewaterhouseCoopers organisasjonen. Medlemmer av Den norske Revisorforening • Foretaksregisteret: NO 987 009 713 • www.pwc.no

PAGE 144 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 THE SUPERVISORY BoD OF SPAREBANKEN VEST

Control Committee’s Report for 2008

The Control Committee has carried out the controls considered necessary to comply with the guidelines and directives which the Committee is required to observe under the Savings Banks Act and in accordance with the instructions issued to the Control Committee.

The Committee has worked closely with the internal auditor, while maintaining contact with the external auditor. The Committee has had meetings with the chairman of the Supervisory BoD, the chairman of the BoD, the CEO and directors responsible for various areas of operations.

The Committee has not found the Bank’s activities to be in conflict with the provisions of the Savings Banks Act, the Financing Activity Act, the Securities Trading Act, the Bank’s Articles of Association, resolutions of the Supervisory BoD or other relevant provisions.

The Committee is of the view that the BoD’ assessment of the Bank’s financial position, as presented in the annual report, is adequate.

In the view of the Committee, the annual accounts have been prepared in accordance with the Savings Banks Act and regulations laid down by the Financial Supervisory Authority of Norway. The Committee recommends that the profit and loss account and the balance sheet for 2008, as submitted by the BoD, be approved by the Supervisory BoD as the accounts of Sparebanken Vest and the Group for 2008.

Bergen, 24 February 2009

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 145 Responsibility Statement

We confirm, to the best of our knowledge, that the financial statements for the period 1Januaryto 31 December 2008 have been prepared in accordance with current applicable accounting standards, and give a true and fair view of the assets, liabilities, financial position and profit or loss of the entity and the group taken as a whole.

We also confirm that the management report includes a true and fair review of the development and performance of the business and the position of the entity and the group, together with a description of the principal risks and uncertainties facing the entity and the group.

Bergen, 31 December 2008 / 12 March 2009 The Board of Directors of Sparebanken Vest

Chairman Deputy chairman

Managing Director

PAGE 146 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Group Key Figures 2004 - 2008

1 January - 31 December PROFIT AND LOSS ACCOUNT SUMMARY 2008 2007 2006 2005 2004

Interest income etc. 5 548 3 642 2 359 1 883 1 725 Interest expenses etc. 4 240 2 516 1 317 911 765 Net interest income and credit commissions 1 308 1 126 1 042 972 960

Commissions receivable and income from banking services 393 422 399 368 363 Commissions payable and cost of banking services 76 75 78 79 78 Net banking services 317 347 321 289 285 Net gain on financial instruments (93) 208 187 102 62 Other operating income 151 123 116 80 59 Net other operating income 375 678 624 471 406 Net operating income 1 683 1 804 1 666 1 443 1 366

Salaries and general administration expenses 844 767 739 708 657 Depreciation 86 68 63 59 60 Other operating expenses 138 138 119 108 102 Total operating expenses 1 068 973 921 875 819 Profit before write-downs and tax 615 831 745 568 547

Write-downs and losses on loans and guarantees 204 (34) (48) (75) 60 Profit before tax 411 865 793 643 487

Taxes 204 215 190 168 179 Profit after tax 207 650 603 475 308

Majority interests 206 649 603 475 308 Minority interests 1 1

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 147 Group Key Figures 2004 - 2008 (continued I)

31 December BALANCE SHEET SUMMARY 2008 2007 2006 2005 1/1-05

Assets Cash and deposits with central banks 4 753 1 810 563 328 351 Loans to and deposits with credit institutions 1 291 558 1 227 2 840 1 441 Net lendings 76 235 64 683 53 451 46 672 41 469 Shares at fair value through profit or loss 463 560 530 381 464 Commercial paper and bonds 8 565 5 109 2 812 2 721 2 527 Shares available for sale 67 67 67 62 62 Financial derivatives 2 368 1 140 1 009 1 219 679 Shareholdings in group companies 121 151 Deferred tax assets 0 81 112 48 26 Other intangible assets 266 263 37 23 25 Fixed assets 466 461 318 336 357 Prepaid expenses 26 11 47 25 59 Customer funds - contribution-based pension agreements 43 33 Other assets 229 121 59 25 15 Total assets 94 893 75 048 60 232 54 680 47 475

Liabilities and equity Debt to credit institutions 12 140 2 781 1 219 1 097 1 522 Deposits 40 521 37 611 31 119 27 390 24 762 Securitised debt 34 249 27 142 21 060 19 862 15 840 Financial derivatives 1 338 1 419 1 361 1 230 692 Accrued expenses and prepaid income 102 141 147 157 147 Provisions and pension commitments 144 186 231 215 178 Deferred tax 162 Other provisions for commitments 14 10 1 1 1 Tax provision 15 189 264 223 135 Subordinated loan capital 1 437 1 042 724 942 1 094 Other liabilities 399 234 308 291 229 Total liabilities 90 521 70 755 56 434 51 408 44 600

Primary capital certificates 267 250 250 250 250 Holdings of own PCCs (4) (3) (3) (7) (3) PCC premium reserve 9 4 4 4 4 Total paid-up equity 272 251 251 247 251

Reserve for valuation variances 60 60 60 58 Gift fund 175 175 150 100 45 Equalisation reserve 6 6 9 2 Other equity 3 858 3 800 3 328 2 865 2 579 Minority interests 1 1 Total retained earnings 4 100 4 042 3 547 3 025 2 624

Total equity 4 372 4 293 3 798 3 272 2 875 Total liabilities and equity 94 893 75 048 60 232 54 680 47 475

AVERAGE TOTAL ASSETS 81 572 66 706 56 253 50 500 43 826

PAGE 148 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Group Key Figures 2004 - 2008 (continued II)

RESULTS AS PERCENTAGE OF TOTAL ASSETS 2008 2007 2006 2005 2004

Interest income etc. 6.80 5.46 4.19 3.73 3.94 Interest expenses etc. 5.20 3.77 2.34 1.80 1.75 Net interest income and credit commissions 1.60 1.69 1.85 1.93 2.19

Commissions receivable and income from banking services 0.48 0.63 0.71 0.73 0.83 Commissions payable and cost of banking services 0.09 0.11 0.14 0.16 0.18 Net banking services 0.39 0.52 0.57 0.57 0.65 Net gain on financial instruments (0.11) 0.31 0.33 0.20 0.14 Other operating income 0.19 0.18 0.21 0.16 0.13 Net other operating income 0.46 1.02 1.11 0.93 0.93 Net operating income 2.06 2.70 2.96 2.86 3.12

Salaries and general administration expenses 1.03 1.15 1.32 1.40 1.50 Depreciation 0.11 0.10 0.11 0.12 0.14 Other operating expenses 0.17 0.21 0.21 0.21 0.23 Total operating expenses 1.31 1.46 1.64 1.73 1.87 Profit before write-downs and tax 0.75 1.25 1.32 1.13 1.25

Write-downs and losses on loans and guarantees 0.25 (0.05) (0.09) (0.15) 0.14 Profit before tax 0.50 1.30 1.41 1.28 1.11

Taxes 0.25 0.32 0.34 0.33 0.41 Profit after tax 0.25 0.97 1.07 0.95 0.70 Minority interests 0.00 0.00

Return on investment. earnings and capital structure (%) 1. Return on equity after tax 4.85 16.24 17.86 15.44 11.54 2. Return on total assets before losses and tax 0.75 1.25 1.32 1.13 1.25 3. Net return on total assets 0.25 0.97 1.07 0.95 0.70 4. Ratio of operating costs to net operating income 63.46 53.94 55.28 60.64 59.96 5. Funding ratio 53.15 58.15 58.22 58.70 59.71

Balance Sheet Development (%) 6. Change in net loans 17.86 21.01 14.52 12.55 13.43 7. Change in commercial paper and bonds 67.65 81.69 3.34 7.68 24.42 8. Change in deposits 7.74 20.86 13.61 10.61 11.35 9. Change in total assets 26.44 24.60 10.15 15.18 14.66

Defaults. provisions and loan losses 10. Loan loss ratio 0.27 (0.06) (0.09) (0.16) 0.14 11. Gross default ratio 0.39 0.21 0.28 0.32 0.36 12. Net default ratio 0.36 0.20 0.24 0.26 0.25 13. Percentage write-down of defaulted loans 7.69 4.52 14.86 17.45 32.45

Capital adequacy 14. Net capital base 4 858 4 597 4 048 3 909 3 477 15. Basis of calculation 53 612 47 546 39 640 34 414 30 835 16. Capital ratio 9.06 9.67 10.21 11.36 11.28 17. Core capital ratio 7.73 8.33 9.44 9.95 9.56

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 149 Group Key Figures 2004 - 2008 (continued III)

Primary capital certificated (Parent Bank) 2008 2007 2006 2005 2004 19. Primary capital certificates NOK( mill.) 267 250 250 250 250 20. Dividend per PCC (NOK) 3.75 19.00 18.25 17.10 12.60 21. Traded price at 31 December 86.50 190.00 213.00 206.00 187.50 22. PCCs as a percentage of capital base 6.63 6.34 7.30 8.36 9.48 23. Book equity per PCC (NOK) 100.00 100.00 100.00 100.00 100.00 24. Profit (gross) per PCC (NOK) 93.26 262.80 220.80 182.00 123.60 25. Earnings per PCC (NOK) 5.91 19.19 20.47 17.25 12.96 26. Diluted earnings per PCC (NOK) 5.91 19.19 20.47 17.25 12.96 27. Effective rate of return per PCC (44.47) (2.23) 11.70 16.59 23.52 28. Direct rate of return 4.34 10.00 8.57 8.30 6.72 29. Payout ratio 4.02 7.23 8.27 9.40 10.19 30. Provision for dividends as a % of PCCs' share of profits 63.42 99.02 89.15 99.13 98.46

Personnel Number of employees 879 845 795 802 848 Number of full-time positions 841 803 750 749 791

Distribution network Sales outlets 59 60 57 58 58

Definitions:

1. Profit for the year as a percentage of opening equity according to IFRS + 50% of the profit for the year. 2. Operating profit before losses and taxes as a percentage of average total assets. 3. Operating profit after tax as a percentage of average total assets. 5. Deposits from and debt to customers as a percentage of loans to and receivables from customers. 6. Change in net lendings to customers at year-end compared with the previous year-end volume 7. Change in securities at year-end compared with the previous year-end volume. 8. Change in customer deposits at year-end compared with the previous year-end volume. 10. Losses on loans and guarantees as a percentage of gross loans to and receivables from customers at year-end. 11. Ratio of gross defaults to gross lendings. 12. Ratio of defaulted loans less individual write-downs to net lendings. 13. Individual write-downs on defaulted loans as a percentage of the gross volume of these loans. 22. PCCs as a percentage of parent bank's equity at year-end, calculated in accordance with NRS 7. 24. Profit for the year divided by the number of PCCs. 25. PCCs' share of the profit for the year divided by the number of PCCs. 27. Dividend plus change in market price from 1 Jan. to 31 Dec. as a percentage of stock exchange price at 1 Jan. 28. Provision for dividends as a percentage of the stock exchange price at year-end. 30. Dividend as a percentage of the gross operating profit per PCC.

PAGE 150 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Group Key Figures 2007 - 2008 - Quarterly Results

PROFIT AND LOSS ACCOUNT SUMMARY 31/12-08 30/09-08 30/06-08 31/03-08 31/12-07 30/09-07 30/06-07 31/03-07 Interest income etc. 5 548 3 963 2 492 1 199 3 642 2 531 1 577 721 Interest expenses etc. 4 240 3 037 1 909 913 2 516 1 701 1 036 459

Net interest income and credit commissions 1 308 926 583 286 1 126 830 541 262 Commissions receivable and income from banking services 393 298 199 98 422 318 204 102 Commissions payable and cost of banking services 76 58 39 19 75 55 37 18 Net banking services 317 240 160 79 347 263 167 84 Net gain on financial instruments (93) (15) 40 (14) 208 164 113 48 Other operating income 151 83 59 22 123 91 64 25 Net other operating income 375 308 259 87 678 518 344 157

Net operating income 1 683 1 234 842 373 1 804 1 348 885 419 Salaries and general administration expenses 844 613 404 180 767 567 377 185 Depreciation 86 60 39 19 68 49 32 14 Other operating expenses 138 111 74 35 138 98 66 25 Total operating expenses 1 068 784 517 234 973 714 475 224

Profit before write-downs and tax 615 450 325 139 831 634 410 195 Write-downs on loans and guarantees 204 89 32 11 (34) (47) (25) (7)

Profit before tax 411 361 293 128 865 681 435 202 Taxes 204 147 98 49 215 168 100 46

Profit for the period 207 214 195 79 650 513 335 156 Majority interests 206 213 195 79 649 513 335 156 Minority interests 1 1 1

AVERAGE TOTAL ASSETS 81 572 78 840 76 751 74 993 66 706 64 827 62 809 59 884

RESULTS AS A PERCENTAGE OF AVERAGE TOTAL ASSETS Interest income etc. 6.80 6.71 6.53 6.43 5.46 5.22 5.06 4.88 Interest expenses etc. 5.20 5.15 5.00 4.90 3.77 3.51 3.33 3.11

Net interest income and credit commissions 1.60 1.57 1.53 1.53 1.69 1.71 1.74 1.77 Commissions receivable and income from banking services 0.48 0.50 0.52 0.53 0.63 0.65 0.65 0.69 Commissions payable and cost of banking services 0.09 0.10 0.10 0.10 0.11 0.11 0.12 0.12 Net banking services 0.39 0.41 0.42 0.42 0.52 0.54 0.54 0.58 Net gain on financial instruments (0.11) (0.03) 0.10 (0.08) 0.31 0.34 0.36 0.33 Other operating income 0.19 0.14 0.15 0.12 0.18 0.19 0.21 0.17 Net other operating income 0.46 0.52 0.68 0.47 1.02 1.07 1.10 1.06

Net operating income 2.06 2.09 2.21 2.00 2.70 2.78 2.84 2.84 Salaries and general administration expenses 1.03 1.04 1.06 0.97 1.15 1.17 1.21 1.25 Depreciation 0.11 0.10 0.10 0.10 0.10 0.10 0.10 0.09 Other operating expenses 0.17 0.19 0.19 0.19 0.21 0.19 0.21 0.17 Total operating expenses 1.31 1.33 1.35 1.25 1.46 1.47 1.53 1.52

Profit before write-downs and tax 0.75 0.76 0.85 0.75 1.25 1.31 1.32 1.32 Write-downs on loans and guarantees 0.25 0.15 0.08 0.06 (0.05) (0.10) (0.08) (0.05)

Profit before tax 0.50 0.61 0.77 0.69 1.30 1.40 1.40 1.38 Taxes 0.25 0.25 0.26 0.26 0.32 0.35 0.32 0.31

Profit after tax 0.25 0.36 0.51 0.42 0.97 1.06 1.08 1.06 Minoritety interests 0.00 0.00 0.00

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 151 Group Key Figures 2007 - 2008 - Quarterly Results (continued I)

QUARTERLY RESULTS 4. Q 3. Q 2. Q 1. Q 4. Q 3. Q 2. Q 1. Q (non-cumulative) 2008 2008 2008 2008 2007 2007 2007 2007

Interest income etc. 1 585 1 471 1 293 1 199 1 111 954 856 721 Interest expenses etc. 1 203 1 128 996 913 815 665 577 459

Net interest income and credit commissions 382 343 297 286 296 289 279 262 Commissions receivable and income from banking services 95 99 101 98 104 114 102 102 Commissions payable and cost of banking services 18 19 20 19 20 18 19 18 Net banking services 77 80 81 79 84 96 83 84 Net gain on financial instruments (78) (55) 54 (14) 44 51 65 48 Other operating income 68 24 37 22 32 27 39 25 Net other operating income 67 49 172 87 160 174 187 157

Net operating income 449 392 469 373 456 463 466 419 Salaries and general administration expenses 231 209 224 180 200 190 192 185 Depreciation 26 21 20 19 19 17 18 14 Other operating expenses 27 37 39 35 40 32 41 25 Total operating expenses 284 267 283 234 259 239 251 224

Profit before write-downs and tax 165 125 186 139 197 224 215 195 Write-downs on loans and guarantees 115 57 21 11 13 (22) (18) (7)

Profit before tax 50 68 165 128 184 246 233 202 Taxes 57 49 49 49 47 68 54 46

Profit after tax (7) 19 116 79 137 178 179 156 Majority interests (7) 18 116 79 136 178 179 156 Minority interests 0 1 1 AVERAGE TOTAL ASSETS (non-cumulative) 89 004 83 346 78 518 74 993 72 142 68 793 65 702 59 884

RESULTS AS A PERCENTAGE OF TOTAL ASSETS (non-cumulative) Interest income etc. 7.08 7.02 6.62 6.43 6.11 5.50 5.23 4.88 Interest expenses etc. 5.38 5.38 5.10 4.90 4.48 3.84 3.52 3.11

Net interest income and credit commissions 1.71 1.64 1.52 1.53 1.63 1.67 1.70 1.77

Commissions receivable and income from banking services 0.42 0.47 0.52 0.53 0.57 0.66 0.62 0.69 Commissions payable and cost of banking services 0.08 0.09 0.10 0.10 0.11 0.10 0.12 0.12 Net banking services 0.34 0.38 0.41 0.42 0.46 0.55 0.51 0.58 Net gain on financial instruments (0.35) (0.26) 0.28 (0.08) 0.24 0.29 0.40 0.33 Other operating income 0.30 0.11 0.19 0.12 0.18 0.16 0.24 0.17 Net other operating income 0.30 0.23 0.88 0.47 0.88 1.00 1.14 1.06

Net operating income 2.01 1.87 2.40 2.00 2.51 2.67 2.84 2.84 Salaries and general administration expenses 1.03 1.00 1.15 0.97 1.10 1.10 1.17 1.25 Depreciation 0.12 0.10 0.10 0.10 0.10 0.10 0.11 0.09 Other operating expenses 0.12 0.18 0.20 0.19 0.22 0.18 0.25 0.17 Total operating expenses 1.27 1.27 1.45 1.25 1.42 1.38 1.53 1.52

Profit before write-downs and tax 0.74 0.60 0.95 0.75 1.08 1.29 1.31 1.32 Loan write-downs and losses on guarantees 0.51 0.27 0.11 0.06 0.07 (0.13) (0.11) (0.05)

Profit before tax 0.22 0.32 0.85 0.69 1.01 1.42 1.42 1.38 Taxes 0.25 0.23 0.25 0.26 0.26 0.39 0.33 0.31

Profit after tax (0.03) 0.09 0.59 0.42 0.75 1.03 1.09 1.06 Minority interests 0.00 0.00 0.01

PAGE 152 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 Group Key Figures 2007 - 2008 - Quarterly Results (continued II)

BALANCE SHEET SUMMARY 31/12-08 30/09-08 30/06-08 31/03-08 31/12-07 30/09-07 30/06-07 31/03-07

Assets Cash and deposits with central banks 4 753 1 986 1 414 694 1 810 1 116 321 290 Loans to and deposits with credit institutions 1 291 805 1 626 1 388 558 2 313 1 971 850 Net lendings 76 235 73 022 70 004 67 339 64 683 62 014 60 000 57 955 Shares at fair value through profit or loss 463 556 673 640 560 593 595 552 Commercial paper and bonds 8 565 7 048 6 280 5 137 5 109 3 400 3 139 3 757 Shares available for sale 67 67 67 68 67 68 68 67 Financial derivatives 2 368 627 627 666 1 140 1 096 1 066 949 Shareholdings in associated companies 121 130 136 148 151 156 156 Deferred tax assets 81 80 81 81 113 113 112 Other intangible assets 266 267 263 262 263 250 255 259 Fixed assets 466 464 466 458 461 471 474 315 Prepaid expenses 26 83 80 35 11 53 43 43 Customer funds - contribution-based pension agreements 43 40 45 38 33 27 23 14 Other assets 229 179 104 103 121 36 126 49 Total assets 94 893 85 355 81 865 77 057 75 048 71 706 68 350 65 212

Liabilities and equity

Debt to credit institutions 12 140 3 311 1 830 1 845 2 781 1 370 1 703 1 945 Deposits 40 521 42 326 41 385 38 648 37 611 37 005 36 150 32 676 Securitised debt 34 249 32 465 31 232 29 279 27 142 25 637 23 186 23 755 Financial derivatives 1 338 763 1 172 890 1 419 1 603 1 720 1 342 Accrued costs and prepaid income 102 107 95 66 141 155 141 128 Pension costs 144 187 187 187 186 203 213 236 Deferred tax 162 Other provisions for commitments 14 16 12 8 10 9 2 1 Tax provision 15 74 22 (27) 189 218 145 200 Subordinated loan capital 1 437 1 098 1 016 1 050 1 042 1 010 657 700 Other liabilities 399 632 555 887 234 340 454 429 Total liabilities 90 521 80 979 77 506 72 833 70 755 67 550 64 371 61 412

Primary capital certificates 267 267 267 250 250 250 250 250 Holdings of own primary capital certificates (4) (7) (6) (3) (3) (6) (6) (5) PCC premium reserve 9 9 9 4 4 4 4 4 Total paid-up equity 272 269 270 251 251 248 248 249

Reserve for valuation variances 60 60 60 60 60 60 60 60 Gift fund 175 175 175 175 175 125 125 125 Equalisation fund 6 6 6 6 6 9 9 9 Other equity 3 858 3 652 3 652 3 652 3 800 3 200 3 201 3 201 Minority interests 1 1 1 1 1 1 1 Total retained earnings 4 100 3 894 3 894 3 894 4 042 3 395 3 396 3 395

Total equity 4 372 4 163 4 164 4 145 4 293 3 643 3 644 3 644

Interim profit (unallocated) 213 195 79 513 335 156 Total liabilities and equity 94 893 85 355 81 865 77 057 75 048 71 706 68 350 65 212

Return on investment, earnings and capital structure (%)

Return on equity after tax 4.85 6.69 9.19 7.52 16.24 17.45 17.57 16.88 Return on total assets before losses and tax 0.75 0.76 0.85 0.75 1.25 1.31 1.32 1.32 Net return on total assets 0.25 0.36 0.51 0.42 0.97 1.06 1.08 1.06 Ratio of operating costs to operating income 63.46 63.53 61.40 62.73 53.94 52.97 53.67 53.46 Ratio of operating costs to operating income, corrected for currency gain/loss 60.14 62.77 64.46 60.47 60.96 60.30 61.53 60.38 Funding ratio 53.15 57.96 59.12 57.39 58.15 59.67 60.25 56.38

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 153 Group Key Figures 2007 - 2008 - Quarterly Results (continued III)

Solvency (%) 31/12-08 30/09-08 30/06-08 31/03-08 31/12-07 30/09-07 30/06-07 31/03-07

Capital ratio 9.06 9.24 9.49 9.66 9.67 9.36 9.07 9.34

Personnel

Number of full-time positions 841 840 819 812 803 801 768 765

Primary Capital Certificates

Profit per PCC (NOK) 5.34 5.51 5.03 2.03 18.95 14.98 9.78 4.56 Diluted profit per PCC (NOK) 5.34 5.51 5.03 2.03 18.95 14.98 9.78 4.56 PCC percentage of capital base, calculated in accordance with NRS 7 6.63 6.58 6.48 6.34 6.34 7.30 7.30 7.30

Definition on page 150.

PAGE 154 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 155 7 | Overviews 7.1 ORGANISATIONAL STRUCTURE 7.3 ELECTED OFFICERS AND ADMINISTRATION 7 | Overviews 7.2 REGIONAL MAP 7.4 BRANCH OVERVIEW

The following pages provide an overview of the bank’s organisation, the physical location of the branches and contact information. This is supplemented by overviews of elected officers in key positions and senior members of the administration. 7.1 OVERVIEWS Organisational Structure

CEO

Corporate Legal Communications

Personnel and Risk Management Competence

Visjon Vest

Retail Market Corporate Market Business Development Business Support Capital Market Division Division Division Division Division

Region Bergen Region Bergen Market IT Intermediary Services and Region Nordhordland Region Nordhordland Products Contingencies/Security Capital Market Products Region Hardanger/ Region Hardanger/ Business Development Banking Systems Asset Management Midthordland Midthordland Accounting/Accounts Custodial Services Trading/Foreign Exchange/ Region Sogn & Fjordane Region Sogn & Fjordane Eiendomsmegler Vest Purchases/Group Interest Rates Region Vest Region Vest Services Liquidity Region Sunnhordland/ Region Sunnhordland/ AS Filialbygg Long-term funding Haugalandet Haugalandet International Payment Services Region Rogaland Region Rogaland Sparebanken Vest Boligkreditt AS Customer Service Major Clients Credit Support Payment Services Credit Support Insurance

PAGE 158 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 7.2 OVERVIEWS Regional Map

Region Stadlandet M å l ø y - Sogn & Selje Fjordane Stryn Måløy Eid- Bryggja Davik Nordfjordeid Florø Førde

Årdal Florø-

Sogndal Førde- Høyanger

Region Masfjorden Sogndal- Nordhordland Lindås Mastrevik Fedje Manger Lonevåg Knarvik

Frekhaug Knarvik- A s k ø y -

-Arna Region Vest Rong Dale Region Kleppestø Bjørkheim Hardanger / Ågotnes Bergen Norheimsund Midthordland S o t r a - -Os Straume Strandebarm Skogsvåg Eikelandsosen Os Odda Storebø Røldal Bekkjarvik

Stord- -Husnes -Odda Region Fitjar Kaigaten Region Sunnhordland / Husnes Korskirkeallmenningen Bergen Haugalandet Sagvåg Xhibition Bremnes Danmarksplass Mosterhamn Haugesund Sletten Leirvik Åsane Sveio Arna Haugesund Loddefjord Sæbøvik Oasen Skånevik Nesttun Etne Lagunen

Stavanger Region Stavanger Rogaland Sandnes -Sandnes Klepp-

-Bryne

-Egersund

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 159 7.3 OVERVIEWS Elected Officers and Administration

Members of the Supervisory Board Karen Dahle after the elections in 2008 Bodil Digranes Lisbeth Ormevik Members elected by depositors Rune Pedersen Arne Buanes, Chairman Morten Monsen Lillian Torsvik, Deputy Chairman Johnny Iden Ingri Geitrheim Waage Mariann Ringen Ottar Arve Sætre Ingolf Arne Marifjæren BoD Torill Kvamme Trygve Bruvik, Chairman Magnhild Bjørlo Anne Kverneland Bogsnes, Ove Ellingsen Deputy Chairman Einar Vatne jr. Øyvind A. Langedal Terje Vidar Vestvik Jan O. Yttredal Anne Grete Ådland Gerd Kjellaug Berge Karianne Mjøs-Haugland Marit Solberg Erling Syvertsen Richard Rettedal Lena Jordalen Tone Mattsson Ragnhild Langøy Arve Havnerås Knut Førland Control Committee Members elected by local authorities Kjell Steinsbø, Chairman Helge Stormoen Tom W. Horne, Deputy Chairman Eli Årdal Berland Liv Henjum Terje Søviknes Roald Korsøen Mette Holmefjord Olsen Brigt O. Gåsdal Election Committee Margreta Navelsaker Trond Mohn, Chairman Arvid Stenehjem Mette Holmefjord Olsen, Gro Berge Deputy Chairman Ingri Geitrheim Waage Members elected by owners of PCCs Magnhild Bjørlo Tor Johannessen Linda Nordeide Widar Slemdal Andersen Erik Bøckmann Leif Holst Trond Mohn External Auditor Eyvind Lunde PricewaterhouseCoopers AS (PwC) Siri Birkeland represented by Jon Haugervåg Rolf W. Karlsen Erik Sture Larre Internal Auditor Jan S. Johannessen Bernt R. Petersen Birgit Nistad Anne Marit Steen Management Jan S. Aske CEO: Stein Klakegg Deputy CEO: Jan Erik Kjerpeseth Employee-elected members Kjell Sævdal Office address: Kaigaten 4, NO-5016 Bergen Inger Finne Post address: P.O. Box 7999, NO-5020 Bergen Linda K. Nordeide Tel.: 05555 – Fax: +47 55 21 73 05 Anne Karin Bjørkelo E-mail: [email protected] Liv Erstad

PAGE 160 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 7.3 OVERVIEWS Elected Officers and Administration

Corporate Communications Banking Systems Jørn Lekve, Director Kristian Maubach, Ass. General Manager Custodial Services Legal Eivind Ingolfsen, Section Manager Pål Pedersen, Director AS Filialbygg Bent Helge Aardal, CEO Company Secretariat Silje Risdal Hjelmtveit, Capital Market Division BoD/Company Secretary Benedicte Schilbred Fasmer, Director Special Commitments Eyvind Bagge, General Manager Intermediary Services Money-Laundering Capital Market Products Inger Søndervik, Manager Per-Hermund Høgheim, Ass. General Manager Asset Management -equities Risk Management Karstein Lien, General Manager Frank Johannesen, Director Trading/Foreign Exchange/Interest Rates Torleif Berg, General Manager Personnel and Competence Liquidity Bjørn Carlsen, Director (since March 2009) Stein Tore Davidsen, Ass. General Manager Head of Investment Advisory Services Visjon Vest Kirsten Gulbrandsen, Ass. General Manager Siren Sundland, Manager Compliance Øyvind Telle, Section Manager Business Development Division Settlement and International Jan Erik Kjerpeseth, Payment Services Deputy CEO Anne-Grethe Grøttvedt, Section Manager Head Economist Market Hallgeir Isdahl, Head Economist Aina Tysse, Section Manager Sparebanken Vest Boligkreditt AS/ Products Long-term Funding Birthe Bjørnes, Section Manager Egil Mokleiv, CEO Business Development Bjørg Marit Eknes, Section Manager Retail Market Division Accounting/Accounts Kate Henriksen, Director Terje Mjelde, Head of Management Accounting Tore Salen, Accounts Manager Customer Service Eiendomsmegler Vest Gro Heidi Skarstein, Section Manager Rune Hansen, CEO Corporate Market Division Business Support Division Henning Nordgulen, Director Arne Selle, Director Major Clients Contingencies/Security Eirik Fausa, General Manager Hans Thorsø Einum, Ass. General Manager Insurance Purchases/Group Services Gunn Kristi Høgøy, General Manager Gerda Sørheim Bøe, Section Manager Payment Services IT Terje Kvamme, General Manager Inge Ådland, Section Manager Credit Support Eirik Brekke, Section Manager

ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 161 7.4 OVERVIEWS Branch Overview

Region Bergen Region Sogn & Fjordane Regional Director - RM Regional Bank Manager - RM Frank H. Bjørndal Atle Stalheim Regional Director - CM Regional Bank Manager - CM Audun Rebnor Olav Hjelle

P.O.B. 7999, NO-5020 Bergen P.O.B. 243, NO-6771 Nordfjordeid Tel.: 05555 Tel.: 05555 Fax: +47 55 21 73 50 Fax: +47 57 88 56 01 Branches: Arna, Åsane, Loddefjord, Oasen, Branches: Nordfjordeid, Måløy, Selje, Korskirkeallmenningen, Xhibition, Lagunen, Bryggja, Davik, Stadtlandet, Florø, Sogndal, Nesttun, Sletten, Danmarksplass and Kaigaten Førde, Årdal, Høyanger and Stryn

Region Vest Region Sunnhordland/Haugalandet Regional Bank Manager - RM Regional Bank Manager - RM Trygve Wåge Arnt Sortland Regional Bank manager - CM Regional Bank Manager - CM Øystein Bredholt Jan Arild Nesse

P.O.B. 152/153, NO-5342 Straume P.O.B. 404, NO-5402 Stord Tel.: 05555 Tel.: 05555 Fax: +47 56 32 34 01 Fax: +47 56 45 68 91 Branches: Straume, Rong, Skogsvåg, Storebø, Branches: Leirvik, Bremnes, Mosterhamn, Bekkjarvik, Ågotnes, Kleppestø and Os Sæbøvik, Husnes, Fitjar, Skånevik, Sveio, Sagvåg, Haugesund and Etne Region Hardanger/Midthordland Regional Bank Manager - RM Region Rogaland Tom Rasmussen Regional Director - RM Regional Bank Manager - CM Bjørn Tjensvold Lars Audun Torvik Regional Director - CM Njål Skår Grova 14, NO-5600 Norheimsund Tel.: 05555 Haakon VII’s gate 7 Fax: +47 56 55 07 01 NO- 4003 Stavanger Branches: Norheimsund, Strandebarm, Bjørkheim, Tel. - Branch: 05555 Dale, Eikelandsosen, Odda and Røldal Fax: +47 51 56 92 21 Branches: Stavanger and Sandnes Region Nordhordland Regional Bank Manager - RM Jan-Tore Thunestvedt Eiendomsmegler Vest AS Regional Bank Manager - CM Administration Margunn Bjørnestad (from Feb. 2009) Rune Hansen, CEO

P.O.B. 140, NO-5903 Isdalstø Eiendomsmegler Vest AS Tel.: 05555 Office address:N edre Korskirkeallm., NO-5017 Bergen Fax: +47 56 34 28 41 Post address: P.O.B. 7999, NO-5020 Bergen Branches: Knarvik Senter, Frekhaug, Lindås, Tel.: +47 55 21 77 00 – Fax: 047 55 21 75 49 Masfjorden, Mastrevik, Manger, Fedje and Lonevåg E-mail: [email protected]

PAGE 162 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 KUTT Rill/FALS Rill/FALS KUTT FLIPP 85 mm FLIPP 85 mm SIDE 211 mm RYGG 11 mm RYGG 11 mm SIDE 211 MM

Contents

1. MAIN FEATURES 1.1 Important local events...... 4 1.2 Highlights 2008-2009...... 6 1.3 Financial highlights...... 7

2. ABOUT THE BANK 2.1 Facts about Sparebanken Vest...... 10 Bergen city centre Haugesund 2.2 CEO Stein Klakegg...... 12 Vaskerelven 16, NO-5014 Bergen Haraldsgata 162, NO-5501 Haugesund 2.3 Management Group...... 14 Tel.: +47 55 21 77 00 – fax: +47 55 21 77 14 Tel.: +47 52 70 46 50 - Fax: +47 52 70 46 59

Xhibition Shopping mall, Småstrandgaten 3, NO-5014 Sandnes - Ottesen & Dreyer 3. MARKET Bergen Langgata 1 E, NO-4306 Sandnes 3.1 Retail Market...... 18 Tel.: +47 55 21 77 00 – Fax: +47 55 21 77 01 Tel.: +47 51 53 20 20 – Fax: +47 51 53 20 21 3.2 Corporate Market...... 20 Askøy Stavanger - Ottesen & Dreyer 3.3 Capital Market...... 22 Kleppestø Shopping mall, P.O.B. 54, NO-5321 Kleppestø Kirkegt. 20, NO-4004 Stavanger 3.4 Regions...... 24 Tel.: +47 56 15 11 98 – Fax: +47 56 15 11 96 Tel.: +47 51 53 20 20 – Fax: +47 51 53 20 21 3.5 Subsidiaries...... 28 Åsane Hinnasvingene 53, NO-4020 Stavanger 3.6 Frende and Norne...... 30 Åsane Shopping mall 40, P.O.B. 160, Ulset, NO-5873 Tel.: +47 51 53 20 20 – Fax: +47 51 53 20 21 3.7 Risk and capital management & Bergen internal control...... 32 Tel.: +47 55 19 74 50 – Fax: +47 55 19 74 51 Solakrossvågen 29 (Giljagården), NO-4050 Stavanger Tel.: +47 51 53 20 20 – Fax: +47 51 53 20 21 Nesttun 4. CORPORATE SOCIAL RESPONSIBILITY REPORT Nesttunvegen 98, NO-5221 Nesttun Kyte Næringsmegling Contents...... 40 Tel.: +47 55 11 61 20 – Fax: +47 55 11 61 21 Office address: Bankgaten 8, Lagunen Post address: P.O.B. 7999, NO-5020 Bergen 4.1 Introduction...... 40 Tel.: +47 55 55 33 50 – Fax: +47 55 55 33 54 4.2 Economic responsibility...... 44 Lagunen 4.3 Social responsibility...... 52 Shopping mall, NO-5239 Rådal Tel.: +47 55 11 29 34 – Fax: +47 55 11 29 31 AS Filialbygg 4.4 Climatic and environmental Bent Helge Aardal, CEO responsibility...... 64 Os Brugården, NO-5200 Os Office address: Nedre Korskirkeallm. 1 A 5. ANNUAL REPORT Tel.: +47 56 57 00 13 – Fax: +47 56 57 0016 Post address: P.O.B. 7999, NO-5020 Bergen Tel.: +47 55 21 75 11 – Fax: +47 55 21 76 80 5.1 Board of Directors...... 72 Fyllingsdalen 5.2 Directors’ Report...... 74 Oasen Shopping mall, P.O.B. 3520, NO-5147 Fyllingsdalen Sparebanken Vest Boligkreditt AS Tel.: +47 55 21 70 00 - Fax: +47 55 17 54 29 Egil Mokleiv, Director 6. ACCOUNTS AND NOTES Contents...... 86 Sotra Office address: Kaigaten 4 6.1 Accounts...... 86 Sartor Shopping mall, P.O.B. 152, NO-5342 Straume Post address: P.O.B. 7999, NO-5020 Bergen. Tel.: +47 56 32 34 80 – Fax: +47 56 32 34 81 Tel.: 05555 Fax: +47 55 21 74 10 6.2 Statement of cash flows...... 89 6.3 Equity movements...... 90 Annual Report 2008 The environment Knarvik For the first time, the Annual Report includes Sparebanken Vest strives to be proactive and 6.4 Notes 1-35...... 91 Knarvik Shopping mall, P.O.B. 140, NO-5903 Isdalstø a Social Report which presents the bank’s forward-looking in its approach to both the Tel.: +47 56 34 28 78 – Fax: +47 56 34 28 75 6.5 Auditor’s Report...... 142 perception of the links between economic, internal and the external environment. This social and environmental responsibility. year only a limited number of the Annual 6.6 Control Committee’s Report...... 145 Førde Report is printed, since most recipients have Storhaugen 9, P.O.B. 229, NO-6800 Førde 6.7 Declaration Board of Directors & informed us that they wish to read it online at Tel.: +47 57 82 81 70 – Fax: +47 57 82 81 61 Managing Director...... 146 . www.spv.no The Annual Report is printed on 6.8 Key figures...... 147 swan watermark paper. Stord Borggaten 8, P.O.B. 404, Leirvik, NO-5403 Stord Tel.: 53 45 68 80 – Fax: 53 45 68 85 7. OVERVIEWS 7.1 Organisational structure...... 158 7.2 Regional map...... 159 7.3 Elected officers and administration.....160

7.4 Branch overview...... 162 PAGE 2 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews ANNUAL REPORT 2008 ANNUAL REPORT 2008 1 main features 2 about the bank 3 market 4 CSR report 5 annual report 6 notes 7 overviews PAGE 163

KUTT FLIPP 85 MM Rill/FALS RYGG 11 MM RYGG 11 mm KUTT KUTT RYGG 11 mm RYGG 11 mm Rill/FALS Rill/FALS KUTT SIDE 211 mm SIDE 211 MM FLIPP 85 MM FLIPP

SWIFT: SPVNOBB Contents COMPANY NUMBER: 832554332 Annual Report 2008 Annual Report 2008

spv.no Being local - makes a difference.

– Focusing on Western Norway – Focusing on Western Norway

KUTT RYGG 11 mm Rill/FALS Rill/FALS KUTT SIDE 2110 mm RYGG 11 mm SIDE 211 MM FLIPP 85 MM FLIPP