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:..a.::i: Definitions Ouerall in terest margin Adjusted shareholders'equity I per share Net interest earnings as a percentage of average total assets. Taxed shareholders' equity, plus 70 per cent of untaxed resewes and the surplus value of the bond portfolio, divided by the number Aoeragetotal assets of ordinary shares at year-end. The Bank: Total assetson a daily-average basis. The Group: Average o{ each month's closing figure; the parent Adjusted shareholders'equity II per share Bank's total assets on a daily-average basis are included. Adjusted shareholders' equity I plus the surplus value of properties after 30 per cent standard tax, divided by the number of ordinary Return on equity after standardtax shares at year-end. Operating profit after 30 per cent tax as a percentage of equity - de' fined as taxed shareholders' equity at the opening of the year minus Core capital ratio the dividends paid during the year plus any new share issue plus The core capital of the S-E-Bank Group as a percentage of risk- 70 per cent of all untaxed reseryes (including the valuation adjust- weighted balance sheet and off-balance sheet volume. Core capital ment reserve for bonds) plus minority interests in shareholders' consists of taxed shareholders' equity, pius 70 per cent of untaxed equity. reserves and the surplus value of the bond portfolio, plus extra depreciation on equipment leased to clients plus minority interest Grossreturn in shareholders' equity minus goodwill. Total operating income as a percentage of average total assets. Total capitalratio percen- Profit margin The total shareholders' eouitv of the S-E-Bank Croup as a Profit after standard tax as a percentage of total operating income. tage of risk-weighted badnc6 sheet and off-balance iheet iolume. Total capital consists of core capital and supplementary capital Earningsper shareafter standardtax minus shareholdings in unconsolidated companies. Supplementary Profit excluding capital gains divided by the number of ordinary capital includes subordinated debenture loans plus reservesand sharesat year-end, where profit excluding capital gains is defined supplementary capital approved by the Government. Supplemen- as operating profit plus extraordinary items excluding capital gains tary capital may not exceed the amourt of core capital. minus 30 per cent tax minus minority interests in profit plus share of profit in associatedcompanies in excessof dividends received. Lending lossleael The lending loss level is defined as lendiag lossesdivided by year- end loans outstanding (to the public and financial institutions). Earnings per shareafter full tax The same definition as above except that the year's tax cost is calcu- Iated as the sum of tax paid plus 30 per cent of all appropriations.

"The Bank" refers to Skandinaviska Enskilda Banken {9€-Banken), 38. MillionCs) is abbreviated M. Billion means one thousand milli "The "The parent company in the 9E-3ank Group. Unless otherwise stated, on. Riksbank" refers to Sweden's central bank. Riksdag" "Goteborg" figures in parentheses refer to 1990. All percentage figwes relating refers to the Swedish Parliament. is Swedish for Goth- to the business of the $E-Bank Group, the Bank and its subsidiaries enburg. are based on exact amounts. Per cent changes refer to comparisons Annual reports and interim reports (January-Apri1 and January- with 1990,unless otherwise stated. August) can be ordered from Corporate Communications, Skandi- SEK refers to Swedish kronor. For other currency codes, see page naviska Enskilda Bankery 9-106 40 Stockholm, Sweden. TheS-E-Bank Group Annual Report 1991

Table of contents

2 Highlights of 1991 Re;ulfsdnd ker1 figures Diuidend

3 Organisational chart, the S-E-Bank Group

4 Chairman's statement An eaentfulyear - t'or betteror worse

6 Statementof the Group Chief Executive Earningsin 199Lboth good and bad

8 SEB Sweden Consumerbanking Corporatebanking

14 SEBInternational Major corporations Inztestmentbanking Mutualfund andasset management

20 Staff and training

Report of the Directors 22 Marketdevelopments n uepostrsana tenatng

24 Earnings and profitability

27 Lending policies and lending losses

28 Treasury Capital baseand capitaladequocy Theoisual theme of thisAnnual Rating Report,with illustrationsby GunnarErkner (watercolors) and 30 Other events in7997 St ephan Maxkell en (photo gr aphs ), Changesin theorganisation reflectsthe role of theS-E-Bnnk Skandiaand the Bank's insurance aenture Croupin theSwedish economy. Gamlestadenand Nobel Newdireclors and officers

32 S-E-Bankenshares

34 Accountingprinciples

36 Profit and lossaccounts, balance sheetsand notes 50 Proposalfor the distribution of profit 50 Auditors'report 51 Long-termstatistics 52 Boardof Directors 54 Group ExecutiveCommittee 55 Auditors 56 Addresses 1991,in brief

Key figures for the S-E-BankGroup*

^1990 1.987 1989 "1991.

Operating profit, SEK M 4,042 4,669 4,444 3,312 2,326 Operating profit before losses, SEK M 4,300 5,090 5,005 5,461 7,096 Total assets, SEK billion 234 289 366 452 451 Return on equity after 30Votax, Vo 24.9 23.5 78.2 11.8 7.6 Total capital ratio, To 8.8 9.7 70.7

Core capital ratio, Vo /.J O.U 6./ Operating income/costs, "t.75 excl. lending losses 1.96 7.99 1.85 1.88 Earnings per share after 30% tax, SEK 10.93 72.61 77.56 7.61 4.50 Dividend per Series A share, SEK 2.73 2.55 3.00 3.30 3.35

* For definitions, see the inside front cover.

Earningssituation in brief

The S-E-Bank Group S-E Banken Change, Change, SEKM 7O SEKM % Net interest earnings 9,473 +17 7,550 +24 Commissions, fees and foreign ,on exchange earnings 4,859 +24 3,291. TLW Other operating income 825 ,no 455 -20 Total operating income 15,157 +19 l'1,296 +20 Staff costs 4,202 +72 -3,007 + 9 Other operating costs 3,319 +10 2,440 + 72 Depreciation 550 +16 277 77 Total operating costs 8,071 +11 5,664 +10 Profit before losses 7,086 +30 5,632 + 33 Lendinglosses 4,760 +744 4,278 +188 Operating profit 2,326 -30 1,354 -47

Proposed dividend The Board of Directors proposes a dividend of SEK 3.35 per share on both SeriesA and SeriesC shares.This proposal entails an increase of SEK 0.05 per share within the framework of an unchanged dividend sum of SEK 883M. The reason is that the previous Series B shares, which entitled shareholders to a higher dividend, were exchanged for SeriesA shares during 1991.

For facts about S-E-Banken shares, see page 32. Organisationalchart, the S-E-BankGroup

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The restructuring of the S-E-Bank Group into two divisions, SEB Sweden and SEB International, was implemented late in the summer of 1,991.SEB Sweden, which is responsible for con- sumer banking and the corporate banking maiket (mainly small and medium-sized companies), had an average of more than 7,300 employees and a total business volume of SEK 250 billion. The corresponding figures for SEB International, which is responsible for major corporations and mutual fund and asset management, were 2,400 employees and SEK 170 billion. CunrG Orssox An eventful year - for better or worse

Another year into the 1990s,we can enjoyed broad-based support from the see that the rapid pace of change pre- political parties. This should facilitate vailing in recent years has not slowed our country's continued pursuit of down at all. Quite the contrary. This closer ties with Europe. Only as a is especially true of other countries, full-fledged EC member can Sweden and above all those to our east, where play an active role in the expanded, the upheavals of 1991 occurred with more intensive European co-oper- a spe^edand intensity hardly anyone ation that is emerging. could have foreseen. The collapse of Another important event that communism and the breakthrough further highlights Sweden's closer re- of democracy and market economies lations with the EC was the Riksbank's in these states will greatly alter our decision in May 7997 to link the world picture - geographically, Swedish krona to the European politically and economically. Currency Unit (ECU).This is a first Western Europe focused mainly on step toward membership in the Euro- its continuing process of international pean Monetary System (EMS). It has integration. The treaty between the eliminated much of the earlier uncer- European Community (EC) and the tainty about Sweden's exchange rate Euronean Free Trade Association policy. It has also paved the way for GFTA) to establish a 19-nation Euro- more stable exchange rates vis-d-vis pean Economic Area (EEA), and the our most important trade partners in Maastricht agreement to create a Europe. closer union among the 12 EC countries themselves, were im- Recession is squeezing the banks portant milestones in this process. Yet the positive effects of these initial In Sweden, too,1.991.brought major reforms in our economic system are changes,both positive and negative. being obscured by the fact that right There was a welcome reorientation now we are in the deepest economic in official policies, which in the long downturn we have experienced in term should help to create a firmer decades. Already in the final months set of rules governing the business of 1990, our economic climate cooled sector and a more favourable econo- perceptibly in the shadow of the mic climate. Sweden needs long- approaching Gulf war. Since then the range growth promotion policies if it Swedish economy has continued to is to perform well in international weaken at an unusually rapid pace, competition. Deregulation, anti-infla- with sharp adverse effects on pro- tionary measures and incentives for duction, employment and capital saving are important elements of such sPenqlng. policies. Many significant steps in This steep economic downturn - this direction were taken during7997. accompanied by a drastic increase in the number of bankruptcies and sus- Moving closer to Europe pensions of payments - has had very Yet perhaps the foremost example of noticeablefinancial repercussions. a policy shift during 1991was the The refreshing winds of innovation change in the former Government's that swept over the banking market attitude toward Swedish member- during the second half of the 1980s ship in the EC. When Sweden submit- have turned into a piercing storm ted its membership application on wind. Lending lossesin the Swedish luly 7, this action consequently banking system have risen dramati- the outflow had re- always in predictable ways. Besides, versed, the Riksbank it is not a question of a lending again lowered the freeze. Projects with good potential call money rate to succeed are not likely to have any gradually, albeit not trouble being financed. to the same level as A certain amount of self-criticism before the currency by Swedish banks is justified, how- market turmoil ever. The increased freedom of action began. they gained in the mid-1980s was perhaps not always handled with Simplistic criticism sufficient prudence. Yet we should of Swedish banks recall that under the nressure of As their lending pent-up loan demand, growing losseshave grown, credit market competition and rap- Swedish banks have idly rising share prices and real estate - out of necessity - values, it was often hard to resist the become more cau- pressures and remain sufficiently criti- tious in their evalu- cal of optimistic projections. Since ation of new loan ap- then, the rapid general economic plications. This has downturn and plummeting property led to criticism from markets have led to a painful but some quarters. The necessaryreturn to sobriety. banks are being ac- cused of strangling Our gratitude to the Group's the flow of credit employees and being too risk- Tougher times impose heavier averse. At the same demands on everyone who works in time, of course, they the S-E-Bank Group. Unfortunately, are also criticised for owr 1991.operating profit did not their mounting loan provide a fair picture of the contri- losses. butions of our employees. Yet we It is no easy task must not allow this to obscure the to strike a balance fact that the Bank's earning capacity cally and will probably remain high between - on the one hand - manag- is good and that its cost curve is for another couple of years as a conse- ing the funds of depositors, lenders pointing in the right direction. I there- quence of recession, new tax rules and shareholders in a sound, profit- fore feel a particularly strong obli- and continued high real interest rates. able manner and - on the other hand gation, on behalf of the Board of Although its link with the ECU has - willingly taking risks by supplying Directors, to express our gratitude to resulted in more stable exchange investment and working capital to all emplovees for their fine contri- rates, the krona remains sensitive to companies with uncertain futures. butioni to the Group during a year outside pressures, as the events of Misjudgements inevitably occur in that has been trying for all of us. early December reminded us. A large individual cases,but I am convinced outflow of foreign exchange from that most of the people who take the Stockholm, F ebruary 7992 Sweden, resulting from speculation lending decisions at Swedish banks against the krona following the de- exercisegood judgement, based on valuation in neighbouring Finland, the best information available at the caused the Riksbank to raise its call time of each decision. It is hardly Curt G Olsson money rate by no less than six per- necessaryto point out that realities Chqirmanof theBoard centage points in a single move. After can subsequently change, and not Bo C E Reupons Earningsin 1991bothgood and bad

Despite a sharp rise in lending losses, Continued cost-cutting programme the S-E-Bank Group managed to show The extensive programme to reduce an operating profit of SEK 2.3 billion Group operating costs that we set in in a year filled with problems. This motion during the autumn of 7990 cleaity demonstrates^the Group's continued throughout 1991.An early fundamental earning capacity. The retirement offer, rationalisation of same thing is apparent from the fact working procedures and restructur- that the year's profit before lending ing helped us to decrease our labour lossesclimbed by 30 per cent, or force in Sweden gradually during the faster than at any other Swedish year. This was one of the reasons bank. All types of operating income - why our operating costs, adjusted for net interest earnings, commissions, the purchase of Scandinavian Bank foreign exchange earnings etc - im- Group and the effects of the three- proved sharply, while the increase in week labour dispute in the Swedish operating costs slowed markedly. banking sector early in 1990,did not Thanks to this income trend, the increase more than about 2 per cent situation was still looking very bright during the year. for the S-E-Bank Group well into the One important element of our cost- "Turbo" autumn of 1,991,,when we reported a cutting programme is the 30 per cent rise in operating profit in project, which is based on employees' the eight-month Interim Report. own suggestions for streamlining While making ample allowance for operations. Manv effects of the Turbo uncertainties about the trend of lend- pioject will be feit only during7992, ing losses during the rest of the year, nowever. we thus dared to forecast equally good earnings growth for 1991 as Broad-based venture into insurance a whole. The fact that we were unable to re- But the downturn during the final alise our ambitions to form an inter- months of the year was far more dra- nationally competitive banking and matic than we had anticipated. Due insurance group together with to a sharp increase in the number of Skandia was naturally a setback. We corporate bankruptcies and suspen- had (and still have) a very strong faith sions of payments, S-E-Banken's lend- in the advantages of combining bank- ing losses for small and medium-sized ing and life insurance operations. companies were more than twice as Indeed, today we are even more large as in 1990.We were also obliged convinced of the synergistic effects of to make sizeable write-downs on a this combination, both in savings and few large loans to finance and prop- assetmanagement, than we were in erty companies. the autumn of 1990, when we ac- Due to the alarming rise in lending quired the option to buy 28.2per cent losses, the task of evaluating and of Skandia. Moreover, the successof managing credit risks has been given our unit-linked insurance policies in- even higher priority than before. We dicates that the Bank's branch office continued the action programme to network is an excellent sales channel improve loan processing that was for insurance products. initiated in 1990.As part of this, we Our conviction that banking and introduced clearer loan portfolio life insurance fit together led to our policies,specifying careiully formu- 1991 decision to enter the life in- lated goals for the Group's maximum surance business on a broad front, exposures in shipping, property and under the name SEB Forsrikring. This local government lending. venture means that we are adding to our unit-linked insurance company Aktiv Frirsdkring a traditional in- surance company that sells deferred We naturallv place entirely due to a sharp increase in such heavy emphasis lending losses.As I pointed out ear- on the conceptof qual- lier, the Group's earning capacity is ity because we are very good. It is also important to convinced that this is bear in mind that the S-E-Bank the best guarantee of Group has a strong capital base success.We thus want and that - even after its ratings were to be the obvious lowered over the past year - it enjoys choice of those custom- very good creditworthiness from an ers who are mainly international perspective. Iooking for profession- alism and quality. Customer-orientated structure Among other things, As part of our strategy for respond- this requires that we ing to the continued changes facing maintain impeccable the banking system in the 1990s,the ethical standards and Group's various customer segments continuouslv develop - private individuals, small and the professional skilG, medium-sized companies and major service-mindedness corporations - are now reflected even and sound business more clearly in the Group's organisa- sense of our emolov- tional structure. ees.In addition, we During 1991 responsibility for should constantly mainly regional or domestic con- renew and adapt our sumer and corporate banking mar- products to the needs kets was gathered under SEB Sweden, of our customers and while responsibility for globally orien- put a high priority on tated major corporations was placed good customer service under SEB International. Structuring and long-term cus- the S-E-Bank Croup into these two tomer relationshios. divisions was a logical step following retirement annuities ("pension in- A high profitability level is, of the organisational changes of 7990, surance") and endowment policies, course, not only important to share- when our geographic units were sup- health insurance policies etc. In re- holders but also necessaryto ensure plemented by two functionally based sponse to growing customer interest our future expansion by raising fresh areas of responsibility: Commercial in foreign insurance products, we canital in Sweden and in inter- and Merchant Banking, respectively. also plan to establish co-operation national markets. Continued structural transforma- with foreign-based insurers or start To achieve this, the Bank's return tion and cost-cutting programmes our own insurance company abroad. on shareholders' equity has to exceed have naturally led to severe strains in the average return at Swedish com- many parts of our organisation. Yet and profitability Quality mercial banks and be comparable our employees have demonstrated During 7991 we conducted a system- with that of the best banks abroad. both adaptability and loyalty, and I atic review of the overall goals, strat- With an average return on equity would like to thank all of them for egies and organisational structure of of 20 per cent, the Bank performed their fine contributions during a the S-E-Bank Group. Our goals - well during the 1980s,both from a difficult year. which all employees are familiar Swedish and international perspec- with - are simple and clear: tive. In 1990 and 1991,return on . We should nrovide our customers equity stood at 72 and 8 per cent, re- with the highest-quatifyservice in spectively. Although these levels are the market. not satisfactory, they must be viewed . We should achieve and maintain in the context of the deep recession high enough profitnbility to give our that has hit the banking system very Bo C E Ramfors shareholders a competitive return hard, both in Sweden and abroad. ManagingDirector and G on their investment. It is important to emphasise that Executiae this deterioration in profitability was SEBSweden

SEB Sweden includes the operations Consumerbanking of the Bank's three central oifices in Stockholm, Griteborg and Malmd, its Customer orientation and specially ten geographic regions with their tailored services total of 326 branch offices around In all, about two million private indi- Sweden, SEB Kort (credit and charge viduals are customers of the S-E- cards) plus the Swedish subsidiaries Bank Croup. Of these, 1.5 million are Svensli Fastighetskredit (real estate customers of the parent Bank. Most loans), FinansSkandic (leasing etc), earnings from consumer banking, Arsenalen and Garnisonen (prop- about 60 per cent, derive from ser- erty related services) and Aktiv For- vices related to savings and invest- sdkring, an insurance company ta- ment management, while the remain- ken over at the beginning of 7992. ing 40 per cent comes from lending. The responsibilities of the SEB Transaction services,which were Sweden Division include two of the once a lossmaking segment overall Group's three principal markets: for the Bank, largely break even now- consumer banking and corporate adays. This improvement is mainly banking. Most customers in these due to systematic efforts in the past sectors have a mainly domestic fo- few years to expand self-service sys- - cus, and the competition primarily tems and automation an invest- consists of Swedish banks, finance ment that has simultaneously made companies and property mortgage it easier for customers to carry out lenders. In southern and western their routine banking transactions. Sweden, SEB Sweden also serves S-E-Banken'sgoal in consumer major corporations. banking is to offer the highest quality During 1991SEB Sweden initiated in the market and provide an active, - a process that will give the regions personal touch without sacrificing greater independence and authority cost-effectiveness.Among other to handle operations in their respec- things, this means the Bank should tive territories. In other words, its take more initiatives and tailor its ambition is to delegate responsibility products to the varying needs of cus- - and decision-making closer to the tomers while continuing its efforts market and to its customers. to improve efficiency in handling routine transactions and back office tasks. S-E-Bankenhas a very high share of the market for investment man- agement and custody services- between 25 and 65 per cent of the various market seghents. During 1997, salesat themore than 70,000retail out- Ietsin Swedentotalled nearly SEK 300 billion. TheS-E-Bank Group has thousands ot' customers - amlng Swedishretailers t'rom major chainsto tiny one-of-a-kindshops throughout the country.

-..rr..", Oneexample is theHennes €t Mauritz clothing chain,nthere the Bnnk is responsiblefor both - paymentsnnd financing and aia theinter- nationalnetwork - seroicesto HEM's units K'"'.'r outsideSweden. \&4\ . " ,! W"tF-'ftb" f: TheBankhas nlso positioned itself in '.\o ' I r$ i'"i : themiddle of retailpayment florus 'ii fl; T$$$$$ht ,,' throughitsthroughits targe-scatectarge-scale credit and 1ifr{ H,h-l"j* o-,nl' chargecard oPerations' t fl $ fl: ftl i$ ff, ,(i 'iii i ffi ;,dl#d

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Part of the Bank'sstrategy for singlebrokerage account called the maintainingand strengthening this FundAccount, which has been a position is to baseits serviceson cus- maior success. iomer needs and offer the best poss- The performanceof the Group's ible assetgrowth consistent with con- mutual funds during 1991is de- trolled risk-taking. To achieve this, scribed in the sectionon Enskilda the Trust Businessunit supports and page19. activates the Bank's investment SvenskFastighetskredit (SFK), the advisors in various ways. In the Bank'smortgage loan subsidiary, metropolitan areas,the Bank is also beganto sell bullet bonds targetedto bringing together advanced advisory individual investorsin 1990.and bv services at separate specialist offices. theend of1991ithad fivesuchloans Customers with extra needs and very outstanding.Both the Bank and SFK large investment portfolios are gath- alsosold zero couponbonds during ered into a separate unit within Trust the year.These bonds carry no interest Business. while maturing. Their advantageis that the owner is taxed only when Larger share of household deposits they are sold or redeemed.At the market sametime they are a safe,liquid The consumer banking market is investment. verv imnortant to the S-E-Bank S-E-Bankenwas very successfulin The S-E-BankGroup's savings Group. bne indication of this is that selling Aktiv Fcirsdkring'sunit-linked alternativesfor households in re&nt years, household deposits life insurances,whose premiums are (December31,7991) have accounted for nearly half of the invested in various mutual funds Change Bank's total deposit base. Over the chosenby the customer.During1991" during Total amount the year Market past five years, S-E-Banken'sshare of the Bank sold about 26,000insurance SEKbillion SEKbillion share,7o household deposits has also grown policies with a total premium value National public slowly but surely. In7987 the Bank of SEK1.2 billion. This was equiv- savingsaccounts 9.4 +0.9 74 had1.L.4 per cent of all household de- alent to a 63 r,er cent shareof Swe- Bank savings accounts 47.0 +3.7 1,2 posits in Swedish banks. At the end den's new unit-linked insurancemar- Bullet bonds for of September 1991,its market share ket and 77 per centof the overall private investors had climbed to 12.5 per cent. Among market for new life insurancepolicies. incl. zero coupon 3.5 +2.'I 25* the reasons behind this success is the During 1992this venture will be Money mdiket funds 9.6 -0.8 31, Bank's decision to market such high- broadenedto include all forms of life Equity mutual funds 1,9.7 +4.4 24 interest accounts as the Shareholders' insurance(see also page 31). Unit-linked insurance 1,.2 +0.9 63 Account and Capital Account. *Estimate

Broader array of savings alternatives Over the past decade, traditional Of Sweden's3 .8 million households,2.3 million liae in bank savings have lost ground to tax- singleJamily homesor co-operatiueflats. advantaged national public savings At year-end,S-E-Banken's subsidiary Saensk accounts, equities, mutual funds and Fastighetskredithad 203,000mortgage loans life insurance products, including outstandingfor single-familyhomes and co-operatiae deferred retirement annuities. In the flats, with an aggregateaalue of SEK42 billion. In past year, as new income tax rules addition,the Bankhad loans of aboutSEK10 billion have made interest-bearing invest- to prioateindioiduals securedby second ments more attractive, bullet bonds mortgagedeeds. targeted to individual investors and zero coupon bonds have been added to the available savings alternatives. Today the S-E-Bank Group can offer its customers a broad array of investments in all these areas. As for mutual funds, the S-E-Bank Group manages a large number of Swedish and international equity, money market and bond funds. For the convenience of customers who have invested in more than one of these funds, the Group introduced a

10 able trend of interest rates during most of the year and SFK's efforts to improve its customer service also contributed to the increase.

Less credit card borrowing The trend of recent years toward lower borrowing on credit cards continued during 1991.SEB Kort, the Bank's credit and charge card unit, reported that sales on the credit card accounts of individual customers totalled SEK 8.1 billion, whereas their outstanding balances subject to interest pavments and finance chargesiv-eraged no more than SEK2.2 billion during the year. (For the corporate card sector, the corre- sponding figures were SEK 7.4billion

Consumerloans down, home SEK2.2 billion or 65 per cent. One loans up reason behind this increase in demand For the first time in many years,the was that many households restruc- volumeof Swedishbanli loansto tured their loans - for example to householdsdeclined during 1991. eliminate some of their credlt card For S-E-Banken'spart, however,the and hire-purchase debt. The favour. declinewas partly offsetby contin- ued heavy demandfor residential mortgageloans from SvenskFastig- hetskredit.During 1991SFK's new lending to householdsrose by

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#,*knqit SEB SwnonN

and SEK 0.8 billion.) The shift from Corporate banking creditcards toward debit and charge cards is expected to continue, and this New service packages is entirely in line with the business Todav more than 100.000small and strategy of SEB Kort. medium-sized comnanies are clients Of SEB Kort's 1.2 million cards of the S-E-Bank Group. These custom- outstanding, 950,000were held by ers constitute an important base for private individuals. The company's the Group's operatibns. In recent product range includes the Eurocard years, however, the corporate market charge card, the ONLINE debit and has become less nrofitable as a conse- credit cards plus affinity cards issued quence of growing insolvencies in co-operation with B & W hyper- among borrowers. Dwing 7997, markets, the Hennes & Mauritz small and medium-sized comr:anies per clothing chain and other companies accountedfor 60 cent of the and organisations. SEB Kort has an S-E-Bank Group'i lending losses. estimated one third of the Swedish Lending lossesare not the only credit and charge card market thing that adversely affects profitabil- (excluding oil company cards), both ity in corporate banking, however. in terms of number issued and sales Unsatisfactory pricing levels for the on these card accounts. Bank and a lower market share in services to industries with good package providing certain basic ser- The S-E-Bank Group's lending growth potential have also contrib- vices at a fixed annual cost. products for households uted to the Bank's weak financial One important component of the (December31,7991,) returns in this sector. In the corporate market, the Bank's Bank's strategy to improve its weak Change duling strategy is therefore to reduce its profitability in the corporate market Total anount the year Market is naturally also to improve loan pro- SEK billion SEK billion share, % costs for routine transactions by means of more efficient processing, cessing.The programme for achiev- Bank loans 29.2 -6.4 11.6 thereby freeing resources for more ing a better credit evaluation process, Mortgage loans advanced customer needs. During initiated in7989, was therefore inten- for single-family the autumn, the Bank also reviewed sified and expanded during 1991 (see homes and its pricing. One result was that it be- also the section on lending policies co-operative flats gan to charge for a number of services and lending losses,page27). (sFK) 42.4 +0.6 10.3 that had not previously covered their Credit card balance 2.2 -0.3 33* costs.Around year-end the Bank also * Estimate introduced a corporate banking

72 Smallershare of corporatedeposit ted on servicing its existing corporate theirservices through several chan- market loan portfolio, Most of the new loans ncls- via theBank's branch office S-E-Banken'sdeposits from small that SFK nevertheless approved for network, equipment dealers and/or and medium-sizbd companies have commercial properties and apartment suppliers. accounted for more than one fifth of blocks were based on price quota- FinansSkandic's international strat- the Bank's total deposits during the tions that it submitted in co-operation egy concentrates on supplying past five vears. In 1991S-E-Banken's with its parent Bank. Swedish and other Nordic-owned heposits from this sector did not in- companies abroad with loans for creaseas rapidly as those of the Larger share of leasing market capital spending via five wholly Swedish banking system as a whole, The expansion in the equipment leas- owned subsidiaries. resulting in a somewhat smaller ing market over the past few years FinansSkandic sold its Consumer market share. slowed during 1991.The Finans- Division (credit and charge cards, Skandic group, which is Sweden's consumer loans) to S-E-Bankenat Sharp increase in corporate lending largest company in this field, strength- year-end 1990,thereby enabling the The supposed and much-debated ened its position and increased its company to concentrate completely tightening of credit from the Swedish market ihare from 16 to more than on the corporate market. banks to small and medium-sized 20 per cent. In factoring services (pur- companies is not borne out by statis- chasesof accounts receivable and Tough market for property related tics. The banking system's total loans lending with invoices as collateral), services outstanding to companies with fewer FinansSkandic held nearly one fifth of In addition to traditional financial than 200 employees rose by nearly 4 the Swedish market. services,the SEB Sweden Division of- per cent during 7997.At S-E-Banken, One key to the successof the Finans- fers a wide range of property related the increase was even larger, about Skandic group, which in7997 report- services through the subsidiaries 10 per cent. The Bank's share of this ed its best earnings ever, is that the Arsenalen (Stockholm and Malmo) market thus rose somewhat. During various companies in the group and Garnisonen (Goteborg). Despite both 1990 and1.991,about half of specialisein different fields. Finans- the tough situation in the real estate S-E-Banken'stotal lending went to Skandic Foretag offers loans for capi- market, both companies increased companies with fewer than 200 em- tal spending and working capital, their appraisal and property analysis ployees. primarily in the form of leasing and business. This largely offset a marked factoring. SkandicBilfinans specialises downturn in property management, Property loans to the business sector in vehicle financing, Vendax focuses estate brokerage and construction SFK did not actively engage in sell- mainly on large computer leasing management business. ing new loans in the corporate mar- transactions etc. An extra source of ket during 1991.Instead, it concentra- strength is that the different units sell

Tzuothirds of Sweden'sexports and imports are shippedby sea.In addition,t'erry lines carry a largeaolume of goodsand passengers. The marketaalue of the Swedishmerchant fleet, which includes many shipsdeliaered during the past threeyears, is estimatedat SEK100 billion.S-E-Banken is a marketleader in financing Swedishaessels. Its shippingclients include Wallenius Lines, Argonaut,Tor Line and Atlantic ContainerLine, which is ownedby theforwarding companyBilspedition,

IJ SEBInternational

SEB International includes the for- mer SEB International as well as the Bank's international network, Treasury & Trading (including the treasury and trading units at the three central offices), the operations of Enskilda in Sweden and abroad, plus BanqueScandinave en Suisse(BS-S). The Division is responsible for the S-E-Bank Group's globally orientated major corporate clients - except for the major corporations handled by the Cciteborgand Malmo groups - in competition with commercial and investment banks operating inter- nationally. The Bank's international network also provides services to SEB Sweden's customers abroad.

Major corporations . Credits - credit research and analy- S-E-Bankentraditionally occupies a sis, loan administration, lending poli- unique position in the market for cies etc. o - major Swedish corporations, with a Trade Seraices payments, cash very high market share in a number management, short-term trade of service segments. The Bank's strat- financing, servicing of accounts, egy is to intensify and maintain exist- correspondent banking etc. . - ing relationships with major Swedish Financing and Trading foreign ex- corporations by being their most skil- change and money market trading, ful advisor and business Dartner. interest rate and debt-related nrod- At the same time, foreign clients are ucts in the money and capital mar- offered a number of genuinely inter- kets plus corporate relationships and national products and services in specialfinancing services. areas where S-E-Bankenis especially The new structure of the Division proficient. These include equity is thus much more customer- and trading, corporate finance, foreign product-centered than previously, exchange trading and cash manage- while at the same time underscoring ment. the ambition to provide services to During 7997, 588 International - corporations on a global basis. except for Enskilda - has been divided into three areas of responsibility that cut straight through the Division, including the international network: iit,

*.t "ii ft il'

itil,-. debt-burdened countries in the Third "debt World, After the crisis" of the early 1980s,most banks, including S-E-Banken,therefore assumed a defensive attitude toward such trans- actions. But since short-term trade financing is an important product for client companies - and is profitable to the Bank * S-E-Bankenrecently be- came active in this field once again. Foreign banks are very important clients, both as counterparts in the Bank's pavment transactions and foreign exchange trading and as depositors. S-E-Banken,which has account relationships with about 2,500 banks throughout the world, took steps during 7997 to further improve its co-operation with them. Large share of payment traffic with each other in handling orders, S-E-Bankenis highly proficient in deliveries, payments etc. This in turn Growing share of foreign exchange providing payment services.This is means that paper documents can be trading reflected in its dominant share of reduced or eliminated. Due to its ex- The foreign exchange trading market payment traffic to and from Sweden. tensive investment in electronic bank- was relatively calm in7997, despite During 1.991.two thirds of all in- ing services,S-E-Banken has good the sharp decline in the U.S. dollar coming and outgoing payment vol- prospects for further increasing its during the year. In the Swedish mar- ume went through S-E-Banken. The share of payment traffic after EDI- ket, the Riksbank's decision to link skills that the Bank has built up in FACT technology is phased in. the krona to the European Currency the domestic market are also being Unit (ECU) required major adjust- increasingly utilized in its inter- Increased trade financing activity ments. Banks and companies that had national network. During the 1980s,the once-dominant used currency basketsas a financing During 1990S-E-Banken began the system of long- and medium-term technique until May 1991 quickly task of adapting its payment system export and import financing was in- had to change their procedures. This to the new EDIFACT world stan- creasingly replaced by short-term resulted in sharplv lower volume dard. This work intensified during trade financing. This kind of financ- during the summer and autumn. 1991.EDIFACT enables computers at ing is used particularly when trading S-E-Banken strengthened its posi- major corporations to deal directly with high-risk countries, such as tion as the leading Swedish foreign exchange trader. The Bank's market share climbed from about 35 to nearly Forestproducts, one of thecountry' s oldestbasic industries , accounts for 40 per cent, which also resulted in - aboutone fifth of Szaedishexports. S-E-Banken throughbothits prede- higher earnings. - cessorbanks hascentury-old conlacts zuith Szuedish forest product com- panies.During 1991,for example,the Bank arranged a syndicatedloan of USD 1.4 billiont'or Storain theinternational capital market. ,.i:

' ,t.'-'

15 SEB lxrsnNalolrel

Of the Bank's foreign exchange issues to SEK 76 billion and because units abroad, those in London and residential mortgage institutions in- New York performed best. During creased their new borrowing from 1991the London branch office was SEK 80 billion to SEK 123 billion. the largest market maker in Scandi- Issues of Eurokronor bond loans, navian currencies outside the Nordic which were on a modest scale during region, and its customer base ex- 1990,rose to more than SEK 7 billion panded sharply. In New York, foreign in 1,997.S-E-Banken arranged the exchange trading rose by 43 per cent, first international bond issue denomi- mainly due to a successfulmarketing nated in Icelandic kronur, totalling campaign aimed at American com- iSK 2.5 billion, for the Nordic Invest- panies. ment Bank. The Bank's participation in Swed- Strong position in capital markets ish bond issues on behalf of bor- The Bank's resources in debt-related rowers other than the Covernment products and services in the money remained at the same level as in and capital markets strengthened 1990 and amounted to a21. per cent Limited in Jersey during the year. As further during 1991.Among other market share. in7990, Osprey financed the purchase things, the Money and Capital Markets The finance company crisis and by issuing international bond loans. department at the subsidiary bank in mounting concern about lending Frankfurt was folded into the func- lossesled to a major change in the Zero coupon bonds launched - tional Capital Markets unit with structure of the Swedish non-corno- As a consecuence of the Swedish tax oDerations in London and Stockholm rate money market during 7997.^ reform, early in 1991 the Riksbank - that was established during 1990. Large first-class borrowers continued granted permission for zero coupon The Bank thereby strengthened its to increase their volumes of money bond issues in Sweden. In March, leading position in dealing with market instruments, while lower- S-E-Bankenwas the first Swedish Nordic borrowers, markets and cur- rated borrowers found it increasingly borrower to issue its own 10-year rencies and also in supplying Nordic difficult to use this market. S-E- zero coupon loan, primarily targeted clients with funds from international Banken maintained its leading pos- to private investors. The issue was investors. ition in this area as well. successfuland reached a nominal (SFK), Svensk Fastighetskredit value of SEK 1 billion during the Sixth place in Europe for syndicated which in 1990became the first "export" year. Late in7997 the Bank issued a loans Swedish credit institution to similar loan on behalf of Electrolux, As expected,Nordic companies assetsin the form of single-family which thereby became the first in- sharplv increased their international home loans, continued to use this borrowing during 1991.S-E-Banken financing technique during 1991. arranged syndicated loans totalling SFK sold a total of about 18,500loans USD 5.7 billion for its Nordic clients, worth SEK 2.5 billion to Osprev- including USD 1.4 billion to the Stora MortgageSecurities (No.2-bl forest products group and USD 1.6 billion to Saab-Scania Holding. The Bank was thus the sixth largest ar- :;i,, ranger of syndicated loans in Europe. f Engineeringis by the largestsector The private placements market far in Szuedishindustry, accounting half ; also grew. S-E-Bankenwas an ad- for of kuedishmerchandise exports and indus- *o1:i"'"ii;'-- visor for a number of such invest- trial employment. ment transactions, totalling about TheS-E-Bank Group has thousands of one billion dollars in value. customersin this sector,ranging from major corporationslike Vokto and Saab- Heavier activity in bond market Scaniato subcontractorsand small-scale Bond issues in the Swedish market manufacturers.During 1991, for instance, rose by 75 per cent during 7997 to the Bank atanged a syndicatedloan of more than SEK 220 billion. This was USD 1.6billion for Saab-Scaniain the mainly becausethe Covernment, internationalmarket. In Griteborg, the faced with a growing budget deficit, Bankput togethera creditfacility of SEK nearly quintupled its volume of bond 6 billion (commercialpaper programme, short-termbonowing etc.) for Volztofinans, tuhichis ozunedin equalshares by Volao and Sweden'sVoloo dealers.

76 during 1991.Despite this severe financial climate, Enskilda - which is responsible for the Group's activities in investment banking and mutual fuhd and assetmanagement - suc- ceeded in consolidating its strong market position.

Larger share of Swedish equity trading With a 5.4per cent increasein the gen- eral share price index, the Swedish stock market was one of the weakest in Europe during 1997.It underwent major fluctuations during the year, nowever. dustrial corporation to sell Swedish National Debt Office),the S-E-Bank During the first half of 1997,the zero coupon bonds in the consumer Group with sevenloans totalling Swedish equity market was strong banking market. SEK3.5 billion was Sweden'ssecond from an international perspective. The Swedish market for bullet largestissuer of bullet bonds (after But during the second half, it became bonds improved substantially, the Urban Mortgage Bank) targeted clear that the American economy mainly due to the tax reform and ex- to private investorsand accountedfor could not be expected to serve as the pected high real interest rates. To im- abbut one fourth of the market. locomotive of a recovery. Combined prove liquidity further, the Stockholm with climbing interest rates in Eur- Stock Exchange established a separate Inoestmentbanking ope and domestic problems in Swe- exchange, SOX, as a market for bullet den, for example plunging property Conditions in the global financial bonds targeted to private investors . prices and sharply higher lending markets deteriorated in responseto At year-end more than 50 bullet lossesin the banking system, this economicand political developments bond loans were outstanding. Their led to growing pessimism among aggregate value was SEK 18 billion. Swedish investors. Aside from the Covernment (the

;i

I

T7 SEBIrurrnNarrorvar-

At the same time, there was strong Share prices on selectedstock exchanges Volumeof equitytrading, interest in Swedish shares among Lastday of eaehmonth, StockholmStock Exchange foreign investors. During the year, Index:December 19BB = 100 SEK billion they made net purchases of SEK 11 billion in Swedish equities, up from only SEK 1 billion during 1990.Swed- ish interest in buying shares of foreign-based companies continued to decline, however, and net pur- chasesreached only SEK 14 billion in 1997, compared with SEK 20 billion the year before. For the first time since 1986, trading volume increased on the AI and AII lists, reaching SEK 724.6bi1- lion compared with SEK 94 billion during t990. Activity increased in December due to the abolition of the 1989 r 990 share turnover tax, and this positive trend continued into early 7992. In spite of this, Enskilda'scorporate SEK47.6billion.In this area.too. a Enskilda strengthened its position as finance unit managed to maintain few companiesaccounted for the the leading brokerage house in Swe- good profitability by participating in snalDlncrease. den, increasing its share of trading a number of large transactions,both Enskilda'sprominent role in very on the Stockholm Stock Exchange in Swedenand internationally. large corporate finance transactions from1.6.2 to 18.5 per cent. In Sweden,the total volume of is reflected in the following break- new issuesof equities and equity- down of its sharein variousseg- Lower international market volume relatedsecurities rose sharply, from mentsof the Swedishmarket: The recessionin Europe caused SEK4.9 billion in 1990to SEK15.6 many international investors to nar- billion in1.991.,dominated by a few Per cent of row their European holdings to qual- very largeissues. At the sametime, Per cent of number of totalvalue transactions ity stocks in less cyclical businesses, the aggregatevalue of initial public "t997 pharmaceuticals 199"1 1.990 1.990 such as and food. offerings on the Stockholm Stock Takeover bids 84 51 LJ 32 Many investors also transferred part Exchangedropped from SEK3.3 of their portfolios from Europe to the New issues 54 42 25 40 billion to SEK0.4 billion. Initial public United Statesand the Far East. The increasein takeover bids in the nffprinoc 96 4334 39 In spite of this, the total holdings Swedishmarket was almostequally of international investors in Euro- dramatic.from SEK17.8 billion to pean securities remained at their i990 level. The volume of trading on the London Stock Exchange contin- ued to climb, while competition from Frankfurt and Paris grew stronger. Enskilda's international trading in European securities declined during the year, despite higher trading vol- ume in options and other derivatives. In response to increasingly stiff com- petition and changes in the market, Enskilda continued to expand its investment research services while strengthening its staffing levels in Frankfurt, Paris and New York.

Large market share in corporate finance The gloomy world economic situa- tion had a negative impact on the in- ternational corporate finance market.

18 S-E-Banken'sshare of stock Enskilda Properties,with real Swedish investors' interest in market trading in Sweden estateinvestment funds in London. foreign-basedmutual funds contin- Quarterlyfigures, per cent Parisand Germany,expanded its op- ued to grow during 1991.S-E-Banken erations to include property broker- consolidatedits position as Sweden's age assignmentsin Stockholm. largest manager of international As part of its expansionin EC mar- mutual funds. kets, Enskilda's corporate finance unit added an office in Madrid dur- Good growth in mutual fund unit ing the year. value All of the Swedish equity funds per- Mutualfund and asset formed better than the GeneralIndex managfuent for the Stockholm Stock Exchange. S-E-Banken'sAllemansfond - Enskilda's mutual fund and asset 1 3 did very well compared managementoperations are carried to the Index, also showing the best out by Enskilda Kapitalforvaltning in growth of all national public Stockholm and Enskilda Asset Man- sharesavings funds over a two- period. agementLimited in London. These and three-year S-E-Bankens operationsare closely coordinated Aktiesparfond, -hi.h received with ihe investment management official permission early in 7991to invest some of its Sixth in European cross'border activities at BanqueScandinave en assets abroad, climbed by 757 per transactions Suisse(BSS) in Geneva,as well as cent. At year-endits assetstotalled During 1991,the international ex- with the Bank's Trust Businessunit. SEK3.9 billion. pansion frenzy of the 1980swas suc- Enskilda and BSSmanage over 60 Ldkemedelsfonden(pharma- ceededby a businessclimate charac- mutual funds, whose total year-end ceutical-relatedsecurities) terised by caution and financial value was more than SEK 32 billion. was by far the most successful restraint. In addition, they provide extensive of the interna- tional funds. During 1991, Enskilda participated in mergers discretionary managementfor pri- the assets of this fund increased and acquisitionswith an overall vate individuals and institutions. from SEK320M to more than SEK 1 billion, value of SEK 51 billion. Eight of these In Sweden,business was affected while the value of one unit rose by full assignmentsinvolved cross-border by the tax reform, which among a 70 per cent. transactionsworth SEK 28 billion. other things put capital gains from There was also great interest Enskilda was placed sixth among the the saleof shareson the samefooting in mutual funds that invest in world's international investment as interest revenues,effective from the United Statesand the Far East. banks participating in the year's 1991.This contributedto a One January example was Europeancross-border mergers and shift toward interest-bearinginvest- Skandifond North America, which increased acquisitions. ments among customers.The intro- ten times in assetswhile duction of unit-linked insurance the value of a single unit climbed 45 policies, whose premiums are invest- by per cent. One innovation during ed in mutual funds of the customer's 1997was Miljofonden, an own choice,also helped changethe environmental market. mutual fund that quickly became very popular, attracting about SEK 95M in Swedish mutuai funds: 27 per cent a little more than two months. of market The mutual At year-end,Enskilda Kapitalforvalt- funds managedby BSS also performed ning and Enskilda Asset Manage- well. This *as eipe- cially true of the ment managed a total of 60 mutual bank's global equi- ties fund Intelsec,which funds - 15unit-linked funds,23 Swed- was the most successful ish and international equity funds, of all Swiss international equity funds over five interest-bearingfunds and 17 the past five years. With the aid of a flexible Luxembourg-basedfunds. S-E-Banken and far- sighted investment had a27 per cent shareof the total policy, BSSalso achievedvery good mutual fund market in Sweden. earningsin its investment managementfor private individuals. At year-end BSS,man- aged and was trustee for investments totalling CHF 10 billion (about SEK 40 billion).

19 Staffand training

At vear-end 1991, the S-E-Bank Group had ab.out 77,700employees, including 1.,700in its international network. This means that during the year its labour force in Sweden shrank by more than 600 - with the aid of early retirements and a hiring freeze. At the same time, the number of emplovees abroad increased due to the^r:uichase of Scandinavian Bank Group in the summer of 7990.

Steps to increase employee mobility During 7997,5-E-Bank Group em- ployees themselves helped to suggest cost-cutting measures in various units and departments, mainly "Turbo" through the project. The task of implementing the organisational and staffing changes entailed by these will, of course, suggestions Sharedresponsibility require greater employee mobility in for Group goals the S-E-Bank Group. Accordingto the goalsand strategies In order to encourage mobility and of the S-E-BankCroup, every indi- create an active internal labour mar- vidual employeeis responsiblefor Bank's management has ket, the ensuringthat the Croup's goals- introduced a number of temporarv - quality and profitability - areachieved policy measures. They personnel in the bestpossible way. To accom- include moving allowances, leaves plish this, the organisationmust share changes to part-time of absence and clearly stated values and have open, emr:lovment status. straightforward communications. A job centre was started in special Theseshared values include the find suitable order to help employees maintenanceof irreproachableethical new in the S-E-Bank Group. positions standardsand professionalbehavior in decision-makingand other actions. The Group's personnelpolicy strategy also includes strengthening and developing its management

S-E-Banken's staff structure By age,sex and full{ime/part-time stalus As of December31 . 1991

20 No profit share for 1991 A profit share is payable to em- ployees on the condition that Group return on eouitv achieves a certain level. Owing tothe decline in return on equity, employees are not receiv- ing any profit share for the year. Since the scheme was introduced skills and taking steps to encourage in1.977,a total of SEK 503M has been individual developmental potential. transferred to the Profit-Sharing The latter is based, among other Foundation. Those entitled to maxi- things, on continuous enhancement mum participation from the start of job content, training courses and have received profit share units equiv- annual professional development alent to 2,762 shares in the Bank. In discussions. During 1991 all em- addition, bonus units may have been receivedfor7986-89. ployees received a special booklet on the importance of such discussions, and 500 managers received special training in this subject.

Staff turnover.S-E-Banken Staff absenteeism, S-E-Banken Staff costs per employeein the Percent of averagenumber of employees Percent of averagenumber of employees S-E-BankGrouo SEKthousands

'1989 1990 19S1 1989 1990 1991

27 Reportof theDirectors Marketdevelopments

Slower expansionin loans out- Deposits in the S-E-BankGroup by standing market segments,December 3L In1997 the Swedish credit market was characterisedby a good increase SEKbillion Change, in depositsand a slower expansionin t99"1 1990 7" lending than over the past few years. Households 39 +28.6 This trend was governed mainly by Small and three factors- changesin the tax sys- medium-sized tem which made it more worthwhile companies 35 32 +10.0 to saveand more expensiveto bor- Major row, the high prevailing interest corporations 55 42 +30.2 rates in Swedencompared with Total 139 113 +23.9 other countries and the problems of the Swedisheconomy. S-E-Banken'sshare of depositsin Favourablesavings climate pushes the Swedish banking market, all up deposits currencies - Total deposits in SEK and foreign Aaerageend-ot'-quarler t'igures; t'or 1991 ,t'irst currencies- in the Swedish banking threequarters onlu. market rose by SEK 46 billion or 7 't989 per cent.SEK-denominated deposits Per cenl 1987 1988 7990 7991 (+5 roseby SEK26 billion per cent), Deposits from whereasdeposits in foreigncur- the public 15.4 1,5.9 16.2 76.3 17.4 renciesclimbed by SEK 20 billion Of which (+17 per cent). Househoulds 11.4 1,1.6 1,2.2 72.2 1.2.5 Depositsfrom householdsclimbed Small and at a somewhatfaster rate, nearly 9 medium-sized per cent. companies 25.1 24.9 24.4 24.8 23.9 One consequenceof the new tax Major corpor- systemis thafbanks are requiredto ations 29.3 33.2 34.6 30.7 39.5 withhold tax on the interest earnings of customers.This meantthat the vol- Smaller household loan volume ume of depositsas of December31, Total SEK-denominated and foreign 1,997was lower than it otherwise currency loans in the Swedish credit would havebeen. market grew by nearly 6 per cent, despite the problems of the financial Deposits in the S-E-BankGroup by service sector. While the lending vol- currencies,December 31 ume of the banks declined by more than 1 per cent and the loan port- SEK billion Change, "199L folios of finance companies shrank 7990 % by 16 per cent, the lending volume Swedish kronor 97 87 +11.6 of residential mortgage institutions Foreign rose by more than 17 per cent. currencies 42 26 +65.4 The new tax system had a re- Total 139 113 +23,9 straining effect on loans to private individuals in particular. While the overall volume of SEK-denominated bank loans declined by 1 per cent, Swedish kronor bank loans to house- holds fell bv 9 per cent. This reversed the expansi,onary trend in consumer loan volume over the past few years.

22 Customers were more sensitive to prevailedin recentyears. At year- fell slightly. In the corporate market, interest rates. This resulted in a more end, the total assetsof the S-E-Bank however, S-E-Banken'sloan portfolio active pricing policy by residential Croup were SEK451 billion, largely grew more rapidly than average, re- mortgage institutions. This, com- unchangedfrom 1990.At the same sulting in a substantial climb in the bined with heavier price competition time, averagetotal assetsfor the en- Bank's market share, especially in among these institutions, contributed tire year roseby 15per cent. loans to major corporati,ons. to a flow of customers from banks to The year-end loan portfolio of residential mortgage institutions. Of Loan portfolio of the S-E-Bank Svensk Fastighetskredit (SFK) the SEK 139 billion increase in the Group, by currencies,December 31 amounted to SEK 104 billion, an in- loan portfolios of these institutions, crease of more than7 per cent. Since SEK 56 billion consisted of lending to SEKbillion "t991 Change, other mortgage institutions increased households. 1990 E, their loan volumes faster, SFK's mar- Swedish kronor 183 181 +1.1 ket share fell by 1 point to 11.1 per Smaller foreign currency Foreign currencies 732 130 +7.4 cent at year-end. loan portfolios Total 315 311 +'1,.2 FinansSkandic's total loan volume The rapid expansion in foreign cur- rose by 28 per cent, increasing its rency loans over the past few years market share by 2.6 points to 9.8 per was reversed during the second Loan portfolio of the S'E-Bank cent. (These figures refer to Septem- quarter of 7997. The linking of the Group, by market segments, ber 1990-September1991.) Swedish krona to the ECU starting in December31 May 7997 narrowed the interest rate S-E-Banken's share of loans gap between the krona and other SEK billion Change, outstanding in the Swedish currencies, which in turn led to a 7997 7990 7" banking market, all currencies -3.5 shrinking market for interest rate Households 106 110 Aaerageend-of-quarter t'igures; t'or 1991,first arbitrage transactions. The decline Small and threequarters only of the U.S. dollar against the krona medium-sized also contributed to the 2 per cent de- comPanres 723 120 +2.0 percent 7987 1988 1989 1990 L991 creasein total foreign currency loans Major Lendingto outstanding in the Swedish banking corporations 86 81 +6.2 thepublic 77.4 17.2 17.0 18.0 20.2 market during 1991. Total 315 311 +-1,.2 Of which Households 71.7 72.4 12.4 12.0 71..6 Stalled growth In the Bank, the volume of loans to Small and After several years of rapid expan- households including loans in medium-sized sion, the overall 1991loan portfolio foreign currencies declined by 18 per companies 18.9 18.3 18.1 79.9 27.5 of the S-E-Bank Croup stayed at the cent compared with 1990.Since this Large corpor- same level as during 1990.After mid- figure was more than the average for ations 25.9 24.5 20.1 20.9 27.7 year, this also brought an end to the the market, the Bank's market share rapid growth in total assetsthat has

S-E-Banken'slending and deposits, Lending by various credit institutions by customer categories,1 991 SEKblllon Average balances

Lendrng

Smal and medium-szed companies, 48Ya (sAYo)

Households, 44ya (46Vo)

Others, 2% (2%)

(1990figures n parentheses)

ZJ Reportof the Directors Earningsand profitability

The goal of the S-E-BankGroup is to fasterthan averagetotal assets. interest-bearing bonds, rose some- achieveand maintain a profitability Crossreturn on assetsconsists of what during the year. Earnings on that givesits shareholdersa compet- two parts:overall interest margin the Bank's portfolio improved both itive return on their investment. Pro- (net interestearnings as a percentage becauseof the wider margin (despite fitability, measuredas the return on of averagetotal assets)plus commis- lower bond yield) and becauseof an shareholders'equity, is thus the most sionsand other operatingincome as improvement in capital gains from important financial ratio for the a percentageof averagetotal assets. bond sales. Groun. The total assetsof the S-E-Bank Net interest earnings were ad- During the 1980s,the S-E-Bank Group on an averagebasis rose by versely affected by deferred interest Croup's return on equity after 30 per SEK57 billion (+15per cent)to SEK payments totalling SEK 255M. Most centtax averagedmore than 20 per 452billion. This increasewas a result of these interest deferrals involved cent.This was higher than the aver- of growth during 1990and early loan commitments to a few large agelevel of return amongits com- 7997. companies connected with the real petitors,and at the sametime re- Sincethe Group's operatingin- estatebusiness. In addition, there presenteda good return evenafter comerose at a fasterrate (19per cent), was an estimated shortfall of SEK adjustingfor inflation.But in 1990 gross return on assetsimproved from 583M on interest -pavments for this picture changed.The Group's 3.22to 3.36per cent.This reversed unsettled claims. return on equity fell to 11.8per cent. the negativetrend that had prevailed In 7997it fell further, to 7.6 per cent. since1986. The improvementwas Sharp increase in commissions The decisiveexplanation for this due to a wider overall interestmar- The linking of the Swedish krona to negativetrend in operatingprofit is gin and very good growth in com- the ECU, successful trading when the the Croup's largelending losses. missionsand other operatingincome. Riksbank increased Swedish interest rates in December, a larger share of Good earning capacity Wider margin increasesnet interest Swedish foreign exchange trading The good growth in Group operating earnings and higher earnings at the Group's incomeover the pastfew yearscon- Net interestearnings rose by SEK international foreign exchange units tinued during 1991.Coupled with a 7,373M(+77per cent)to 5EK9,473M. are all factors that contributed to an slowerincrease in operatingcosts, Not only did averagevolume rise,but improvement of nearly SEK 1 billion the outcomewas very good growth marginsimproved in most markets. in commissions including foreign ex- in the Group's underlying earning Foreigncurrency loans accounted for change earnings. capacity.Operating profit before the most striking improvement.Mar- An unstable world situation - in- lossesrose by SEK1,625M (+30 per gins on the Bank'score deposits and cluding the Gulf war early in7997 cent)to SEK7,086M. However, oper- loans,as well as on FinansSkandic's and the tense situation in Eastern Eu- ating profit fell SEK986M or 30 per corporatelending, also widened. Dur- rope - increased the hazards of trade centcompared with 1990,because ing1991the interestrates on the with many countries. This resulted in lending lossesmeanwhile increased Bank'score deposits and loanswere higher risk premiums for payment bv- SEK2,677M. lowered four times and raised twice. services such as documentary letters The Group's operatingprofit and Takenaltogether, the Croup's overall of credit. return on equity after 30 per centtax interestmargin roseby 0.05percen- SEB International landed a number changedas follows: tagepoints to 2.10per cent. of large deals in connection with The volume of the Group's invest- corporate acquisitions and mergers, 1991. 1.991. 1990 7990 ment portfolio, which consistsof in competition with other banks and Outcome Retuin Outcome Returrr on equrty, on equrty/ SEKM % SEKM % Operating profit The S-E-BankGroup's return on equity The S-E-BankGroup's gross return before losses 7,086 23.2 5,467 1,9.4 on assets After30 percent standard tax Totaloperat ng ncomeas a -75.6 *1,949* -6.9 ^f .\/o..^^ +--^r r^^.+- Lending losses 4,760 Percent ve, uv, ,Lovq v ovc, o9o Provision for poiitical risks abroad 0 -200 -0.7 Operating r{ofit 2,326 7.6 3,312 11.8 n Including an additional provision of SEK 500M for possiblelending losses.

Gross return on assets climbing One important component in an evaluation of the Group's earning ca- pacity is the trend of its gross return on assets,i.e. total operating income as a percentage of average total assets. This financial ratio shows a positive trend if operating income is growing I989 1990 1991 24 financial servicecompanies. These Swedishbanking sector early in7990, staff benefits than before. This re- transactionsadded substantially to operating costsrose by only 2 per sulted in a cost increase of nearly commissionearnings during 1991. cent. SEK 8OM. The Group's purchaseof Scandina- The acquisition of SBG during the vian Bank Group (SBG)including Effectsof Turbo project continuing summer of 1990increased costs by- BanqueScandinave en Suisse(BSS) The programmeto reduceoperating SEK 400M in 7991.This included during the summer of 7990both in- costswhich the Group initiated in higher depreciation of goodwill. The creasedits volume and gaveit ad- the autumn of 7990continued at full restructuring of the Group's London ditional expertisein international intensityduring 7997.Itincluded units which began in 1990continued investmentmanagement. Operating such measuresas offering early re- during 1991,resulting in additional incomerose by about SEK550M in tirements,streamlining work pro- costs. Although staffing in London 7997as a result of theseacouisitions. ceduresand restructuringentire areas was cut back after the SBG acqui- TheGroup's ventures in unit- of operations.Most unitiin Sweden sition, the purchaseincreased ihe linked insurlnce and the credit and were involved in an extensivecost- average number of Group employees chargecard markets also contributed cutting project known as Turbo. abroad by 350 between 1990 and subtantially to the favourable trend As a result of thesemeasures, the 7997. of operatingincome. labour force at Swedish units was In the autumnof 1997,the Group's gradually trimmed by more than 600 units abroad began a cost-cutting Narrower profit margin or 6 per centduring 1991.The aver- programme similar to the one under While grossreturn on assetsprovides agenumber of employeesin Sweden way in Sweden. an indicationof the trend of ooer- thus fell by 250. ating income,the profit margin indi- Many effectsof the Turbo project Sharply higher loss level cateshow much of operatingincome will not be felt until1992, however. Lending losseswere more than twice is left after subtractingoperating The 1991salary agreement for the those of 1990,reaching SEK 4,760M. costs,losses and standardtax. The Swedishbanking sectorwas in line As a result, the Group's loss level - profit margin is thus a yardstick of with the recommendationsof the lending lossesas a percentage of how well the S-E-BankGroup has Covernment-appointedRehnberg year-end loans outstanding - managedto hold down its totalcosts, Commission.Including the effects climbed from 0.63 per cent in7990 including lending losses.The lower of 7990agreements, salary costs at to 1.51 per cent iniggt. (Seealso theseoperating costs and lossesare, Swedish units attributable to central the section on lending policies and the higher the profit margin will be. collectiveagreements rose by more lending losses, page 27.) From a level of roughly 30 per than 4 per centduring 1991. In the caseof loan commitments in cent,the Group's profit margin slid Comparisonsbetween 1990 and countries experiencing payment dif- to 18per centin 1990and 11per cent 7997are affected by the 1990labour ficulties, S-E-Banken applies the prin- in7991.The decisiveexplanation for disputein the Swedishbanking mar- ciple that the loan portfolio is report- this declinewas the largelending ket, which reducedthe operating ed at the value stated by the auth- lossesof the past two years. costsof the S-E-BankGroup by SEK orities or its estimated market value, At 11per cent,the increasein op- 85M that year. whichever is lower. At the close of eratingcosts during 1991was lower The new tax systemalso affected 1991the market value of this port- than during the immediatelypreced- the Group's operatingcosts. Swedish folio was.high enough that no further ing years.Adjusted for the purchase companieswere orderedto pay ross provrsron was necessary. of SBGand the labour dispute in the socialcharges on a broaderrange of After the meeting of the Board of

Balancesheet structure S-E-Banken'sinterest margins Profit margin of the S-E-BankGroup of the S-E-BankGroup Fourmonthperiods, per cent Asa pecentageo{ tota ope.alng nco-ne Averages,SEK billion

Core lending ano oeposrls

nveslmenls Botrowing in fore gn in forelgn currenc es currences Core Core renong [,/oney market l\loney b,orrowtng Overallinterest market margin rnvestments Other Long-term Other liabI ties nveslmenlSano financingcosts tnvestments Flxed-rate borrowng Lendingand F xed-rate depositsin nvestments Equityand rorergn reseryes currenctes 1990 1991 1991 1990

25 Reportof the Directors EaruvuvcsaNo ooorrroo

Directorson January28,1992, when write down the SI sharesby SEK lations,the S-E-BankGroup closed the preliminary resultsfor the S-E- 322M. out its untaxed reserves- thosemen- Bank Group were presented,certain This write-down was offset by an tioned above plus the payroll reserve eventsoccurred that were related to equally largeSEK 322M revaluation - by withdrawing a toial of SEK large loan commitments by the of the Bank'sshares in most of its 79,923M.At the sametime, it appro- Group. Parts of the Reinhold Group, foreign subsidiaries.It was possible priated SEK5,729Mto new tax equal- a real estateand construction to do sobecause the bookvilue of isationreserves. company/ suspendedpayments and theseshares had remained far below The S-E-BankGroup's tax costs the Avena property company was their net assetvalue. The reasonwas were SEK4,224M, up from SEK declaredbinkiupt. The f9g1"ac- that the Bank had not brought home 552Min 1990.Of the 199i amount. counts included provisions of retained earnings from thesesubsidi- SEK287M was attributable to ordi- SEK1.1 billion foi these commitments. anes. nary operating profit while SEK Theseevents have quite naturallv 3,937Mwas related to the with- increasedthe level of uncertaintv. but Withdrawal of reservesmeans drawal of reserves.According to the until the present insolvency neg-otia- higher taxes existing rules, banks do not have to tions are completed the Board finds Accordingto the new corporatetax pay taxesimmediately on suchwith- no reasonto make further provisions. rules that went into effect on lanuarv drawals,but may insteadpay them 7,1991,banks - like other companiei in installments over a four-year New property - appraisal may appropriateearnings toi tax periodbeginning 1n 1992. Since the At the end of 1988the value of the equalisationreserve. Banks will thus Croup will postpone its tax payment, Group's real estateholdings in Swe- no longer be permitted to appropri- a sizeabletax liability remains in the den was estimatedat more than ate earnings to untaxed reservesfor balancesheet. Group companiesnot SEK5 billion by an independentap- lending, foreign currencies,bonds classifiedas banks or othei credit praisalcompany. A new appraisalper- and interestrate risks. institutions follow somewhat differ- formed at the end of 1997estimated As a consequenceof the new regu- ent rules. their market value at slightly above SEK4 billion, a declineof approxi- mately25 per cent.The sameSwedish Sensitivity analysisof the S-E-BankGroup,s earnings properties have a book value of SEK1.5 billion. This doesnot include Impact on earnings, Impact on earnings SEK M per share, SEK * the new bank building in Rissne,out- Net interest earnings + -17o -0.24 side Stockholm,which will be ready / +/-95 +/ Commissions +/-1% -0.1.2 for occupancyin the summer of 7992. +/- 49 +/ Average change in staff +/-100 -/+ -/+0.1.0 New book values for shares persons 39 Salary increase _40 - Owing to developmentsin banking +7% 0.10 Other operating costs -/+ - markets elsewherein the Nordic +/-1% 39 / +0.70 Lending losses SEK +/-500 - - countries,S-E-Banken wrote down M / +500 / +7.26 * the book value of its shareholdingsin After 30 per centstandard tax. the other banks belonging to Scandi- navian Banking Partners- Den nor- Changes in interest rates affect earn- interest rate period ske Bank, Unidanmark and Unitas commitment ings to differinq deqreesdependine mainly related to the mon-eymarket, (holding companyof Union Bank of on*the size of tfr'ediYference'betwee"n -by fixed-interestinvestments entail a Finland) u total of SEK235M. the interest rate commitment periods substantial interest rate exposure. In the Bank's1991 accounts, the on volumesof investedand bor- Sensitivity to interest rates'can be book value of its shareholdingin the rowed funds - and what tvpe of limited by employing special risk SwedishExport Credit Corporation interest rate these volumei ire tied to. management instruments. (SvenskExportkredit) was written up Some of the Bank's investments Changes in interest rates also affect to more than half of net assetvalue. and borrowings in Swedish kronor the yield on the bond portfolio in carry interest rates This revaluationtotalled that are tied to another way. Bonds which are sub- SEK235M, various money market rates, while ject i.e.an amount equivalent to interest rate adjustments begin to the total others have fixed interest rates. The to carry a different interest write-down rate wfien of sharesin the SBP difference is far larger in the caseof their interest rate period runs out. If banks. volumes directly re-iatedto money long-term rates have risen since the ScandinavianInvestments Ltd. (SI) market rates,and their interest raie preceding adjustment date, this has a is a wholly-owned subsidiary of the maturities diverge. Interest rate sen- favourable effect on bond yield. Bankand consistsof a number of sitivity is greatest on fixed-interest During 1991,SEK 0.4 billion of the units from the former Scandinavian items, where investments are con- Bank's bond portfolio was subject to Bank Group (SBG)which siderablylarger than financingbe- interest rate adjustment.The corre- are being causeof the Bank's portFolio. restructured.When most bond sponding amount in1992 is SEK 0.2 of the loan Since the financing of fixed- billion. portfolio of SBGwas transferred to interest assetsthus carries a different the Bank's London branch office in January7997, it becamenecessary to

26 Lendingpolicies and lending losses

Greatlysimplified, traditional bank- Economicsectorst Per cent unsettledclaims totalled ing is basedon beingan intermediarv SEK5.S bil- Manufacturing jI lion net at year-end. betweencustomers-with a surplus o? Retailing and wholesaling capital and customerswith a siort- 10 Financialservices and insurance Structureof the loan portfolio in 1991 age,while accommodatingthe diver- L9 Property management and construction About 85per centof the S-E-Bank gentwishes of depositorsand bor- 3g Service and transport 13 Croup'soutstanding loans to thepub- rowers with regard to amounts, Private individuals 9 lic consistof lendinf in theSwedish maturities and other terms. Lending * market.The Group'l year-endloan is thus a natural and important pari Beforerecoveries on loanspreviously written down and withdrawal from portfoliowas distiibuted as follows: of a bank's total customer relation- specialreserve for possiblelending losses ships. Per cenl Of necessity, banking involves vari- Size of losses Retailing and wholesaling, industry, ous kinds of risks - mainly lending service and agriculture 50 risks, Number Total amount but also interest rate and Mortgage and construction loans g4 Lessthan SEK 10M ca 8,800 2,030 foreign currency risks. Each office of Loans to private individuals, SEK 10 - lOOM 66 1,553 S-E-Banken,like those of other banks. excluding mortgage loans 10 sEK 100- 300M thereforehas a certain definite ceiling 3 413 Insurance companies, finance More than or limit on the size of loans it is en- SEK 300M 3 companres etc 3 Lessrecoveries - titled to approve. Applications for 188 Miscellaneous 3 and withdrawal loans exceedingthis limit are re- from special reserve for 100 ferred to a higher level. The very possiblelending losses - 500 largest loans are approved by the Aside from mortgage loans to pri- 4,760 Bank's central Board of Directors. vate individuals and companies, property Ioansare also iniluded in The individual write-downs of SEK Improved loan processing other categories in the table. In 300M or more are for loans to the all, The S-E-BankGroup experienceda property-related lending - property companiesAvena (SEK i.e. loans rise in lending lossesstarting whose purpose is acquisltion 9ha1p 625M)and Reinholds (SEf 4ZSl4r) of prop- in 1990.During 1991 the Bank took erty etc or where property and to the finance companv is the col- a number of steps to help prevent a Gamle- lateral- comprises staden(SEK 352M). about half of the continued increase.This included !1! Bank Group's total lending of introducing clearer portfolio policies, SEK 315 billion. Interest defermentsof SEK 255M including carefully formulated goals In order to help a number concerning the Group's maximum of cus- Small business and start-ups: tomers get through the economic exposure to property, shipping and big credit risk slump, the Group has approved local government loan commitments. During 1991the Bank conducted a interestdeferments on loanstotalling The Group also intensified the train- study of all lending lossesof SEK SEK4.1 billion net. In the ing programmes for credit analysts 1991 0.5M or more at branch offices. accounts,unpaid interest that it had begun earlier. due on Among its findings were that theseloans amounted to During 1991the Group also devel- SEK2S5M. companies with fewer than 10 em- During 7992,interest deferments oped a computer-based system for ployees accounted for two thirds of basedon agreementsin effect analyzing loan applications from at these lending lossesand that com- year-end1991 will result small and medium-sized companies. in an esti- panies established in 1988 or later mated income shortfall of SEK 257M. Its purpose is to provide support and accounted for 30 per cent of losses. In addition, the interest shortfall guidance to loan officers at SEB Swe- on unsettledclaims was estimated den's branch network, while ensur- at Write-down process in four stages SEK583M in1997.The Group's ing that these loans comply with the net The procedure of making write- lending policies established by the downs and provisions begins with a Bank. The system will begin to be in- The S-E-BankGroup's lending losses selection.The loan commitments that stalled at branch offices during the and year-endlending volume are examined are: autumn of 7992, and users wifl o Unsettled claims - i.e. loans where undergo a brief training programme the borrower has gone bankrupt, sus- at the same time. pended payments or not paid interest and/ or principal for two months. Property companies and small o Loan watches - i.e. loan commit- businesses hardest hit ments which can be regarded as The Group's lending lossesduring possible lending losses"forvarious 799'l were distributed as follows: reasons. Here the rule is that all loans exceeding SEK 1M should be Businesssegments* Per cent reported to the regional management Small and medium-sized companies 60 committee if at least one of the fol- Major corporations 37 lowing criteria is fulfilled: Private individuals 9 1. The company has an equity/assets ratio of less than 10 per cent.

27 Repqrtof the Directors poLtcTFS LE\DI\C ono arto,** Treasury

2. The company shows negative earn- Strongercapital base financingbut alsoto achievethe ings for one of the past two years. In recentyears S-E-Banken - with the cheapestpossible financing. On all 3. The company is newly established aid of good profits,new shareissues reporting dates sincenew inter- (younger than two years) or is a new and subordinateddebentures - has nationalcapital adequacy rules went customer in the Bank. built up a strongfinancial position. into effectin Februaryi990, the 4. Collateral is insufficient. At year-endthe Croup's risk capital Group hasalso exceeded the mini- 5. The company has been granted a amountedto SEK31.7 billion. This mum capital requirement that will temporary easing or postponement capitalbase is managedby the Bank's becomemandatory only at year-end of interest payments. Treasuryunit, which is alsorespon- 7992.Thecapital base was so strong 6. The borrower's repayment ca- siblefor the Group's short-and long- in7997 that the Bank could even pacity is considered uncertain for term borrowing, foreign exchange haveexercised its option to acquire other reasons. and interest rate risks, liquidity man- 28.2per cent of the sharesin Skandia The offices divide up their loan agementand portfolio management. without capitaladequacy compliance watches into three categories - A, B To further strengthenthe Group's problems. and C. For loan commitments in cat- capitalbase, during 1991the Bank egory C, where there is believed to issuedsix subordinateddebenture Higher liquidity be an obvious danger of a lending loans in the international market In order to strengthenthe Group's loss within the next few years, only with a total value equivalent to SEK liquidity, 19bond loanstotalling the the regional management can ap- 2.2billion. The issueof a domestic equivalentof SEK3.8 billion were prove an increase in the loan amount zero couponbond loan contributed issuedin the internationalcapital br a change in the collateral. an additionalSEK 1 billion. market. The second stage consistsof apprais- At year-end 1997,the S-E-Bank Comparedwith 1990,when S-E- ing the collateral.This appraisal is per- Group's total capitalratio amounted Bankenissued more than SEK20 formed in compliance with the direc- to 70.7per cent,representing an in- billion worth of subordinateddeben- tives of the Finlncial Suoervisorv creaseof 1.6percentage points since turesand bond loans,the volume of Authority and is basedon a conserva- December1990. This improvement long- and medium-termborrowing tive market appraisal of the col- was primarilv due to an increaseof was not especiallylarge during 1991. lateral. The amount that remains SEKr.6 billion in the capitalbase, but This was mainly becausethe Bank after the value of the collateral has alsoa reductionof SEK 1.7billion in had taken advantageof the good been subtracted from the loan the capitalrequirement. The overall conditions prevailing in the market amount is the Bank's risk exnosure. effectwas that the Croup's capital during 7990to undertake extra large The third stage in the write-down surplusrose bv SEK4.3 billion to borrowing. The Bank'sfinancing process is appraisingthe borrower.This SEk7.9billion. This surplusis equiv- requirementswere consequently includes a thorough analysis of the alentto an expansionof approxi- not so large during 1991. comDanv's financial statements and mately 40 per centin total assetsat At the sametime, the economic figuies for the current period in currentaverage capital requirements. problems of the Nordic countries and order to make an assessmentof the The corecapital ratio was 6.7per ihe severeplight of a number of borrower's payment capacity on the centat year-end.This level exceeds Nordic banksmeant that it was not basis of cash flow, earnings and net the Group's establishedtarget and is as easyas beforeto find investorsfor assetvalue data. alsogood in internationalterms. debt instrumentsof Swedishbanks in In the final stage, the loan commit- The level of capitaladequacy is im- the internationalcapital markets. It ments in question are divided up into portant not onlv to enablethe S-E- thus becamemuch more important incurred losses,prouisions t'or possible Bank Groun to varv its sourcesof thanpreviously for S-E-Banicento lossesand loan commitmentswhere proaisionsto reseraesnre not considered necessary. Swedish and international interest rates Interest rate movements in Sweden Incurred lending lossesare those I B0 day maturity,per cent l\,4onthlyaverages, per cent resulting, for example, from bank- ruptcies, composition agreements or similar creditor arrangements where the amount of assetsto be distributed has been fixed. Loan commitments where there are other very strong ar- guments for a write-down are also reported as incurred losses. Possible lending lossesare those where the Bank believes that bor- rowers cannot fulfill their pavment obligations. Provisions foipossible lending lossesrepresent by far the largest category of total lending Iosses - 77 per cent.

28 present a clear image of itself to insti- it lowered this rating a further step, rating is very good in an inter- tutional investors abroad. These mar- to Aa2. national comparison. keting efforts, which are also aimed In January 79925-E-Bankenwas A high rating leads to lower costs at reducing dependence on the inter- againplaced on Moody's watchlist, and good opportunities for borrow- bank market and increasing inves- at the sametime asthe other maior ing in the international capital tors' deposits in the Bank, are being Swedishbanks had their credit market,at thesame time as it means further strengthened during 1992. ratings lowered. One month later, greater security for the Bank's cus- S-E-Banken's short-term bor- Standard& Poor'slowered its rating tomers. In order for S-E-Bankento rowing base was broadened during of S-E-Banken'slong-term inter- maintain its leading position in the 7997 after changes in U.S. banking national borrowing from AA to AA-. long term, it is therefore very impor- regulations made it possible for the Even after the downgradings of tant to have the best possible rating. Bank's New York branch office to the past year, however, S-E-Banken's issue certificates of deposit in the American market. At year-end the Capital adequacy value of the Bank's outstanding CD's Capital requirement, SEK M totalled USD 2.5 billion. On the same date, the branch office's outstanding" Dec.37,7997 volume of short-term commercial The Bank The Group paper was USD 1.7 billion. Risk category Assets Risk-weighted Assets Risk-weighted The liquidity of the bond portfolio amount amount also increased, becausebondholdings declined as a percentage of assets 07a 146,367 0 87,036 0 while holdings of Treasury discount 207o 1,07,758 120,808 24,162 notes and German and American 50% 29,873 74,906 111,847 55,923 government securities increased. 100% 156,386 1,56,386 217,805 217,805 Duration, a yardstick of the risk TotaI 440,324 192,844 537,496 297,890 level of the portfolio, continued to Requirement 8% 75,428 23,837 fall and was 1.5 years at the end of 1991compared with 2.3in1990. Dec.31, 1990 The Bank The Group Lower rating Risk category Risk-weighted Assets Risk-weighted For many years, S-E-Bankenenjoyed amount amount a first-class rating for its international 0% 1,05,676 0 63,566 borrowing. But the growing prob- 0 20% q6 1)1 1q ))q 778,354 lems of the Swedish economy and 23,671 50% 27,551, 10,775 101,055 the related increasein the Bank's lend- 50,527 700% 182,985 182,985 )Lq 1)7 ing losseshave led to a downgrading of its creditworthiness over the past Total 406,337 212,985 528,502 319,725 "17,039 year. In January 1991Moody's Inves- Requirement B% )q 17R tors Service lowered its rating of the Capital base,SEK M* Bank's long-term senior debt bor- rowing from Aaa to Aa1. In August Dec.31.,7997 Dec.31, 1990 The Bank The Group The Bank The Group .14 Taxed equity 73,454 tgg 4,667 5,537 Capitalbase according to new rules Minority interest 0 0 0 300 Suppementary Untaxed reserves 3,488 6,457 17,975 14,853 Uorecaprlal captal') Minus goodwill 0 -1,,206 0 -1 444

70 percent of ii Total :tt,rt,::trlt.t:i:::i:,tttr,:l core capital 16,942 19,844 1.6,582 19,246 ta equalistion Otherreserues reserue andsuoole- : - mentary'capital' Subordinated extra by pemission depreciatlon oTile uovern- debenture loans 70,874 12,325 9,498 10,830 on eouomenl ment leasedio Minus shares in uncon- clients solidated companies -477 -779 -978 Total capital base 27,405 31,742 25,361. 29,-t58 Subordinated debt,whiah Equiqr maynot oxc€d Surplus I ?)) 50 perrent of l 77,977 7,977 3,580 aore €pital Total capital ratio 74.2% 70.77a 77.9% 9.1,% Core capitai ratio 8.87o 6.7% 7.87o 6.0% Deductons * After appropriations

.) Suppementarycapital may not exceedcore captal less goodw ll

29 Report of the Directors Other eventsin199l,

Changesin the organisation resentative office in Berlin is being reorganised During 1991the into a branchoffice of S-E-BankGroup was the subsidiary reorganisedinto two bank in Frankfurt, divisions,5EB which changed Sweden its nameduring 1991 and SEB International, each from Deutsch-Skandinavische governed by Bank its own management AG to Skandinaviska committee. Roger Enskilda Holtback, also BankenAG. Head of the Goteborg group, was ap- pointed chairman of SEB Sweden Resolution ofr the Skandia while the chairmanship of SEB Inter- affair national was assumedby Bo C E Ramfors, Group Chief Executive. In October 1990 S-E-Bankenacquired SEB Swedenlncludes the opera- an option to buy 27,685,080shaies in tions of the three central offices in the insurance company Skandia Stockholm, Gdteborg and Malmci, Group Fcirsdkrings AB, equivalent to the ten geographic regions and their 28.2per cent of share capital. The respective branch office networks agreed purchase price was SEK as well as the Bank's Swedish sub- 4,717M or SEK 277.50per share plus sidiaries. a price supplement of 72 per cent an- SEB International comprises the nually minus dividends received on operations of the previous SEB Inter- shares until the option was exercised. national, plus the foreign network, After a year of ?ruitless nego- Treasury & Trading and Enskilda tiations, S-E-Bankendecided to re- (equity trading, corporate finance duce its option holding. In November and mutual fund and assetmanage- the Bank reached agreement with ment). two insurance companies, Norway's At the end of 7991the Bank, which UNI Storebrand and Denmark's had owned 58 per cent of the credit Hafnia, to sell them most of the and charge card processing firm option, equivalent to23.3 per cent of Kortbetalning Servo AB, sold 10 per the share capital in Skandia, for SEK cent of the companv to the Swedish 4 billion. There was a difference of banking groupbota. SEK 415M between this sale price The number of branch offices was and the originally agreed purchase reduced by 14 and totalled 326 at price for the portion of the Bank's year-end, mainly due to closures and option holding being divested. This mergers in the Stockholm, Goteborg amount was reported in the 1991 and Malmo metropolitan areas. accounts as an extraordinary cost. FinansSkandic sold its bill collec- The agreement also specified that tion subsidiary Finanslnkasso to the the Bank and the two insurance company's Managing Director. companies will objectively examine Early in 79929-E-Banken decided the potential for joint Nordic co- to be the first Nordic bank to open a operation in banking and insurance. branch office in Tokyo. It is expected To manifest its commitment to such a to begin operations during the sec- link between these two lines of busi- ond half of 1992, initially focussing ness, the Bank thus decided to mainly on foreign exchange trading acquire its own 4.9 per cent stake in and money and capital market trans- the share capital of Skandia. This also actions. S-E-Bankenhas had a repre- ensured a basis for continued dia- sentative office in Tokyo since 1971. logue on possible co-operation with The new branch office requires the Skandia. approval of Swedish and Japanese In January 7992 the Bank received authorities. Government permission to acquire At the end of 7991.a Luxembourg 4.9 per cent of the shares in Skandia. branch office was establishedto The option was written down by supplement the operations of the sub- SEK 76M, which was reported in sidiary bank Skandinaviska Enskilda the financial statements as an extra- Banken (Luxembourg) S.A., in the ordinary cost. This amount is equiva- same way as had been previously lent to the difference between the done in New York and Singapore. price that the Bank paid to the seller During the first half of 7992 the rep- of these shares and the price the Bank

30 received for the shares included in its During the spring and summer of Early in 1992Nobel demandedthe sale of most of the Skandia option to 1991the financialsituation of Gamle- repaymentof assetsthat UNI Storebrandand Hafnia. included the stadendeteriorated, and in August SEK 1.6billion that the companvhad the companyannounced that ii so far M ai or insur ance paid to Gamlestaaen.inii ae- 7)enture would have to make substantialpro- mand was rejectedby Gamlestaden visions At the sametime asit resolvedthe for possiblelending losses. and the banks,however. Due Skandiaaffair, the Bank alsodecided to the equity/assetsratio guaran- to expandits own life insurance tee,this developmentimplied an im- New directors and officers operationsunder mediate risk that Nobel would sus- the nameSEB Four new join Forsdkring. pend payments.In order to ensure directors the Board the At S-E-Banken'sAnnual General The basisfor this large-scaleven- continuedoperations of Gamle- Meeting on April 24,7997,three for- ture is the unitlinked ilrsurance stadenand Nobel, late in the summer mer Deputy Directors - GciranAhl- company Aktiv Fors:ikring, which an agreementwas therefore reached strcim,Managing Directorof Syd- theBank established in co-operation betweentwo bank consortiaheaded by S-E-Banken(Gamlestaden) kraft, Rune And6rsson,Chairman of with the investmentcompanv Custos and Nordbanken (Nobel), Trelleborg,and LarsOberg, Manag- 1990.Early in February1992 respectively, 4gtlg and Gamlestaden, ing Directorof Custos- aswell as- S-E-Bankenexercised its option to ac- Nobel and Yggdrasil. Mauritz Sahlin,Managing Director of quire Aktiv Forsiikringfrom Custos For SKF,were electednew Directors. at a cost of SEK 123M.Around the Nobel, this agreementmeant a capital injection Pehr G Gyllenhammar, Chairman of sametime, a permit application was in the form of a new shareissue Volvo, was electeda new Deputy submitted to the authorities to estab- totaling SEK4.7 billion. S-E-Banken Chairman as well as Chairmin of the lish a traditionalIife insurancecom- togetherwith Nord- banken, GoteborgBoard of Directors.Gunnar pany that will provide all types of SvenskaHandelsbanken and Skoog,Managing Director of Skoogs retirement annuity and endowment SwedBanksupplied SEK2.T billion of this amount by converting Foretagsgrupp,was electeda new insurances,health insurancepolicies Deputy Director. etc. This venture will their claimsinto correspondinghold- involve doubl- ClasBlix, Deputy Auditor, was ing the number ings of preferenceshares in Nobel. of salespeople,which electedan Auditor and Lars Bonnevier totalledmore than 100at year-end The nominal value of S-E-Banken's shareholdingin Nobel is SEK575M. was electeda new Deputy Auditor. 7997. Bjcirn In the caseof Gamlestaden,the Stensonwas appointed by the Financial solutionwas that the 14banks in the Supervisory Authority as a GamlestadenandNobel "Co-operation new Coirsortium" together Auditor. In the autumn of 7990,non-bank formed a company called Gamle- In October1991, Ingegerd Troedsson finance companies in Sweden lost stadenIntressenter AB (GIAB).GIAB resignedfrom her position asa Deputy the opportunity to finance their busi- took over Nobel's and Yggdrasil's Director of the Bank after shehad been ness operations by selling short-term sharesin the company,which added electedSpeaker of the Riksdag. debt certificates. As a result, the up to an 87.5per centstake. It was finance company Gamlestaden ended agreedthat Nobel and Yggdrasil Three new Group Executives In up in an acute liquidity crisis. The fulfilled their obligation in terms of January1991 Roger Holtback, for- mer seven banks that had previouslv the equity/assetsratio guaranteeby Managing Director of Volvo Car Corporation issued its debt certificites approved writing off certain claims and sup- and memberof Volvo,s a new collateralised consortium loan plying a conditionalshareholder-s' Croup ExecutiveCommittee, became of SEK 6.5 billion. Among the terms contributionof SEK2.3 billion. Head of the Bank'sGoteborg gloup. of the loan was a joint guirantee by Early in 7992GIAB,which had in- _ At the end of January Arne Ogren, former Gamlestaden's two main owners, ihe creasedits holding to more than 90 Managing Director of the diversified chemicals group Nobel per cent following the agreement, subsidiaryFinansSkandic, became Industries and the investor Erik submitted a public tender offer for Head of the Stockholm group. Penser'sholding company Yggdrasil, the remainingshares in Gamlestaden Latein the summerGerard De that the equity /issets ratio of bamle- while also taking stepsto implement Geer,who was Chairmanof Enskilda staden wouldbe maintained at16per a compulsory redemption. At the until the end of the year, left the S-E- Bank cent or higher at all times. Nobel ind sametime, the partnersin GIAB ap- Group ExecutiveCommittee Yggdrasil undertook to cover any provedthe restoral of the company's and was succeededthere by Carl- " Diedric shortfall on a joint basis by meatrs sharecapital, provided that it ic- Hamilton, Chief Executive of shareholders' contributions or quiresall sharesin Gamlestaden. Officer of Enskilda. subordinated debenture loans. This meant that the banks undertook In March 7997, Gamlestaden's 14 to make conditionalwrite-downs of creditors formed a new consortium SEK2.2billion. S-E-Banken'sportion which also received guarantees con- amountedto SEK352M, and this cerning the company's equity/assets sum was reportedas a lending lossin rauo. the 1991financial statemenrs.

31 S-E-Bankenshares

Sharecapital At year-end 7991,the sharecapital of S-E-Bankenwas Data per share divided asfollows: 1987 1988 1989 1990 1991 Shareseries Number Percentage Percentage Earnings per share of share of voting - after 307o capital power standard tax, SEI( 1) 10.93 12.61 11..56 7.61 4.50 244,082,887 92.6 96.9 - A unrestricted * after full tax, SEK 1) 9.58 11.47 11.53 6.86 5.04 6,530,370 2.5 2.6 C unrestricted 1,2,846,467 4.9 0.5 Adjusted shareholders' 263,459,664 equity per shareI, 556 r,z) 94.34 69.25 74.46 80.11 83.47 100.0 100.0 * Adjusted shareholders' Held by Den norske Bank (Norway), Unidanmark (Denmark) and Union Bank of Finland. equity per share II, SEK 1,2) 78.50 83.33 87.93 89.90 Dividend Eachshare has a nominal value of SEK10. Each Series A - 3) per SeriesA share,SEK 2.13 2.55 3.00 3.30 3.35 shareentitles its holder to one vote,whereas one SeriesC - per SeriesC share, SEK r) 3.00 3.30 3.35 shareentitles its holder to 1/10 vote. Year-end market price S-E-Banken'sshare capital -perSeriesA share,SEK 61.00 86.00 91.00 56.00 52.00 SinceS-E-Banken was establishedin7972,its - per SeriesC share, SEK 103.00 57.00 52.00 share- holders' equity has been increasedby the following new Dividend per SeriesA share as a percentage of snarelssues: - earnings per share (30% tax),7o 19.5 20.2 26.0 43.3 74.4 Price Total increase - adjusted sharehoiders' 7975 1:5 SEK125 SEK135M equity I per share, To 3.9 3.7 4.0 4.7 4.0 1976 7:6 SEK140 SEK152M - market price per 7981 18:10 SEK110 SEK167M SeriesA share, Vo 3.5 J.J 3.0 5.9 6.4 1983 1A:5 SEK160 SEK642M Year-end market price per SeriesA share 1986 14:15 SEK90 SEK723M (paid up in^1987) - divided by earnings per share 7990 Directed SEK88.42 SEK577M (30%tax) = P/E ratio 5.6 6.8 7.9 7.4 11.5 - as a percentage of adjusted The first five issueslisted above were rights issues.In equity I per share 112.2 124.2 1,22.2 69.9 62.3 1,982,a bonusissue of one SeriesA sharefor five old shareswas carriedout, increasingshare capital by 1) After full conversion of convertible debentures, startins in 1988. SEK167M. In 1989the Bank carriedout a bonusi-ssue 2) Seethe definition on the inside front cover. of 3) According to the Board's proposal. nine SeriesA sharesand one SeriesC sharefor ten old shares,increasing share capital by SEK1,285M. Through splits in 1977(2:1) and1984 (5:1) the nominal value of a sharehas changed from SEK100 to SEK10.

per Earnings S-E'Bankenshare* Market price of S-E-Bankenshares Growth of S-E-Banken'sdividend Averagepurchase price, After30% standard tax SEK Index1985=1 00 SEK

T10

100

General Index

S-E-Banken shares

40 T9B7 1988 1989 1990 1991 1987 19BB 1989 1990 1991 .As defined by the Swed sh Source Findata Bankers'Association

JZ Distribution of sharesby size of holding S-E-Bankenshares on the Stockholm Stock Exchange Size of holding Number of shares Number of 1987 1988 1989 1990 1991 shareholders Year-end market capitalisation, 1- 500 28,202,542 70.70 748,395 SEK M 15,711 22,734 23,527 74,789 13.700 q Volume of share 501- 1,000 73,81,3,775 1A 18,574 trade, sEK M 1,001- 2,000 16,834,757 6.39 1"1,758 2,747 7,876 3,227 2,077 3.254 2,001,- 5,000 20,955,855 7.95 6,933 5,001-10,000 70,898,870 4.74 1,567 The 20 largest 10,001-20,000 7,578,263 2.88 533 shareholders 20,001-50,000 6,369,851, 2.42 208 Number of shares Of which, Percentage 50,001-100,000 4,929,470 7.87 69 SeriesC of all 100,001- 153,863,678 58.40 135 shares 1? ?r?x AB Custos (investment company) 27,535,375 Total 263,459,664 100.0 8.17 788,172 Knut and Alice * Unexchanged share certificates and unclaimed bonus issue shares. Wallenberg Foundation 74,318,680 640,934 5.43 Forsiikringsbolaget These figures are based on the public shareholders, register for S-E-Banken SPP maintained by the Swedish Securities Register Centre iVdrdepapperscentra_ (pensioninsurance) 11.,920,996 24,879 4.52 len, VPC) and are dated Artgust 2-1,1991 . Li vforsdkrings AB Skandia (life insurance) 9,098,124 66,300 J.rt3 Of the approximately188,000 shareholders of S-E-Banken, Trygg Omsesidig Liv about2 per centare institutionalinvestors. They account (life insurance) 8,647,974 ?R) qA4 3.28 for more than 60 per cent of the Bank's total shires. S-E-Bankens Allemansfonder 1-4 (national Dividend policy public share savings funds) 6,249,485 8,067 2.37 It is the goal of S-E-Bankenthat the dividend paid to its Skandinaviska Enskilda shareholdersshould increaseat a faster pace than in- Banken Profit-Sharing flation.Owingto the declinein earningJduring 1991,this Foundation 5,357,791 377,982 2.03 was not possiblethis year. * The Bank's pension funds 5,272,000 200,000 1.98 National Pension Insurance Convertible debentures Fund, Fourth Fund Board 4,815,400 261,800 1.83 A convertibledebenture loan of SEK1.2 billion was is- Investment AB Cardo 3,178,480 1.21 the employees ry"d_tg of the S-E-BankGroup in 1988. Union Bank of Finland 2,902,264 1.10 The debenturecertificates carry fixed interest of 8.25per Trygg-Hansa Forsiikrings AB cent annually and may be converted into SeriesA shares (insurance) 2,700,950 101,332 1.03 during the period 1990-june1995. June The conversion AB Export-Invest 2,000,000 0.76 price is SEK 79 per share.In the event of full conversion, S-E-BankenShare Savings Fund 7,970,600 0.75 the number of sharesin S-E-Bankenwill increasebv Fcirvaltnings AB Providentia 15.2million, equivalentto lessthan 6 per centof the (investment company) 1,900,000 0.72 presentnumber of shares. AB Investor 1,900,000 0.72 Den norske Bank 1,841,654 0.70 Unidanmark A/S 1,,786,477 0.68 AMF Arbetsmarknads- forsdkringar, pensionsforsdkring (pension insurance) 7,777,491 0.67 Forvaltnings AB Oresund (investment company) 1,685,000 0.64 " Stockholms Enskilda Banks Pensionsstiftelseand Skandinaviska Bankens Pensionsstiftelse.

According to the Bank's Articles of Association, no one may vote for more than 2 per cent of all shares in the Bank. This means that each of the seven largest share- holders at year-end had their voting poweireduced to 5,269,793votes.

JJ Accountingprinciples

Consolidated accounts In translating the financial state- TheS-E-Bank Group includes Skan- ments of foreign subsidiaries, the dinaviska Enskilda Banken and those current rate methodis used. Balance companies in which the Bank directly sheet items, except shareholders, or indirectly has more than 50 per equity, are thus translated using the cent of the voting power. The con- exchange rate prevailing on the bal- solidated accounts do not include ance sheet date. Shareholders' equitv companies which the Bank has taken is translated using the exchange rate over for the protection of claims. on the date of the respective invest- The consolidated balance sheet has ment or the date on which income been prepared accordingto the pur- was reported. Items in the profit and chasemethod of accounting. This loss statement are translated accord- means that the book values of shares ing to the average exchange rates in subsidiaries are eliminated against during the year. the amount of equity of each sub- Since different items in the sidiary at the time of acquisition. In financial statements are translated at connection with acquisitions in different exchange rates, exchange Sweden, a deferred tax liability of differencesarise. These exchange 30 per cent has been charged to un- differences are not recorded in the taxed reserves.Outside Sweden, this consolidated profit and loss accounts has been done at the tax rate prevail- but are directly included in share- ing in each respective country. holders' equity, distributed between Each subsidiary's contribution to statutory and free reserves. consolidated shareholders' equitv is The Bank'ssssets and liabilitiesin thus only the equity capital t6at has foreign currencies,aside from shares been created after acquisition. Excess in subsidiaries and corresponding values arising on elimination of financing, are translated at the ex- shares in subsidiaries are allocated to change rate prevailing on the balance the assets of the respective company sheet date. The average of buying or are shown as goodwill. These ex- and selling rates quoted in Sweden cessvalues are depreciated according is used as the exchange rate on the to their estimated economic lifespan. balance sheet date. For some goodwill this means a le- Liabilities in foreign currencies preciation period of 5 years; for most intended for refinancing of shares goodwill 10 years; and for property in subsidiaries are translated at the (real estate) during its remaining exchange rate on the date incurred. -period of use. The net amount of unrealised gains The profit and loss accounts and less unrealised lossesfrom forward balance sheets of foreign subsidiaries foreign exchange contracts on the have been drawn up according to the balance sheet date has been carried accounting practices prevailing in forward in its entirety. each respective country. When pre- paring the consolidated financial Depreciation statements of the S-E-Bank Group The Bank's oft'iceequipment is depre- these statements have been adiusted ciated according to a schedule. The to reflect the accounting principles of difference between scheduled der:re- the parent Bank. ciation and depreciation for tax pur- poses is reported as an extra depre- Valuation of assetsand liabilities in ciation reserve. Bank premisesare foreign currencies depreciated at the highest percentages Each respective subsidiary translates permissible for tax purposes. assets and liabilities denominated in a currency other than the local one at an exchange rate based on the aver- age of the buying and selling rates quoted in Sweden on the balance sheet date.

34 Equipment leased to clients is dep- assets,condition and location. An Taxes reciated in annuities, based on "Taxes" a equivalent valuation of properties The item in the profit and conseruativelyestimated residual taken over for protection ofclaims is loss statement includes the estimated value at the end of the contract undertaken. Any necessarywrite- tax on business operations and the period, according to earlier experi- down is reported as a lending loss in total tax on funds withdrawn from ence. For leased equipment that can- this case,too. untaxed reserves in7997. Propertv not be sold in a functioning market at Extra depreciation of equipment tax is reported as an operating coit. the end of the contract peri"ocl,the leased to clients due to the lease- scheduledresidual value is zero. holder's inability to make payments Tax equalisation reserve is also reported as a lending loss. Banks are required by law to restore Reporting of lending losses, Provisions for political risks their untaxed reserves to taxable unsettled claims and deferred abroad are madeln the requisite status during1997. The taxes will, interest payments amounts in accordancewilh either however, be payable over a four-year Actual lending lossesincurred the Financial Supervisory Authori- period fi991-199r. (directly "tax written off) during the year ty's recommendation or the market A equalisation reserve" has and provisions for possible lending price quotation, whichever is lower. been introduced as a replacement losses are reported as lending losses. Information on unsettledclaims is for these appropriations. Briefly, it The loan portfolio is reported on a provided in connection with each re- enables companies to make appropri- net basis, i.e. after subtracting provi- spective assetitem. Unsettled claims ations to an untaxed reserve based sions for possible lending losses.The are defined as loans that are more on either payroll or shareholders' gross amount is reported separately than 60 days past due or where other equity after certain adjustments. The in a note to the financial statements. circumstances give reason for uncer- S-E-BankGroup's appropriations are The general reserve for political risks tainty as to whether the loan will be based on shareholders' equity. abroad is reported on a gross basis repaid. In caseswhere these loans are among liabilities in the balance sheet. believed to involve a lending loss Valuation of interest-bearing debt Incurredlending lossesare those risk, provisions for possible'iending instruments losseswhose amount is regarded as losseshave been made. The remai- The Group's bondholdings and hold- finally established, for example in ning amount described as unsettled ings of other interest-bearing debt bankruptcy proceedings, through the clairns is thus not an exr:ression of instruments are divided into a acceptanceof a composition proposal lending loss risk in the ioan portfolio. trading and an investment portfolio. to creditors or through other re- Information is also provided on the The trading portfolio is valued at mission of claims. amount of loans for which interest market price on the balance sheet A provision for a possibleloss is defermentshave been granted, date, and the resulting gain or loss is defined as the difference between the compared with the original terms of reported as part of net interest earn- loan amount and the amount that is the loan. These items refer to loans of ings, along with interest income and expected to be recovered, taking into at least SEK 1M on which the interest gains or lossesrealised on an ongoing account the repayment capacity of rate has been lowered to less than basis during the year. the borrower and the value of the market level. Information on the The investment portfolio is valued loan collateral. A provision is made if affected loan volume at year-end at the market price on the balance * interest or principal is more than 60 1991 and on the estimated impact of sheet date. The resulting gain or loss days past due or other circumstances interestdeferral agreementson earn- is shown as an appropriation to, or a give reason for uncertainty as to ings (income shortfall) during 1991 withdrawal from, a special value ad- whether the loan will be repaid and and7992 is also included. justment account for tonds, which is - it does not appear possible to im- Loan terms are renegotiated in reported on a net basis against bonds prove the borrower's repayment order to enablea borrower experi- in the balance sheet. The investment capacity sufficiently within two encing temporary payment difficult- portfolio is thereby presented at the years ano ies to resume pavments at a normal lower of cost or market value. - the value of the collateral does not level. Defermenis a.e granted only if cover the amount of the loan. there are good prospects of a turn- Changes in accounting principles The value of the loan collateral is around in the borrower's situation. The 1990financial statements have calculated on the basis of its market They are also normally granted on been adjusted to 7997accounting value. If the collateral consists of a the condition that if all goes well, the principles. Certain figures in the property mortgage deed, the valu- borrower will also repay the deferred accounts have therefore been placed ation is based on a conservative esti- amounts to the Bank. in new categories. mate of market value, taking into account the property's return on

35 Profitand loss accounts Noteson pages 38-41.

The S-E-BankGroup S-E-Banken

1991 1990 Change 1991 1990 Change SEKN/ SEKM TO SEKM SEKM a/n Operatingincome Netinterest earnings Note 1 9,473 8,100 16.9 7,550 6,084 24.1 Commissions,fees and foreignexchange earnings . Note2 Domestic operations 3,.161 2,458 28.6 2,130 1,679 26,9 Internationaloperations '1 1,698 1,470 tc.c ,161 1,068 8.7 4,859 3,928 23.7 3,291 2,747 19.8 Other operatingincome NoTe3 825 ot4 22.4 455 567 -19.8 Total operating income 15,157 12,702 19.3 11,296 9,399 20.2 Operatingcosts Staff costs Note4 4,202 3,750 12.1 3,007 2,747 9.5 premises Costsfor Note 5 IOI 678 |,t.z 885 770 14.9 Otheroperating costs Note 6 2,552 ZTJJV 9,1 1,401 11.0 Depreciatlon Note Z 550 474 15.9 217 244 -1'1.1 Totaloperating costs beforelosses 8,071 7,241 11.5 5,664 5,162 9.7 Operating profit before losses 7n086 5,461 29.7 5,632 4,236 33.0 Lendinglosses 4,760 1,949 144.2 4,2t6 1,486 187.9 Provisionsfor politicalrisks abroad 200 186

Operatingprofit 2,326 3,312 - 25.8 1,354 2,564 - 47.2 Extraordinaryincome and cosfs Extraordinaryincome NoteI 120 14 95 lJo - 30.1 Extraordinarycosts ,-- Noie I 624 406 53.9 499 171 Profit before appropriations and taxes 1,822 2,920 - 37.6 950 2,529 -62.4

Appropriations Note10 +12,87O -t,t t\t +12,439 -1,4O1 Taxes Note11 -4224 - 552 - 3,851 -128 Minorityinterests - to +9 Reported profit for the year 10,453 604 9,538 1,000

36 Balancesheets December31 Noteson pages41 * 49.

TheS-E-Bank Group S-E-Banken

1991 1990 Change 1991 1990 Change SEKM SEKM a/o SEKM SEK IVl v. ,4ssefs Cashholdings and compulsory cash reserves Note12 2,867 3,929 - 25.1 2,836 3,821 - 25.8 Tradingportfolio Note13 10,684 5,442 Investmentportfolio Note13 35,440 34,227 3.5 26,809 29,762 - 9.9 Depositedwith Swedishbanks 14,330 26,863 - 46.7 10,540 25,662 - 58.9 foreignbranks 27,879 34,521 - 19.2 48,702 45,439 7.2 Lenolng 14 .._' Notei4 314,661 311 ,029 t.a 224,355 208,745 7.5 Equipmentleased to clients_,_. __ Notetb 10,896 9,347 to.o 14 Properlyand officeequipment -_ Notero 3,726 3,902 - 4.5 628 710 -11.5 Shares 2,130 935 127.9 7,062 5,386 31.1 Nationatpublic savings """*"t", ""t = illi!]l 210 130 61.7 210 130 61.7 Otherassets Note19 27,956 26,936 3.8 22,211 17,398 27.7 Total assets 450,779 451,719 -o.2 348,809 337,053 3.5 of which due from Groupcompanies _. 65,525 52,874

Collateralpledged Note20 5,882 1,580 5,788 1,057 Totalcredit commitments 338,188 332,117 13.7 246,266 229,701 7.2

Liabilities Borrowedfrom Swedishbanks 5,544 12,093 - 54.2 8,581 11,301 - 24] otherSwedish financial institutions 16,137 21,606 aFa 1,108 1,596 - 30.6 foreignbanks 113,446 137,809 - 17.7 109,195 121,729 - 10.3 Deposits Nore2i 139,479 112,555 23.9 131,901 115,599 14.1 Commercialpaper 11,849 11,487 3.2 1,770 2,403 - 26.3 (lortifinatoc '19,135 nf rlanncil 24,623 4,781 1,763 Long-termliabilities - Nore22 82,070 8'1,1 16 t.z 34,715 33,528 3.5 Reservefor politicalrisks abroad 547 610 - 10.4 568 596 - 4.7 Otherliabilities - Note23 32,027 43,713 - 26.7 22,403 27,356 - 18,1 Minorityinterests 205 308 - 33.2 Total liabilities 425,927 426,078 0.0 329,376 315,971 4.3 of whichliabilities to Grouocomoanies 18,789 15.990

Untaxedreseryes and shareholders'eauitv ll^+^,,^i ur rLo^vu tEDvt vvD 9,370 19,499 - 51.9 5,109 15,515 - 67.1 Sharecapital 2,635 2,635 2,635 2,635 250,613,19/Series A shares,nominal value SEK 10 each 12,846,467Series C shares,nominal value SEK 10 each Statutorvreserves 2,156 2,244 - 3.9 1 7CC |,tzz Freereserves 238 659 * 63.8 429 310 38.4 Reportedprofit for the year 10,453 604 1,000 15,482 6,142 152.1 14,324 5,667 152.8 Total untaxed reserves and shareholders' equity Note2b 24,852 25,641 - 3.1 19,433 21,182 - 8.3 Total liabilities, untaxed reserves and shareholders' equity 450,779 451,719 -o.2 348,809 337,053 3.5 Guaranteesissued Note26 30,545 34,037 37,604 40,263 Approvedbut unutilisedletters of credit 7,545 6,455 7,300 6,455

Claims on and liabilities to Swedish financial institutions as well as claims and liabilities in foreign currencies are inctuded in several balance sheet items; a summaryof these is pravided in Note 27. ln addition, Note28 providesa specificatianof ceftain obligationsoutside the Bank'sbalance sheet.

J/ Notesto the financialstatements Amountsin SEK M, unless otherwise specified

Currency codes Thefollowing international DEM Germanmarks NCZ Braziliancruzeiros currencycodes are used: DKK Danishkroner AUD Australian NLG Dutchguilders (florins) dollar ESB Spanishpesetas NOK Norwegiankroner BEF Belgianfrancs FIM Finnishmarks PTE Portuguese CAD Canadian escudos dollar GBP Britishpounds sterling SGD Singaporedollar CCU Capitalcurrency unit INR lndianrupees THB (basket Thaibaht of USD,cBp, JPY Japaneseyen TND Tunisiandinars CHF,DEM) LUF Luxembourgfrancs USD U.S. CHF Swissfrancs dollars MXP Mexicanpesos XEU Europeancurrency units (ECU)

,{ Net interest earnings Specificationof net interesiearnings inthe Bank. Dailyaverages (annual averages of each balance sheet item day by day) as well as correspondinginterest rates and interestamounts. The averageofficial discount rate during 1991 was 9.40 per cent,down l.T2percenragepoints on the 1990 average.

1990 Daily Interest lnteresl Daily Interest Interest a/o average raie, SEK l\l average rate, yo SEK 1\,4 Investments and lending Compulsorycash reserves ..... : ...... 2,937 3,297 Swedishbonds ...... 21,591 10.29 2,222 23,459 10.56 2,477 Othergovernment securities and bonds .... 10,813 12.59 1,361r) 5,044 11 ,66 5BB1) Depositedwith Swedishbanks ,.,,,...... ,. 14,931 12.45 1,859 17,000 13.61 2,314 foreignbanks 68,589 9.0S 6,204 44,838 B.B7 3,977 Lendingin Swedishkronor 88,020 13.37 11,7732) 73,131 14.97 rc,9472) foreigncurrencies 129,757 8.70 11,284 102,583 9.38 9,620 Otherassets 10,376 21 8,244 _42 Total investments and lending . 347,O14 10.01 34,724 277,596 10.76 29,881 Sources of funds Borrowedfrom .1 Swedishbanks..,.,...... "....6,094 12.59 767 7,619 1 .81 900 otherSwedish financialinstitutions ..,...... 260 12.61 33 3BB 11.60 'l 45 foreignbanks 61,068 8.27 13,326 109,387 9.35 10,224 Depositsin Swedishkronor ...,.,.,.,...... ,.... 89,666 B.68 7,787 78,606 9.92 7,797 foreigncurrencies 19,144 6.1B 1,183 22,326 9.16 2,044 Long-termliabilities 36,178 B.38 3,031 22,992 .1 LB6 2,268 Otherliabilities 1,1 91 9.36 1,047 14,616 51I Total borrowed funds 323,601 8.40 27,174 255,934 9.30 23,797 Shareholders'equity and untaxedreserves 23,413 21,662 Totaf sources of funds .... g4Z,O14 7.Bg 27,174 277,596 8.57 23,797 Net interestearnings 7,SS0 6,084 Overallinterest margin ..,...... 2j8 2.19 1) of which,interest on monev marketinstruments 167 150 2) of which,loan fees 242 222

The 19911net interestearnings of the Group,sEK 9,479M(sEK B, j o0M),included net leasing incomeof sEK 1,1 56M (sEK Bg2M), consisting of teasingfees totailing sEK 9,1 53M (sEK 2,497M)less depreciation on equipmentleased to clientstotalling sEK j,997M(sEK 1,604M).

$ Commissions,fees and The Group The Bank fr foreign exchange earnings 1991 1990 -!9r -]!!9 Domesticlending operations,..,...... 478 350 453 267 Domesticand internationalsecurities operations B9B 592 582 497 Legaland trust operations 593 494 593 486 Otherdomestic operations 1,1e2 1p22 502 429 lnternationaloperations 1,698 1,470 1,1 61 1,068 4,859 3,928 3,291 2,747

38 Otheroperating income S TheGroup TheBanks 1991 1990 1991 1990 Rental income 118 86 0 Dividends 55 64 230 449 Dealingin bonds,etc BB 16 56 36 Miscellaneous 564 508 tov 82 825 674 455 567 Anticipateddividends Io theBank were SEK 162M (SEK STOM)

Staff costs The Group 4 1991 1990 1990 Salariesand remuneration.....,...... 2,807 2,440 1,926 1,717 lmputedpensions 114 124 114 124 premiumspaid Pension 51 37 to B Socialbenefit charges 951 815 770 659 Otherstaff costs 279 334 181 239 4,202 3,750 3,007 2,747 Salariesand remuneration: to Boardsof Directorsand ManagingDirectors ...... 33 48 20 to otheremplovees in Sweden 2,014 2,158 1,731 to otheremployees abroad 754 217 177 92 appropriationto holiday and oveftime reseryes ...... 6 17 6 I Bonuses: to Boardsof Directorsand Managing Directors ...... 82 Averagenumber of employees: 10,846 10,743 8,382 a e^n Of which,Stockholm 2,922 2,796 Goteborg 629 653 Malmo 293 319 Branch offices 4,162 4 rAO 1,729 1,377 376 322 Numberof hoursworked 13,639,25813,897,599

Excludingthe effectsof the SBG acquisitionon July 1, 1990,the averagenumber of employeesdeclined by 173. Detailedinformation about the averagenumber of employeesand salariesand remunerationas requi- red by Chapter4, Section9, Paragraph2 of the SwedishBanking Operations Act will be providedby the Bank upon request,Ofthe S-E-BankGroup employees, 57 per cent werewomen and 43 per cent men, Pensioncosts in lhe Bank havebeen calculated in accordancewith the instructionsof the Swedish FinancialSupervisory Authority, which involvesan actuarialcalculation of imputedpension costs. Pension Marketvalue The Bank's pension commitments of assets funds, December 31 '1991 1990 1991 1990

SkandinaviskaBankens Pensionsstiftelse ,,212 \?11 4,156 4530 StockholmsEnskilda Banks Pensionsstiftelse 817 674 3,376 3,070 3p29 2385 sr132 ?,600 Thesharp increase in pensioncommitments was dueto the earlvretirement offer carried out in late1990 and during 1991

Gostsfor premises The Group The Bank '1991 S 1990 1991 1990 Rents...... 535 405 699 546 Othercosts for premises 232 273 too 224 767 678 885

Otheroperating costs TheGroup The Bank S 1991 1990 Stationery 1i9 125 83 82 Postageand telecommunicationscharges 3OS 297 221 194 Machineryrentals ...... ,.. 241 i93 212 163 Printedmatteretc...... ,.. 156 199 82 107 Transactionfees ...... ",. 190 178 187 1B0 Servicespurchased 659 b11 296 282 Miscellaneous BB2 936 474 393 2,552 2,339 1,555 1,4O1

39 Depreciation The 7 Group The Bank 1991 1990 1991 1990 Goodwill 1r, 135 Officeequipment 31I 314 216 244 Property 34251 550 474 21- 244 Goodwill is depreciatedat an annualrate of 10 per cent (in some cases 20 per cent). Totalgoodwill in |he Group was SEK 1,206M after depreciation.Office equipment in lhe Bank is depreciatedaccording to a speclalschedule, In brief.it specifiesthat personalcomputers and in 3 years, office terminalinstallations in 7 years and other office equip- I:]f,"^ment rn T5 years ^l?lreciated

Lendinglosses The Group The Bank & r 991 1990 .1 Incurredlosses ...... 1,263 680 ,159 565 Provisionfor possiblelosses ...... 3,685 1,369 3,288 994 Hecoveneson prevtouswnte-downs .,. * 188 - 100 - 169 *73 4,760 1,949 4,278 1,486

Extraordinaryitems The Group The Bank s lee1 1ee0 _j!gl ,=1990 Income Capitalgain on saleof OM option B6 B6 Capitalgain on saleof properties lo Capitalgains on saleof shares EnskildaSecurities Ltd .,.,...... ,., 123 BanqueMarocaine 7 Othershares 13 B Otherextraordinary income B 1 6 120 14 95 136 Costs Loss,partial sale of Skandiaoption below book value 415 415 Write-down,value of exercisedportion, Skandia option ,...... 76 76 Write down of sharesin Scandinavianlnvestmenis Ltd ....,...,...... 123 pt\,ta 7 7 Othercompanies ...... ,.,...... 25 Termrnationallowances ..,.. 20 20 Capitallosses on saleof shares...... ,. 3S 3 Miscellaneouswrite-downs in the FinansSkandicgroup ol Stampduty tor newshare issue ,....:.,. 12 . 12 Allocationto S-E-BankenDevelopment Foundation 55 Discontinuationof Scandinavian Bank,...... aFa Shareholders'contribution to DSB ...... ,. B Repaymentof excesstax withheld a Otherextraordjnary costs ol 91 624 406 499 171

Appropriations TheGroup The Bank 10 1991 r990 1991 1990 Appropriationto equity-basedtax equalisationreserve .,...... - 5,729 - 4,983 Appropriationto valueadjustment accounl for investmentporlfolio *694 -35 -678 Appropriationsto untaxedreserve for lending(see Note 24) ...... - 1,215 -1,174 Withdrawalfrom untaxedreserve for lendingand foreign currencies,...... +16,783 +1 +15,377 Withdrawalfrom untaxedreserves for bonds/interestrate risks + 3,132 + 138 + 3,112 Withdrawalfrom payroll reserve ...... +B +2 Recoveryfrom special investment reserve .,...... +22 +6 Withdrawalfrom developmentand investmentreserves +1 +3 Drfferencebetween book and scheduleddeoreciation -956 -970 +12 +4 Recoveryof imputedpension premrums + 114 + 124 + 114 + 124 Compensationfrom pensionfunds + 390 + 300 + 390 + 3OO Pensiondisbursements - 201 * 127 - 201 - 127 Groupcontributions received +236 + 135 Groupcontributions paid ..... +12,870 -1,773 +12,439 -1/4Ol

40 raxes The Group $ { 1991 1990 1991 Estimatedcorporate tax etc ...... ,... 287 470 239 128 Estimatedtotal tax on deferredamount 3,937 3,612 Estimatedprofit-sharing tax (feeto employeeinvestment funds) andtemporary profit tax 82 4,n4 552 3.851 128

Cash holdingsand The Bank {" * $ compulsory cash reserves --l9a -i!9g Cashholdings in Swedishkronor ..., 2,374 1,899 Fundsdeposited with the Riksbank. 386 1,827 Cashholdings in foreigncurrencies 2,760 3,726 Tocover cash reserverequirement 76 95 Total cash holdings and compulsory cash reserves 2,836 3,A21 Cash reserverequirement 1,969 3j82

Riksbankregulations impose a cashreserve requirement on lheBank amounting to 2 percent (4) of the Bank'sdeposits in Swedishkronor and cerlain other obligations. The Bank's own cashhol- dingsin Swedish kronor plus funds deposited in the Riksbank must add up to at leastthis amount.

{ fr Tradingand invest- Holdingsof bondsand otherinterest-bearing debt instrumentsare divided into a tradingporlfolio r u mentportfolios (short-termholdings) and an investmentportfolio (long-term holdings) which are reported below for 1991" For1990, both types of holdingsare reported under the investmentporlfolio.

A. Trading portfolio The Group The Bank 1991 1991 Acquisition value lvloneymarket instruments 1,154 896 Treasurydebt cedificatesincl. Treasury discount notes 4,714 2,033 Governmentbonds ...... ,.. 2,623 727 Localgovernment bonds 55 Housingbonds 1,993 1,720 Industrialbtonds ..... 14 14 Foreignbonds ...... 79 Mrscellaneous...... 102 47 Total acquisition value 10,684 5,442

Market value Moneymarket instruments 1,154 896 Treasurydebt certificates incl. Treasury discount notes ...... 4,778 2,084 Governmentbonds ...... 2,607 701 Localgovernment bonds 55 Housingbonds,.,.,...... 1,974 1,695 14 14 ol 102 47 Total market value 10,695 5,442

B. Investmentportfolio The Group The Bank 1991 I 990 Acquisition value Moneymarket instruments 990 2,268 990 1,372 Treasurydebt cerlificatesincl. Treasury discount notes ...... , 5,489 6,475 395 3,121 Governmentbonds ...... 6,s33 10,850 6,11 4 9,408 Localgovernment bonds 319 318 86 114 Housingbonds ...... 8,931 7,574 9,931 11,794 Industrialbonds .....,...... 1,687 3,422 1,499 3,374 Foreignbonds 8,996 5,112 7,225 3,243 Miscellaneous 3,189 1,340 1,247 448 Total acquisition value 36,134 37,359 27,487 32,874 Less: valueadjustment account for bonds - 694 - 3j32 * 678 - 3,112

Net book valueas per balancesheet ...,.,...... 35,440 34,227 26,809 29,762 Bondsinclude subordinated debentures of ,...... ,...... 205 369 205 369 47 Note 13, continued TheGroup The Bank '1991 --1rr1 1990 lrro Market value Moneymarket instruments 1,002 2,268 1,002 1,372 Treasurydebt certificates incl, Treasury discount notes ,,,,,,,,,,,,,,, 5 F'14 0,594 520 3,249 Governmentbonds ...... , 6 4rA 10,304 6,005 8,962 Localgovernment bonds 320 315 87 111 Housingbonds ...... 8,33S 6,738 9,327 10,948 Industrialbonds ...... ,.,. 1,620 3,217 1,441 3,167 Foreignbonds 8,983 5,425 7,214 3,240 Miscellaneous 3,138 1,256 1,213 366 Totalmarket value ,...... gS,44O36,1 17 26,909 91,406 Excessvalue (market value minus net book value) ...... 0 1,890 0 1,644 The Bank'stotal holdingsof governmentsecurities and bonds at nominalvalue are distributed as follows in terms of remainingmaturities until redemption:

Dec.31, 1991 Dec.31,1990

Nominal o/oo{total Nominal % oftotal Lessthan 1 year...... 7,625 25 5,692 18 1 - 5 years 15,891 53 16,832 53 6-10years 3,943 14 5,439 17 Morethan 10years 2,526 B 3,612 12 29,985 100 31,575 100 Averageremaining matunty 3.7 years 4.6 years Averagecoupon rate as a percentageof acquisitionvalue ...... 10.88 11 .30

Lendine Lendingincludes all loans except loans/claims involving Swedish and foreign banks, i.e. loans to $ $ insurancecompanies, intermediary institutions and finance companies as wellas to otherleqal entitiesand privateindividuals.

TheGroup The Bank 1990 1991 1990 Swedishfinancial institutions 11,035 10,586 48,629 39,980 Othar lanrl aniitioc 197,419 190,432146,518133,099 Privateindividuals 106.207 110.01 1 29,208 35,666 314,661 311 ,029 224,355 208,745 Of which unsettledclaims, net 5,527 3,446 730 t,/oc Interestdeferment volume, net 4,053 1,077 Deferred1991 interest payments totalled SEK 103M for the Bank and SEK 255M for ihe Group. Unsettledclaims are defined as receivableson whichborrowers have suspended payments or on whichprincipal or interestpayments are more than two monthspast due. An unsettledclaim is not necessarilyrecorded as a possiblelending loss. Provisionsfor possiblelending losses are subtracted in the abovetable of loansoutstandinq. Thetotal reserve is soecifiedas follows:

The Bank 'r 991 1990 1991 1990 n^^^i-^ h^t^^^^ vPYr ilr rg uarar ruu 1,615 577 1,026 325 Transpositionwithin the Group ....,...... 372 -fho rrorr'c innr rrrori lnccoc -1,249 -331 -1,006 -293 The year'srecoveries of previouswrite-downs -64 -64 Provisionfor possible losses ....."..,.,. 3,685 1,369 3,288 994 Closingbalance 3,987 1,615 3,616 1,026

,d fi Equipment leased TheGroup The Bank r w to clients r9g1 1990 T991 1990 Acquisitionvalue of leasedequipment ...... 13,422 11,252 24 Accumulatedoepreciation according to plan,...... - 3,463 - 2,993 _10 Write-downof leasedequipment -86 *35 Advancespaid on leasedequipment 1,O23 1]23 Residual value according to plan 10,896 9,347 14 Residualvalue includes SEK 112M (SEK7BM) in equipmentwhich has been leasedto Group companiesand thus constitutesoffice equipment from the standpointof the Group.

42 Propertyand office TheGroup {'v ff '1991 '1991 equipment 1990 1990 Prnnorhr 2,916 2,988 25 .13 n#i^^ ^^.,i^-^^+ vilrus EgurprI rvttL ...... ,.,...... 810 914 603 697 Totalproperty and officeequipment 3,726 3,902 628 710 't Taxablevalue of property 2,210 ,788 1'l 7 "Propefty" Theheading includessEK 1,122M (sEK j ,0s9M)for Bankhusgo, the newbank buildingunder construction in Rissne,outside Stocknotm.

$ p- Shares Sharesin foreigncompanies are repofted at theirnominal value in millionsof eachrespective currency;book values are translated to Swedishkronor at the exchangerate prevailing on the dateof acquisition.Certain holdings in foreigncompanies are written down to SEK1 fer hold- ing.Dividends are reported in the profitand lossstatement under "Other operatinq income". Book value Dividends '1990

A. Subsidiaries 5,718.24,636.9 175.5 386,3 B. ScandinavianBanking Partners 306.4 541.3 18.4 eAa Cl . Othercompanies in Sweden 444.7 199.9 34.8 26.7 C2. Sharestaken over for the protectionof claims 11.5 0.1 C3. Sharesin stockbrokingoperations 3.8 7.5 0.1 0.3 C4.Other shares ...... D. Othercompanies abroad .,...... 2.8 0.5 1.2 0.8 The Bank's shareholdings 7,062.45,386.2 230.0 448.9 E.Shareholdings of subsjdiaries ...... ,.,...... ,.. 785.8 j85.3 0.7 1.5 Total Group shareholdings (B+G+D+E) 2,190.1 934.6 SS.2 64.1 For a specificationof these shareholdings,see page 48.

{ $l Nationalpublic savings The Bank * v accounts,net 1990 Receivablefrom SwedishNational Debt Office 9,627 8,667 Balance,national public savings accounts -v!7 - jfgz Net claimon SwedishNatlonal Debt Office 210 130

Otnerassets Otherassets include SEK 1,206M (SEK 1,444M) goodwill $ S in net '1991 1990 Earningsitems brought forward Interest 10,913 8,782 Otheritems 1,058 167 11,971 g,g4g Other assets . 10,240 8,449 22,211 1?/398

Collateralpledsed The Group The Bank ffiffi 1991 1990 1991 1990 Lending 5,784 1,156 5,784 1,055 Mortgagedeeds 98 421 Other :: 5^88' 1,580 5,788 1,057 "Lending" Theitem in theBank refers to the pledgingof sEK 672Min promissorynotes for the benefitof AB SvenskExporlkredit. ffi$ Denosits The Bank: Thousands Balance Thousands Balance of accounts SEK M of accounts SEK IV

^h^^,,^ vr raquE ouuuur [- 60 20,745 RA 19,967 Privateaccounts ...... ,.."..... 413 5,226 389 4,954 Companyaccounts ol 7,278 5B 7,274 Savingsaccounts 829 35,204 869 24,146 Depositson soecialterms 21,427 I 19,304 Otherdeposits 939 5,647 899 11,066 Totaldeposits in Swedishkronor ...... 2,314 95,527 2,278 86,711 Depositsin foreigncurrencies 6 36,374 7 2B,BBB .131 2,320 ,901 2,285 115,599

43 pp LonS-termliabilities The Group: In additionto the Bank's subordinateddebenture loans, this item mainlyincludes long-term borrowing by Svensk FastighetskreditAB. The Bank: This item includesthe book value of subordinateddebenture loans and bond issues outstanding.Nominal amounts are in millionsof the respectivecurrencv

Maturity Original Book Subordinateddebenture loans nominalvalue value hterestrate % 1974/84/94 SEK 75,0 11.2 7.50 1986/92 LUF 300"0 53.3 7.25 1AA7/AA sEK 1,000.0 970.4 r) 1987/92 LUF 300,0 53.3 7.25 1987/92 LUF 300.0 53.3 7.625 .100.0 lgBB/94 cHF 403.9 4.50 19BB/93 DKK 300.0 279.4 10.75 1989/99 sEK 1,000.0 817.7 2) 1990/9s LUF 3OO.O 53.3 10.125 lggo/97 LUF 600.0 106.6 9.75 1990/95 LUF 300.0 53.3 10.25 1990/05 DKK 300.0 281.7 3) 1990/05.... DKK 25,0 23.5 3) 1990/00.... usD 330.0 1,830.7 3) 1990/00 XEU 60,0 445.2 6.0 GBP 12,0 124.8 cHF 100.0 411.2 7.125 DEM 200.0 731.9 9.0 LUF 1,000.0 ttt,o 9.375 usD 100,0 554.8 3) DEM 170.0 622.1 3l AUD 2OO,O 844.0 6.0 AUD 150,0 633.0 6.0 AUD 1OO,O 422.0 7.5 AUD 230.0 970.6 6.0 sEK 1,000.0 341.8 0 DKK 350.0 262.9 JPY 8,902.6 392.8 0 sEK 450.0 450.0 3) USD 92,5 513.1 3) cHF 100.0 411.2 7.5 1991 /98 LUF 750,0 133.2 9.25 1991/93 USD 2B,O 155.3 3) 1991/98 CHF 89.9 369.6 8.4375 1991/99 USD I0.0 55.5 3) 14,O14.2

Convertible subordinated debenture loan 1 oqR/o6 sEK 1,203.2 1,1 94.8 8.75 15,209.0

Bond issues 1987/92 JPY 10,000.0 441.3 4.50 1987/93 DEM 100,0 365.9 19BB/93 USD 1OO,O 554.8 9.00 19BB/94 LUF 300.0 53,3 7.50 19BB/93 JPY 10,000.0 354.1 1989/92 CAD 87.5 418.7 11.25 1989/99 DEM 161.0 589.2 1989/92 JPY 5,000.0 220.6 6.00 1989/96 usD 150.0 832.1 10.00 1989/94 JPY 16,644.0 734.4 5.00 1s\g/s2 DEM 5O,O 183.0 8.00 1990/95 GBP 100.0 1,039.9 3) r 990/96 JPY 48,OOO.O 2,118.O 3) 1990/95 CHF l OO.O 411.2 6.5 1990/96 usD 100.0 554,8 9.05 1990/00 GBP 100.0 1,039.5 13.125 1990/95 DE|V 400.0 1,463,8 1990/9s JPY 8,104.3 3s6.8 3) 1990/95 JPY 30,000.0 | ,,52J, I 7.O I OOn/Ot DEM 189.1 691.9 1990/93 JPY 15,000.0 661.9 6.45 1990/93 JPY 6,000.0 264.8 1990/97 cHF 150.0 616.8 7.375 M Note 22, continued Original Book nominalvalue value Interestrate % 1990/90 XEU 3O.O 222-6 1990/95 JPY 5,000.0 220.6 3l 1990/95 GBP 5O.O 519.9 1990/93 JPY 10,000.0 441.3 1991/94 DEM 200.0 731.9 9.0 1991/93 JPY 4,500.0 198.6 8.0 lool/oA cHF 100.0 411.2 7.O t99t/93 JPY 4,000.0 176.5 7.5 1991/92 USD 24.0 133.1 3) 1001 /oo JPY 5,000.0 220.6 1991/93 JPY 5,000.0 220.6 7.0 1991/94 JPY 5,000.0 220.6 8.0 1991/93 SEK 2O.O 20.o 0 1991 /98 JPY 10,000.0 441.2 tvv| ...... SEK 36.8 36.8 0 19,506.0

1) .FloatingRate Note; interestrate 3-month STIBOR. 2) FloaiingRate Note; interestrate 3-month STIBORless 0.10%. 3) Floaijng interest rate, related to LIBOR. 4) Discountloan, proceedsJPY 8,0241Vpaying 4.9252% interest

4ltl Otherliabilities Art Earningsitems carried forward q 6Aa il ttgt EDL ...... 7,945 Otheritems 478 1,440 8,423 7,003 Bankgiro payments 2,252 2,891 Bank drafts 1,497 Taxliability 3,741 48 Otherliabilities 6,566 15,917 22,403 27,356

p$ Untaxedreserves The Group The Bank 1991 1990 1991 1990 A Tax equalisation reserve Balanceat beginningof year...... An^r nririi^nc tr,7CO 4,983 Balance at year-end 5,729 4,983

B Untaxed reserves for lending Balanceat beginningof year...... 16,509 15,324 15,052 13,878 Appropriations 1 215 .tr: Withdrawals ...... - 16,464 - -15,052 Acquisitions,transpositions and exchangedifferences 7 -30 Bafance at year-end 52 16,509 0 15,052

C Untaxed reserve for foreign currencies Balanceat beginningof year 326 327 325 325 Withdrawals -326 -1 - 325 Balance at year-end 326 325

D Extra depreciation on equipment leased to clients Balanceat beginningof year ,...... 2,485 1,511 Appropriations 949 974 Exchangedifference 1 Balance at year-end 3,435 2,485

E Extra depreciation on office equipment Balanceat beginningof year..,.,...... 143 147 138 143 Appropriations Withdrawals - 14 -4 1a Balance at year-end 126 138

45 Note 24, continued The Group TheBank 1991 1990 1991 1990 F Other untaxed reserves Specialinvestment reserve ...... 22 Developmentreserve 1 Payrollreserve B Generalinvestment reserve 45 36 Total untaxed reserves (A+B+C+D+E+F)... 9,370 19,499 5,109 15,515

Shareholders' equity gs The Bank and translation Share Statutory Fetained profjt for difference reserve capital reserues earntngs the year Balanceat beginningof year ...... , .... z,oJc 1,722 310 1,000 5,667 Reallocationof profitfor 1990to retainedearnings 1,000 - 1,000 Dividendfor 1990 - BB1 _ BB1 Profitfor the year 9,538 9,538 Balanceat yearend 2,635 1,722 429 9,538 14,324 TheGroup Share Statutory Free Profitfor capttal reseryes reserues the year Balanceat beginningof year...,...... 2,635 , ,LL 659 604 6,142 Reallocationof profitfor 1990to retainedearnings 604 * 604 Dividendfor 1990 _ BBl _ BB1 Changein translationdifference reserye .. - 118 -114 * 232 Reallocationbetween free and statutory reserves 30 -30 Profitfor the year 10,453 10,453 Balanceat year-end 2,635 2,156 238 10,453 15,482

Guaranteesissued TheGroup *ffi The Bank 1991 I 990 1991 1990 7,925 14,752 6,249 11,227 20,43517,887 29,170 27,638 Suretybonds 508 503 508 503 Billspayable 1,677 895 1 677 895 30,545 34,037 37,604 40,263 TheBank has also pledged to the MonetaryAuthority of Singaporethat it willbe responsiblefor ensuringthat the subsidiary bank in Singaporefulfils jts commitments.

Swedish financial a)The balance sheet items b$p belowinclude claims on and liabilitiesto Swedishfinancial institutions t institutions and foreign inthe following amounts: currencies TheGroup TheBank Assets 1990 1991 Cashholdings and compulsorycash reserves ...... , 386 1,827 386 1,827 Investmentportfolio 116 237 116 237 Depositedwiih Swedishbanks ...,...,.,... 14,330 'A AAE 10,540 25,662 Lendins ::::: .:.:::: .::::: 11,035 10,586 48,629 39,980 Otherassets 509 2,139 s09 2,139 Total assets 26,376 41,652 60,1801) 69,845 Totalcredit commitments 50,211 41,317 1) Of which, SEK 391\,1in unsetfledctaims. Liabilities Borrowedfrom Swedishbanks q R/A 12,093 8,581 11,301 otherSwedish financial institutions 16,137 21,606 1,1 0B 1,596 Deposits 22,210 6,498 7,954 6,776 Otherliabilitles . 852 2,179 852 2,179 Total liabilities 44,743 42,376 18,495 21,852

46 b) Thebalance sheet items below include claims and liabilitiesin foreigncurrencies in the followingamounts:

The Group TheBank Assets 1991 1991 1990 Cashholdings and compulsory cash reserves ...... ,... 7B s4 78 94 Tradingportfolio .....,...... 2,188 358 Investmentportfolio 10,115 8,939 7,060 3,915 Depositedwith Swedishbanks ...... ,.,... 4,504 3,045 843 2,894 foreignbanks 21,611 27,998 42,736 39,979 Lending 131,548 129,784 142,951 122,518 Propertiesand officeequipment 69 36 69 36 Otherassets 3,741 6,314 1,614 1,634 Total assets 173,852 176,210 195,707 171,O70 Liabilities Borrowedfrom Swedishbanks ...... ," 2,772 5,960 36 6,084 otherSwedish financial institutions 2,058 2,283 894 1,275 foreignbanks 103,092 127,990 101,219 112,461 Deposits 42,456 25,683 35,096 28,B8B n^"n-^.^i^r ^^^^- vvr | il | isr urqr Popvr . ,. ,. ,...... 11,849 11,487 1,770 2,403 Certificatesof deposit 19,726 4,781 19,135 1,763 l^^^ +^.- ti^hiri+i^^ LVr rg-rvr ilr ilduilruv- 31.137 30.966 30,872 30,048 Reservefor politicalrisks abroad 509 484 516 405 Otherliabilities 4,863 2,225 3,084 Total liabilities 218,462 217,197 191,763 186,411

Off-balance sheet TheBank and certainsubsidiaries have obligations outside their balance sheets as partof the obligations Group'sbusiness operations. These obligations entail a possiblelending loss and createa capitalrequirement (calculated on the basisof an B percent requirement) of SEK2,818M in the Groupand SEK2,492M in the Bank.The following table specifies these obligations as of December31 , 1991(SEK M).

Volumes,Dec. 31, 1991 Capitalrequirement The Group The Bank The Group The Bank Guarantees LOanguarantees 10,110 8,434 657 529 Athar nr rrran+66c 20,435 29,170 660 630 Letters of credit Unutilisedimport letters of creditand confirmedexport letters of credit J, roc 3,066 30 28 Obligations for future payments Repos...... 17,563 19,394 36 36 Forwardcontracts to purchasesecurities 144 144 1 .1 Forward/forwardcontracts . B3 5 Programmesto issuesecurities 523 toz 5 Exchange rate- and interest rate-related contracts (translatedamounts that require capital coverage) Exchangerate-related contracts 38,619 35,456 856 821 Interestrate-related contracts 5,963 5,582 tuo 104 Other obligations Unutilisedportion of overdrafts 23,527 21,911 Liquiditymanagement assignments 3,387 3,387 56 54 Miscellaneousoblioations 11,735 8,994 390 284 2,818 2,492

47 Specificationof shareholdingsaccording to Note 17 1991 Bank's Nominal Book voting valUe value Dlvldend power,% Subsidiariesin Sweden AktivPlacering AB, Stockholml) 21.0 212 100 Aktiv PlaceringFondfinans AB, Stockholm 120.0 124.0 100 Arsenalen,AB, Stockholm 4.0 0,'1 20.02) 100 FinansSkandicAB, Stockholm 225.0 145.0 30.02) 100 Garnisonen,AB, Goteborg 4.O 0.0 15.02) 100 SEB-FastigheterAB, Stockholm 130.0 980.0 25.02) 100 SvenskFastighetskredii AB, Stockholm 200.o 608.93) 100 EurocardAB, Stockholm 5,0 52.4 65.02) 100 Totalsubsidiaries in Sweden 1 927.6 155.0 Subsidiariesabroad SkandinaviskaEnskilda Banken AG, Frankfurtam Main DEM 81.2 393,9 100 ScandinavianInvestments Ltd, Londona) GBP 18.1 1 200.95) 100 ScandinavianFinance BV, Amsterdam6),.,...,...... ,.,. NLG 266,5 1200.07) 100 SkandinaviskaEnskilda Banken Corporation, New York USD 2O.O 169.68) 100 SkandinaviskaEnskilda Banken (Luxembourg) S,A., LUXemDOUTg gg 1)Aktiv Placerlngowns SEB lnvestAB and the tuF 1000.0 292.4"\ SkandinaviskaEnskilda Banken Swedish mutualfund companies,among others. .1gl,3-0, 2) Anticipateddividend. (SouthEast Asia) Limited, Singapore SGD 4O,O 20,5111 100 3) Durlng1991, bookvalue rose bySEK 1351V1due SkandinaviskaEnskilda Banken lo a shareho'dersconrribJLion. Fundinglncorporated, Delaware USD O.O 0,1 100 4) ScandinavianInvestments Ltd, London,owns InterscanServiqos de Consultoria SBG HoldingsLtd, which in turn owns Ltda, EnsklldaSecurities, among others. Sao Paulo NCZ 0,2 0.012) 100 5) Was written down by SEK 866N,4. SkandinaviskaEnskilda Reinsurance S.A., 6) ScandinavianFinance BV owns Banque LUXemOOUTg BEF 5O.O 8.2 100 Scandinaveen Sulsse,which it bought frorn lnn Subordinateddebentures in EnskildaSecurities ..,.,... GBP 13.8 149.8 IUU ScandinavianInvestments Ltd, 7) Fevaluedby SEK 316M. BanqueScandinave d LuxembourgS.A., 8) Revaluedby SEK 81]V. LUXemOOUTg BEF 450.0 75.2 100 9) Revaluedby SEK 162M. Subordinateddebentures in SkandinaviskaEnskilda 10) Revaluedby SEK 81N/. Banken(Luxembourg) S.A. ...,.,.,.,..... LUF 600,O 109.2 99 11) Of which SEK 6.81Vls an anticipateddivldend. 12) Was writtendown by SEK 2M. Total,subsidiaries abroad 3,790,6 24.5

1991 Banh's Nominal Book voting value value Dlvldend power, % B. Scandinavian Banking Partnersl)

Dennorske Bank A/S, Bergen ...,.,..... NOK 115.9 9.4 J.O I UnidanmarkA/S, Copenhagen DKK 63.8 123.0 6.0 1.38 .100,8 AffZirsbankenUnitas Ab, Helsinki FrM 174.0 12.4 1) Altogether,SBP shareswere written down by SEK 2.20 2351\,4to their market price on the balancesheet Total,Scandinavian Banking Partners 306.4 18.4 date.

1991 Bank's Nom nal Book voting value value Dlvldend power, 7o C1. Other companies in Sweden FastighetsAB Abisko 1.0 1,0 50.0 SvenskBostadsfinansierinq AB BOFAB 25.0 29.3 50.0 KortbetalningServo AB 0.3 0.3 48.0 BankgirocentralenBGC AB 1.7 1.7 33.1 0.3 0.3 28.0 UpplysningscentralenUCAB . 0.3 0,3 1.7 27.4 BankernasPMC Holding AB 0.3 0.0 23.3 BankomatCentralenAB 0.1 0.1 22.0 Gamlestadenlntressenter AB 0,0 0.0 24.4 SvenskExportkredit, AB , 126.0 361.01) 30.2 18.0 VardepapperscentralenVPC AB 0.4 0.4 15,0 PenningmarknadsinformationPlVl AB o.4 0.4 14.4 BackupcentralenAB 0.1 0.0 0.3 12.5 IndustrikreditAB 19.8 19.8 2.3 12.2 ForetagskapiialAB 2.3 t.o 0.3 t'.c PenningmarknadscentralenPMC AB 3.0 0.0 2.6 OM FondkommissionAB 1.1 1) Revaluedby SEK 235M. 0.6 2.5 Sharesin co-operativeblocks of flats 0.0 27.4 Total,other companies in Sweden 444.7 eta

48 C2' Sharestaken over for protectionof claimshave a nominalvalue of SEKB.4M and a bookvalue of SEK11.5M, C3,These shares are current assets and havethus not beenspecified. c4. Preferenceshares in NobelIndustrier AB havea nominaland bookvalue of sEK s75M,

Bank's Nominal Book voting value value Dividend power,% D. Other companies abroad ScandinavianBanking Partners Holding A,/S, Denmark DKK 0.1 0.1 25.O BancoFinasa de lnvestimento,Sao Paulo NCZ127.2 0.3 3.6 Euro-clearClearance System Public Limited Co., Zurich USD 0.2 o.4 0.8 3.3 Euro-clearClearance System Sbciet6 Coop6rative, Brussels BEF O.O 0.0 0.01 AdelaInvestment Company S,A., Luxembourg ...,..... USD 2,8 0.0 3.0 Soci6t6Internationale Financidre pour les Investissementset la D6veloppementen Afrique (SlFlDA),Luxembourg USD 0,2 0.0 1.2 Societyfor WorldwideInterbank Financial Telecommunication(S.W.l.FT.), Brussels BEF 3.9 0.0 0.91 Banquede D6veloppementEconomique de Tunisie, Tunis....,...... TND 0.1 0.0 0.1 0.5 The IndustrialCredit and InvestmentCorporation of IndiaLimited (lClOl), Bombay. tNR 0.6 0.0 0.0 0.1 Londonlnterbank Financial Futures Exchange(LIFFE) ...... GBP 0.1 2.3 0.0 Total,other companies abroad ...... ,... 2.8 1.2

Nominal Book Voting value value Dividend powers, % E. Shareholdings of subsidiaries PastorSkandic Leasinq S.A.. Madrid ESB 90.O 4.8 45.0 NokiaLeasing GmbH, Dusseldorf .....,...,...... ,.. DEM 0.5 1.9 T 25.1 GFIIndustriemontagen GmbH & Co KG, Dusseldorf DEM 4,5 16.5 24.O LeaseinvestSociedad de LocaqaoFinanceira Mobiliaria,s.a,r.l,, Oporto PTE190.1 6.8 14.0 EurocardInternational S.A. Brussels BEC 8,2 2.2 8.0 Liquiditdts-KonsortialbankGmbH, Frankfurtam Main DEM 0.3 0.8 0.0 NeptunOrient Lines Limited SGD 1.8 0.3 0.0 NestorLeasing Co Ltd .,...... USD O.O 0.2 25.0 SwedishSuites Hotels USD O,O 0.3 49.0 TheRoyal Bachelors Club Residence AB ...... SEK 0,1 0.1 1,0 IFASystem AB ....,...... SEK O.2 0.2 33.0 .13.1 SwedishLeasing Ltd, Bangkok THB120.0 0.0 ExportLeasing (Cayman Islands) Ltd USD 0,2 1.2 0.2 20.0 145East 32nd Street L.P ...... USD 8.7 48.4 64.0 260 PeachtreeStreet L.P USD 11.7 65.0 66.0 WeigangScandinavian A8 .....,....., SEK 0,1 0.0 25.0 NokiaRent S.A...... ,..... ESB 0.5 0.0 50.0 ArlingtonHenley Dev Ltd ....,...,.,.,.. GBP O.O1 1.2 0.0 Ania Pack International NLG O,O2 0.0 0.0 ln+ararol+ .lrnr rn | +ri v, vuP L'v GBP 0,7 0.0 0.0 Rentaminsterplc. .,...... ".". GBP 0,1 2.2 0.0 PapisLtd GBP O.O1 0.0 0.0 'I EnsorHoldings GBP 0.1 "1 0.0 Severnplc. GBP 0.5 0,0 0.0 BlueThane Ltd...... ,.,. GBP 0.3 t.o 0,0 YorkdaleHoldings GBP 0.3 Acuma LifeInsurance. GBP 0.5 2.6 PrivateCapital Property Investment. GBP O.O 4.7 0.0 33.7 AustralianWool Textiles Ltd ...... AUD 0.1 0,0 0.0 0.0 TelekursAG ....,.,...... cHF 0.0 0.3 Sharesin stockbrokingoperationsl) 62.4 Mutualfund units ...... 545.7 Othersincl, shares in co-operativeblocks of flats...... 2.2 Totalshareholdings of subsidiaries ...... ,... 785.8 o.7 1) Heldby EnskildaSecuriiies Ltd,, London.

49 Proposalfor the distributionof profit Theunrestricted equity capital of the The Boardproposes that, following the S-E-BankGroup amounts to SEK10,691 M. aoorovalof the BalanceSheet of Standingat the disposalof theAnnual SkandinaviskaEnskilda Banken for the GeneralMeeting in accordancewith the financialyear 1991, the Annual General BalanceSheet of SkandinaviskaEnskilda Meetingshould distribute the above-men- Banken: tionedunappropriated funds as follows:

SEK M SEK M Carriedforward from 1990 429 declarea dividendof Reportedprofit for 1991 ...... 9,538 SEK3.35 per Series A share... 84O 9,967 SEK3.35 per Series C share... 43 and carryforward to nextyear ....9,084

Stockholm,February 25, 1992

CunrG OlssoN PrrenWRnrNerRo PEHnG GvllENHRuunRKARL-ERIK SnHLeEnc GOnnruAHrsrRoHl Lrrr A Axoenssorr:RuNE AruoERssoN Rorr Bronr HnrusCRveu:-B;0RxvRrrt Tone Dnun SreruGusrRrssorrr BrNcr Hnnx ArurorurRAx;sol Jotri:soN RornKnnrssoN lrucronnoJ OsxnnssoNLrnruRr PerrEnsson MRuRrrzSnruru SvrNSOorneenc KruurWRcHrversrcR TolltWncHrurrslen KRRINWgsreneeRc Lans Osrnc Bo C E RRvroRs

Auditors'report We haveexamined the AnnualReport, We recommend, consolidatedfinancial statements, ac- thatthe orofitand lossstatement and countsand administrationof the Board balancesheet be approved of Directorsfor 1991. Ourexamination thatthe profitbe distributedaccording was performedin accordancewith to the proposalin the Reportof the generallyaccepted auditing standards. Directorsand that the membersof the Boardof The Bank Directorsbe dischargedfrom The Bank'sinternal auditing departmeni personalliability for the financialyear. hasexamined the accountsand checked the physicalexistence of the Bank's The Group assets.Reoorts on thesematters have Theconsolidated financial statements beensubmitted to us. havebeen drawn up in compliancewith TheAnnual Reoort has been drawn the SwedishBanking Operations Act. up in compliancewith the Swedish We recommend, BankingOperations Act. thatthe consolidatedprofit and loss statementand consolidatedbalance sheetbe approved.

Stockholm,March 6, 1992 LrruNRnrSvrrussolr Chairman NrrsBRernreR Cus Bux Cru NRcxsrnD BJoRNSrrrusoru Auditorsappointed by the Financial SupervisoryAuthority

50 Financialsumma ry, 1gB2-1 gg1 SEKM

Profitand loss accounts,the S-E-BankGroup

1982 1983 1984 1985 1986 1987 19BB 1989 1990 1991 Netinterest earnings 2,281 3,204 3,440 3,216 4]10 5,332 6,295 6,612 B,lOO 9,473 commrssions,feesand foreign exchange oarnings 1,130 1,374 1,582 1,742 2,257 Z,ZIO 2,426 2.,811 S,gzg 4,859 Other operatingincome 450 597 741 771r | | 1,325|,rto 1,245|,z4c -^^ 1,498t,4vtJ 1,4991,499 674 925 Total operating income 3,861 5,175 5,763 s]29 8,292 8,787 10,219@ Staffcosts 1,138 1,329 1,473 1,665 1,969 2,276 2,459 2p2!---3/5o 4202 Costsfor premises 255 323 388 439 469 512 679 767 67A 767 Otheroperating costs .1 508 681 799 907 1,066 1,442 1,719 ,883 2,339 2.552 Depreciation 84 98 120 139 199 257 282 347 474 Total operating costs before losses 1,985 2,431 2,780 3,150 3,703 4,487 5,139 5,517 72i1 8.071 Lendinglosses etc 730 SS7 797 gZB Operating profit i,146 2,182 2,186 2,201 4,064 4,U2 4,669 4,444 g,312 2,326 Returnon equity after3oo/o standard tax, % 24.9 23.5 18.2 11.8 7.6 Earnrngsper share after30Vo standard tax, SEK 7.61 4.50 Averagenumber of employees 7.526 7,893 8,078 8,461 9,149 9,384 9,620 10.743 10,846

Balancesheets, the S-E-BankGroup

1982 1983 1984 1985 1986 1987 1988 1989 1990 1991

Government QQ CA1 securitiesand bonds 29,024 33,783 41,208 31,897 33,206 24,626 30,624 34,227 46,124 lnvestments 24,569 29,279 J I 26,765 ,OJC 31,206 39,314 53,350 53,510 61,384 42,209 Len0rng 77,091 86,366 100,741 94,554 111,616 139,395187,477 239,440 311,029 314,661 Otherassets s,221 13,398 13,391 Ic,co., 16,334 21,773 23,946 42,066 45,079 47.785 Borrowing 56,487 67,578 69,276 68,118 69,716 81,376 101,919 I06,592 187,776 '171,599 Deposits 59,307 63,473 77,703 66,426 69,306 81,310 89,260 105,981 112,555 139,479 Otherliabilities 18,091 22,397 24,849 29,28O 38,615 54,209 77,209 129,977 125,747 114,849 Shareholders'equity and untaxed reserues 6,020 9,378 10,277 11,189 13,416 16,793 21,011 23,090 25,641 24,852 Total assets 139,905 162,826 182,105 175,013 19.1,053 233,688 289,399 365,640 451,719 450,779

Profitand loss accounts,S-E-Banken

1982 1983 1984 1985 1987 1988 1989 1990 1991 Netinterest earnings 1,863 2,636 2,829 2,498 3,805 4,103 4,918 5,154 6,084 Commissions,fees and foreign exchange earnings 1,033 1,249 1,392 1,451 1,849 1,820 1,989 2,428 2,747 3,291 Otheroperating income 259 354 416 366 908 616 727 718 567 Total operating income 4,239 4,637 4,315 6,562 6,539 7,634 8,300 9,398 11,296 Staff costs 1,005 1,131 1,222 1,359 I,561 1,747 1,909 2,248 2,747 3,007 Cosisfor premises 210 249 298 332 372 389 546 614 770 885 Otheroperating costs 407 516 639 716 841 983 1,076 1,234 1,401 | ,ccc Depreciation AF E' 70 B3 125 145 174 196 244 217 Total operating costs before losses r,oo/ 1,948 2,229 2,490 2,903 3.705 4,292 5,162 Lendinglosses etc 628 676 306 481 1,672 4,278

Balancesheets, S-E-Banken

1982 1983 1984 1985 1986 1987 1988 1989 1990 Governmentsecurities and bonds 28,596 33,151 38,435 29,284 25,480 23,697 25,986 29,104 29,762 32,251 Investments 20,797 24,022 21,362 24,258 25,797 31,067 48,392 49,217 71,101 59,242 Lending 56,431 64,A92 74,249 65,531 71,822 91,693 1I6,031 145,139208,745 224,355 Other assets 7,307 10,712 I 0,157 11,810 12,494 16,227 18,530 23,680 27,445 32.961 Borrowing 44,983 52,344 49,745 47,892 47,228 55,155 81,494 96,131 138,792 139,789 Deposits 58,11 7 64,063 76,100 63,294 65,576 75,484 46,474 98,525 115,599 131,901 Other liabilities 4,909 7,168 9,336 I 0,170 11,408 17,265 22,773 33,267 61,480 57,686 Shareholders' equity and untaxed reserves 5.122 8,402 I,O22 9,527 11,381 14,380 18,1 98 19,217 21,182 19,433 Total assets 113,131 131.977 144,203 130,883 135.593 162.684 208,939 247,140 337.053 348,809 Curt G Olsson Peter Wnllenberg Pehr G Gyllenhammar Karl-ErikSahlberg Gdrsn Ahlstrdm Rune Andersson

Hms Caualli-Bjdrkman Tore Daun StenGustafsson Bengt Haak Antonia .Lx :son I ohnson Mauritz Sahlin

Saen Sdderberg Knut Wachtmeister Tom Wachtmeister Karin Westerberg LarsOberg

"1991, Gonan AslsrBdtr., 1936; (1,987) SvsN Sonsnsruc, 1928; 7983 (7974) Board of Directors Managing Director, Sydkraft AB, Consul General, Managing Director, Forvalt- (S) Directors elected by the Malmo (M) ningsaktiebolaget Ratos, Stockholm Annual General Meeting Shareholding: 620 Shareholding: 5 440 (7987) KNur WecuruErsrrn, 1924; 1987 (1974) Cunr G OrssoN, 7927; 1,976(1,970) RuNr AmornssoN, L944;1997 (M) (M) Stockholm Chairman, Tielleborg AB, Trelleborg Member of the Riksdag, Lund Chairman of the Board Shareholding:0 Shareholding: 19 629 Shareholding: 10 312 HaNs Caverrr-BJonruerv, 1,928;1976 (7965) Tov Wacururrsrrn, 1931; 1989 (1982) (M)) (S) PErERWALLENnnnc, 7926;7974 (7969) Dr. Econ. h. c., Malmo Deputy Chairman, Atlas Copco AB, Nacka Dr. Econ. h. c., Skandinaviska Enskilda Banken, Shareholding: 864 Shareholding: 7 680 (S) Stockholm ToRE DAUN, 7929;1989 (7979) MRS. KARIN WESTERBERG,7924;7985 (7978) First Deputy Chairman, also Chairman of the Former Managing Director, Goteborg (G) Ph. D, Gciteborg (G) Stockholm Board Shareholding: 431 Shareholding:3 000 Shareholding: 92 600 Srsm Gusrepss oN, 7923; 1985 (197B) Lens Osrnc, 1936;1991(1989) (1,979) Psun G GvrrENuavuan, 7935; 7982 Dr. Econ. h. c., Dr. Techn. h. c., Dr. Med. h. c., Managing Director, AB Custos, Dr. Med. h.c., Dr. Techn. h. c., Chairman, Chairman, AB Astra, Stockholm (S) Stockholm (S) (G) AB Volvo, Coteborg Shareholding: 340 Shareholding: 0 Deputy Chairman, also Chairmnn of the Gdteborg Board BnNcr H.n.a.x, 1925;1987 (1,980) Bo C E RAMFoRS,1.936; 1990 (1.981) Shareholding: 200 Chairman, AB Custos, Stockholm (S) Stockholm Shareholding:0 Managing Director and Croup Chief Executiae (1982) Kenr-Enrr SaHrernc, 7928; 7989 Shareholding: 720 Chairman, Perstorp AB, Perstorp (M) Mns. ANroNr.q. Ax:soN JoHNSoN, 1943; 7990 Deputy Chairman, also Chairman of the Malmd (1982) Board Chairman, Axel Johnson AB, Stockholm (S) Shareholding: 540 Shareholding: 780 MAURrrz SnnlrN, 1,935;7997 Managing Director, AB SKF, Goteborg (G) Shareholding: 0

52 Leif A Andersson Ingegiird I Oskarsson Lennart Pettersson RoIfBIom RolfKarlsson Bo Berggren

BertilBertilsson Saen Borelius Gijsta BAstedt Lars V Kylberg Martin Lundberg Hdkan Mogren

Gunnar Skoog UIf Wikman LarsAhlborn Hjiirdis Cronsjd

Directors appointed by the Government BEnrrr BlnurssoN, 7926;7983 Mns. INcscrno Tnonossol, 1929; 1987 Managing Director, Henry och Gerda Dunkers Speaker of the Riksdag, Grillby (S) LEIFA ANDERSSoN,1938;1986 Stiftelse och Donationsfond, Helsingborg (M) Deputy Director until October 22,199L Chairman, Gciteborgs Stads Fastighetskontor, Shareholding:4 400 Gciteborg (G) Uul-l WrrueN, 7928;7985 Shareholding: 920 SvrN BonEuus , 1928;7984 Chairman, Wikman & Malmkjell AB, Teby (S) Former Managing Director, Stockholm (M) Shareholding: 1 064 Mns. INcrcAno J Osr

53 !pp"t to- from the left: Carl Lrjwenhielm,Otto Wrangel,Rutger Barnekow, Roger Holtback, Anders Hedenstrcim. Lower row from the left: Carl-DiedricHamilton,Yngae Andersson, Bo C E Ramfors,Arne Ogren.

54 Group ExecutiveCommittee

Bo C E Ramfors,born 1936, Managing Director and GroupChief Executioe External directorships:Chairman Nolato; Director Bilspedition and Regnbdgen.

Rutger Barnekow,born 1935, DeputyGroup Chief Executioe. External directorships:Chairman FastighetsRenting; Deputy Chairman Industrikredit; Director Robert Bosch,Rank Xerox Svenska,Saab-Scania and Svenska Dagbladet.

ManagementCommittee of ManagementCommittee of SEBSweden SEBInternational Roger Holtback, born1945, Head of Gdteborggroup and Bo C E Ramfors,born 1936, Chairman ChairmanSEB Sweden. SEBInternational. External directorships:Director Frico International, Anders Hedenstriim, bornL945, Head of Treasury. Getinge Intressenter,Scandinavium, Goteborg, SvenskaMdssans Stiftelse, Vdstsvenska Carl Ltiwenhielm, born1942, Handelskammarenand Thyssen-Bornemisza Group, External directorships:Director Electrolux och Monaco. G&L Beiier. Arne Ogren, born 1930,Head of Stockholmgroup, Carl-Diedric Hamilton, born1948, Head of Enskilda Externaldirectorships: Chairman Angpannefore- ningen; Director Arands, Arands International, Alfort & Cronholmand ABB Asea-Skandia.

Otto Wrangel, bornL943 , Headof Malmrigroup.

Yngve Andersson,born1942,Headof Staff SEB Sweden. External directorships:Director Vdrdepappers- centralenVPC AB, and SvenskaFondhandlarefore- ningen

Auditors

Auditors electedbq the Annual Auditors appointedby theFinancial Deputy,Auditorselected by theAnnual GeneralMeeting Sup erztis ory Author ity GeneralMeeting Lennart Svensson Caj Nackstad Lars Bonnevier Authorised Public Accountant, Authorised Public Accountant, Authorised Public Accountant, Malm

55 Addresses

Units and subsidiariesin Sweden

HEAD OFFICE AND SEB SWEDEN AB Arsenalery SEB-Fastigheter AB, SEB INTERNATIONAL CENTRAL OFFICES Stockholm Stockholm Officeaddress: Stockholm Officeaddress: Officeaddress: Kungstradgerdsgatan8 Malmskillnadsgatan 42 Malmskillnadsgatan42 Officeaddress: Sergels Torg 2 Postaladdress: 3-706 40 Stockholm Postal address:Box703 46, Postaladdress: Box703 46, Postaladdress: 3--106 40 Stockholm Telephone: +46 I 763 50 00 S-107 23 Stockholm S-10723 Stockholm TelEhone:+46 8 76350 00 +468221900 Telephone:+46 8 79057 00 Telephone:+46 8 79057 00 Far +46 I 76371 63 Board, Executive and Fax:+4681.03661. Fax:+468103667 Teler:15 000essebs s General Management Cable:Essebank stockholm Fax:+46876371.63 S.W.LF.T.address ESSE SE SS Eurocard AB, SEB Fiirslikring +46 I 763 73 06SEB International Stockholm Stockholm Telex:'1.6600 essebh s Head Office 11 000 essebi s SEB International Giiteborg Officeaddress: Officeand postal address: l0 400 essexs s Foreign Exchange Officeaddress: Mdster Samuelsgatan34 Sveavdgen90, Dealing Ostra Hamngatan24 Postaladdress: 3-1.03 83 Stockholm 5-11359 Stockholm Telephone:+46 8^\467 00 Telephone:+46 8 67392 00 12 620 esseds s Euro-deposits Postaladdress: 3-405 04 Gdteborg ^15 Fax:+46 8 27 67 30 Fax:+46 Cable: Essebank stockholm Telephone:+46 37 6270 00 I 61218 S.W .I .F.T . atldress;ESSE SE SS Fax:+46 31 62"1430 Telex:73763 Telex:16 500essebg s SEB Kort, Stockholm ENSKILDA 20 000essexg s Foreign FinansSkandic AB, Officeaddress: ExchangeDealing Stockholm Enskilda Fondkommission, Mdster Samuelsgatan34 2238esseng s Note Dealers Postaladdress: Stockholm Officeaddress: CnDle;Essebank goteborg Malmskillnadsgatan42 S-10383 Stockholm Officeaddress: S.W .I .F .T . address:ESSE SE SG Postaladdress: 3-1,03 78 Stockholm Telephone:+46 8 14 70 00 Norrlandsgatan15 ^160 Telephone:+46 8 14 60 00 Fax:+46 8 2167 30 Postaladdress: Box 67, Malmii Fax:+46 8"10 38 45 +468 1064 08 S-10322 Stockholm Ot'ficeaddress: Ostergatan 39 Telex:"13763 Telephone:+46 I 76395 00 Postaladdress: 5-205 20 Malmii AB Garnisonery Fax:+46 I 7798 92 Telephone:+46 40 20 60 00 Giiteborg Svensk Fastighetskredit AB, Telex:11009 nsklda s Fax:+46 40 20 64 38 Ot'ficeaddress: Stockholm Teler:15 400essebm s Nordstadstorget3 Enskilda Kapitalf iirvaltning, Officenddress: 32 850essexm s Foreign Postaladdress: Box1,19 23, Regeringsgatan65 Stockholm ExchangeDealing 5-40439 Gciteborg Postal addr ess : Box 737 0, Ot'ficeaddress: Ca&le:Essebank malmo Telephone:+46 31.62 29 00 5-10391 Stockholm Jakobsbergsgatan17, plan 9 S.W .LF .T . address:ESSE SE SM Fax: +46 37 1.552 96 Telephone:+46 8 72375 00 Postaladdress: Box 16053, Fnx:+46821.1438 5-10321 Stockholm Telephone:+46 8 791.37 00 Fsx:+46 8"1L 8"1 29 Telex:1,3 292 placabs

Branch offices in Sweden (326offices)

Stockholm group (144offices) Arboga, Arlanda, Arninge, Askersund, Boden, Boliden, Borldnge, BAlsta,Danderyd, Djursholm, Eskilstuna (2), Falun, Flen, Gnesta, Giillivare, Giivle, Hallstahammar, Haninge, Hofors, Huddinge, Hudiksvall, Hiillefors, Hdrnosand, fakobsberg, Jiirna, Kalihiill, Karlskoga (2), Katrineholm, Kumla, Kungsor, Koping, Lidingo, Linkoping (2), LuleA, Marie fred, Motala, Mdrsta, Nacka (2), Nora, Norrkoping (3), Nykoping, Nyndshamn, Niisbypark, Oxelosund, PiteA, Roslags Niisby, Salem, Saltsjobaden,Skelleftehamn, Skellefted, Sollentuna, Solna (5), Stallarholmen, Stockholm (55), Stocksund, Strdngnds, Sundbyberg, Sundsvall, Soderhamn, Sodertiilje (2), Torshdlla, Trosa, Tumba,.T:iby Centrum, Tiiby Kyrkby, UmeA, Upplands Viisby, Uppsala (3), VagnhArad, Vaxholm, Viksjo, VingAker, VdsterAs,Orebro (3), Ornskoidsvik

Giiteborg group (111 offices) AlingsAs, Anderstorp, Bor, BorAs (4), Brastad, Brdlanda, Burseryd, Dalsjofors, Ed, Ellos, Falkoping, Floby, Floda, Fritsla, Gnosjo, GrAbo, Goteborg (39), Gotene, Habo, Halmstad (3), Hillerstorp, Hunnebostrand, Huskvarna, HogsAter, Honci, Jonkoplng (2), Karlstad, Kinna, Kinnared, Kungsbacka (2), Kungshamn, Kungdlv, Kdllered, Lerum, Limmared, Lindome, Lysekil, Mariestad, Mullsjci, Munkedal, Molndal, Partille (2), RonnAng, Sandared, Skdrhamn, Skovde, SmA- landsstenar, Smogen, Stenungsund, Stromstad, Tranemo, Trollhdttan (2), Uddevalla, Ulricehamn, Unnaryd, Varberg, Virnamo, Vdrobacka, Ytterby, AmAl, Asarp, Alvsered, Ockero, Overlida.

Malmii group (71 offices) Alsterbro, Anderslov, Arlciv, Bjuv, Bromolla, BAstad, Dalby, Eslov, Gamleby, Helsingborg (4), Hiissleholm, Hogands, Hcirby, Kalmar, Karlshamn, Karlskrona, Klippan, Kristianstad, Lagan, Laholm, Landskrona, Lessebo, Ljungby, Lomma, Lund (5), Malmo (14), Markaryd, Nybro, Oskarshamn, Perstorp, Ramkvilla, Ronneby, Simrishamn, Skancir, (2), Skurup, -Staffansto.rp,Svalov, Svedala, Siilvesborg, Tollarp, Trelleborg, Vellinge, Vinslov, VAstervik, V2ixjo Ystad, Astorp, Almhult, Angelholm, Orkelljunga International branch offices and sr.lbsidiaries International representative offices

Skandinaviska Skandinaviska Banque Scandinave Xtaly - Milan People's Republic of China - Enskilda Bankery Enskilda Banken, Representative Off ice, Officeand postal address: Beiiing London Branch Luxembourg Branch London YiaMGonzagaT, Officeand postaladdress: Trading name: Skandinaviska Officeand postaladdress: 1-20123 Milan Unit 11-10Liang Ma Tower Scandinavian Bank Enskilda Banken 30, Finsbury Square Telephone:+39 2720 01144 8 North Dongsanhuan Road Ot'ficeand postal adfuess: (Luxembourg) S.A., GB-LondonEC2A 1SB Fax: +39 2720 01997 ChaoyangDistrict Telex:3'!^1420swtr i ScandinavianHouse Luxembourg Telephone:+M 71.6 38 64 39 Beijing i00026 2/6 CannonStreet Fax:+M77 6380778 Telephone:+86 1 501 19 06 GB-LondonEC4M 6XX Officeaddrus: Switzerland - Zurich +86 1 501 66 88 ext 2'1745 16, Boulevard Royal Fax:+86'1.501 19 13 Telephone:+4477 588 3494 Banque Scandinave Oft'iceand postaladdress: Fax:+447'1 588 0929 Postaladdress:BP 62L, Telex:222 535 sbpbj cn L-2016 Luxembourg Skandinaviska Hottingerstrasse 21 Telex:8950281. esseldn g Telephone:+352 47 79 81-L Enskilda Bankery CH-8032 Zwich S.W.I.F.T.address: ESSE GB 2L "l Thailand - Bangkok Fax:+35247 3137 Marbella Telephone:+41, 26'13141 Fax:+47'1.261309"1 lelex: 5/JL eSSeD tU Ot't'iceand postaladdress: Officeand postaladdress: S.W.I.F.T.address; ESSE LU LL Ricardo Soriano 50-4 Telex:872082seb2ch 17th Floor/Paci.fic Place Skandinaviska E-29600Marbella 140 Sukhumvit Road Enskilda Banken, "12 Bangkok 10110 Skandinaviska Telephone:+34 52 82 81. Spain och Portugal NewYork and Cayman - Telephone:+66 2 254 46 60 Enskilda Banken AG, Fax:+3452829476 Madrid Islands Branches +662254 45 6L Frankfurt am Main Officeand postaladdress: Fax:+662254 46 62 Skandinaviska Oft'iceaddress: Enskilda Securities, Carrerade SanJer6nimo 17,3" Skandinaviska E-28014Madrid Enskilda Banken Alte Rothofstrasse 8 Brazil - Sio Paulo Corporation, New York Postaladdress: Enskilda Limited, Telephone:+34 1.4 29 80 52 Officeand postaladdress: Postfach100548 London Fax:+341 429 34 69 Officeand postaladdress: Centro Empresarial,Faria Lima, W-5000 Frankfurt am Main telex: z/ / f,J esseD e 245 Park Avenue, 33rd Floor Officeand postaladdress: Avenida Brigadeiro Faria Telephone:+49 69 29 83-0 New Yo& N.Y. 10157 26, Finsbury Square Lima 2020- 7 andar - Conj. 71 Fax:+49 69 28 38 55 Germany - Berlin Telephone:+1. 2'12 286 06 00 GB-LondonEC2A 1DS 0145256o Paulo Telex:4-^13413 sebf d Telephone:+M7'l 6383 500 Ot't'iceaddress: Fax:+^l 212370 16 42 - Telephone:+55'1.1 815-27 33 Telex:421.6^18 esseb ny Fax: +44 7"1628 9 01.3 InternationalesHandels- Fax: +55 11 81.52796 551590esseb ny Scandinavian Telex:8955951. nsklda g zenmm Telex:017 831 04 isac br Cable:Essebanken Facific Lt4 Sydney Friedrichstrasse 93-97 Cable;Essebankrep S.W.LF.T.address; ESSEUS 33 Officeand postaladdress: Enskilda Ventures Postaladdtess: Postfach 90 O-1086Berlin Levei 3, 17-19Bridge Street tr-imited, London Mexico - Mexico City Skandinaviska Sydney,N.S.W.2000 Telephone:+49 30 2643 2313 Officeand postalad.dress: Officeand postaladdress: Telephone:+61. 2 231 1433 Fax: +49 30 2643 2312 Enskilda Bankery 26, Finsbury Square EliseosNo. 385,Esq. Fax:+61.2251 1.893 Telex:114219ajco Campos Paris Branch GB-LondonEC2A 1 DS MoliEre "Torro A" - Piso 1 Telex:7482'1,scan Telephone:+M'I 6383500 Officeaddress: Hungary - Budapest Colombia Chapultepec 59,Boulevard Haussmann Fax:+M^1867 9067 Polanco Postaladdress: BP 125 Banque Scandinave Officeaddress: 11550 Mexico D.F. F-75353Paris Cedex 08 en Suisse, Geneva Enskilda Asset Rdk6czi rit 1-3 Telephone:+52 5 281.25 24, Postaladdress: Telephone:+33 7 M 71.92 00 Ot'ficeaddress: Management Ltd, London 52 5 28245 04,52 5 28249 74 Postafiok300/20 Fax:+331 47 425499 11,Cours de Rive Fax: +52 5 281 24 46 Officeand postaladdress: HU-1443Budapest 70 Postaladdress: '11.7 30, Finsbury Square Telephone:+36 1. 77 70 CasePostale 901 Scandinavian Skandinaviska GB-LondonEC2A 1 SB Fax:+36'1.2527006 Enskilda Banken, Lll-lzrl Geneva J "l'I Telephone:+447^1 374 6133 Banking Partners Telephone:+41 22787 31. Hong Kong Branch Fax:+M71.867 9084 - Fax:+41227353370 Foland - Warsaw Finlanil Helsinki Officeand postaladdress: Officeand postal address: 2201 House Enskilda S.A., Paris Officeaddress: Jardine LII Pawla iI, 73 1 Connaught Place Banque Scandinave Jana c/o Union Bank of Finland Officeand postaladdress: PL-01038Warsaw Central en Suisse, Zurich "10 Fabianinkatu31A 2, rue de la Baume Telephone:+48 22 38 40 Postaladdress: P.O. Box 630, Hong Kong Officeaddress: F-75008Paris "18 +4839'120237 SF-00101Helsinki Telephone:+852 868 201i Schipfe 2 Telephone:+33 1.42 89 89 "15 Fax:+4822384202 Telephone:+3 58 0 17 1130 Fax:+852868 4037 Postaladdress: +33 1.42 19 Fax: 89 Telex:825590 sbppl Fax:+3 58 0 17 1.938 Telex:67341, esseb hx Postfach5130 Telex:640 302 nsKda f S.W.LF.T.address; ESSEHKHH CH-8022 Zuich Telex:125796 sebfsf - Telephone:+41 1 229 33 33 Czechoslovakia Prague "16 Enskilda Securities Fax:+41'1.2'11. 47 Nonnay - OsIo Skandinaviska Inc., New York Ot'ficeand postaladdress: Enskilda Eanken Parizskl25 Officeaddress: Officeand postaladdress: Branch Banque CS-11000 Prague1 c,/o Den norske Bank Singapore 245 Park Avenue, 33rd Floor Scandinave i Telephone:+42 2 23^l 4698, Kirkegatan21 New York, N.Y. 10167 Skandinaviska Luxembourg S.A., +422231 4673 Postaladdress: P .O. Box 9579, Enskilda Banken Telephone:+"1 21.2351 4870 Fax:+42223"1 4656 Luxembourg Fax:+'l 2129836767 Egertorget, (South East Asia) N-0128Oslo 1 Officeaddress: Limite4 Singapore CIS - Moscow Telephone:+47 2 4270 66 15,Boulevard Royal Enskilda and postaladdress: Fax:+47 2 48 27 77 Office Postaladdress: BP 487 (Deutschland) Gnb[I, Officeaddress : Proy ezd 50 RafflesPiace #36-01 Chudozhestvennogo L-2014Luembourg JFIamburg Shell Tower TelEhone:+3 52 46 17 1.7-1. Teatra 6, Kv 34 Denmark- Copenhagen Singapore0104 "17 Officeand postaladdress: Postal address : Prshkinskaya Fax:+3 52 46 10 Officeaddress: Republicof Singapore Esplanade41 U].5/5, Kv 34 Moscow c/o Unibank Telephone:+652235 6M (Finnlandhaus) Telephone:+7 095292 0338 Representative offices Torvegade2 Fax:+65 2253 047 W-2000Hamburg 36, +7 095 292 0738 Postaladdress: P.O. Box 1000 Tele::RS 25188 essebk Banque Scandinave Telephone:+49 40 35 45 95 Fax: +7 095 200 0237 DK-l786 Copenhagen Cable:Essebank Representative Off ice, Fax:+49 40 35 45 90 Telex:413 286 unlt st Telephone:+45 31 57 38 L"I S.W.l.F.T.address: ESSESG SG Monaco (Branch) Fax:+45 3'1.57 81 70 Officeand postaladdress: Enskilda Espafia S.A., fapan - Tokyo Telex:271.96 unib dk ESSESG MER (Merchant) "Les Caravelles" Madrid Officeaddress: Rm 425, 25,bd Albert 1:er Officeand postaladdress: Shin Tokyo Building MC-98 000Monaco Monte Esquiroa, 11 3-3-1Marunouchi, TelEhone:+33 93 50 84 67 E-28010Madrid Chiyoda-ku, Fax:+33 93 50 03 97 Telephone:+34 1 3i9 0889 Postaladdress: C.P.O. Box 1633, Fax:+34 1.308 3682 Tokyo 100 Telephone:+81 3321.4 55 85 Fax:+81.32'145595 Telex:0222 37 29 essebkj ProductionSolbergs, Gciteborg Cable:Essebank TranslationScanEdit, San Fransisco Printed in Swedenby HelsingborgsLito