Aditstedshareholders' equitv per share Definitions 70 per centof untaxed interestmargin Taxedsharehoiders' e{uity. plus Auuall divided by the number of ordi- Net interestearnin-gs as a pertentageof averagetoial assets' reserveswirere they exist, nary sharesat year-end. Aueragetotal assels Total assetson a daily-averagebasis' Corecapitnl ratio ftt;;?;i.,* of risk-weighted balancesheet Average of eachmon&'s closing figqe; Core capital as a Pelcentage The Group:^ Core capital consistsof taxed the paient Bank's total assetsorr a daily- and off-balancesheet voiume. 70 per cent of untaxed-reserves averagebasis are included. sharehoiders'equity plus where they exi:i, pius minority interest in shareholders' minusgoodwili. Returnon equityafter statzdard tax equif Operating ptoiit ifter 30 per cent tax as a percentageof capitalratio eq'uitv- d"eiinedas taxed shareholders'equity at the opening Total Total shareholders'equity as a percentageof risk-weighted of th6 year minus the dividends paid during the year plus and off-balancesheet volume. Total capital u.t ,rJ- share issueplus 70 per ient of all untaxed reserve$ balancesheet capital and supplementary capital minus wl{ere they exist (inciuding the valuation adjustmentleserve consistsof core in unconsolidatedcompanies. Suppiement- for bondsiplus minority inlerestsin shareholders'equity' shareholdings arv capital iiciudes subordinateddebenture loans plus and capital contribution, approved by-the Govern- Earninssper share afler stnndnrd tnx ruserues capital may not exceedthe amount of Profit Sxcludit g cupitul gains divided by the number of ordi- ment. Supplementary gains core capital. nary sharesat feariend, where-profii exciuding capital is defined as operating profit plus extraordinary items lossleael excludingcapilal gains minus 30 per cenItax minus minoritv Lendinp loss level is defined as lending lossesdivided interestsln piofit plus shareoJ prblit in associaiedcorn- The leiding loans outstanding (to the pubiic and financial paniesin eicessof dividends received. by year-end institulions) plus loan guaranlees. Eantingsper share at'ter ftrll tax The sainedefinitioir as aboveexcePa that the year's tax cost is calculatedas the sum

"The refers to Sweden's "The Bank" refers to Skandi:raviskaEnskilda Banken thousand miliion. Riksbank" "The the Swedish (S-I-Banken),parent comPany in the S-E-BankCroup' centrai bank. Riksdag" refers to "Goteborg" lor Goihenblrg' Unlessotheiwise stated, figures in parenthesesrefer to Parliarnent. isSrvedish , reports can be ordered 1991.A1l percentage figures relatingto.the business of the Annual reports andinterim Skandinaviska S-E-Bank'Gro,rp,ihe Bink and its subsidiariesare basedon frr:m Cortorate Cornmunications, 40 3tockholm, Sweden' exactamol:.nts. Per cent changesrefer to comparisonswith Enskilda 8anken,5-106 1991,unless otherwise stated" SEK refers to Swedish kronor. For other eurrencycodes, seepage 38. Million(-s) is abbreviatedM. Billion rllean$one SkandinaviskaEnskilda Banken AnnualRePort for 1992

2 1992in brief Contents ResultsandkeY figures 3 Important events and decisions 4 Statementof the Group Chief Executive 3i$iiiil.i?,ffi'f;l3fio" Banken 8 Deposits and lending 10 Retail banking 16 Corporate banking 20 The S-E-BankGrouP staff 21 S-E-Banken'sbranch offices in Sweden

Reportof the Directors 22 Result and ProfitabilitY 27 Lending Poiiciesand lending Iosses 29 Treasury 32 S-E-Bankenshares 34 Accounting PrinciPles 36 Profit and loss accounts, balancesheets and notes 52 Proposal for the distribution of profit 52 Auditors'rePort 53 Long-termstatistics 54 Board of Directors 55 GrouP ManagementCommittee 55 Auditors 56 Stockholm,Goteborg and Malmo Boards of Directors 56 Addresses 1992in brief

Key figures fsr the S,'E-BmikGroup*

7992

Operatingprofit/loss,SEKM ^,:: ^,?; 3,312 2,326 -5,370 Operating profitbefore losses,SEK M 5,080 5,005 5,461 7,086 5,813 Total assets,SEKbillion 289 366 452 451. 485 Return on equity after 30Vostandard tax, Vo 23.5 18.1 11.8 7.6 - 77j "t0.7 Total capital ratio, To 8.8 9.'t 8.4 Core capital ratio, 7o 7.3 6.0 6.7 5.1 Operatingincome/costs, excl. lending losses 1.99 i.85 1.74 1.88 1.74 '1.84 Operating income/costs, incl. lending losses 7.69 1.35 1.18 0.72 Earningsper shareafter30Vo standard tax, SEK 12.61 11.56 7.61. 4.50 -17.07 Dividend per share,SEK 2.55' 3.00 3.30 3.35 0

* For definitions, seethe inside front cover.

Earnings situation in brief

The Group The Bank Change Change SEKM per cent SEKM percent

Net interest earnings 6,637 - 30 4,770 - 36 Commissions,fees and foreign exchangeearnings 6,084 + 25 4,936 +32 Other operating income 986 +'16 501 +0

Total operating income 13,707 -L0 10,107 - 13

Staff costs 4,152 -1 3,158 +4 Other operating costs 3,186 -4 2,709 +4

Depreciation 556 ft 201. -8

Total operating costs 7,894 -2 6 068 +3

Profit before losses 5,813 -L8 4,039 -30 'n,1.67 Lending losses 9,587 Provisions for political risks abroad 1,6

Operating loss - 5,370 - 5,548

In view of these negative earnings, the Board of Directors proposes that no dividend be paid to the shareholders for 7992. For facts about S-E-Banken shares, see page 32. Impurtfint&vents and decininnn

in size' and The Board of Directors was sharply reduced BjornSvedberg was appointed the new Managing Director Enskilda Banken' and Group Chief Executive of skandinaviska * TheBankformedarealestatecomPanytomanagetheproperties thattheGrouptakesovertoprotectitsclaims. + from its mortgage The Bank took over loans of nearly SEKz4billion subsidiarySvensk Fastighetskredit' * swedish authorities glanted a licence for the establishment of a new life insurance company' which was company combined with the Bank's existing unit-linked insurance underthecommonnameS-E-BankenForsdkring. + and 1,600emPloyees The new bank building in Rissnewas completed, moved there from central Stockholm' * under the terms of Preliminary talks began with the Ministry of Finance thenewGovernmentSuPportsystemforSwedishbanks. + which only A law passed.by the Riksdag eliminated restricted shares, became swedish citizens could buy. All sharesin s-E-Banken unrestricted effective from January 1" 1'993' + new organisational structufe' At the beginning of 19g3,theBank introduced a grouping its operations into two customer-orientated loans and divisions supplemented by a seParateunit for nonPerfolming pledgestakenoverinconnectionwithloanforeclosures. At the sametime, the Bank's credit organisation was strengthened' x onFebruary2S,lggs,theBanksubmittedaformalapplication for GovernmentsuPPort' Statementof theGroup Chief Executive

n L,ln Tuesday,Septemb er 7,1,992-with great At the sametime,I would like to emphasise humility and respectfor tle task ahead- I assumed that most of our operationsremain sound. The the post of Managing Direptor and Group Chief greater part of our lossesemanates from a small Executiveof SkandinaviskhEnskilda Banken. number of company clients. Our businesswith the The subsequentperiod $as been very eventful, vast majority of the two million private individuals to say the least:The Riksb{nk's 500 per cent call and more than 100,000companies that are Group money rate in September{nd its decision in customersshows good profitability. November to float the Swddish krona were, of Another important positive observation is that course,among the most remarkableevents of an our commission income has risen sharply. Today otherwise dramatic autumn. it representsnearly 45 per cent of total operating The recessionrefuses to easeits grip on Sweden, income. the general economiccrisis is deepening- and the difficulties plaguing many of our customers continue to grow. Wrn the aid of the American investment bank Morgan Stanley and our own Enskilda, last /-tr autumn we began an in-depth analysis of the Lrlur 1992financial statementsshow an operating financial situation of our Group, in which we also loss of more than SEK 5 billion, or worse than we tried to assessthe probability and consequencesof foresaw when we published our Interim Report for various scenariosover the next few years. the first eight months of the year. Lending losses According to this analysis,there is a risk of have risen more than anticipated, and the volume continued sizeablelending lossesduring 1993and of problem loans has grown faster than expected. 1994.We therefore also consider it highly prob- The growing volume of nonperforming loans is able that the Group will fall below the 8 per cent a seriousproblem. The absenceof interest pay- capital adequacyminimum during 1993. ments on theseloans is the main reasonwhy our Our projection of future lossesand of a gradual operating profit before lossesalso deteriorated undermining of Group shareholders'equity natu- between 1991.and7992. rally implies that the capital baseof Skandinaviska At year-end 1992,Skandinaviska Enskilda Enskilda Banken must be strengthenedas soon as Banken'scapital ratio was 8.4 per cent. One factor possible. behind the sharp decline in this ratio, aside from On February77,7993, the Bank'sBoard of the operating loss,was that the weaknessof the Directors therefore made a formal decision to krona pushed up the value of our foreign currency apply for support under the guaranteescheme for denominatedassets by over SEK35 billion as of the banking system that the Riksdag approved December31. This is a seriousconsequence in a late in 1992(Government Bill7992/93:135 on "Measures situation where it is extremely important that we for strengtheningthe financial system"). shrink our balancesheet to improve capital adequacy. T In parallel with our analysis of the financial situ- ation, we conducted a thorough review of the Group's businessplans and organisational struc- ture, during the autumn of 1992. This work led to a restructuring into three divisions - S-E-Banken,Enskilda Corporate and In theEnskilda Corporate Dirtision, which is responsiblefor largecorporate clients and,pro- ducts intended for them, we are building further on our traditionally strong market position, with the goal of being the leading Nordic bank for major corPorations. Inthe DiligentiaDiaision, we are gathering all of the Group's nonperforming loans above a certain size, aswell as pledges taken over in connection with loan foreclosures,mainly properties but also shares. In parallel with its businessoperations, the Bankls credit organisationhas been restructured and strengthened.

A At tt'tlt writing, we are starting our discussions with the Ministry of Financeand the Bank Support Authority on suitablemechanisms for Government support. it', facittg this task, my position has alwavs been - that the sound, healthy part of the Bank which clearly meansmost of it - should be allowed to survive in the best possibleway, and that SkandinaviskaEnskilda Banken shouid continue to existas a strongbank in the serviceof its customersand for the benefitof its shareholders' In this context,I would also like to emphasise that among the most important reasonsfor my fundamental optimism about the Bank and its - future - despite its large loan problems is that with great p1"utnt" and respect,I have seenthe loyalty, ptofi.i"tt.y and extremededication of the Diligentia - which the Board adopted in January Croup'semPloYees. f 9SJ.Its purpose is to create more focused' ef- ficient and customer-orientated operations' While gathering our forces along clearer lines Stockholm,FebruarY 1993 in these divisions, we are also creating a decentra- and lised organisation with fewer decision levels shorter dittutt."t between customer and manage- ment. fl=_P*_, Diuision, we serve private In the S-E-Banken slKsr,"au"rg individuals as well as small and medium-sized / companies through our 330 branches in Sweden' Organisationalchart, SkandinaviskaEnskilda Banken

lnvestments [*d"'-] "*r*''"ffi Deposits Stockholm I citv l @ffi @pn:*" Securities Corporate - Equty Trading - Correspondenl Re ations - Foregn Exchange Banking t *r'""-_l- - Insurance Greater- Sharelssues Debt Securties Cash Mergers& ,Derivatives N,4anagement Stockholm Acquisltions Mutualfunds I Researchand Payments -il--l analyss Payments/ andcharge cards west ] ] Financing t;;It"*n I I Subsidiaries SvenskFastrghetskredit, Landon,New York,Frankfurt/Berlin/Hamburg, FinansSkandrc, ;;lEast Geneva,Luxembourg, Paris, Madrid, Srngapore, S- E- B an ken Fo ndf o rv altn in g- ] Bangkok,Sydney, Hong Kong, Tokyo S- E- Banken Forsdkring, Arsenalen,Garntsonen, t;;I .9-tr - Rn nL an Fa

Weakincrease in depositsin While the increaseat all bankswas approximately the bankingsystem 1 percent, the increase at S-E-Bankenwas 5 per Total deposits in the S-E-Bank Group as shown in cent.SEK-denominated deposits rose by a full the balance sheet,i.e. including deposits from 9 per cent. financial institutions, rose somewhat dving 7992. One reasonwhy total bank depositsgrew Deposits denominated in SEK accounted for the slowly was that many householdschose to pay entire increase, while deposits in other currencies down their debts instead of increasingtheir bank declined. savings.There was alsokeen competition from other forms of savings.While overall household Total deposits in the S-E-Bank Group depositsin Swedishbanks declined by nearly by currencies 3 per centduring the year,S-E-Banken's deposits December31 SEKbillion Change from householdsremained largely unchanged. 1992 1.99"1 per cent Measuredon a daily-averagebasis during 1992, Swedish kronor 704 97 +7 the Bank alsoeasily maintained its shareof house- Forreign currencies 38 42 -10 hold deposits. Total 1,42 t39 +2 S-E-Banken'sshare of deposits in the Swedish banking market, Total depositsin the S-E-BankGroup by all currencies principal market segments Average figure for each year "1990 December 31 SEKbillion Change per cent 799"1. 1992 L992 7991 per cent Households 12.4 12.6 12.6 ,a Households 50 49 Companiesetc. 23.0 24.7 24.8 't6.2 Companiesetc. 84 82 Total 15.7 1,6.5 Financialinstitutions 8 8 +n Total 142 1,39 +2

Depositsfrom households,companies etc. showedstronger growth at S-E-Bankenthhn in the Swedishbanking market as a whole. The Bank thus increasedits market shareduring the year.

The S-E-BankGroup's deposits and lending, Lendingby variouscredit institutions by customer categories SEKbillion

900

800

Households Households 700 36% 234/a 600

500

400

300

200

100

o 90 88 S-E-BankGroup also reported a decline in foreign currencyloan portfolio at The Larger volume during 1992'This was th; S-E-BankGrouP householdloan partly due to the saleof single-family home.mort- Sincea largeshare of theGroup's lending to.house- by SvenskFastighetskredit (SFK)' the holds, companiesetc. and financial institutions iage"loun, ilut-tt't mortgagesubsidiary, to OspreyMortgage ioans denominatedin foreign currencies' consistsof (see 17)'The Bank and SFKconse- 1992had a major Securities page shifts in exchangerates during to the quently saw their combined shareof lending impact on loan portfotio figures' In November SEK householdsfall during the Year' Grl.rp's loans outstanding roseby more than due to the weaker krona' 20 biilion, entirely Loan portfolio of the S-E-BankGroup' bY market segments portfolio of the S-E-BankGroup' PrinciPal Loan Change December 31 SEKbitlion bY currencies 1992 1991' Per cent Change 31 SEKbillion December cenl t 79gZ 799'l Per Households 73 aao!/ '192 Companiesetc. 246 Swedishkronor 183 10 11 -7 +4 Financial institutions Foreigncurrencies 137 IJL 329 315 +4 +4 Total Total 329 315 The volume of loans to companiesetc' by all banks,mortgage institutions and financecompanies Weak increase in Swedish lending roseby about 2 percent.The S-E-BankCroup's In the Swedishmarket,lending by credit institu- Swedish-basedcompanies in thesefinancial ser- during 1992'Bankloan tions roseinsignificantly increaseof more than 11 the vice sectorsreported an volume increaied by lessthan 2 per cent' while oer cent.The volume of SEK-denominatedcorPo- loan portfolios of mortgage institutions roseby iate loans rose considerablyfaster in the 1 peicent. Loans outstanding from finance com- S-E-BankGroup than in the rest of the market' In paniescontinued to decrease' addition, therewas an increasein the Group's The recessioncombined with recently imposed foreign currency loans to companies,local govern- on tax deductions resulted in lower house- limits etc.,while in the rest of the market the the year' Outstand- *"nt, hold demand for loans during loans declined' - volume of foreign currency ing bank loans to households denominated in - fell nearly 8 per cent' SEk and foreign currencies The S-E-BankGroup's share of loansoutstanding to In contrast,lending by mortgage institutions in the Swedishmarket, all currencies householdscontinued to rise, though at a far Average figure for each Year -199L 1.992 slower pacethan in previous years' per cent 1990 1.0.4 Households I2.3 11.0 16.7 Companiesetc. 17'0 1.6.9 Total 15'1 14.7 ],4.3 Retailbanking

Major quality-raising effort The Bank managedto increaseits shareof shrink- During1992,9-E-Banken's 330 branch offices took ing householddeposits somewhat during7992, aggressivesteps to improve the quality of their largely due to the successof its high-interest serviceto customers. accounts,the Shareholders'Account and the 90s To get a better idea of the situation, the Bank Account. conducteda large-scalesurvey during 7992to The S-E-BankGroup increasedits shareof f/ze gauge the perceptionsof both customersand staff mutualfund market,especially Swedish and inter- about the quality of the work being done at the national equity funds and international money branchoffices. market funds. The survey found that both consumerand At the end of 1992,S-E-Banken and its subsidi- middle-market customersthink that S-E-Banken's ary SvenskFastighetskredit (SFK) together had a branch offices are highly service-mindedand portfolio of 72bullet bond losns targeted to indi- skilled in generalbanking transactions.On the vidual investorsworth SEK5.1 billion. Theseloans other hand, customersfeel that the offices should - with maturities of between one and ten years - have longer opening hours and that waiting times include both interest-bearingand zero coupon are too long. Many customerswould alsolike the bonds,on which interestis paid only at maturity. Bank to take more initiatives of its own. The S-E-BankGroup's shareof the fast-growing The survey also demonstratesa clear correlation retail bond market declined during7992. between the quality of a branch office and its prof- The life insurancemarket performed poorly in itability. 7992.But S-E-Banken'sunit-linked lit'e insurances, On the basisof this study, the branch offices whose premiums are invested in various mutual have begun a major effort to raise quality. Among funds chosenby the customer,reported very good the stepsthey are implementing are training pro- sales.S-E-Banken Fcirsdkring sold about 33,000 grammesand extendedbusiness hours. One policies - 24 per cent more than in 7997- with a exampleof the latteris that theRegion Stockholm total premium value of SEK1.1 billion. This was City's 44 branchesextended their openinghours equivalent to 19 per cent of the overall market for by 1.5hours per day. new life insurancepolicies. The market value of TheBank also expanded its investmentsin self- the unit-linked funds, which are managedby servicesystems by installingspecial machines that EnskildaKapitalforvaltning, more than doubled to convertcurrencies, accept deposits or changeand SEK2.7billion. count coinsin a number of branchoffices. in addi- During theautumn a new unit-linkedretire- tion, a largenumber of the existingcash-dispensing ment pol"icy,PrivatPension, was launched. The machineswere replaced by more up-to-datemodels premiums are investedin a very low-risk Swedish that enablecustomers to make transfersbetween moneymarket fund. Sales of thisnew insurance their own accounts. policyexceeded expectations.

Consumerbanking The S-E-BankGroup's savingsalternatives for households Large share of household savings December31 1992 Change Market The approximately two million private indi- during the year, share, SEK billion SEK bjllion per cent viduals who are customersof the S-E-BankGrouo comprise a very important and profitable markei Bank deposits 46.8 _ nt 12 segment. NatiOnal public The improved savingsclimate of recentyears savingsaccounts 10.3 + 0.9 15 National public and the resulting growth of the popularity of sharesavings funds 7.5 + 0.3 76 financial investmentshave led S-E-Bankento Other equity mutual funds 14.4 + r.y Jo redouble its ambition to provide suitable savings Money maiket funds 11.1 + 1.5 3l products for all types of needs. The Group thus Unit-linked insurance 2.7 + 1..6 58 t rte shareof totalhousehold financial Retailbonds savrngs.lllf: (incl. zero coupon) 5.1 + 1.6 L2

10 Thefirst Swedishcoins were minted underOtof Skt)tkonung,kingof the Saeaand GdtapeoPles, in qbout gg5A.D.The onlYdenomination - the penning - usasmade of silaer and modeledon an Englishcoin.In theL6th centurY , Kng GustaaVasa mnrlemajor changes in theSwedish coinsystem.This included the inlroductionof thedaler, known after7604 as the riks- SEK 38 billion in mutual funds daler,whichbecame funds and Managementof S-E-Banken'smutual a coin of inter- managementtor other discretionary portfolio nationalcoffimerce. and prlvate individuals were provided institutions The last riksdalet bv Enskilda Kapitalforvaltning / Enskilda Asset in 1877.The il;;;""t in Stockholm,.London,L:."*PTq wasminted Portrait likenesson thedaler improued ouer and Hons Kong, as well as by BanqueScandinave ) 1542onward IheY en SuisseiBSSiCeneva, and Banque Scandinave fime, and from Luxembours (BSL). wereof high artisticqualitY' The prodJct range includes both Sweden- and Luxembourg-based equity and money market funds, encompassing both Swedish and inter- national inveitments. Enskilda Kapitalforvalt- ning/Enskilda Asset Management operates more ttrai SOmutual fund's altogether, with a total mar- ket value of SEK 36 billion at year-end' In ad- dition, they manage individual portfolios on a large scale. buring lgg2,BSSstarted two new Luxembourg- based mutual funds: the BSSUniversal ]apan Fund and the BSSUniversal Far EastFund' At year- end, BSSmanaged and was trustee for investments totalling about SEK 55 billion, of which SEK 2 billion in mutual funds.

11 Rrran BANKTNG

Swedishmutual funds:28 per cent tax reform and the advent of new products. To market share provide knowledgeable customers with advanced The single factor that had the greatestimpact on local advisory services,the Bank has therefore mutual fund operationsduring 7992wasthe weak- established a number of specialist offices, where ening of the krona, which led to sizeableincreases customers can also receive help with more com- in the SEK-denominatedmarket value of mutual plex or specialised investment matters. funds investedin foreign securities.Swedish equity The Bank's consumer investment advisers had and bond mutual funds, too, were indirectly helped a turbulent year in 1992.During the first half, by the weaker krona. The volume of managed demand for various types of interest-bearing funds increasedby SEK 5.4 billion during the year. investments gradually rose, culminating during S-E-Bankenthereby consolidatedits position as the interest rate unrest in September. When the the largest mutual fund manager in Sweden,with Riksbank floated the krona in November, prefe- a 28 per cent market share. rences swung from interest-bearing securities to Investmentsin foreign equities and interest- equities. S-E-Banken'sinvestment recommenda- bearing securitiescontjnued to climb at the expense tions are based on a portfolio with adequate risk- of Swedish equities.At year-end,total managed spreading between equities and bonds as well as assetsconsisted of 32 per cent Swedish equities, between different geographic markets. 33 per cent foreign equitiesand 35 per cent interest- bearingsecurities. SEB Kort: 1.2 million cards S-E-Banken'sbroad range of mutual funds SEBKort, the Bank'scredit and chargecard unit, makes it possibleto achieverisk-spreading even had a total of 1.2million cardsoutstanding at with small investments.This is accomplished year-end- about a third of the Swedish market - either by purchasing a combination of mutual one million of them held by private individuals. funds or by investing in a balancedfund, such as Saleson the card accountsof individual cus- the Aktiv Viirlden insurancepremium fund, which tomers reachedSEK 5.5 billion, while outstanding investsin equitiesand bondsworldwide. Aktiv balancessubject to interest payments and finance Viirlden's 7992v alueincrement including dividend chargesaveraged SEK 1.9 billion during the year. was 20 per cent,while the Swedishbusiness weekly The corresponding figures for the corporate card Veckani Affdrer's index was unchangedand the sector* mainly Eurocard- were SEK6.7 billion bond index of the StockholmStock Exchange rose and SEK700 million respectively.

-J byl3percent.I Thecrackdown on creditcard counterfeiting and fraud intensified, with good results, mainly New forms of investment management becauseof well-developed international co-oper- During 1992, the Bank's Trust and Securities ation.New electronicallybased security pro- Businessunit began using a new computer system grammesin the MasterCardand VISAnetworks f or tru st u..orrrrt"ud*inislration and securi ti es alsoyielded the desiredeffects in the form of information. The system provides a modern, fewerlosses due to fraud. flexible base for administration and advisorv services related to managing the assetsof trust Decline in lending to households account customers. For the secondconsecutive year, S-E-Banken's The Bank also changed its investment sa-lesand volumeof loansto Swedishhouseholds diminished. advisory services system. In principle, all branch At SFK,,rt i.tt hasabout 184,000individual mort- offices previously sold all services offered by the gagecustomers, the number of loanapplications Bank. Today the situation is completely different. from householdswas half that of the 1991figure. The need for advisory serviceshas expanded and Decliningsingle-family home pricesand the changed, due to such factors as the elimination of stagnationin the housingmarket also resulted in a Sweden's long-time exchange controls, the 1990-91 tighteningof loanapproval rules during theyear.

t2 In 1568Dukes lohan and Karl min- tedsquare silaer coins showing their initiatslooped together as a signof theiralliance against their halt'- brother,King ErikXN, eldestson of Gustaa "blood Vasa.Called c01ns, tnevwere supposedlymade of silverthat the widow of a SaanteSture, The number of householdsthat have fallen prominentnobleman, behind on their interest and principal payments hadreceiaed from Erik XIV ascom- on loans rose during 1992.lnview of high real pensationafter he had her husband 'l590s, interest rates and rising unemployment, the situ- killed. In the Swedenexperi' 1993'At ation is expectedto becomeworse during encedone of its worst boutsof infla' the Bank began io the end of 7992,bothSFK and tion. By increasingthe copper con- with the growing, build up specialunits to deal tent of theSwedish silaer in the household sectorand help insolvency level coinskxcePt the daler), customersresolve their financial problems' thecountry could Produce thesame The S-E-BankGroup's lending products more coinswith for Swedishhouseholds quantityof puresilaer.ln 1'592the Market "siluer" 1".62 31,1992 Change 114dre coinweighed December share' during the Year a mere0.0095 SEKbillion SEKbillion Percent gramsbut contained of silaer.Annual inflationwas - 1a grams loans 28'7 0.5 Bank g cent. rti"'is";;isxi " 3e.6 _ 27 seaeralhundred Per - JJ' Credit card balances 1'9 0.3

o After the saleof SEK 2.1billion in mortgagesio Osprey (seepage 17). 2'Estimaie.

13 Rrren BANKING

Themiddle market SFK's loans outstanding for apartment blocks totalled SEK37.7 billion. It is extremely important Importantclient category to both SFK and the Bank to properly assesswhat The more than 100,000small and medium-sized effects the cutbacks in Government interest sub- companiesthat are clientsof the S-E-BankGroup sidies, rent levels and occupancy levels will have constitutean important baseof its operations.In on housing companies and municipal govern- 7992,this middle-market category accountedfor ments. New loans for multifamily buildings are more than half of former SEBSweden's revenues not being approved unless there is an explicit local and 60 per centof earningsbefore problem loans need for new housing. and losses.Due to the growth in lending losses, however,the Group's operatingearnings were Larger share of leasing market deepin the red. Its lending lossesfrom small and While the overall volume of the Swedish leasing medium-sizedcompanies more than doubled market shrankby 11per cent,the FinansSkandic during7992. group, which is Sweden'slargest company in this For many years/the profitability of the middle field, increasedits volume by 8 per cent.Finans- market was also affectedby the fact that various Skandic'smarket sharethus climbed from 20 to services,such the counting daily as of cash nearly 25 per cent. In factoring services(purchases receipts payment transactions,were free and to of accountsreceivable and lending with invoices customerswhile costlyto the Bank.In late autumn as collateral),the companyhad almost 15per cent 1991,the Bank thereforestarted to chargefor of the Swedishmarket. This successis largely due various raisedtheir Also for servicesor price. to FinansSkandic'sbusiness strategy, which is reasons fairness, is desirable of it that all cus- basedon having a number of companieswith tomersbear their own costs. different specialitiesand a variety of distribution One exampleis the CompanyBanking Package, channels. The which was introducedearly in1.992. package FinansSkandic'sco-operation with S-E-Banken providesa number of servicesat a fixed annual intensified during 7992in the form of joint train- was intendedto help costand of coursealso cus- ing programmes,joint customervisits and other tomers simplify their routines. At first, the intro- activitiesaimed at enablingthe S-E-BankGroup duction of the Company Banking Packagetrig- to offer the most comprehensivepossible range geredprotests. According to a survey conducted of financing alterna tives. in the autumnof 1992,however, only 15per cent of the Bank'smiddle-market customers opposed Large share of payment traffic the package-feesystem and preferredseparate S-E-Bankenretained its large market share (over paymentsfor variousservices. 60 per cent) in international payment services.In the Swedish market, the Bank co-operatedwith More loans to middle-market companies the other membersof Bankgirocentralen(an inter- Swedish The frequently heard accusationthat bank transfer network) to launch a modernised loan "autogiro" bankshave adopted a tough attitude toward payment system.After someinitial applications from small and medium-sized com- difficulties,the service is functioningwell, and paniesis not supportedby lendingstatistics at during 1993this important product will undergo S-E-Banken.Loans outstanding to companies furtherrefinement. with fewer than 200 employeescontinued to in- The introductionof the new-Bankgiroimage creasesubstantially. Of total Group lending in technologywas accompanied by majortechnical 1992,about4S per cent went to small and medium- difficulties,which seriouslydisrupted the Swedish sizedcompanies. corporatepayment market. Although the situation

11 la In theearly 17th cen- tury Swedenhad a shortageof the most importantminting metal-silaer-and therewas heaaY demand for coins. After the 16L3Peace with Denmark, had largely beencorrected by year-end,these dis- for example,Sweden agreed to PaY a substantialloss of momentum' ruptions caused thatcountry a million Wh"n the final remnants of the exchangecontrol riksdslerransom fot the systemdisappeared on january 7,7993,Swedish returnot' Alasborg For- banks lost their monopoly on international pay- tress.Lnrge sums of ments.S-E-Banken is neverthelesswell equipped from abroad' thanks moneyTaere later needed arma' to respond^high to any competition for to lts technologicalstandards and its good mentswhen Swedenioined the Thirty knowlelge of the needsof Swedish clients' YearsWar. The country'sbiggest services Expansion in property-related qssetwas q centu- in the real estatemarket led The diificult situation ries-aldmine at heavier load of assignmentsfor S-E-Banken's to a Falun,which two property managementcompanies, Arsenalen accountedfor, ur,a bu*irooen' TGy included appraisals-and per centoI propertv analysesas well as monitoring of con- /u ,arrr",ion projects in connectionwith lending' Europe'scoPPer Toward the end of 7992,assignments also in- production.To cluded working together with Diligentiato, mana- takebetter adaan- ge properties taken t""t ftt protec"tionof claims' tageof Suteden's copperresources, KingGustau II Adolt'(Gustauus Adolphuil decidedto issuepure cop' per coins.His daughter, Quern Chris- tina, alsoissued tin coinsbeginning in 1644.The largest - rnofih 10 dalers- mensures325x675 mm bucr 7x2ft) anLdweighs 19 .7 kg haer 43 tb). It is theworld's largest coin'

15 tmrpmratehnmk{mg

The leader in payment services Global expansionin derivatives SkandinaviskaEnskilda Banken's strong position and futures in the market for major Swedish corporations is The Bank strengthenedits resourcesin derivative reflected in its high market share in a number of productssuch as interestrate and currencyswaps fields. According to a survey conducted during as well as options,by expandingits staff and com- 7992, the Bank is perceived as the market leader in puter investmentsin various parts of the interna- electronic banking services.Ninety per cent of tional network. Sweden's major corporations mention S-E-Banken In the futures market, where participants deal as one of their leading payment service banks. in forward contractson financial instrumenrs In the branch of operations called Trade Services, through specialexchanges, the Bank expanded which includes payments, cash management, both its trading and clearingactivities. At the end short-term trade financing and correspondent of 7992S-E-Banken, already a full member of the banking, the Bank continued developing and mar- futures exchangesin London (LIFFEand the Inter- keting systems for automatic transmission of pay- national Petroleum Exchange)and Stockholm ment information between customers and its own (OM), was also granted full membership in the computer systems. French futures exchangeMATIF). In payment services,it is important to expand co-operation with corporate clients in their units Strong position in capital markets outside Sweden. In view of stiffening international The Bank retainedits leadingposition in debt- competition, the Bank took steps to build up the related products and servicesin the money and local proficiency of its international network capital markets for Nordic borrowers, markets during 1992. and currencies. To meet the growing need of Swedish multi- During 7992,the Bank arranged syndicated national corporations for a continuous overview loans for a number of new corporateborrowers in of their various subsidiaries' transactions, the the Euromarket, including Sweden'sSecuritas, Bank improved its cash pool systems, which are Nyn?isand Esaband Norway's Jotun.The Bank now also available at Bank units outside Sweden. was also an adviser for a number of private place- Consultancy work in Cash Management was ments aimed at international investors.Since it discontinued, since neither the demand nor the was establishedin June1990, S-E-Banken Capital prices for this type of service have remained satis- Markets has arranged more than USD 8 billion factory. worth of loansand privateplacements. The Bank also continued to broaden its investor Growing shareof foreign baseand increasethe number of Eurocommercial exchangetrading paper programmes,i.e. short-termsecurities in the The Bank's foreign exchange trading unit had a internationalmarket. This included settingup a new very good year in 1992.Its structure and working programme for Vattenfall, a Swedishpower utility. methods enabled it to deal successfullywith the market fluctuations generated by unstable Heavier activity in bond market exchangerates and the autumn interestrate shock. The Swedish money and bond markets had an Skandinaviska Enskilda Banken strengthened eventfulyear in 1992.Thetotal volume of issues its position as the leading Swedish foreign exceededSEK 300 billion, compared with SEK240 exchange trader. Its market share climbed from billionin 1991. almost 40 to nearly 50 per cent. Most of the Bank's Togetherwith Enskilda,S-E-Banken Capital foreign exchange units abroad also performed Marketsissued two equity index bond loans very well. whoseyield is linked to stockexchange indexes in Europe and the United States,respectively. The Bank and its subsidiary SvenskFastighetskredit (SFK)atso issubd a number of retail bond loans, both zero coupon and interest-bearing.

76 warsof Karl (Chfirles)XII were ahugedrain on the Szoedishecon' omy.ln an attemPtta salaageits finances,in 1,7L5-1719the Crown " issuedemergency coins" equiualent to'Ldaler silver' In an effortto collect ualuablemelals, the Crown de- a seven-yearbond The Bank lead-managed mandedthat siluer and tin coinsbe for Ericsson,the Swedish telecommunications issue exchangedfor these Eurokronor bond issuestotalling SEK group, plus emergenrycotns. 5.Suittlo" (1991:SEK 7 billion), of which one biliion "jumbo" At onepoint it was a issuefor the EuropeanInvestment issuedemergencY Bank. commercial paper marketwas coinsworth less than'L0 per cent on The Swedish "assurance characterisedby lower volume and a smaller ntlm- thedaler plus an note" concernuTolg ber of activeProgrammes due to promisingan- investorsabout further lending losses' As durmg other40 per cenf enjoyed " 1991,however, large first-classborrowers asslon es pruc' Bankmaintained its eoodmarket access. The ticable"- thus ieading positionin this areaas well, amongother makinga 50 Per thingsby assistingVattenfall in establishingits centprofit. first Swedishborrowing Programme' SFK,which in 1990became the first Swedish credit institution to export assetsin the form of tt', sinsle-familyhome loans, continued to usethis finincing techniqueduring 1992'During the year' SfK solJt3,300loansworth SEK2'1 bilfion to OsprevMortgage Securities (No' D Limitedin purchase I".r"v. a., prwionsly, Ospreyfinanced the bv issuinginternational bond loans' Early iilggZ,SFK sold off an additional9'300 sinele-familyhome loansworth iEK2'2 billion' A tota'lof 46,500loansworth SEK7'8 billion have thus beensold to the OspreycomPanles'

T7 CoRponerEBANKING

Inaestmentbanking numberone on themedia company Extel Financial,s list of leadinganalysts of Turbulent year in Europeanstock markets Scandinavianequities. Enskilda's research and execution The lengthy recessioncombined with the financial capability also received very high marks in a study and political uncertainty surrounding the continued published by Euromoney magazine. integration of the EC createda difficult business In Sweden, S-E-Banken/Enskilda Fondkommis- climatefor Enskilda,which is responsiblefor the sion defended its position Group's investment banking activities. as the leading brokerage house, with a 14.9 per cent share The year beganwell on the Europeanstock of trading on the Stockholm Stock Exchange. exchanges.However, it graduallybecame clear to market participants that the expectedeconomic Fewernew issues upturn in the United Stateshad been delayed and The gloomy economicsituation was not conducive that the recoveryof the Europeaneconomy was to any large-scalenew issue activity - either in still distant. This led to extremely weak equity Swedenor internationally. pricesduring the secondand third quarters,not In Sweden,Enskilda carried out an initial least in the Nordic markets. public offering of sharesin the shipping company Toward the end of 7992,however, the decline in ICB and new equity issuesfor the metals group the British pound sterling,the Swedishkrona, the Trelleborg and the shipping company Frontline. Norwegian krone and the Finnish mark led to a OutsideSweden, Enskilda lead-managed a new rise in stockexchange indexes around Europe, shareissue for Securitas,a securi{zservice company, especiallyin the Nordic countries.In spite of this, targeted mainly to investors abroad. It also acted 1992as a whole was a weak year in the equity as co-leadmanager of equity issuesfor a number markets of many countries,including Denmark of Swedish and Norwegian companies,among (-26.2percent), Germany (-3.5 per cent)and others. Norway C1.Bper cent).Among marketsthat per- formed well were Finland (+6.3per cent)and Lower takeover activity France(+1.9 per cent).On the Swedishstock International takeover activity involving Nordic exchange,the GeneralIndex was basically flat companiesremained at a low level. The prevailing comparedwith a year earlier, although the "Top 1.6"- recessionin their home marketsnaturallv made the sixteenmost heavily traded issues- experienced Nordic companiesless interested in foreignacqui- an increaseof 75.2per cent. Shareprices of differ- sitions.At the sametime, companieselsewhere ent economicsectors also varied sharply. While were clearly more interestedin investing in the the Swedish construction industry index fell by Nordiccountries. 44.3per cent and banking and financial services Although overall volume was smaller than pre- droppedby 64.6per cent, the indexof engineering viously,activity was heavy at Enskilda,which companiesclimbed by 223 per cent. servedas an adviserin 18international mergers ln Europeanand especiallyNordic stock mar- and acquisitions- including the acquisition of the kets, trading volume was consistentlyheavier than Norwegian-basedFreia Marabou confectionary in7997.The 33 per cent volume increasein Sweden group by Kraft CeneralFoods, the acquisition of waspartly due to extensivetrading among stock- Sweden'sKloster Speedsteel by France's brokers, however. This, in turn, was due to the fact Eramet,the sale of ScandinavianAirlines System's that the shareturnover tax was finally abolished stakein IntercontinentalHotels and the joint ven- and that trading in options and other derivative ture agreementbetween the Norwegian food instruments increased. com- pany Orkla and Sweden'sCoteborgi Kex. . In Sweden,both the number of tJkeover Strong position in stock market trading bids and the averagevolume per transactionwere Enskildamaintained its positionas a leadinginter- Iowerthan in 1991.Enskilda was an adviserin nationalbroker and dealerin Europeansecurities. lnvestor'stakeover of its sisterinvestment company For the fourth consecutiveyear, Enskilda ranked Providentia,Incentive's sale of Engstrom&

l8 At thesuggestion of A.O. Wallenberg, Bsnk, founderof StockholmsEnskilda Swedenissued a gold coin betzueen 1858and 1872 withboth Swedish and Frenchdenominstions (1 carolin - to 10francs) to facilitatepayments counlriesin theLatin curr?ncY union.In 1873,Sweden switched to Nilsson and Kabi Pharmacia'ssale of ACO Hud- fhegold standqrdand beganto use office pro- vird. The spinoff of Scribonafrom the the krons (crown), consistingof 100 the divestment of portions ducts group Esselteand tire.Small quantif ies of goldcoins electricity grids in the Stockholm of theinnnicipal had beenminted in Swedensince suburbs of Solna and Sundbyberg also took place L56B, but it was not until the reign of with Enskildaas an adviser. KingOscar il thatthe counily issued Good performance in other operations themin significant ffix Enskilda'srisk capitalfunds, whose investments includele'ueraged buyouts, had anothersuccessful i;::;;,:;,,,:::; Capital,a fund special- tn W u"ur. e,r.oo"an"Acquisition ended Practtce ising in non-Nordic Europeanbuyouts, raised and wasreplaced bY a and ECU a: M (aboutSEK 700M) by early 1993 papermoney sYstem' carriedout an investmentin the Britishmarket' ScandinavianAcquisition Capital, which specialises in acquisitionsin the Nordic countries,had invested *or" thunSEK 470M of its totalcapital of SEK764M bv vear-end1992. This fund showedvery good "ur,lingt, especiallyafter the saleof its 20 per cent stakein the Swedishpublisher Liber' During 1992,therc was heavyactivity at Enskilda Strategy,which performsconsulting work for Nordii companies.Advisory servicesin such fieldsas financialrisk managementand property mattersalso generated very good revenues'

19 TheS-E'Bank Group staff

At year-end1992,1he S-E-Bank Group had 11,610 grows/ training and professionaldevelopment employees,including 1,540in its international net- becomeincreasingly important. Training is a vital work. The averagenumber of employeesduring element of the goals and strategiesof S-E-Banken. the year fell by 527to 10,325.This reduction, During 7992allGroup training programmes which is an important component of the cost- were co-ordinated.Banking technology training cutting programme of recent years,was achieved was systematisedby subjectgroups and adapted with the aid of a hiring freeze,natural attrition, to new needs.The new managementdevelopment a voluntary early retirement offer and ihe de- programme, which is aimed at all management consolidation of the card processingcompany levels,accommodated221 newly appointed man- Kortbetalning ServoAB. agersduring the year. The first mutual fund and Efforts to increasemobility in the Group, initiated insurancesales staff also receivedtheir credent- in7997, continued during 1992.Numerous ials, and the first classgraduated from the "SEB employeesmoved between different departments College" run in co-operationwith the Stock- and units, as well as between different parts of holm Schoolof Economicsand the business Sweden.The new organisationalstructure intro- schoolsat the Universities of Goteborg and Lund. duced early in 1993will naturally make it even This programme is equivalent to three full-time more important to maintain an active internal terms (60points) at a Swedishuniversity or college. labor market.

Co-ordinated training In a financial servicecompany like the S-E-Bank Croup, it is especiallyimportant for employeesto have a high level of knowledge, coupled with service-mindednessand communication skills. As the need for employee expertiseand commitment

Staff turnove4S-E-Banken S-E-Banken's staff structure Staff costs per employee in the Percent of averagenumber of employees By age, sex and full-time/part-timestatus S-E-BankGroup AsoTDecember31,1992 SEKthousands (permanentstaf0

NeW employees '1989 1990 19911992

20 S-H-Banken'sbranch offices in Sweden

West Region South Region Greater- Region East Region Region North (92 (60 Stolkholm (48 branches) branches) branches) (35branches) PerstorP (51 branches) Alsterbro AlingsAs Andersldv Arboga Ronneby Alvik AnderstorP nora! (z) Bjuv Askersund Simrishamn Arlanda Bor Brastad Biomtilla Boden Skaniir/Falsterbo Bromma (2) Burseryd n.aiurlau Bistad Boliden SkuruP Danderyd Eskilstuna(2) Dalsjiifors DalbY Borliinge StaffanstorP Djursholm Flen Ed Esliiv Bebta (3) Svaiiiv Farsta(2) Gamleby Ellos Halmstad Falun t3) Svedala ForumNacka (2) Gnesta Falkopine Helsingborg Giillivare Stilvesborg Frudngen Gnosjo Flobv Hiissleholm Gdvle Trelleborg Globen Habo Flod'a HVellinge Hiigersten Gtjtene Karlskrona Hiillefors Jiirna Vinsliiv H6gdalen (2) Hunnebostrand Kinnared Hdrntisand ]iinkiiping Ystad Kalmar Hijgsiiter KliPPan Karlskoga(2) [akobsberg AstorP Kailhell Katrineholm A;il-- Krisiianstad Karlstad Angelholm KungensKurva Lagan Krnnrhu*n Laholm Kumla (2) orkelljunga Kista Lessebo Kunisbacka Landskrona Kungscir Kiirrtorp Linkiiping Kungiilv Lomma Koping (4) Liding

fr a '.,1 *

at a a

1, .'11t' a .; *r

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27 RspoRr oF THE DrREcroRs Resultand profitability

The S-E-BankGroup reportedan operatingloss of banking system- and at S-E-Banken- in the past SEK5,370M in1992, compared with an operating few years. profit of SEK2,326M in 7991.The sharp deterio- ration in earningswas mainly due to larger lending Effects of the interest rate shock losses,but also to the growing number of cus- In the secondhalf of 7992,there were additional tomers who did not pay interest on their loans. problems. During the summer, the prevailing This led to declining net interest earnings and unrest in European currency markets spread to thereby poorer earning capacity. Sweden.Combined with a lack of confidencein Obviously,the Bank'slending lossesand the Swedish economy and government economic unpaid interest are intimately connectedwith the policieson the part of both Swedishand foreign deepeningrecession and high real interest rates companies,this led to a large-scaleoutflow of during the year. But thesedifficulties must also be foreign currency beginning in August. The Riks- seenin the light of developmentsin Swedenover bank respondedby raisingits call money (over- a somewhatlonger perspective. night) rate severaltimes, peaking at an unpre- The deregulation of the Swedish credit market cedented500 per centin mid-September. in the mid-1980scoincided with an unusually About the sametime, the Government pre- strong and lengthy international economicexpan- sentedits guaranteeproposal for Swedish finan- sion.In addition, until 1990-91Sweden had a tax cial institutions.Neither this proposalnor a series systemthat favoured borrowers and discrimin- of joint Government-SocialDemocratic crisis pack- atedagainst savers. Together with an expansive ages- aimed at reducing the Government budget monetary policy, this led to high inflation and an deficit and strengtheningthe competitiveness overheatedeconomy, which resulted in sharply of Swedishindustry - was ableto createmore rising priceson suchassets as property and than temporary calm in the money and currency equities.These trends were reinforced by the fact markets. In mid-November, the krona was again that capital was largely restricted to Swedenuntil exposedto healy speculation.There was a mass- 1989,when exchangecontrols in forcefor half a ive outflow of foreign currency: nearly SEK 160 century were finally lifted. billion in a single week, compared with about The deregulationof the credit market was SEK 80 billion during the three most critical weeks followed by severalyears of strong expansionin in September. Iending, characterisedby the pursuit of volume In the end,it was no longer possibleto continue and market share.A growing proportion of loans defending the krona. On the afternoon of Novem- was securedby real estate,and the steadily rising ber 1.9,the Riksbank decided to un-peg the krona market valuesof propertiescreated room for in- from the EuropeanCurrency Unit (ECU)and let it creasedloan amounts.To a greatextent, Swedish float. By year-end,its value had fallen by about banksappraised collateral on the basisof its 15per centagainst the ECU. higher market value, rather than on its earning capacity. Impact on S-E-Banken During 1990property prices began to fall due to In principle, the weaker krona was neutral in rising real interest rates,decelerating inflation and termsof S-E-Banken'sown foreign exchange new tax rules.The slowdown in the Swedish positions.On the other hand, it had a negative economyalso helped reduce the demandfor com- impact on the Bank'stotal capitalratio (seethe mercial space.This led to declining rents, which in Treasurysection on page29). turn depressedprices even further. In the past two Of course,a floating krona exchangerate also years,the price of commercialproperties has increasesthe risk of losseson loansto Swedish fallen by more than 50 per cent,while apartment customersthat have borrowed in foreign cur- blocksand single-familyhomes have declined in rencieswithout hedging. As long as their loans value by 20-30per cent. remain in good standing, however, theseare un- Excessivelending to the real estatesector com- realisedlosses and it is difficult to estimatetheir bined with the recession,structural changesand impact on the Bank.At the sametime, a cheaper the unfortunate timing of political decisionsthus krona enablesSwedish export companiesto causedenormous lending lossesin the Swedish expandtheir market shareand/or raisetheir profits. Combined with falling interest rates,this )) rate, which mainly controls the pricing of loans to meansthat manycorporate clients that had pre- major corporate clients, and on the mortgage rates viouslybeen operating with narrowmargins have chargedby its subsidiary SvenskFastighetskredit' improved their chances of survival' Taken altogether,the Group's overall interest points to 1'52per Lower grossreturn on assets margin fell by 0'58percentage The weaker earning capacity of the Group is re- cent. on the Bank's bond portfolio im- flected, for instance,in the trend of its grossreturn Earnings becausefinancing was cheaPerdue to on assets,i.e. total operatingincome as a percent- proved short-term rates and becausecapital ageof averagetotal assets. ieclining - orrsalesof portfolio assetsnearly tripled' Grossreturn on assetsconsists of two parts gains overall interest margin (net interest earnings as a SharP increase in commissions percentageof averagetotal assets)plus commis- The Group's commissionsincluding foreign sions and other operating income as a percentage exchangeearnings improved by 25 per cent to of averagetotal assets. SEK 6,0b4M.This was mainly becausethe Bank During 1992,the averagetotal assetsof the (-3 successfullyhandled the major fluctuations in S-E-BantGroup declined by SEK 13 billion per foreign exchangeand interest rate markets during cent) to SEK 438billion. Sinceoperating income the autumn. Commissionsfrom mutual fund also declined by 10 per cent to SEK L3,707M'gross managementand feesfor credit and chargecard return on assetsfell from 3.36to 3'13per cent' servic-esalso contributed substantially to the good income' Lower net interest earnings increasein commission The main reasonfor the 30 per cent decline in net Cutbacks in oPerating costs interest earningswas that the income shortfall Over the period 1980-90,the operating costsof the attributable to negotiated interest deferments/ S-E-BankGroup climbed by an averageof 16 per concessionsand unpaid interest on nonperforming cent annually. This trend was reversedby the loansrose by SEK1'7 billion, reachingSEK 2'5 cost-cuttingprogramme initiated in the autumn of biltion during 1992'Interest defermentshave 1990and completed during 1'992'Dueto a number mainly involved loans to a few large companies of measuresthat included a hiring freeze,a volun- relatedto the real estatebusiness' tary early retirement offer, rationalisation of work During 1992,interest rates on the Bank's core oroceduresand various structural changes,oper- depositsand loans outstanding were raised once ating costsdeclined by a total of 2 pet cent during and lowered four times' The Septemberinterest tggi.thrswas becausethe averagenumber of rate shock had its main impact on the Bank's base

Group'sgross return on assels The S-E-BankGroup's return on equity TheS-E-Bank tax Totaloperating Income as a After30 Percent standard percentageof averagetotal asse1s Per cent

1988 1989 1990 1991 1992

zc REPoRToF rHs Drnncrons

employeesfell by 521to 1.0,325and the costsof earningsby 31 per centto SEK397M. SEB Kort computer systemsand consulting serviceswere also had a good year in1.992. substantiallyreduced. The former SEBInternational reported good The Group ManagementCommittee has set an ovcrall earnings,not leastdue to the outstanding ambitious cost-cutting goal for 1993.By year-end, performanceof its trading operations.Several of operating costsshould be 11 per cent or about the foreign subsidiariesalso reported substantial SEK900M below their 1992level. improvementsin earnings.

Sharply higher loss level SEK 24 billion in loans transferred from Lending lossesin 7992weremore than twice those SFK to the Bank of 7997,reaching SEK 11,167M. As a result,the SvenskFastighetskredit's (SFK) loans secured by Group's losslevel - lending lossesas a percentage commercial properties and its nonperforming of loans outstanding (including loan guarantees)- loans in certain apartment blocks were transferred rosefrom 1..49per centto 3.32per cent.(See also to the parent company, S-E-Banken.The trans- the sectionon Lending policies and lending losses, ferred loan volume of nearly SEK24 billion was p.27). placed in a new unit, SpecialCredits. Provisions For the Bank's loan commitments in countries for possiblelending losseson theseexposures experiencingpayment difficulties, the loan port- have thereafterbeen made in the Bank. folio is reported either at the value statedby the This transfer was an important element of a authorities or at its estimatedmarket value, strategy in which SFK will focus exclusively on whicheveris lower. In the 1992accounts, a loss providing first mortgage loans on residential provision of SEK16M was made. properties. Another important effect is that SFK lowered its risk exposureand improved its capital Good earning capacity adequacy,which is expectedto improve the terms in healthy operations of its borrowing in financial markets. While growing lending lossesand missing interest During 7992,SFKand HandelsbankenHypotek payments undermined the earningsof the - mortgageloan subsidiaryof SvenskaHandels- S-E-BankGroup, large portions of operationsper- banken - offered all holders of BOFAB bonds the formed very well. opportunity to exchangethese at facevalue for Six of the Bank's ten regions showed positive bonds in SFK and HandelsbankenHypotek, operating profits, even after lending losses.Finans- respectively.By issuing about SEK 18 billion Skandichad its bestyear everand increasedits worth of new bonds each,the two mortgagelenders eliminated the liability to BOFAB (owned on

Balancesheet structure The S-E-BankGroup's of the S-E-BankGroup S-E-Banken'sinterest margins lendinglosses and year-end Averages,SEK billion Four-monthperiods, per cent lendingvolume (incl,loan guarantees) Percent SEKbillk Liabllities Core lending and deposts Deposited with bankr Trading Borrowed portfolio from panKs lnvestmenl portfolio

Commercial paper/CD's Core endingand deposits,incl.non- Deposits peform ng ioans Overal nterest margrn Long-term Lendingand liabilities depositsin foreign currencies lnvestment portfolo fnancing COSIS 1992 1991 1989 1990 1991 1992

.,^ a 50/50 basisby S-E-Bankenand Handelsbanken) that had existed sinceits operationswere dis- SensitivitY analysis continuedin1997. Changesin interestrates affect earnings to differing sizeof the differencebe- d"gre""sdepending on the Write-down of shares in on volumes of twien the commitment periods associated comPanies borrowed funds - and what type of invested and Due to the declining shareprices of S-E-Banken's thesevolumes are tied to' interestrate Nordic partner banks in ScandinavianBanking the Bank's investmentsand borrowings Someof Partners(SBP), the Bank-sshareholdings in these kronor carry interest rates that are tied in Swedish banks were written down by a total of SEK 173M' money market rates,while others have to various The book value of its holdings in the SBPbanks fixed interest rates.Interest rate sensitivity is great- wasSEK 133M at Year-end' items, sincethey are financed est on fixed-interest The 4.9 per cent stake in Skandia Group that at floating rates,mainly related to the by borrowing S-E-Bankenacquired in ]anuary 1992waswritten marklt. Sensitivity to interest rates can be *ottuy down by SEK530M to its market value, SEK 321M' limited by employing specialrisk management instruments. Write-down of goodwill Changesin interest rates also affect the yield on In connectionwith the current restructuring of the the bonl portfolio in another way' Bonds which are a S-E-BankGroup, goodwill and the surplus value subjectto interest rate adjustmentsbegin to carry of property in the consolidatedaccounts were different interest rate at maturity' If long-term rates this written down bY SEK 750M' have risen sincethe preceding adjustment date' hasa favourableeffect on bond yield' Duringl992' Atle and Bure SEK 0.7billion of the Bank's bond portfolio was Group becamea share- subjectto interest rate adjustment' The correspond- During l992theS-E-Bank holding companies ing amount in 1993is SEK 4'0 billion' holdeiin the newly established Atle and Bure and the six risk capital companies that will managethe assetsof the former employee SensivitYanalYsis of investment funds (wage earner funds), which the S-E-BankGrouP's earnings were phased out after the nonsocialistGovern- in ImPacton mentlook power in7997.Shares were allocated InPact on eamings/loss the profit-sharing tax that eachcom- share' proportiorrto oPeratingresult, Per 1985-91' Change SEKM SEK" pany had paid during the incomeyears b-E-Ba.tk"nwas thus allotted 8'3 per cent of the +/-7% +/-66 +/-0'17 Net interest earnings sharesin Bure ForvaltningsAB and 2'2pet cent Nonperforming -/+1'00 -/+0'25 in Atle Forvaltnings AB. In the 1992accounts, Ioans +/-1billion + 0'15 thesecompanies have been valued at Commissions + /-1'Vo + /-58 /- holdings in Average change SEK20 per share' -/+ 40 -/+0'1'0 in staff +/-700 persons -40 -0'10 Salary increase + 17o Major shareholder in Other operating -/+37 -/+0'09 Stockholm Stock Exchange costs +/-7% -/+500 -/ + L'26 StockExchange was trans- Lending losses +/-500M \Mhen the Stockholm formed into a corporation, a decision was made n tax After 30 Per cent standard that its shareswould be owned on a 50/50 basis by exchangemembers and equity issuers'S-E-Ban- kln subscribedfor its allotted portion, thereby be- coming the largesf single shareholder,with 10 per centof the sharecaPitai.

25 REPoRT oF THE DIRECToRS

Deferred withdrawal of untaxedreserves piedin stagesduring the summer and autumn. At In accordancewith a corporatetax reformwhich year-end1,600 people, including computer, pay- was effectiveJanuary 7,7991,, Swedish banks were ment, training and servicestaff, were working in required to withdraw their untaxed reservesand the new building. When it occupied the Rissne include such amountsin income for the year ended building, the Bank moved out of a number of December37,7991. The additional tax resulting rented premisesin Stockholm and filled its own from the net withdrawal (after certain alternative buildings at SergelsTorg and KungstriidgArds- appropriations) was to be payable over a four-year gatan. Given the current low rent levels in central period. Stockholm,the investment in the new bank In ]une 7992,however,the Riksdag approved building, SEK1.8 billion, naturally seemshigh - at an alternative tax rule with retroactive effect.The least in a short-term perspective.But the decision, new rule permits Swedishbanks to defer the tax- which was made in the mid-1980s,should alsobe ation of untaxed reservesby wiihdrawing only 25 viewed in light of the increasedsecurity of the per cent of the reserveseach year during the period Bank's computer operationsand the greater effici- 1991through7994. As a result of the alternative ency resulting from the concentrationof different tax ruling, the S-E-BankGroup was able to restore activities under one roof. SEK9.8 billion from previously taxed retainedearn- Early in 1992,the representativeoffice in Berlin ings and tax liabilities to the Group's statutory was reorganisedinto a branch office under the reservesand deferred tax liabilities (seeNote 27 subsidiary bank in Frankfurt. on page45). During the autumn, S-E-Bankenwas the first Nordic bank to open a branch office in Tokyo. Changes in the organisation Its operationsfocus on Nordic-related business Early in the autumn of 7992,the Bank established and foreign exchangetrading. a real estatecompany, Diligentia, which was At the beginning of 7993,the Bank was granted entrusted with managing properties that had been a licenceto open a branch office in Bangkok, taken over in connectionwith loan foreclosures. where it hashad a representativeoffice since 1990. By year-end,Diligentia had taken over 65 properties Early in 7993,the Bank was reorganisedinto worth SEK2.8 billion. two customer-and market-orientateddivisions. FinansSkandicsold five of its foreign subsidi- the S-E-BankenDivision and the Enskilda aries to the Bank. The operationsof thesecom- Corporate Division. At the sametime, a separate panies - located in the United States,Britain, division for nonperforming loans and pledges France,Cermany and Singapore- were merged taken over was created.In addition, the Bank's into the Bank's units in eachrespective country. credit organisation was greatly strengthened. (See The subsidiary Tax Return was also divested. also pageT). At year-end,the operationsand most of the staff of the subsidiary SkandicProjectorwere trans- Changes in the Board and Group ferred to the Bank. Management Committee During the autumn, the Bank was granted a S-E-Banken'sAnnual GeneralMeeting on April licenceto establisha new life insurancecompany, 28,7992approved a major reductionin the sizeof whose operationswere combined with those of the Board of Directors. The number of directors the unitlinked insurancecompany acquired in electedby the Annual GeneralMeeting was re- ducedfrom 30 (18 January 1.992under the joint name of S-E-Banken directorsand72 deputy direc- Fcirsiikring. tors) to 10 (nine directors and one deputy direc- During 7992,a number of branch offices- main- tor). The number of directors appointed by the ly in the Stockholm,Goteborg and Malmci metro- Government was reduced from three to one. (The politan areas- were merged, while others were system of Statedirectors on the boards of banks divided into consumerand middle-market was discontinuedat year-end1992). The main banking units. At year-end the Bank had 330 purposeof the sizereduction was to enablethe branchoffices. Board to operatemore efficiently. During 7992,theBank's new building in Rissne, On September1, Bjorn Svedbergassumed the outsideStockholm, was completed.It was occu- post of Managing Director and Group Chief Executive,succeeding Bo C. E. Ramfors.

26 Lendingpolicies and lending losses

of collateralis performedin compliance Lending basedon analyses Appraisnl with the directives of the Financial Supervisory TheS-E-Bank Group's efforts of recentyears to Authority. The amount that remains after the improve loan proceduresintensified during 1992' value of the collateral has been subtractedfrom The most important contribution to this task is the the loan amount is the Bank'sloss provision presentatiorrof a Group-wide lending policy docu- requirement. ment with guidelines on how to balancequantity Accordingly, properties that have been taken and quality when dealing with various categories over, or are expectedto be taken over, by the Bank of customers,types of financing and economicsectors' are appraisedby using a market value basedon To achievethe goal of Group lending policies their long-term Yield. - assetsof high quality - various proiectswere This appraisalemploys a carefulcalculation of implemented: future nef operatingincome over ten years,plus Ouring the autumn, SEBSweden introduced an residual value. Theseare then discounted to cur- improved analytical model for evaluating corpor- rent value using a projected interest rate of 8 per ateclients. The model,which focuseson repay- cent,based on assumptionsabout long-termin- ment capacity,includes an analysisof accounting flation and real interest rates' This projectedinter- records?bothhistorical data and future cashflows' estrate, which should not be confusedwith the etc.),character and credibility factors(management' yield requirement used in the real estatemarket' owners) and operative factors(industry outlook' varies foi properties located in different countries competitiveness,etc.). due to varying assumptionson long-term inflation One important tool in this analytical task is a levels.Each property is appraisedindividually' computer-basedsystem that servesas a checklist As an example of the appraisalsresulting from for credit analYsts. this method, residential properties in central SEBInternational continued its efforts to im- Stockholm have an averageyield of 7'5 per cent or prove the quality of loan processing'It distributed an appraisedvalue of SEK 7,000per squaremetre' an updated .."dit trruttnal,including clearerguide- In the sameway, residential properties in the linesfor analysis,the decision-makingprocess/ Helsingborg region in southern Swedenyield risk classificationand loan monitoring procedures' 11per cent (SEK3,6QQ/m2). The corresponding At year-end,a new position was establishedfor figures for office properties in central Goteborg a Group Head of Credits, whose responsibilities are 8 per cent (SEK7 ,000 / m2)' include the overall portfolio and lending policies Yield is basedon estimatednet operatingin- of the S-E-BankGrouP. comefor 1993.Reliable figures are not available for 1992,since the properties were only held for Lending losses of more than SEK 1L billion part of the year. During 7992,theincurred and possiblelending The above examplesof prices are taken trom losrer"ofthe Group totalledSEK 11,167M' or SEK geographicareas and typesof property that are 6,407Wmorethan during the precedingyear' ieasonably representativein statisticalterms' In lncurred lossesare those resulting, for example' addition, the Bank has taken over industrial and from bankruptcies,composition agreementsor office properties and construction projectsin the similar creditor arrangementswhere the value of Stockholm region, residential properties and assetsto be distributedhas been fixed' reconstructionprojects in the Goteborg region and Possiblelending losses are those where the Bank in the Malmo region' cannot fulfill their pay- office properties believesthat borrowers - appraised losses At year:endDiligentia held properties ment obligations.Provisions for possible - accordingto theseguidelines with a book value represented66 per centof total lending losses' totalling SEK2.8 billion. During 1993,thevolume of properties taken over in connectionwith loan foreclosuresis expectedto increaseto about SEK 10 billion, of which SEK 6 billion has already been approved.

27 'rge REPoRT op Drnectons

It is important to point out that the operating The largest single lending losseswere: earningsin one particular year may be affectedby vacancies/periodic maintenance etc, as well as by SEKM the fact thai the properties have only been held The Coronado Group 1 )9? during part of the financial year. This has an Gamlestaden 763 hccumulated,gl-92: 1 115) impact on the yield measuredas a function of the The Reinhold Group 737 hccumutated,91-92: 1 210) reported operating earningsbefore depreciation Lokalen 405 plus interest payments and the book value accord- Gota 400 ing to the balancesheet. In caseswhere the Bank d,oesnot intend to keep Problem loans totalling SEK 28.5 billion a property for a long period, it is booked at current During 7992,the S-E-BankGroup granted interest market value. In most instances,the Bank engages deferrals and concessionson loans with a net appraisal expertsfrom AB Arsenalen and AB Gar- value totalling SEK 11.6billion. The Group's non, nisonen - well-respectedappraisal institutions in performing loans, i.e. those on which borrowers the real estatemarket - to determine the current have not paid interest and/or principal for 60 value. days,had a net value of SEK14.2 billion at year- In this manner, it has been possibleto securethe end. necessaryexpertise to carry out the substantial The value of properties that the Bank has taken amount of appraisalsduring 1992. over on a long-term basisfor protection of claims amountedto SEK2.8 billion. Largest losses in real estate companies After provisions, problem loans totalled SEK Nearly half of the Group's lending lossesemanate 28.6billion, or 8.7 per cent of the Group's overall from about 15 large loan commitments, most of loan portfolio. them in the real estatebusiness. During 1992, A high-quality loan portfolio is a central pre- the Bank establishedthe real estatecompany requisite for the long-term successof a bank. Diligentia in order to counteractthe continued Despite the large-scalelending lossesand problem growth in the number of available properties and loans of recent years,it is important to note that the resulting downward pressureon property the coreof the S-E-BankGroup's customerbase is market prices. sound - both amongcompanies and private indi- viduals. Lending lossesdurin g 1992w ere At year-end 7992,theS-E-Bank Group's prob- distributedas follows: lem loans and total loans outstanding (after pro- visions for possiblelosses) were distributed as Economic sectors Per cent follows: Property management 49.7 Banking and other financial services 17.8 Problernloa:rs Ilamoutstanding per cent per cent Wholesaling, retailing, hotels, restaurants 7.5 Property management 73.8 36.5 Other service sectors 7.6 Banking and other financial Construction 3.7 services 17.0 7.4 Manufacturing 3.6 Wholesaling, retailing, hotels, Private individuals 7.5 restaurants 0.5 6.6 Other categories 2.6 Other service sectors J.Z 10.5 Construction 0.3 7.9 Manufacturing 1.6 10.6 Size of losses Number Total amount Private individuals 1.9 22.7 '1..7 Other categories 3.8 Lessthan SEK 10M about 17,000 2,930 SEK10 - 1OOM 103 2,871 sEK 100- 300M 9 1,775 More than SEK 300M 5 3,591.

28 Treasury

during the final months of 1'992to reduce caPital base steps Weaker balancesheet' sub- and restructure its Aided by good profits, new shareissues and the At year-end 1992,thetotal capital ratio of over a period of years ordinateddebenture loans, to 8'4 per cent' com- order S-E-BankGroup amounted built up a strong capital basein The S-E-Banken pared with 10.7per centat the closeof 1991' for increasedlending to createenough room 5.1per cent(6'7 per cent)' the corecapital ratio was and/or other businessopportunities' During past year, the Bank instead had to use the surplus The effects of the weaker krona in itscapital baseto absorbthe largelosses' (share- deterioration in the capital ratio was due not At year-end,the Group's capitalbase The only to the impact of losseson the capital base'but holders' equity, reservesand subordinated deb- with also to the de facto devaluation of the krona in entures)toialld SEK27.1'billion, compared mid-November, which abruptly increasedtotal SEK31.7 billion at the closeof 7997'Core capital SEK35 biltion' This was because (shareholders'equity plus reserves)amounted to assetsby about nearly half of the Group's assetsare denominated SEK16.4 billion (SEK19.8 billion)' foreign currencies.During 7992as a whole' To strengthenthe capital base,the Bank issued in assetsincreased by almost8 per cent' two USD-denominatedsubordinated debenture total At the sametime, the decline in the krona in- loans with a total value equivalent to SEK 3'2 creasedthe value of S-E-Banken'sown perpetual billion during 1992.Italso issued a zero coupon (of debentureloans from SEK2'6 billion subordinateddebenture loan of SEK 1 billion subordinated 3.2 billion, which had a positive impact on which SEK135M had beensold by December31' to SEK capital base.This was, howevet, not sufficient 7992)inthe Swedish market' the to offset the effectsof the negative factors on the capital base. Lower caPital adequacY the Bank's term subordinated debentureloans The total capitalratio, i.e.the capitalbase as a per- in foreign currenciesalso increasedin value' when centageof risk-weighted assets,is affectedby a translated to Swedish kronor' Sincethese loans number of different factors:the size of total assets' - may not exceed50 per cent of core capital which the trend of earnings,the distribution of the loan - is entirely SEK-denominated and this ceiling had portfolio by risk categoriesand the prospectsfor already been reachedbefore the decline of the raising fresh capital and issuing new subordinated krona, the latter had no effect in this context' debentures. While the Group's capitalbase decreased by Aside from issuing new subordinated deben- SEK4.7 billion, the capital requirement increased ture loans,the Bank therefore also took various

interestrates movementsin Sweden Swedishand international lnterestrate maturity, cent MonthlYaverages, Per cent 180day Per

29 Reronl oF THE DIREcToRS

by SEK 1,9billion. The overall effect was that the The bond portfolio capitalsurplus narrowed to SEK1.4 billion. At year-end,the Bank'sportfolio of interest- Given sucha modestsurplus, it is not possible bearing securitiesaccounted for about 12 per cent to operatea banking businessfor very long of total Group businessvolume. Sincebond without a contribution of fresh capital. A bank holdings have been supplementedin recent years with such large-scaleinternational borrowings as by Treasury discount notes and foreign govern- S-E-Bankenalso needsto maintain a total capital ment securities,the portfolio has simultaneously ratio well above the stipulated minimum level of becomemore diversified and short-term.It thus 8 per cent. This was among the reasonswhy at the servesas a liquidity reservefor the Bank to a end of 1992,the Bank contactedthe Ministry of greater extent than previously. Financeunder the terms of the guaranteesystem The duration of the portfolio continued to fall, approved by the Riksdag in December1992. reaching1.0 year at the end of 7992,compared (See also page4, Statementof the Group Chief with 1.5 in7991,.This further reduced the risk Executive.) level in the portfolio. Due to lower interest rates towards the end of Liquidity 7992,the deficit in the investment portfolio was The operationsof the Group are financed in both SEK309M smaller than on December31,1997. Swedish kronor and foreign currencies,in approxi- At the end of December1992, the trading and mately equal proportions. investment portfolios had a total market value of Its financing requirement in Swedish kronor is SEK59 billion. largely coveredby deposits,bond issues,share- holders' equity and reserves.The Bank can also Lower rating borrow from the Riksbank. In recent years the international rating institutes As for its financing in foreign currencies,the have lowered their assessmentsof the credit- situation is different. Sincethe Group has com- worthinessof Swedishbanks on severaloccasions. paratively small depositsin foreign currencies,it The institutes consistentlyexplain thesedown- is strongly dependent on foreign banks and in- gradings by saying that the general quality of the vestorsas sourcesof international financing. banks' assetsis too low. In a Swedish economy To strengthenthe liquidity of the Group in plagued by continued problems, there is a risk foreign currencies,it issued five bond loans equiv- that uncertain loan commitments will lead to alent to SEK4.4 billion in international capital further losses,which in turn will undermine the markets during 7992.Theeconomic problems of shareholders'equity. Swedenand Swedish banks made it increasingly In January 7992,5-E-Bankenwas placed on the difficult to find investors for debt instruments in watch list of Moody's InvestorsService, which the international capital markets during the year. simultaneously lowered the credit ratings of the This trend was reversed,however, after the other major Swedishbanks.In May 7992Moody's Riksdagapproved the Government'sbill on support lowered its rating of S-E-Banken'slong-term to Swedish banks and government-relatedcredit senior debt from Aa2to Aa3. Early in 1993it institutions. lowered the rating further to A2. Moody's rating The exceptionalsituation during the autumn of the Bank's short-term borrowing remained - with unstable exchangerates and interest rate unchangedat the highestlevel, P1. shocks- led to a substantialliquidity shortage, Standard & Poor's lowered its rating of forcing the Swedishbanking system to become S-E-Banken'slong-term borrowing in three steps heavily dependent on the Riksbank. This was during 7992,from AA to A-. S & P marginally exacerbatedby the successivelowering of the lowered its rating of the Bank's short-term credit ratings of Swedishbanks, which made it borrowings,but it remainedat a high A-1. more difficult and expensivefor them to borrow In ]anuary 1993,several Swedish banks were in international markets. upgraded by the British rating institute IBCA. To facilitate the refinancing operationsof Owing to the guaranteethat the Swedish Govern- Swedishbanks in foreign currencies,the Riksbank ment had issued for the banking system,all major decided to deposit a portion of its currency reserve Swedishbanks received a rating of A1+ for short- in the banks on market terms during the autumn. term borrowing.

30 I

The S-E-BankGrouP 1991 Dec.31',1992 Dec.31, Risk-weighted Assets Risk-weighted Risk categorY Assets amount amount 87,036 0 0% r27,067 0 120,808 24,1.62 207o 1,30,992 26,198 r1,1.,847 55,923 50% L12,040 56,020 217,805 217,805 100Vo 238,91.0 238,9'10 32'1,,128 537,496 297,890 Total 609,009 23,83r Requirement8% 25,690

S-E-Banken 31,1991 Dec.31',^1992 Dec. Assets Risk-weighted Risk category Assets Risk-weighted amounl amount t46,367 0 0% 153,549 0 1,07,758 71 44t 20% 1,10,290 22,058 tq R1? 14,906 50Vo 40,042 20,02t 1,56,386 1,56,386 100Vo 200,961. 200,96r 440,324 192,844 Total 504,842 243,040 15,428 Requirement8% 19,M3

The GrouP The Bank Dec. 31',^1991' Dec. 31,"\992 Dec.3l',"199^l Dec. 31,,1992

Taxed equitY (incl' 16,81.4 L4,599 6 1qR 13,454 minority interest) . 6,451 6R?g 3,488 Untaxed reserves - -1,205 Minus eoodwill 447 L1,987 16,942 Total core caPitill 16,367 19,844

subordinated Perpetual " )), 2,4Q3 debentureloans J,ZZL 2,403 Term subordinated o at, 5,994 8,471 debentureloans 8;184 Minus sharesin unconsolidated - -708 - 427 - 544 411, 20,659 27,405 Total capital base 27,065 31.,742 1.,21.6 11,,977 Surplus 1,375 7,9r1 Capital baseas a Percentage 8,5 1L) of risk-weighted assets,Per cent 8,4 r0,7 6.7 4.9 8.8 Core capital ratio, Per cent 5.1

* A{ter aPProPriations

31 S-E-Bankenshares

Data per share Share capital

Due to a changeof law, all S-E-Bankenshares became Earnings per share unrestricted (" free") at year-end 1992. - alter 307ostandard The sharecapital of the Bank was divided asfollows: tax, SEK 1) 72.6't 1't.56 7.6'l 4.50 -'t7.07 - after full tax, SEK 1) 1."t.4111.53 6.86 5.04 Share series Number Percentage Percentage of share of voting POwer Adjusted shareholders' equity, SEK 1,2) 69.25 74.46 80.11 83.41 64.56 250,673,797 95.1 99.5 C 12,846,467 4.9 0.5 Dividend - per SeriesA share,SEK 3) 2.55 3.00 3.30 3.35 263,459,664 100.0 100.0 - per SeriesC share,SEK s) 3.00 3.30 3.35 Eachshare has a nominal value of SEK10. Each Series Year-endmarket price A shareeniitles its holder to one vote, whereasone Series - per SeriesA share,SEK 86.0091.00 56.00 52.00 11.00 C shareentitles its holder to 1/10 vote. - per SeriesC share,SEK 103.0057.00 52.00 10.50 S-E-Banken'sshare capital Dividend per Series A share as a percentage oI - earningsper share (30% tax), % 20.2 26.0 43.3 74.4 SinceS-E-Banken was establishedin7972, shareholders' - adjusted shareholders' equity has been increasedby the following new share equity per share,Vo 3.7 4.0 4.7 4.0 issues: - market price Price Total increase SeriesA share,To J.U J.J 5.9 6.4 r975 1:5 SEK 125 SEK135M Year-endmarket price per SeriesA share 1976 1,:6 SEK 140 SEK152M - divided by earnings 1981 18:10 SEK 110 SEK167M pershare,(30%tax),=P/E 6.8 7.9 7.4 11.5 1983 1A:5 SEK 160 SEK642M - as a percentageof 1.986 14:15 SEK 90 SEK723M (paid up in 1987) adjustedequity per 1990 Directed SEK 88.42 SEK 577M share 124.2 722.2 69.9 62.3 17.04

1) After full conversionof convertibledebentures, starting in 1990. In7982, a bonus issueof one SeriesA sharefor five old 2) Seedefinition on the inside front cover. shareswas carriedout, increasingshare capital by SEK 3) According to the Board'sproposal. 1.67M.In1989 the Bank carriedout a bonusissue of nine SeriesA sharesand one SeriesC sharefor ten old shares, increasingshare capital by SEK1,285M. Through splits in 7977(2:1.) and 1984(5:1) the nominal value of the sharehas changed from SEK100 to SEK10.

Earningsper S-E-Bankenshare* Market price per S-E-Bankenshare Growth of S-E-Banken'sdividend After30% standard tax Averagepurchase price, SEK Index 1985=1 O0 SEK

'1990 19BB 1SB9 1991 1992 1988 1989 -As definedbV the SwedishBankers' Association Source:Findata

cz shareson the Stockholm of holding S-E-Banken Distribution of sharesby size Stock Exchange Number o{ 7991 1992 shareholders i988 1989 1990 Sizeof holding Number of shares Per cent 1A) ^)q 1- 500 30,034,541 11.40 Year-endmarket 22,1'3423,527 1'4'789 13'700 ) R9) 501- 1000 15,540,538 5.90 20,538 capitalisation,SEKM 1 001- 2 000 18,933,496 7.19 13,136 Volumeof shares 7,803 M 1',81'6 3,221' 2,0L1' 3'254 2,868 2001- 5 000 23,723,989 9.00 traded,SEK 1 7)\ 5 001-10 000 12,117,728 4.60 10001- 20 000 7,840,780 2.98 55J 20001- 50 000 6,127,265 2.32 200 50001-100 000 4,247,858 1.61 oz The largest shareholders 100001- 144,893,469 55.00 97 Of which Percentage December 31, 1992 Number of shares 26g,459,664 100.00 206'939 Series C of all Total shares for S-E-Bankenmain- Thesefigures are basedon the public shareholders'register (Vdrdepapperscentralen'VPC) ,"i""a U" if." S*edish SecuritiesRegister Centre AB Custos and are dated AugustTl',1992' (investmentcomPanY) 22,035,375 8.36 Knut and Alice 5.43 Of the nearly 207,000shareholders of S-E-Banken'about Wallenberg Foundation 14,318,680 640,934 for 1 per cent are institutional investors' They account SPPOmsesidig Livfcirsiikring 12,220'996 24,879 4.64 slightly lessthan 60 per centof the Bank'stotal shares' (life insurance) Trygg-HansaOmsesidig Liv 3.28 ilife insura.tce) 8,641',974 382,965 Dividend PolicY SkandinaviskaEnskilda that the dividend paid It has been the goal of S-E-Banken Banken'spensions funds 5,211,000 1..98 than to its shareholdersshould increaseat a faster pace S-E-Bankens inflation. Considering the large loss during 1'992'how- Allemansfonder 1-4 the ever, the Board proPosesthat no dividend be paid on (national public share funds) 4,763,624 1.81 Bank's sharesfot 7992. savings Livforsdkrings AB Skandia (life insurance) 4,623,458 1..72 Convertible debentures AB Investor 4,542,300 1qo A convertibledebenture loan of SEK1'2 billion was Investment AB Cardo 4,178,480 issuedto the employeesof the S-E-BankGroup in 1988' SkandinaviskaEnskilda BankenProfit-Sharing The debenturecertificates carry fixed annual interest of Foundation 3,945,789 54,833 1.50 and may be converted into SeriesA shares 1.10 8.75per cent Union Bank of Finland 2,902,264 june 1995'The conversion during the period 1990-]une Trygg-HansaFcirsdkrings AB price is SEkTg per share.In the event of full conversion' (insurance) 2,536,133 1.0'1,332 096 ihe numbe, of sharesin S-E-Bankenwill increaseby 1'5'2 LE Lundberg million, equivalent to lessthan 6 per cent of the present Kapitalforvaltning (hoiamg companY) 2,500,000 0.9s number of shares. National PensionInsurance Fund, Fourth Fund Board 2,478,400 0.94 AB Export-Invest 2,000,000 0.76 Den norske Bank ]"841"654 0.70 0.68 UnidanmarkA/S L,786,392 Protorp Fdrvaltnings AB (investment comPany) 1,490,000 40,000 0.57

According to the Bank's Articles of Association' no one may votelor more than 2 per cent of all sharesin the gant . tnis meansthat eachof the four largest share- holders at year-end had their voting Power reduced to 5,269,1,93votes.

JJ Accountingprinciples

TheAnnual Reportand the consolidatedaccounts have In translating the financial statements of foreign subsidi- beenprepared in accordancewith the regulationsof the aries,the currentrate method is used. Balancesheet items, SwedishFinancial Supervisory Authority. except shareholders'equity, are thus translated using the exchange rate prevailing on the balance sheet date. Share- Consolidated accountb holders'equity is translated using the exchangerate on the TheS-E-Bank Group includes Skandinaviska Enskilda datesf therespective investment or thedate on which Banken and those companies in which the Bank directly or income was reported. Items in the profit and loss statement indirectly has more than 50 per cent of the voting power. are translated according to the average exchange rates The consolidated accounts do not include companies during the year. which the Bank has taken over in connection with loan Since different items in the financial statements are trans- foreclosures. lated at different exchange rates, translation differencesarise. The consolidated balance sheet has been prepared accord- These translation differences are not recorded in the consoli- ing to the purchasemethod of accounting. This means that dated profit and loss accountsbut are directly included in the book values of shares in subsidiaries are eliminated shareholders' equity, distributed between statutory and against the amount of equity of each subsidiary at the time free reserves. of acquisition. In connection with acquisitions of Swedish The Bank'ssssets and liabilities in foreign currencies,except companies, a deferred tax liability of 30 per cent has been for shares in subsidiaries and the corresponding financing, recorded on untaxed reserves and for companies outside are translated at the exchange rate prevailing on the balance "Swedish Sweden at the tax rate prevailing in each respective country. sheetdate. The Bankers'Associationmiddle rate" Each subsidiary's contribution to consolidated shareholders' is used as the exchange rate on the balance sheet date. equity is thus only the equity capital that has been created Liabilities in foreign currencies in the Bank, intended for after acquisition. refinancing of shares in subsidiaries are valued at the Excessvalues arising on elimination of shares in subsid- historical exchange rate on the date incurred, as are the iaries are allocated to the assetsof the respective company corresponding shareholdings. or are shown as goodwill. Theseexcess values are depreci- ated according to their estimated economic life. Certain Office equipment, premises and equipment goodwill is depieciated over a period of 5 years, but most leased to clients ofit over a 10-year period. Properties are depreciated The Bank'soffice equipmenl is depreciated according to plan. during their remaining period of use. The difference between scheduled depreciation and depre- The accounts of companies that have been sold or ciation for tax purposes is reported as an extra depreciation bought during the year are consolidated only for the period reserve. that the S-E-Bank Group has directly or indirectlyowned Bank premisesare depreciated at the highest percentages more than 50 per cent of the voting power. permissible for tax purposes. The profit and loss accounts and balance sheets of Equipmentleased to clients is depreciated in annuities, foreign subsidiaries have been drawn up according to the based on a conservatively estimated residual value at the accounting practices prevailing in each respective country. end of the contract period. For leased equipment that cannot When preparing the consolidated statements of the be sold in a functioning market at the end of the contract S-E-Bank Group these statements have been adjusted to period, the scheduled residual value is zero. reflect the accounting principles of the parent Bank. Effective frorn7992, the consolidated accounts are being Lending losses and problem loans prepared according to the recommendation of the Swedish Incurred lending losses (directly written off) during the Financial Accounting Standards Council, with untaxed year and provisions for possible lending losses are reported reserves in the balance sheet shown as deferred taxes and as lending losses.The loan portfolio is reported on a net restricted equity, and with appropriations in the profit and basis, i.e. after subtracting provisions for possible lending loss accounts not being affected by changes in untaxed losses.The provision is reported separatelyin a note to the reserves. Changes in deferred taxes are reported separately financial statements.The general reserve for political risks under "Taxes" in the consolidated profit and loss account. abroad is reported on a gross basis among liabilities in the Comparative figures for the Group have been recalculated balancesheet. in accordance with the new principles (seeNote 27). Incurred lending lossesare those losses whose amount is regarded as finally established, for example in bankruptcy Foreign currency translation proceedings, through the acceptanceof a composition pro- Each subsidiary translates assetsand liabilities denominated posal to creditors or through other remission of claims. "Swedish in a currency other than the local one at the A provision for apossibleloss is defined as the difference Bankers'Association middle rate." Where this middle rate between the loan amount and the amount that is expected is not quoted, an exchange rate based on the average of to be recovered, taking into account the repayment capacity buying and selling rates quoted in Sweden on the balance sheetdate is used.

J+ Taxes of the loan collateral' A pro- of the borrower and the value "Taxes" presents The item in the profit and loss accounts vision is made if Property tax is- the estimated tax on business operations' is more than 50 days past due or other - interest or principal cost' The change in the deferred as to whether reported as an operating circumstances give reason for uncertainty "Taxes"' iui fiuUiU,y is reported in a separate line below the loan witl be rePaid and the borrowels repay- - it does not appear possible to improve Untaxed reserves sufficiently within two years and The ment capacii, Untaxed reserves are reported only for legal entities' does not cover the amount of - the value of the collateral financialstatementsoftheBankthereforereportnotonly other the loan. extra depreciation on office equipment and certain also a tax untaxed reserves in foreign branch offices' but collateral is calculated on the basis of withdrawals The value of the loan equalisation reserye and tie amounts of deferred to the tax marketvalue,Ifthecollateralconsistsofapropertymort- frtm untaxed reserves. The Bank's appropriation (where has been or is expectedto be taken gage deed ProPerty equalisation reserve is based on adjusted shareholders' is tased on a long-term yield value' 3"E.1 ttt" valuation equity. return on assets' taking into account the property's potential is also condiiion and location. etty tt"i"ttary write-down Valuation of interest-bearingdebt instruments lending loss' interest- reported as a The Group's bondholdings and holdings of other of equipment leased to clients due to and an ixtra depreciation bearing debt instruments are divided into a trading inability to make payments is also reported at the leasehoider's investirent portfolio. The trading portfolio is valued as a lending loss. the resulting gain or loss is reported as is market prici, and onnonperformlng loans (unsettled claims) income and Information part of net interest earnings, al'ong with interest in connection with each respective asset item' the year' orovided guirw o, lossesrealised on an ongoing basis during assetsare defined as loans that are more on irlonpe.fo.ming The investment portfolio is valued at the market price pist due or where other circumstances give is shown than-60 days the balance sheet date. The resulting gain or loss urrcertainty as to whether the loan will be repaid' reason for as an aPproPriation to, or a withdrawal ftom' a special these ioans are believed to involve a lending on a In caseswhere value adiustment account for bonds, which is reported for possible lending losseshave been ifr, ,irk, provisions net basisagainst bonds in the balance sheet' The investment remaining amount described as nonperlormmg or made. The portfolio it-sthereby also presented at the lower of cost not an expression of the risks of lending losses loans is thus market value. in the loan Portfolio. on the amount of loans for Information is also provided Changes in accounting PrinciPles been granted' compared with which interestdefermeitshave statements have been adjusted to 1992 at The 1991 financial terms of the loan' These items refer to loans of have in" .tigi""l accounting principles. Certain figures in the accounts on which the interest rate has been lowered to least SEK 1M therefore been reclassified' level. less than market Term contracts are valued at the market price on the are renegotiated in order to enable a borrower are Loan terms balance sheet date, which means that unrealised gains temporary payment difficulties to resume pay- The effect experiencing also included in the operating result for the year' tevel.,oeferments should be granted only if ments at a normal of this for 1992is not material' of a turnaround in the borrower's there are good prospects As from 1992, funds recovered from nonperforming are also normally granted on the condition and situation.lhey loans are applied against interest, in the first place' goes well, the borrower will also repay the de- that if all against principal, in the second place' Bank' "During ferred amounts to the 1'992theRiksdag adopted legislation retro- actively fhanging the rules for the Bank's withdrawal of Political risks abroad funds irom the previously authorised reserves for lending for political risks abroad are made in the requi- Provisions and foreign currencies. This change involves the following siteamountinaccordancewitheithertheFinancialSuper- to the year-end balance fot 799\: quotation' adiustments visory Authority's regulations or the market price whichever is lower. Original balance New balance year-end 1991 Change year-end 1991 Pensions costs" in the -2,709 18,270 The cost of pensions is reported under,"staff Other liabilities 20,979 pension profit and loss accounts and refers to the cost of Deferred withdrawal regula- +9,030 9,030 iommitments. In the Bank, in accorda-ngewith the amounts 0 involves tions of the Financial Supervisory Authority' this Reported profit plus 9,538 -6,321. 3,217 an actuarial calculation of imputed pension costs for the year insurance (deferred innuity) premiums paid' The f".rion "Appropriations"' imputed cost is recoveredunder

35 Profitand loss accounts Noteson pages38 - 41.

The Group' The Bank 1992 1991 Chanqe 1992 1991 Change sEK M SEKM % SEKM SEK M o/o

Operatingincome lnterestincome 51,104 47,O74 36,934 34,714 + 6.4 Interestcosts 44,467 37,625 r,18,? - 92,164 - 27,284 + 17,8 Netinterest earnings Note 1 6,637 9,449 * 29,8 4,770 7,430 - 35,8 Brokeragecommissions 241 zoc * g.3 241 265 - 9.3 androreisn exchanse earninss - Notez 5,943 4,595 3,406 + 34.9 3,.:Tffi:'f,1".fjes -125 'l; 44 |:H5"J:li.:Sf;i?*"'@ ZI ZI 2 Caprtal[ains,Oonos 303 234 7g Dividendson shares 64 230 -72.2 Otheroperating 408 ll: 176 192 - 8.1 Totaloperating income 13,707 15,160 -9,6 10,107 11,604 - 12.9 Operatingcosts 1a Staffcosts Note3 4,152 4,202 - t,L 3,158 3,051 + 3.5 Costsfor premises Note4 7()n 778 + 1.6 1,001 913 + 9.6 Otheroperating costs Note5 2,396 2,544 1,708 1,695 + 0.8 Depreciation Note6 RtrA 550 + 1.1 201 218 -7.s Total operating costs before losses 7,994 8;074 *2.2 6,068 5,877 + 3.3 Operating profit before losses 5,813 7,086, - 18.0 4,039 5,727 - 29.5 Lendinglosses Note7 1'1;167 o,rY n,uI 0,.: Provisionsfor.political risks abroad 16

Operating -5,070 2,326 - 5,548 7,414

Extraordinaryincome Notc I + 237 + 120 + 95.9 t 1)/. + 95 + 30.5 Extraordinarycosts NoteI * 1,683 - 624 - 1,54; - 559 ProfiUlossbefore appropriations and taxes - 6,816 1,822 - 7,(X)6 950 Appropriations NoteI + 661 + 2,741 . u.-n8?.-?127 Taxes - 142 - 1,221 Deferredtaxes Note10 + 1,555 + 35 Minorityinterests -20 - 15 Reported profiUloss for the year -4,762 3,362 -962 3,217

35 - Noteson Pages39 51. Balance sheets December3l

The GrouP The Bank Change 1991 an.nOz? 1991 1952 SEKM Vo' SEKM SEKM

Assets -25.9 1,903 2,481 -267 Cash 885 1,207 Clearingreceivables Depositedwith + 4.2 Swedishbanks l?393 :J - 29.8 foreignbanks t3??3 ,;H;:::J Interest-bearing securities 5,442 - 25.0 1Z 4,473 Tradingportfolio + 79.3 '13 54,937 -3:33326,809 lnvestmentPorffolio -"* 224,355 + 9.9 Note 14 '?i''izl,.it.lti * 18.7 leasedto clients Note 15 Equipment 496 Goodwill '16 lllt.t*ur 590 + 23.6 Shares,current Note Properiiestaken over for protectionof claims---.'------.-----.--- ,,trtt? 6,47L +7.1 Note17 3,580 Shares,long-term 603 -12.8 equiPment # + 5.8 Office 18 Propertiesfor own offices Note ,33; + 34.6 Note 19 s+,26s 30.189 22,4?1 Otherassets ,3:331.i'ri,.1 384,4(X) 348,809 + 10.2 Totalassets 36,692 65,525 - 44.0 of which,due from GrouPcomPanies -.u3 Note20 ..r13 CollateralPledged :;;,; *?;21t^Z:,LZZ 3 Totalcredit commitments

tn![!;*,rn * 22.1 1,6'15 2,072 - 22.1 liabilitiesand bank drafts 2,O72 t"ffiHilJt8lnks 30,103 andrinancial institutions Note21 .1,,-21,033 ..-3.1 113,791 'jtir t^I:t\tr tn'r?r"_il3 lll;3?i CommercialPaPer 21,763 ,u,,3[ Certificatesof dePosit 27,519 Note23 s2,512 ;il3 Bonds 1S,588 Note24 ,r?u^??3?55 + 26.9 Subordinateddebenture loans + 36.6 697 Beservefor politicalrisks abroad + 30.2 26,654 fi*#l18,270.) + 45.9 Note25 36,134 ,,,?TL Oif,"t li"Oifiti'"s - 26.7 Deferredtaxes on untaxed reserves ^'lLZ';3: interests Minority gxi,ffi7 ,|$4tr5 428,693 + 9.3 369,806 + 13.2 Total 17,712 18,789 - 5.7 of which,liabilities to Groupcompanies

8,436 14,139) - 40.3

"T"1.:y"!i#,:"'J .''ZLV-221 LL{Z ',,1i1, FreereseryesFreereserves ,-,-- llif: ReportedProfit/loss fc -z4o -"0 ffi-*ru #:r*'-** ,"o,ji:11f."r-r1i",v u* -24.o uroz -u*.1 and shareholders'ec Note2zand2s Totalliabilitie",.T,"I:111:"*"" 4s5.git3 4W,77g +7.7 3s4,4.(X) 348,809 + 10.2 andsharehofders'equitY - .%%T]5--Iaj Guarantees,,,u"on';:i^-j:!:."^:^:r,-,*^*|!:!S:--.:1;T*-}'L i{r-if;5:','!ffi,",:i,',i:'::!i:Tfu',:#:!!rff[::"",::::.:'::::,:::;:"";:::,37 i NOK Norwegiankroner PTE Protuglese escudos SGD Singaporedollars THB Thai baht TNDTunisian dlnars USD U.S.dollars XEU Europeancurrency units (ECU)

.'9ejly Interest average SEK IV

.:; 2,454 r ,.60e :10.f0 4; 3t794 11,28 . ?8$78 ai,lio . ,ll 1,6f ? 14irr.0F!2,4q, 1,,757 6.067 08,58q on6 6,2n4 24,171 224,?2.1 16:,44 22,997 .7? .6t217 aoo. q 5 -* ,2'q 36,934 w,a77 9;g7 94,714

18,688 2n.47 3,826 6,094 1?59 767 145,864 8,50 12,400 rc2,A77 A 1R r 3,275 105,6369.15: s,boo 10s,606 6.Zl 9,066 37,213 9.31 3,4M 35;643 8.32 2,9s7 12,735 22.04 2,808 , IA:444 11.58 1,209 m;r i24,ffi4 8.49 27t9€c,, 4tr 23,+lS . '4,7i0 ilg,orz i.o* 27,2U l9*e 7,430 {.40 2.13

Tho

Ile qrup --ffirrs, -.-saz' 1rr1 *l*tolt Jr 455 612 837 373 4gg 407 433 ,,12'1,i?3 962 826 I,sr9 1,730,''__"-2,502 1,1931 rp-a -Fat 4,595 3,4(F l

Staffcosts $ 'lfi n ro$1t.,,-+ro*:....,...... ,,,,,,...... '.llm*ril#tr11".:l.:.'.:::: TT$H # # ii3fiuii:i:::=i^#H:::l:::--::::,?1,^,,?11, ::3 ",?"

1'623''"n Number",nlf:#*::: : : ::: "nou'13113'63e';

'.

4 Gostsfor premises

5 Otheroperating costs Lendinglosses I ne uroup The Bank 7 1SS1 1992 1991 Incurred1osses...... ,... S,Bg7 2,576 spro 1€r, Reversalof provisionfor incurred|osses...... ,. - j.693 -1 taa - 1,604 - 634 Provisionfor possiblelosses ...... 7,521 3,685 6,479 3,288 Reeovariesofprevious reserves...... - g69 -AA -254 -64 ' Recoveries -49 _ 1BB -44 - 169 ' r1,t'67 4r7ffi 9,587 4,313 Of which, receivables appraised by category

lncurredlosses ...... 137 201 120 198 Provisionforlrecovery of reserves z tJ -,,41 Recoverieson previolsincurred losses ...... -3/ *31 -3+ -1? , 313 1N 84 121

Grouplending losses include SEK 130Mon equipmentleased to clients. Receivablesappraised by categoryrefer to homogeneousclaims of limitedvalue and similarcredit risk Such appraisalhas beenmade of creditand chargecard claimsand of single{amilyhouses and co-operativeblocks of flatsin SFKand MortgageTrust Ltd.

Extraordinaryitems The Group- The Bank I 1992 1S91 lngome Sharesin employeeinvestment funds tz I 121 Capitalgain on saleof OM option B6 oo Capitalgain on saleof properties..... 100 JO Gapitalgains on saleof shares IJ t ; Otherextraordinary income...... I t' 1 237 120 124 ,5 Gosts 491 491 9B

7

tzo 530 280 500

39

a1 1 61 1,683 624 1,582 559

Appropriations I he group The Bank I ---t!9,,-!a Withdrawal/appropriationto deferred withdrawal amounts ...... -lr,ortrou Withdrawal/appropriationto equity-based ^'|J::H:.Ttax equatisationr".;;-....'.:..: "::T ----, . . . - l,*l J:.'SX?"lfl::i::::::l - 385 - 694 - 350 -678 Withdrawalfrom value adjustmentaccount forinvestm-ent portfolio ...:...... :.. ,...... + 694+ + _ 3,132 678 + 3,112 Translationdifference from releaseof investmentportfolio reserve ...... +22 . *Appropriation io untaxedreserves (see Note 26) ..:r....,.,...... -40 nT?ffiIJf #::T:3 :::T: ::: l:::": *"'l'rl oin"r"...olt*."" o""l ".J..rr.irl"i i"pr."i"ii"...... *,, Recoveryof imputedpension- premiums ...... ,. Compensationfrom pension funds ...... :IZ?i lJ3 :'^3? IlJ6 Pensiondisbursements .t...... -226 -201 -226 -201 Group contributionsreceived . + 363 + 236 Groupcontributions paid -756 - 940 40 +661 + 2,741 +5,980 + 3,4(D --#%t TheBank raxes {Q - r13- 1,rr1j-al:

:#-*+-1,14' *""'werea positiverisure' Derened taxriabirities werethus ?.:'r::J?,.H"s=?,f,i33^i,:tSE^X"jr";f#

The Group banks Oenositedin Swedish Fo'u d*_,* { | 386 ^^*^"r^^h'^,*t'rraean/ac * 478 compulsorycashreserves":...:....:.:..,..:.:...... :...... 9,647 9,333 Otherinvestments...... '...... """" ' 1o,r1 r,r4 #tr10'595 13'5097i-,tts ,,fis

Acquisition value -dfb TradinsPortfolio -#t%t | ! *'.,*tt'ltt *t,,,.,,,,.,,,,..,,*1*4Lii,!Li H,;ihfli."*tr'# t'?'^i''n?? ,:#:ll ti', t?? ,:rZ ; W,,,".i.i.i'ii.'....'"...... '.'...... ''...4,479 1o,w 4,084 5,42 333,33? #*

InvestmentPortfolio -=#%-'#b | $

*'lfi offfi

+1. Strares'curnent | $

Snares,long-term { /

eronertiesfor own offices { $

.;

TheGroup . Otnerassets leel l#tt-t6 l$ lry? _ ;i'?:33?i,ltS iSlS 19,943 14,8[i3 17,14it 11,971 I3;3.i-Z:,"1i-l3:313 -3:l?l "-|ff# ng 210 ag zn "'"*ffir; $ii:"*H:::ffi;:#;::: #--'###; Collateralpledged The Group The Bank S --r!g -i:a 5,784 2,510 5,784 z,co4?,2:o J,456 1,221

lil---:*_ w5'l 5,882 2,514 5,799 rererstothe pledsins orsEK SeeM (sEK 672M) incredits ror the benerit liiJ"S.,fiEiilL,.,fff--

Borrowed from Swedish I ne uroup The Bank banks and other financial institutions Swedishbanks...... 29.331 4,893 28,574 7,930 OtherSwedish financial institutions 1,52616,137 1,526 1,108 Mortgageloans on own properties 3333 30,8&) 21,033 30,103 0,041

DeRosits The Bank 1992 fl Thousandsof Balance, Thousandsof Balance accounls SEKlV accounts SEKM ...... 67 20,570 60 2A,745 9l=:":::":ntsPrivateaccounts ...... ,...,. 511 5,261 413 5,226 ::: ::: ::: :::::::::::: :::::::::: :: : : 52 6,500 7,278 Savings9;;;;;;;i;acceunts 624 20,348 829 23,144 Capitilaccount...... 221 12,321 '192 1..t 12,060 Depositson specialterms . 17 27 A2rl 12 21,427 oi;*J;p;J;:- _ ::::::::::::::::::::::::::::348 10,862 747 5,O41 Totaldeposits in Swedishkronor ...... 1,840 103,692 2,314 95,527 Depositsin foreigncurrencies 5 34,935 6 36,374 1,845 138r6f 2,320 131,901

Bondissues l$ 1992 1991 rhB"B,ilL.r". 25,979 19,449 Zero-couponbond issues 1,540 57 Totalbond issues,the Bank ...... 27,519 19,506

6s,44247,884 Other:"il'AT:Hi:::::::li'subsidiaries,...... ,...,..., Lessintra-Group holdings - 4,487 - 1,725 Totafbond issues,the Group...... 92,512 65,677

Fora specificationof the Banks bond issues,see page51.

Subordinated debenturc 'Yv' loans 'n3.?T,.l,nu"d debe-nturetoaf...... :.....1... ; t#::s:tiilsililllT:s::"*lnril;;::::::I'ii:'?'i:: Peroetuaisubordinateddebentureloans...... g.222 2.4Og 1e's88 15'2oe -":."-"#:T:"J1"-roans Subordinateddebenture |oans...... , 99? 743 Othersubsidiaries ...... 552 1,089 Lessintra-Group holdings * 576 - 842 Totalsubordinated debenture loans ...... 90,556 16,19S,

Fora specificatlonof the Bank'ssubordinated debenture loans, see page51.

44: - Tho Bank Otherliabilities ,*tt% 1992 1991 !$ 18,66512,524 14,636 7 '945 ff#:i:-:'::::n:o*"' 888 478 380 478 Otheritems 19,553 13,002 15,018 E,4Al

*- 'iT', 1,205 2,2; ....: . . . : . : . : ...... ?1':,'?tt t'ol:. :dtffi.#:*r.t."tti'...... 518 518 11,75211,3; 9,636 6,542 *nilIiil#r;l**-i 36J34 ,?,?g5 %,w 18,270

Untaxedreserves -#'ek ffi

9,030 a#:T:flvJLlffi:?i,H:::" 9,0; fil,i#iJf:[:::::: :: :: :: ::: : -s,oro 6,020 9,030 Balanceat year-end.....'...... r..... '

2,2ffi 4,9€ii} Balanceat Year-end.....

325 -325 Withdrawals _0 Balanc,eat year-end..... ;,-lik,:ffiiixn'T#:::"::l:T:::: : :: :T? ]?: 109 126 Balanceat Year-end....

.1gg2 to.therecommendations Changes in 1991 Effectivefrom theconsolidated accounts are being prepared according of providingaccounts that are balance of the swedishFinanciat n#r"*s -Crirws1;;;;;;r councli,wiirr ihe aim consolidated to_variousappropriations clearerthan thoseof i"orjir"i companies,primarily with regard sheet if "#'JJTj*km jim:i::1",*ffi':',",1.:"lnnru'ff ["##i""":'*"*]{:ld:i [i.1 --- i::.*lff.T.S?1*#.",i"ltm'*,J:$fiT::'"Sff.),*,/"'?:ffi Jls.ffi Xm,f into defened tax liabilitiesand an equity portion preuiou, yntaxed |."o,G, r.luu. been divided '"#ffi*ll3[1?JJi13,',".'"'S,"o'uonu*been recarcural*::"*":::"::-:'::::*:':]:" inthe traditionarwav accordinsto the resura- o"inl,rst-""";lltl*T:isl?.trffflftffi:rted

45 Note27, continued Changesin the 1991 consolidated balance sheet

Balancesheet 'ffiHx:ftTif;;tt-T.Ti# item1991

Untaxedreserves,,,,,,,,,,:::::.::.:::::::::::.:::..::.:::::*'10':17€ 0 !:313 2,635 3lL1li"1X'JlX!;;:::: z,is6 + 13,519 15,675 + 176 414 ffiil:*,*.i",.i,"v*;.:: :. ::::::: ::: _,.?33 - 227 3,362 1'* 22,W **%l|iffi,:.'"ol*-l*: ^'?i? ;;;; tt:L\!" Defenedtax liabilities...... ,..,...... +s,707

Shareholders'equity Thetsank !f| S]jEre Statutory Retained Proflt,4oss eapltal reserves earningsfor the year H#..,flT lol,"', .'...... '.... 2,635 1,722 u': tril?i;l]!:t : :::i:: ,or'.n,i'i',', Dividendfor 1,991 ...r:...:.... - 883 - 883 Reportedprofit/loss for theyear , Balanceat year-end

TheGroup Share Statutory Retained. Profit/loss :dapltal rgserves earningsfor the year H:5[H,tffi?H??;l i?g,i"i.i"i i"o 2,635 15,675 414 '__':,':,'*3,362 22,086 Eil,1*tliT*M***',,,,,',,,-;;3i:iif ,^:*:, Reportedproflt/loss for the year Balanceat year...... 2,@5 12,M 6,709 - 4,762 16,788

Guaranteesissued The Group The Bank lff '1ee2 t?gl Loanguarantees ...... 7,751 7,925 7,080 6,249 27,631 20,435 29,074 29,17A ffi;ffiffi:*l:::::::: ::::::::::::::::: ::::::::::::::::: 509 5oB 509 5oB ;ilb;";;;: : :: : :::::::::::::::::: ::::::::::::::: 509 1,677 509 1,677 96,400 fi,ils 97,172 37,604 n:EiT.#I;j[:lfit"{1;y"'.:f tr#,#il{l*tir3;ffi :r"l#:;;,:-"

Suredish financial institutions and foreign

currenQies Th6 Grdp The Bank _ 1992 1991 -# 1,815 2,450 zffi ',,??;1BB5 1,207 ,'#33;3 i??l J:33?6,224 9,930

10.595 14,330 10,1?5 9,719 rr'3??.11,,035 ?0-,9,17 48,629 528 341 528 s,69g " mffi 4t,g3s 74,182 29,309 50,211

4.5

Off-balancesheet The Bank and certainsubsidiaries have off-balance sheet obligations as part of the Group's obllgations businessoperations. These obligations entail a possiblecredit risk and createa capitalre- quirement(calculated.on the basis of an B per cent requirement)of SEK 3,799M in the Groupand SEK3,202M in the Bank.

Volum$,Doo,31, 1gg2 Capltatrequlrem€nt Thecroup ih" B*k ft" er"p fn" e*k ,3;3?l3?3 t3S

,5;Og5 4,,624 4gB ....' 20,bgS 20,894 l'.e7ggt 106 106 2,79s 48 40 , ,'180 180 .e 3 1,85i t;852 a7 62 ...t...,,

.l: + 9,348 , ,- 668 + 3,378 - z,+z I

+6,431 248 244 1,151 1,074

Other obligations Long-termloan commitments ....,.,....,...... 9j261 9,066 293 291 Unutilisedlines of credit 42\47:4 42,474 Guaranteesin connectionwith liquidity I .'3,603 g,Qoe '2 25 oo

The total interest rate exposure of the Bank, calcuiated according to the definition of the Swedish FinancialSupervisory Authority, amounted to SEK, 1,650Mon an interestrate change of 1 per cent.

., : :::'i .,. Ij],,.::

,'j .-,,1,1 :.

' .11.....:.1 i ':l'l ..:, ,

48

r',:r:,..' i, of shareholdings and subordinated G""iti""tion 1592 Bank's JEbenturesaccording to Note 17 Nominal Book vollng value value Dividend power% A. Subsidiaries Subsrdiariesin Sweden )' 21,0 21.2 100 EnskildaKapitalforvaltning, Stockholmr ' 120,0 132.7 100 S i gank"n ForsAkringHolding AB, Stockholm2)" 10.0 12.5 100 DiligentiaAB, Stockholm 4,0 0.1 100 Arsenalen,AB, Stockholm 225.0 145.0 100 FinansSkandicAB, Stockholm 4.0 0 100 Garnisonen,AB, Goteborg 130.0 980.0 100 SEB-FastigheterAB, Stockholm 1,608.9 100 SvenskFaitighetskreditAB,Stockholmo)" " " "' 200.0 Subordinateddebentures in 250.0 SvenskFastighetskreditAB ..'.. "'"' 250.0 00 100 AktivPlacering AB, Stockholm4).,...." """' 0 ioo EnskildaFondkommission AB, Stockholm" "' 0 52.5 100 EurocardAB, Stockholm 5.0 3,202.9 Totalsubsidiaries in Sweden 969.0 Subsidiariesabroad SkandinaviskaEnskilda Banken AG, 393.9 100 Frankfurtam Main DEM 81.2 118.6 659.9 100 ScandinavianInvestments Lid, Londons) GBP 700.0 100 ScandinavianFinance BV Amsterdam6)" "" """ ' NLG 0.5 EnskildaBanken Corporation, Skandinaviska 100 New York USD 20.0 169.6 (Luxembourg)S A , AB. SkandinaviskaEnskilda Banken 1) Namechange from Aktiv Placering LUF 1,010.0 294.2 100 2) Shareholders'coniributionofSEK 12 7|V]' LuxembourgT) SEK1 billion EnskildaBanken 3) Shareholders'contribuiion of Skandinaviska 100 4) Namechange from Enskilda Kapitalforvaltning' (SouthEast Asia) Limited, Singapore SGD 40.0 191.2 to goodwill,written down by 5) SEK352Nii transferred SkandinaviskaEnskilda Banken contributionof SEK90 9M' SEK280M, shareholders' Delaware USD 0 0.1 100 lnvestmentowns Fnskilda Securities FundingIncorPorated, Scandinavian Ltda,56o Paulo ' BRE 2.3 0 100 Ltd,London, and Scandinavian Pacific Ltd, Sydney, lnterscanServiqos de Consultoria amongothers. SkandinaviskaEnskilda Reinsurance S.A., 8,2 100 6) Writtendown by SEK500lV ScandinavianFinance Luxembourg LUF 50.0 79 percent of the sharesin Banque BVowns Subordinateddebentures in en Suisse Scandinave Ltd...... "'..."... GBP 13.8 149.8 7) Purchaseat nominalLUF 10N4. EnskildaSecurities 1.BM. BanqueScandinave dr Luxembourg S A , Bookvalue SEK 75.2 100 8) Purchase. Luxembourg LUF 450.0 Subordinateddebentures ln 162.9 SkandinaviskaEnskilda Banken (Luxembourg) S'A' LUF 900.0 8) FinansSkandic(France) S'A...... ,... FRF 10,0 14.9 100 2,819.9 Totalsubsidiaries abroad 1992 Nominal Book vollng value value Dividend power 7o Banking Partnersl ) B, Scandinavian 0.75 Dennorske Bank A/S, Bergenzt NOK 11.5 Altogether,SBP shares were written down by B; 5.9 1.38 1) UnidanmarkA,/S, Copenhagen3) ...... "" " ' DKK 63.7 SEK1 73,2M to theirmarkot price on thebalance 2.3 2.20 AffArsbankenUnitas Ab, Helsinki4) FtM 100.8 50.9 sheetdate. BankingPartners 133.0 8.2 2) Writtendown bY SEK 9.3M TotalScandinavian 1992 3) Writtendown bY SEK 40.8M Bank's 4) Writtendown bY SEK 123.1N/l Nominal Book voting value value ,P!yerl'" comPaniesin Sweden C, Other 50.00 AB Abisko 1.0 1.0 Fastighets 50.00 Bostadsfinansiering AB BOFAB 25.0 29.3 Svensk 48,00 KortbetalningServo AB 0.3 0.3 BGCAB ...... ' 1.7 1.7 JJ. IU Bankgirocentralen 28.00 PrivatgirotAB ..,...... 0.3 0.3 UC AB ... .'...... 0.3 0.3 2.5 27.40 Upplysningscentralen 23.30 BankernasPMC Holdingbolag AB ...'.'.....' 0.3 0.1 22.0O BankomatoentralenAB 0.1 35.3 18.00 SvenskExportkredit AB'...... ". 126.0 361.0 o.4 0.1 15.00 VArdepapPerscentralenVPC AB 0.4 0.4 14.36 PenningmarknadsinformationPMI AB 0.4 AB ...... 0 0.0 0.5 12.50 Backupcentralen 12.20 lndustrikreditA8 ...... '...... '. 9.8 19.8 0.3 11,50 ForetagskapitalAB ...... 2.3 1.6 2.9 10.00 StockholmsFondbors A8...... '...... ' 2.9 JZI.U 15.1 4.90 GroupForsdkrings AB1)..'...'. 939.4 Skandia 2.60 PenningmarknadscentralenPMC A8.. "" 3.0 0.9 2.50 OM FondkommissionABz) 1.7 ; 26.O Sharesin co-operativeblocks of flats . ". . " " ' 0 1.4 Holdingin FastighetsbolagetInedal 0 , 1) Marketvalue SEK 321M. 768.6 54.7 Total,other companies in Sweden 1,114.9 2) MarketvalueSEK165M 49 1992 Bank'9 BOOK votinc ugrq1 Dividend powerzi continued ;;"*;*";#-*r-J"i"J" r",o'nsA"/s, Denmark DKK 0.1 0.1 '??i 0. : :Yg"*ggg*%ffi"'#;iil3',k;;;;: ;;;., 335 o? BancoFinasa de InvestimentoS.A., SiSo Paulo ...... BRE127.2"I:3 0 i:H"5[:ffi ff,!fi1,]?"t"il*Eg1*i. ::: : : 335 0 t :,il *' "#:5ffi :ffi 3 1u"!:.:rt!n:"[?i- -- - -'lotlli: '- usDo02 2 o vvvrvry.":iffffi'"tdil;il",r,T1il;ili"^:i::TTi:?,;.;;;; rv' vYvrrslvrve ;;;;;;; ::: 0 ,,1 ^' ll 0 O,50 lmtulY:Psm#*;*';;,=,i

CtearanceSystem Soci6t6 C< "ls[!ir;*;k;;;;;;i;,il;; 0 l; GBP::: ":o1 3.0 '1.1 Tota,",'J,':,il:"":'jJfu;;; other companiesabroad a7

1992 Bank's Nominal'"ili11 voting 3.T: Dividend power%

ESB 90.O 4.8 45.00 3.2 33.70 0.2 33.00 19.8 24.W zv t1 -:- 20.00 1.5 20.o0 2.2 4.g0 2.0 1.0 4.00 14.9 1.60 0.1' 0.00 1.0 0.00 0.9 0.00 0.0 0.00 O.O 0.00 o,o 0.00 Lrlgs'...... '.'.....".:..t....:..'..:..:....:.t..;.....:.....\f,rJr u. I 1.2 0.00 '""""""":""" ':""" ": ": GBP 05 0.0 0.00 ,, l:6 :--: 0.00 2.7 o.o0 ..1....: GBP 0.3 o,o 0.00 , 0.4 0.00 ' 0:-1 0,00 r#+

2,563B 7r0 ,,6rot 11.1 Bookvaruernterest ratevo ff:5 rnterestrateo/o @ YllT,|1"""" Ri',Y1il1^,o,", " X'iXlXl*,* - 1e87/e3, . . oer',r100.0 1191 ^ ^^ ;;;^],iJ;- sFK 7b.0 7,5 7,50"-- ,elr:rsi... . Jpv"iEEXs,oooo 283.3 99? t2!:',2:'"0 ::: ''?333,.ffi'X *ni! ', l8E#l : : ii't ?e?e iee tnfff' ' F# l3l:3 4so lffi/il : . JPY10,000.0 380'6 999 l:HiH Xll "XXX ;;li'ZL;i 10,;; iffi;r; ,...... Lur 300.0 640 7-29 I?;LZ tsls,rcq yt? 1999 .!1!'" .::: l;ffi; :.'' ::: "'i'::'XXXX: #l ' ffi:; oii"il-;s 2) isaeTeo....uso 1s0.0l8iE 1,0575 1000-. l:::i:: ',:i:",'?:10,12s l3#*fi3:: : #il ie:e;;r:; :.-',gf t:::139: ill: 3333 ,1i:L'Atl lffi;::::Ip'i''u,o*6 uuo 1999f: j'-Lu':3: ;::: ', lSEBiE&o;': ;iiK ffi;";;:; eoi-zit.is i ii 1ee0/e3.... . xEU 300 ??9! :l l#xixxi# il 28.4 e00 lSSg€:1ee0/e5: :f'""?!!:!JPY 5'0999 _,6il,i:::: 283.3 'i'ii,,2?z ,n n.'' lBffiYll[fir;x* r:: y:l'::: [$ 330.0 'l?Si2,15e.1 ;;3,6) Hn3ffil,,:,,,,:,,,,,,Effiiffi,s ]?il,i fiilffi..:.....:.:.:.[E? ;ii.l iii,i ,,';:"' 'r.o rseorss1333i33:::: JPYiie'e"!!!! 1o,o0o.o 'iii: 4e8.! 999 l:HiXX Xl; ;#; ;;;; rseoreo u_s.?.i999 nou,,r:: l:::1*r:r35y.333:3 !13:3 ,."3 "i9::'iLTZ 7s7s l33H1ll,";;;:jiilil;fr;l::i:l,3LliESiHEil' il;; rs#i3?: ::f#-'?33:i 2) 1990/bo/05...... AUD 200.0in,: 974'0i+i;z uo;; 1333i3?: : 338,ii,i ,iii,? ,^^x; ]HS,S#''....:'iUBfSS.3ni: ::' 1ee1/e3::: Dlyglxl. -19I :i12 ::: lxxHlxx'll:: ;ffi ffi:; ri,o l ; o oeNr frI lfi]fftsstrcq "'o.,;i;; ?999 ?19: 99: l::li:l I# iHX i63i'3Hi -:; lfi llnfi*llrffiffil'l!3 ffi 700 ifii/;6::: : ;li illI f:: l::li3l' ' tg leel/es JPY10,000.0 199! n nn'' l::li:: IH ;;.; ;0:; 3) rseilee , . ... DEM1oo 0 243'7 999 lllllll,^^;; HH # x "ii'i ; i;;1ff :#il _ie9 ^:::t o0o l:fi3:*"'"'Y"Y,.333 133:3 622i; l33li3ll33li3i::::: : :f'[""!3eli.Y..iii :ii.i :;:,s4s'' ti,iiiii']':1:tiJ'ffi3 ,i:i:"3?3 3?331'oB ii?:i 1) :Z7:,ZZtvuztvz " ; ""' HP,?,fiffi3oEr\ I'uwv 1gg2/gg ...... XEU 30.0 256'4 - tssitss...... sEK 130.G 139.8 0.09 18,393.2 ffir{r","""1,""::r'":,,., 875 ,W{,!!!..ffi',fi|* #l' ; :ilg:ffi1,11*ffiftifi,;i,*tr 1$lffffftnt11*::;.r?e l'i]ffi,,,,,,,,,,,,ii, '',- irii 1ZZ7',2:,::: :: U33ISBSB u*.,o

51 Proposalfor the distributionof profit The unrestrictedequity capital of the The Boardproposes that, following s-E-BankGroup amounts tosEK ' 3i:lifflilfinl?ffi Bxi?'";t,o,,n" totlfl'.n atthe disposal ofthe financlalyear 1gg2,the Annuat General AnnualGeneral Meeting in accordance Meetingshould carry forward all un- withthe balancesheet of Skandinaviska appropriatedfunds to nextyear. EnskildaBanken: sEK M '1991 Carriedforward from Tl22 Reportedlossfor1992...... , 33?

Stockholm,February 25, 1993 pnenwR*eNarRc-il:l;l'ffrrr-":-;:.ft:::;^-':,".,:trhl[-*["[,:il^, Knnr-EnrxsnHlsrnc

Auditors' report We haveexamined the AnnualReport, that the profitbe distribuledaccording consolidatedfinancial statements, ac- to the proposalin the Reportof the :iil,:'"?i,i?sI 311:1",? :ji[:,3i3'"',n "?'i;:'ff:, bers ofth e Board of was performedin acco seneraryaccepted ",01,1ru".:#'lX,u. 3J'".""T:i ffifrfii:l"t:ixlfiiar year The Bank The Group TheBank's internal auditing department Theconsolidated financialstatements hasexamined the accounts and havebeen 9tq*1up in compliancewith the.SwedishBanking Operations Act. checkedR#*""Fli,lffTf{+#ffithe physicalexistence of the TheAnnual Report ha ba|ance ;1'"",-Ytr##i*sffJradr::.-:lx':ii"J#1;31*,.0*"d "*[$$#;",':1.-t:-e:Wed: ent an d TJ[? si"Jll #t !"ffl3i"Jl -",,ffiff*'"'

"*. r":' J,: BReHueR -..****"p'n,*"""",

52 Balancesheetsn 1983-1992 SEKM

Profit and loss accounts' the S-E-BankGroup 1991 1992 1987 1988 1989 1990 1983 1984 1986 6'612 8'100 9'449 6'637 3,116 4,?1O 5,33' 6,295 3'zu4 3,440 z'att 3'928 4'a62 6'084 Net interestearnings 1 ^R2 j,742 2,2s7 2,210 i,iza fees"andforeign " exchange earnings t'2'^: ",i_ j]i]sL ilffiil, 741 -tts :tvt -l{= -.JF--:*-t#,i-13'7gz qrlryesaleq;se - --r?:r: irL?- y::gn?- ua2 -15'190 plzg- Llg--jyT 4'152 rotal oPeratinsincome z,+se 2'gzo 3'750 4'202 ;..131,473 1,665 1,969 z,zta Staff costs 512 67e '9! 323 388 43e 46e ^ 9l? ^l'^22'544 '2'999 i:: Costs tor 1,71s 1'883 2'3ss Premlses 6:] 799 # , lEu t 'iii operatingcosts zaz 347 474 Other 98 120 139 1ee zsl -' -- - ??: r ::? ftonrociationuvPluuiauv,| s'iss 1'srz 7'241 u?': 2,431^ ^ 2,780 3,150 3,703- 4'487 -t-:7: Jo-q!9!eq9 !9!99q-- -- 4i1-561 tl IglqLqPgrallg 557 797 i-"* zs' ?'t^1? :'-u"2 - i:: lossesetc o'ooo "'"t' z'"zu u'e'o Lending , 1R6 ,,;L1 o,oZo o,6i) o,uan 7.6 - 17.7 Returnon equlty 24.9 29.5 18.2 11.8 after30% standardtax, % 7.61 4.50 - 17.o7 EarningsPer share - 12.61 -"11.56 - 10,84610'€ 10,325 after30%standardtax,SEK - -" 9'384 9'6200 10,74310'743

Balancesheets, the S-E-BankGroup 1S88 1989 1992 1983 1984 1985 1986 1987 24,626 30,624 94,227 46,124 59'410 33,783 41,208 33,261 31,897 33,206 Governmentsecurities and bonds 53,350 53,510 61,384 41,388 37,344 29,275 26,765 31,635 31,206 39,314 lnvestments 187,477 239,440 311 ,029 314,661 328'739 86,366 100,741 94,554 111,616139,395 Lending 23,946 42,066 45,079 48,606 59'840 13,398 13,391 15,563 16,334 21,773 Otherassets 101 106,592 187]76 134,479 144'651 67,57a 69,276 68,118 69,716 81,376 ,919 Borrowing 89'260 105,981 112,555 139,479 141,975 63,473 77,703 66,426 69,306 81,310 Deposits 77,209 129,977 125,747 154,735 181,919 22,397 24,849 29,280 38,615 54,209 Otherliabilities - - Shareholders'equity and as to 1991 21 1 23,090 25,641 22,086 16,788 9,378 10,277 11,189 13,416 16,793 ,01 untaxedreserves 289,399 365,640 451,719 450,779 485,333 162,826 182,105 175,013 191,053 233,688 Total assets

Banken Profit and loss accounts, SkandinaviskaEnskilda 1988 1989 1990 1991 1992 1983 1984 1985 1986 1987 2,6s62,Bzs 2,4s8 t8o- 1191 1:* 2r^2t 2'21: i21?'361 X:LLZ-:3? ?':ii l:2i';; ;::i:'so8 '::?:'oio ''121''+12 ''Lti ?'!iZ 727 718- 503- 501 !:'J["J:''J"T[:Slndtoreignexchangeearninssa4L 416; -. -, tgL .10, Other operatingIncome L---- -;^ ; rff oqr, c qnn I 398 11 11.604 CiA 1a 1O7107 4'23sa??: /-,.on- al q 6 ^6/ --tt+t n.o.]Y -t/ ,uo+ -z'l!8^ :: roraroperatinsincome i7r, i::: ?::?,*t 711t, 1:::o* i:iXi ?:1i'r,0.,''1:'^ t':?l 3,158 Staffcosts i'*- 546 614 770 913 :1 ,001 H? 249 298 JOZ 372 389 Costsfor Premises 1,076 1,294 1,401 1,695 1'198 516 639 716 841 983 OtheroPerating costs 174 196 244 218 201 52 70 83 129 145 6'oqq Depreciation e,26a 3,705 4,292 -1162 !'817 9,587 E!1"!9E!ns_9"'t9-!91"i9!9999" zvo 306ouu 4A1 1,672 4,313 406 676 243 3853lJ5 Lending lossesetc g'623 2'59!- 1'414 - 5'548 1 aQ^ 1 732 1.5A2 g,274 3,072 3'527 profiVloss

Balancesheets, SkandinaviskaEnskilda Banken 1 1990 1991 1992 1983 1984 1985 1986 1987 988 25,986 29,104 29,762 32,251 52,144 33,151 38,435 29,244 25,480 23,697 Governmentsecurities and bonds 48,392 49,217 71,101 58,421 44,292 24,O22 21,362 24,258 25,797 31,067 lnvestments .116,031 145,139 208,745 224,355 246,488 64,O92 74,249 71,822 91,693 Lending 18,530 23,680 27,445 33.782 41,476 10,712 10,157 11 ,810 12,494 16,227 81,494 96,131 138,792 118,236 141,410 52,344 49,745 47,A92 47,228 55,155 Borrowtng 98,525 r16 ^oo 131 ,901 138,617 76,100 63,294 65,576 75,844 86,474 64,063 '1 61 76,530 89,779 Deposits 10,170 1,408 17,265 22,773 33,267 ,480 7,168 9,336 21jA2 22,142 14,594 Otherliabilities 9,527 11,38.1 14,380 18;198 19,217 and untaxedreserves 8,402 I,O22 Shareholders'equity '130,883 208,939 247,140 337,053 348,809 384,400 131,977 144,203 135,593 162,684 Total assets

53 Bnardnf Directors

LarsOberg

Bo Berggren

Peter Wallenberg RolfBlom

Karl-Erik Sahlberg

Curt G Olsson Bjdrn Saedberg

ToreDaun

PehrG Gyllenhammar RolfKnrlsson

Rune Andersson

Directors elected by the Kanr--Enrr Saulslnc, 1,928;1,989 (1982) L.c.nsOspnc, 1.936;1.991. (1,989) Annual General Meeting Dr. Econ. h.c., Chairman Perstorp AB, Managing Director, AB Custos,Stockholm (S) Perstorp (M) Chairman Hufuudstaden, Sandblom& Cunr G OrssoN, 7927;1,976 (1.970) Deputy Chairman, also Chairman of the Malmd Stohne;Director SCA, Skanska,FFNS Dr. Econ. h.c., Stockholm Board Shareholding:0 Chairman of the Board Chairman Cardo, Svensk-Danska Brofrir- Director Atlas Copco, Hufvudstaden Bo C E RAMFoRS,7936;1990 (7981.) bindelsen SVEDAB, Oresundskonsortiet, Shareholding: 10 496 ManagingDirector and GroupChiet' Executiz:e Vattenfall; Deputy Chairman Skoogs; up to andincluding August 31,1992 Prrun WarlrNBERG, 1,926;1,974 (7969) Director Tetra Laval Group, Lunds Dr. Econ. h.c., Skandinaviska Enskilda Universitet BJonNSvlonEsc, 1,937 ;'1,992 Banken, Stockholm (S) Shareholding: 540 Dr. Techn.h.c., Stockholm First Deputy Chairman, also Chairman of the ManagingDirector and GroupChiet' Executiae RuNr ANornssoN, 1944; 7997 (1,987) Stockholm Board as September1, 1992 Dr. Techn. h.c., Chairman Trelleborg AB, from Chairman Atlas Copco, Asea, Investor, Chairman Ericsson;Director ABA, ABB, Trelleborg (M) Knut & Alice Wallenberg's Foundation; Co- Asea,Sila Chairman ASG, Esselte, Getinge, SSAB, chairman ABB , Zwich; Deputy Chairman Shareholding:100 Scribona. Svedala; Director BPA Ericsson; Honorary Chairman STORA Shareholding:0 Shareholding: 92 926 Directors appointed by the employees Bo BsnccnrNl, 1936;1992 (7987) PsHn G GvllrNueuuan, 1935; 1982 (1979) Rorr Bron, 7932;1984 Dr. Techn. h.c., Chairman and Group Chief Dr. Med. h.c. Dr. Techn. h.c., Chairman AB Senior Manager, Stockholm (S) Executive, Stora Kopparbergs Bergslags AB, Volvo, Goteborg (G) Shareholding:2 661 Falun (S) Deputy Chairman, also Chnirffian of the Gdteborg Swedish Chairman SAS; Chairman ABA, RoLF KARLSSoN,1953; 1991 Bosrd Feldmiihle AG, Sila; Deputy Chairman Department Manager/ G

ToRE DAUN, 1929;1,989 (1,979) Former Managing Director, Goteborg (G) Director NII Gambro, Almedahl-Fagerhult Shareholding: 431 54 GrnuplVlanagement Csrnmitten

RutgerBarnekow

(right) rnitht.he Bank's three Chief Operating Managing'onrilt',,"frt*Director Bjiirn Saedberg together Gustafsson' theleft Mats ceaerioti, anaus Hedenstrdmand Lars

OperatingOfficer, Diligentia ManagingDirector and Chief Crornnolla, born 1945 GroupChief Executiae Mars 1937 HidrdisCronsjd BJdnNSvsosrnc, born GroupCredit Officer LowrNntrlrvt, born 1942 DeputyGrouP Chief Executne Canl ANDERsHrosNsrn6l\4, born 1945 ChiefFinancial Officer LarsAhlborn IsncssoN 1944 ChiefOperating Officer, S-E-Banken Lans ,born Diaision Controller LARSGusrAFssoN, born 1946 Group UnoeN jeNno, born 1945 Headof RegionWest, S-E-Banken GrouPCommunicatrons Tons SarraunlssoN,born 1943 Hmd of Ke.nr AnlsNtus, born 1938 Headof RegionSouth, S-E-Banken Headof Staff Orro WneNcst,born 1943 Group Director apPointed by the Government KsnsrtN RYEn,born 1948

INGEGARDJ Osrenssot't, 1'932; 7977 ChiefOperating Officer, Enskilda Corporate ChiefLegal Counsel Former Member of the Swedish Riksdag, Diztision EvsRr Srocsernc, born 1936 Vice President, European Handicraft ANDERSHrosusrnola, born 1945 Industries, CrimslScania,Svenska Dagbladet Auditars Shareholding: 9 917 Auditors elected bY aPPointed bY Deputy Directors the Annual General Meeting the employees LARS BONNEVIER LENNARTSVENSSON 1'947; 1'983 Authorised Public Accourtant, Stockholm Lens AHrnonN, Authorised Public Accountant, Malm

56 Internationalbranch offices and subsidiaries Internationalrepresentative offices

Italy-Milan Mexico - Mexico City Skandinavlska Skandinaviska Representatizteffices postal Enskilda Banken, Enskilda Banken' BanqueScandinave Office'\'/iaMand postal address: Officeand address: London Branch Bangkok Branch Repriesentative Of f ice, GonzaeaT, Lampos t1llseos"Torre I\o, JdJ/ I-20 123Milano Esq. Moli6re A" Officeand postal address: Office'17thand postal address: Monaco - 'Scandiriavian Place Telephone:+39 2720 011'M Piso 1 House Floor/Pacific Officeand postal address: Chapultepec Sukhumvit Road -"Les Faxi+39 272001997 Colombia 2-6 Cannon Street 140 Caiavelles" Polanco Bangkok 10110 Telex:371,420swtr 7 GB-London EC4M 6)C( 25,bd Albert 1:er 11560 Meico D.F. Telephone: +M 71 588 3494 Telephone:+66 2 25446 60 000Monaco MC-98 - Telephone:+52 5 281 26 24, Faxi+4471.588 0929 +6622544661 Telephone: +33 93 50 84 61. Switzerland Zurich +525 28224 M, lt2 5 28226 57 Telex:8950287 esseldn g Fax:+662254 46 62 Fax!+33 93 50 03 97 Office'Hottingerstrasseand postal address: Fax: +52 5 287 24 46 S.W.I.F.T.address; ESSE-GB 2L 21 Skandinaviska CH-8032 Zurich Banque Scandinave Scandinavian Enskilda Bankeru Off ice, Telephone:+47 1.2613l4l Branch Repfesentative Banking Partners Skandinaviska Luxembourg London Faxi+4'L"l261 3091 Enskilda Bankery Skandinaviska Telex:812082 sebz ch Einland - Helsinki New York and Ca)'man Office'2 and postaladdress: Enskilda Banken Officeaddress: Islands Branches (Luxembourg) studiri Place 'Union S.A., Kinnerton Street Snain and Portugal Bank o{ Finland Skandinaviska Luxemboutg GB-London SI'VI 8 EP -Madrid Fabianinkatu 31A Enskilda Banken Office'i6, address: Telephone: +M 7'1,235 M 47 Officeand postal address: Postaladdress:P.O. Box 530, New York "Carrera Corporation, Boulevard Royal Faxi+447"1 823 1.6 52 de Sar Jer6nimo SI-00101Helsinki 'l"I Officeand postal address: Postaladdress: BP 62L, 173" E-2801.4Madid Telephone:+358'17 ^19 0'17 30 '2,15 38 Park Avenue, L-2016Luxembourg Banque Scandinave Telephone:+34^I 429 80 52 Fax! +358 0 42 nd Floor lelepnofie: +552+/ /> o!-\ Skandinaviska Faxi+341 42934 69 New York, N.Y. 10167 Fax:+352 47 31.37 Enskilda Banken, I elex:1/ / 5J esseDe Norway - Oslo 47 00 I el?xi5/5r esseDru Telephone:+'1.212907 Marbella adfuess: 17 09 S.W.I.F.T.address: ESSE LU LL Office'tlo Faxi+1.212370 postal Hungary - Budapest Den norske Bank 42'161,8esseb ny Office'Ricardoand address: Telex: 50-4 Kirkegatan 21 Telex:661590 esseb ny Soriano Officeaddress: Skandinaviska E-29600Marbelia Po stal a[d.r us : P.O.Box 9579, (General) Enskilda Banken AG, "12 -KaKOCZI Ur ]-J Telephone:+3452 82 81 Postaladdress: Egertorget, Cable:Essebanken Ftankfurt am Main N-0128Oslo 1 S.W.l.F.T.address: ESSEUS 33 Fax:+3452829476 Postafiok300/20 Office'Rahmhofstrasseaddress: HU-l088 BudapestVItr Telephone:+47 2 2 42 70 66 2-4 Enskilda Securities, Teleplorc:+%'t2667770 Faxi+47 22 482777 Skandinaviska Postaladdress: Fax:+361.2667005 Enskilda Banken, Skandinaviska Postfach101957 Limite4 Denmark - Copenhagen Paris Branch 1 Enskilda W-5000Fmrikfurtm Main London - Telephone:+49 69 920 210 Poland Warsaw Office'Vesterbrogadeand postal address: Office' address: 8 Haussmann Fax!+49 69 283 855 Office'26, and posIaladdress: Officeand postal address: 69, Boulevard 'Ai. DK-1620Copenhagen V Putal address:Boile Postale125 Telex:4-134-13sebf d Finsbury Square JandPawla II,73 GB-LondoriEC2A lDS PL-01038Warsaw telepnone: ++J JJ JJ J7 co F-75363Paris "! Cedex 08 M 71 92 00 Branches Telephone: +44 7'I 6383500 Telephone: +48 22 38 70 36 Fax:+45 33 33 55 35 Telephone:+33 "120237 dk Faxi+33 1.47 42 54 99 Hamburg Faxi+M7'1628901,3 +4839 Telex:27196untb 5957nsklda g Office' address: Telex:895 Fax:+4839 120237 SchauenburgerStrasse 32 Telex:825 590 sbp pl Skandinaviska Pmtaladdress: Enskilda Banken, Enskilda Ventures Postfach101508 Limite4 London Russia- Moscow Hong Kong Branch 1 W-2000Hamburg andpostal address: Officeand postal address: +49 40 3d95050 Office'26, Office'Proyezdaddress: '2201 Telephone: Finsbury Square JardineHouse Fax! +49 40 3095 0530 1 ConnaughtPlace GB-LondodEC2A 1 DS Chridozhestvennogo CentralH6ng Kong Berlin Telephone:+4471. 638 3500 Teatra 5, Kv 34 Faxi+M71.867 9067 Telwhone:+852-868 20 11 Office'Internationalesaddress: Pos t aI addr ess: Pushkinskaya Fnx! +852 86840 37 Ul. 5/5, Kv 34,Moscow Telex:67341esseb hx Handelszentrum Enskilda S.A.,Paris Telephone:+7 95 292 0338 S.W.l.F.T.address: Friedrichstrasse93_97 Telebhone: +7 95 292 0738 Office'2, and postaladdress: ESSEHKHH Postaladdress: Baume Fax!+7 952923606 rue de 1a 413 286 unlt st Postfach90 F-75008Paris Telex: O-1086Berlin Skandinaviska Telephone:'1+33 1, 42 89 L889 Bankerl Telephone:+49 30 2643 2313 Faxi+33 42 89 19 15 People'sRepublic of China Enskilda 23L2 Singapote Branch Faxi+49 30 2643 Telex:640 3]Znsklda f - eeiling postal Skandinaviska Scandinavian Oftice'Unitand address: Enskilda Banken Pacific Ltd" Sydney Enskilda Securities 11-10Liang Ma (South EastAsia) Inc., New York Tower Oflce andpostal address: Dongsan-huan Limited" Singapore andpostal address: 8 North Level J, Office Road 245Park Avenue, Office'50 and postal address: 17-19Bridge Streei, ChaoyangDistrict Raffl'esPtace #36-01 Sydney N.S.W.2000 42nd Floor Beijing 104025 "1906 ShellTower Tel|phonb:+61 2231 1433 New York, N.Y. 10167 : +86 7 501. 21.235L4870 Telephonb Singapore0104 Fax:+61.2 251. 1.893 Telephone:+7 +i351 50156 88 Rep:u6licof Singapore Telex:74821 Faxi+1.21.2983 676"1 ext 2L"145 Tel ephon e: +65 22 55'644 Fax:+861 50 11913 Fax!+65 22 53 047 Banque Scandinave Enskilda Telex:222 635 sbpbi cn Telex:RS 25188 essebk en Suisse,Geneva (Deutschland) GmbH, Cable:Essebank Hamburg Officeaddress: Brazil - Sdo Paulo S.W.I.F.T.addre ss; ESSESGSG 'i1, Ofliceand postaladdress: (Branch) Coursde Rive )f,, Officeand postaladdress: o CasePostale 901 tssplanaoe+r 'CmtoEmprmiaf ESSESGMER(Merchant) Postaladdress: (Fihnlandhaus) CH-121'I Geneva 3 tsmaLtrm, Telephone:+41.22787 3"1 77 W-2000Hamburg 36, F Skandinaviska Telephone:+49 40 35 45 95 Avenida Brigadeiro Faxi+41227353370 Faria Lima 2020- Enskilda BankerL Faxi+49 40 35 45 90 -Cni.7'I Tokyo Branch 7 andat Banque Scandinave 01481-900Sdo Paulo ! Officeaddress: en Siisse, Zuich Enskilda EspaflaS.A, Telephone:+55 1.'1815 27 33 Rrn 425, Madrid Faxi+55 71.8^15 2796 Shin Tokyo Building Officeaddress: isacbr a - Office'Monteand postal address: Telex:011 831 04 3-3-1Maimouchi, bcnlprez Essebankrep Postaldddress: Esquinza,11 Cable; Chiyoda-ku E-28010Madrid PostaI'address: Postfach5130 CH-8022Zrlch Telephone:+341 3190889 EP" CPOBox1633, "l Faxl+34-l 3083682 Tokyo 100 Telephone:+41. 22933 33 FR Telephbne:+81 3 32 14 55 86 Fax:+4-l 1.21.11.6 47 Fax:+8'1.332"145595 Enskilda Asset Telex: 02?2 37 29 essebkj Banque Management Ltd, Cable:Essebank Scanomave a London p^! Luxembourg S.A., Office'30, and postal address: Luxembourg FinsburySquare oo GB-LondoriEC2A 1 SB Office'i6, address: dt3 Boulevard Royal Telepho n e: +44 71. 37 4 6133 Postaladdress: BP 487 Fax!+M7L 8679084 L-2014Luxembourg 9? tercpnone:+JJz+o r/ t/-r Fax:+352 46 L7 1.0