Presented at the Bankers Association for Finance and Trades 82nd Annual Meeting A Global Focus

1
Jacob Wallenberg, Chairman SEB Operating a
Financial Institution in the 21st Century Risks
and Rewards
Presented at the Bankers Association for
Finance and Trades82nd Annual Meeting A Global
Focus
2
Predictions at the end of the 20th century

• Globalization and Deregulation
• Increased consolidation
• Increased cross-border mergers
• Technological Innovation
• Branches will die and Internet will rule
• One-stop shop
• Geography matters
• Asia will rule
• Above all, Japan will rule (until mid-nineties)

3
Evolution of European banks ranking
Market capitalization, 1994 - 2004, EUR billions
Source Bloomberg, Global Vantage, McKinsey
29 HypoVereinsbank (11.5), 33 Commerzbank (9.6)
4
There has been huge upheaval among the top
institutions
European banks by assets
100
31
Top 100 European banks at end 1993
"Organic" survivorsat end 2003
5
Most consumers are expected to continue using
branches
Percent of customers
In the future I will continue using
branches 80 I intend to make all
transactions through the internet or
other alternative channels 20
Financial institutions without branches I do
not trust 63 I trust 37
Source McKinsey European Mass Affluent Market
Research
6
Increased industrial usage of the Internet
Share of companies,
On-line purchases
35
30
25
20
On-line sales
15
10
5
0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2003
2003
Source 2003, The European E-Business Report
European Commission
7
e-business revolution will arrive but a few
years late
Western Europe, '000 users
2000 estimates
2003 estimates
Internet users
Broadband users
90,000
1 - 2 years shift
1 - 2 years shift
60,000
2 - 4 years shift
2 - 4 years shift
30,000
0
1999
2000
2005
2006
2001
2002
2003
2004
1999
2000
2001
2002
2003
2004
2005
2006
Internet banking penetration 2002 45 -
502007 55 - 60 2010 more than 160 million
accounts
Online Banking Accounts/Internet
Users Population 23 - 64 year old in 2010
Source IDC, UN Population Division, McKinsey
8
Trends shaping European banking during 1990s
Sector
Demographics

• Rising wealth and affluence
• Some savings-driven growth

• Major changes across industries
• Globalisation
• Consolidation
• Privatisation

A decade of optimism"
Macro-context
Increased Competition

• Strong equity markets
• Sustained economic growth
• Benign credit environment

• Ambitious leadership teams
• Domestic consolidators in banking
• Stronger emphasis on performance

Regulation

• Strongly pro-market

Technology and operations
9
Financial services have not grown faster than GDP
in Europe
Financial services sector value added as of GDP
Value added is defined as the financial
sectors net revenues (i.e., interest income
interest expensefee income commission
expense) Source Global Insight database (EIU)
10
There are wide variations in profitability across
Europe
Average post tax ROE, 1998 - 2002, percent
15.1
13.1
12.2
11.5
11.5
10.7
10.2
8.6
5.0
Average cost of capital 9
Source McKinsey
11
Forces shaping European banking going forward
Demographics
Sector

• Ageing
• Immigration
• Women as decision makers

• Consolidation
• Globalisation
• Impact of China, India, Russia

Uncertain outlook
Macro-economic context
Technology Operations

• Risk of shocks?
• Impact of EU accession countries?

• Adoption of direct channels
• Restructuring of operations

Regulation
Competitor strategies

• Basel 2, IAS
• Competition constraints

• Europe vs. U.S. vs. Asia
• Focus vs. diversification
• Execution vs. big plays

12
Strategic questions all banks need to answer

• Where is our growth to come from?
• What should be our geographic focus?
• Should we be more focused, less of a
  conglomerate?
• What is the right balance of execution and
  major strategic moves?
• Do we have the talent and culture required to
  succeed?
• How can we manage the regulatory environment?

13
Our history
1800
1900
2000
..of BfG Germany
1999
Stockholms Enskilda Bankfounded
Merger Stockholm Enskilda Bankand Skandinaviska
Banken
1972
1856
..of BOS Polen
2000
1982
SEB International
Skandinaviska Bankenfounded in Gothenburg
1864
2006 SEB 150 years
1997
Acquisition of Trygg Hansa
1998
.. of Baltic banks
14
We develop SEB step by step
SEBs traditionalstrenghts
1997-2001 2001-2003 2003-2005
15
SEB in Northern Europe global competence and
local presence

• Market
• Home markets in 9 countries
• 150 million inhabitants

5.2

• SEB
• gt 4 million customers
• 1.5 million Internet customers
• 672 branch offices
• 18 000 employees
• SEK 800 bn in AuM (USD 100 bn)
• Balance sheet SEK 1200 bn

4.5
8.8
7.3
5.3
38
82
16
Risks and Rewards Focus on Growth

• Management
• Regulatory Environment
• Risk Management
• Strategic Choices
• Emerging Markets
• Customer Focus
• Choose wholesale model
• Corporate culture
• Brands