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SEB Abg Sundahl Collier Presentation, Stockholm, Anders Kvist Dec 2008
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SEB Abg Sundahl Collier Presentation, Stockholm, Anders Kvist Dec 2008

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  • 1. Anders Kvist Head of Group Treasury ABG Sundahl Collier 10 December 2008 1
  • 2. Diversified business mix Share of Operating profit, Jan – Sep 2008 Germany Wealth Merchant Life Management Sweden Banking 8% 9% Lithuania 13% 12% Latvia 5% 43% 4% 50% Estonia 36% 5% 6% Finland 9% Denmark Norway Retail Banking Geography - Adjusted for Other Divisions - Adjusted for Other 2
  • 3. Resilient underlying business Corporate credit exposure Swedish mutual funds – Net inflows Jan-Sep, SEK bn SEK m , Q4-06, Q2-07, Q4-07, Q2-Q3-08 5,9 500 450 -1,1 400 -7,3 350 -11,6 -17,0 300 Robur SHB Nordea SEB Others 250 200 Life – Total sales 150 SEK bn 100 13,3 12,0 12,0 11,9 50 10,7 10,7 9,7 0 s s er s s nt nt nt nt th lie lie ie lie O Cl rC lC rC ltic ai e e rg rg t Ba Re La La h an cquot; is ed di m Q1-07 Q2 Q3 Q4 Q1-08 Q2 Q3 or er Sw quot;N G 3
  • 4. SEB's franchise Recent awards/customer acknowledgements Merchant Banking In October and November ● #1 Nordic stock broker Best SME bank in Sweden ● #1 Nordic and Baltic investment bank ● #1 Nordic and Baltic cash manager Best stockbroker in Sweden ● #1 Custody Nordic and Baltic markets ● #1 Scandinavian currencies Sub-custodian of the year Wealth Management Trade community ● #1 Nordic and Baltic private bank ● #2 Nordic asset manager First Green Bond Life and pension Nordic Asset Management ● #1 Nordic unit-linked business firm of the year Retail Bank of the year in Estonia and Lithuania ● #2 Baltic region 4
  • 5. Diversified credit portfolio Credit exposure, On and off-balance, SEK 1,805bn By sector By geography Banks Baltic Public Corporate administration 14% 6% 10% 24% German 40% 26% 66% 14% Households Nordic Property management 5
  • 6. Corporate and real estate exposures SEB Group Corporate credit exposure Property management credit exposure SEK 720bn SEK 245bn 12% 3%1% 19% 8% 6% 11% 2% 42% 3% 10% 27% 18% 35% 3% Finance and insurance Wholesale and retail Sweden Germany Estonia Transportation Other service sectors Latvia Lithuania Other Nordic Construction Manufacturing Other European Other Other 6
  • 7. Development of lending market SEB Swedbank shares – Baltics DnB Nord Parex Banka Per cent, Jan 2005 – Sep 2008 Sampo/Danske bank Nordea Estonia* Latvia Lithuania 50% 50% 50% 40% 40% 40% 30% 30% 30% 20% 20% 20% 10% 10% 10% 0% 0% 0% Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 05 06 07 08 05 06 07 08 05 06 07 08 * Sampo as per Q1 2008 Swedbank as per Q2 2008 7
  • 8. Managing the Baltic downturn Group credit exposure Strategic priorities Total exposure = SEK 1,805bn Targeted credit portfolio reviews Non-Baltic Joint local and head-office work- 90% out team Early conservative provisioning Estonia 2% Latvia 3% Individual country approach Lithuania 5% Full integration in SEB Group to Baltics - Provisioning to build up reserves broaden product palette SEK m Specific Collective 350 Develop relationships with existing and new customers 250 150 50 -50 Q4-07 Q1-08 Q2-08 Q3-08 8
  • 9. High and stable deposits to loans ratio Lending to the public Deposits from the public SEKbn SEKbn Jan-Sep 08 +12% yoy Jan-Sep 08 +18% yoy 900 1,400 800 1,200 1,000 700 800 600 600 500 400 400 Q1 Q2Q3 Q4Q1 Q2 Q3Q4Q1 Q2Q3Q4 Q1 Q2Q3 Q1 Q2Q3Q4Q1 Q2Q3 Q4Q1 Q2Q3Q4Q1 Q2Q3 2005 2006 2007 2008 2005 2006 2007 2008 Deposits to loans ratio 100% 90% 80% 70% 60% 50% 40% 30% 2001 2002 2003 2004 2005 2006 2007 Q3 2008 9
  • 10. Structural liquidity position Balance sheet structure Net liquidity position across maturities SEK bn, 30 Sep 300 SEB is match- 250 funded approx. Short-term Liquid one year funding assets 200 150 100 Long- 50 term Lending funding, 0 deposits 1 week 2 weeks 4 weeks 2 months 3 months 4 months 5 months 6 months 9 months 12 months & Equity More than 12 months matched funding, i.e. based on no access to capital markets, no refinancing of debt to credit institutions, issued bonds or subordinated capital; and moderate reduction of Assets Equity & Liabilities business activities. 10
  • 11. Funding raised with original maturity > 1 year Jan – Sep 2008 Product Bn SEK YCD 3,0 Examples of transactions: Senior unsecured Germany 1,7 April: 5 Year Euro covered bond at spread of 17 bps Senior unsecured Sweden 36,0 May/June: 2 Year Senior Euro FRN Structured bonds 13,2 notes at spread of 48 bps Covered bonds Germany 29,1 Covered bond Sweden 64,2 Hybrid Tier 1 4,7* Total 151,9 * Issued in Dec 2007 11
  • 12. Diversified funding structure SEB Group, Sep 2008 SEK 1,702bn Schuldscheins and Reg Bonds CPs/CDs 3% 11% Mortgage Covered Bonds Sweden 10% Mortgage Covered Bonds Germany 2% Deposits - General Public Covered Public Bonds Germany 42% 7% Senior debt 2% Deposits - Subordinated debt Interbank 3% 20% * Over collateral within covered pools SEK 57bn 12
  • 13. Capital adequacy SEB Group Core capital ratio, % Total capital ratio, % Basel II Transition Basel I 11,5 11,0 10,8 10,5 9,3% 10,4 10,3 10,2 Basel I 8,6 8,2 8,1 8,0 7,9 7,8 7,5 7,3% Dec Dec Dec Dec Dec Dec Sep 2002 2003 2004 2005 2006 2007 2008 SEK bn Capital base 52.7 54.7 58.7 76.2 85.8 93.0 97.7 Basel I Risk-w. Assets 503 535 570 704 741 842 937 1.045 13
  • 14. Improved quality of the capital base Focus on true loss absorption Strategy to improve the quality and 100% loss absorption capacity of the capital 31,7 base: 35,5 80% ● LT2 redemption in June 2007 6,7 4,8 replaced by hybrid tier 1 capital in 7,5 60% 70,0 December 2007 60,6 ● € 500 hybrid tier 1 capital issued in 40% December 2007 - enhanced loss absorption capacity; cancellation of 20% coupon payments and write down of principal pre-liquidation 0% ● Ambition to partly replace 'Dec 2006 'Sep 2008 outstanding UT2 capital with hybrid Equity * Enhanced hybrid capital capital with enhanced - “CEBS Hybrid capital Tier II compliant” - loss absorption * Total equity in the capital adequacy capacity 14
  • 15. Economic capital in relation to the capital base September 2008 The capital base holds an significant buffer in comparison to the required economic capital 100 80 60 40 20 0 Capital base incl Economic deductions capital 15
  • 16. Nordic capital ratios Tier 1 capital ratio reported Q3 2008 (%) Tier 1 ratio - Full Basel II Tier 1 ratio - Basel II transition rules 10.5 10.1 10.0 10.0 9.4 7.9 8.2 8.2 7.3 7.0 6.7 Swedbank Danske Bank SEB SHB DnB NOR Nordea Notes: 1 Swedbank: Including SEK 12.5bn capital rasing announced 27 October 2008 2 Danske: only reports tier 1 ratio under full Basel II 3 DnB NOR: RWA adjusted for life insurance impact (life insurance assets risk weighted under statutory disclosure) to allow comparison 16
  • 17. Rating agencies deems SEB’s capital adequate S & P 10 October 2008 “ The ratings on SEB reflect its group's well-diversified revenue base, underpinned by its very strong franchise in corporate and merchant banking in Sweden; adequate capitalization…Likewise, negative rating action could follow if capitalization were to deteriorate, given the risk profile of the group.” Moody’s 25 September 2008 “SEB's BFSR remains well placed in the B- category reflecting its current earnings profile, liquidity and capital levels.” Fitch 3 July 2008 “ `~éáí~äáë~íáçå áë=ëçìåÇI=ïáíÜ=ÖççÇ=Å~éáí~ä=ê~íáçë=éêçîáÇáåÖ=~=ÅìëÜáçå=Ñçê=íÜÉ=Ä~åâÛë=ä~êÖÉê= Åçêéçê~íÉ=Ä~åâáåÖ=ÄìëáåÉëë=~åÇ=Éñé~åëáçå=áåíç=b~ëíÉêå=bìêçéÉK=qÜÉ=pí~ÄäÉ=lìíäççâ=áë= Ä~ëÉÇ=çå=cáíÅÜÛë=îáÉï=íÜ~í=pb_Ûë=ìåÇÉêäóáåÖ=éêçÑáí~ÄáäáíóI=ëìééçêíÉÇ=Äó=íÜÉ=ÇáîÉêëáÑáÅ~íáçå= çÑ=áíë=É~êåáåÖëI=~åÇ=Å~éáí~äáë~íáçå ~êÉ=ëìÑÑáÅáÉåí=íç=ÅìëÜáçå=~=ã~íÉêá~ä=ÇÉíÉêáçê~íáçå=áå=ëçãÉ= çÑ=áíë=çéÉê~íáçå~ä=ã~êâÉíëÒK 17
  • 18. Stress tests The Swedish Central Bank, IMF and the Swedish FSA (not disclosed public) have performed stress test to assess SEB capital strength. The Swedish Central Bank’s and the Swedish FSA’s stress tests aimed at capturing a general down turn/stressed scenario, whilst IMF primarily focused on the Baltic exposure. The out come showed in all cases that, despite severe credit losses and deteriorating underlying earnings, SEB should manage to maintain a sufficient capital base in the scenarios used for the stress tests. 18
  • 19. Summary of strategic review 2006 Increase capitalisation Avoid late business-cycle expansion – Commercial Real Estate – Leveraged Finance/Private Equity – Shipping Controlled slow-down of Baltic market One SEB/Operational excellence Integration/cost management Bolt-on acquisitions and divestments of non-core entities 19
  • 20. Going forward ● Holistic balance sheet management ● Robust capital and good liquidity ● Resilient customer business ● Cost management 20
  • 21. 21