• Startpage
• 2008 in summary
• This is Swedbank
• Letter from the Chair
• President's statement
• Vision and strategy
• Market analysis
• Business areas
• Employees
• Sustainable development
• The share and owners
• Board of Directors' report
• Board of Directors and Group Executive Management
• Corporate governance report
• Annual General Meeting
• Five-year summary
• Three-year summary
• Market shares Sweden
• Market shares Baltic region

• Addresses
• Contacts
• Definitions

Corporate governance report

General

Swedbank AB (“Swedbank”) is a public, listed banking company with around 338 000 shareholders and the parent company of the Swedbank Group. The Group operates in Sweden, Denmark, Estonia, Finland, Japan, China, Latvia, Lithuania, Luxembourg, Norway, Russia, Spain, Ukraine and the United States, and has 21 280 employees as of 31 December 2008. In accordance with the listing agreement of the NASDAQ OMX (Stockholm), Swedbank applies the Swedish Code of Corporate Governance (“the Code”). The Code, which is an element in the self-regulation of Swedish businesses, is based on the principle, “comply or explain”. This means that a company that applies the Code can deviate from individual rules provided that the reason for each deviation is explained. This corporate governance report has been prepared by Swedbank’s Board of Directors in accordance with the rules of the Code. The report is included as part of the printed annual report, but is not part of the annual accounts and have not been reviewed by Swedbank’s auditors.

Ownership structure

Swedbank’s shares have been listed on the NASDAQ OMX (Stockholm) since 1995. As of 30 January 2009, it had 338 215 shareholders. The largest shareholder was Sparbanksstiftelsernas Förvaltningsaktiebolag, with 19.3 percent of the capital. 321 471 shareholders, or 95 percent, owned fewer than 1 000 shares, while 13.5 of the capital was owned by international shareholders. Further information on shareholders and shareholdings can be found on " The share and owners" in the annual report.

Annual General Meeting

The shareholders exercise their rights at the Annual General Meeting of Swedbank. In addition, Extraordinary General Meetings can be called. Swedbank normally holds its Annual General Meeting before the end of April. Under special circumstances the meeting can be held at a later date, though not later than 30 June. The Annual General Meeting is normally held in Stockholm, but can also be held in Göteborg, Malmö or Umeå. In its year-end report and on its website, Swedbank indicates where and when the meeting will be held.

The notice of the Annual General Meeting is normally published around five weeks in advance in the Swedish dailies Dagens Nyheter and Svenska Dagbladet as well as Post och Inrikes Tidningar (Official Swedish Gazette) and at least one other newspaper, usually Dagens Industri. The notice is also made available on the bank’s website. The Annual General Meeting is held in Swedish with an English interpretation. The material released prior to and in connection with the meeting is in Swedish, but is translated to English, including the minutes. The documents are posted on Swedbank’s website.

Right to attend the Annual General Meeting

Swedbank is a so-called VPC company, which means that its share register is maintained by Värdepapperscentralen AB (the Swedish Central Securities Depository). All shareholders who are directly recorded in the register on the fifth day before the meeting and who have notified Swedbank in time of their intention to participate are entitled to attend the meeting. Shareholders may attend the meeting in person or by proxy. Shareholders may be accompanied by a maximum of two persons. Swedbank gives shareholders the opportunity to register for the meeting in several different ways. The notice indicates in which ways and by which dates shareholders must register and notify the bank in order to be entitled to attend the meeting.

Agenda and documents for the Annual General Meeting

Shareholders who wish to have an issue brought before the Annual General Meeting must submit a request in writing to the Board. The request must normally be received by the Board not later than seven weeks prior to the meeting.

Board of Directors and Auditors

The Annual General Meeting elects the members of the Board, including the Chair, and, if an election is scheduled, the Auditors. Board members have a term of not more than one year. The nomination of Board members, including the Chair and Auditors, is made by the Nomination Committee. The principles for appointing the Nomination Committee are set by the Annual General Meeting.

Nomination Committee

The Annual General Meeting 2008 decided on the principles for the appointment of the Nomination Committee for the Annual General Meeting 2009. The Nomination Committee consists of five members. The Chair of the Board, who is a member of the Nomination Committee, contacts Swedbank’s four largest shareholders or shareholder groups, based on holdings known as of 30 August 2008, which make up the remaining four members. The Nomination Committee selects a Chair from among its members, though not the Chair of the Board. Members who step down from the Nomination Committee before its work is completed will be replaced, if so decided by the Nomination Committee, by another person who represents the same shareholder or by a person who represents the next largest shareholder. No compensation for work or expenses will be paid to members of the Nomination Committee. The Nomination Committee has the right to hire a recruiting consultant or other outside consultants, as it deems necessary, at the bank’s expense, to fulfil its duties. Prior to the Annual General Meeting 2009, the Nomination Committee presented a proposal for the Chair of the meeting, the Chair of the Board and other Board members, as well as all remuneration that will be received by the Chair, other Board members elected by the Annual General Meeting and the Auditors. Lastly, the Nomination Committee presented a proposal for the principles for appointing the Nomination Committee for the Annual General Meeting 2010.

The Nomination Committee for the Annual General Meeting 2009 consists of the following persons:

Hans Laufeld, the Chair of the Nomination Committee, representative of Sparbanksstiftelsernas Förvaltningsaktiebolag and the Savings Bank Foundations; Peder Hasslev, representative of AMF Pension and AMF Pension fondförvaltning; Erik Hägglöv (successor to Lennart Ohlstenius), representative of the savings banks and the Swedish Savings Banks Association; Torgny Wännström, representative of AFA Försäkring; and Carl Eric Stålberg, Chairman of the Board of Swedbank.

The Nomination Committee convened has held meetings, in addition to other contacts. Its members have not received any compensation for their work. The Nomination Committee has received the evaluation of the Board’s work conducted in part through discussions between the Chair and each Board member and in part through a written questionnaire. The Nomination Committee has discussed the Board’s competence needs and the composition of the Board taking into consideration Swedbank’s strategies. The Nomination Committee has hired a recruiting consultant at the bank’s expense. Shareholders were able to present proposals to the Nomination Committee until 23 January 2009.

Composition of the Board, etc.

The Annual General Meeting 2008 elected eight members. The Board also includes two members appointed by the Financial Sector Union of Sweden. Furthermore, the Financial Sector Union and the Swedish Confederation of Professional Associations (SACO) have each appointed one deputy. The deputies normally do not participate in the Board’s meetings. The CEO is not a member of the Board but attends its meetings, except when it discusses issues that disqualify him/her, e.g., when the CEO’s work is evaluated. The Head of Internal Audit and the Secretary of the Board, as well as the Chief Legal Counsel of the bank, also attend the Board’s meetings.

The new Board member elected by the Annual General Meeting 2008, Helle Kruse Nielsen, has received introductory training from Swedbank. As a member of the board of another listed Swedish company, she had already received training from the OMX Nordic Exchange (Stockholm).

Prior to each Board meeting, a proposed agenda is distributed along with additional material. The documents are normally sent a week in advance. The material from meetings is saved electronically, including documents not attached to the minutes.

The Board’s organization and work in general

The delegation of the Board’s duties is stipulated in its rules of procedure and the special instructions for the Board’s Compensation Committee and other committees. The Board appoints and dismisses the CEO and deputy. The delegation between the Board and the CEO, including the Chair of the Board and the CEO, is stipulated in the Board’s rules of procedure and the Board’s instruction for the CEO. The Board has a Compensation Committee, a Credit Committee and an Audit Committee. The only committee with the right of decision-making is the Credit Committee. In addition, the Board has at its disposal an independent audit function directly subordinate to the Board (Internal Audit). The Internal Audit’s responsibility is to review and evaluate efficiency, governance, risk management and control in the Group. The function works proactively to propose improvements to internal control.

The Chair of the Board has certain specific areas of responsibility, including:

• Overseeing the CEO’s work and providing a discussion partner and support, as well as monitoring that the Board’s decisions and instructions are implemented,
• Ensuring that the Board maintains its responsibility for risk control through the necessary instructions and risk reports;
• Ensuring that the Board maintains its responsibility for the independent audit function (i.e., that the function works and reports according to established instructions);
• Organising and managing the Board’s work, encouraging an open and constructive discussion within the Board, and initiating the development of the Board’s competence in issues of importance to operations, including the evaluation of the Board’s work.

The Board’s rules of procedure mainly cover strategic and supervisory roles, responsibility for risks, conflicts of interest and disqualifications, the Compensation Committee and other committees, special issues decided by the Board, the decisions taken at the statutory meeting, signatories, evaluations, confidentiality and formalities (e.g., the distribution of information prior to meetings, the attendance of individuals other than Board members, presentations, and the signing, content and distribution of the minutes).

At least twice a year, the Auditors’ Chair reports to the Board on the Auditors’ reviews and observations, once in the absence of the CEO. In addition, the Auditors’ Chair regularly meets the Chair of the Board and the Chair of the Audit Committee.

Compensation Committee

The Board’s Compensation Committee prepares compensation issues for resolution by the Board, including:

• Salary, pension, bonus and other benefits for senior executives according to the compensation policy adopted by the Annual General Meeting and for the Head of Internal Audit and the Secretary of the Board,
• The Board’s proposal to the Annual General Meeting with compensation guidelines for senior executives, an incentive policy for the Group and other related documents,
• Decisions according to policies in the compensation area,
• Changes in allocation criteria for the Swedbank Group’s profit-sharing fund, Kopparmyntet, and a recommendation on the annual allocation,
• Questions concerning the bank’s pension funds which, according to the Board’s rules of procedure, are resolved by the Board,
• Other compensation issues that deviate from established policies or questions of principle.

The Annual General Meeting 2008 adopted the compensation guidelines for senior executives proposed by the Board. For more information, see Board of Directors' report. Swedbank did not have any share or share price-related incentive programs in 2008.

The Committee consists of three Board members. The members of the Committee in 2008 were Carl Eric Stålberg (Chair), Ulrika Francke and Berit Hägglund-Marcus. In 2008, the Committee held eight meetings.

Credit Committee

The Board’s Credit Committee prepares credit issues for discussion by the Board and otherwise decides on credit-related issues within the amounts determined by the Board. In addition, the Committee recommends credit risk strategies for discussion by the Board.

The Credit Committee consists of not more than five members appointed from among the Board’s members. The CEO is a co-opted member of the Committee. Decisions require a quorum of three Committee members. If any of those present express reservations about a decision, it is referred to the Board for a ruling. Questions of principle or otherwise of major importance will always be resolved by the Board.

The members of the Committee since the Annual General Meeting 2008 have been Carl Eric Stålberg (Chair), Simon Ellis, Ulrika Francke and Göran Johnsson. In 2008, the Committee held 22 meetings.

Audit Committee

The Audit Committee is a drafting body for the Board. Through its work, and in consultation with the outside auditor and the Head of Internal Audit, the Committee provides the Board additional information on:

• Potential improvements in the organisation and processes with regard to governance, risk management and control,
• The reliability and efficiency of the financial reporting,
• Whether the auditors’ work has been conducted efficiently and otherwise in a satisfactory manner.

The main responsibility of the Audit Committee is to provide the Board with additional information on any deficiencies in routines and the organisation with regard to governance, risk management and control. The Audit Committee reviews the reliability and efficiency of the financial reporting and ensures that the Auditors’ work has been conducted efficiently and otherwise in a satisfactory manner.

The Audit Committee consists of not more than four Board members. More than half the full number of members constitutes a quorum. If the Committee consists of four members, three constitute a quorum, one of whom must be the Chair. The members of the Committee since the Annual General Meeting 2008 have been Ulrika Francke, Chair, Gail Buyske and Berit Hägglund-Marcus, Deputy Chair. All members are independent according to the definition in the Code. In 2008, the Committee held six meetings.

Board work in 2008

In 2008, the Board held 20 meetings, of which two were held per capsulam. All meetings were held in Stockholm. The Board establishes an annual plan for its work, normally at the statutory meeting, where it decides which issues will be treated in depth during the year. The issues in 2008 included the strengths and weaknesses of all strategic business areas, the capital market’s opinion of the bank, the impact of climate change on operations, a review of IT operations, ICAAP, recruitment of a new CEO and new share issues.

The current CEO is retiring in April, because of which there was no evaluation of the CEO’s performance in 2008. No new objectives were established as of April 2009 either.

The Board regularly monitors operational risks and the capital situation, for which it receives a risk report at each meeting. It also receives reports on security and compliance.

No objections were noted to any of the decisions during the year. In 2008, the Auditor reported at 2 of the Board’s meetings. At one of these meetings, neither the CEO nor other members of Group Executive Management were present.

All the Board members except one, the Group Executive Management except one member and the Chief Auditor were present at the Annual General Meeting 2008. More than half of the Board’s members as well as the Chief Auditor were present at the Extraordinary General Meeting held in November 2008.

The Board’s independence

The Board’s composition complies with the requirements of the listing agreement and the Code in terms of independent Board members.

Listing agreement: None of the Board members elected by the Annual General Meeting are senior executives of Swedbank or its subsidiaries. More than half of the Board members elected by the Annual General Meeting are independent in relation to Swedbank and its Management. Of the eight Board members elected by the Annual General Meeting, one has been dependent according to the definition of the listing agreement. At least two Board members elected by the Annual General Meeting, who are independent in relation to Swedbank, are also independent from Swedbank’s major shareholders, and at least one of these two has experience with the requirements placed on a listed company.

The Code: The majority of the Board members elected by the Annual General Meeting are independent in relation to Swedbank and its Management. At least two of the Board members who are independent in relation to Swedbank and its Management are also independent in relation to Swedbank’s major shareholders.

Auditors

The appointed auditor is Deloitte AB, Sweden, with Authorised Public Accountant Jan Palmqvist as Chief Auditor. Jan Palmqvist has supervised auditing duties for Swedbank since 2003. Aside from Swedbank, he has auditing assignments for the following companies: D. Carnegie AB and HEBA Fastighets AB. In addition, he is auditor for Aktiespararna (the Swedish Shareholders’
Association) and Länsförsäkringar Stockholm. Jan Palmqvist has no assignments for other companies that affect his independence as an auditor of Swedbank.

Compensation for the Group’s auditors is reported in note 9 of the annual report for 2008. The Financial Supervisory Authority did not appoint an auditor for 2008.

CEO and Group Executive Management

The CEO is responsible for the operating management of Swedbank. The delegation of responsibility between the Board and the CEO is stipulated in the Companies Act as well as the Board’s rules of procedure and its instruction for the CEO. The CEO leads the work of the Group Executive Management and makes decisions after consulting its members. The Group Executive Management consists of (i) the CEO, (ii) the Head of Baltic Banking, (iii) the Head of Swedish Banking, (iv) the Head of Customer and Product Offerings, (v) the Head of Hansabank in Lithuania, (vi) the Chief Financial Officer, (vii) the Head of Swedbank Markets, (viii) the Head of International Banking and (ix) an employee representative, totalling nine members. The Group Executive Management normally meets twice a month.

Business areas

The CEO has decided that Swedbank will be organised in the following six business areas: Swedish Banking, Baltic Banking, International Banking, Swedbank Markets, Asset Management and Insurance, and Shared Services. For more information on Swedbank’s business areas, see Business areas. The head of each business area is responsible for the business area’s operations. Swedish Banking primarily comprises Swedish retail and corporate banking operations. Baltic Banking comprises retail and corporate banking operations in the Baltic countries, Estonia, Latvia and Lithuania. International Banking comprises the Ukrainian and Russian banking operations as well as other international banking operations. Swedbank Markets, Swedbank’s investment bank, is responsible for the Group’s securities, fixed income and foreign exchange trading, professional analysis and advice on the equity, fixed income and foreign exchange markets, contacts with financial institutions, Corporate Finance, project, export and corporate financing, and management of large credits. The Asset Management and Insurance business area is comprised of Swedbank Robur, Swedbank Försäkring and Folksam Fond. The Shared Services business area supports the operations of the other business areas by providing specialised services, including the IT area.

Group Staffs

Swedbank has a number of Group Staffs, including Credit, Treasury, Legal Affairs, Risk Control, Compliance, Accounting, Human Resources & Competence, Investor Relations, Community Relations, Communication and IT Oversight and Control. Among the roles of the Group Staffs is to draft Group-wide policies for decision by the Board and Group-wide instructions for decision by the Board or the CEO. The purpose of the Group-wide rules and processes is to support the CEO and the business operations in the Group and to clarify Swedbank’s vision, mission and values in all of the bank’s markets. The Staffs are also responsible for compiling, analysing and providing information to the CEO and the Board.

Internal control

The following information relates strictly to the organisation of internal control with regard to financial reporting and does not contain an opinion on how well the control has worked. External financial reporting in Swedbank comprises (i) interim reports, (ii) the year-end report and (iii) the large part of the annual report. The internal control in the most important processes in financial reporting, based on the largest profit and loss statement and balance sheet items in the Group, have been evaluated during the year in the parent company, Swedbank AB, including Swedbank Markets, Swedbank Mortgage, Swedbank Robur and Baltic Banking. As a basis for this evaluation and the report, Swedbank has used the so-called COSO model.

The Board determines the overall organisation and financial objectives for the CEO and operations, and evaluates the CEO’s performance and results. The CEO ensures that an evaluation is made of other senior executives. The CEO is responsible for and ensures that the Group has a well-structured process for succession planning.

Regulatory framework

The policies laid down by the Board apply to all companies in the Group after adoption by each company. Among the areas where the Board has established policies are ethics, gender equality and diversity, communication, crisis management, environmental concerns, compliance, risks, security and outsourcing. Policies and instructions at the Board and CEO level follow an established structure. For financial reporting, Swedbank Accounting Policies are in place. There is also a Group-wide system for internal accounting principles, planning and follow-up processes and report routines. At the company level, detailed instructions are in place for practical account registration and reconciliation routines.

Reporting

The Board establishes reporting requirements in order to obtain effective information on financial outcomes as well as the risks in the Group’s operations and how outcomes and risks are affected by various scenarios. Monthly risk reports are compiled by Group Risk Control and otherwise by Group Finance. Reports are also presented to the CEO and Group Executive Management. Since 2006, the compliance and security functions serve the entire Group in order to safeguard the Group’s perspective and independence. The CEO annually establishes an operating plan for the Group, including an IT plan. The risks inherent in the Group are included in the plan. The operating plan is managed by each business area based on local demands and needs.

Risk assessment

A structured risk assessment facilitates identification of significant operational risks. Through self-evaluation processes, Swedbank has documented where the relevant risks exist at the company, business unit, function and process level. The organisation to assess risks mainly consists of Group Risk Control – which is responsible for managing operational risk, credit risk, financial risk, security and compliance – and the Group’s credit staff. In addition, each business unit has functions to monitor and limit risks, including IT risks. Moreover, Internal Audit conducts an annual independent risk analysis to serve as the basis for its annual audit plan, which is adopted by the Board after preparation by the Audit Committee.

Control activities

The Group has overall control activities that are shared by several processes. Continuous work is done to evaluate, improve and document control activities in all significant processes. A special process is in place to ensure that identified deficiencies are remedied. Examples of significant processes include lending to the public, lending to credit institutions, deposits and borrowings from the public, borrowing from credit institutions, issuance of securities, card processing services, asset management, human resource administration, invoicing services and financial reporting. Examples of control activities include routines for duality, risk classification and other routines for credit decisions, payouts, reviews and monitoring of credits, compilation of the total credit portfolio and risk profiles. In other areas, examples include limit monitoring, manual and automated reconciliation of various positions, stress tests, self-evaluations and risk and vulnerability analyses. Control activities associated with financial reporting mainly relate to reconciliations – manual and automated – against sub-ledgers and ledgers and comprise routines to ensure the existence of assets and liabilities and that assets, liabilities and business transactions have been correctly recorded. Continuous system development produces gradual improvements in control activities, e.g., by replacing manual routines with automated alternatives. A special process to test and approve new products ensures that new products can be handled in the system and are correctly reported.

Information and communication

The Group-wide intranet introduced last year has been further enhanced. In addition, each country has its own intranet where applicable rules are available to all employees. Current policies, instructions, guidelines and manuals are updated continuously. Moreover, all employees have channels to communicate significant information to relevant recipients (ultimately the Board) when necessary. Swedbank has a whistleblower system that allows employees to anonymously report rules transgressions.

A policy for communication with external parties includes guidelines. The purpose of the policy is to ensure that information obligations are met in a correct and thorough manner.

Monitoring

The main monitoring units within the Group are Group Finance, Group Risk Control and Internal Audit. Monitoring is performed monthly based on balanced scorecards in which profitability, efficiency, risk, sales and market shares, customer satisfaction and employeeship are reported and evaluated. Each quarter, in-depth monitoring meetings are held with the CEO, the CFO and the heads of Group Finance and each business area. Monthly monitoring reports are prepared in the business areas based on the balanced scorecards. Results, risks and events are always traceable to specific customers and departments. Monitoring meetings are held monthly or at least quarterly at all levels within each business area. Operational risks are also monitored at least once a month by the CEO and the Board.

Internal Audit

Internal Audit’s duty is to review and evaluate the internal controls. All audit work in the Group is coordinated, i.e., reviews are planned, implemented and reported using the same approaches and methods. Internal Audit is a review function independent from the Group Executive Management and directly subordinate to the Board. The Head of Internal Audit regularly reports to the Board, the Audit Committee, the CEO and the external Auditor. Reviews are summarised quarterly in reports to the Board. The written report contains an opinion of internal control in various areas, based on the reviews conducted.

Graphs

Operational structure

Tables

Board members as of the calendar year 2008