• Startpage
• 2008 in summary
• This is Swedbank
• Letter from the Chair
• President's statement
• Vision and strategy
• Market analysis
• Business areas
  • Swedish Banking
  • Baltic Banking
  • International Banking
  • Swedbank Markets
  • Asset Management and Insurance
  • Shared Services and Group Staffs
• 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

International Banking

Swedbank’s most important markets in International Banking – Ukraine and Russia – faced considerable uncertainty during the second half of 2008. As a result, the rate of expansion slowed and special measures are being taken to further strengthen risk assessment and control.

Priorities

• Consolidation of operations, with an emphasis on quality and control

• Improvements to the credit process and implementation of the Group’s credit and risk systems

• Gradual upgrade of branches to the Swedbank Group’s uniform standards

• Development of IT systems

• More efficient customer segmentation and product offerings

• Putting the bank’s values and leadership criteria into concrete action in every part of the Group

New organization supports development in Ukraine and Russia

International Banking’s organizational structure was modified on 1 July 2008 to further improve support for international operations, especially in oversight and risk control. All operations outside Swedbank’s home markets are now consolidated in the strategic business area International Banking, including overall responsibility for Swedbank’s relationships with other banks and financial institutions.

Swedbank’s aim in Ukraine and Russia is to eventually develop these operations into strategic business areas. Due to the uncertainty in the market and the global recession, the short-term growth targets have been revised downward. At least throughout 2009, the operations will focus on quality control rather than growth. Many of the activities now being implemented in risk monitoring, product development, distribution and IT fall within the framework of Swedbank’s objective to eventually create a fully integrated banking group with a single brand, a consistent offering and a uniform organization.

Ukrainian Banking

Focus on integration and risks

Measures to strengthen and co-ordinate the Ukrainian operations continued in 2008, but were impacted by the recession. The most important aspects of this work have been intensified communication and co-operation with customers to mitigate the effects of any issues before they become serious problems. In this way, a number of deals and credit commitments have been restructured, benefiting both the customers and the bank.

The integration between Swedbank’s two banks in Ukraine was also a priority during the latter part of the year. The smaller bank, CJSC Swedbank Invest, has a niche offering primarily for large companies and high net worth individuals, while the larger OJSC Swedbank is a universal bank. However, the banks’ product offerings partly overlap. Swedbank plans to merge the banks early in 2010. There are opportunities to further streamline product development and administration by co-ordinating customer offerings.

Upgrade of retail network

A large part of the profit generated in Ukraine is currently being reinvested to upgrade and restructure the distribution network. The branches will be made more customer-friendly through modernization, but even more so through a greater degree of customization within the quality standards that apply to the entire Swedbank Group. A key element of the distribution strategy for Ukraine is the introduction of a more distinct retail concept for the private and corporate segments.

Electronic channels

Internet use in Ukraine still remains low due to an antiquated telecommunications infrastructure, high usage charges and low PC usage. Distribution of banking services online will become an important channel in Ukraine as well, however. Preparations for an Internet Bank will therefore begin in 2009.

More distinct offerings

The Ukrainian operations are based in large part on standardized products. In connection with the current upgrade of the branches and integration between CJSC Swedbank Invest and OJSC Swedbank, product and service development is being co-ordinated to create a more distinct customer offering. Although the needs of local customers are always the determining factor, harmonization will increase long-term through co-ordination with central product development units.

Stronger work processes and IT systems

In 2008, 22 new branches were opened in Ukraine, at the same time that the new retail concept for the private and corporate markets was implemented. This places high demands on work processes, systems and personnel. Human resources and training were therefore a priority in 2008. Training activities mainly focused on credit and risk control processes.

Intangible fixed assets

Goodwill Impairment was identified in Ukrainian Banking which led to an impairment of SEK 1 403m. It is recognised in the income statement as Impairment of goodwill. After the impairment, goodwill attributable to the cash-generating unit OJSC Swedbank amounted to SEK 1.2bn. The value of the assets declined due to the major slowdown in the Ukrainian economy in late 2008. Because of the slowdown and the great uncertainty about the country’s future economic development as of the closing day, the estimation of cash flows in the immediate future has been significantly revised downward. Estimated cash flows, which are based on Swedbank’s long-term investment in Ukraine, have therefore been pushed later into the future and, due to discounting, were worth less as of the closing day.

Russian Banking

New management with focus on control and monitoring

Growth objectives have also been temporarily revised downward in Russian Banking in favour of quality and risk monitoring. Improvements to the bank’s risk controls continued in 2008, and several specialists were recruited. In addition, management of the Russian operations was strengthened during the year through the appointment of a CFO and a head of risk management, a head of international corporate banking and a head of banking processes. In mid-September, a new president of the Russian bank took over.

Expansion of private operations

Swedbank’s banking operations in Russia have been strongly focused on corporate customers, especially medium-sized
Russian companies and international firms with operations in Russia. Swedbank has offered leasing services since 2002 and banking services since 2005. The focus in the initial years had been on corporate customers, but a campaign was launched during the year to attract private customers. During the fouth quarter, two new retail branches were opened, one in Moscow and one in St. Petersburg. The most important product areas in the private market are savings, mortgages, car loans and consumer credit. Russian Banking will remain strongly focused on corporate customers, however, primarily medium-sized Russian companies and international companies active in Russia.

Controlled expansion

Long-term growth has been the goal of Swedbank’s Russian banking operations since they were established in 2005. Due to current market conditions, short-term growth objectives have been revised downward. Product offerings for both private and corporate customers have been broadened and simplified, which has improved efficiencies in sales and administration. This has facilitated the establishment of a new type of smaller, more
efficient branches in attractive locations.

Implementation of new IT platform

Preparations for the first step of the implementation of a new IT platform began in 2008. The system will be a critical component in the further development of the Russian operations. The system will initially be able to manage the Swedbank Group’s
universal product range. At a later stage, a card administration system will be installed.

Full leasing operations restored

In the third quarter of 2008, the bank recovered SEK 83m in value-added tax that had been withheld by Russian authorities pending a legal review of the bank’s leasing operations, which the authorities deemed were failing to report VAT. As a result of this ruling, the bank has recovered all VAT and fully restored its leasing operations.

Nordic branches

The highest priority of Swedbank’s Nordic branches is to support customers from its home markets by meeting their needs in each country. In 2009, the priority is to co-ordinate Nordic customer offerings, primarily with regard to cross-border corporate services and electronic banking. A single steering group for the Nordic branches will be established in 2009.

When Swedbank established its first Nordic branch in Oslo during 1998, the main purpose was to serve Swedish customers with operations in Norway. Since 2007, operations have expanded to include the private market. These measures are being taken in co-operation with EnterCard and First Securities.

The branch in Helsinki is focused primarily on large Swedish companies with operations in Finland, Finnish companies with business in the Baltics and Russia, and a selected number of other Finnish corporate customers. Possible expansion of offerings for small and medium-sized companies is under evaluation.

The Danish branch serves both private and corporate customers. The market share among commuters between Sweden and Denmark across Öresund is estimated at around one third. Swedbank supplies FDB, the Danish Co-operative Retail and Wholesale Society and the country’s largest retailer, with environmental and socially responsible banking solutions.

Other branches

The branch in New York was established in 1991 to facilitate Swedbank’s funding operations and to provide services for corporate customers. The branch primarily targets customers with a connection to Swedbank’s home markets.

The branch in Shanghai was opened as a representative office in 2001 and received a banking licence in 2007. The branch provides Nordic and Baltic corporate customers with a complete range of savings and lending services in foreign currency as well as trade finance, cash management and payment services.

Luxembourg

The financial crisis slowed activity among private banking customers in Luxembourg during the year. The unfavourable market conditions are expected to persist in 2009. The bank maintains a close dialogue with customers on individualized investment alternatives and is providing advice on today’s challenging market.

The bank also provides fund administration services, which developed well during the year.

Global Financial Institutions

Global Financial Institutions was transferred on 1 July 2008 from Swedbank Markets to International Banking, which means that the latter business area now has the overriding responsibility for the Swedbank Group’s relationships with international banks and other financial institutions.

The emphasis of the activities in 2008 was on risk monitoring and customer relationship management. Particular focus on risk monitoring of financial institutions is expected to continue in 2009. The unit co-ordinates the interactions by Swedbank’s various business areas with global financial institutions.