Annual Report

Production: SEB and Intellecta Communication AB • Photos: Mats Lundqvist, Bruno Ehrs • Printing: Elanders • R:5056
Annual General Meeting

ANNUAL REPORT 2006

The Annual General Meeting will be held on Wednesday
28 March, 2007 at 2 p.m. (Swedish time) at Stockholm
Concert Hall.

2006
Notices convening the General Meeting including an agenda for the Meeting will be
published in the major Swedish daily newspapers and on www.sebgroup.com on
26 February 2007. Shareholders wishing to attend the Annual General Meeting shall
– both be registered in the shareholders’ register kept by VPC (the Swedish Securities
Register Centre) on Thursday 22 March, 2007.
– and notify the Bank in writing under address Skandinaviska Enskilda Banken AB,

■ Robust business climate and high customer interaction

Box 47011, SE-100 74 Stockholm, or by telephone 0771-23 18 18 between
9.00 a.m. and 4.30 p.m. in Sweden or, from abroad, at +46 771 23 18 18 or via
Internet on www.sebgroup.com, not later than 1 p.m. on Thursday 22 March, 2007.
■ Improved efficiency and continued organic growth
Dividend
The Board proposes a dividend of SEK 6.00 per share. The share is traded ex dividend ■ Operating profit SEK 15,562m (11,223)
on Thursday 29 March, 2007. Monday 2 April, 2007 is proposed as record date for the
dividend. If the Annual General Meeting resolves in accordance with the proposals, dividend ■ Earnings per share SEK 18.72 (12.58)
is expected to be distributed by VPC on Thursday 5 April, 2007.
■ Return on equity 20.8 per cent (15.8)
■ Focused strategy and new organisation as from 2007

www.seb.se
Contents SEB’s financial information is Addresses
available on www.sebgroup.com
Head Office

2006 in brief 1 Group Executive Committee

Chairman’s statement 2 Postal Address: SE-106 40 Stockholm

President’s statement 3 Visiting Address: Kungsträdgårdsgatan 8

SEB today 4 Telephone: +46 771 62 10 00

+46 8 22 19 00 (management)
Markets, competition and customers 8 Financial information during 2007
SEB’s employees 14
Publication of annual accounts 9 February
SEB’s role in society 16
Publication of Annual Report on the Internet 6 March
The SEB share 18
Divisions
Annual General Meeting 28 March
Interim report January–March 4 May Merchant Banking
Report of the Directors
Financial Review of the Group 20 Interim report January–June 19 July Postal Address: SE-106 40 Stockholm
Result and profitability 20 Interim report January–September 26 October Visiting Address: Kungsträdgårdsgatan 8
Financial structure 23
Telephone: +46 771 62 10 00
Divisions
SEB Merchant Banking 26 For further information please contact:
Nordic Retail & Private Banking 28 Retail Banking
SEB in Gemany (SEB AG Group) 30 Postal Address: SE-106 40 Stockholm
Per-Arne Blomquist
German Retail & Mortgage Banking 31
Chief Financial Officer Visiting Address: Sergels Torg 2
Eastern European Banking 32
Telephone +46 8 22 19 00 Telephone: +46 771 62 10 00
SEB Asset Management 34
E-mail: per-arne.blomquist@seb.se
SEB Trygg Liv 36
Risk and Capital Management 38 Wealth Management
Ulf Grunnesjö
Head of Investor Relations Postal Address: SE-106 40 Stockholm
Corporate Governance within SEB 45
Telephone +46 8 763 85 01 Visiting Address: Sveavägen 8
Board report on the internal
E-mail: ulf.grunnesjo@seb.se Telephone: +46 771 62 10 00
control of the financial reporting for 2006 54

Annika Halldin
Financial Statements 55 Life
Financial Information Officer
SEB Group Postal Address: SE-106 40 Stockholm
Telephone +46 8 763 85 60
Income statements 56
E-mail: annika.halldin@seb.se Visiting Address: Sergels Torg 2
Balance sheets 57
Statement of changes in equity 58 Telephone: +46 771 62 10 00
Cash flow statements 59
Skandinaviska Enskilda Banken
Income statements 60
Balance sheets 61
Statements of changes in equity 62
Cash flow statements 63
Notes to the financial statements 64
Skandinaviska Enskilda Banken AB’s
Five-year summary 121 corporate registration number: 502032-9081
Definitions 123
Proposal for the distribution of profit 124
Auditors’ report 125

Board of Directors 126

Group Executive Committee and Auditors 128

Addresses
2006 in brief
result and proposed dividend Key figures
006 2005
n operating profit increased by 39 per cent, to return on equity, % 20.8 15.8
SEK 15,562m. return on equity excl. one-off charges, % 20.8 17.0
Basic earnings per share, SEK 1)
18.72 12.58
n net profit increased by 50 per cent to SEK
Cost/income ratio 0.58 0.65
12,623m, or SEK 18.72 per share.
Credit loss level, % 0.08 0.11
n the SEB share rose by 33 per cent while the total capital ratio, % 11.47 10.83
Swedish SaX-index increased by 24 per cent Core capital ratio, % 8.19 7.53
and the European Bank index by 19 per cent. number of full time equivalents, average 19,672 18,948
number of e-banking customers, thousands 2,597 2,299
n the credit loss level remained low.
assets under management, SEKbn 1,262 1,118
n return on equity was 20.8 per cent. total assets, SEKbn 1,934 1,890
n proposed dividend is SEK 6.00 (4.75). 1) For further information on the SEB share, please see page 18.

Important events during 2006

n In April, SEB aquired the russian bank
petroEnergoBank.
n In July, SEB sold its 47-per cent ownership in Bank
ochrony Środowiska S.a. and opened a branch in
Warsaw during the autumn.
n In September a new organisational structure, with four
customer-oriented divisions and three support func-
tions, was presented. the structure is effective as of
1 January 2007. SEB’s retail activities in five countries
were integrated and the private Banking business area
was united with the asset Management division.
n Throughout the year, SEB celebrated its 150th anni-
versary by arranging events for customers and all its
20,000 employees. these special anniversary celebra-
tions gave SEB many occasions for strengthening its
customer relations and for creating new business
opportunities.
n SEB continued to receive a number of awards, such as
Best private bank in the nordic and Baltic countries
and Best cash management bank in the nordic region.
n SEB has advanced within many areas, among others a
number one position with a market share in own mutual
funds net sales of 26 per cent in Sweden.

Operating profit per division Net profit per SEB share

SEKm SEK


SEB Merchant Banking


Nordic Retail & Private Banking

German Retail & Mortgage Banking


Eastern European Banking

SEB Asset Management


SEB Trygg Liv


0 2,000 4,000 6,000 8,000
    

2005 2006

SEB annual rEport 2006 1

Chairman’s statement

Continued efforts in order to create

­long-term shareholder value
A year of very satisfactory results for SEB has just passed. 2006
was also a specific year, marked by the fact that the bank has
been in operation for 150 years. It is with a sense of pride and
humility that we now take on the challenges of the future.
The global economy showed strong growth in 2006. Even
though the U.S. slowed down during the second half, Asia and
Europe showed a solid development. The euro-zone picked up
speed and Germany experienced both stronger growth and fall-
ing unemployment.
All the Nordic countries performed very well and the Baltic
countries were among the fastest-growing economies of the world.
Financial markets in general held up well, despite some
nervousness about the U.S. slowdown. The Federal Reserve con-
tinued to hike its interest rate, and in Europe and Asia the trends
in general were also rising. The American residential market
cooled, stock markets were volatile, while overall bond yields
remained at historically low levels. The dollar was sliding as a
result of the U.S. slowdown and narrowing rate spreads. In Swe-
den, repo rates doubled and stock prices rose more than in most
other EU countries.

SEB’s share price at all time high

Last year’s positive economic conditions in combination with
SEB’s geographical spread and business mix once again proved
fruitful and SEB’s profitability compared well with its peer  “We could not have received a better birthday
group.
present for SEB’s 150th anniversary than the
With a share price increase of 33 per cent, SEB outperformed
both the Swedish General Index and the European Banking strong result and the high return achieved
Index in 2006. For the period 2004–2006 the market value of SEB
in 2006.”
has more than doubled. My fellow Board members and I will
continue to make every effort to create long-term value for SEB’s
shareholders.
n Last, but not least, we have the current implementation of
Industry consolidation and financial integration the Basel II capital adequacy rules within the EU. As with
The consolidation within the European banking industry contin- any other major regulatory change, the strategic implications
ued in 2006 with a number of mergers and acquisitions. We con- on the global and European arenas remain to be seen.
tinue to follow SEB’s stated strategy to develop our attractive
platform for profitable growth through a combination of cost- On behalf of the Board I would like to thank the President, the
efficiency and organic expansion. Group Executive Committee and the SEB staff for their commit-
The financial industry is working under more regulatory ment and professionalism. We could not have received a better
requirements than many other industries. There is still a long birthday present for SEB’s 150th anniversary than the strong
way to go before global harmonisation of financial services can result and the high return achieved in 2006.
be reached. Regulatory demands that currently have an impact
on SEB:s operations include:
n The creation of the Single European Payment Area – SEPA – Stockholm in February 2007
will enable companies and private individuals to make their
cross-border payments within EU as easily as in their domes-
tic markets.
n MiFID (Markets in Financial Instruments Directive) will
replace EU’s existing Investment Services Directive (ISD), Marcus Wallenberg
with effect from 1 November 2007. MiFID introduces new Chairman of the Board
and more extensive requirements, particularly for business
conduct and internal organisation.

 SEB annual report 2006

 President’s statement

Well positioned for reaching

long-term ambitions
The past year was a very good year for SEB and its shareholders.
In a buoyant economic climate with high financial market activi-
ties and business volumes, SEB achieved its best result to date.
The combination of strong revenue growth and only moder-
ately increasing costs, which marked 2006, reflects the increasing
scalability of our business model. Improved customer satisfac-
tion continued to be in focus and we intensified our efforts to
offer customers better access to all of SEB’s services and product
range. I am proud of what we have accomplished in 2006.

An attractive business mix and customer base

Over the years SEB has established a platform with a diversified
business mix around the Baltic rim. We have a solid customer
franchise in our core areas of strength – large corporate and
institutional customers and affluent individuals. We are especial-
ly strong in offering our customers advisory services.
During 2006, intensified customer activities led to increased
operating profits in all divisions. Commissions, including net life
income, overall generated close to 50 per cent of total revenues.

Committed to excellence
Our ambition is to be top-ranked in terms of customer satisfac-
tion within our selected segments, in order to reach leadership
in financial performance. This is a long-term undertaking, build-
ing on the two cornerstones of operational excellence and profit- “Customer satisfaction continues to be a top
able growth.
­priority. We have intensified the efforts to offer
An integrated bank our ­customers the markets’ best services and
SEB has expanded considerably over the last ten years. We now
product range, in our selected areas.”
need to consolidate and focus our efforts. In 2006, we narrowed
our strategy to a full universal offering in Sweden, Estonia,
Latvia, Lithuania and Germany, and a more focused offering in
other markets based on our core strengths. In order to better SEB well positioned
serve our customers we laid out a roadmap to integrated busi- All in all, these measures aim at strengthening our customer
nesses and common support functions. offerings and increasing efficiency. The work to fully exploit
We launched the SEB Way, our operational excellence pro- the SEB platform will continue in 2007. SEB is well positioned
gramme which includes installing streamlined processes, for further profit growth. My own and the whole SEB team’s
improving quality and encouraging a culture of continuous commitment to long-term leadership remains unchanged.
improvement.
Several initiatives were taken to address the underlying cost-
base. These are gradually yielding result. We will continue to Stockholm in February 2007
increase the resilience of the cost-base in order to cater also for
periods of a more feeble business climate.

Annika Falkengren
President and Group Chief Executive

SEB annual report 2006 

SEB today
Increased ambitions for customer
satisfaction and financial performance
SEB is a North-European financial group for corporate customers, institutions and private
individuals. Its activities comprise mainly banking services, but SEB also carries out
significant life insurance operations.
SEB serves 400,000 corporate customers and institutions and
more than five million private individuals. SEB has local pres-
ence in the Nordic and Baltic countries, Germany, Poland,
Russia and the Ukraine and has a strategic presence through
its international network in another ten countries.
More than half of SEB’s approximately 20,000 employees
are located outside Sweden. On 31 December 2006, total
assets amounted to SEK 1,934bn, while the Group’s assets
under management totalled SEK 1,262bn.
Business concept SEB’s business concept is to provide
financial services and to handle financial risks and transac-
tions for companies and private individuals in such a way
that customers are satisfied, shareholders get a competitive
return and that SEB is considered a good citizen of society.
Strategic development
Expansion between 199 and 001
In the mid-1990s SEB formulated its vision of becoming the lead-
ing North-European bank. SEB’s traditionally strong position
among companies and demanding private customers was
strengthened through acquisitions in the area of life insurance
and asset management and through expansion in new markets
in Germany and Eastern Europe.
Consolidation and profit growth between 00 and 005
With the broadened platform in place, several steps were taken
in order to consolidate it, primarily through the so-called 3 C-
programme (Cost efficiency, Customer satisfaction and Cross-
servicing within the Group).
4 SEB annual rEport 2006
Vision, targets and strategy SEB’s vision is to be highest
ranked by its customers within the chosen segments in
Northern Europe and leading in terms of financial perform-
ance. These goals shall be reached with the help of motivated
employees, increased co-operation between the Group’s dif-
ferent parts and Group-wide support and staff functions.
”One SEB” shall give customers access to SEB’s total com-
petence and supply of services.
As from 2006 SEB has set new financial targets. SEB’s
return on equity shall be the highest among its peers, while
its profit growth shall be sustainable. SEB’s minimum rating
shall be AA.
Improved efficiency and organic growth complemented with
minor add-on acquisitions around the Baltic rim supported
SEB’s profit growth.
Realising the full potential 006–
Higher ambitions to realise the full potential of the platform
shall contribute to profitable growth in SEB’s existing markets.
Increased pro-activity towards customers in combination with a
better integrated business will form the basis of increased cus-
tomer satisfaction and profitability. By fully realising the whole
SEB, higher quality, more complete services to our customers as
well as cost-efficient operations will be achieved.
 SEB today

New and higher targets

Financial targets and outcome

Return on equity Net profit growth Core capital ratio Dividend

Per cent SEK billion Per cent Per cent of earnings per share

25 15 10 50

20 12 8 40

15 9 6 30

10 6 4 20

5 3 2 10

0 0 0 0
2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006

Snitt för jämförbara banker

Target: Highest among its peers K/I-tal
Target: (%)
Sustainable profit growth Target: At least 7 per cent
Primärkapitalrelation (%) Target: 40 perpercent
Utdelning aktieof(%)
net profit per
Mål (%) Mål (%) shareMål
over
(%) a business cycle

Customers and employees – targets and outcome

The most important non-financial targets to be achieved are:
n Top ranked in terms of customer satisfaction within SEB’s chosen segments.
n The most motivated employees among SEB’s peer group.

KNIX (Customer satisfaction index) PULSE (Motivation index)

Index showing customer satisfaction and loyalty, group average. Index showing employees’ motivation and
satisfaction with leadership, group average.
Private individuals1) Corporates and institutions2)

80 80 80

60 60 60

40 40 40
In the future SEB has decided to
carry through attitude surveys
among the staff with longer
20 20 20
intervals. During 2006 no survey
was made. Next poll is planned
to take place during the autumn
0 0 0 of 2007.
2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 2002 2003 2004 2005

European average European average Motivation

Leadership
1) Includes Germany since 2003 2) Germany included 2003–2005
European average
and the Baltic countries since
2004

SEB annual report 2006 

SEB today
A focused strategy
SEB has a broad product mix and an attractive customer franchise in its core areas of
strength – large corporations, institutions and affluent individuals.
A strategy for growth
SEB has expanded its geographical scope and its busi- Business structure
ness mix over the last ten years. In 2006 several steps
were taken to consolidate the platform in order to
better position SEB for future profit growth. These
included initiatives to establish a more integrated
bank, thereby facilitating customers’ access to SEB’s
offerings in different markets. Other key actions
during last year comprised:
n Increasing pro-activity in meeting customer
demands
n Installing operational excellence
n Improving cost-efficiency.
SEB’s ambition is to be top-ranked in terms of custom-
er satisfaction within selected segments in order to
reach leadership in financial performance.
Customer offerings
In Sweden, SEB’s original home market, the Bank has a univer-
sal offering and aspires to be leading in all areas. Also in the Bal-
tic countries SEB has a full range of universal banking services
and operates from a strong market position. In Germany SEB
offers retail and wholesale banking as well as asset management
services.
In the rest of the Nordic countries and Poland, SEB will offer
wholesale banking, private banking, asset management, life
insurance and cards to medium sized and large corporate cus-
tomers, financial institutions and affluent private individuals.
A customer-oriented organisation
In order to strengthen customer offerings, increase the integra-
tion of the Group and minimise double functions, SEB’s opera-
tions are as from 1 January 2007 carried out through four divi-
sions (compared with six divisions in 2006):
n Merchant Banking – wholesale and investment banking
n Retail Banking – retail operations in five countries and Card
activities
n Wealth Management – asset management and private banking
n Life – life and pension insurance operations.
New Markets, i.e. SEB in Ukraine and Russia, is kept separate in
order to take better advantage of the long-term growth potential
in these attractive regions.
All businesses are supported by three cross-divisional sup-
port functions – Group Operations, Group IT and Group Staff.
6 SEB annual rEport 2006
President and
Chief Executive Officer
Merchant Retail Wealth
Life
Banking Banking Management
Group Operations / Group IT / Group Staff
Merchant Banking
Merchant Baking has global responsibility within SEB for bank-
ing and capital markets products aimed at large and medium-
sized corporations as well as financial institutions. The division
is also responsible for SEB’s international network in the world’s
major financial centres.
Going forward, Merchant Banking will make targeted invest-
ments in products and staff in order to continue growing profita-
bly in its main markets in the Nordic and Baltic countries, Ger-
many and Poland. The division sees further opportunities to sell
additional products to existing customers and to increase market
share in its main markets outside Sweden, not least through
intensified activities aimed at medium-sized corporations and
financial institutions. This will be achieved by pursuing the divi-
sion’s proven strategy of investing in cutting edge products and
value added financial solutions.
Retail Banking
The new retail division comprises SEB’s retail operations in
Sweden, Germany, Estonia, Latvia and Lithuania as well as the
Group’s card business. The growth opportunities are to expand
on the market for small and medium-sized companies in Swe-
den, continuing a turn-around of the German retail operations
and sustainable organic growth in the Baltic countries, including
expansion of the card business.
SEB’s initiatives to further strengthen customer services
based on increased simplicity, clarity and availability – the
“Enkla-assortment” – will continue.

Wealth Management
This division includes the former SEB Asset Management divi-
sion and the business area Private Banking within the former
Nordic Retail & Private Banking division. By year-end 2006, the
division’s assets under management amounted to SEK 928bn of
the Group’s total assets under management of SEK 1,262bn.
Going forward, the ambition is to offer enhanced advisory
service, more alternative products and shorter time-to-market
for new products. SEB has a strong market position within asset
management in Sweden. Building on this franchise and knowl-
edge the division will grow further outside Sweden, primarily in
the Nordic and Baltic countries and Germany. The ambition is to
become the leading North-European wealth manager.
Life
This division is responsible for SEB’s life insurance activities and
consists of SEB Trygg Liv (Sweden), SEB Pension (Denmark) and
SEB Life & Pension International. The business concept is to pro-
vide customers with security throughout every phase of their
lives using insurance solutions.
The growth opportunities are within corporate pension and
care business in Sweden and Denmark, maintained quality lead-
ership in Sweden and continued unit-linked transition in Den-
mark. The division is also aiming at a leading position in the
emerging Baltic life insurance market as well as growth in new
East European markets.
Support functions with focus on productivity
The divisions are supported by three common functions – Group
Operations, Group IT and Group Staff. The guiding principle is
from now on “one function, one solution”. Processes will be
streamlined, efficiency increased and the creation of one inte-
grated bank will be facilitated.
SEB today
With the formation of Group Operations SEB is building scala-
bility and a global process ownership. This means for example a
stepwise integration of all lending, payment and securities proc-
esses – operations that have up to now been taking place within
each of the divisions.
The transformation within Group IT comprises for example
a reduction of the number of IT-platforms and a streamlining of
processes.
Within Group staff a separate staff and support project has
been set up in order to create Group wide centres of excellence
based on best practice.
The cost improvement potential is SEK 1.5–2.0bn over the
next three years, excluding incremental investments. For 2007
the savings are targeted to roughly SEK 300–500m.
SEB Way for increased productivity
In order to ensure a continuous productivity work, SEB acceler-
ated its operational excellence programme – “SEB Way” – dur-
ing 2006. By SEB Way the Group strives to encourage a culture
of continuous improvement, meeting increased quality demands
from customers and the productivity pressure in the banking
industry.
So called transformations are being rolled out continuously
in small teams of 10–50 people at a time – after diagnosis of the
divisions and business areas. Up to year-end 2006, the equiva-
lent of 1,500 full time employees has been involved in transfor-
mations and about 6,000 employees have been included in the
roll-out plan.
Examples of achievements reached include the Custody
Services-unit, which could increase its volumes by 150 per cent
without adding staff. Simultaneously, error rates went down by
35 per cent. In the Life division, the first front-end transforma-
tion led to sales staff booking 30 per cent more customer meet-
ings with the average premium increasing by almost 20 per cent.
SEB annual report 2006 
Markets, competition and customers
Increased growth in all of SEB’s markets
The North-European markets account for almost all of SEB’s income, result and number
of employees. During 2006, SEB continued to consolidate its position through increased
volumes and high rankings. Approximately 50 per cent of the operating profit emanated
from markets outside Sweden.
High economic activity and growth characterised SEB’s North-
European core markets during 2006. All the Nordic countries
performed well and the Baltic economies were among the fastest
growing ones in the world. Germany experienced a stronger
growth than in previous years. In Poland, Russia and Ukraine
growth was also good.
In the market for large corporations and financial institu-
tions SEB meets tough competition from international financial
groups such as Citigroup, Deutsche Bank, J P Morgan, Royal
Bank of Scotland and Merrill Lynch. In the market for small and
medium-sized companies, the competitors are mostly domestic
or regional banks like Hansabank in the Baltic countries and
Nordea, Handelsbanken and Danske Bank in the Nordic region. In
the private market local banks and insurance companies account
for most of the competition, but various niche players are also
competing for investors and savers.
Sweden
Sweden is still SEB’s single largest market, with approximately
1.9 million private and 200,000 corporate customers. In 2006, the
Swedish market accounted for approximately 50 per cent of the
Group’s operating profit.
In Sweden, SEB occupies a clearly leading position among
large corporations and demanding private individuals, with
substantial market shares of foreign exchange trading, equities
Customer segmentation, Nordic banks
Share of total income, per cent
SEB
Swedbank
SHB
Nordea
Danske Bank
DnB NOR
0 20 40 60 80 100
The Nordic banks differ in terms of business structure. Corporate customers
account for a considerably higher share of the business of SEB and DnB NOR
compared with the other banks.
8 SEB ANNUAL REPORT 2006
trading, cash management, private banking, asset management,
unit linked insurance and cards, for example. For several years,
SEB has been ranked the best foreign exchange bank in Swedish
kronor on a global scale. SEB was once again the largest broker
on the stock exchange in Stockholm in 2006.
Within the traditional deposit and lending market SEB is
number four. During 2006, SEB’s market share of deposits from
and lending to the public decreased, due to a lower share of cor-
porate lending. SEB’s market share of household lending was
unchanged. Seen over a five-year period, SEB’s share of private
mortgage loans has grown from 12.3 to 14.7 per cent.
In the total Swedish household savings market (excluding
directly owned shares), the Group ended the year as number
two, with a share of 13.0 per cent (12.7).
In 2006, SEB consolidated its market position in the asset
management and private banking areas. The business magazine
Euromoney appointed SEB the best private bank in the Nordic
and Baltic countries. In the biannual Prospera survey, retail cus-
tomers ranked SEB as number two of all major fund companies
operating in the Swedish market. SEB’s market share for new
sales of of mutual funds rose to 26 per cent (17).
Within life insurance SEB Trygg Liv is the second largest
player, with a total market share of 18 per cent. As regards new
sales of unit-linked funds SEB is No 1 with a market share of
29 per cent in 2006.
Income distribution, Nordic banks
Share of total income, per cent
100
Retail, Nordic
countries
80
Retail, Germany Net interest
60 income
Retail, The Baltic
Net fee and
commission
Retail, GB/Ireland 40 income
Net financial
Merchant Banking
income
20
Asset Management Net life insurance
income
Life insurance
0 Net other
SEB Swedbank SHB Nordea DnB Danske income
NOR Bank
SEB’s commission income traditionally weighs heavier than that
of other Nordic banks due to the Group’s specialisation on advi-
sory services and more transaction-intensive activities with large
companies and demanding private customers.
 Markets, competition and customers

SEB’s markets Profit growth 2006 1)

+57%

+38%

+33% Finland
100
+50%
+96%
Norway St: Petersburg 90

St Petersburg
80

Sweden Moscow 70

+34% +42% 60

Estonia
50
40
Moscow 30

Latvia 20

Denmark 10

New York Beijing

Lithuania

Gross income +29%

Shanghai
Geographical distribution, per cent London
Germany Poland
Sweden 42 (44)
Germany 20 (26) Paris Luxembourg
Ukraine
Rest of the
Nordic countries 16 (14)
The Baltic 8 (6) Singapore
Geneva
Rest of Europe 6 (6)
Rest of the world 8 (4) Marbella

SEB’s markets in Northern Europe account 1)

Overall operating profit growth 2006, 39%
for the dominating part of income.
São Paulo

Marbella

The other Nordic countries Denmark

In Denmark, Norway and Finland, SEB has a strong position
within selected areas, for example cards, asset management,
wholesale and investment banking as well as life insurance.
The Group has close to 1.4 million customers in these countries.
On a Nordic scale, SEB has a leadership position within cor-
porate and investment banking for large corporations and finan-
cial institutions. This is due to SEB’s unique position in Sweden,
and the aim is to reach similarly prominent positions within the
Bank’s chosen areas in the other Nordic markets.
In Denmark, SEB’s customer offering comprises wholesale and
investment banking, life insurance, asset management, private
banking and cards (Eurocard, Diners Club, MasterCard and
Visa). At year-end 2006, SEB in Denmark had 780 employees and
more than 600,000 customers, accounting for approximately
7 per cent of the Group’s operating profit for 2006.
Within investment banking, SEB retained its strong market
position. SEB was market leader in the corporate finance area
and ranked among the top three players in all major equity and

Total assets under management Market shares of total savings, Sweden

SEKbn Per cent

1,500
Swedbank 14.2 (13.8)
SEB 13.0 (12.7)
Handelsbanken 11.0 (10.8)
1,200
Skandia 10.2 (10.5)
Alecta 10.1 (10.5)
Nordea 8.3 (8.6)
900
AMF 7.3 (7.5)
Other 25.9 (25.3)
SEB is one of the largest
600 SEB is number two on the Swedish private savings market.
asset managers in the
Nordic region.
300

2006
0 2005
SE Sw SH No D D
B ed B rde ansk nB N
ban a eB O
k ank R

SEB ANNUAL REPORT 2006 9

Markets, competition and customers

capital market products. The generated profits from the Danish

Market shares merchant and investment banking activities have significantly
Per cent 2006 2005 2004
increased, making 2006 the best year to date.
Deposits from general public
Assets under management in Denmark amounted to SEK
Sweden1) 20.5 21.7 21.4 143bn, primarily on behalf of institutional clients, and SEB is
The Baltic countries 27.3 29.0 31.0 ranked third in the Danish market after the two major local
Lending to general public banks, Danske Bank and Nordea. SEB’s funds were again top
Sweden2) 14.4 15.0 15.0 ranked in different ratings and surveys. In the spring, SEB
The Baltic countries 27.2 29.0 29.0 acquired Prime Management, a smaller Danish private banking
Mortgage loans, total company.
Sweden 12.6 12.5 12.3
SEB Pension is Denmark’s fourth-largest private pension
Mortgage loans, private market
Sweden 14.7 14.7 14.8
company with 300,000 customers and assets of SEK 82bn. The
The Baltic countries 24.1 n.a. n.a. annual gross premiums rose by 21 per cent, to SEK 6.1bn. The
Mutual funds, new business company offers both unit-linked and traditional insurance.
Sweden 26.1 17.1 7.4
Finland 4.4 1.7 3.9 Norway
Mutual funds, total volumes3) SEB in Norway offers wholesale and investment banking servic-
Sweden 16.6 16.0 16.3
es, private banking and cards (Eurocard, MasterCard and Diners
Finland 5.5 5.7 7.3
Club). SEB has 500 employees and close to 600,000 customers in
Estonia 22.2 24.9 27.5
Norway. In 2006, Norway accounted for approximataely 9 per
Poland 1.6 3.3 4.7
Germany4) 8.2 6.5 6.7 cent of SEB’s operating profit.
Unit-linked insurance, new business The niche bank Privatbanken ASA, acquired in 2005, is serv-
Sweden 29.1 32.6 34.6 ing affluent private customers under the name of SEB Privat-
Life insurance, total banken. In addition, SEB started asset management activities in
Sweden 18.3 19.5 20.9 Norway in early 2006.
Denmark 10.0 9.0 9.0 Business flows were strong within most product areas and
Equity trading prioritised customer segments. Activity on the Oslo Stock
Stockholm 10.1 10.6 10.0
Exchange was high, measured both in trading volumes and
Oslo 7.6 7.9 8.4
numbers of IPOs. SEB arranged and participated in several
Helsinki 3.5 3.8 3.2
Copenhagen 5.9 6.8 6.0
major transactions and SEB maintained its position as one of the
five highest-ranking banks for large corporations. SEB Enskilda
1) Market shares for deposits from households were 12.2 per cent (12.2) and from
companies 25.8 per cent (27.5). secured its position as the market leader within investment
2) Market shares for lending to households were 12.5 per cent (12.5) and to companies banking and was No. 3 on the Oslo Stock Exchange (after DnB
16.0 per cent (17.0). NOR and Carnegie), with a market share of 7.6 per cent in 2006.
3) Excluding third-party funds.
4) Real estate funds.
Finland
SEB in Finland comprises wholesale and investment banking,
card operations (Diners Club and MasterCard) and wealth man-
agement (primarily via the subsidiary SEB Gyllenberg). Close to
350 employees serve more than 100,000 customers in total. In
2006, Finland accounted for approximately 3 per cent of SEB’s
operating profit.

Nordic M&A transactions Nordic IPO’s

Deals completed during 2006, USDm By bookrunner 2006, USDm

SEB Enskilda SEB Enskilda

Deutsche Bank UBS
Goldman Sachs ABG Sundal Collier
Carnegie SHB
Morgan Stanley Pareto Securities
ABN Amro Carnegie
Lazard Nordea
JP Morgan Morgan Stanley
Merrill Lynch Lehman Brothers
Lehman Brothers Credit Suisse

0 5,000 10,000 15,000 20,000 25,000 30,000 0 200 400 600 800 1 000

Source: Thomson Financial Source: Dealogic

10 SEB ANNUAL REPORT 2006

 Markets, competition and customers

Within custody services SEB is the second largest bank, after
Nordea, but ranked No. 1 in terms of customer satisfaction. SEB
Enskilda is also highly ranked within research and equities in
Finland and No. 1 within M&A advice.
In 2006, SEB participated in seven (excl. commercial real
estate) syndicated loan transactions, acting as mandated lead
arranger for five of these. Other financing transactions in the
form of private placements and major leasing transactions were
carried out during the year. The Commercial Real Estate unit
financed or participated in six important real estate transactions
during 2006. Trade finance activities were successful and contin-
ued growth is expected for this area.
The leasing business ABB Credit Oy (acquired in 2005) was
In the Baltic region, SEB has a leading position among large cor-
porations, especially in the areas of foreign exchange, trading,
cash management and M&A business.
The three Baltic banks have during 2006 sucessfully met the
increased demand for new savings products, such as mutual
funds and unit-linked insurance. The SEB banks have a signifi-
cant share of these markets.
Market share per country 2006
Per cent
50

re-branded SEB Leasing Oy and merged with the financing

operations of SEB Finans Helsinki Branch. SEB, which is the
leading provider of large leasing financing in Finland, expanded
further in the leasing market and diversified its business into
structured receivables financing.
SEB’s market share of the Finnish mutual fund market,
where the subsidiary SEB Gyllenberg is one of the largest play-
ers, was 5.7 per cent in 2006. SEB Gyllenberg has a top position
in the institutional asset management market and is one of the
leading providers of private banking services in Finland.
Germany
In Germany, SEB AG is one of ten banks with a nation-wide net-
work of branch offices. The bank is focused on private customers
with savings and mortgage loans, merchant banking activities,
commercial real estate financing and asset management. SEB has
approximately 3,400 employees and close to one million custom-
ers in Germany. In 2006, SEB AG accounted for approximately 10
per cent of the Group’s operating profit.
SEB is a strong player in the German market for real estate
funds, with a market share of 8 per cent. The share of the total
deposit and lending market in Germany is less than one per
cent.
SEB has a strong position within commercial real estate
financing in Germany, having been one of the key banks in this
area for years.
SEB’s services to corporate clients and financial institutions in
Germany were once again ranked at the very top. Within retail
banking, customer satisfaction improved substantially and SEB is
now one of the highest-ranking banks in Germany in this respect.
Estonia, Latvia and Lithuania
In the Baltic area SEB has three subsidiary banks – SEB Eesti Ühis-
pank in Estonia, SEB Unibanka in Latvia and SEB Vilniaus Bankas
in Lithuania – with 4,500 employees and 2.6 million customers, of
whom 178,000 corporate customers. In addition, SEB has a life
insurance company in each Baltic country. The combined result
for 2006 corresponds to 15 per cent of SEB’s operating profit.
The three banks have strong positions in their respective
markets. SEB Eesti Ühispank is the second largest bank in Esto-
nia after Hansabank. SEB Unibanka is number three in size in
Latvia but number one in terms of deposits and lending. SEB
Vilniaus Bankas is the largest bank in Lithuania.
The three banks’ combined share of the total deposit and
lending markets of the Baltic countries is approximately 30 per
cent. SEB Vilniaus Bankas has a somewhat higher share while
that of SEB Unibanka is slightly lower.
40
Due to signs of potential economic
30 overheating in Estonia and Latvia,
SEB has increased the focus on
return and loan portfolio quality.
20
As a consequence, the bank’s lending
market shares have marginally
decreased in these countries.
10
Loans
0 Deposits
Estonia1) Latvia2) Lithuania
1) Excluding loans to financial institutions
2) Resident deposits only
Poland, Ukraine and Russia
After the sale of its 47-per cent shareholding in Bank Ochrony
Środowiska, BO Ś, SEB’s operations in Poland comprise a branch,
a wholly-owned mutual fund company, SEB TFI, and a branch
of SEB’s German leasing company.
In Ukraine, SEB Bank with 500 employees has 21,000 private
and 6,300 corporate customers. The demand for various types of
banking services is growing. However, only 27 per cent of the
inhabitants in Ukraine have an established bank relation today.
Thus, the potential for future growth is substantial. SEB’s ambi-
tion is to open ten branch offices per year and to establish life
insurance business in the country during 2007.
In 2006, SEB acquired PetroEnergoBank which in 2007 will
be renamed SEB. Twelve branch offices are planned for the next
two years. SEB’s other operations in Russia include a representa-
tive office in Moscow and a leasing company in St Petersburg –
SEB Russian Leasing.
Other international locations
SEB runs operations at strategically important locations in such
financial centres as London, New York and Singapore to serve
corporate customers with international operations. Nordic and
German private individuals living outside their home countries
make use of these offices, too.

SEB ANNUAL REPORT 2006 11

Markets, competition and customers

Higher customer interaction

The SEB Group serves more than five million private individuals
and 400,000 corporate customers today. In recent years, growth Number of users of the Bank’s Internet services
has primarily taken place in its new markets.
SEB offers individual, active and developing banking rela-
tions whenever and wherever customers so desire. This means, 3,000,000
among other things, that SEB solutions by combining products
and services in order to meet different customers’ needs. SEB 2,500,000
stands for pro-activity, competence and attention to customers’
individual needs. 2,000,000

Focus on increased customer satisfaction 1,500,000

In order to realise the vision of being the leading bank in its cho-
sen markets in Northern Europe , SEB strives to improve service 1,000,000 The Baltic region
levels and increase activity levels with respect to customers.
Germany
SEB is a financial partner to more than 1,500 large companies 500,000

that are active in the Nordic countries, Germany and the Baltic Denmark

countries. In addition, on a global basis SEB counts approxi- 0 Sweden

mately 1,000 banks and more than 200 major institutions among –97 –98 –99 –00 –01 –02 –03 –04 –05 –06

its customers.
Within the corporate sector SEB occupies a leading position
since long as a bank for large companies and financial institu-
tions in Sweden, in several cases with more than century-old
relations. In recent years SEB has strengthened its position on
the market for large corporations in the rest of the Nordic area
and Germany. During 2006, large companies and institutions
accounted for approximately 40 per cent of SEB’s income.
SEB serves 400,000 small and medium-sized corporate cus-
tomers, mainly in Sweden and the Baltic countries. These cus-
tomers can benefit from the knowledge and competence that
SEB has built up in co-operation with the large companies and
Today, SEB’s Internet banks are used by approximately 2.6 million private custom-
ers and small companies in six countries. In addition, the Group offers specialist
services via the Internet such as foreign exchange and interest trading, mainly to
large companies.
adapted to the needs of smaller companies. SEB’s customer base
in the market for small and medium-sized companies is impor-
tant and growing in Sweden and the Baltic area. The ambition is
to focus more on these customer groups, both in the rest of the
Nordic region and Germany.

Branch offices Automatic bank service Personal telephone service Card transactions
machines Calls to SEB’s call centers, million Million
Thousands

600 1.8 3.0 300

500 1.5 2.5 250

400 1.2 2.0 200

300 0.9 1.5 150

200 0.6 1.0 100

100 0.3 0.5 50

The figure for 2005 includes
approx. XXX branch offices
0 0 and 50 for 2001. 0 0
in Poland
1997 2001 2006 2004 2005 2006 2004 2005 2006 1997 2001 2006

After a reduction of the number of branch
offices at the end of the 1990s, the Bank
has more than doubled its branch office
network through acquisitions in Germany
and Eastern Europe. During 2006 the Bank
opened seven new branches offices in the
Nordic region and the Baltic countries.
Automatic bank service
machines include ATM’s,
machines for cash deposits,
transfers, foreign exchange and
recharging cards.
In Sweden and the Baltic coun-
tries, SEB’s private customers
are offered personal service
around the clock. In Sweden,
the service is offered in 17
different languages.
Since 2001 the number of
card transactions has dou-
bled and amounts to 332
million transactions.

12 SEB ANNUAL REPORT 2006

 Markets, competition and customers

During 2006 small and medium-sized companies accounted for
approximately 25 per cent of SEB’s income.
Today, SEB has the privilege of assisting 5 million private
individuals, providing solutions to their everyday finances,
loans and investments. During 2006, private individuals
accounted for approximately 35 per cent of SEB’s income.
When it comes to the private individual customers in Sweden,
SEB has a leading position among financially active people with-
in such areas as asset management, mutual funds and unit-linked
insurance. SEB also has extensive operations in the private mar-
kets of the Baltic countries, where the Group’s position is strong,
and in Germany. That also applies to certain niches, e.g. asset
management, cards and life insurance, in the rest of the Nordic
region.
Distribution channels
SEB’s customers can keep in contact with the bank around the
clock via branch offices, internet and telephone service. In total,
around 200 million customer meetings take place every year in
the SEB Group, of which a third through the Internet.

SEB’s ranking 2006 – examples

Area Rank Organisation/publication etc
Best bank at cash management in the Nordic and Baltic region 1 Euromoney
Best bank at cash management in the Nordic region 1 Global Finance Magazine
Best bank at liquidity management in the Nordic region 1 Global Finance Magazine
Best bank at payments and collections in the Nordic region 1 Global Finance Magazine
Best bank for risk management 1 Global Finance Magazine
Best sub-custody bank in Denmark, Finland, Latvia, Lithuania, Norway and Sweden 1 Global Finance Magazine
Best sub-custody bank in Estonia 2 Global Finance Magazine
Best stockbroker in the Nordic region 1 Prospera
Best research house in the Nordic region 1 Prospera
Best European equity team 2 Morningstar
Best Swedish small cap team in Europe 3 Morningstar
Best mututal fund company in Sweden 2 Prospera
Best M&A house in Latvia 1 Euromoney
Best at commercial real estate banking in the Nordic and Baltic region 1 Euromoney Real Estate Awards
Best at investment real estate banking in the Nordic and Baltic region 1 Euromoney Real Estate Awards
Best at advisory financial services in real estate banking in the Nordic and Baltic region 2 Euromoney Real Estate Awards
Best agent bank in the Nordic region 1 Global Custodian
Best research house in the Nordic countries 1 Extel Survey, Thomson Financial
Best bank for Scandinavian currencies 1 FX Week
Best bank in Lithuania 1 Euromoney
Best consumer internet bank in Lithuania 1 Global Finance Magazine
Best internet bank in Estonia 1 Metasite Business Solutions
Best risk manager in the Nordic region 1 TMI
Best private bank in the Nordic and Baltic region 1 Euromoney
Best private bank in Sweden 1 Prospera
Best overall customer service cards 1 Teleperformance Danmark A/S CRM Grand Prix
Best of Europe in Prepaid 1 MasterCard

SEB ANNUAL REPORT 2006 13

SEB’s employees

SEB’s employees
SEB’s capability to attract, develop and keep the most competent employees is a key
competitive factor for a successful development of SEB.

SEB’s values mented a common global process for performance management

The SEB Group’s common corporate culture is based upon four for all employees with individual targets, linked to SEB’s busi-
values: Commitment, Continuity, Mutual respect and Profes- ness plan. The same process is used in the annual top manage-
sionalism. These values form a natural part of leadership and a ment review. The purpose is to ensure that SEB’s managers
basis for the daily relations both between the employees of the have the appropriate competence and that there exists a good
Group and between employees and customers. SEB’s commit- succession planning for the key managers of the Group.
ment to customers and society shall be reflected in these values.
The goal is to create value for customers and shareholders and SEB Licence
as a matter of course for the employees, too. In November 2005, SEB launched a common training programme
in order for all employees to become better SEB ambassadors
Competence and leadership development and strengthening the SEB brand. Improved knowledge about
Continuous competence and leadership development are of deci- the Group’s products and services would lead to enhanced
sive importance for a growing business operation and a prerequi- customer services and to an incentive to identify new product
site for enabling SEB to deliver the right solutions to its customers. needs.
To make sure that SEB’s development activities are in line with The programme consisted of two parts. The first Internet-
the objectives set in its business plan, the Bank initiated a process based part gave the participants general knowledge about
during 2006, which not only assesses employees and leaders but almost all the products that SEB has on offer. The second part
also defines the needs for competence development in terms of consisted of workshops to gain more profound knowledge
individual goals, in view of the Group’s overriding objectives. about products and processes and to establish contacts between
It is SEB’s ambition to create a culture in which managers and employees. Nearly all of SEB’s 20,000 employees participated in
employees constantly are trying new ways of developing the busi- this programme.
ness in order to make the Bank an even more effective business
partner. This is why the contents of the leadership programmes of
2006 are more clearly focused on change and innovation.
SEB is active in some 20 countries and attaches great impor- Educational level
tance to making use of the total competence that exists within Per cent
all parts of the Group. Job rotation is encouraged as well as
Post gymnasium/University > 3 years 38
work across divisional lines and geographical borders.
Post gymnasium/University < 3 years 12
To mirror the Group’s global structure, SEB developed a frame-
Upper secondary school education 34
work for Group-wide training in 2006. This means that all
Compulsory school 10
employees and managers are offered the same opportunities for Other/Unspecificed 6
development, regardless of division or geography.
In 2006 SEB invested a
total of SEK 252m (250)
in competence develop- Internal employee survey
Training cost per employee
ment. Almost every SEB has a systematic approach to an open and continuous dia-
employee participated in logue about employees’ views on such important matters as
SEK
some kind of training work environment, motivation, leadership and Group perform-
15,000 and 1,800 managers par- ance in the market. SEB has chosen to carry out attitude surveys
ticipated in the Group’s every second year in order to give time for improvement work
12,000 internal or external lead- to reach good, long-term results. Next survey is planned for the
ership programmes. autumn of 2007.
Internal training com-
9,000
prises everything from Equality and diversity
professional competence The SEB Group strives to offer everybody equal opportunities
6,000 courses to the Group’s and rights, regardless of gender, national or ethnic origin, age,
own management pro- sexual orientation and religious faith.
3,000 grammes such as the According to the equality plan that was adopted by SEB in
Wallenberg Institute and Sweden in 1998 the long-term goal is an equal distribution
the Wallenberg Executive between men and women. Each sex shall be represented by at
0
2004 2005 2006
(for high-level managers). least 40 per cent at each level. SEB has taken several measures in
In 2006, SEB imple- order to achieve this objective. For example, when a new man-

14 SEB ANNUAL REPORT 2006

 SEB’s employees

ager is appointed both sexes shall be represented among the SEB and ”young professionals”
three main candidates. In order to secure its position as an attractive employer SEB con-
In 2006, 38 per cent (37) of all the Group’s managers were tinuously works on building long-term relations with the target
women and the same percentage was true for Sweden. The share groups of “young professionals” (academics with a few years of
for group and customer service managers was 48 per cent, while it working experience) and “last-year university and college stu-
was 33 per cent for department and branch office heads. At higher dents”. The work consists in communicating the Group’s values
levels, the share of women was 22 per cent. and in defining the desirable profiles of future employees. In Jan-
SEB’s diversity plan was established in 2005. uary 2007 SEB’s first international trainee programme involving
all divisions was concluded. A new programme will start in 2007.
Work environment and health issues
The awareness of the connection between work and health care Remuneration within SEB
is of vital importance for the working environment. In Sweden, a SEB operates both in global and local environments as well as in
well-functioning and systematic programme is therefore being different types of areas, e.g. retail banking, wholesale and invest-
implemented. In co-operation with local, occupational health ment banking, life insurance and wealth management. SEB’s suc-
care SEB carries out extensive rehabilitation work to help long- cess depends on the commitment and professionalism of its staff.
term sick-listed employees return to work. In 2006, the number The remuneration shall aim at meeting the financial objec-
of long-term sick-listed employees decreased to 2.4 per cent tives of SEB. The total remuneration shall also be competitive
(2.8), while total sickness absence dropped to 4.1 per cent (4.6). within each market in which SEB is present to attract, motivate
and retain highly skilled individuals. Individual remuneration
levels shall only be based on the factors of experience, compe-
tence, responsibility and performance.
SEB’s total remuneration structure consists of the following
No. of employees Sick-leave, SEB in Sweden main components: base salary, short term incentive compensa-
Distributed by age and gender Short and long-term leave by gender.
tion, long-term incentive compensation to senior managers and
Of regular working hours, per cent. other key employees and pension and benefits.
The base salary depends on the complexity of work and the
8,000 8
individual’s work performance, experience and competence.
7,000 7 The majority of SEB employees are eligible for short-term
incentive compensation. This is based on the achievement of cer-
6,000 6
tain predetermined goals, individual and general, qualitative
5,000 5 and quantitative. All employees in Sweden, as an example, can
receive short-term incentive compensation of maximum SEK
4,000 4
30,000 based on the financial result of the Group plus another
3,000 3 SEK 18,000 based on the result of each respective division and/
2,000 2
or local unit and individual/team performance during 2006.
Managers and key specialists are generally subject to individual
1,000 1 agreements, usually maximized to either a certain percentage of
0 0 the base salary or a fixed amount.
–29 30–39 40–49 50– –29 30–49 50– In 2006 approximately 500 senior managers and key special-
Women Men Men, short- Women, short- ists were granted long-term incentive compensation in the form
term leave term leave of performance shares. The purpose of this compensation is to
Men, long- Women, long- stimulate senior managers and other key staff to increased
term leave term leave
efforts by aligning their interests and perspectives with those of
Total sick leave for SEB in Sweden the shareholders. (See page 52 for more information on the SEB
2006 was 4.1 per cent and long- long-term incentive compensation programme)
term leave 2.4 per cent.
Pension conditions vary from one country to another. In
Sweden, the pension conditions are defined by the collective
agreements. Only a small number of employees at senior man-
agement level have pension conditions that go beyond the col-
lective agreements. The pension conditions of the Group Execu-
Employee turnover
tive Committee are specified in note 9.
Heads
Year Average Starters Leavers Retired
2002 19,994 884 (4.4%) –1,343 (–6.7%) –273 (–1.4%)
2003 19,411 643 (3.3%) –1,069 (–5.5%) –108 (–0.6%)
2004 19,108 784 (4.1%) –789 (–4.1%) –189 (–1.0%)
2005 19,872 2,029 (10.2%) –1,183 (–6.0%) –109 (–0.5%)
2006 20,689 2,249 (10.9%) –2,012 (–9.7%) –228 (–1.1%)

SEB ANNUAL REPORT 2006 15

SEB’s role in society
An active role in society
In order to achieve the goal of being a good social citizen it is of decisive importance to be-
have in a responsible and ethical way towards all interested parties in the daily operations.
In its capacity as a financial group, SEB plays an important role
in society by
■ acting as an intermediary between companies and/or pri-
vate individuals with surplus capital and those who have
borrowing needs,
■ providing an effective payment system, which is a condition
for a functioning society and
■ handling financial risks.
Primarily through carrying out these tasks in an ethical and
responsible manner SEB will gain respect and contribute to a
positive social development.
Being a good social citizen in all countries where it is active is
one of the Group’s overriding goals. SEB shall stand for good eth-
ics and openness and contribute to a sustainable development.
SEB’s corporate social responsibility
SEB has a policy for the social responsibility of the Bank and
supports the principles of the United Nation’s Global Compact
and the OECD guidelines for multinational companies. This policy
means that SEB takes long-term responsibility in its day-to-day
work. SEB’s operations are based upon the long-term confidence
of customers, employees and society.
It applies to ethical issues that have a direct impact on SEB’s
customers and business as well as to responsibility for the
employees and, in a broader sense, for the society and environ-
ment.
Several Group-wide policies and instructions govern the
work on SEB’s social commitment. All this work is based upon
SEB’s common values – Commitment, Continuity, Mutual
respect and Professionalism. In addition, targets have been set
for continuous and systematic assessment and follow-up of the
work, which is led by a Group-wide Corporate Social Responsi-
bility Committee, CSR, with representatives from all divisions
and staff functions. The heads of divisions and subsidiaries have
the operative responsibility for social commitment.
Ethics and long-range planning
SEB’s activities are based upon trust, continuity and long-term
relations with customers. This means that SEB and its employees
SEB’s priority areas within Corporate Social Responsibility
■ Ethical and sustainable business conduct
■ SEB’s role as a lender
■ SEB’s role as an asset manager
■ SEB’s role as an employer
■ Social commitment
■ Environmental responsibility
16 SEB ANNUAL REPORT 2006
must meet the highest ethical standards and act in a long-term
perspective. It is a matter of course that SEB observes all laws
and other general regulations concerning bank secrecy, treat-
ment of personal information, integrity protection and informa-
tion safety. In addition, the Group has adopted a number of own
rules regarding ethical issues. In early 2007 SEB’s Board of Direc-
tors adopted a new Code of Business Conduct.
SEB’s role as a lender
SEB’s credit policy describes the role and responsibility of the
Group as a lender. SEB strives to increase awareness of the indi-
rect effects and responsibilities that the Group’s credit-granting
activities have on the environment and what they mean for a
sustainable development. A special section of the credit policy
stresses SEB’s social responsibility beyond the associated impor-
tant issues of confidence in the customer, the credit purpose and
environmental matters.
The Group’s Head of Credits has issued special instructions
and prepared follow-up systems to support credit decisions that
involve SEB’s social responsibility. Factors that may have a nega-
tive impact on the environment and other issues of importance
are assessed and analysed in connection with credit decisions
and annual follow-up routines. Such analyses and assessments
are made in a broader perspective than just taking factors that
affect borrowers’ repayment capacity into account. Special atten-
tion is paid to financings of major infrastructure projects, which
may involve risks for a negative impact upon the population
and environment.
SEB’s role as an asset manager
SEB strives to maintain high ethical standards in its relations
with customers, employees, suppliers and other partners. The
Group offers a broad range of asset management products with
a special ethical profile and works actively with corporate gov-
ernance issues. SEB Fonder (Mutual Funds) finds it important
SEB’s Code of Business Conduct
The SEB Code of Business Conduct describes and develops SEB’s
values and standards of business conduct. The Code provides
guidance on how to live by those values. The aim is to achieve
the following main objectives:
■ Describe the responsibilities that follow with employment in SEB.
■ Describe the standards of business conduct.
■ Provide guidance on how to resolve potentially difficult situations.
■ Establish procedures for reporting Code-related issues.
■ Show stakeholders that SEB acts in an ethical and professional
way.
 SEB’s role in society

that each company in which they choose to invest has an estab-
lished ethical and environmental policy.
As a major manager of savings capital, it is the responsibility
of SEB Fonder to be an active owner and to act in order to give
companies the best possible opportunities for carrying on their
activities.
SEB’s mutual funds are put under strict obligations as to
which shares its ethical portfolios may include by excluding
such lines of business as weapons, alcohol, tobacco, pornograpy
and gambling. SEB’s ethical assortment of funds must follow
certain ethical standards and two different methods are used for
selecting companies: screening by using Global Ethical Standard
and exclusion of companies according to so-called negative crite-
ria.
Global Ethical Standard is based upon international stand-
ards regarding human rights, labour, environment, bribes, cor-
ruption and arms trading. Investments in indexed forwards are
excluded since it is difficult to exclude indirect exposures on
companies that violate SEB’s ethical criteria.
Social commitment
Being a good member of society forms part of SEB’s business
concept and this is why the Group supports various social
projects both centrally and through its different business areas.
Youth, education, equality and diversity are areas of priority. In
addition to direct grants of SEK 16.2m during 2006, the aim is
that all SEB employees shall actively contribute with knowledge
and personal commitment.
Mentor Sverige and Mentor Lietuva
Since 1997 SEB supports Mentor Sverige, a Swedish foundation
engaged in drug prevention measures for the youth that runs
two drug prevention programmes: a mentorship and a parental
training programme. During 2006, 34 persons within SEB partic-
ipated as mentors, while 100 took part in the parental training.
SEB employees can be mentors for pupils at the senior level of
the compulsory school during one school year. SEB’s Lithuanian
subsidiary bank, SEB Vilniaus Bankas, was one of the initiators
of a national mentor organisation in Lithuania, Mentor Lietuva.
SEB is trying to broaden its co-operation with Mentor to include
also Germany, Estonia and Latvia.
Other projects
In various ways, wherever SEB is represented, the Bank sup-
ports local projects and initiatives that focus particularly on
school-training and sports-linked children’s and youth issues.
In connection with the ‘Rosa Bandet’-campaign (Pink Band),
SEB sold about 8,000 pink bands for the benefit of the Cancer
Fund, which also received SEB’s Christmas gift, which is given
for charity purposes instead of sending Christmas cards.
Since 1999, SEB’s Baltic Fund/WWF sends an annual contri-
bution to the World Wide Fund for Nature and its Baltic action
programme.
At the annual Swedish Christmas concerts it is a tradition to
collect money for various projects. In 2006, money was collected
for Mentor, Queen Silvia’s Children’s Hospital and the Child-
ren’s Cancer Fund in Skåne. SEB also gave pictures to the City
Mission of Stockholm for its art auction for the benefit of the
homeless and to the Swedish Church in London.
Environmental matters
According to SEB’s environmental policy SEB shall consider
environmental aspects to the greatest extent possible. SEB has
signed the environmental documents of both the United Nations
and the International Chamber of Commerce, under which the
signatories are committed to paying due regard to, and acting for,
a better environment within their respective activities. This work
is led by a Group-wide environmental committee that makes
reports on, and follows up, these issues on a continuous basis.
Further information is available at www.sebgroup.com.

Social key figures

2006 2005
Overall CSR Employee attitude:
Per cent of employees who think;
– SEB is an ethical company 4)
77
– it is important that SEB is
an ethical company 4)
76

Customer attitude:
Per cent of customers who think;
– SEB is an ethical company 75 65
– it is important that SEB is an
ethical company 99 87
Role as an Motivation index 4)
63
employer Leadership index 4)
78
Gender equality1) 38 37
Sick leave rate2) 4 5
Health index 62 61
SEB as an attractive employer, rank;
– all companies 11 18
– banks only 2 2
Social Mentorship programme3) 90 95
Commitment Financial support of
social projects, SEKm 17.5 18

1) Per cent female managers 2) In Sweden

3) Internal knowledge in Sweden 4) As from now measured every second year

SEB ANNUAL REPORT 2006 17

The SEB share

The SEB share doubled in value

In 2006 the SEB Class A share rose by 33 per cent. In three years the SEB share
has more than doubled in value. Earnings per share were SEK 18.72 (12.58). The
proposed dividend is SEK 6.00 (4.75) per share.

Share capital Sales of own shares

The SEB share is listed on the Stockholm Stock Exchange. The
share capital amounts to SEK 6,872m, distributed on 687.2
million shares. The Class A share entitles to one vote and the
Class C share to 1/10 of a vote.
Stock Exchange trading
During 2006, the value of the SEB Class A share increased by
33 per cent, while the Swedish General Index rose by 24 per
cent and the European Banking Index by 19 per cent. During
the year, the total turnover in SEB shares amounted to SEK
163bn. SEB thus remained one of the most traded companies
on the Stockholm Stock Exchange. Market capitalisation by
year-end was SEK149bn.
Dividend policy
The size of the dividend in SEB is determined by the financial
position and growth possibilities of the Group. SEB strives to
achieve long-term growth based upon a capital base for the
financial group of undertakings that must not be inferior to a
core capital ratio of 7 per cent. The dividend per share shall,
over a business cycle, correspond to around 40 per cent of
earnings per share, calculated on the basis of operating result
after tax.
In the third quarter 2006 SEB sold approximately 3 million
shares, in excess of needs for the hedging of SEB’s long-term
incentive programmes.
SEB’s Class C shares
To facilitate foreign ownership the Class C share was introduced
at the end of the 1980s. The trading volumes of the Class C share
are very limited and the number of Class C shares only consti-
tutes 3.5 per cent of the share capital of the Bank. Due to this, the
prerequisites for creating only one class of shares, thus giving
the Class C shares the same rights as the Class A shares, have
been examined. The examination has shown that there are sig-
nificant practical difficulties to implement such a structure.
According to the Swedish Companies Act a proposal that the
Class C shares should carry the same rights as the Class A shares
requires that the proposal is supported by shareholders repre-
senting at least 2/3 of the votes cast and shares represented at a
General Meeting of Shareholders as well as by 9/10 of the Class
A shares represented at the General Meeting. Furthermore
approval from a majority of all Class A shareholders is required.
The reason for this is that a resolution to this effect would lead to
a certain dilution for the Class A shareholders. Since the number
of shareholders in SEB is large, obtaining such approval would
be a drawn-out and complicated procedure.

SEB Share Monthly share price 2006

SEK SEK
250
200
180
160 200

140

120
150
–120,000
100

–90,000 100
80

–60,000
60 50

–30,000

0
40
2002 2003 2004 2005 2006 © FINDATA Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
DIREKT
SEB Share, logarithmic scale. European Bank Index (FTSE)
Highest paid
Price equals last closing price
Number of shares traded,
paid on last day of each month. Lowest paid
in thousands, linear scale
SIX General Index (incl. after-hours transactions)

18 SEB ANNUAL REPORT 2006

 The SEB share

SEB share Share capital

Number Number Percentage of
Data per share 2006 2005 2004 2003 2002
Share series of shares of votes capital votes
Basic earnings, SEK 18.72 12.58 10.83 8.22 7.60
A 663,004,123 663,004,123 96.5 99.6
Diluted earnings, SEK 18.53 12.47 10.82 8.19 7.60
C 24,152,508 2,415,251 3.5 0.4
Equity, SEK 98.98 84.84 77.31 70.10 65.51
687,156,631 665,419,374 100.0 100.0
Adjusted equity 112.66 96.44 85.66 75.53 68.88
Each Class A-share entitles to one vote and each Series C-share to 1/10 of a vote.
Net worth, SEK 115.90 102.19 89.50 78.03 70.55
Cash flow, SEK 6.32 52.49 4.95 –4.24 4.49
Dividend per A and C share, SEK 6.00 4.75 4.35 4.00 4.00
Year-end market price The SEB share on the OM Stockholm Stock Exchange
per Class A share, SEK 217.50 163.50 128.50 106.00 72.50
2006 2005 2004 2003 2002 2001
per Class C share, SEK 209.00 158.00 124.50 96.50 65.00
Year-end market
Highest price paid during the year
capitalisation, SEKm 149,251 115,026 90,382 74,391 50,850 66,900
per Class A share, SEK 220.00 165.50 131.00 107.00 110.00
Volume of shares
per Class C share, SEK 212.50 159.50 126.50 96.50 99.50
traded, SEKm 162,707 104,372 86,293 85,648 83,758 75,424
Lowest price paid during the year
per Class A share, SEK 152.50 122.50 99.50 66.50 66.00
per Class C share, SEK 145.50 118.00 92.50 61.00 58.50
Dividend as a percentage
Change in share capital
of result for the year, % 32.0 37.8 40.2 48.6 52.7
Skandinaviska Enskilda Banken’s share capital has changed as follows since the Bank
Yield, % 2.8 2.9 3.4 3.8 5.5
was started in 1972:
P/E 11.6 13.0 11.9 12.9 9.5
Share
Number of issued shares, million Change in no. Accumulated capital
average 673.3 667.8 679.8 693.5 700.1 Year Transaction SEK of shares no. of shares SEKm
at year-end 678.3 668.8 668.5 691.4 697.6 1972 5,430,900 543
1975 Rights issue 1:5 125 1,086,180 6,517,080 652
1976 Rights issue 1:6 140 1,086,180 7,603,260 760
1977 Split 2:1 7,603,260 15,206,520 760
1981 Rights issue 1B:10 110 1,520,652 16,727,172 837
Distribution of shares by size of holding
1982 Bonus issue 1A:5 3,345,434 20,072,606 1,004
Size of holding No. of shares Per cent No. of shareholders 1983 Rights issue 1A:5 160 4,014,521 24,087,127 1,204
1–500 37,742,017 5.4 243,800 1984 Split 5:1 96,348,508 120,435,635 1,204
501–1,000 18,694,359 2.7 25,764 1986 Rights issue 1A:15 90 8,029,042 128,464,677 1,284 1)
1,001–2,000 18,644,235 2.7 13,176 1989 Bonus issue 9A+1C:10 128,464,677 256,929,354 2,569
2,001–5,000 21,299,129 3.1 6,934 1990 Directed issue2) 88.42 6,530,310 263,459,664 2,635
1993 Rights issue 1:1 20 263,459,664 526,919,328 5,269
5,001–10,000 10,917,413 1.6 1,543
1994 Conversion 59,001 526,978,329 5,270
10,001–20,000 7,868,496 1.1 564
1997 Non-cash issue 91.30 61,267,733 588,246,062 5,882
20,001–50,000 10,535,204 1.5 338 1999 Rights Issue3) 35 116,311,618 704,557,680 7,046
50,001–100,000 11,148,415 1.7 156 Reduction of
2005
100,001– 550,307,363 80.1 339 the share capital –17,401,049 687,156,631 6,872
687,156,631 100.0 292,614 1) The recorded share capital at 31 December, 1986 was still SEK 1,204m, since the
Source: SIS Ägarservice proceeds from the rights issue were not paid in full until early 1987.
2) The issue was directed at the member-banks of Scandinavian Banking Partners. Through
splits in 1977 (2:1) and 1984 (5:1), the nominal value of the shares has been changed from
SEK 100 to SEK 10.
3) According to the instructions of the Financial Supervisory Authority, subscribed shares that
have been paid will not be registered as share capital in the balance sheet until the rights
Basic and diluted earnings Dividend issue has been registered (which took place in January, 2000).
Per SEB share, SEK Per SEB share, SEK
24 6

20 5
SEK 19,000 has grown to SEK 2.6m
Those who bought 100 SEB shares at the price of SEK 190 per
16 4 share on 1 January 1972, when Skandinaviska Enskilda Banken
was formed, would have invested a total of SEK 19,000. Those
12 3 who after that participated in all new issues of shares up to the
present would have invested another SEK 195,000. On the other
8 2 hand, they would have received total dividends of SEK 535,000
over the years. Today, the original 100 shares would have grown
4 1 to 11,350 shares. On 31 January 2007, the share price was SEK
230, which means that the original investments represent a
0 0 present value of SEK 2.6m.
2002 2003 2004 2005 2006 2002 2003 2004 2005 2006

Basic earnings per share A dividend of SEK 6.00 per share is

Diluted earnings per share proposed for 2006.

SEB ANNUAL REPORT 2006 19

Report of the Directors
Financial Review of the Group
The SEB Group continued to develop positively during 2006,
increasing its business volumes and improving both results and
key ratios. Favourable economic development of the markets in
which SEB is active in combination with the Group’s broad geo-
graphical base and product mix were the reasons for this
improvement.
A couple of minor acquisitions were made during the year in
the form of the Russian bank PetroEnergoBank in St Petersburg
and the Danish asset management company Prime Manage-
ment.
SEB’s sale of its total holding, 47 per cent, of the shares in
Polish Bank Ochrony Środowiska S.A. to the national fund for
environmental protection and water purification (NFOS) for
about SEK 1.4bn was completed in July, 2006. A few months later
SEB opened a branch in Warsaw.
During 2006 SEB’s operations were carried out through six
divisions.
■ SEB Merchant Banking – the Group’s relations with large
corporations, institutions and real estate companies,
■ Nordic Retail & Private Banking – the Group’s Nordic retail
operations, private banking and card activities,
■ German Retail & Mortgage Banking – SEB’s German retail
and mortgage business,
■ Eastern European Banking – SEB’s activities in Estonia,
Latvia, Lithuania, Poland, Russia and Ukraine,
■ SEB Asset Management – mutual fund and asset manage-
ment and
■ SEB Trygg Liv – life insurance operations.
As from 1 January 2007, the operations of the SEB Group are
carried out through four divisions and three support functions
(see further the Corporate Governance Report on pages 45–54).
Result and profitability
Best result to date
SEB’s operating profit for 2006 increased by SEK 4.3bn or 39 per
cent, to SEK 15,562m (11,223). Approximately 50 per cent of this
was generated outside Sweden. Net profit rose by 50 per cent, to
SEK 12,623m (8,421).
Income up by 13 per cent
Total operating income increased by SEK 4.5bn or 13 per cent to
SEK 38,747m (34,227).
Net interest income was flat at SEK 14,281m (14,282). Margin
pressure, although less pronounced, in combination with
increased funding costs due to higher short-term interest rates
were offset by rising volumes. The customer driven proportion
of net interest income increased by 14 per cent.
Net fee and commission income improved by 19 per cent, to
SEK 16,146m (13,559). All commission income categories
increased significantly. This was particularly evident for securi-
ties commissions, which net of expenses increased by 24 per
cent, and advisory, up by 36 per cent.
Net financial income rose by 19 per cent to SEK 4,036m (3,392).
The increase was an effect of high customer-driven activity in
the trading and capital markets area.
Net life insurance income improved by 13 per cent, to SEK
2,661m (2,352), principally as a result of continued strong sales
and higher unit-linked volumes. A complete description of SEB
Trygg Liv’s operations, including changes in surplus values, is
found in “Additional information” on www.sebgroup.com.
Net other income increased to SEK 1,623m (642), mainly due
to higher capital gains and positive effects from hedge account-
ing. One-off capital gains during 2006 totalled SEK 474m.

Operating profit – geographical distribution Operating profit – divisional distribution1)

Per cent Per cent
2006 SEB Merchant Banking 43 (43)

Operating profit SEK 15.6bn Nordic Retail & Private Banking 22 (26)
Eastern European Banking 14 (11)
Sweden
Sweden 47%
47%(50)
(50) SEB Trygg Liv 9 (7)
Other
OtherNordic
Nordic 19%
19%(19)
(19) SEB Asset Management 8 (8)
German Retail & Mortgage Banking 4 (5)
1997 Eastern
EasternEurope
Europe 15%
15%(13)
(13)
Operating profit 1) Adjusted for eliminations
Germany
Germany 10%
10%(11)
(11)
SEK 4.1bn1)
Other
Other 9%
9% (7)
(7)

Sweden, 85%
Other Nordic, 5%
Other, 10%

1) Excl. restructuring costs of SEK 1,018m

20 SEB ANNUAL REPORT 2006

 Report of the Directors

Profit and loss account on quarterly basis – SEB Group

SEKm 2006:4 2006:3 2006:2 2006:1 2005:4
Net interest income 3,604 3,503 3,578 3,596 3,803
Net fee and commission income 4,274 3,772 4,107 3,993 3,895
Net financial income 1,120 890 1,047 979 890
Net life insurance income 732 739 607 583 644
Net other income 274 538 352 459 305
Total operating income 10,004 9,442 9,691 9,610 9,537

Staff costs –3,735 –3,443 –3,463 –3,722 –3,766

Other expenses –1,878 –1,820 –2,101 –1,999 –2,904
Net deferred acquisition costs 151 45 144 167 199
Depreciation, amortisation and impairments of
tangible and intangible assets –218 –232 –217 –216 –258
Total operating expenses –5,680 –5,450 –5,637 –5,770 –6,729

Gains less losses from tangible and intangible assets 22 6 14 28 53

Net credit losses2) –222 –136 –162 –198 –331
Operating profit1) 4,124 3,862 3,906 3,670 2,530

Income tax expense –334 –803 –959 –843 –560

Net profit from continuing operations 3,790 3,059 2,947 2,827 1,970

Discontinued operations –50

Net profit 3,790 3,059 2,947 2,827 1,920

Attributable to minority interests 3 6 4 5 5

Attributable to equity holders3) 3,787 3,053 2,943 2,822 1,915

1) SEB Trygg Liv’s operating profit 439 453 295 283 268
Change in surplus values, net 364 381 493 422 643
SEB Trygg Liv’s business result 803 834 788 705 911

2) Including change in value of seized assets

3) Earnings per share (weighted), SEK 5.61 4.54 4.38 4.22 2.94
Weighted number of shares, millions 675 673 672 670 668

Key ratios
2006 2005 20041) 2003 2) 2002 2)
Return on equity, % 20.8 15.8 14.7 14.2 13.7
Return on equity excl. one-off charges, % 20.8 17.0 14.7 14.2 13.7
Return on total assets, % 0.64 0.48 0.51 0.52 0.51
Return on risk-weighted assets, % 1.71 1.31 1.32 1.26 1.24

Basic earnings per share, SEK1) 18.72 12.58 10.83 8.22 7.60
Basic earnings per share,
excl. one-off, SEK1) 18.72 13.54 10.83 8.22 7.60
Diluted earnings per share, SEK 18.53 12.47 10.82 8.19 7.60

Cost/Income ratio 0.58 0.65 0.65 0.65 0.69

Cost/Income ratio, excl. one-off 0.58 0.62 0.65 0.65 0.69

Credit loss level, % 0.08 0.11 0.10 0.15 0.13

Reserve ratio for impaired loans, % 75.1 77.7 79.2 66.3 70.8
Level of impaired loans, % 0.22 0.22 0.31 0.52 0.47

Total capital ratio, incl. net profit, % 11.47 10.83 10.29 10.23 10.47
Core capital ratio, incl. net profit, % 8.19 7.53 7.76 7.97 7.88
Risk-weighted assets, SEKbn 741 705 570 535 503

Number of full time equivalents, average 19,672 18,948 17,772 18,067 19,003
Number of e-banking customers, thousands 2,597 2,299 1,953 1,614 1,332
Assets under management, SEKbn 1,262 1,118 886 822 742
1) Restated to IFRS except for IAS 32 and IAS 39.
2) Not prepared under IFRS.

SEB ANNUAL REPORT 2006 21

Report of the Directors

Stable costs
Net interest and Net fee and commission income Total operating expenses amounted to SEK 22,537m (22,149), an
SEB Group, SEKm increase of 2 per cent compared with last year. The increase was
4,500 mainly due to higher performance-related remuneration,
increased provisions for the long-term incentive programmes
4,000 and for redundancy costs. Approximately SEK 200m of the one-
off charges of SEK 890m for unutilised office space and integra-
3,500
tion in 2005 was used during 2006.
Staff costs rose slightly, excluding performance-related remu-
3,000
neration and provisions for
redundancy costs. Including
2,500
these effects, total staff costs Cost/Income ratio
amounted to SEK 14,363m 1.0
Q4 2002 Q4 2003 Q4 2004 Q4 2005 Q4 2006 (13,342). The average number
of full time equivalents in
0.8
Net interest income 2006 increased to 19,672
Net fee and commissions (18,948), of which 650 due to
acquisitions and growth in 0.6

Eastern Europe.
Other expenses decreased 0.4
by 7 per cent, to SEK 7,798
Net financial, Other and Life insurance income (8,383). Adjusted for the
0.2
SEB Group, SEKm
unutilised office space
charges and insurance-
1,200
related broker commissions, 0
2002 2003 2004 2005 2006
1,000 other expenses were up by
1 per cent, mainly due to The incremental
800 Cost/Incomecost/income
ratio (%) ratio
increased costs for IT and 2006 was 0.28.
Target (%)
600 marketing.

400
Low credit loss level
200 The Group’s net credit losses, including changes in the value of
assets taken over, decreased to SEK 718m (914). The credit loss
0
level was 0.08 per cent (0.11). Asset quality remained stable.
Q4 2002 Q4 2003 Q4 2004 Q4 2005 Q4 2006

Reduced tax rate

Net financial income
Total tax costs amounted to SEK 2,939m (2,770). The total tax
Net other income
rate was 18.9 per cent (24.7). The reduced tax rate was mainly
Net life insurance income
due to improved results of business operations subject to a lower
tax rate and increased non-taxable income. The expected tax rate
for 2007 is around 23 per cent.

Household mortgages – Sweden

Volumes and margins
180 1.2

150 1.0

120 0.8

90 0.6

60 0.4

30 0.2

0 0.0
Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec
2004 2005 2006

Outstanding volume, SEKbn

Average margin, %

22 SEB ANNUAL REPORT 2006

 Report of the Directors

Financial structure Derivatives

At year-end 2006, the nominal amount of the Group’s deriva-
Balance sheet tives contracts totalled SEK 6,995bn (6,909). The volumes are pri-
The balance sheet total increased by 2.4 per cent to SEK 1,934bn marily driven by offering clients derivatives products for man-
(1,890) due to growth within general public lending and trading agement of their financial exposures. The Group manages the
securities. Risk-weighted assets increased proportionally more resulting positions through entering offsetting contracts in the
than the balance sheet (by 5 per cent over the year), since much market place. As a consequence, the mix of derivatives as
of the new lending business was to corporations carrying full detailed in Note 45 largely reflects the demand of our customer
risk weight. base. The customer and market making transactions form part of
the trading book and are valued at market on a continuous basis.
The Group also uses derivatives for the purpose of protect-
Balance sheet ing the cash-flows and fair value of the Bank’s financial assets
SEKbn and liabilities from interest rate fluctuations. Following IFRS,
Assets Liabilities
also these contracts are accounted for at market value.
2,000 The major portion of the Group’s derivatives engagements is
related to contracts with short maturity, which are dominated by
1,600 interest- and currency-related forwards. A minor portion con-
sists of exchange-traded derivatives contracts, where profits and
losses are continuously settled on a cash basis.
1,200
Positive market values imply a counterparty risk; to reflect
also future uncertainty in market conditions, a credit risk equiv-
800
alent is calculated. Depending upon the type of contract, curren-
cy and remaining maturity, an add-on to the current market
400 price is computed. The credit risk equivalent is fully consolidat-
ed in the Group’s credit exposure.
0
Netting contracts (i.e. being able to offset negative against
2005 2006 2005 2006 positive closing gains) are disregarded in accounting but form a
Lending to credit institutions Deposits by very important part of the Group’s credit risk mitigation strate-
Lending to the public
credit institutions gy. SEB strives to enter agreements with all major derivatives
Deposits and borrowing counterparties about netting and, where relevant, marginal col-
Financial assets from the public
Other assets Financial liabilities laterals, thereby reducing the exposure in the event of a counter-
Other liabilities party default. The counterparties are mainly Swedish and inter-
Subordinated liabilities national banks of very high quality as well as central banks. On
Shareholders’ equity a net basis, the total credit risk equivalent at year-end was SEK
and untaxed reserves 55.8bn (61.7). Further details on exposures by industry are found
in Note 44.

Intangible fixed assets, including goodwill

Assets
The most important asset item on the balance sheet consists of
loans to the public, which rose to SEK 946.6bn (901.3) during the
year. Loans to credit institutions increased to SEK 179.3bn
(177.6).
Total credit exposure, including contingent liabilities and
derivatives contracts, amounted to SEK 1,315bn (see further pp
40–41 in the Risk and Capital Management section and Note 44).
Financial assets within insurance operations are classified as
financial assets at fair value. Financial assets where the insurance
policyholders carry the risk (unit linked insurance) amounted to
SEK 120.9bn (96.1). Financial assets within traditional insurance
operations amounted to SEK 81.4bn (89.6).
Trading securities
At year-end 2006, the market value of the trading securities of
the SEB Group, classified as financial assets at fair value, was
SEK 340.9bn (286.2). These portfolios consist of immediately liq-
uid and pledgeable securities in SEK, EUR, USD and other major
currencies. The higher level reflected increased trading activities
in investment grade instruments; credit and market risk levels
for the portfolios showed minor changes only.
At year-end 2006 intangible assets totalled SEK 15.6bn (15.2), the
majority consisting of goodwill.
The most important goodwill items were related to the fol-
lowing: The acquisition of the Trygg-Hansa group in 1997 (SEK
5.7bn at year-end 2006), the Group’s investments in banking activ-
ities in Eastern Europe from 1998 (SEK 2.0bn), and investments
in the credit card business in Norway and Denmark (SEK 1.1bn).
Goodwill items are not amortised, but are subject to a yearly
impairment test.
Deferred acquisition costs in insurance operations amounted
to SEK 2.8bn (2.3).
Further information is found in Note 27.
Deposits and borrowing
The financing of the Group consists of deposits from the public
(households, companies etc.), loans from Swedish, German and
other financial institutions and issues of money market instru-
ments, bonds and subordinated debt.
Deposits and borrowing from the public increased by SEK
71.8bn to SEK 641.8 (570.0). Deposits by credit institutions
decreased by SEK 33.5bn to SEK 366.0bn (399.5).

SEB ANNUAL REPORT 2006 23

Report of the Directors

Composition of capital base

Deposits from the public Lending to the public The capital base of the financial group of undertakings was SEK
SEKbn SEKbn
84.9bn (76.3) at year-end 2006. Core capital amounted to SEK
60.7bn (53.1).
1,000 1,000
Core capital consists of total equity plus minority interests,
after deduction for intangible assets (mainly acquisition good-
800 800
will), deferred tax claims and the dividend proposed by the
Board. Adjustments should be made where capital adequacy
600 600 regulation differs from how the balance sheet is prepared, specif-
ically as concerns hedge accounting and surplus values in avail-
400 400
able for sale portfolios. Certain subordinated debt issues can be
included as core capital contribution, up to maximum 15 per
cent of core capital. SEB could include SEK 7.5bn (8.0) of such
200 200
debt in the core capital.
In addition to core capital, the capital base may include sub-
0 0 ordinated debt up to maximum 100 per cent of core capital.
2004 2005 2006 2004 2005 2006 Deductions from the capital base shall be made for investments
in companies that are not consolidated with the financial group
of undertakings, including insurance companies. As regards
SEB, the deduction of SEK 11.0bn (12.2) was in all essentials due
Liabilities in insurance operations to the acquisition of the Trygg-Hansa group in 1997 and to the
At year end, liabilities in insurance operations amounted to SEK acquisition of Codan Pension in 2004. A deduction of SEK 0.6bn
203.7bn (185.4). Out of this, SEK 120.1bn (96.2) was related to is also made for pension surplus values, except for such indem-
financial contracts (unit linked insurance) and SEK 83.6bn (89.2) nification as prescribed in the Swedish Act on safeguarding of
to insurance contracts (traditional insurance). pension undertakings.

Total equity Risk-weighted assets

Total equity at the opening of 2006 amounted to SEK 56.8bn The combined risk-weighted volume of assets, off-balance-sheet
(51.8). In accordance with a resolution of the Annual General commitments and market risk positions totalled SEK 741bn
Meeting of April 2006, SEK 3,264m (3,065) of this was used for (705). The increase includes growing credit volumes of house-
dividend purposes including dividend to repurchased shares. hold mortgages and in the Baltic banks, together with increased
At year-end 2006, total equity amounted to SEK 67.3bn. corporate lending during the first part of the year.
Business volumes in SEB’s German operations decreased
Capital adequacy during the year and the divestiture of BO Ś Bank during the third
The SEB Group is a financial group that comprises banking, quarter led to a reduction of risk-weighted assets (RWA). Cur-
finance, securities and insurance companies. The capital adequa- rency effects curbed RWA growth during the fourth quarter,
cy rules apply to each indi- when accounted for in SEK.
vidual Group company
that has a licence to carry Capital adequacy ratio
Capital adequacy
on banking, finance or The total capital ratio was 11.5 per cent (10.8) and the core capi-
Per cent
securities operations as tal ratio 8.2 per cent (7.5). SEB’s objective is to maintain a core
12
well as to the consolidated capital ratio of at least 7 per cent and a total capital ratio of at
financial group of under- least 10 per cent, which reflects SEB’s ambitions in the interna-
10
takings. Similarly, Group tional money and capital markets. This also leaves a good mar-
companies that carry on gin with respect to statutory requirements, where the lowest per-
8
insurance operations have missible total capital ratio and core capital ratio are 8 and 4 per
to comply with capital sol- cent, respectively.
6
vency requirements. According to Swedish rules, deductions for investments in
The consolidated SEB insurance operations, including goodwill, may be made in full
4
Group should also comply from the total capital base. A more restrictive treatment of this
2
with the capital require- goodwill in line with other goodwill, i.e. with a deduction from
ments introduced by the the core capital, would lead to a core capital ratio of 7.4 per cent
0
new legislation concerning and an unchanged total capital ratio. Some analysts and rating
2004 2005 2006 combined banking and agencies prefer this way of calculation.
Supplementary capital insurance groups (“finan- The combined capital requirements for the SEB financial con-
Core capital ratio
cial conglomerates”). glomerate was SEK 67.6bn, while the capital resources amounted
Goal core capital ratio,
to SEK 97.7bn.
minimum 7% Further information about capital adequacy and capital base
is found in Note 49.

24 SEB ANNUAL REPORT 2006

 Report of the Directors

Rating
Last years’ positive rating trend for SEB was confirmed during
2006. Standard & Poor’s up-graded the Bank to A+ and Fitch
changed the outlook for SEB from “stable” to “positive”. In Feb-
ruary 2007, Moody’s changed SEB’s rating to Aa1. SEB has an
AA-rating ambition and currently holds an AA-equivalent rating
with Moody’s and DBRS. Strong ratings are important, since a
higher rating over time leads to lower funding costs and more
business opportunities in the international capital markets.
The following table shows the current rating of SEB
(February 2007).

Rating
Standard &
Moody’s Poor’s Fitch DBRS
Outlook Stable Outlook Stable Outlook Positive Outlook Stable
Short Long Short Long Short Long Short Long
R–1
P–1 Aaa A–1+ AAA F1+ AAA AAA
(high)
R–1 AA
P–2 Aa1 A–1 AA+ F1 AA+
(middle) (high)

P–3 Aa2 A–2 AA F2 AA R–1 (low) AA

R–2 AA
Aa3 A–3 AA– F3 AA–
(high) (low)
R–2
A1 A+ A+ A
(middle)

A2 A A R–2 (low) BBB

A3 A– A– R-3 BB

Baa1 BBB+ BBB+ R–4 B

CCC
Baa2 BBB BBB R–5
CC C

Baa3 BBB– BBB– D D

Dividend
The size of SEB’s dividend is determined by the financial posi-
tion and growth possibilities of the Group. SEB strives to achieve
long-term growth based on a capital base for the financial group
of undertakings supporting a core capital ratio of minimum 7 per
cent. Over a business cycle, the dividend per share shall corre-
spond to around 40 per cent of earnings per share, calculated on
the basis of operating result after tax.
For 2006, the Board proposes a dividend of SEK 6.00 (4.75)
per Class A and Class C share, resepctively. The total dividend
amounts to SEK 4,123m (3,264), calculated on the total number of
issued shares as per 31 December 2006, including repurchased
shares. This proposal corresponds to 32 per cent (38) of earnings
per share. The SEB share will be traded ex dividend on 29 March
2007.
The size of the proposed dividend is based upon an adjust-
ment of the Group’s capital structure and its opportunities for
future growth. The Board is of the opinion that the proposed div-
idend does not prevent the company nor any other of the compa-
nies of the Group to fulfil its short- and long-term obligations.
The so-called rule of prudence of the Swedish Companies Act
has been taken into account and the proposed dividend can thus
be justified (Chapter 17, Section 3, Swedish Companies Act
2005:551).

SEB ANNUAL REPORT 2006 25

Report of the Directors

SEB Merchant Banking

This division has overall responsibility for servicing large and medium-sized
2006 2005
companies, financial institutions, banks, and commercial real estate clients.
Percentage of SEB’s total income 37 36
It operates in 17 countries.
Percentage of SEB’s operating profit 47 48
Merchant Banking offers its clients integrated investment and corporate
Percentage of SEB’s staff 16 18
banking solutions.
In 2006 the investment banking activities of Enskilda Securities were Profit and loss account
integrated within Merchant Banking and re-branded SEB Enskilda. Merchant Change,
Banking´s main areas of activity include: SEKm 2006 2005 per cent
■ Lending and debt capital markets Net interest income 4,595 4,827 –5
■ Trading in equities, currencies, fixed income, derivatives and futures Net fee and commission income 5,730 4,649 23
■ Advisory services, brokerage, research and trading strategies within Net financial income 3,511 2,498 41
equity, fixed income and foreign exchange markets Net other income 683 181
■ Prime brokerage and securities related financing solutions Total operating income 14,519 12,155 19
■ Export, project and trade finance Staff costs –4,436 –4,309 3
■ Corporate finance Other expenses –2,585 –2,398 8
■ Acquisition finance Depreciation of assets –70 –92 –24
■ Venture capital Total operating expenses –7,091 –6,799 4
■ Cash management, liquidity management and payment services Profit before credit losses etc 7,428 5,356 39
■ Custody and fund services Gains less losses on assets 1 –100
■ Leasing and factoring products Net credit losses1) –116 –24
■ Management of the SEB Group´s liquidity portfolio Operating profit 7,312 5,333 37

SEB Merchant Banking is continuously strengthening its presence and wid- Cost/Income ratio 0.49 0.56
ening its range of products in SEB’s markets outside Sweden, primarily Business equity, SEKbn 20.9 18.0
Denmark, Finland, Germany, Norway, Poland and the Baltic countries. Return on equity, % 25.2 21.3
Number of full time equivalents, average 3,188 3,392
1) Including change in value of seized assets

Strong income and high operational leverage
Activity and volumes remained strong in all markets in 2006,
resulting in the division’s highest result to date. Operating profit
was 37 per cent higher than in 2005, at SEK 7,312m (5,333).
The financial performance in 2006 was based on strong
income generation, good cost control as well as continued low
net credit losses. The division’s scalable business model enabled
it to take advantage of the favourable business climate through-
out the year.
Total operating income rose by 19 per cent. Improved reve-
nues were due to customer acquisition and increased product
penetration. Client revenues increased by approximately SEK
2.5bn. Approximately 50 per cent of total income was generated
outside Sweden (45).
Total operating expenses grew by 4 per cent compared with
2005 as a result of higher performance-related remuneration.
Asset quality remained good and stable.
2006 in review
Market conditions during 2006 were excellent, although the
third quarter was somewhat weaker. Stock market turnover was
high and valuations rose throughout the year, recovering strong-
ly from reversals in May. Turnover on the Stockholm Stock
Exchange reached record levels while the Norwegian market
benefited from strong attention and capital inflows from interna-
tional investors.
Apart from the US dollar weakness, the FX market lacked
clear trends and customer behaviour was therefore rather event-
driven. Rising interest rates and high commodity prices had
limited impact on investor sentiment, which for the most part
remained positive.
A significant feature of 2006 was the continued inflows of
investment in private equity and alternative investment funds.
The event driven market and investors’ searching for yield cre-
ate new business opportunities for Merchant Banking, particu-
larly in the trading and advisory areas.
An expanded presence around the Baltic rim
In line with the division’s strategy of investing in growth outside
its traditional largest market, Sweden, Merchant Banking
achieved the highest income growth in the other Nordic coun-
tries and in Germany.
As from 1 January 2007 Merchant Banking has assumed full
responsibility for wholesale banking activities in the Baltic coun-
tries. SEB Enskilda Corporate Finance and SEB Enskilda Equities
will expand activities in Estonia, Latvia and Lithuania, with the
intention to lead the development of investment banking in the
Baltic countries. Merchant Banking’s expanded presence in these
countries, its new branch in Poland and continued expansion in
Germany strengthens its leading position in Northern Europe as
a provider of integrated regional banking solutions.
Renewed activity in trading and capital markets
The division’s trading and capital markets businesses performed
well, with higher profitability, in all asset classes, most particu-
larly equity related areas. Business activity was significantly

26 SEB ANNUAL REPORT 2006

 Report of the Directors

Gross income Financial development

Geographical distribution 2006, per cent Operating profit and return on equity

Sweden 50 (55) 7,000 28

Norway 15 (12)
Germany 10 (11) 6,000 24
Denmark 5 (5)
Finland 4 (3) 5,000 20
Rest of the world 16 (14)
4,000 16

In 2006, income derived outside Sweden increased to 50 per cent (45).

3,000 12

2,000 8

higher among corporate customers as well as financial institu- 1,000 4

tions. Operating profit, SEKm

0 0
The Norwegian business developed particularly well. RoE, %
2002 2003 2004 2005 2006
2006 saw a number of new introductions to the Nordic stock
exchanges. IPO activity was one of a number of factors which
contributed to high stock exchange turnover in 2006. After a dip
in activity during the summer months, commission generation
returned to high levels in the fourth quarter. SEB was once again
the largest broker by market share on Nordic stock exchanges. Leading equity broker
Sales of structured products were significantly higher and SEB Market shares, Nordic stock exchanges, Jan–Dec 2006, per cent
increased its market share in this growth product. Total primary
issuance by SEB increased 69 per cent from 2005 while SEB’s share SEB Enskilda
of new issues registered with the Swedish VPC increased to 17 per
Carnegie
cent (14). SEB distributes these products through its proprietary
network in nine countries. In addition, third party distribution Morgan Stanley
arrangements have been expanded in Finland and Norway SHB
whereby SEB’s products will be sold by local savings banks.
Fischer

High activity among corporate customers 0 2 4 6 8

Demand for corporate finance advice was high throughout 2006
and SEB was the leading advisor on Nordic M&A transactions as
well as the leading bookrunner on Nordic IPOs. In the fourth quar-
ter, SEB Enskilda Corporate Finance was advisor to SAS and the
Rezidor Hotel Group in the SEK 4.5bn initial public offering and
listing of Rezidor on the Stockholm Stock Exchange. Other notable
transactions during the year included advising EQT and Investor
AB on their SEK 39bn buy-out of Gambro from the Stockholm
Stock Exchange, advising the Swedish State-owned company
Sveaskog on its divestment of AssiDomän Cartonboard to
Korsnäs, advising Securitas AB on the listing of Securitas Direkt
and Securitas Systems on the Stockholm Stock Exchange, and
advising Ahlstrom on its initial public offering and listing on the
Helsinki Stock Exchange.
SEB maintained its regional leadership in commercial real
estate banking and further developed its franchise in Norway and
Finland with a focus on structured finance solutions. In Germany,
SEB continued to develop its commercial real estate business with
increasing profitability.
From the first quarter of 2007, the financial result for SEB’s
commercial real estate activities in Germany will be included in
the result for Merchant Banking.
Strong stock market valuations and companies’ increased
appetite for acquisitions and investment presented good opportu-
nities for venture capital exits. At the end of 2006, the portfolio of
SEB Företagsinvest, SEB’s venture capital vehicle, comprised 35
holdings balanced over technology and life sciences. Overall deal
flow quality continued to be satisfactory
2005 2006
The leveraged buy-out markets continued to show high levels of
activity throughout the year. SEB led and participated in a number
of acquisition financings in the Nordic countries, Germany and
the UK.
Increased market share in transaction banking
Strong customer acquisition in cash management and securities
services led to higher profitability in transaction banking. As the
year progressed this was further aided by higher interest rates.
Assets under custody have doubled in two years. At the end
of 2006, assets under custody amounted to SEK 5,234bn (4,176),
an increase of 25 per cent compared with the previous year.
Transaction volumes increased 69 per cent compared to full year
2005. Investments in IT and processes allowed the large increase
in volumes to be accommodated with unchanged costs. SEB’s fund
services offering continued to capture market share. Volumes grew
by 45 per cent year-on-year and the number of clients doubled
for the second year in succession.
Throughout 2006, awards and customer surveys have con-
firmed SEB’s regional leadership in wholesale banking. This
includes both advisory services, such as research and corporate
finance, as well as custody, cash management, commercial real
estate, equities, foreign exchange and other banking services for
companies and institutions.

SEB ANNUAL REPORT 2006 27

Report of the Directors

Nordic Retail & Private Banking

The division serves 1.6 million private customers and 139,000 small 2006 2005
and medium-sized corporate customers. Customers have access to Percentage of SEB’s total income 25 27
SEB’s complete range of financial services through branch offices and Percentage of SEB’s operating profit 24 29
24-hour open telephone and e-banking services. Percentage of SEB’s staff 22 25
The business areas are:
■ Retail Banking consists of SEB’s approximately 200 Swedish Profit and loss account
branch offices, ATMs, telephone banking and e-banking, as well as Change,
of back office and support functions. The mortgage business (SEB SEKm 2006 2005 per cent
BoLån AB) is also a part of Retail Banking in Sweden. In addition, Net interest income 4,679 4,558 3
the division has branches in Copenhagen and Oslo. Net fee and commission income 4,740 4,437 7
■ Private Banking has representation in seven Swedish cities and Net financial income 295 200 48
branches in Luxembourg, Copenhagen, Oslo, London, Zurich, Net other income 150 71 111
Geneva, Nice, Marbella, Singapore and Warsaw. In Sweden, SEB is Total operating income 9,864 9,266 6
the leading asset manager for private clients and foundations. Staff costs –3,102 –3,032 2
■ SEB Kort includes 3 million charge, credit, debit and co-branded Other expenses –2,786 –2,691 4
cards. The business area operates in Sweden, Denmark, Norway Depreciation of assets –79 –53 49
and Finland and includes trade marks like Eurocard and Diners Club. Total operating expenses –5,967 –5,776 3
SEB Kort also has acquiring agreements with 196,000 retailers. Profit before credit losses etc 3,897 3,490 12
Gains less losses on assets 29 1
Net credit losses1) –146 –192 –24
Operating profit 3,780 3,299 15

Cost/Income ratio 0.60 0.62

Business equity, SEKbn 13.6 12.2
Return on equity, % 20.0 19.5
Number of full time equivalents, average 4,730 4,657
1) Including change in value of seized assets

High business activity during the year
2006 was characterised by strong business flows and good cost
control across all business areas. Operating profit increased by
15 per cent, to SEK 3,780m (3,299).
Total operating income rose by 6 per cent. Net interest
income increased by 3 per cent, as the negative effect of lower
pre-redemptions and margin pressure on household mortgages
was compensated for by lending and deposit volume increases.
Net commissions increased by 7 per cent, driven by a strong
sales and volume development of savings products, such as
equity-linked bonds and mutual funds, among other things.
Total operating expenses increased by 3 per cent, primarily
due to investments made in Norway and Denmark. For the retail
operations in Sweden costs remained unchanged between the
years.
Increased market shares
During 2006, market shares developed favourably within such
key areas as mortgages, deposits, consumer credits and equity-
linked bonds. According to SEB’s so called Sparbarometer, SEB’s
share of household savings was 13.0 per cent as of December
2006. Lending volumes increased by 13 per cent, to SEK 280bn
(247) and total deposit volumes increased by 14 per cent to SEK
160bn (141), of which SEK 137bn was related to Sweden.
Asset quality remained stable.
All business areas reported improved profit
Retail Banking
Activities to improve operational efficiency and customer servic-
es, in order to create a basis for profitable growth, were carried
out during the year. Retail Banking increased its operating profit
by 14 per cent, to SEK 2,118m (1,853). A strengthened focus on
sales and pro-activity continued to yield result. As an example,
the number of sales offers given to customers increased by more
than 60 per cent. Income from the small and medium-sized com-
panies segment improved considerably and new customers were
gained. In 2007 further initiatives will be taken, among others via
an intensified co-operation with the Merchant Banking division.
SEB Way, SEB’s main tool for operational excellence, was
implemented in back-office operations and pilot transformations
started in branch operations, both with promising results. The
roll-out of SEB Way will continue throughout 2007 and 2008 in
remaining parts of the business area.
Initiatives to improve customer offerings based on increased
simplicity, clarity and availability, were continued throughout
2006. The launches were overall successful and have strengthened
SEB’s position within key areas. For example, SEB’s market
share of new deposit volumes has been above 20 per cent since
the launch of “Enkla Sparkontot” (the easy and accessible sav-
ings account), and 20,000 customers have signed up for “Enkla
depån”(the easy and accessible internet custody account) since
the launch in mid-December. In 2007, additional “Enkla”-pro-
ducts will be launched.

28 SEB ANNUAL REPORT 2006

 Report of the Directors

SEB Kort
Operating profit by business area SEB Kort increased its operating profit for 2006 to SEK 881m (807).
Per cent The result included a capital gain of SEK 72m from the listing
of MasterCard. Margin pressure was compensated by higher
volumes. During 2006 the business area made further investments
Retail Banking 56 (57)
in organic growth in the Nordic region and in establishing busi-
ness operations in the Baltic countries.
SEB Kort 23 (24)
SEB Kort has received awards for best customer service with-
Private Banking 21 (19) in credit cards and for best overall customer service in Denmark
(Teleperformance Danmark A/S CRM Grand Prix). In Norway,
Eurocard Norway was appointed Best of Europe in Prepaid 2006
Growth cash-management customers, by MasterCard.
small and medium-sized companies
Thousands
80

70

60

2004 2005 2006

Card turnover
SEKbn
240
The figures include Eurocard in
Norway (from December 2002)
200
and Eurocard Denmark (from
August 2004)
160

120

80

40

0
2002 2003 2004 2005 2006

During the year three branches have been opened at new loca-
tions, in Falkenberg, Enköping and Liljeholmen.

Private Banking
Private Banking increased its operating profit for 2006 by 22 per
cent, to SEK 780m (639), due to high stock market activity, good
sales and appreciating assets under management, SEK 307bn
(252) at year-end. Net new volumes amounted to SEK 13bn dur-
ing the period and the number of customers continued to grow.
Customer satisfaction within the business area remained high
and SEB was appointed best Private Bank in Sweden by Pros-
pera. Euromoney ranked SEB as the best Private Bank in both
the Nordic and Baltic countries.
In June, SEB acquired Prime Management in Denmark. The
acquisition contributed with SEK 4bn in assets under manage-
ment. Private banking activities in Poland were launched in
January 2007.

SEB ANNUAL REPORT 2006 29

Report of the Directors

SEB in Germany (SEB AG Group)

High business activities and enhanced sales
The SEB AG Group comprises SEB’s operations in Germany: the Ger- Merchant Banking reported stronger results within trading and
man Retail & Mortgage Banking division, Merchant Banking Germany
capital markets, successful acquisition of new clients and strong
and Asset Management Germany.
activities regarding tailor-made solutions, for example struc-
tured investment products, structured financing solutions and
2006 2005
Percentage of SEB’s total income 17 19
cash management.
Percentage of SEB’s operating profit 10 10 Commercial Real Estate showed higher results mainly due to a
Percentage of SEB’s staff 17 18 40 per cent increase in new business volume compared to the
previous year. The integration of the former subsidiary SEB
Profit and loss account Hypothekenbank in 2005 led to lower operating costs.
Change, Asset Management reported good income development due
SEKm 2006 2005 per cent to high transaction activity and performance fees. The real estate
Net interest income 3,436 4,094 –16 funds of SEB ImmoInvest recorded high net inflows and
Net fee and commission income 2,561 2,167 18
increased its market share to 8.2 per cent (6.5).
Net financial income 107 –32
Assets under Management reached SEK 165bn, up 7 per cent
Net other income 352 240 47
Total operating income 6,456 6,469 0
compared with last year.
Staff costs –2,571 –2,502 3 Within Retail, the new market positioning and growth initia-
Other expenses –1,724 –1,893 –9 tives were yielding results. Enhanced sales activities resulted in
Depreciation of assets –271 –301 –10 significantly higher commission income.
Total operating expenses –4,566 –4,696 –3
Profit before credit losses etc 1,890 1,773 7
Gains less losses on assets –9 –5 80
Net credit losses1) –393 –593 –34 Improved key ratios
Operating profit 1,488 1,175 27 SEB AG Group – entire operations in Germany

Cost/Income ratio 0.71 0.73 Cost/Income-ratio1) Return on allocated capital,1) %

Business equity, SEKbn 12.6 12.2
Return on equity, % 9.5 7.7 1.0 10

Number of full time equivalents, average 3,404 3,388

1) Including change in value of seized assets 0.8 8

0.6 6

Gradual financial improvement

0.4 4
The German economy showed strong signs of recovery during
2006 with increased private household consumption. The Ger-
man stock market developed favourably. 0.2 2

The entire operations of SEB in Germany benefited from this

positive economic environment. SEB AG reported an operating 0 0
profit of SEK 1,488m, up by 27 per cent compared with 2005. 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006
Net interest income decreased due to the negative impact
1) Excl. one-off items.
from reduced risk-taking in treasury portfolios and higher short-
term interest rates.
Commission income was up by 18 per cent owing to
increased sales activities across all business areas.
Operating expenses decreased by 3 per cent. Cost saving
measures within IT and operations as well as staff and support
functions compensated investments in growth initiatives.
Net credit losses decreased by 34 per cent compared with
2005 due to improved asset quality.

30 SEB ANNUAL REPORT 2006

 Report of the Directors

German Retail & Mortgage Banking

Increased sales activities
This division serves close to one million private customers, 23,000 Retail banking in Germany faced fierce competition in 2006. The
small and medium-sized comapanies and real estate companies
appearance of new competitors and demanding customers led to
throughout Germany. Customers are able to access its services
high margin pressure. In order to strengthen its competitiveness,
through 174 branches, an Internet platform, telephone banking and a
mobile sales force. Since 2006 SEB ImmoInvest, previously reported
SEB undertook several initiatives in 2006 for future growth,
under the German Retail & Mortgage Banking, is consolidated with higher profitability and an efficient customer oriented business.
Asset Management. The period for 2005 has been restated. The measures comprised the further build up of a mobile sales
force. At the end of 2006 the number of mobile financial advisors
2006 2005 reached 50. The target figure in 2008 is 200. In addition, the
Percentage of SEB’s total income 11 13 branch network sales force increased by 70 advisors. That
Percentage of SEB’s operating profit 4 4 included extensive quality improvements through product train-
Percentage of SEB’s staff 15 15 ings on assurance and mortgage offerings for branch staff.
The stepwise transformation of the Call Centre into Sales
Profit and loss account
Centre developed favourably. The number of customer appoint-
Change, ments through the Call Centre went up significantly. A new
SEKm 2006 2005 per cent
internet platform was implemented at year-end, offering new
Net interest income 2,670 3,180 –16
Net fee and commission income 1,401 1,128 24
Internet banking features. The better usage of the Internet as an
Net financial income 19 74 –74 efficient sales channel is part of the multi-channel approach of
Net other income 346 224 54 SEB in Germany. Another key initiative of the growth strategy
Total operating income 4,436 4,606 –4 included the new market and marketing positioning with the
Staff costs –2,053 –1,978 4 creation of a new and innovative sales culture, a clear brand
Other expenses –1,146 –1,294 –11 image and a new branch design.
Depreciation of assets –251 –279 –10
SEB signed a broad co-operation agreement with the insur-
Total operating expenses –3,450 –3,551 –3
ance company AXA to benefit from the large potential in sales of
Profit before credit losses etc 986 1,055 –7
pension savings plans in Germany. The co-operation started in
Gains less losses on assets –9 –5 80
Net credit losses1) –347 –561 –38
January 2007.
Operating profit 630 489 29 Consumer loan volumes increased by 30 per cent. New sales
in mortgage loan were higher than in 2005. Net sales of funds
Cost/Income ratio 0.78 0.77 were up 20 per cent in 2006.
Business equity, SEKbn 9.4 9.9 In order to concentrate on its core activities, the bank entered
Return on equity, % 5.4 4.0
an agreement to sell Union Inkasso, a retail debt collection sub-
Number of full time equivalents, average 2,918 2,870
sidiary, and the related non performing retail claim portfolio.
1) Including change in value of seized assets
The transaction had no impact on the result in 2006 and will
have marginal effect on the profit and loss account in 2007.
German Retail further strengthened its customer satisfaction
Improved result leadership among German banks in 2006.
The division’s operating profit for 2006 increased by 29 per cent,
to SEK 630m (489). N.B. The tax rate for the division is set at 20 per cent to reflect the
Total income was slightly down which was mainly caused medium-term tax rate. The actual tax rate is below 10 per cent.
by the development of net interest income. Thus the total income
did not reflect the improvements in sales activities in 2006.
As for SEB’s entire operations in Germany, net interest
income was negatively affected by the higher short-term interest
rates and the decision to reduce interest rate risk in treasury.
Excluding treasury, the division’s operating income and operat-
ing profit improved considerably.
Commission income rose by 24 per cent due to increased
activity in the German economy and SEB’s higher sales of struc-
tured products, securities and life insurances.
In spite of the various investments in growth and quality
initiatives, total costs were reduced by 3 per cent.
Credit losses were significantly below previous year
although they increased in the fourth quarter.

SEB ANNUAL REPORT 2006 31

Report of the Directors

Eastern European Banking

Strong volume and profit growth
this division comprises three Baltic banks – SEB Eesti Ühispank Strong volume growth within all product and customer segments
(Estonia), SEB Unibanka (latvia) and SEB Vilniaus Bankas (lithua- increased operating profit by 66 per cent, to SEK 2,320m (1,401).
nia), SEB Bank in ukraine and PetroEnergoBank in russia. Total operating income rose by 35 per cent as a result of con-
the Baltic banks serve 2.6 million clients, whereof 178,000 corporate tinued volume and business growth. Net interest income
clients via some 200 branch offices and via Internet banks; more than
increased by 45 per cent. Net interest margins stabilised during
1.3 million use the banks’ Internet service. SEB’s mutual fund company
the year after downward pressure at the beginning of the year.
in poland, SEB TFI, and a leasing company in russia also form part of
the division.
Commission income grew by 19 per cent, mainly due to
increased commissions from payments, cards and investment
2006 2005 and trading services. Life insurance income showed a strong
percentage of SEB’s total income 11 9 growth of 137 per cent.
percentage of SEB’s operating profit 15 12 Total operating expenses increased by 13 per cent due to
percentage of SEB’s staff 27 25 investments in organic growth, the acquisition of the Russian
PetroEnergoBank as well as cost inflation. Net credit losses were
Profit and loss account
low and asset quality remained stable.
Change,
SEKm 2006 2005 per cent
net interest income 2,560 1,767 45
net fee and commission income 1,114 935 19 Market share per country, per cent
net financial income 391 314 25
net life insurance income 116 49 137 Estonia1) latvia2) lithuania
loans 30 20 35
net other income 82 85 –4
Deposits 27 23 30
Total operating income 4,263 3,150 35
Staff costs –1,040 –858 21 1) Excluding loans to financial institutions
2) resident deposits only
other expenses –656 –608 8
net deferred acquisition costs 5
Depreciation of assets –201 –207 –3
Total operating expenses –1,892 –1,673 13
Profit before credit losses etc 2,371 1,477 61 Increased product penetration
Gains less losses on assets 50 63 –21 Significant volume growth increased the total loan portfolio by
net credit losses1) –101 –139 –27 39 per cent during 2006, to SEK 106bn (76). Lending volumes
Operating profit 2,320 1,401 66 grew in all major segments, particularly within household mort-
gage lending. Due to signs of potential economic overheating in
Cost/Income ratio 0.44 0.53
Business equity, SEKbn 7.5 4.8
Estonia and Latvia, SEB has increased the focus on return and
return on equity, % 26.3 24.8 loan portfolio quality. As a consequence, the bank’s lending
number of full time equivalents, average 5,278 4,787 market shares have marginally decreased in these countries.
1) Including change in value of seized assets
Deposits rose by 17 per cent, to SEK 59bn (50). Assets under
management amounted to SEK 21bn (16).
SEB’s broad range of services in the Baltic countries is
reflected in customer satisfaction surveys. SEB received a
number of Euromoney awards such as best cash management
bank in all three countries, best bank in Lithuania and best
M&A house in Latvia. SEB is also at the forefront in offering top
ranked e-banking services. During the year the division opened
five new branch offices.
Increasing wealth in the Baltic countries leads to a higher
demand for more sophisticated financial solutions. Therefore,
significant attention is put on offering more value added services
such as asset management, life insurance, structured products
and corporate finance services. As a result, SEB’s product pene-
tration is rapidly increasing.

32 SEB annual rEport 2006

 Report of the Directors

2,500
The demand for investment banking advice in the Baltic markets
Customer growth, SEB’s Baltic banks continues to increase and during the year SEB further strength-
number of customers, in thousands ened its business by recruiting a number of top resources. In 2006,
2,000
SEB’s Baltic corporate finance business, SEB Vilfima, reinforced
2,500
its leading position in the region.
1,500 SEB’s Eastern European funds, managed by equity teams in
2,000 Tallinn, Vilnius and Warsaw, continued to perform well. The
1,000
funds clearly outperformed their key competitors.
1,500 In line with SEB’s real estate strategy, a process to divest
property holdings in Estonia, Latvia and Lithuania was initiated.
500
The sale is expected to be completed during the first half of 2007.
1,000
In Ukraine SEB successfully completed the re-branding
0 process of Bank Agio, which is now named SEB Bank. This was
500 2003 2004 2005 2006 a step towards the Group’s target to be recognised as a strong
Total customers international bank in the local market.
0
of which e-banking customers
Integration of the Russian PetroEnergoBank, acquired in
2003 2004 2005 2006 2006, with the rest of the Group is proceeding according to plan.
Total customers 100,000
N.B. The tax rate for the division is set at 15 per cent in order to reflect
Lending
of whichand deposits,
e-banking SEB’s Baltic banks
customers
the actual tax rates in the region
(including Ukraine from 2005) 80,000
100,000
SEKm
100,000 80,000 60,000

80,000 60,000
40,000

60,000 40,000 20,000

40,000 20,000 0
2004 2005 2006

20,000 0
Lending Deposits
2004 2005 2006
of which mortgage loans
0 Lending Deposits
2004 2005 2006
of which mortgage loans
Lending Deposits
of which mortgage loans
Operating profit development
SEKm
2,500

2,000

1,500

1,000

500

0
2002 2003 2004 2005 2006

SEB annual rEport 2006 33

Report of the Directors

SEB Asset Management

No 1 in Swedish fund market
SEB asset Management offers a full spectrum of investment manage- SEB managed to keep up strong net sales throughout the year,
ment services to institutions, life insurance companies and private indi-
also during periods of uncertainty on the equity market. Annual
viduals. the services include equity and fixed income, private equity, real
net sales increased by 23 per cent, to SEK 48bn (39), corresponding
estate and hedge fund management. the division has some 150 portfo-
lio managers and analysts, who manage over SEK 900 billion of assets.
to 6 per cent of assets under management at the beginning of
the division’s activities during 2006 have been conducted in Copenha- the year. For the division as a whole institutional sales increased
gen, Frankfurt, Helsinki, oslo, luxembourg and Stockholm. Since 2006 by 19 per cent and mutual funds sales improved by 27 per cent,
SEB ImmoInvest, previously reported under the German retail & Mort- with Sweden as the main contributor. Net sales of third party
gage Banking, is consolidated with asset Management. the period for funds1) increased its importance during 2006 to SEK 8.0bn (3.6),
2005 has been restated. which correspond to 17 per cent of total net sales. The distribu-
tion of net sales between various countries was well balanced
2006 2005 with 40 per cent (51) from units outside Sweden.
percentage of SEB’s total income 7 7 Finland had an exceptionally strong year in terms of total
percentage of SEB’s operating profit 9 9
net sales and especially in the institutional segment. As an effect
percentage of SEB’s staff 3 3
of this Finnish market share of SEB’s mutual funds net sales
Profit and loss account more than doubled to 4.4 per cent (1.7).
Change,
The market share for the real estate fund company SEB
SEKm 2006 2005 per cent ImmoInvest in Germany, which was integrated in Asset Man-
net interest income 104 85 22 agement’s entity in Germany in 2006, rose to 8.2 per cent (6.5).
net fee and commission income 2,477 2,110 17 The German market share for securities funds of 1.0 per cent
net financial income 9 17 –47 remained stable compared to last year.
net other income 20 21 –5 In Sweden, SEB’s net sales of own mutual funds increased
Total operating income 2,610 2,233 17
to SEK 18bn (14.1), compared with a total market which
Staff costs –731 –656 11
declined to SEK 70bn (83). This represents a record market share
other expenses –458 –493 –7
Depreciation of assets –19 –24 –21 in net sales of 26 per cent (17) and a number one position.
Total operating expenses –1,208 –1,173 3 Excluding PPM-funds the net sales market share is 45 per cent
Profit before credit losses etc 1,402 1,060 32 (19). The strong mutual fund sales were explained by strong net
Operating profit 1,402 1,060 32 sales through SEB Trygg Liv’s distribution channel and institu-
tional clients. SEB’s net sales of third-party mutual funds in
Cost/Income ratio 0.46 0.53
Sweden fell to SEK 0.2bn (1.8).
Business equity, SEKbn 2.0 1.8
return on equity, % 50.5 42.4
number of full time equivalents, average 580 549
Increased assets under management
Strong net sales and appreciating equity markets increased the
division’s total assets under management by 10 per cent to SEK
928bn (841) at year-end 2006.
The distribution of assets under management between asset
Strong net sales and performance types has shifted moderately during the year. Real estate consti-
2006 was overall characterised by robust net sales and buoyant tutes 8 per cent (8) of assets under management, equities
equity markets. Profit grew from a combination of strong increased to 41 per cent (40) while the fixed income part of 48 per
income generation and cost management. cent (48) was in line with last year. Compared with the previous
The division’s operating profit of SEK 1,402m outperformed year-end, total mutual funds, including third-party mutual
2005 by 32 per cent. The profit contribution from operations out- funds, increased its share of the division’s assets under manage-
side Sweden increased to 44 per cent (42). ment and represented 49 per cent (46) of the total, corresponding
Total income increased by 17 per cent due to strong equity to SEK 453bn (385), of which SEK 284bn (240) in Sweden.
markets as well as increased performance fees and higher trans-
action fees. Performance fees amounted to SEK 336m (276) and Strong investment performance
transaction fees to SEK 130m (75). The division’s aggregate investment performance finished the
Total operating expensesrose by 3 per cent. Staff costs year on a strong note, with most geographic markets and asset
increased by 11 per cent due to investments in staff and higher classes contributing. 61 per cent (60) of all portfolios and 79 per
variable compensation following strong financial net sales and cent (48) of assets under management were ahead of their
investment performance results. Other non-staff expenses respective benchmarks.
declined compared with 2005, partly due to successful cost At the end of 2006 SEB’s funds in all of its markets had an
management. average Morningstar rating above 3. In total, SEB has 182 rated
funds (172), of which 78 per cent (43) had a four- or five-star
rating.
1) Which are not included in the official market share statistics.

34 SEB annual rEport 2006

 Report of the Directors

Assets under management Total net sales per year, SEB Group, SEKbn
Of which Asset Management SEK 48bn in 2006
Per asset type (incl. ImmoInvest)
Total amount SEK 928bn 80

70
Fixed income 48% (48)
60
Equities 41% (40)
Real estate 8% (8) 50
Cash 3% (4)
40

30
Per country (incl. ImmoInvest)
20
Total amount SEK 928bn
10
Sweden 60% (58) Of which SEB Asset Management
0 (incl. ImmoInvest)
Denmark 15% (18)
2003 2004 2005 2006
Germany 15% (9)
Finland 10% (15)

SEB Asset Management manages 74 per cent of the SEB Group’s

total assets under management Total net sales per year and country,
Asset management, SEKbn
Total amount SEK 48bn in 2006
Mutual funds per product type
30
Total amount SEK 453bn (incl. ImmoInvest)

25

Equity funds 48% (47)

20
Fixed income funds 22% (24)
Balanced funds 12% (12)
15
Other funds 18% (17)

10
Sweden

5 Finland

Customer satisfaction remained strong Denmark

During the year Asset Management was ranked number two in 0 Germany
2004 2005 2006
the Prospera mutual fund client survey in Sweden and thereby
retained the same position as in previous survey 2004. Local sur-
veys in Finland and Denmark also ranked SEB among the top
three asset managers.

Increased product launch activity

During 2006 more than 30 new products were launched or re-
designed. Around half of these were designed to meet the
increased demand for alternative products including real estate
products.
The start-up in Norway developed according to plan and
had by year-end launched three new funds.

SEB ANNUAL REPORT 2006 35

Report of the Directors

SEB Trygg Liv

The business result increased by 41 per cent, to SEK 3,130m. The
SEB trygg liv is one of the leading life insurance groups in the nordic surplus values are not included in the SEB Group’s consolidated
region. operations comprise insurance products within the investment
accounts. For details, see Additional Information at www.seb-
and social security area for individuals and corporations. SEB trygg liv
group.com.
provides both unit-linked and traditional insurance. the division operates
in Sweden, Denmark, Finland, Ireland, the uK and luxembourg and
serves 1.7 million customers. the SEB Group also has life Insurance
Improved performance in each market
operations in Estonia, latvia and lithuania. Total sales for the division, measured as weighted volume,
the traditional life insurance operations in Sweden are conducted in increased by 3 per cent, to SEK 45.8bn (44.4). Unit-linked prod-
the mutually operated insurance companies nya and Gamla ucts represented 85 per cent of total sales. Total premium
livförsäkringsaktiebolaget SEB trygg liv, which are not consolidated income was at the same level as last year, SEK 30.4bn (30.2).
with the SEB trygg liv Group’s results. The value of unit-linked funds increased by 24 per cent dur-
ing 2006, to SEK 119bn (96) and total net assets under manage-
2006 2005
ment rose by 7 per cent, to SEK 394bn (367).
percentage of SEB’s operating profit 9 8
In Sweden, the occupational pension segment showed stable
percentage of SEB’s staff 5 6
growth and represented 69 per cent (61) of total sales. The vol-
ume of collective occupational pension sold through SEB’s own
Profit and loss account
distribution channels increased by 18 per cent. Sales of endow-
Change, ment policies (excluding “Kapitalpension”) increased by 11 per
SEKm 2006 2005 per cent
net interest income –15 9
cent while the volume of “Kapitalpension” was down by SEK
net life insurance income 3,352 2,857 17 5.1bn, or 53 per cent, to SEK 4.6bn. The decline was due to
Total operating income 3,337 2,866 16 exceptionally high sales during 2005 and uncertainty regarding
Staff costs –970 –952 2 tax conditions. However, the decrease was offset by an increase
other expenses –1,351 –1,405 –4 in primarily corporate pension products.
net Deferred acquisition Costs 502 477 5 SEB Trygg Liv maintained its number one position in the
Depreciation of assets –48 –53 –9 Swedish unit-linked market with a market share for new unit-
Total operating expenses –1,867 –1,933 –3
linked business of 29 per cent.
Operating profit 1,470 933 58
Despite increased competition from new entrants, SEB Trygg
Change in surplus values, net 1,660 1,280 30
Business result 3,130 2,213 41
Liv also maintained the position as the second largest player in
Change in assumptions –72 the total market (i.e. including traditional life), with a market
Financial effects of short-term share of 18 per cent. Total premium income was SEK 21.3bn
market fluctuations 528 1,651 –68 (22.0). The business transferred from Salus contributed with a
Total result 3,586 3,864 –7 premium income of about SEK 3.1bn. Operating profit increased
by 62 per cent.
Cost/Income ratio 0.56 0.67
Business equity, SEKbn 7.0 7.2
In Denmark, SEB Pension increased total sales by 62 per
return on equity, % cent compared with last year. Sale of unit-linked rose by 85 per
based on operating profit 18.5 11.4 cent and now comprise 59 per cent (52) of all sales. Corporate
based on business result 39.3 27.0
number of full time equivalents, average 1,051 1,089

Sales volume Operating profit

SEKbn SEKm
50 1,500
Strongly increased operating profit and business result
High inflows of premiums, strong market trends and growing 1,250
40
corporate pension volumes contributed to the improved operat-
ing profit of SEK 1,470m (933), up by 58 per cent. 1,000
30
Total operating income rose by 16 per cent, to SEK 3,337m
(2,866). The increase for the unit-linked business was 26 per cent 750

compared with last year. 20

Total operating expenses were SEK 1,867m (1,933), a decrease 500

of 3 per cent. The effects from SEB Way as a means for establish- 10
250
ing a lower long-term cost base are materialising. Volume-related
sales bonuses were somewhat higher due to improved sales of
0 0
occupational pension products compared with last year. Integra-
2002 2003 20041) 2005 2006 2002 2003 20041) 2005 2006
tion synergies related to IT-operations in Denmark contributed to
lower expenses. The gradual decrease in the number of employ- 1) Including SEB pension from Q4
ees led to lower staff costs during the second half of the year.

36 SEB annual rEport 2006

 Report of the Directors

Volumes Unit-linked insurance in Sweden, new business

2006 2005 Per cent
Sales volume (weighted), SEKm
Traditional life and sickness/health insurance 6,914 5,510 SEB Trygg Liv 29.1 (32.6)
Unit-linked insurance 38,927 38,914 Skandia 15.6 (18.8)
Swedbank 11.2 (11.0)
Total 45,841 44,424
Folksam 7.9 (6.8)
Premium income (SEKm) Länsförsäkringar 7.3 (5.9)
Traditional life and sickness/health insurance 7,715 7,755 SHB 7.7 (8.0)
Unit-linked insurance 22,706 22,431 Danica 5.3 (4.2)
Total 30,421 30,186 Other 15.9 (12.7)

Assets under management (net assets), SEK bn Source: The Swedish Insurance Federation statistics
Traditional life and sickness/health insurance 274.8 271.5
Unit-linked insurance 119.2 95.6
Total 394.0 367.1

Sales margin, excluding SEB Pension

SEKm 2006 2005
pension is the main growth area representing 77 per cent (68) of Sales volumes weighted
(regular + single/10) 3,345 3,678
total sales. Operating profit increased by 45 per cent and was
related both to traditional business and unit-linked. Present value of new sales
The operations outside Sweden and Denmark increased the (8% disount rate1)) 1,788 1,924
Selling expenses –970 –1,116
operating profit by 19 per cent, excluding the positive effects of
Profit – new business 818 808
SEK 30m from the divestment of the UK subsidiary in September.
The forming of a UK branch for the Swedish business transferred Sales margin, per cent 24.5 22.0
from the UK subsidiary will further strengthen SEB Life (Ireland)
which now has total unit-linked funds of SEK 13.8bn in total.
New business margin excluding SEB Pension was 24.5 per
cent compared with 22.0 per cent last year. Traditional life insurance in Sweden
As per 31 December 2006 Gamla Liv Nya Liv
Traditional life insurance in Sweden Assets under management, net assets, SEKm 182,725 8,137
In Sweden, traditional life insurance is conducted in two mutu- Result for the period, SEKm 17,512 289
ally operated companies, whose results are not consolidated Premium income, SEKm 2,219 621
with SEB Trygg Liv. This means that the policyholders are carry- Collective consolidation ratio1),
ing the result and investment risk. retrospective reserve, % 122 100
Bonus rate, % 7 3
The total return for Gamla Livförsäkringsaktiebolaget was
Solvency ratio2), % 207 113
11.1 per cent and the collective consolidation ratio 122 per cent.
Capital base, SEKm 94,556 954
For Nya Livförsäkringsaktiebolaget the total return was 0.7 per Required solvency margin, SEKm 3,659 360
cent and the collective consolidation ratio 100 per cent. For more Solvency quota3) 25.8 2.7
facts concerning these companies, see Additional Information at Total return, % 11.1 0.7
www.sebgroup.com. Share of equities/equities exposure,% 43 12
Share of fixed income, % 45 88
Restructuring of Nya Liv Share of real estate, % 12 0
The Board of Nya Livförsäkringsaktiebolaget SEB Trygg Liv has 1) The collective consolidation ratio shows the company’s assets in relation to its commitments
decided to propose to the policyholders of Nya Liv that the com- to policyholders. The commitments include both guaranteed and non-guaranteed values.
2) The company’s net assets (including equity and subordinated debts) in relation to the
pany will merge with the unit-linked company Fondförsäkring- guaranteed commitments in the form of technical provisions.
saktiebolaget SEB Trygg Liv. The unit-linked company has 3) Quota capital base/required solvency margin.

accepted the merger. It has sufficient capital resources to absorb

Nya Liv as a separate portfolio with unchanged guarantee levels
to the policyholders. It is also the ambition to offer a right to
transfer policies, provided change in regulation. The merger is
subject to the policyholders not voting against the proposal. SEB
has decided to support the merger.

N.B. The tax rate for the division is set at 12 per cent in order to
reflect the actual tax rate for the business.

SEB ANNUAL REPORT 2006 37

Report of the Directors

Risk and Capital Management

In providing its customers with financial solutions and products
SEB assumes various risks that must be managed. The Group’s
profitability is directly dependent on its ability to evaluate, man-
age and price these risks, while maintaining an adequate capital-
isation to meet unforeseen events.
As a consequence, risk management is always a prioritised
area for the Group, continuously under development. Board
supervision, an explicit decision-making structure with a high
level of risk awareness among the staff, common definitions and
principles, controlled risk-taking within decided limits and a
high degree of transparency in external disclosures are the cor-
nerstones of the Group’s risk and capital management. To secure
the Group’s financial stability, risk and capital related issues are
identified, monitored and managed early on. This is an integral
part of the long-term strategic planning and operational busi-
ness planning processes performed in all parts of the Group.
Like most banks, SEB views the macro economic environ-
ment as the major driver of risk to the Group’s earnings and
financial stability. The various risk types described in this chap-
ter are also affected by economic events, to a greater or lesser
degree. SEB uses scenario stress testing to assess the effect of the
economy moving into a less benign state and applies conserva-
tive risk parameters in its estimation of capital needs.
2006 highlights
During 2006, the main focus has been the alignment and docu-
mentation of business processes, risk methods and stress scenar-
understanding. The Group’s financial steering model is largely
built on the same concepts as the new capital adequacy rules,
which limits the impact on customers and market offerings.
SEB analyses the capital effects of Basel II by regularly
assessing risk-weighted asset (RWA) levels under the new
framework and by continuously observing national regulatory
developments. The quality of the Group’s credit portfolio and
the internal risk management culture translate into substantial
RWA reductions for the Group – however limited by supervisory
floors during the first years of the regime. This cannot be equat-
ed to a similar capital release though, due to the framework’s
increased business cycle sensitivity, to supervisory evaluation
and to rating agency considerations. Careful capital manage-
ment will be necessary during the transition period:
Managing the transition period
Basel I Transition period Basel II
Long term
Basel I I
capital level
Buffer
Capital Requirement

io definitions to support the Group’s applications to use the

advanced approaches for reporting of credit and operational risk
under Basel II. Building on the strengths of its economic capital
concept refined over the last decade, SEB is now ready to benefit
from the new regulatory framework.
During 2006 the Swedish FSA has implemented a “Traffic 2006 2007 2008 2009 2010 2011

Light System” as a tool in the supervision of life insurance com-

panies. The tool does not single out any of SEB’s insurance com- Basel I capital

panies for “red light”, but over a longer time perspective the
increased focus on insurance asset liability risk could lead to a
re-balancing of assets on the Swedish insurance market.
From 1 July 2006 new Swedish legislation is in force concern-
ing combined banking and insurance groups (“financial con-
glomerates”). SEB is classified by the Swedish FSA as a financial
conglomerate due to its significant banking and insurance oper-
ations. The Group meets the extra layer of requirements as con-
cerns risk control, capital strength, etc. introduced by the new
legislation.
Basel II going live
EU and national authorities are now implementing the Basel II
capital adequacy rules; in Sweden the new regime is in effect
from 1 February 2007. SEB received a positive ruling on 19
December 2006 to use the Internal Ratings Based (IRB) approach
for reporting of banking, corporate and household mortgage
portfolios in Sweden and Germany. This corresponds to more
than 70 per cent of the total credit volume.
Regarding operational risk, SEB plans to use the advanced
approach as it gets available from 2008.
For Basel II implementation, the Group has been using a
decentralised project approach to ensure local commitment and
Basel II pillar 1 capital
Transitional capital level
SEB is also preparing itself for review by the supervisory author-
ities of the capital assessment process as described within Basel
II’s second pillar. During the second half of 2006, the Swedish
FSA – on a pilot basis – conducted such a review, and concluded
SEB’s methodology and process to be satisfactory.
Risk organisation and responsibility
The Corporate Governance chapter on page 45 ff describes the
risk organisation and responsibilities, and the roles of the Risk
and Capital Committee of the Board, the Group Asset & Liability
Committee, the Group Credit Committee and the Group Risk
Control function. SEB’s Risk Policy and Capital Policy form the
foundations for the Group’s risk and capital management as
­further described below.

38 SEB annual report 2006

 Report of the Directors

Risk, risk management and risk control
SEB defines risk as the possibility of a negative deviation from an
expected financial outcome. For overall risk quantification purposes
SEB’s Economic Capital framework establishes a uniform meas-
ure, as further described below.
Risk management includes all activities relating to risk-taking,
i.e. the processes and systems that the Group has at its disposal
in order to identify, measure, analyse, monitor and report
defined risks at an early stage. Internal control processes, which
consist of rules, systems and routines including follow-up of
compliance therewith, ensure that the business is carried out in
efficient and controlled forms.
Risk control comprises all activities involving measuring,
reporting and following up of risks, independently from the
risk-taking functions.
SEB’s total credit exposure, including contingent liabilities and
derivatives contracts but excluding bonds and repos, amounted
to SEK 1,315bn (1,328), of which loans and leasing amounted to
SEK 937bn (930). The strengthening of the Swedish krona, par-
ticularly against the U.S. dollar, affected volumes in SEK down-
wards. Credit volume growth was mainly related to Swedish
households and to all sectors in the Baltic banks. Public sector
and bank volumes decreased which explains the lower share of
credit exposure in the best risk classes (risk class 1–4). Risk class
migration (upgrades and downgrades) has had no signifigant
effect on the average risk class of the credit portfolio. Credit
quality remained strong in the Nordic and Baltic operations and
improvement has been noted in the German operations.

Credit risk
Credit exposure – by category
In total SEK 1,315bn
Credit risk is the risk of loss due to the failure of an obligor
to fulfil its obligations towards SEB.
Corporates 35% (34)
Households 28% (24)
The definition also encompasses counterparty risk in the trading Banks 13% (15)
operations, country risk and settlement risk. SEB also gives spe- Property management 13% (13)
cial attention to the concentration of credit risk in sectors and to Public sector 11% (14)
individual obligors.
Credit risk refers to all claims on companies, banks, public For details about Credit exposure see note 44.
institutions and private individuals. The exposures consist main-
ly of loans, but also of contingent liabilities such as credit com-
mitments, letters of credit, guarantees and counterparty risks
arising in derivatives and foreign exchange contracts.
The credit policy of the Group is founded on the principle Credit portfolio – geographical distribution
that all lending shall be based on credit analysis and be propor- In total SEK 1,315bn
tionate to the repayment capacity of the customer. The customer Sweden 41% (41)

shall be known to the Group in order to evaluate both capacity Germany 27% (31)

and character. Depending upon the customer’s creditworthiness Rest of the world 13% (13)
Rest of the
and the nature and complexity of the transaction, collateral and Nordic Countries 8% (7)
netting agreements are used to a varying extent. The Baltic 10% (7)
All counterparties (excluding private individuals) on whom Emerging markets 1% (1)
the Group has credit exposure are assigned an internal risk class
that reflects the risk of default on payment obligations. The risk
classification scale has 16 classes, with 1 being the best possible
risk and 16 being the default class. Risk classes 1–7 are consid-
ered “investment grade”, while classes 13–16 are classified as Credit exposure1), Emerging markets
“watch list”. SEB uses the risk classes when deciding on credit SEKbn 31 Dec 2006 31 Dec 2005
limits and in monitoring and managing the credit portfolio Asia 8.2 9.4
In order to manage the credit risk on each individual cus- Hong Kong 2.1 2.7
tomer or group of customers a total limit is decided. The limit Korea 1.0 1.3
China 3.0 3.0
represents the maximum exposure that the Group accepts, given
Latin America 1.4 1.7
the customer’s financial status and existing business relations.
Brazil 0.8 0.9
Limits are also established for the total exposure on various
Eastern and Central Europe 5.2 4.7
countries and for settlement risks in trading operations. russia 2.6 2.9
All total limits and risk classes are subject to a minimum of Africa and Middle East 4.0 4.2
one review annually by a credit approval authority. High-risk uaE 0.8 0.1
engagements (risk classes 13–16) are subject to more frequent Iran 0.5 1.4
reviews in order to identify potential problems at an early stage, turkey 0.6 0.7
thereby increasing the chances of finding constructive solutions. Saudi arabia 0.6 0.5
Total – gross 18.8 20.0

Credit portfolio monitoring reserve 0.3 0.4

The aggregate credit portfolio is reviewed regularly, e.g. by Total – net 18.5 19.6
industry, geography, risk class, product type, size etc. In addition, 1) Exposure on the domestic market for the Baltic
specific analyses and stress tests are made when market develop- subsidiary banks has been excluded from the table
ments require a more careful examination of certain sectors.

SEB annual rEport 2006 39

Report of the Directors

Impaired loans and reserves1), SEKm Credit exposure – by risk class, excl. households
31 Dec 2006 31 Dec 2005 In total SEK 941bn
non-performing, gross 7,123 7,957
performing, gross 1,403 1,144 Risk class 1–4 39% (43)
Impaired loans, gross 8,526 9,101 Risk class 5–7 16% (13)
Risk class 8–10 37% (36)
Specific reserves 4,234 4,787
Risk class 11–12 6% (6)
Collective reserves 2,170 2,283
off-balance sheet reserves 215 268 Risk class 13–16 2% (2)

Total reserves 6,619 7,338

Impaired loans, net 2,122 2,031

Reserve ratio, % 75.1 77.7

Probability of default for SEB risk classes
Specific reserve ratio, % 49.7 52.6

Level of impaired loans, % 0.22 0.22 risk classes lower pD upper pD

1) For further information see note 44. Investment grade 1–4 0.00% 0.08%
5–7 0.08% 0.32%
a loan is classified as impaired when it is probable that the contractual pay- normal business 8–10 0.32% 1.61%
ments will not be fulfilled. Each loan specifically provided for is included in 11–12 1.61% 5.16%
impaired loans with its full amount i.e. even the portion covered by collateral. Watch list 13–16 5.16% 100.00%

3. Loss in the event of a default (LGD). Evaluation of how

much the Group could lose of an outstanding claim in case
Credit loss level
per cent of default, considering collateral provided etc. Evaluations
0.4
are based upon internal and external historical experience
and the specific details of the relevant transaction.

0.3 These components are combined and used in a portfolio model.

Calculations are made both at divisional and Group level, taking
0.2
into account industry and geographic diversification when the
credit risks are aggregated. The model is validated with the help
Germany of studies of actual outcome within selected parts of the portfo-
0.1
The Baltic region lio as regards probability of default and loss in the event of a
The Nordic region
default. SEB regularly reviews parameters and estimates to
0 ensure that the model remains valid for changing portfolios and
SEB Group
2004 2005 2006 economic circumstances.

Credit risk quantification
The economic capital framework represents yet another dimen-
sion for follow-up of the portfolio. The methodology is based
upon the following three components, aligned with the Basel II
framework for credit risk:
1. Probability of default (PD). For each class in the risk classifi-
cation scale SEB estimates a one year probability of payment
default, using nine years internal history of defaults. SEB’s
PD estimates are estimated “through the cycle” meaning that
today they include an upward adjustment to allow for a
worse economic climate in the future. The estimates are also
aligned against the scales of international rating agencies
and their published default frequencies.
For private individuals a scoring method is used to assign
loans to pools of similar transaction type and sharing similar
likelihood of default. Conservatively adjusted historical
default data are then used to estimate the one year “through
the cycle” default rate for each pool.
2. Size of exposure in the event of a default (EAD). Exposure is
measured both in nominal terms (e.g. in the case of loans, leas-
ing, letters of credit and guarantees) and through estimated
market values, plus an increase for possibly increased expo-
sure in the future (derivatives and foreign exchange contracts).
Market risk
Market risk is the risk of loss or reduction of future net
income following changes in interest rates, foreign exchange
and equity prices, including price risk in connection with
the sale of assets or closing of positions.
The Group Asset and Liability Committee allocates the market
risk mandate set by the Board to each division which, in turn,
allocates the limits obtained among its business units.
SEB makes a clear separation between market risks in the
trading book and in the banking book. Market risks in the trad-
ing book arise from the Group’s role as a market maker for trad-
ing in the international foreign exchange, money and capital mar-
kets following transactions with customers and other profession-
al market participants. The risks are managed at the different
trading locations within a comprehensive set of limits in VaR,
stop-loss and delta-1 terms, with a supplementary limit structure
for non-linear risks. The risks are consolidated each day on a
Group-wide basis by Risk Control for reporting to executive
management. Risk Control is present in the trading room and
monitors limit compliance and market prices at closing, as well
as valuation standards and the introduction of new products.

40 SEB annual rEport 2006

 Report of the Directors

Market risks in the banking book arise because of mismatches in The following graph displays daily trading result during the
currencies, interest rate terms and periods in the balance sheet. year. SEB uses this data to backtest the accuracy of the risk mod-
Group Treasury has the overall responsibility for managing el, verifying that actual loss has not exceeded the VaR level sig-
these risks which are consolidated centrally through the internal nificantly more than one per cent of the trading days.
funds transfer pricing system. Small market risk mandates are
granted to subsidiaries where cost-efficient, in which case Group
Treasury is represented on the local Asset and Liability Commit- Distribution of daily trading result
tee for co-ordination and information sharing. The centralised No of days
operations create a cost-efficient matching of liquidity and inter- 20
est rate risk in all non-trading related business. 18
The Group uses a Value at Risk (VaR) method to measure its 16
overall market risk. This statistical method expresses the maxi- 14
mum potential loss that can arise with a certain degree of proba- 12
bility during a certain period of time. For day-to-day risk man- 10
agement SEB has chosen a probability level of 99 per cent and a 8
ten-day time horizon. SEB holds a supervisory approval to use 6
its internal VaR model for calculating capital requirements for 4
the majority of the Bank’s trading book market risks. 2
The following table summarises ten-day trading book VaR 0
for SEB during the year. The large spreads between the mini- –30 –25 –20 –15 –10 –5 0 5 10 15 20 25 30 35
mum and maximum VaR-values during 2006 were due to turbu-
lent equity markets from May to September. For short periods Profit and loss, SEKm

SEB also undertook higher equity positions to meet customer

demand. Except for these deals, positions have been fairly con-
stant during the year and the VaR figure has mainly been driven The use of VaR is supplemented with measures of interest rate
by market volatilities, which have been at historically low levels. sensitivity, foreign exchange exposure and option activities. Sce-
nario analyses and stress tests are made on a regular basis. For
example, existing positions are analysed in historical or potential
31 Dec Average Average market crisis scenarios and risk levels in the portfolio are
SEKm Min Max 2006 2006 2005 assessed without diversification effects.
Interest risk 30 117 62 63 47
Currency risk 5 85 12 30 34 Analysis of net interest income
Equity risk 9 290 33 48 24
Net interest income (NII) is exposed to external factors such as
Diversification –42 –45 –41
yield curve movements and competitive pressure. The NII risk
Total 54 283 65 96 64
depends on the overall business profile, especially mismatches
between interest-bearing assets and liabilities as regards volumes
and repricing periods. The NII is also exposed to a “floor” risk.
The following chart shows VaR development over recent years. Asymmetries in pricing of products (deposit rates cannot really go
below zero) create a margin squeeze in times of low interest rates,
making it relevant to analyse both “up” and “down” changes.
VaR levels vs. trading flows The Group measures the NII risk as the potential change in
income, over a pre-defined period, from a standardised shift in
140 7
the yield curve. The NII risk should be kept within the limit set
120 6
by the Group ALCO. As per year end, the one-year effect of a
one per cent “up” scenario was SEK -551m (-805), and SEK +488
100 5 (+715) for an equal-size “down” scenario.
Further information on interest rate sensitivity can be found
80 4
through Note 43 which exposes repricing periods for the Group’s
60 3
assets and liabilities. Monitoring and management of the NII risk
gives a performance-oriented view and supplements the value-
40 2 based perspective given e.g. by the VaR measure described above.
Average Value at Risk
20 1 10 days, SEKm
Foreign exchange risk
Average Value at Risk Foreign exchange risk arises both through the Bank’s foreign
0 0
divided by Net Financial
2000 2001 2002 2003 2004 2005 2006 Income, per cent exchange trading in international market places and because the
Group’s activities are carried out in various currencies. Within the
limit set by Group ALCO, Group Treasury manages the structural
foreign exchange positions that arise on the balance sheet of the
The chart also illustrates that SEB has been able to service grow- Group. Examples are equity investments in subsidiaries outside
ing customer trading flows without a corresponding increase in Sweden when the corresponding financing is not made in the cur-
the risk level. rency of the share capital; and the translation risk of accrued
income in foreign currencies.

SEB ANNUAL REPORT 2006 41

Report of the Directors
Equity price risk
Equity price risk arises within market making and trading in
equities and related instruments. VaR is the most important risk
and limit measurement for equity risks. In addition, equity risk
measurements defined by the Swedish capital adequacy rules
are used both for limits and follow-up.
Insurance risk
The value contribution from life insurance operations is ana-
lysed in terms of surplus values (see note 51) – i.e. the present
value of future net income on previously written insurance.
Life insurance surplus value risk is the risk of a loss due
to the fact that estimated surplus values cannot be realised
due to slower than expected asset growth, cancellations or
unfavourable price/cost development.
Furthermore, life insurance operations are exposed to the risk of
shifts in mortality rates. Lower rates lead to more long-term pen-
sion commitments, whereas higher rates result in higher death
claims.
The surplus value risk level is closely associated with the
aggregate savings volume. The following chart shows the risk
components:
Components of life insurance surplus value risk in SEB
per cent
Asset growth risk 40 (38)
Expense risk 25 (28)
Persistency risk 19 (21)
Mortality risk 7 (6)
New Business risk 5 (4)
Morbidity risk 4 (3)
Guaranteed-benefit life insurance portfolios give rise to a mis-
match risk between assets and insurance liabilities.
Life insurance asset liability risk is the risk that growth in
assets held to secure future payments is insufficient to meet
policyholder claims.
The insurance asset liability risk is negligible in unit-linked port-
folios, while it is more pronounced in SEB Pension’s operations.
The Swedish FSA has from 2006 implemented a “Traffic Light
System”, focussing on the mismatch risk between assets and lia-
bilities. A similar system has been in use in Denmark for several
years, thus affecting SEB’s Danish operations. These systems con-
stitute supervisory tools to identify insurance companies where a
closer analysis of assets versus liabilities is needed. All SEB’s
Swedish and Danish companies show green light, using the
supervisory-defined measures for life insurance companies.
The surplus values and the financial risks regularly reported
by the division form the basis of risk measurement. Life insur-
ance risks are controlled with the help of so-called actuarial anal-
ysis and stress tests of the existing insurance portfolio. Mortality
and morbidity risks are reinsured against large individual claims
or against several claims caused by the same event. The risks in
42 SEB annual rEport 2006
guaranteed-benefit products are mitigated through standard
market-risk techniques and monitored through scenario analysis.
The Group also operates, on a run-off basis, a reinsurance
non-life business with a limited risk to SEB’s shareholders.
Operational risk
Operational risk is the risk of loss due to external events
(natural disasters, external crime, etc) or internal factors
(e.g. breakdown of IT systems, mistakes, fraud, non-compli-
ance with external and internal rules, other deficiencies in
internal controls).
SEB has developed several Group-wide techniques to identify,
analyse, report and mitigate operational risk. Key indicators
serve as early warning signals about changes in risk level and
business efficiency. The divisions perform self-assessment of the
operational risk on a regular basis as well as on new or changed
products, processes or services.
Operational risks include legal risks, which the Group
strives to reduce, e.g. when establishing the terms and condi-
tions that apply to various products and services.
During 2006 SEB has implemented an IT-based infrastruc-
ture for management of operational risk, security and compli-
ance. The system enables all staff in the Group to register risk-
related issues and management at all levels are able to assess,
monitor and mitigate risks and compile prompt and timely
reports. This facilitates management of risk exposures and mini-
mises the severity of incidents in progress. The implementation
was made as a part of the Basel II project for operational risk.
The system also provides input to SEB’s model for calculat-
ing the capital requirement under the Advanced Measurement
Approaches (as detailed in SEB’s February 2007 application to
use the model for regulatory reporting). This model, which is
used also for economic capital, is based on internal data and on
operational losses of a considerable size that have actually
occurred in the global financial sector. The quality of the risk
management of the divisions, based upon their self-assessment,
is taken into account. Effective operational risk management
results in a lower allocation of capital.
Business and strategic risk
Business risk is the risk of lower revenues due to an
unexpected shortfall in normal income usually caused
by reduced volumes, prices pressure or competition.
SEB measures business risk as the variability in income and cost
that is not directly attributable to other types of risk. Business
risk also includes reputational risk, the risk that revenues drop
due to external rumours about either SEB or the industry in gen-
eral. A specific case of business risk is venture risk related to
undertakings such as acquisitions, large IT projects etc.
Furthermore, SEB defines strategic risk as the risk of loss
due to adverse business decisions, improper implementation of
decisions, or lack of responsiveness to political, regulatory and
industry changes. Being close in nature to business risk, this risk
type focuses on large-scale, structural risk factors.

Liquidity risk and financing
Liquidity risk is defined as the risk of a loss or substantially
higher costs than calculated due to SEB Group being forced
to make business changes or borrow at unfavourable rates
in order to meet its payment commitments on time.
The Group maintains sufficient liquidity to meet current pay-
ment obligations while keeping extra capacity for unforeseen
events. Deposits from households and corporate customers con-
stitute the most important funding source of the Group. Further-
more, the Group has access to the international money and capi-
tal markets for financing over a range of maturities. In order to
reduce the liquidity risk, the Group has diversified its financing
by using various instruments and currencies, and by tapping
several geographical areas. As a complement, payment capacity
is ensured through the holding of a sufficiently large volume of
liquid assets, e.g. in the form of bonds that can be pledged in the
central banks and thus transformed into liquid funds with
immediate effect.
Liquidity is measured and reported using techniques such
as short-term pledging capacity, analysis of future cash flows,
scenario analyses and key ratios within the balance sheet. The
Group uses liquidity limits for its operational control.
By setting targets for its short-, medium- and long-term bor-
rowing in relation to its lending, the Group creates balance sheet
stability. Liabilities due within three months should be fully fund-
ed with assets that are available within the same time horizon. The
relation between stable liabilities (including equity) and illiquid
assets should always be above 70 per cent; the average level dur-
ing the year was 100 per cent. Liquidity management also includes
a contingency plan, to ensure that even very strained liquidity situ-
ations can be handled in a satisfactory manner.
The Group’s presence in the international markets via its own
international network is an important part of the contingency plan.
SEB risk taxonomy
regulatory capital Economic capital
Credit risk
Credit concentration risk
Counterparty risk
Trading market risk Non-trading market risk
Operational risk Business risk
Life insurance
liability risk Life insurance
Non-life surplus value risk
insurance risk
Report of the Directors
Asset and liability management
The Group’s Treasury function is responsible for analysis and
management of the balance sheet of the Group. This includes the
following:
■ Management of the structural interest and foreign exchange
risks
■ Cost-effective funding of balance sheet assets, including an
on-going analysis of net interest income earned
■ Analysis, measurement and planning to ensure Group
liquidity
■ Capital management, including supporting analysis and
long-term planning.
Economic capital – CAR
Good risk management notwithstanding, the Group must keep
capital buffers against unexpected losses. The regulatory capital
requirements serve as one measure of the necessary capital buffer
to meet these risks. Requiring a more precise and risk-sensitive
measure for internal capital assessment and performance evalua-
tion, SEB has implemented an economic capital framework.
This framework assesses how much capital is needed to car-
ry out various business activities. The greater the risk – granted
that all business is pursued within strong internal control proce-
dures – the larger risk buffer is needed. SEB calls this capital
need Economic Capital and bases it on a Capital at Risk (CAR)
model.
Average and reasonably expected losses are regarded as an
operational expense. The estimation of risk capital requirements
is focused on unexpected losses. The quantification is based on
statistical probability calculations for various types of risk on the
basis of historical data and a probability level of 99.97 per cent,
representing the capital requirements for a AA-rating.
Due to diversification effects when aggregating risks across
divisions, the Group’s total capital requirement becomes consid-
erably lower than if the divisions were independent legal units.
The Group’s total economic capital was SEK 52.8bn (53.2) at the
end of 2006. Increases due to expanding business volumes
Capital assessment Group-wide
risk management
Liquidity risk
Strategic risk
Reputational risk
Event risk
Macro
economic risk
SEB annual rEport 2006 43
Report of the Directors

during the year were countered by using lower estimates for credit
risk drivers, made available through the Basel II programme.
The following table shows the size of the risk components at
the end of 2006 and the diversification effect.
Risk type
Credit risk
Market risk
Insurance risk
Operational risk
Business risk
Diversification
Total economic capital
Risk-based management and performance evaluation
Allocation of capital to divisions is an integral part of the regular
planning process. The analysis is based upon planned business
volumes. Profitability is measured by relating reported result to
allocated capital, which makes it possible to compare the risk-
adjusted return of the Group and its divisions. Risk-adjusted
measurements are also used as a basis for pricing certain trans-
actions and services.
The following diagram shows the composition of the eco-
nomic capital and thus the risk profile of each division.
Capital assessment process
The Group’s capital policy defines how capital management
should support the business goals. Shareholders’ return require-
ments shall be balanced against the capital requirements of the
regulators, the expectations of debt investors and other counter-
parties as regards SEB’s rating, and the economic capital that
SEKm represents the total risk of the Group. Scenario stress testing is
42,300 used to assess an extra safety margin over and above the formal
3,000 capital model requirements – covering e.g. the potential of a
14,800 sharp decline in the macro-economic environment.
3,500
The Chief Financial Officer is responsible for the process,
7,100
linked to overall business planning, to assess capital require-
–17,900
ments in relation to the Group’s risk profile, and to propose a
52,800
strategy for maintaining the capital levels. Together with contin-
uous monitoring, and reporting of the capital adequacy to the
RCC and the Board, this ensures that the relationships between
shareholders’ equity, economic capital, regulatory and rating
based requirements are managed so that SEB does not jeopardise
the profitability of the business and the financial strength of the
Group.
Capital is managed centrally, meeting also local require-
ments as regards statutory capital. Dividends, securitisation,
credit derivatives, investments, new issues, repurchases etc., are
important measures that affect the capital level and relevant
ratios. The alternatives are regularly evaluated under various
scenarios and form the basis for Group ALCO recommendations
to the Board.

Risk composition by division

Per cent
100

80

60
Business risk

40 Operational risk

Insurance risk
20
Market risk
0 Credit risk
MB NRPB GRMB EEB AM Trygg SEB
Liv

44 SEB ANNUAL REPORT 2006


Corporate Governance within SEB
Swedish Code of Corporate Governance
SEB applies the Swedish Code of Corporate Governance
(Bolagsstyrningskoden), effective from 1 July 2005. No devia-
tions have been made from the provisions of the Code.
The Corporate Governance Report has not been reviewed
by the auditors.
Clear distribution of responsibilities
The ability to maintain confidence among customers (e.g. depo-
sitors and lenders), shareholders and others is of vital impor-
tance for SEB. An essential factor in this context is a clear and
effective structure for responsibility distribution and govern-
ance, thus avoiding e.g. conflicts of interest. SEB attaches great
importance to the creation of clearly defined roles for officers
and decision-making bodies within credit-granting, corporate
finance activities, asset management and insurance operations,
for example.
The structure of responsibility distribution and governance
comprises:
■ The Annual General Meeting
■ The Board of Directors
■ The President
■ The divisions, business areas and business units
■ Staff and Support functions
■ Internal Audit, Compliance and Risk Control.
The Board of Directors and the President perform their govern-
ing and controlling roles through several policies and instruc-
tions, the purpose of which is to clearly define the distribution of
responsibility. The Group’s credit instruction, instruction for the
handling of conflicts of interest, ethics policy, risk policy, instruc-
Corporate Governance Structure
Board of Directors
Risk & Capital Remuneration & HR
Committee
Group Credit
Committe
Group Credit
Officer
Head of
Group Risk Control
SEB’s activities are managed, controlled and followed up in accordance with policies and instructions established by the Board and the president (CEo).
Corporate Governance
tion on measures to prevent money laundering, Code of Busi-
ness Conduct and the Corporate Social Responsibility policy are
of special importance.
Annual General Meeting
Shareholders’ influence is exercised at the Annual General Meet-
ing, which is the highest decision-making body of the Bank. All
shareholders, registered in the Shareholders’ Register and hav-
ing notified their attendance properly, have the right to partici-
pate in the Meeting and to vote for the full number of their
respective shares. A shareholder who cannot participate in the
Meeting can be represented by power of attorney.
The 2006 Annual General Meeting was held in Swedish and
simultaneously interpreted into English. The minutes from the
Meeting can be found on the Bank’s website.
SEB’s major shareholders and shareholder structure as per
31 December, 2006, appear from the tables on page 46.
Nomination Committee
According to a decision of the 2006 Annual General Meeting
(AGM) the members of the Nomination Committee for the 2007
AGM were appointed during the autumn of 2006. Four of the
Bank’s major shareholders have appointed one representative
each who, together with the Chairman of the Board, forms the
Nomination Committee. These four representatives are: Lars
Wedenborn, Investor, Chairman of the Nomination Committee,
Hans Mertzig, Trygg Foundation, Ramsay Brufer, Alecta and
Torgny Wännström, AFA Försäkring. The composition of the
Nomination Committee was announced on 28 September 2006.
The task of the committee is to prepare proposals for Chair-
man of the AGM, for the number of Board members, for remu-
Audit & Compliance
Committee Committee
Head of Group
Internal Audit
CEO
Group Executive Asset & Liability
Committee Committee
Group
Compliance Officer
Appointed by
Reporting to/informing
SEB annual rEport 2006 45
Corporate Governance

neration to the Board of Directors and the auditors, for Board

Shareholder structure members and Chairman of the Board and for the distribution of
percentage holdings of equity on 31 December 2006
the remuneration between the Board members, as well as for
committee work, to be presented at the AGM for decision. The
Swedish shareholders size and composition of the Board of Directors should be such as
Institutions and foundations 45% to serve the Bank in the best possible way. This means that the
Private individuals 15% Directors’ broad experience from, and knowledge about, the
Mutual funds 10%
financial and other sectors, their international experience and
Foreign shareholders 30%
strong network of contacts should meet the demands that the
Bank’s position and future orientation call for. The result of the
the majority of the Bank’s approximately 300,000 shareholders
internal evaluation of the Board of Directors and its members
are private individuals with small holdings.
forms part of the material used by the Nomination Committee.
Source: SIS Ägarservice
If necessary, the nomination committee will use external advisors.
The Nomination Committee has held five meetings since the
2006 AGM as well as contacts between meetings. An account for
the way in which the Nomination Committee has performed its
work is found on the website of the Bank and will be presented
The largest shareholders1) at the 2007 AGM. No special compensation has been paid to the
per cent of members of the Nomination Committee.
of which number of all
December 31, 2006 no. of shares Series C shares shares votes
Board of Directors
Investor aB 123,527,895 2,500,000 17.9 18.2
trygg-Foundation 65,677,962 0 9.6 9.9 The Board members are appointed by the shareholders at the
alecta 21,562,211 695,211 3.1 3.1 Annual General Meeting for a term of office that lasts until the next
Swedbank robur Funds 16,841,155 0 2.5 2.6 Annual General Meeting. In accordance with the Corporate Gov-
aFa Försäkring 14,350,981 875,560 2.0 2.1 ernance Code the Chairman of the Board was also appointed by
SHB/Spp Funds 13,092,556 0 2.0 2.0 the 2006 AGM for a term of office until the end of the next AGM.
SEB Funds 11,192,934 0 1.7 1.7 During 2006 the Board of Directors has consisted of ten
Wallenberg foundations 10,330,389 5,871,173 0.8 0.8
members, without any deputies, elected by the AGM and of two
nordea Funds 9,277,296 0 1.4 1.4
members and two deputies appointed by the employees. In
pioneer Investment Funds 6,865,833 0 1.0 1.0
order for the Board to form a quorum, at least half of the mem-
EB-Foundation 6,680,993 70,000 1.0 1.0
andra ap-fonden 6,497,530 0 1.0 1.0
bers must be present. The President is the only Board member
SHB 5,456,978 18,779 0.8 0.8 elected by the Annual General Meeting who is equally an SEB
Första ap-fonden 5,236,793 67,847 0.8 0.8 employee. All other Board members elected by the AGM are
tredje ap-fonden 4,700,384 0 0.7 0.7 considered to be independent in relation to the Bank and its
Foreign shareholders 203,676,048 1,713,475 29.9 31.1 Management. With the exception of Marcus Wallenberg and
1) according to the VpC-register, excluding SEB as shareholder through repurchased
Jacob Wallenberg, who are not considered to be independent in
shares to hedge employee stock option programme and for capital management. relation to the shareholder Investor AB, all Board members are
considered to be independent in relation to major owners. Inde-
Source: SIS Ägarservice pendent Board members are defined as those who have no
essential connections with the Bank, its Management or major
shareholders (holding 10 per cent or more of the shares or votes)
besides being Board members. The composition of the Board of
Directors as from the 2006 Annual General Meeting appears
Ownership concentration from the table on page 47 and information on the members is
largest owners’ share of capital and votes, per cent found on pages 126–127.
70
The Board of Directors has adopted Rules of Procedure that
regulate the role and working forms of the Board as well as spe-
60 cial instructions for the committees of the Board. The Board has
the overall responsibility for the activities carried out within the
50
Bank and the Group and thus decides on the nature, direction,
40 strategy and framework of the activities and sets the objectives
for the activities. The Board regularly follows up and evaluates
30 the operations in relation to the objectives and guidelines estab-
lished by the Board. Furthermore the Board has the responsibili-
20
ty to ensure that the activities are organised in such a way that
10 the accounts, management of funds and financial conditions in
Capital all other respects are controlled in a satisfactory manner and that
0 Votes the risks inherent in the activities are identified, defined, meas-
10 largest 25 largest 100 largest ured, monitored and controlled in accordance with external and
owners owners owners
internal rules, including the Articles of Association of the Bank.
The Board appoints and dismisses the President and his/her
Deputy as well as the Executive Vice Presidents, the Group

46 SEB annual rEport 2006

 Corporate Governance

Board of Directors as from the 2006 Annual General Meeting

risk and audit and Compensation total presence presence

Capital Compliance and Hr remuneration, Board Committee
name Elected position Committee Committee Committee SEK Meetings Meetings
Marcus Wallenberg 2002 Chairman ● ● ● 2,600,000 100% 100%

Gösta Wiking 1997 Deputy Chairman ● 880,000 100% 100%

Jacob Wallenberg 1997 Deputy Chairman 530,000 100%

penny Hughes 2000 Director ● 785,000 90% 100%

urban Jansson 1996 Director ● 895,000 100% 100%

tuve Johannesson 1997 Director ● 610,000 90% 100%

Hans-Joachim Körber 2000 Director 435,000 70%

Jesper ovesen 2004 Director ● 725,000 100% 100%

Carl Wilhelm ros 1999 Director ● 610,000 100% 100%

annika Falkengren 2006 Director, president and CEo ● – 100% 100%

ulf Jensen 1997 Director appointed by the employees – 100%

Göran lilja 2006 Director appointed by the employees – 75%

Göran arrius 2002 Deputy Director appointed by the employees – 100%

Magdalena olofsson 2003 Deputy Director appointed by the employees – 90%

● Chairman ● Deputy Chairman ● Director 8,070,000

Credit Officer, the members of the Group Executive Committee
and the Head of Group Internal Audit.
The Chairman of the Board organises and manages the work
of the Board by convening Board meetings, deciding on the
agenda and preparing the matters to be discussed at the meet-
ings, after consulting the President, among other things.
The Board members receive regular information about and,
if necessary, training in changes in rules concerning the activities
of the Bank and listed company directors’ responsibilities,
among other things. They are regularly offered the opportunity
of discussing with the Chairman of the Board, the President and
the Secretary to the Board of Directors.
The President takes part in all Board meetings except when
the work of the President is evaluated. Other members of the
Executive Management of the Bank participate whenever
required for purposes of informing the Board or upon request by
the Board or the President. The General Legal Counsel of the
Bank and the Group is the Secretary to the Board of Directors.
During 2006, ten Board meetings were held. External audit
representatives were present at three of these meetings, includ-
ing the one at which the annual accounts were adopted. The
decisions of the Board are made after open and constructive dis-
cussions. Essential matters dealt with during the year included
the following:
■ Strategic direction of Group activities (nature and scope)
■ Overall long-term goals for the activities
■ Group organisation
■ Policies and instructions, including an annual review and
revision
■ Business plans, fi nancial plans and forecasts
■ Major investments and business acquisitions/divestments
■ The Group’s risk-taking, including the development of the
credit portfolio
■ Capital and fi nancing issues, including risk limits
■ Issues concerning customer and staff satisfaction
■ Succession planning, management supply, remuneration
and other personnel matters
■ Interim reports and annual report
■ Board committee reports
■ Evaluation of the functioning of the Bank’s internal control
■ Follow-up of external and internal audit activities and the
Group’s compliance activities
■ Evaluation of the work of the Board of Directors, the Presi-
dent and the Group Executive Committee
The overall responsibility of the Board cannot be delegated.
However, the Board has established committees, pursuant to the
Board’s instructions, to handle certain defined issues and to pre-
pare such issues for decision by the Board of Directors. At
present, there are three committees within the Board of Direc-
tors: the Risk and Capital Committee, the Audit and Compliance
Committee and the Remuneration and Human Resources Com-
mittee. Minutes are kept of each committee meeting and com-
municated to the other Board members promptly after the meet-
ings. The committees report regularly to the Board of Directors.
Committee members are appointed for a period of one year at a
time. It is an important principle that as many Board members
as possible shall participate in the committee work, also as com-
mittee chairmen. Although the Chairman of the Board is a mem-
ber of all three committees, he is not chairing any of them. Nei-
ther the President nor any other officer of the Bank is a member
of the Audit and Compliance Committee or the Remuneration
and Human Resources Committee. The President is a member of
the Risk and Capital Committee. The work of the Board commit-
tees is regulated through instructions adopted by the Board.
Apart from the committee work, no work distribution is applied
by the Board.

SEB annual rEport 2006 47

Corporate Governance
Risk and Capital Committee
The Risk and Capital Committee of the Board shall support the
Board in establishing and reviewing the Bank’s organisation so
that it is managed in such a way that all risks inherent in the
Group’s activities are identified and defined and that the risks
are measured, monitored and controlled in accordance with
external and internal rules. The Committee decides the princi-
ples and parameters for measuring and allocating risk and capi-
tal within the Group. The Committee reviews and makes pro-
posals for Group policies and strategies, such as risk policy and
risk strategy, credit policy, capital policy, liquidity and pledging
policy as well as trading and investment policy, for decision by
the Board, and monitors that these policies are applied and fol-
lows up the development of the risks of the Group. The Commit-
tee prepares the Board decisions concerning limits for market
and liquidity risks.
As far as credit matters are concerned, the Committee adopts
credit policies and instructions that supplement the credit policy
and credit instruction of the Group and makes decisions on indi-
vidual credit matters (matters of major importance or of impor-
tance as to principles). In addition, the Committee reviews on a
regular basis both significant developments in the credit portfo-
lio and the credit process within the Bank and the Group. It fur-
thermore examines matters relating to operational risk, market
and liquidity risk and insurance risk.
As far as capital matters are concerned, the Committee regu-
larly reviews essential changes in the overall capital situation
and the capital adequacy situation of the Group including close-
ly monitoring the implementation of Basel II. The Committee
prepares changes in the Group’s capital goals and asset manage-
ment matters, for decision by the Board, such as dividend level
and the set-up and utilisation of repurchase programmes of own
shares. The Committee consists of four members, including the
President, and forms a quorum whenever a minimum of three
members are present, including the Chairman or Deputy Chair-
man of the Committee. During 2006 the Committee had the fol-
lowing members: Urban Jansson, Chairman, Marcus Wallenberg,
Deputy Chairman, Jesper Ovesen and Annika Falkengren. The
Group’s Chief Financial Officer is the presenter of reports in the
Committee, except for credit matters, which are presented by
the Group Credit Officer and for risk control matters, which are
presented by the Head of Group Risk Control. The Committee
has held 18 meetings during the year.
Audit and Compliance Committee
The Audit and Compliance Committee of the Board supports the
work of the Board in terms of quality control of the Bank’s finan-
cial reports. It prepares an annual report on internal control and,
if necessary, a proposal for the appointment or dismissal of the
Head of Group Internal Audit, for decision by the Board. The
Committee maintains regular contact with the external and
internal auditors of the Bank and discusses the co-ordination of
the external and internal audit. During 2006 the Committee has
met with representatives of the external auditors on several
occasions, without the President or any other member of the
Executive Management of the Bank being present. It deals with
the accounts and interim reports as well as with audit reports,
including any changes in the accounting rules. It ensures that all
remarks and observations from the auditors are attended to. The
Committee furthermore decides on guidelines for which services
other than auditing services that may be procured by the Bank
and the Group from the external auditors. It assesses the external
48 SEB annual report 2006
auditors’ work and independence and prepares proposals for
new auditors prior to the Annual General Meeting’s election of
auditor. The Committee establishes an annual audit plan for the
internal audit function co-ordinated with the external audit plan.
The Committee shall furthermore, if necessary, express its
opinion on the President’s proposal for the appointment and
dismissal of the Group Compliance Officer. The internal audit
activities and compliance activities are monitored on a continu-
ous basis.
The Committee consists of three members, none of whom is
in the employ of the Group, and forms a quorum whenever a
minimum of two members are present, including the Chairman
of the Committee. During 2006, the Audit and Compliance Com-
mittee had the following members: Gösta Wiking, Chairman,
Marcus Wallenberg, Deputy Chairman and Carl Wilhelm Ros.
The Head of Group Internal Audit and the Group Compliance
Officer are the presenters of reports in the Committee. The Audit
and Compliance Committee has held five meetings during the
year. The external auditors attended all of these meetings.
Remuneration and Human Resources Committee
The Remuneration and Human Resources Committee of the
Board prepares, for decision by the Annual General Meeting and
the Board, respectively, a proposal for remuneration principles
applicable to the President and the members of the Group Exec-
utive Committee as well as a proposal for remuneration to the
President and the Head of Group Internal Audit. The Committee
decides on issues concerning remuneration to the members of
the Group Executive Committee according to the principles
established by the Annual General Meeting. The Committee fur-
thermore prepares matters regarding incentive programmes and
pension plans, monitors the pension commitments of the Group
and monitors, together with the Risk and Capital Committee of
the Board, all measures taken to secure the pension commit-
ments of the Group including the development of the Bank’s
pension foundations. It furthermore discusses personnel matters
of strategic importance, such as succession planning for strategi-
cally important positions and other management supply issues.
The Committee consists of three members, none of whom is
in the employ of the Group. The Committee forms a quorum
whenever minimum two members are present, including the
Chairman of the Committee. During 2006, the Committee had
the following members: Penny Hughes, Chairman, Marcus Wal-
lenberg, Deputy Chairman and Tuve Johannesson. The President
presents proposals, reports and information to the Committee,
together with the Head of Group Human Resources, with
respect to matters where the President does not have an interest
that may conflict with the interests of the Bank. The Remunera-
tion and Human Resources Committee has held six meetings
during 2006.
Evaluation of the Board of Directors, the President and the
Group Executive Committee
SEB applies an annual self-assessment method, which among
other things includes a questionnaire, followed by discussions
within the Board. Through this process the activities and working
methods of the Board and each respective committee are evaluat-
ed. Among the things examined through the assessment are the
following: how to improve the work of the Board further, wheth-
er or not each individual Board member takes an active part in
the discussions of the Board and the committees; whether they
contribute independent opinions and whether the meeting

atmosphere facilitates open discussions. The outcome of the eval-
uation has been presented to, and discussed by the Board and the
Nomination Committee. The Chairman of the Board evaluates
each individual member’s work, formally once a year. Marcus
Wallenberg did not participate in the evaluation of the Chair-
man’s work, which evaluation was conducted by Gösta Wiking.
The Board evaluates the work of the President and the
Group Executive Committee on a continuous basis without
attendance by the President or any other member of the Group
Executive Committee.
The President
The Board of Directors has adopted an instruction for the Presi-
dent’s work and role. The President is responsible for the day-to-
day management of the Group’s activities in accordance with
the guidelines and established policies and instructions of the
Board. The President reports to the Board of Directors.
The President appoints the Chief Financial Officer of the
Group, Heads of divisions, Heads of branches, the Group Head
of Staff, the Group Compliance Officer, the Head of Group Risk
Control, the Chief Information Officer, Heads of the individual
staff and support functions and the members of the Manage-
ment Advisory Group. The Chief Financial Officer of the Group
is appointed in consultation with the Chairman of the Board and
the Group Compliance Officer in consultation with the Audit
and Compliance Committee of the Board.
President and Chief Executive Officer is Annika Falkengren.
More information about the President is found on page 128.
The President has three different committees at her disposal
for the purpose of managing the operations; the Group Execu-
tive Committee, the Group Credit Committee and the Asset and
Liability Committee.
In order to protect the interests of the whole Group in the
best way possible, the President consults with the Group Execu-
tive Committee (GEC) and its IT-Committee on matters of major
importance or of importance as to principles. The GEC deals
with matters of common concern to several divisions, strategic
issues, business plans, financial forecasts and reports. The GEC
has held 31 meetings during 2006. During 2006, the following
persons were members of the Group Executive Committee and
its IT Committee:
SEB’s organisation
Board of Directors
President and Internal
Chief Executive Officer Audit
Group Credits & Chief Financial
Group Risk Control Officer
Merchant Retail Wealth
Life
Banking Banking Management
Group Operations / Group IT / Group Staff
Corporate Governance
Annika Falkengren, Nils-Fredrik Nyblæus, Magnus Carlsson,
Bo Magnusson, Fredrik Boheman, Mats Kjaer, Harry Klagsbrun
(up to 15 August), Anders Mossberg, Per-Arne Blomquist (as
from 1 October) and Hans Larsson (as from 1 October).
The Group Credit Committee (GCC) is the highest credit-
granting body of the Group, with the exception of a few matters
that are reserved for the Risk and Capital Committee of the
Board, see further on page 50.
The Asset and Liability Committee (ALCO) is a Group-wide
body responsible for the long- and short-term financial stability
of the Group, see further on page 50.
There is a special forum for information exchange at Group
level, the Management Advisory Group (MAG), which consists
of senior officers representing the whole Group. The members of
MAG are appointed by the President in consultation with the
GEC.
Divisions, business areas and business units
The Board of Directors has regulated the activities of the Group in
an instruction concerning the Group’s operations and established
how the divisions of the Group, including the international activi-
ties through branches and subsidiaries, shall be managed and
organised.
SEB’s activities are as from 1 January 2007 organised in four
divisions (six divisions during 2006):
■ Merchant Banking, with Magnus Carlsson as Head, for SEB’s
relations with large and medium-sized companies, financial
institutions and real estate companies,
■ Retail Banking, with Bo Magnusson as Head, for SEB’s retail
operations and card activities,
■ Wealth Management, with Fredrik Boheman as Head, for
SEB’s mutual fund and asset management activities and
private banking and
■ Life, with Anders Mossberg as Head, for SEB’s life insurance
activities.
All Heads of division are members of the Group Executive
Committee.
Each division’s operations are divided into business areas
which, in turn, are divided into business units. The Head of divi-
sion has the overall responsibility for the activities of the divi-
sion and appoints, after consultations with the President, heads
of business areas within the division and of those subsidiaries
for which the division is responsible. Within each division there
is a management group, which includes the Head of division
and a number of heads of business areas and subsidiaries per-
taining to the division. There are management groups within the
business areas and business units, too.
A Country Manager has been appointed for the co-ordination
of activities within some of those countries outside Sweden in
which several divisions carry out activities, such as Denmark,
Norway and Finland. The Country Manager reports to a member
of the Group Executive Committee, specially appointed for the
purpose.
Staff and support functions
SEB’s staff and support functions are as from 1 January 2007
divided into three cross-divisional support functions in order to
streamline operations and front office support; Group Opera-
tions, Group IT and Group Staff. SEB has, besides IT, a number
of staff and support functions, such as Finance, Treasury, Human
Resources, Communication, Legal, Security, Marketing, Economic
SEB ANNUAL REPORT 2006 49
Corporate Governance
Research, Strategic Planning and Procurement. In SEB the staff
functions have a global functional accountability and own and
manage the SEB Group’s common instructions and policies,
processes and procedures with the aim to proactively support
the President, the Group Executive Committee, managers and
staff as well as all business units of the Group.
SEB’s organisation as from 1 January 2007 appears from the
chart on page 49.
Risk organisation and responsibility
The Board of Directors has the ultimate responsibility for the
risk organisation of the Group and for the maintenance of satis-
factory internal control. The Risk and Capital Committee of the
Board shall support the Board in this work, e.g. by reviewing the
Group’s risk, capital and liquidity policies for updates on a year-
ly basis. The Board receives a risk report at each Board meeting.
Subordinated to the Board of Directors and the President are
committees with mandates to make decisions depending upon
the type of risk. The Group Asset and Liability Committee
(ALCO), chaired by the President, deals with issues relating to
the overall risk level of the Group and the various divisions,
decides on risk limits and risk-measuring methods, capital allo-
cation etc. Within the framework of the Group Capital Policy
and the Group Risk Policy of the Board, ALCO has established
policy documents for the responsibility and management of the
risk types of the Group and for the relationship between risk
and capital. ALCO has held 14 meetings during 2006.
The Treasury Committee monitors the development of mar-
ket and liquidity risks.
The Group Credit Committee (GCC) is the highest credit-
granting body within the Bank, with the exception of a few matters
that are reserved for the Risk and Capital Committee of the Board
of Directors. GCC is furthermore responsible for reviewing the
credit-granting rules on a regular basis and for presenting propos-
als for changes to the Risk and Capital Committee of the Board, if
necessary. The President is the Chairman of the Committee and
the Group Credit Officer is its Vice Chairman. GCC has held 46
meetings during 2006.
The credit organisation is independent from the business activ-
ities. Group Credits is responsible for the administration and man-
agement of the credit approval process and for important individ-
ual credit decisions and furthermore for analysis and follow-up of
the composition of the credit portfolio as well as for the adherence
to policies established by the Risk and Capital Committee and the
Board of Directors. Its activities are regulated in the Group’s Credit
Instruction, adopted by the Board of Directors. The Group Credit
Officer is appointed by the Board and reports to the President. The
Group Credit Officer presents credit matters in the Risk and Capi-
tal Committee of the Board. The Chairman of each credit commit-
tee has the right to veto credit decisions. The credit organisation is
kept separate from the ­business units and handles credit matters
exclusively. Significant exceptions to the credit policy of the Group
must be referred to a higher level in the decision-making hierarchy.
Responsibility for day-to-day risk management in the Group
rests with the divisions (and similarly with Group Treasury).
Thus, each division and Head of division is responsible for
ensuring that the risks are managed and controlled in a satisfac-
tory way on a daily basis, within established Group guidelines.
It is a fundamental principle that all control functions shall be
independent of the business operations.
50 SEB annual report 2006
Internal audit, compliance and risk control
The Group has three control functions, which are independent
from the business operations: Internal Audit, Compliance and
Risk control.
Group Internal Audit is an independent group-wide func-
tion, directly subordinated to the Board of Directors. The main
responsibility for the Internal Audit is to evaluate risk manage-
ment, control and governance processes within the Bank, which
includes that the activities of the Group are conducted in accord-
ance with the intentions of the Board and the President. The
Head of Group Internal Audit reports regularly to the Audit and
Compliance Committee of the Board and keeps the President
and the Group Executive Committee regularly informed. The
Audit and Compliance Committee adopts an annual plan for the
work of Internal Audit.
Compliance within SEB is mainly a support function for the
business operations, entrusted with the task of identifying and
evaluating the risk that the licensed activities are not carried out
in accordance with external and internal rules. Among other
things, the Compliance officers of the Group provide advice and
actively promote compliance with the rules, engage in training in,
and inform about, prevailing and new rules and inform the man-
agement and the Board on compliance issues. In addition to the
rules concerning the licensed activities, special areas of responsi-
bility are ethics, the risk of conflicts of interest, insider issues,
Know Your Customer and measures against money laundering
and personal account dealings. The task of the Group Compliance
Officer is to assist the Board and the President on compliance mat-
ters and to co-ordinate the handling of such matters within the
Group. The Group Compliance Officer reports regularly to the
President and the Group Executive Committee and informs the
Audit and Compliance Committee of the Board about major com-
pliance events that concern the whole Group. The President
adopts an annual plan for the compliance work. During 2006 a
project was initiated to evaluate and further strengthen the com-
pliance function and organisation of the Group.
The Group’s risk control function (Group Risk Control) car-
ries out the Group level independent risk control. Group Risk
Control ensures that the risk control functions of the divisions
are of high quality, and it monitors the risks of the Group, pri-
marily credit risk, market risk, operational risk and liquidity risk
(see further on page 38). The Head of Group Risk Control is
appointed by the President and reports to the Group Credit
Officer. The Group’s ALCO is regularly informed. The Head of
Group Risk Control is the presenter of reports on risk control
matters in the Risk and Capital Committee of the Board.
The Board of Directors has adopted instructions for the internal
audit and compliance activities of the Group. The President has
adopted an instruction for the Group Risk Control activities.
Financial reporting
The quality of the financial reporting is ensured by governing doc-
uments in the form of policies and instructions for responsibility
distribution and governance adopted by the Board, such as the
Instruction for the President and Chief Executive Officer on
amongst other things financial reporting. The President adopts, in
turn, policies and instructions such as the Instruction for the Chief
Financial Officer, Group Treasury, Group Controller and Finance
and SEB’s Accounting Standard Committee (ASC). The decision
hierarchy is firmly established; Head of Group Controller and
Finance reports to the Chief Financial Officer, who in turn reports
to the President. ASC, with the Head of Group Controller and

Finance as Chairman, adopts detailed instructions for the Bank
and the Group on the financial reporting and the accounting
standards as well as guidelines on the interpretation of internal
rules regarding the financial reporting and makes sure that these
rules are observed within the Group. The Group’s functions for
Internal Audit, Group Risk Control and Compliance control and
follow the reporting, compliance with internal and external rules
and the risks inherent. The Board and its Audit and Compliance
Committee (ACC) regularly follow up and evaluates the quality
control as the annual accounts and interim reports as well as audit
reports and changes in the accounting rules are regularly handled
at the Board and ACC meetings. The Board’s report on the internal
control of the financial reporting for 2006 is found on page 54.
Information about the auditors
According to its Articles of Association the Bank shall have at least
one and not more than two auditors with at the most an equal
number of deputies. A registered accounting firm may be appoint-
ed auditor. The auditors are appointed for a period of four years.
PricewaterhouseCoopers AB has been the Bank’s auditor
since 2000 and was re-elected in 2004 for the period up to and
including the 2008 Annual General Meeting. Chief responsible
has been Peter Clemedtson, Authorised Public Accountant, as
from the 2006 Annual General Meeting. Peter Clemedtson has
auditing assignments also in the following major companies:
Electrolux, Ericsson and OMX.
In addition, Authorised Public Accountant Ulf Davéus, has
been the auditor appointed by the Financial Supervisory
Authority since the 2004 Annual General Meeting.
The fees charged by the auditors, including those expected
for the auditing of the Bank’s 2006 annual accounts and for other
assignments invoiced up to and including 31 December 2006, are
as follows:
Fees to the auditors
SEKm 2006 2005
audit assignments 49 48
other assignments 10 13
Total 59 61
Remuneration to the Board of Directors, President and other
Senior Officers
The Board of Directors
SEB’s 2006 Annual General Meeting fixed a total remuneration
amount of SEK 8,070,000 for the members of the Board to be dis-
tributed as follows: SEK 2,600,000 to the Chairman of the Board,
SEK 3,670,000 to be distributed by the Board among those other
members elected by the Annual General Meeting who are not
officers of the Bank and SEK 1,800,000 for committee work. The
remuneration amount has been distributed by the Board. A higher
amount is paid to the Chairman and the Deputy Chairmen as well
as to those members who form part of the Committees of the
Board. The Chairman of the Board has waived any fee for his com-
mittee assignments. The distribution of the directors’ remuneration
for 2006 appears from the table on page 47. The remuneration is
paid out on a running basis during the mandate period.
Following a recommendation by the Nomination Committee
for SEB, the Board of Directors has adopted a Share Ownership
Corporate Governance
Policy for the Board. The policy recommendation is that each
Board member shall use the net after tax of 25 percent of the
annual remuneration (excluding remuneration for committee
work) distributed to said Board member to acquire shares in
SEB.
The President and the Group Executive Committee
SEB’s Board of Directors has prepared proposals as to principles
for the remuneration and other terms of employment of the
President and the Group Executive Committee, which were
approved by the 2006 Annual General Meeting. According to
those principles, the Board has decided on the actual remunera-
tion to the President following a proposal from the Remunera-
tion and Human Resources Committee. The remuneration of the
President has been benchmarked towards the Swedish and inter-
national market. The Committee has also approved the remuner-
ation of the other members of the Group Executive Committee
according to the principles established by the Annual General
Meeting.
The total remuneration shall be competitive within each
market in which SEB is present. The remuneration structure is
based upon four main components: base salary, short-term
incentive compensation, long-term incentive compensation and
pension. In addition, other benefits such as a company car may
be offered.
The base salary depends on the complexity of work and the
individual’s work performance, experience and competence.
The short-term incentive compensation is based on the
achievement of certain predetermined goals, individual and
general, qualitative and quantitative, agreed in writing with the
individual. The short-term incentive compensation is set for one
year at a time. Operating result, costs and customer satisfaction
are examples of objectives used. Short-term incentive compensa-
tion shall be maximized either to a certain percentage of the base
salary or a fixed amount.
The aim of SEB’s long-term incentive compensation is to stim-
ulate the participants, whose efforts are deemed to have a direct
impact on the Bank’s result, profitability and value growth, to fur-
ther increased efforts, by aligning their long-term interests and
perspectives with those of the shareholders. The intention with
annually installed long-term incentive programmes is to create a
commitment to SEB, to strengthen the overall perspective on SEB
and to offer the participants an opportunity to take part in SEB’s
long-term success and value creation.
Long-term incentive programmes shall be share-based and per-
formance-based. The estimated value at allotment shall amount
to a maximum of 50 per cent of the annual base salary.
The pension plan may be defined benefit-based or contribu-
tion-based and shall be inviolable. SEB aims at increasing the
defined contribution-based element. The size of the pensionable
salary is capped. At termination of employment by the Bank,
severance pay of between 12 and 24 months’ salary will be paid.
The Bank has the right to make deductions from such severance
pay of any cash payments that the Executive may receive from
another employer or through his/her own business.
The Board will propose that the Annual General Meeting
2007 approves above referred principles for the time up until the
Annual General Meeting 2008.
The base salaries , the incentive compensation and other
benefits of the President and the members of the Group Execu-
tive Committee are specified in Note 9.
SEB annual rEport 2006 51
Corporate Governance

Long-term incentive programmes New programme from 2005 – Performance shares

SEB’s first long-term incentive programme was introduced in
1999, after which additional programmes have been launched
for the years 2000–2006. From 1999 to 2004, the long-term incen-
tive came in the form of an employee stock option programme.
For 2005 and 2006, performance shares were used. Information
about these programmes has been provided in the annual
reports for these years and at the Annual General Meetings since
2002. The scope of SEB’s long-term incentive programmes
appears from Note 9.
Value development and hedging arrangements
The value development of the programmes, including the exer-
cised employee stock options, reflect the positive development
of SEB’s share price over the last three years. Since the introduc-
tion of long-term incentive programmes in 1999, total sharehold-
er return, i.e. market capitalisation and paid-out dividends, has
increased by SEK 124bn, as of 31 December 2006 (see further on
page 19). The cost for the Bank has been limited due to the hedg-
ing of the value development and related social security contri-
butions through the acquisition of own shares and equity swap
contracts. The hedging arrangement offset the value of the long-
term incentive programmes in equity. The hedge of social securi-
ty contributions was dismantled during the autumn of 2006 due
to timing differences in the recognition of these effects.
The value split between the different programmes reflects
that the sensitivity to the share price of the performance share
programmes is lower than the previous employee stock options.
Cap on the 2004 programme
According to the terms and conditions for the year 2004 pro-
gramme, the value of each option for the optionholders is limit-
ed to SEK 100. The Bank shall prematurely terminate the pro-
gramme if the market price (based on the listed closing price on
the exchange) for the Class A-shares in the Bank during the exer-
cise period (2 April 2007–1 April 2011) is equal to or above the
limit of SEK 220.
For the years 2005 and 2006 the Annual General Meeting has
decided to launch long-term incentive programmes with a new
performance-based structure compared with the programmes of
previous years. The proposals were prepared by the Board and
the Remuneration and Human Resources Committee of the
Board, with the support of independent international expertise
and in consultation with a large number of SEB’s major share-
holders. The programme is designed in line with internationally
established, so-called Performance Share-programmes used by
several leading international banks.
The purpose of performance shares is that senior SEB officers
shall act as and over time become shareholders in the Bank. The
programme is performance-based, focused on equities and trans-
parent. One performance share under the programme represents
the right to purchase one Class A share at a future point in time
for the price of SEK 10. A price significantly below the prevailing
market price will still motivate the holder to perform, if the share
price falls below its present level, thereby aligning the interests of
the participants with those of the shareholders.
The outcome of the programme, that is the number of allot-
ted performance shares that can be exercised, will depend upon
fulfilment of the two predetermined performance criteria, the
real increase in earnings per share and the total shareholders
return compared to SEB’s competitors. The performance criteria
will be measured during an initial three-year qualification peri-
od. A further requirement is that the participant remains within
SEB. The programme is running for a seven-year period, includ-
ing the qualification period. To reach full outcome of perform-
ance shares under the programme, the profit of the Bank must
increase substantially during the performance period and the
total return must develop significantly better than that of SEB’s
Nordic and European competitors. The measures have been cho-
sen in order to balance absolute and relative performance. Both
performance criteria must be met before the programme can be
utilised in full.

Value split of SEB´s LTI programmes Value development

December 31, 2006, share of contribution to total For SEB´s shareholders and LTI participants, 1999–2006 programmes, SEKm
value of SEK 2,583m, 1999–2006 programmes
40,000

35,000
20061) 5%
20051) 5% 30,000
2004 21%
25,000
2003 27%
2002 18% 20,000
2001 13%
2000 9% 15,000
1999 2%
Paid out dividend and yearly
10,000
change in market capitalisation
Performance shares, 10%
5,000 Yearly change in market
Employee stock options, 90% values of LTI programmes
0
1)
2005 and 2006 performance 1)
2005 and 2006 performance
share programmes at an assumed –5,000 share programmes at 40% vesting.
1) 1)
40 per cent vesting. 20061) 5% 1999– 2002 2003 2004 2005 2006
2001
20051) 5%
2004 21%
2003 27%
2002 18%
2001 13%
2000 9%
1999 2%
52 SEB ANNUAL REPORT 2006 Performance shares, 10%

Value development for performance shares
SEB 3-year relative performance
Embedded gain after 3 years for a participant
receiving 20,000 performance Shares (SEKm)
lower Quartile Median
SEB share price +50 0 1.2
development, % +30 0 1.0
(starting price 0 0 0.8
SEK 200) –30 0 0.5
relative
< Index Index
tSr
real EpS
<2%pa 2%pa
growth
the allotment equals SEK 1.3m in fair value.
The Year 2006 Programme covers a maximum of 1,525,000 per-
formance shares allotted to about 500 senior officers. The Presi-
dent and the Group Executive Committee were allotted approxi-
mately 15 per cent of the total number of performance shares
under the 2006 long-term incentive programme. The remaining,
approximately 85 per cent, was allotted to approximately 500
other senior officers.
In order to motivate the holders to keep their performance
shares after the first day on which they can be exercised, the
holders are compensated for dividends to the shareholders after
the performance period, by recalculating the number of Class A
shares to which each performance share entitles, on an annual
basis during the exercise period after the Annual General Meet-
ing has been held each year. In addition, the Board has recom-
mended the members of the Group Executive Committee to
reach a holding in the Bank of a value that corresponds to at least
one year’s base salary, after tax. Holdings of shares as well as of
performance criteria for the 2006 programme
In order to calculate the real increase in earnings per share the
comparative number, i.e. SEB’s earnings per share is reduced
by yearly actual inflation during the three year performance
period. The measure implies a final outcome of performance
shares if the real increase of earnings per share reaches 2 per
cent per year. The outcome is then set at 10 per cent of the
maximum allotment. There is also a ceiling for the number of
shares that can be utilised. Maximum outcome (i.e. 50 per cent
of total maximum allotment) is achieved if the average yearly
real increase in earnings per share is 10 per cent.
The total shareholder return measure is determined as
the difference between the starting-point for the share price,
the average price over the last three months in 2005 and the
Corporate Governance
employee stock options/performance shares that can be exerised
may be included in this value.
Performance shares are not securities that can be sold,
hedged or transferred to another party. However, an estimated
value per performance share may be calculated, based upon the
expected outcome of the performance criteria, the price to
Superior
acquire one Class A share and upon the fact that compensation
5.8
5.0 for dividends is not payable during the performance period.
3.8 The Board has consulted independent expertise for these calcula-
2.6 tions. The estimated value of one performance share under the
Index
2006 programme amounts to SEK 65.
The cost of the 2006 programme in the profit and loss
+8%pa
or above accounts of the total value of the programme is SEK 99.1m
10%pa
(1,525,000 shares x SEK 65), to be distributed over the first three
years. If earnings per share deviate from the expected outcome
or above
during the vesting period the cost changes accordingly. This cost
does not imply any disbursement from the Bank, which means
that shareholders’ equity is not affected. In the profit and loss
accounts social security contributions will accrue, the size of
which will depend upon the difference between exercise price
and market price at the time of exercise. This difference will be
accounted for in shareholders’ equity.
If and when employee stock options/performance shares are
exercised, the Bank will deliver shares already issued, which
means that no new shares will be issued as a result of the pro-
grammes.
The scope of SEB’s long-term incentive programmes and the
number of employee stock options/performance shares allotted
to the President and the Group Executive Committee appear
from Note 9. Except for the President, no Board members have
received any allotment under any of the programmes.
The Board will propose a new performance share programme
for 2007, for decision by the 2007 Annual General Meeting,
according to the same principles as those applicable to the 2006
programme.
closing rate of the average share price over the last three
months in 2008 including dividends paid out. If the total
shareholder return equals the development in a weighted
Banking Index (60 per cent Dow Jones Nordic Banks index
and 40 per cent FTSE Eurotop300 Banks), the outcome is 10
per cent of the maximum allotment. Above that level, the
number of performance shares that can be utilised increases
until a ceiling of 8 percentage points average per annum
above the Banking Index is reached. At that level the maxi-
mum outcome according to the total share return measure is
reached (i.e. 50 per cent of total maximum allotment).
SEB annual rEport 2006 53
Corporate Governance
Board report on the internal control
of the financial reporting for 2006
This report on the internal control of the financial reporting for
the year 2006 has been prepared in accordance with the Swedish
Code of Corporate Governance. This report is part of the report
on corporate governance. It has not been reviewed by the audi-
tors of the Bank.
Organisation of the internal control of the financial reporting
Traditionally, banks have focused very strongly on risk manage-
ment and internal control. Within SEB this is reflected in well-
established risk management processes and well-developed
internal audit, compliance and risk control functions. Within
SEB, internal control of the financial reporting is defined as the
process, effected by the Board, management and other personnel,
designed to provide reasonable assurance regarding reliability of
financial reporting. The internal control can be described in
terms of control environment, risk management, control systems,
information and communication channels and follow-up rou-
tines.
Control environment
Internal control of the financial reporting is based upon the con-
trol environment and its organisation, decision channels, authori-
ties and responsibilities. In SEB, this is documented and commu-
nicated in governing internal rules such as policies and instruc-
tions. For example, this applies to the distribution of work
between the Board and the President and between the various
bodies that the Board and the President have set up as well as to
instructions regarding authority and responsibility for entities
and positions for accounting and reporting.
Risk management
Risk management within the SEB Group has for long been an area
of priority, which has been developed continuously, not least due
to the implementation of Basel II. Cornerstones of the Board’s risk
and capital management are: Board responsibility, a clear decision
order with a high degree of risk consciousness among the
employees, common definitions and principles, a controlled risk-
taking within decided limits and a high degree of transparency
in the external financial statements. A formal assesment of the
risks that may result in material misstatements in the financial
reporting is performed annually. The findings from the assess-
ment form basis for measures to improve the internal control as
well as direct follow-up routines.
54 SEB annual report 2006
Control systems
All risks relating to the financial reporting that are identified are
handled through the Group’s control systems and documented
in process and internal control descriptions. SEB has routines
and controls for the purpose of ensuring that satisfying internal
control is establised within all relevant areas and at all levels.
SEB’s Accounting Standards Committee (ASC) follows the devel-
opment within IFRS and other relevant accounting frameworks
and oversees the implementation within SEB.
Information and communication channels
The purpose of SEB’s information and communication channels
is to ensure that the financial reporting is complete and accurate.
In order to achieve this, there are governing documents in the
form of internal policies, guidelines and manuals for the finan-
cial reporting that are updated yearly and communicated to all
staff concerned.
Follow-up routines
SEB follows up compliance with internal rules, on a continuous
basis as well as the effectiveness of the control structure and the
accuracy of the financial reporting. In addition, the functions
Risk Control, Compliance and Internal audit are continuously
engaged in follow-up routines. This follow-up work furthermore
ensures that the information and communication channels of the
Bank are well adapted to the financial reporting.
The Internal Audit function of the Group reviews the internal
control of the financial reporting and works according to a plan
that is established by the Audit and Compliance Committee of
the Board. The result of Internal Audit’s reviews as well as all
measures taken and their current status are regularly reported to
the Audit and Compliance Committee.
The Board of Directors receives monthly financial reports
and the financial situation of the Group is addressed at each
Board meeting. In addition, the committees of the Board play an
important role in the follow-up work. The work of these commit-
tees is described on page 48 of the Corporate Governance Report.
Financial statements – Contents
SEB Group Page
Income statements 56
Balance sheets 57
Statement of changes in equity 58
Cash flow statements 59
Skandinaviska Enskilda Banken 34 Other liabilities 97
Income statements 60
Balance sheets 61
Statement of changes in equity 62
Cash flow statements 63
Notes to the financial statements
1 Accounting policies 64
2 Segment reporting 70
Notes to the income statements
3 Net interest income 72
4 Net fee and commission income 72
5 Net financial income 73
6 Net life insurance income 73
7 Net other income 74
8 Administrative expenses 75
9 Staff costs 75
10 Other expenses 82
11 Net deferred acquisition costs 82
12 Depreciation, amortisation and impairments
of tangible and intangible assets 82
13 Gains less losses from tangible and intangible assets 83
14 Net credit losses incl changes in value of seized assets 83
15 Appropriations 84
16 Income tax expense 84
17 Earnings per share 85
Notes to the balance sheets: Assets
18
Risk disclosures 85
19 Cash and cash balance with central banks 85
20 Loans to credit institutions 86
21 Loans to the public 86
22 Financial assets at fair value 87
23 Available-for-sale financial assets 88
24 Held-to-maturity investments 88
25 Investments in associates 88
26 Shares in subsidiaries 90
27 Tangible and intangible assets 91
28 Other assets 94
Notes to the balance sheets: Liabilities Page
29 Deposits by credit institutions 94
30 Deposits and borrowing by the public 95
31 Liabilities to policyholders 95
32 Debt securities 96
33 Financial liabilities at fair value 97
35 Provisions 98
36 Subordinated liabilities 99
37 Untaxed reserves 99
Additional information
38
Memorandum items 100
39 Current and non-current assets and liabilities 101
40 Financial assets and liabilities by class 102
41 Debt instruments by maturities 104
42 Debt instruments by issuers 105
43 Repricing periods 106
44 Loans and loan loss provisions 107
45 Derivative instruments 111
46 Fair value information 113
47 Related party disclosures 114
48 Future minimum lease payments for operational leases 114
49 Capital adequacy 115
50 Assets and liabilities distributed by main currencies 117
51 Income statements – Life insurance operations 119
52 Assets in unit-link operations 120
53 Discontinued operations/Assets held for sale 120
Five-year summary
SEB Group 121
Skandinaviska Enskilda Banken 122
SEB annual report 2006 55
Financial statements

Income statements
SEB Group

SEKm Note 2006 2005 Change, %

Interest income 66,137 54,471 21
Interest expense –51,856 –40,189 29
Net interest income 3 14,281 14,282 0
Fee and commission income 20,145 16,741 20
Fee and commission expense –3,999 –3,182 26
Net fee and commission income 4 16,146 13,559 19
Gains (losses) on financial assets and liabilities held for trading, net 4,098 3,098 32
Gains (losses) on financial assets and liabilities designated at fair value, net –62 294 –121
Net financial income 5 4,036 3,392 19
Net insurance premium revenue 5,642 5,050 12
Income investment contracts 976 702 39
Investment income net 1,507 9,066 –83
Other insurance income 383 456 –16
Net insurance expenses –5,847 –12,922 –55
Net life insurance income 6 2,661 2,352 13
Dividends 63 76 –17
Profit and loss from investments in associates 44 61 –28
Gains less losses from investment securities 1,038 272
Other operating income 478 233 105
Net other income 7 1,623 642 153
Total operating income 38,747 34,227 13

Staff costs 9 –14,363 –13,342 8

Other expenses 10 –7,798 –8,383 –7
Net deferred acquisition costs 11 507 477 6
Depreciation, amortisation and impairments of tangible and intangible assets 12 –883 –901 –2
Total operating expenses –22,537 –22,149 2

Gains less losses from tangible and intangible assets 13 70 59 19

Net credit losses incl. changes in value of seized assets 14 –718 –914 –21
Operating profit 15,562 11,223 39

Income tax expense 16 –2,939 –2,770 6

Net profit from continuing operations 12,623 8,453 49

Discontinued operations 53 –32 –100

Net profit 12,623 8,421 50

Attributable to minority interests 18 20 –10

Attributable to equity holders 12,605 8,401 50
Net profit 12,623 8,421 50

Basic earnings per share, SEK 17 18.72 12.58

Diluted earnings per share, SEK 17 18.53 12.47
Basic earnings per share from continuing operations, SEK 17 18.72 12.63
Diluted earnings per share from continuing operations, SEK 17 18.53 12.52

56 SEB annual report 2006

 Financial statements

Balance sheets
SEB Group

31, December, SEKm Note 2006 2005 Change, %

Cash and cash balances with central banks 19 11,314 27,545 –59
Loans to credit institutions 20 179,339 177,592 1
Loans to the public 21 946,643 901,261 5
Securities held for trading 340,879 286,243 19
Derivatives held for trading 65,212 115,768 –44
Derivatives used for hedging 2,660 2,998 –11
Fair value changes of hedged items in a portfolio hedge 283 2,810 –90
Financial assets – policyholders bearing the risk 120,524 96,148 25
Other financial assets designated at fair value 81,387 89,639 –9
Financial assets at fair value 22 610,945 593,606 3
Available-for-sale financial assets 23 115,482 93,265 24
Held-to-maturity investments 24 2,208 16,502 –87
Discontinued operations/Assets held for sale 53 2,189 1,405 56
Investments in associates 25 1,085 1,218 –11
Intangible assets 15,572 15,196 2
Property and equipment 2,302 3,307 –30
Investment properties 5,040 4,971 1
Tangible and intangible assets 27 22,914 23,474 –2
Current tax assets 2,568 1,637 57
Deferred tax assets 1,121 1,209 –7
Trade and client receivables 11,277 21,910 –49
Other assets 27,356 29,114 –6
Other assets 28 42,322 53,870 –21
Total assets 1,934,441 1,889,738 2

Deposits by credit institutions 29 365,980 399,494 –8

Deposits and borrowing from the public 30 641,758 570,001 13
Liabilities to policyholders – investment contracts 120,127 96,178 25
Liabilities to policyholders – insurance contracts 83,592 89,185 –6
Liabilities to policyholders 31 203,719 185,363 10
Debt securities 32 388,822 353,205 10
Trading derivatives 60,343 119,592 –50
Derivatives used for hedging 5,894 8,901 –34
Trading liabilities 84,762 72,563 17
Fair value changes of hedged items in portfolio hedge –147 718 –120
Financial liabilities at fair value 33 150,852 201,774 –25
Current tax liabilities 1,036 1,193 –13
Deferred tax liabilities 9,099 8,358 9
Trade and client payables 12,479 26,120 –52
Other liabilities 47,914 40,415 19
Other liabilities 34 70,528 76,086 –7
Provisions 35 2,066 2,816 –27
Subordinated liabilities 36 43,449 44,203 –2
Total liabilities 1,867,174 1,832,942 2

Minority interests 130 112 16

Revaluation reserves 772 1,363 –43
Share capital 6,872 6,872
Other reserves 30,207 28,882 5
Retained earnings 29,286 19,567 50
Shareholders’ equity 67,137 56,684 18
Total equity 67,267 56,796 18

Total liabilities and equity 1,934,441 1,889,738 2

SEB annual report 2006 57

Financial statements

Statement of changes in equity

SEB Group

31, December, SEKm 2006 2005 Change, %

Minority interests 130 112 16
Shareholders’ equity 67,137 56,684 18
Total equity 67,267 56,796 18

Shareholders’ equity
Reserve for cash flow hedges 380 882 –57
Reserve for available-for-sale financial assets 392 481 –19
Revaluation reserves 772 1,363 –43
Share capital, 663 004 123 Series A shares, 24 152 508 Series C shares 6,872 6,872
Fund for cancelled shares 174 174
Equity fund 94 86 9
Translation difference –475 –291 63
Other restricted reserves 30,410 28,913 5
Equity, restricted 37,075 35,754 4
Swap hedging of employee stock option programme –303 –795 –62
Eliminations of repurchased shares for employee stock option programme –393 –1,625 –76
Eliminations of repurchased shares for improvement of the capital structure –2,022 –2,022
Profit brought forward 19,403 15,608
Net profit attibutable to equity holders 12,605 8,401 24
Equity, non-restricted 29,290 19,567 50
Total 67,137 56,684 18
Changes in equity
Reserve for Reserve for
Minority cash flow afs financial Share Restricted Retained
2006 interests hedges assets ­c apital reserves earnings Total
Opening balance 112 882 481 6,872 28,882 19,567 56,796
Dividend to shareholders1) –3,264 –3,264
Dividend, own holdings of shares1) 75 75
Neutralisation of PL impact and utilization of employee stock options 580 580
Eliminations of repurchased shares for employee stock option programme2) 1,232 1,232
Other changes 1,505 –1,505
Change in market value –502 –27 –529
Recognised in income statement –62 –62
Translation difference –184 –184
Net income recognised directly in equity –502 –89 –184 –775
Net profit 18 12,605 12,623
Total recognised income 18 –502 –89 –184 12,605 11,848
Closing balance 130 380 392 6,872 30,203 29,290 67,267
2005
Opening balance 85 7,046 27,277 17,355 51,763
New accounting principle (IFRS/IAS) 680 335 –2,324 –1,309
Reduction of share capital –174 174
Dividend to shareholders1) –3,065 –3,065
Dividend, own holdings of shares1) 216 216
Result, holding of own shares –12 –12
Neutralisation of PL impact and utilization of employee stock options 616 616
Eliminations of repurchased shares for employee stock option programme2) 204 204
Eliminations of repurchased shares for improvement of the capital structure3) –218 –218
Other changes 7 1,606 –1,606 7
Change in market value 474 146 620
Recognised in income statement –272 –272
Translation difference –175 –175
Net income recognised directly in equity 202 146 –175 173
Net profit 20 8,401 8,421
Total recognised income 20 202 146 –175 8,401 8,594
Closing balance 112 882 481 6,872 28,882 19,567 56,796
1) Dividend per A-share SEK 4.75 (4.35) and per C-share SEK 4.75 (4.35). Further information can be found in The SEB-share on page 18.
2) As of 31 December 2006, SEB has repurchased 7.0, 6.2 and 6.2 million Series A shares for the employee stock option programme as decided at the Annual General Meetings in 2002, 2003 and 2004
respectively. The acquisition cost for these shares is deducted from shareholders’ equity. In 2005 1.0 million shares was transferred from the capital structure programme to the stock option pro-
gramme and 2.0 million employee stock options was sold as employee stock options was exercised. During 2006 6.5 million of these shares have been sold as employee stock options have been exer-
cised. In addition 3.1 million shares have been sold in accordance with decision at the AGM. Thus, as of 31 December SEB owned 8.8 million Class A-shares with a market value of SEK 1,929m.
3) Repurchased 18.4 million shares in order to create possibilities for the improvement of the capital structure of the Bank as decided at the 2004 Annual General Meeting. The acquisition cost for these
shares is deducted from shareholders’ equity. Of these 17.4 million shares have been cancelled by the end of 2005 as decided at the 2005 Annual General Meeting and the remaining 1.0 million shares
transferred to the employee stock option program.

58 SEB annual report 2006

 Financial statements

Cash flow statements

SEB Group

SEKm 2006 2005 Change, %

Interest received 64,759 51,971 25
Interest paid –49,484 –37,997 30
Commission received 20,145 16,741 20
Commission paid –3,999 –3,182 26
Net received from financial transactions 4,941 2,710 82
Other income 4,865 3,207 52
Paid expenses –23,010 –17,426 32
Taxes paid –2,727 –3,717 –27
Cash flow from the profit and loss statement 15,490 12,307 26

Increase (–)/decrease (+) in trading portfolios –69,110 –121,965 –43

Increase (+)/decrease (–) in issued short term securities 10,581 38,816 –73
Increase (–)/decrease (+) in lending to credit institutions 17,745 57,327 –69
Increase (–)/decrease (+) in lending to the public –46,351 –102,155 –55
Increase (+)/decrease (–) in liabilities to credit institutions –33,559 33,033
Increase (+)/decrease (–) in deposits and borrowings from the public 71,495 44,786 60
Increase (–)/decrease (+) in insurance portfolios 18,319 24,042 –24
Change in other balance sheet items –1,587 91
Cash flow from operating activities –16,977 –13,718 24

Sales of shares and bonds 175 1,340 –87

Sales of intangible and tangible fixed assets 449 401 12
Dividends 38 40 –5
Investments in subsidiaries2) –17 –5,466 –100
Investments in shares and bonds –42 –1,266 –97
Investments in intangible and tangible assets –615 –2,427 –75
Cash flow from investment activities –12 –7,378 –100

Issue of securities and new borrowings –24,764 –16,058 54

Repayment of securities 49,001 75,054 –35
Dividend paid –3,189 –2,849 12
Cash flow from financing activities 21,048 56,147 –63

Net increase in cash and cash equivalents 4,059 35,051 –88

Cash and cash equivalents at beginning of year 70,796 35,252 101

Exchange rate differencies in cash and cash equivalents –1,104 493
Net increase in cash and cash equivalents 4,059 35,051 –88
Cash and cash equivalents at end of period1) 73,751 70,796 4
1) Cash and cash equivalents at end of period is defined as Cash and cash balances with central banks (note 19) and Loans to credit institutions – payable on demand (note 20). Cash and cash
equivalents 2005 is restated.

2) Investments in subsidiaries
Cash 113 314
Loans from customers 395 19,107
Other assets 56 1,657
Due to customers –307 –13,084
Other liabilities’ –204 –2,857
Goodwill 77 643
Total purchase consideration paid 130 5,780

Cost of acquisition –130 –5,780
Less cash acquired 113 314
Cash flow outflow on acquisition –17 –5,466

SEB annual report 2006 59

Financial statements

Income statements
In accordance with the Swedish Financial Supervisory Authority regulations

Skandinaviska Enskilda Banken

SEKm Note 2006 2005 Change, %

Interest income 3 32,316 23,438 38
Leasing income 3 877 780 12
Interest expense 3 –28,482 –19,333 47
Dividends 7 1,407 1,919 –27
Fee and commission income 4 8,374 6,055 38
Fee and commission expense 4 –1,211 –974 24
Net financial income 5 3,515 2,558 37
Other income 7 2,108 965 118
Total operating income 18,904 15,408 23

Administrative expenses 8 –13,073 –10,854 20

Depreciation, amortisation and impairments of tangible and intangible assets 12 –399 –336 19
Total operating expenses –13,472 –11,190 20

Profit before credit losses 5,432 4,218

Net credit losses 14 –134 –79 70

Change in value of seized assets 14 –9 –100
Impairment of financial assets 7 –100 –220 –55
Operating profit 5,198 3,910 33

Appropriations 15 –345 –1,058 –67

Tax for the year 16 –1,158 –263
Other taxes 16 467 –30
Net profit 4,162 2,559 63

60 SEB annual report 2006

 Financial statements

Balance sheets
Skandinaviska Enskilda Banken

31, December, SEKm Note 2006 2005 Change, %

Cash and cash balances with central banks 19 1,828 6,037 –70
Loans and receivables to credit institutions 20 360,728 331,451 9
Loans and receivables to the public 21 333,129 291,861 14
Securities held for trading 285,313 247,291 15
Derivatives held for trading 63,001 112,441 –44
Derivatives used for hedging 1,290 2,365 –45
Other financial assets designated at fair value 160 139 15
Financial assets at fair value 22 349,764 362,236 –3
Available-for-sale financial assets 23 22,057 19,074 16
Held-to-maturity investments 24 3,820 3,483 10
Discontinued operations 53 661 –100
Investments in associates 25 1,059 1,160 –9
Shares in subsidiaries 26 55,306 57,381 –4
Intangible assets 634 68
Property and equipment 14,763 15,035 –2
Tangible and intagible assets 27 15,397 15,103 2
Current tax assets 1,485 636 134
Deferred tax assets 35
Trade and client receivables 9,694 23,702 –59
Other assets 17,747 19,038 –7
Other assets 28 28,961 43,376 –33
Total assets 1,172,049 1,131,823 4

Deposits by credit institutions 29 332,371 345,510 –4

Deposits and borrowing from the public 30 389,127 324,719 20
Debt securities 32 172,288 138,038 25
Trading derivatives 60,693 115,012 –47
Derivatives used for hedging 1,386 1,023 35
Trading liabilities 79,422 71,498 11
Financial liabilities at fair value 33 141,501 187,533 –25
Current tax liabilities 226 20
Deferred tax liabilities 473 112
Trade and client payables 10,900 23,979 –55
Other liabilities 34,567 25,970 33
Other liabilities 34 46,166 50,081 –8
Provisions 35 416 654 –36
Subordinated liabilities 36 42,278 43,049 –2
Total liabilities 1,124,147 1,089,584 3

Untaxed reserves 37 12,089 11,402 6

Revaluation reserves 579 1,009 –43

Share capital 6,872 6,872
Other reserves 12,804 12,260 4
Retained earnings 15,558 10,696 45
Shareholders’ equity 35,813 30,837 16

Total liabilities, untaxed reserves and shareholders’ equity 1,172,049 1,131,823 4

SEB annual report 2006 61

Financial statements

Statement of changes in equity

Skandinaviska Enskilda Banken

31, December, SEKm 2006 2005 Change, %

Reserve for cash flow hedges 367 818 –55
Reserve for available-for-sale financial assets 212 191 11
Revaluation reserves 579 1,009 –43
Share capital, 663 004 123 Series A shares, 24 152 508 Series C shares 6,872 6,872
Reserve fund and other restricted reserves 12,086 12,086
Fund for cancelled shares 174 174
Reserve for unrealised gains 544
Equity, restricted 19,676 19,132 3
Group contributions net after tax 1,627 1,794 –9
Swap hedging of employee stock option programme –303 –795 –62
Eliminations of repurchased shares for employee stock option programme –393 –1,625 –76
Eliminations of repurchased shares for improvement of the capital structure –2,022 –2,022
Translation differencies –26 11
Profit brought forward 12,513 10,774 16
Net profit for the year 4,162 2,559 63
Equity, non-restricted 15,558 10,696 45
Total 35,813 30,837 16

Changes in equity
Reserve for cash Reserve for afs Share Restricted Retained
2006 flow hedges financial assets ­c apital reserves earnings Total
Opening balance 818 191 6,872 12,260 10,696 30,837
Effect of merger of SEB IT and Enskilda Securities 1,031 1,031
Dividend to shareholders1) –3,264 –3,264
Dividend, own holdings of shares1) 75 75
Group contributions net after tax 2) 1,627 1,627
Neutralisation of PL impact and utilization of employee stock options 580 580
Eliminations of repurchased shares for employee stock option programme3) 1,232 1,232
Other changes 544 –544
Change in market value –451 45 –406
Recognised in income statement –24 –24
Translation difference –37 –37
Net income recognised directly in equity –451 21 –37 –467
Net profit 4,162 4,162
Total recognised income –451 21 4,125 3,695
Closing balance 367 212 6,872 12,804 15,558 35,813
2005
Opening balance 7,046 12,364 9,684 29,094
New accounting principle (IFRS/IAS) 671 –1,394 –723
Reduction of share capital –174 174
Dividend to shareholders1) –3,065 –3,065
Dividend, own holdings of shares1) 216 216
Group contributions net after tax 2) 1,794 1,794
Neutralisation of PL impact and utilization of employee stock options 616 616
Eliminations of repurchased shares for employee stock option programme3) 204 204
Eliminations of repurchased shares for improvement of the capital structure4) –218 –218
Other changes –278 278
Change in market value 147 304 451
Recognised in income statement –113 –113
Translation difference 22 22
Net income recognised directly in equity 147 191 22 360
Net profit 2,559 2,559
Total recognised income 147 191 2,581 2,919
Closing balance 818 191 6,872 12,260 10,696 30,837
1) Dividend per A-share SEK 4.75 (4.35) and per C-share SEK 4.75 (4.35). Further information can be found in The SEB-share on page 18.
2) In accordance with the opinion of the emergency group of the Swedish Financial Accounting Standards Council, Group contributions are reported in the parent company directly under ­Shareholders’ equity.
3) As of 31 December 2006, SEB has repurchased 7.0, 6.2 and 6.2 million Series A shares for the employee stock option programme as decided at the Annual General Meetings in 2002, 2003 and 2004
respectively. The acquisition cost for these shares is deducted from shareholders’ equity. In 2005 1.0 million shares was transferred from the capital structure programme to the stock option pro-
gramme and 2.0 million employee stock options was sold as employee stock options was exercised. During 2006 another 6.5 million of these shares have been sold as ­employee stock options have
been exercised. In addition 3.1 million shares have been sold in accordance with decision at the AGM. Thus, as of 31 December SEB owned 8.8 million Class A-shares with a market value of SEK 1,929m.
4) Repurchased 18.4 million shares in order to create possibilities for the improvement of the capital structure of the Bank as decided at the 2004 Annual General Meeting. The acquisition cost for these
shares is deducted from shareholders’ equity. Of these 17.4 million shares have been cancelled by the end of 2005 as decided at the 2005 Annual General Meeting and the remaining 1.0 million shares
transferred to the employee stock option program.

62 SEB annual report 2006

 Financial statements

Cash flow statements

Skandinaviska Enskilda Banken

SEKm 2006 2005 Change, %

Interest received 32,436 24,414 33
Interest paid –27,692 –19,029 46
Commission received 8,357 6,050 38
Commission paid –1,120 –903 24
Net received from financial transactions 3,782 2,541 49
Other income 2,866 1,162 147
Paid expenses –13,667 –10,170 34
Taxes paid –1,038 –3,047 –66
Cash flow from the profit and loss statement 3,924 1,018

Increase (–)/decrease (+) in trading portfolios –32,945 –44,240 –26

Increase (+)/decrease (–) in issued short term securities 60,688 32,354 88
Increase (–)/decrease (+) in lending to credit institutions –18,537 19,719 –194
Increase (–)/decrease (+) in lending to the public –41,796 –40,249 4
Increase (+)/decrease (–) in liabilities to credit institutions –13,138 55,264 –124
Increase (+)/decrease (–) in deposits and borrowings from the public 64,407 14,574
Change in other balance sheet items 9,411 –9,626 –198
Cash flow from operating activities 32,014 28,814 11

Sales of shares and bonds 617

Dividends and Group contributions 3,646 4,397 –17
Investments in subsidiaries/Merger of subsidiaries 1,975 –1,466
Reduction of the share capital in subsidiaries 3,440 –100
Investments in shares and bonds –337 –4,177 –92
Investments in intangible and tangible assets –693 –1,919 –64
Cash flow from investment activities 5,208 275

Issue of securities and new borrowings –53,306 50,783

Repayment of securities 26,099 –12,612
Dividend paid –3,189 –2,849 12
Cash flow from financing activities –30,396 35,322 –186

Net increase in cash and cash equivalents 6,826 64,411 –89

Cash and cash equivalents at beginning of year 82,666 18,217

Exchange rate differencies in cash and cash equivalents –294 38
Net increase in cash and cash equivalents 6,826 64,411 –89
Cash and cash equivalents at end of period1) 89,198 82,666 8
1) Cash and cash equivalents at end of period is defined as Cash and cash balances with central banks (note 19) and Loans to credit institutions – payable on demand (note 20).
Cash and cash equivalents 2005 is restated.

SEB annual report 2006 63

Notes to the financial statements

Notes to the financial statements

Currency codes
BRL Brazilian reales EUR Euro ISK Icelandic kronor NOK Norwegian kroner THB Thai baht
CHF Swiss francs GBP British pounds JPY Japanese yen PLN Polish zloty USD U.S. dollars
DKK Danish kroner HKD Hong Kong dollar LTL Lithuanian litas SEK Swedish kronor
EEK Estonian kroon INR Indian rupees LVLatvian lats SGD Singapore dollars

Corporate information

The SEB Group provides corporate, retail, investment and private banking ser­ The parent company is included in the Large Cap segment of the Stockholm
vices. The Group also provides asset management and life insurance services. Stock Exchange.

Skandinaviska Enskilda Banken AB (publ.) is the parent company of the Group. The consolidated accounts for the financial year 2006 were approved for publi-
The parent company is a Swedish limited liability company with its registered of- cation by the Board of Directors on 23 February and will be presented for adop-
fices in Stockholm, Sweden. tion at the 2007 Annual General Meeting.

SEKm, unless otherwise stated.

1 Accounting policies

Significant accounting policies for the Group
Basis of presentation
The consolidated accounts have been prepared in accordance with the Interna-
tional Financial Reporting Standards IFRS/IAS endorsed by the European Com-
mission. Additions to these standards, provided in the Act (1995:1559) on annual
accounts of credit institutions and securities companies (AACS), the accounting
regulations of the Financial Supervisory Board (“FSA 2005:33”) and Recommen-
dation RR 30 (2005) of the Swedish Financial Accounting Standards Council
(SFASC), have also been applied.
The consolidated accounts are based on amortised cost, except as regards
the fair value amounts applied to available-for-sale financial assets and to finan-
cial assets and liabilities valued at fair value through profit or loss.
Changed accounting policies
The adoption of the changes to IAS 19, IAS 39 and IFRS 4 did not result in sub-
stantial changes in the Group’s accounting policies and have not impacted re-
ported results or equity.
Amendment to IAS 19 Actuarial Gains and Losses, Group Plans and Disclosures
Another alternative for the reporting of actuarial gains and losses on defined ben-
efit plans directly against equity was introduced on the basis of this amendment.
This amendment was endorsed by the European Commission in November 2005.
The Group has chosen not to utilise this reporting option.
Amendment to IAS 39 Cash Flow Hedge Accounting of Forecast Intra-group
­Transactions
This amendment allowing for cash-flow hedge accounting of the foreign ex-
change risk in certain future intra-group transactions was endorsed by the
­European Commission in December 2005. The Group does not hedge these
types of transactions.
Amendment to IAS 39 and IFRS 4 regarding Financial Guarantee Contracts
This amendment is intended to ensure that issuers of financial guarantee con-
tracts include the resulting liabilities in their balance sheet. The amendment
was endorsed by the European Commission in January 2006. The Group has
­previously reported financial guarantee contracts according to this method.
The Group has chosen early adoption of IFRS 7 Financial Instruments: Disclo-
sure (August 2005). This standard was endorsed by the European Commission
on 27 January 2006 and was applied by the Group in the annual accounts of 2005.
The following standards, amendments and interpretations are mandatory for
accounting periods beginning on or after 1 January 2006, they are relevant to
the Group’s operations but have no effects on the Groups accounts:
IAS 21 (Amendment), relating to Net Investment in a Foreign Operation.
IAS 39 (Amendment), relating to the Fair Value Option.
IFRIC 4 Determining Whether an Arrangement Contains a Lease.
Consolidated accounts
The consolidated accounts comprise the parent company and its subsidiaries in-
cluding Special Purpose Entities (“SPE”). Subsidiaries are companies over which
the parent company has control, implying that they have the power of governing
the financial and operating policies of an entity so as to obtain benefits from its
activities. Such influence is deemed to exist when, amongst other circumstanc-
es, the parent company holds, directly or indirectly, more than 50 per cent of the
voting power of an entity. For SPE’s, consolidation also takes place if the Parent
Company or subsidiary does not have more than 50 percent of the votes but
bears the economic risks and receives the economic benefits in another manner.
Companies in which the Parent Company or its subsidiary hold more than 50 per-
cent of the votes, but are unable to exercise control due to contractual and legal
reasons, are not included in the consolidated accounts.
The financial statements of the parent company and the consolidated subsid-
iaries refer to the same period and have been drawn up according to the account-
ing policies applicable to the Group. A subsidiary is included in the consolidated
accounts from the time of its acquisition, which is the date at which the parent
company gains control over the subsidiary, and the subsidiary is included in the
consolidated accounts until the date at which control over the company ceases
to exist.
The consolidated accounts are prepared in accordance with the purchase
method. The cost of an acquisition is measured as the fair value of the assets
provided as compensation, the fair value of any equity instruments issued, and
the fair value of liabilities incurred or assumed, plus costs directly attributable to
the acquisition. The identifiable assets acquired and the liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair
values at acquisition date, irrespective of any minority interest. The excess of
the cost of the acquisition over the fair value of the Group’s share of the identifi-
able acquired net assets is recorded as goodwill. If the cost of the acquisition is

64 SEB annual report 2006


less than the fair value of the net assets of the acquired subsidiary, the differ-
ence is recognised directly against profit or loss.
Goodwill is allocated between the cash-generating units or groups of units
which are expected to gain benefits from an acquisition through synergies. The
cash-generating units to which goodwill is allocated correspond to the lowest
­level within the Group in which goodwill is monitored for internal management
purposes. These units may not be larger than the equivalent of one segment,
that is, one business segment or one geographical segment, as determined in
the segment reporting of the Group.
The useful life of each individual intangible asset is determined, however the
useful life of goodwill is reported as indefinite. For information regarding amorti-
sation and impairment, see further comments under intangible assets.
Intra-group transactions, balances and unrealised gains and losses on trans-
actions between Group companies are eliminated. The minority share of the re-
sults in subsidiaries is included in the reported results in the consolidated profit
and loss account, while the minority share of net assets is included in equity.
The consolidated accounts also include associated companies, which are
companies over which the Group has a significant influence. By significant influ-
ence is meant that the Group can participate in the financial and operating policy
decisions of the company, whilst not determining or controlling such financial
and operating policies. A significant influence is deemed to exist if the Group,
­directly or indirectly, holds between 20 and 50 per cent of the voting rights of
an entity. A company in which the Group holds fewer than 20 percent of votes
can also be classified as an associated company if the Group is represented in
the Board of Directors and participates in work related to the company’s strate-
gic ­issues and issues affecting guidelines.
According to the major principle, associated companies are consolidated in
accordance with the equity method. However, the Group has chosen to designate
investments in associates held by the Group’s venture capital organisation at fair
value through profit or loss.
The equity method implies that participations in associated companies are
­initially reported at acquisition cost. The carrying amount of the participations
is thereafter adjusted to the Group’s share of the change in the value of the net
assets of the associated companies. The Group’s share of the results of the as-
sociated companies is included in profit or loss.
Dilution gains and losses in associates are recognised in the income statement.
Segment reporting
A segment is a business segment or a geographical segment. A business seg-
ment is a distinguishable component, in terms of accounting, of an entity en-
gaged in providing an individual product or service or a group of related products
or services, and that is subject to risks and returns differing from those of other
business segments. A geographical segment from a reporting point of view is a
distinguishable component of an entity engaged in providing products or servic-
es in a particular economic environment and that is subject to risks and returns
differing from those applicable to other economic environments.
The Group has defined business segments as primary segments and geo-
graphical segments as secondary segments.
Foreign currency translation
The consolidated financial statements are presented in Swedish kronor (SEK),
which is the presentation currency of the Group.
When a foreign currency transaction is initially recognised, the amount is
translated into the functional currency at the spot exchange rate on the date of
the transaction. On subsequent balance sheet dates monetary items in foreign
currency are translated using the closing rate. Non-monetary items, which are
measured in terms of historical cost in foreign currency, are translated using the
exchange rate on the date of the transaction. Non-monetary items, which are
measured at fair value in a foreign currency, are translated applying the ex-
change rate on the date on which the fair value is determined.
Gains and losses arising as a result of exchange rate differences on settle-
ment or translation of monetary items are recognised in profit or loss. Transla-
tion differences on non-monetary items, classified as financial assets or financial
liabilities at fair value through profit or loss, are included in the change in fair val-
ue of those items. Translation differences from non-monetary items, classified
as available for sale financial assets, are recognised directly in equity.
The income statements and balance sheets of Group entities, with a functional
currency other than the Group’s presentation currency, are translated to Swedish
kronor (SEK) in the consolidated accounts. Assets and liabilities in foreign Group
entities are translated at closing rate and income and expenses in the income
statement are translated at the average exchange rate for the year. Resulting
­exchange rate differences are recognised as a separate component of equity.
Notes to the financial statements
Hedge accounting is applied to net investments in foreign subsidiaries. Foreign
currency loans constitute the major portion of hedging instruments in these
hedging transactions. The translation differences arising when the hedging in-
struments are translated to the presentation currency are also recognised as
translation differences in equity. When a foreign operation is partially disposed
of or sold, exchange differences recorded in equity are recognised in the income
statement as part of the gain or loss on the sale.
Goodwill arising in conjunction with acquisitions of foreign Group entities, as
well as adjustments to the fair value of assets and liabilities made in conjunction
with acquisitions, is included in assets and liabilities in the foreign entity in ques-
tion and is translated to the presentation currency at closing rate.
Financial assets
Classification
Financial assets are divided into the following four categories:
– Financial assets at fair value through profit or loss
– Loans and receivables
– Held-to-maturity investments
– Available-for-sale financial assets
Financial assets at fair value through profit or loss consist of financial assets
classified as held for trading and financial assets which, upon initial recognition,
have been designated at fair value through profit or loss (Fair Value Option).
­Financial assets are classified as held for trading if they are held with the inten-
tion to be sold in the short-term and for the purpose of generating profits. Deriva-
tives are always to be seen as being held for trading purposes, unless they are
designated as hedging instruments.
The Fair Value Option can be applied to contracts including one or more em-
bedded derivatives and in situations in which such designation results in more
relevant information. The nature of the financial assets and financial liabilities
which have been designated at fair value through profit or loss and the criteria
for such designation are described in the relevant notes to the financial state-
ments.
Loans and receivables are financial assets with fixed or determinable pay-
ments that are not quoted in an active market.
Held-to-maturity investments are financial assets which an entity has the inten-
tion and ability to hold until maturity. This category consists of financial assets
with fixed or determinable payments and fixed maturity. Equity instruments can-
not be classified as held to maturity as their life is indefinite.
Available for sale financial assets are either financial assets classified in this
category or those financial assets that have not been classified as financial as-
sets measured at fair value through profit or loss, as loans and receivables or
as investments held to maturity.
Measurement
Financial assets are measured at fair value on initial recognition. In the case of
­f inancial assets which do not belong to the category financial assets valued at
fair value through profit or loss, transaction costs directly attributable to the
­acquisition of the financial asset in question are included in the fair value calcu­
lation.
Trade date accounting is applied to financial assets classified in the catego-
ries, financial assets at fair value through profit or loss and available for sale
­f inancial assets. Settlement date accounting is applied to the other categories
of financial assets. A financial asset is removed from the balance sheet when the
contractual rights to the cash flows arising from the asset expire, or if the com-
pany, in all material respects, transfers all of the risks and rewards associated
with the ownership of the asset.
The valuation of financial assets after initial recognition is governed by their
classification.
Financial assets at fair value through profit or loss are measured at fair value.
Gains and losses arising from changes in fair value are reported in the income
statement on an ongoing basis under the item Net income from financial trans­
actions.
Loans and receivables and held-to-maturity investments are measured at
­amortised cost using the effective interest method.
Available for sale financial assets are measured at fair value. Gains and losses
arising from changes in fair value are reported directly in the fair value revaluation
reserve in equity until the financial asset with which they are associated is sold or
impaired. In the case of the sale or impairment of a financial asset, the accumulat-
ed gains and losses previously reported in equity are recognised in profit or loss.
Interest on interest-bearing, available for sale financial assets is recognised in
profit or loss, applying the effective interest method. Dividends on equity instru-
SEB annual report 2006 65
Notes to the financial statements
ments, classified as available for sale, are also recognised in profit or loss.
Investments in equity instruments without a quoted market price in an active
market are measured, if possible, at fair value on the basis of a recognised valua-
tion method.
Investments in equity instruments without a quoted market price in an active
market and whose fair value cannot be reliably measured are measured at cost.
Financial liabilities
Classification
Financial liabilities are specified in two categories:
– Financial liabilities at fair value through profit or loss
– Financial liabilities.
Financial liabilities at fair value through profit or loss are comprised of financial
­liabilities classified as held for trading and of those financial liabilities which have
been determined by management to belong to this category on initial recognition
(Fair Value Option).
The criteria for classification of financial liabilities under the Fair Value Option
are the same as for financial assets.
Financial liabilities held for trading are comprised, primarily, of short positions
in interest-bearing securities and equities, as well as of derivatives.
The category financial liabilities primarily includes the Group’s short-term and
long-term borrowings.
Measurement
Financial liabilities are measured at fair value on initial recognition. In the case of
financial liabilities not included in the category of financial liabilities measured at
fair value through profit or loss, transaction costs directly attributable to the ac-
quisition or the issuance of the financial liability are included in the calculation of
fair value.
After initial recognition, financial liabilities measured at fair value through prof-
it or loss, are measured and reported in a manner equivalent to the measurement
and reporting of financial assets measured at fair value through profit or loss.
­Financial liabilities are, after initial recognition, measured on an ongoing basis
at amortised cost, using the effective interest method.
Embedded derivatives
The major rule is that embedded derivatives are separated from the host con-
tract and accounted for in the same manner as other derivatives not included in
hedging transactions. Embedded derivatives are not separated if their economic
characteristics and risks are closely related to the economic characteristics and
risks of the host contract, or if the financial instrument is valued at fair value.
Certain combined instruments, i.e. contracts containing one or more embed-
ded derivatives, are classified as a financial asset or a financial liability at fair
­value through profit or loss. This choice of classification implies that the entire
combined instrument is valued at fair value and that any changes in fair value are
recognised on an ongoing basis in profit or loss.
Fair value measurement
The fair value of financial instruments quoted in an active market, for example quot-
ed derivatives, financial assets and financial liabilities held for trading, and avail-
able for sale financial assets, is based on quoted market prices. The current bid
price is used for financial assets and the current offer price for financial liabilities.
The fair value of financial instruments that are not quoted in an active market
is determined by applying various valuation techniques which make maximum
use of market inputs. The valuation techniques used are analyses of discounted
cash flows, valuations with reference to other financial instruments that are sub-
stantially the same, and valuations with reference to recent transactions in the
same instrument. Profits on day one can be recognised when a valuation tech-
nique is used whose variables only include data from observable markets.
Interest income and interest expenses
The effective interest method is applied to recognise interest income and inter-
est expenses in profit or loss for financial assets and financial liabilities mea-
sured at amortised cost.
The effective interest method is a method of calculating the amortised cost
of a financial asset or a financial liability and of allocating interest income and
­interest expenses. The effective interest rate is the rate that exactly discounts
estimated future cash payments or receipts through the expected life of the fi-
nancial instrument. When calculating future payments, all payments included in
the terms and conditions of the contracts, such as advance payments, are taken
into consideration. However, future credit losses are not taken into account. The
calculation of effective interest includes consideration of the fees to be received
and paid as stipulated in the contracts.
Once a financial asset or a group of similar financial assets has been written
down as a result of an impairment loss, interest income is subsequently recog-
nised applying the rate of interest used to discount the future cash flows for the
purpose of measuring the impairment loss.
Commission income and fees
Commission income and income in the form of fees on financial instruments are
66 SEB annual report 2006
accounted for differently, depending upon the financial instrument from which
the income in question is derived. When commission income and fees are includ-
ed in the calculation of the effective interest rate of a financial instrument mea-
sured at amortised cost, such interest and fees are usually allocated over the
­expected tenor of the instrument applying the effective interest method.
Commission income and fees from asset management and advisory services
are reported in accordance with the stipulations of the respective agreements.
This income is usually recognised during the period in which the service is pro­
vided. Performance-based fees are reported when the income in question can
be reliably calculated.
Fees from loan syndications in which SEB acts only as arranger are reported
as income when the syndication is completed.
Repurchase agreements
In repurchase transactions, the asset continues to be reported on the selling
­party’s balance sheet and the payment received is reported as a deposit or bor-
rowing. The sold instrument is reported as pledged collateral. The buying party
reports the payment as an outstanding loan to the selling party. The difference
in amounts between the spot and the forward payments is allocated as interest
over the life of the instrument.
Securities lending
Securities lent remain on the balance sheet and are recognised as pledged col-
lateral. Borrowed securities are not recognised as assets. When borrowed secu-
rities are sold (blanking), an amount corresponding to the fair value of the securi-
ties is entered as a liability.
Credit losses (impairment of financial assets)
All financial assets, except those classified at fair value through profit or loss,
are tested for impairment.
On each balance sheet date the Group assesses whether there is objective
­evidence that a financial asset or group of financial assets is impaired. A financial
asset or a group of financial assets is impaired and impairment losses are in-
curred if, and only if, there is objective evidence of impairment as a result of one
or more events occurring after the initial recognition of the asset, and if that loss
event will have an impact on the estimated future cash flows of the financial asset
or group of financial assets that can be reliably measured.
Examples of objective evidence that one or more events have occurred which
may affect estimated future cash flows are:
• significant financial difficulty on behalf of the issuer or obligor,
• the borrower is granted a concession as a consequence of financial difficulty,
the nature of which normally would not have been granted to the borrower,
• a breach of contract, such as a default or delinquency in the payment of inter-
est or principal, or
• it is probable that the borrower will go bankrupt or undergo some other kind of
financial reconstruction.
An impairment is reported as a write off, if it is deemed impossible to collect the
contractual amounts due that have not been paid and/or are expected to remain
unpaid, or if it is deemed impossible to recover the acquisition cost by selling the
collateral provided. In other cases, a specific provision is recorded in an allow-
ance account. As soon as the non-collectible amount can be determined and the
asset is written off, the amount reported in the allowance account is dissolved.
Similarly, the provision in the allowance account is reversed if the estimated
­recovery value exceeds the carrying amount.
Financial assets measured at amortised cost
An impairment of a financial asset in the category loans and receivables or in the
category held to maturity investments carried at amortised cost is calculated on
the basis of the original effective interest rate of the financial instrument in ques-
tion. The amount of the impairment is measured as the difference between the
carrying amount of the asset and the present value of estimated future cash
flows (recoverable amount). If the terms of an asset are renegotiated or other-
wise modified due to financial difficulties on behalf of the borrower or issuer, im-
pairment is measured using the original effective interest rate before modifica-
tion of the terms and conditions. Cash flows relating to short-term receivables
are not discounted if the effect of the discounting is immaterial. The entire, out-
standing amount of each loan for which a specific provision has been established
is included in Impaired loans, i.e. including the portion covered by collateral.
In addition to an individual impairment test, a collective assessment is made
of the value of receivables that have not been deemed to be impaired on an indi-
vidual basis. Receivables with similar credit risk characteristics are grouped to-
gether and assessed collectively for impairment. The Group’s internal risk classi-
fication system constitutes one of the components forming the basis for deter-
mining the total amount of the collective provision.
For certain homogeneous groups of individually insignificant credits (credit
card claims, for example), provision models have been established on the basis
of historical credit losses and the status of these claims. Collective impairment
provisions are also established for credits to borrowers in countries with transfer
obstacles, general problems in the banking system in question or similar circum-
stances.

Financial assets measured at acquisition cost
The impairment of unquoted equities, measured at acquisition cost, is calculated
as the difference between the carrying amount and the present value of estimat-
ed future cash flows, discounted at the current market rate of return for similar
equities.
Available for sale financial assets
If an available for sale financial instrument is impaired, the accumulated loss that
has been recognised directly in equity is reported in profit or loss. The amount of
the accumulated loss that is transferred from equity and recognised in profit or
loss is equal to the difference between the acquisition cost and the current fair
value, with a deduction of any impairment losses on that financial asset which
had been previously recognised in profit or loss.
Impairment losses on bonds or other interest-bearing equity instruments clas-
sified as available-for-sale are reversed via profit or loss if the increase in fair val-
ue can be objectively attributed to an event taking place subsequent to the write
down. Impairment losses for equity instruments classified as available for sale
are not reversed through profit or loss.
Hedge accounting
Derivatives are always valued at fair value in the balance sheet. Hedge account-
ing is applied to derivatives used to reduce risks such as interest rate risks and
currency risks in other financial instruments.
There are three different types of hedges, fair value hedges, cash-flow hedges
and net investment hedges. SEB applies all three of these types of hedges to
varying degrees. Derivatives are almost exclusively used as hedging instruments.
The only exception is the hedging of net investments in foreign subsidiaries, for
which foreign currency loans are also used for hedging purposes.
Hedge accounting is applied when hedging relationships comply with the fol-
lowing conditions:
– There is a formal designation and documentation of the hedging relationship
(identification) at its inception.
– The hedge is expected to be highly effective.
– As regards cash flow hedges, the likelihood that a forecasted transaction,
which is to be hedged, will take place must be highly probable
– The effectiveness of the hedge must be reliably measured.
– The effectiveness of the hedge must be assessed on an ongoing basis.
The hedging of fair value is the hedging of exposure to changes in the fair value
of an asset or liability, or an identifiable component of such an asset or liability,
which is attributable to a certain risk and which could affect the profit or loss.
Gains and losses arising from the revaluation of derivatives to fair value are re-
corded in the income statement at the same time that any gains or losses attrib-
utable to the hedged risk of the item in question adjust the reported value of the
hedged item and are also reported in the income statement.
Where SEB hedges the fair value of interest rate exposure in a portfolio includ-
ing financial assets or financial liabilities, so-called portfolio hedging of interest
rate risk, the gains or losses attributable to the hedged item are reported either
as a separate item under assets or as a separate item under liabilities.
Fair value hedges will be discontinued in the following situations:
– The hedging instrument expires or is sold, terminated or exercised.
– The hedging relationship no longer meets the criteria for hedge accounting.
– The hedging relationship is discontinued.
When hedging relationships are discontinued, any accumulated gains or losses
adjusting the carrying amount of the hedged item shall be allocated in profit or
loss over the remaining tenor of the hedged item.
Cash flow hedging is applied for the hedging of exposure to variations in future
interest flows, such as future interest payments on assets or liabilities with vari-
able interest rates. The portion of the gain or loss on the hedging instrument that
is determined to be an effective hedge is recognised directly against equity. The
ineffective portion of the gain or loss on the hedging instrument is recognised in
profit or loss.
Gains or losses on hedging instruments reported directly against equity are
reclassified and recognised in profit or loss in the same period in which interest
income and interest expenses from a hedged asset or liability are recognised in
profit or loss.
Cash flow hedges are discontinued in the same situations as listed above re­gard­
ing the termination of fair value hedges. When cash flow hedges are discontinued
but future cash-flows still are expected to occur, accumulated gains or losses
from the hedging instrument will remain as a separate item in equity. Accumulated
gains or losses are subsequently reported in profit or loss in the same period in
which the previously hedged interest flows are recognised in ­profit or loss.
The hedging of a net investment in a foreign operation refers to the hedging of
the equity in a foreign subsidiary against foreign exchange fluctuations. This type
of hedging is accounted for in a manner equivalent to the reporting of cash flow
hedges. Gains or losses on a hedging instrument which are attributable to the
­effective portion of the hedge and which have been recognised directly against
equity are recognised in profit or loss upon disposal of the foreign operation in
question.
Notes to the financial statements
Tangible fixed assets
Tangible fixed assets, with the exception of investment properties held in insur-
ance operations, are reported at historical cost and are depreciated according
to plan on a straight line basis over the estimated useful life of the asset. The
maximum depreciation period for buildings is 50 years. The depreciation period
for other tangible fixed assets is between 3 and 5 years.
Tangible fixed assets are tested for impairment whenever there is indication
of impairment.
Leasing
Leasing contracts are specified as finance or operating leases.
A finance lease is a lease that transfers, from the lessor to the lessee, sub-
stantially all of the risks and rewards incidental to the ownership of an asset. Op-
erational leasing contracts are those leases which are not regarded as finance
leases. In the Group, essentially all leasing contracts in which the Group is the
lessor are classified as finance leases. Finance leases are reported as lending,
which implies that the leasing income is reported as interest income.
Investment properties
Investments in properties held in order to receive rental income and/or for capi-
tal appreciation are reported as investment properties. The recognition and mea-
surement of such properties differs, depending upon the entity owning the prop-
erty. Investment properties held in the insurance operations, used to match liabil-
ities providing a yield directly associated with the fair values of specified assets,
including the investment properties themselves, are accounted for using the fair
value model. Holdings of investment properties in the banking operations are
­valued at depreciated cost.
Intangible assets
Intangible assets are identifiable, non-monetary assets without physical sub-
stance. In addition, an entity must be able to demonstrate control of the intangi-
ble asset, which implies that the entity has the ability to ensure that the future
economic benefits flowing from the underlying resource will accrue to the com-
pany. Intangible assets, other than goodwill, are only recognised in the balance
sheet if it is probable that the future economic benefits attributable to the asset
will accrue to the Group and if the acquisition cost of the asset can be measured
in a reliable manner.
Intangible assets are measured initially at acquisition cost, and thereafter at
cost less any accumulated amortisation and any accumulated impairment losses.
Intangible assets with finite useful lives are amortised on a straight line basis
over their useful lives and tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. Cus-
tomer lists are amortised over 20 years and internally generated intangible as-
sets, such as software development, are amortised over a period of between 3
and 5 years.
Intangible assets with indefinite useful lives, such as goodwill, are not amor-
tised but, instead, are tested for impairment annually and whenever there is an
indication that the intangible asset may be impaired. As regards goodwill, an im-
pairment loss is recognised in profit or loss whenever the carrying amount, with
respect to a cash-generating unit or a group of cash-generating units to which
the goodwill can be attributed, exceeds the recoverable amount. Impairment
losses attributable to goodwill are not reversed, regardless of whether the cause
of the impairment has ceased to exist.
The replacement value of an asset is determined if there is indication of a re-
duction in the value of the asset. An impairment loss is recognised if the carrying
amount exceeds the replacement value of the asset.
Provisions
A provision is established when the Group has a present obligation as a result of
past events. Conditions for the establishment of a provision are that the amount
can be estimated in a reliable manner and that it is more likely than not that an
outflow of resources will be required to settle the obligation. Provisions are eval-
uated at each balance sheet date and are adjusted as necessary.
Provisions are valued at the present value of the amount expected to be re-
quired in order to settle the obligation. The applied discount rate before tax re-
flects the current market assessment of the time-dependent value of the funds
or the risks to which the provision refers. The increase of the provision over the
course of time is recorded as an interest expense.
Pensions
Depending upon local conditions, there are both defined benefit and defined
­contribution pension plans within the Group.
The pension commitments of the Group with respect to defined benefit plans
are covered by the pension funds of the Group, through insurance solutions or
through provisions in the balance sheet. Defined benefit pension plans are calcu-
lated at present value according to the actuarial method called the Projected Unit
Credit Method. The assumptions upon which the calculations are based are
found in the note addressing staff costs. Actuarial gains and losses are recog-
nised in profit or loss to the extent they exceed the greater of 10 per cent of
­pension commitments and plan assets at the beginning of the reporting period.
Amounts outside this corridor are reported in profit or loss over the employees’
SEB annual report 2006 67
Notes to the financial statements
expected average remaining working lives. Pension commitments and any spe-
cial plan assets are consolidated on a net basis per unit in the balance sheet.
Pension costs for defined contribution pension plans are carried as an ex-
pense on a continuous basis in line with the pension rights earned by the indi­
vidual concerned.
Share-based payments
Group company employees receive compensation through share-based incentive
programmes. The compensation consists of employee stock options (equity in-
struments), entitling the holder to subscribe for shares in the parent company
at a future date and at a predetermined price.
The total value of issued stock options is amortised over the vesting period.
The vesting period is comprised of the period from the date on which the options
are issued until the stipulated vesting conditions are satisfied. The total value of
issued stock options equals the fair value per option, multiplied by the number of
options that are expected to become exercisable, taking the vesting conditions
into consideration. The allocation of this amount implies that profit and loss are
impacted at the same time as the corresponding increase in equity is recog-
nised. At each balance sheet date an assessment is made to determine if the
vesting conditions will be fulfilled and the extent to which they will be fulfilled. If
the conclusion of this assessment is that a lower number of options is expected
to be vested during the vesting period, then the previously expensed amounts
are reversed through profit or loss. This implies that in cases in which the vesting
conditions are not fulfilled, no costs will be reported in profit or loss, seen over
the entire vesting period.
The employee stock option programmes are hedged through the repurchase of
own equity instruments (treasury shares) or through contracts to buy own ­equity
instruments (total return swaps). However, hedge accounting is not applied, as it
is deemed that such hedges do not qualify for hedge accounting under IAS 39.
Treasury shares are eliminated against equity. No gains or losses on the sale
of treasury shares are recognised in profit or loss but are, instead, recognised as
changes in equity.
Total return swap contracts entered into with third parties represent an obliga-
tion for the parent company to purchase its own equity instruments (own shares) at
a predetermined price. Consequently, the swap contracts are classified as ­equity
instruments. Contracts with an obligation to purchase own equity instruments give
rise to a financial liability for the present value of the redemption amount, and an
amount equivalent to this liability is reported as a decrease in ­equity.
Interest paid under the swap contracts is recognised in profit or loss and dividends
received are regarded as dividends on own shares and are recognised in equity.
Taxes
The Group’s tax for the period consists of current and deferred tax. Current tax is
tax referring to the taxable results for the period. Deferred tax arises due to tem-
porary differences between the tax bases of assets and liabilities and their carry-
ing amounts. Current tax and deferred tax are generally recognised in profit or
loss. However, tax relating to items reported directly against equity is also re-
ported directly against equity. Examples of such items are changes in the fair
­value of available-for-sale financial assets and gains or losses on hedging instru-
ments in cash flow hedges.
Deferred tax assets are recognised in the balance sheet to the extent that it
is probable that future taxable profits will be available against which they can be
utilised. The Group’s deferred tax assets and tax liabilities have been calculated
at the tax rate of 28 per cent in Sweden and at each respective country’s tax rate
for foreign companies.
Insurance and investment contracts
Insurance contracts are contracts under which the Group accepts significant in-
surance risk from the policyholder by agreeing to compensate the policyholder
or other beneficiaries on the occurrence of a defined insured event. Investment
contracts are financial instruments that do not meet the definition of an insur-
ance contract, as they do not transfer significant insurance risk from the policy-
holder to the Group.
Insurance contracts
Insurance contracts are classified as Short-term (non-life) or Long-term (life).
Short-term insurance comprise sickness, disability, health-care, and rehabilita-
tion insurance. Long-term insurance comprise mainly traditional life insurance
within the Danish subsidiary, SEB Pension.
Measurement of Short-term insurance contracts (non-life)
The provision for unearned premiums is intended to cover the anticipated cost of
claims and operating expenses arising during the remaining policy period of the
insurance contracts in force. The provision for unearned premiums is usually
strictly proportional over the period of the insurance contracts. If premiums are
judged to be insufficient to cover the anticipated cost of claims and operating
­expenses, the provision for unearned premiums is strengthened with a provision
for unexpired risks.
The provision for claims outstanding is intended to cover the anticipated fu-
ture payment of all claims incurred, including claims incurred but not reported
(IBNR provisions). This provision should also cover all costs for claims settle-
68 SEB annual report 2006
ment. The provision for claims outstanding is not discounted, with the exception
of provisions for sickness annuities, which are discounted using standard actu­
arial methods.
Measurement of Long-term insurance contracts (life)
For long-term life insurance contracts, a liability for contractual benefits that are
expected to be incurred in the future is recorded when the premiums are recog-
nised. The liability equals the sum of the discounted value of expected benefit
payments and future administration expenses, less any outstanding future con-
tractual premium payments. Liabilities for long-term life insurance are discount-
ed using standard actuarial methods.
Liability adequacy test
Swedish actuarial procedures involve performing liability adequacy tests on
­technical provisions. This is to ensure that the carrying amount of the provisions
is sufficient in the light of estimated future cash flows. The carrying amount of
a provision is the value of the provision less any related intangible asset or de-
ferred acquisition costs. The current best estimates of future contractual cash
flows, as well as claims handling and administration costs, are included in per-
forming these liability adequacy tests. These cash flows are discounted and
compared to the carrying amount of the provision. Any deficit is immediately
­reported in profit or loss.
Revenue recognition
Premiums for insurance contracts are recognised as revenue when they are paid
by the policyholders. Premiums received during a period which are intended to
cover insurance claims arising in that period are recognised as revenue propor-
tionally during the period.
Recognition of expenses
Costs for insurance contracts are recognised as an expense when incurred, with
the exception of commissions and other variable acquisition costs related to new
contracts and the renewal of existing contracts. These costs are capitalised as
deferred acquisition costs. The principles for deferring acquisition costs of insur-
ance contracts are similar to the principles for deferring acquisition costs of in-
vestment contracts. Insurance compensation is recorded as an expense when
­incurred.
Reinsurance
Contracts with reinsurers, whereby compensation is received by the Group for
losses on contracts, are classified as ceded reinsurance. For ceded reinsurance,
the benefits to which the Group is entitled under the terms of the reinsurance
contract are reported as the reinsurers’ share of actuarial provisions. Amounts
recoverable from reinsurers are measured in the same manner as the amounts
associated with the reinsurance contracts and in accordance with the terms of
each reinsurance contract.
Investment contracts
The majority of the Group’s unit linked insurance is classified as investment con-
tracts. No significant insurance risk is transferred from the policyholder to the
Group. A small portion of the Group’s unit linked insurance business, the portion re-
ferring to the Lithuanian insurance subsidiary, is classified as insurance contracts.
Measurement
Investment contracts are financial commitments whose fair value is dependent
on the fair value of the underlying financial assets. The underlying assets and
­related liabilities are measured at fair value through profit or loss. The fair value
of the financial liabilities is determined using the fair value reflecting the current
value of the financial assets to which the financial liabilities refer on the balance
sheet date.
Revenue recognition
Amounts received from and paid to policyholders are reported in the balance
sheet as deposits or withdrawals. Fees charged for managing investment con-
tracts are recognised as revenue. The revenue recognition for these manage-
ment services is evenly distributed over the tenor of the contracts in question.
Recognition of expenses
Variable expenses directly attributable to securing a new investment contract
are deferred. These costs are primarily variable acquisition costs paid to sales
personnel, brokers and other distribution channels. Deferred acquisition costs
are reported in profit or loss as the related revenue is recognised. The asset is
tested for impairment during each accounting period to ensure that the future
economic benefits expected to arise from the contract exceed the carrying
amount of the asset. All other costs, such as fixed acquisition costs or ongoing
administration costs, are recognised in the accounting period in which they arise.
Contracts with discretionary participation features (DPF)
Traditional life insurance contracts within the Danish subsidiary, SEB Pension, in-
clude a discretionary participation feature. This feature entitles the policyholder
to receive, as a supplement to guaranteed benefits, additional benefits or bo-

nuses. These contracts are reported applying the same principles as those es-
tablished for the reporting of insurance contracts. The amounts referring to the
guaranteed element and to the discretionary participation feature are reported
as liabilities to policyholders.
New and amended international accounting standards and IFRIC
­interpretations
New and amended accounting standards and new IFRIC interpretations have been
published which, after endorsement by the European Commission, will ­apply to
accounting periods beginning on or after 1 January 2007. The Group’s assess-
ment of the impact of these new standards and interpretations is set out below.
Amendment to IAS 1 Capital Disclosures
The amendment introduces requirements regarding capital disclosures. The
amendment was endorsed by European Commission in January 2006. The
amendment is applicable from 1 January 2007. Capital disclosures are usually
quite extensive in a banking group, and the adoption of this amendment could
lead to even further disclosures.
IFRIC interpretations
The following IFRIC interpretations, which will not affect the Group’s financial
statements, have been issued:
– IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting
in Hyperinflationary Economies (endorsed)
– IFRIC 8 Scope of IFRS 2 (endorsed)
– IFRIC 9 Reassessment of Embedded Derivatives (endorsed)
– IFRIC 10 Interim Financial Reporting and Impairment (not yet endorsed)
– IFRIC 11 Group and Treasury Share Transactions (not yet endorsed). However,
this interpretation will affect the subsidiaries’ accounting of equity-settled
share-based payment transactions as the parent has granted such instru-
ments directly to the employees of subsidiaries. In such cases, the subsidiar-
ies shall measure the services received from its employees in accordance
with the requirements applicable to equity-settled share-based payment trans-
actions, with a corresponding increase in equity reported as a contribution
from the parent company.
Critical judgments in applying the Group’s accounting policies
Consolidated accounts
Within the life insurance operations of the SEB Group there are two life insurance
entities which are operated as mutual life insurance companies, Gamla Livförsäk­
rings AB SEB Trygg Liv and Nya Livförsäkrings AB SEB Trygg Liv. These entities
are not consolidated, as the judgment of the Group is that it does not control
these two entities. Control is seen to imply the power to govern the financial and
operating policies of an entity in order to obtain benefits from its activities. Life
insurance entities operated as mutual life insurance companies cannot pay divi-
dends. For this reason the Group deems that it cannot obtain benefits from these
entities. In Gamla Livförsäkrings AB SEB Trygg Liv there are specific policies
specifying the composition of the board, which implies that the SEB Group is not
able to govern the financial and operating policies of the entity.
The policyholders in SEB’s unit-linked company choose to invest in a variety of
funds. The insurance company providing unit-linked products invests in the funds
chosen by the customers. By doing so SEB might, in some cases, hold more than
50 per cent of the funds, which it holds on behalf of the customers for whom it
acts as investment manager. Due to the legislation regarding fund operations,
SEB considers that it does not have the power to govern the financial and operat-
ing policies of such investment funds to obtain benefits. This applies irrespective
of whether the funds held on behalf of customers are greater or less than 50 per-
cent of a fund. It is the policyholders who carry the investment risk, not SEB.
Consequently, the policyholders are entitled to all of the returns generated by
the funds. SEB only charges fees, on market conditions, for managing the funds.
SEB has come to the conclusion that the funds which it manages should not be
consolidated. However, the shares that the Group holds in such funds on behalf
of its customers are recognised in the balance sheet.
Important assumptions
Significant assumptions have been made as regards financial instruments, build-
ings held for investment purposes in the insurance operations, the write-down
­requirements for goodwill and financial assets, reporting of tax assets, and ac-
tuarial calculations. The assumptions that have been made are described in the
respective notes.
Significant accounting policies of the parent company
The annual report of the parent company has been prepared in accordance with
the Act (1995:1559) on annual accounts of credit institutions and securities com-
panies (“AACS”), the accounting regulations of the Financial Supervisory Board
(“FSA 2005:33”) and recommendation RR 32 (2005) of the Swedish Financial
­Accounting Standards Council (“SFASC”).
Notes to the financial statements
The parent company applies so-called “legally restricted IAS”, which means that
international accounting standards are applied to the extent permitted under
Swedish accounting legislation. As the Swedish standards have not been fully ad-
justed to IFRS, the accounting principles of the parent company differ, in certain
respects, from the accounting principles applied by the SEB Group. The essential
differences are described below.
Presentation format
The presentation format for the balance sheet and the profit and loss account
­according to the AACS are not in conformity with IFRS. Credit institutions and
­securities companies applying international accounting standards (IFRS/IAS)
­endorsed by the European Commission in their consolidated accounts are pro-
vided the option to deviate from the presentation format for the balance sheet
as stipulated in AACS, but may not deviate from the AACS stipulated profit and
loss account. The parent company has chosen to utilise this option, implying
that presentation format of the balance sheet is, in all material respects, the
same in both the Group and the parent company.
Definition of the Group
The AACS and IAS 27 have different definitions of a group. According to the AACS,
companies are not reported as parent companies and subsidiaries if there is no
ownership interest. According to IAS 27, it is sufficient that there is controlling in-
fluence. In other words, no share in the ownership of the company is required.
There is a definition in AACS which determines when a company is the parent
company of a group and is, therefore, liable to prepare consolidated accounts,
but it is IAS 27 which stipulates the companies to be included in the consolidated
accounts. For SEB, this means that the consolidated accounts comprise a differ-
ent group of companies than those constituting a group according to AACS.
Holdings in subsidiaries and associated companies
Participations in subsidiaries and associated companies shall be reported in ac-
cordance with the cost method. Dividends received are reported as income to
the extent that they emanate from profits earned after the acquisition. Dividends
in excess of such profits reduce the reported value of the participation. If the val-
ue of the participations is lower than their acquisition cost on balance sheet date,
a write-down to the lower value will be made if such decrease in value is deemed
permanent.
The parent company has chosen to apply hedge accounting to the foreign ex-
change risk in participations held in foreign subsidiaries and to the exchange risk
in accrued profits in these subsidiaries. For this purpose the hedging of fair values
is applied, which means that the value of the participations and the loans serving
as hedging instruments are translated taking into consideration the hedged risk.
Participations in subsidiaries subject to hedge accounting are, consequently,
­reported at a value differing from their acquisition cost.
Segment reporting
The parent company need not present segment information. However, information
shall be disclosed regarding income per business area and geographical market.
Financial assets and financial liabilities designated at fair value through
profit or loss (Fair Value Option)
It is only possible to designate financial assets and financial liabilities as mea-
sured at fair value through profit or loss in those cases permitted by AACS.
Therefore, it is not possible for the parent company to fully apply the Fair Value
Option. For example, it is not possible to designate liabilities as measured at fair
value through profit or loss, except for those held for trading purposes or which
constitute derivatives.
Leasing
According to RR 32, leasing contracts which are classified as finance leases in
the consolidated accounts may be accounted for as operating leases in legal
­entities. The parent company has chosen to utilise this option.
Pensions
The Act on safeguarding of pension commitments and the guidance from the
FSA include regulations the application of which results in accounting treatment
as ­regards defined benefit plans differing from the treatment stipulated in IAS
19. Compliance with the Act on safeguarding of pension commitments is a con­
dition for fiscal deductibility. In view of this, RR 32 states that it is not mandatory
that the regulations in IAS 19 regarding defined benefit pension plans be applied
in the legal entity. The parent company, whose obligations are covered by pension
funds, has chosen to utilise this possibility. Imputed pension costs are, therefore,
reported as personnel costs in the profit and loss account and reversed in appro-
priations. The parent company compensates itself for pensions paid from the pen-
sion funds, provided the financial position of the funds so permits. Paid pensions
and compensation from the pension funds are recorded among appropriations.
Group contributions
Group contributions paid or received for the purpose of minimising the Group’s
taxes are reported in the parent company as a decrease/increase in non-restricted
equity, after adjustment for estimated tax.
SEB annual report 2006 69
Notes to the financial statements

2 Segment reporting

Business segments in SEB Group

SEB Nordic Retail German Retail Eastern
Merchant & Private & Mortgage European SEB Asset SEB Other incl.
Income statement, 2006 Banking Banking Banking Banking Management Trygg Liv1) eliminations 2) SEB Group
Interest income 76,293 16,116 19,489 5,320 143 –15 –51,209 66,137
Interest expense –71,698 –11,437 –16,819 –2,760 –39 50,897 –51,856
Net interest income 4,595 4,679 2,670 2,560 104 –15 –312 14,281
Fee and commission income 5,730 4,740 1,401 1,114 2,477 4,683 20,145
Fee and commission expense –3,999 –3,999
Net fee and commission income 5,730 4,740 1,401 1,114 2,477 684 16,146
Net financial income 3,511 295 19 391 9 –189 4,036
Net life insurance income 116 3,352 –807 2,661
Net other income 683 150 346 82 20 342 1,623
Total operating income 14,519 9,864 4,436 4,263 2,610 3,337 –282 38,747
of which internally generated

Staff costs –4,436 –3,102 –2,053 –1,040 –731 –970 –2,031 –14,363
Other expenses –2,585 –2,786 –1,146 –656 –458 –1,351 1,184 –7,798
Net deferred acquisition costs 5 502 507
Depreciation, amortisation and
­impairments of tangible and
­intangible assets –70 –79 –251 –201 –19 –48 –215 –883
Total operating expenses –7,091 –5,967 –3,450 –1,892 –1,208 –1,867 –1,062 –22,537

Gains less losses from tangible

and intangible assets 29 –9 50 70
Net credit losses incl. changes
in value of seized assets –116 –146 –347 –101 –8 –718
Operating profit 7,312 3,780 630 2,320 1,402 1,470 –1,352 15,562

Income statement, 20053)

Interest income4) 45,779 8,928 14,216 3,342 85 9 –17,888 54,471
Interest expense4) –40,952 –4,370 –11,036 –1,575 17,744 –40,189
Net interest income 4,827 4,558 3,180 1,767 85 9 –144 14,282
Fee and commission income 5,443 5,860 1,556 1,318 2,493 72 16,741
Fee and commission expense –794 –1,423 –428 –383 –383 229 –3,182
Net fee and commission income 4,649 4,437 1,128 935 2,110 300 13,559
Net financial income 2,498 200 74 314 17 289 3,392
Net life insurance income 49 2,857 –554 2,352
Net other income 181 71 224 85 21 60 642
Total operating income 12,155 9,266 4,606 3,150 2,233 2,866 –49 34,227
of which internally generated 379 727 86 17 –1,317 563 –455

Staff costs –4,309 –3,032 –1,978 –858 –656 –952 –1,557 –13,342
Other expenses –2,398 –2,691 –1,294 –608 –493 –1,405 505 –8,383
Net deferred acquisition costs 477 477
Depreciation, amortisation and
­impairments of tangible and
­intangible assets –92 –53 –279 –207 –24 –53 –193 –901
Total operating expenses –6,799 –5,776 –3,551 –1,673 –1,173 –1,933 –1,245 –22,149

Gains less losses from tangible

and intangible assets 1 1 –5 63 –1 59
Net credit losses incl. changes
in value of seized assets –24 –192 –561 –139 2 –914
Operating profit 5,333 3,299 489 1,401 1,060 933 –1,292 11,223
1) Business result in SEB Trygg Liv amounted to SEK 3,130m (2,213), of which change in surplus values was net SEK 1,660m (1,280).
2) Profit and losses from associated companies accounted for under the equity method are recognised in Net other income by SEK 44m (61). The aggregated investments are SEK 415m (398).
3) The movement of Immoinvest from German Retail & Mortgage Banking to SEB Asset Management has been restated.
4) Intra Company interest flows were previously netted.

Balance sheets, 2006-12-31

Assets 1,184,502 422,137 308,579 138,481 7,849 214,095 –341,202 1,934,441
Liabilities 1,147,790 405,811 298,092 128,069 4,700 206,279 –323,567 1,867,174
Investments 125 73 105 386 43 432 243 1,407

Balance sheets, 2005-12-31

Assets 1,161,011 364,747 343,471 100,055 8,199 200,112 –287,857 1,889,738
Liabilities 1,127,337 351,929 331,811 93,201 5,611 192,074 –269,021 1,832,942
Investments 100 639 351 585 4 9 207 1,895

70 SEB annual report 2006
 Notes to the financial statements

Note 2 ctd. Segment reporting

Geographical segments in SEB Group

2006 2005
Gross Income* Assets Investments Gross Income* Assets Investments
Sweden 49,625 1,124,026 319 36,439 1,024,467 267
Other Nordic 18,246 364,045 461 11,287 405,630 640
The Baltics 7,282 133,936 309 4,815 96,535 421
Germany 23,872 461,957 149 22,024 515,829 371
Other Europe 8,907 105,618 100 4,856 115,528 187
Other world 9,061 137,015 69 3,383 103,359 9
Group eliminations –22,391 –392,156 –6,549 –371,610
Total 94,602 1,934,441 1,407 76,255 1,889,738 1,895
*Gross income in the Group is defined as the sum of Interest income, Fee and commission income, Net financial income, Net life insurance income and net other income according to IFRS.

Business segments in Parent company

SEB Nordic Retail German Retail Eastern
Merchant & Private & Mortgage European SEB Asset SEB Other incl. Parent
2006 Banking Banking Banking Banking Management Trygg Liv eliminations company
Gross income* 20,856 3,886 20 809 91 22,935 48,597
Assets 918,676 55,567 12,498 1,009 184,299 1,172,049
Investments 43 15 2 60

2005
Gross income* 13,365 3,495 4 11 751 73 18,016 35,715
Assets 961,294 51,300 597 669 117,963 1,131,823
Investments 43 8 51

Geographical segments in Parent company

2006 2005
Gross Income* Assets Investments Gross Income* Assets Investments
Sweden 32,421 889,631 60 26,104 685,645 51
Other Nordic 6,769 193,417 4,476 270,464
Other Europe 4,576 33,177 2,982 83,125
Other world 4,831 55,824 2,153 92,589
Total 48,597 1,172,049 60 35,715 1,131,823 51
*G ross income in the Parent company is defined as the sum of Interest income, Leasing income, Dividends, Fee and commission income, Net Financial income and Other income according to
SFSA accounting regulations.

Primary segment – Business segment Secondary segment – Geographical segment

The Business segments are presented on a management reporting basis. The
different divisions assist different groups of customers. The customers’ de-
mands decide the type of products that are offered. SEB Merchant Banking ­offer
two main groups of products to their customer (large corporates, financial insti-
tutions and medium-sized companies) Corporate banking and Investment bank-
ing. Nordic Retail & Private Banking offers products mainly to the retail custom-
ers (private customers and small corporates). German Retail & Mortgage Bank-
ing and Eastern European Banking offer mainly traditional banking products to
retail customers. Due to the management view and the regulatory environment
the Nordic, German and Baltic retail divisions are shown separately SEB Asset
Management offers funds management and SEB Trygg Liv offers life and pen-
sions insurance.
The split is based on the location of the entity.
Transfer pricing
The internal transfer pricing objective in the SEB Group is to measure net interest
income, to transfer interest risk and to manage liquidity. The internal price is set
according to the market price, which is the price paid at the interbank market for
a specific interest and liquidity term. The business units do not pay nor receive
any margins on funds transferred to and from the Treasury unit. Transactions
­between Business Segments are conducted at arm’s length.

SEB annual report 2006 71

Notes to the financial statements

3 Net interest income

Group Parent company
2006 2005 2006 2005
Loans to credit institutions 8,548 6,977 12,105 8,189
Loans to the public 42,090 35,979 10,959 8,295
Interest-bearing securities1) 11,929 8,697 6,814 4,917
Other interest income 3,570 2,818 2,438 2,037
Interest income2) 66,137 54,471 32,316 23,438

Deposits by credit institutions –13,313 –11,038 –12,766 –9,695

Deposits and borrowing from the public –18,472 –13,832 –5,147 –3,333
Interest-bearing securities –14,771 –11,057 –7,151 –4,159
Subordinated liabilities –2,111 –1,546 –2,003 –1,474
Other interest costs –3,189 –2,716 –1,415 –672
Interest expense –51,856 –40,189 –28,482 –19,333

Total 14,281 14,282 3,834 4,105

1) of which, measured at fair value 11,167 8,161 6,424 4,781
2) including interest on impaired loans 56 62

Net income from leases1)

Income from leases 877 780
Depreciation of leased equipment –302 –284
Total 575 496
1) In the group Net income from leases is reclassified to interest income. In the parent company depreciation of leased equipment is reported as Depreciation, amortisation and impairment of
tangible and intangible assets.

Net interest income

Interest income 32,316 23,438
Income from leases 877 780
Interest expense –28,482 –19,333
Depreciation of leased equipment –302 –284
Total 4,409 4,601

4 Net fee and commission income

Group Parent company
2006 2005 2006 2005
Issue of securities 290 193 1,155 38
Secondary market shares 3,300 2,599 785 653
Secondary market other 531 340 534 308
Custody and mutual funds 6,184 5,010 2,159 1,854
Securities commissions 10,305 8,142 4,633 2,853

Payments 1,787 1,679 1,123 1,072

Card fees 3,730 3,371 156 146
Payment commissions 5,517 5,050 1,279 1,218

Lending 946 940 537 569

Deposits 124 96 67 67
Advisory 1,742 1,284 551 58
Guarantees 278 225 180 149
Derivatives 384 306 280 260
Other 849 698 847 881
Other commissions 4,323 3,549 2,462 1,984

Fee and commission income 20,145 16,741 8,374 6,055

Securities commissions –898 –583 –174 –118

Payment commissions –2,150 –1,807 –490 –468
Other commissions –951 –792 –547 –388
Fee and commission expense –3,999 –3,182 –1,211 –974

Total 16,146 13,559 7,163 5,081

72 SEB annual report 2006

 Notes to the financial statements

5 Net financial income

Group Parent company
2006 2005 2006 2005
Gains (losses) on financial assets and liabilities
held for trading, net 4,098 3,098 3,515 2,558
Gains (losses) on financial assets and liabilities
designated at fair value, net –62 294
Total 4,036 3,392 3,515 2,558

Gains (losses) on financial assets and liabilities

held for trading, net
Equity instruments and related derivatives 392 1,616 189 1,068
Debt instruments and related derivatives 1,437 –904 1,557 –425
Currency related 2,269 2,386 1,769 1,915
Total 4,098 3,098 3,515 2,558

Gains (losses) on financial assets and liabilities

designated at fair value, net
Equity instruments and related derivatives –50 4
Debt instruments and related derivatives –13 285
Currency related 1 5
Total1) –62 294
1) of which measured at fair value with valuation techniques based on –69 25
­assumptions that are not supported by prices from observable current
market transactions in the same instrument and not based observable
market data.

Fair value changes in financial assets and financial liabilities within the unit linked insurance business, designated as at fair value through profit or loss offset each
other in full.

6 Net life insurance income*

Group
2006 2005
Net insurance premium revenue 5,642 5,050
Income investment contracts 976 702
Investment income net 1,507 9,066
Other insurance income 383 456
Net insurance expenses –5,847 –12,922
Total 2,661 2,352

Other insurance income

Direct yield1) 3,896 3,810
Realised result on investments at fair value, net –1,908 2,534
Unrealised result on investments at fair value, net 59 4,025
Foreign exchange gains (losses) –240 229
1,807 10,598
Expenses for asset management services –96 –107
Policyholders tax –204 –1,425
Total 1,507 9,066
1) Net interest income, dividends received and operating surplus from properties

Net insurance expenses

Claims incurred, net –8,205 –6,872
Change in collective bonus provisions –411 –2,208
Change in other insurance contract provisions 2,769 –3,842
Total –5,847 –12,922
* 2006 the Baltic insurance business is included line by line. In 2005 the total income for the Baltic business, SEK 49m, is
­included in other insurance income.

SEB annual report 2006 73

Notes to the financial statements

7 Net other income

Group Parent company
2006 2005 2006 2005
Dividends 63 76 1,407 1,919

Impairment of financial assets 7 –26 –100 –220

Investments in associates 44 61
Gains less losses from investment securities 1,038 272 496 113
Gains from tangible assets1) 4 9
Other income 471 259 1,608 843
Total 1,623 642 2,108 965
1) See note 13 for the Group.

Dividends
Available-for-sale investments 61 50 21 14
Investments in associates 2 26 38 39
Shares in subsidiaries 1,348 1,866
Total 63 76 1,407 1,919

Impairment of financial assets

Impairments –26 –100 –220
Reversals 7
Total 7 –26 –100 –220

Investments in associates1)
VPC –15 53
BGC 56
Other 3 8
Total 44 61
1) Recognised through the equity method.

Gains less losses from investment securities

Available for sale financial assets – Equity instruments 942 206 496 113
Available for sale financial assets – Debt instruments 168 67
Loans 17 23
Capital gains 1,127 296 496 113

Available for sale financial assets – Equity instruments –5 –6

Available for sale financial assets – Debt instuments –74
Loans –10 –18
Capital losses –89 –24

Total 1,038 272 496 113

Other income
Fair value adjustment in hedge accounting 124 –109 6 –20
Operating result from non-life insurance, run off 7 –29
Other income 340 397 1,602 863
Total 471 259 1,608 843

Fair value adjustment in hedge accounting

Fair value changes of the hedged items attributable to the hedged risk –178 189 727 272
Fair value changes of the hedging derivatives 82 –285 –732 –281
Fair value hedges – ineffective portion –96 –96 –5 –9

Fair value changes of the hedging derivatives 11 –13 11 –11

Cash-flow hedges – ineffective portion 11 –13 11 –11

Fair value changes of the hedged items –2,218

Fair value changes of the hedging derivatives 2,427
Fair value portfolio hedge of interest rate risk – ineffective portion 209

Total 124 –109 6 –20

74 SEB annual report 2006

 Notes to the financial statements

Note 7 ctd. Net other income

Fair value hedges

The Group hedges a proportion of its existing interest rate risk, in financial assets
payments and financial liabilities with fixed interest rates, against changes in fair
value due to changes in the interest rates. For this purpose the Group uses inter-
est rate swaps, cross-currency interest rate swaps and in some situations also
options.
Cash flow hedges
The Group uses interest rate swaps to hedge future cash flows from deposits and
lending with floating interest rates. Interest flows from deposits and lending with
floating interest rates are expected to be amortised in profit or loss during the
period 2006 to 2026.
Net investment hedges
The Group hedges the currency translation risk of net investments in foreign op-
erations through currency borrowings and currency forwards. Borrowing in for-
eign currency to an amount of SEK 53,350m (53,526) and currency forwards to
an amount of SEK 369m (429) was designated as hedges of net investments in
foreign operations. No ineffectiveness has been recognised from these hedges.

8 Administrative expenses
Group Parent company
2006 2005 2006 2005
Staff costs –14,363 –13,342 –8,409 –6,186
Other expenses –7,798 –8,383 –4,664 –4,668
Total –22,161 –21,725 –13,073 –10,854

9 Staff costs
Group Parent company
2006 2005 2006 2005
Salaries and remuneration –10,246 –9,528 –5,186 –3,836
Payroll overhead –2,631 –2,409 –1,724 –1,240
Employee stock option programme –397 –187 –397 –191
Payroll related costs –13,274 –12,124 –7,307 –5,267

Imputed pension costs –345 –284

Pension premiums paid –396 –274
Benefit retirement plans 388 280
Contribution retirement plans –703 –660
Pension related costs –315 –380 –741 –558

Other staff costs –774 –838 –361 –361

Total –14,363 –13,342 –8,409 –6,186

Pension costs in the Group are accounted for according to IAS 19, Employee benefits. Pension costs in Skandinaviska Enskilda Banken have been calculated in
­accordance with the directives of the Financial Supervisory Authority, implying an actuarial calculation of imputed pension costs. Non-recurring costs of SEK 327m
(SEK 45m) for early retirement have been charged to the pension funds of the Bank.

9 a Salaries and other remunerations per category

Group Parent company*
2006 Executives1) Other Total Executives1) Other Total
Sweden –33 –4,547 –4,580 –17 –3,864 –3,881
Norway –57 –937 –994 –169 –169
Denmark –21 –721 –742 –264 –264
Finland –13 –260 –273 –163 –163
Estonia –7 –212 –219
Latvia –8 –195 –203 –5 –5
Lithuania –18 –240 –258
Germany –244 –1,829 –2,073 –112 –112
Poland –3 –16 –19 –5 –5
Ukraine –3 –24 –27
China –5 –5 –5 –5
Great Britain –1 –469 –470 –466 –466
France –9 –9 –9 –9
Ireland –1 –8 –9
Luxembourg –9 –151 –160
Russia –1 –13 –14
Singapore –61 –61 –52 –52
United States –8 –109 –117 –55 –55
Other2) –13 –13
Total –427 –9,819 –10,246 –17 –5,169 –5,186

SEB annual report 2006 75

Notes to the financial statements

Note 9 a ctd. Salaries and other remunerations per category

Group Parent company*

2005 Executives1) Other Total Executives1) Other Total
Sweden –72 –4,517 –4,589 –16 –3,114 –3,130
Norway –44 –592 –636 –140 –140
Denmark –23 –634 –657 –109 –109
Finland –11 –201 –212 –71 –71
Estonia –7 –176 –183
Latvia –7 –149 –156
Lithuania –23 –210 –233
Germany –281 –1,727 –2,008
Poland –3 –7 –10
Ukraine –3 –18 –21
China –1 –1 –1 –1
Great Britain –2 –474 –476 –265 –265
France –12 –12 –12 –12
Ireland –1 –6 –7
Luxembourg –8 –153 –161
Russia –3 –3
Singapore –53 –53 –53 –53
United States –9 –89 –98 –55 –55
Other3) –1 –11 –12
Total –495 –9,033 –9,528 –16 –3,820 –3,836
1) Comprises current and previous Board members and their substitutes in the parent company and subsidiaries, President in parent company and Managing Directors and Deputy Managing
­Directors in subsidiaries. Total number of Presidents, Managing Directors and Deputy Presidents was 102 (90) of which 15 (14) female. Total number of Board members and their substitutes
was 208 (204) of which 47 (44) female. These Board members do not, with the exception of the Board members elected at the AGM in the parent company, receive board remuneration.
2) Other in 2006 includes Switzerland and Brazil.
3) Other in 2005 includes Spain, Switzerland and Brazil.
* SEB IT and Enskilda Securities merged with the parent company in 2006.

Loans to Executives
Group Parent company
2006 2005 2006 2005
Managing Directors and Deputy Managing Directors1) 114 85
Boards of Directors2) 178 180 25 14
Total 292 265 25 14
1) Comprises of current President in the parent company and Managing Directors and Deputy Managing Directors in subsidiaries. Total number of executives was 102 (90) of which
female 15 (14).
2) Comprises of current Board members and their substitutes in the parent company and subsidiaries. Total number of persons was 208 (204) of which female 47 (44).

Pension commitments to Executives

Group Parent company
2006 2005 2006 2005
Pension disbursements made 80 78 18 36
Change in commitments 51 61 9 13
Commitments at year-end 1,589 1,587 741 709

The above commitments are covered by the Bank’s pension funds or through Bank-owned endowment assurance schemes. Includes active and retired Presidents
and Deputy Presidents in the parent company and Managing Directors and Deputy Managing Directors in subsidiaries, in total 116 (119) persons.

76 SEB annual report 2006

 Notes to the financial statements

9 b Retirement benefit obligations

Defined benefit plans in SEB Group

Net amount recognised 2006 2005

in the Balance sheet Sweden1) Foreign1) Group1) Sweden1) Foreign1) Group1)
Defined benefit obligation at
the beginning of the year 13,233 4,958 18,191 11,341 4,125 15,466
Acquisitions and reclassification 16 16 79 79
Service costs 296 110 406 206 80 286
Interest costs 483 205 688 494 211 705
Benefits paid –709 –213 –922 –734 –192 –926
Exchange differences –184 –184 170 170
Unrecognised actuarial gains/losses 1,009 124 1,133 1,926 485 2,411
Defined benefit obligation
at the end of the year 14,312 5,016 19,328 13,233 4,958 18,191

Fair value of plan assets

at the beginning of the year 16,533 4,193 20,726 13,836 3,817 17,653
Acquisitions and reclassification 83 83
Calculated return on plan assets 1,240 263 1,503 1,038 234 1,272
Benefits paid –709 170 –539 –732 –190 –922
Exchange differences –158 –158 157 157
Unrecognised actuarial gains/losses 515 4 519 2,391 92 2,483
Fair value of plan assets
at the end of the year 17,579 4,472 22,051 16,533 4,193 20,726

Funded status 3,267 –544 2,723 3,300 –765 2,535

Unrecognised actuarial gains/losses
on liabilities 3,914 856 4,770 2,911 747 3,658
Unrecognised actuarial gains/losses
on assets –3,285 –114 –3,399 –2,770 –110 –2,880
Exchange differences –6 –6 10 10
Net amount recognised
in the Balance sheet 3,896 192 4,088 3,441 –118 3,323
of which recognised as assets 3,908 238 4,146 3,468 3,468
of which recognised as liabilities 12 46 58 27 118 145
Movements in the net assets or
net liabilities
Defined benefit obligation
at the beginning of the year 3,441 –118 3,321 3,102 64 3,038
Acquisitions and reclassification 16 16 –4 4
Total expense as below 455 –67 388 337 57 280
Pension paid 709 213 922 734 –192 926
Pension compensation –709 170 –539 –732 190 –922
Exchange differences –20 –20 3 –3
Amounts recognised in Balance sheet 3,896 192 4,088 3,441 118 3,323

The actual return on plan assets was SEK 1,755m (3,429) in Sweden and SEK 267m (326) in foreign plans. The allocation of total plan assets in Sweden is 65 per
cent (62) shares, 16 (17) interest-bearing and 19 (21) hedgefunds, in foreign plans 25 (22) shares and 75 (78) interest-bearing.
The pension plan assets include SEB shares with a fair value of SEK 1,092m (1,355) and buildings occupied by the company with a value of SEK 792m (792).

Amounts recognised in the Profit and loss

Service costs –296 –110 –406 –206 –80 –286
Interest costs –483 –205 –688 –494 –211 –705
Return on plan assets 1,240 263 1,503 1,038 234 1,272
Actuarial gains/losses –6 –15 –21 –1 –1
Total included in staff costs 455 –67 388 337 –57 280

Principal actuarial assumptions used, %

Discount rate 3.8% 4.3% 4.5% 5.0%
Inflation rate 2.0% 1.5% 2.0% 1.5%
Expected rate of salary increase 3.5% 2.3% 3.5% 2.5%
Expected rate of increase
in the income basis amount 3.0% 3.0%
Expected rate of return on plan assets 7.5% 6.0% 7.5% 6.0%
1) Defined benefit obligations and plan assets are disclosed gross in the table. There exist no legal right to offset obligations and assets between entities in the Group but in the Balance sheet
the net amount is recognised for each entity either as an asset or liability.

Defined contribution plans in SEB Group

Net amount recognised 2006 2005

in the Profit and loss Sweden Foreign Group Sweden Foreign Group
Expense in Staff costs –467 –236 –703 –418 –242 –660

SEB annual report 2006 77

Notes to the financial statements

Note 9 b ctd. Retirement benefit obligations

DEFINED BENEFIT PLANS IN SK ANDINAVISK A ENSKILDA BANKEN

Parent company
Net amount recognised in the Balance sheet 2006 2005
Defined benefit obligation at the beginning of the year 10,275 10,289
Imputed pensions costs 345 284
Interest costs and other changes 964 383
Early retirement 327 45
Pension disbursements –707 –726
Defined benefit obligation at the end of the year 11,204 10,275

Fair value of plan assets at the beginning of the year 15,767 13,171
Return in pension foundations 2,283 3,322
Benefits paid –707 –726
Fair value of plan assets at the end of the year 17,343 15,767

The above defined benefit obligation is calculated according to Tryggandelagen. The obligation is fully covered by assets in pension foundations and is not included in
the balance sheet.
The assets in the foundations are mainly equity related SEK 11,383m (10,025) and to a smaller extent interest related SEK 2,674m (2,594). The assets include SEB
shares of SEK 1,085m (1,338) and buildings occupied by the company of SEK 792m (792). The return on assets was 11 per cent (25) before pension compensation.

Amounts recognised in the Profit and loss

Imputed pension costs –345 –284
Total included in staff costs –345 –284

Recovery of imputed pension costs 345 284

Pension disbursements –707 –726
Compensation from pension foundations 707 726
Total included in appropriations 345 284

Net pension costs for defined benefit plans

Principal actuarial assumptions used, %

Gross interest rate 3.0% 3.5 %
Interest rate after tax 2.5% 3.0 %
The actuarial calculations are based on salaries and pensions on the balance sheet date.

DEFINED CONTRIBUTION PLANS IN SKANDINAVISKA ENSKILDA BANKEN

Parent company
Net amount recognised in the Profit and loss 2006 2005
Expense in Staff costs –396 –274

Pension foundations
Pension commitments Market value of asset
2006 2005 2006 2005
SB-Stiftelsen, Skandinaviska Enskilda Bankens Pensionstiftelse1) 4,926 6,758
SEB-Stiftelsen, Skandinaviska Enskilda Bankens Pensionsstiftelse1) 11,204 5,349 17,343 9,009
SEB Kort AB:s Pensionsstiftelse 235 206 236 216
SEB IT AB:s Pensionsstiftelse1) 539 550
Total 11,439 11,020 17,579 16,533
1) SB-Stiftelsen, Skandinaviska Enskilda Bankens Pensionstiftelse and SEB IT AB:s Pensionsstiftelse were merged with EB-Stiftelsen, Skandinaviska Enskilda Bankens Pensionstiftelse
during 2006. At the same time the name was changed to SEB-Stiftelsen, Skandinaviska Enskilda Bankens Pensionstiftelse.

Retirement benefit obligations
The Group has established pension schemes in the countries where business is
performed. There are both defined benefit plans and defined contribution plans.
The major pension schemes are final salary defined benefit plans and are funded.
The defined contribution plans follow the local regulations in each country.
Defined benefit plans Defined contribution plans exist both in Sweden and abroad. In Sweden a smaller
The major defined benefit plans exist in Sweden and Germany and covers sub-
stantially all employees in these countries. Independent actuarial calculations
­according to the Projected Credit Unit Method (PUCM) are performed each year
as per 31 December to decide the value of the defined benefit obligation. The
benefits covered include retirement benefits, disability, death and survivor pen­
sions according to the respective countries collective agreements.
The plan assets are kept separate in specific pension foundations. The assets
are market valued each year at the same date as the obligation. The asset alloca-
tion is determined to meet the various risk in the pension obligations and are de-
cided by the board/trustees in the pension funds. The pension costs and the return
on plan assets are accounted for among Staff costs.
Defined contribution plans
part of the retirement collective agreement is defined contribution plans. Over a
certain salary level the employees can also choose to leave the defined benefit
plan and replace it by a defined contribution plan. Most other countries have full
defined contribution plans except for the Baltic countries where the company to
a very limited extent contribute to the employees retirement. The defined contri-
bution plans are accounted for as an expense among Staff costs.

78 SEB annual report 2006

 Notes to the financial statements

9 c Compensation to the top management and the Group Executive Committee

Compensation to the top mangement, SEK

Variable Remunera-
2006 Base salary salaries tions1) Benefits 2) Total
Chairman of the Board, Marcus Wallenberg 2,600,000 2,600,000
Other members of the Board 5,470,000 5,470,000
President, Annika Falkengren 6,587,529 2,778,750 630,540 9,996,819
Total 6,587,529 2,778,750 8,070,000 630,540 18,066,819

2005
Chairman of the Board, Marcus Wallenberg 1,775,000 12,659 1,787,659
Other members of the Board 4,275,000 4,275,000
President, Annika Falkengren (10 November–31 December) 1,068,063 916,667 68,148 2,052,878
President, Lars H Thunell (1 January–9 November) 5,554,400 2,900,000 209,143 8,663,543
Total 6,622,463 3,816,667 6,050,000 289,950 16,779,080
1) As decided at AGM.
2) Includes benefits for homeservice and company car.

The principles for compensation of the President and the other members of the
Group Executive Committee were prepared by the Board and the Remuneration
and Human Resources Committee of the Board and approved by the Annual
­General Meeting 2006. For more information, see page 51.
Short Term Incentive
Short term incentive for the Group Executive Committee are based on Group
and divisional financial criteria, such as operating result, costs and other varying
quantitative criteria. In addition to that there are individual qualitative criteria
measured discretionary. All short term incentives to the Group Executive Com­
mittee members are maximised to a percentage of base salary.
Long Term Incentive programme
From 1999 to 2004, employee stock options have been used as the vehicle for
SEB’s long term incentive programmes. For 2005, the Annual General Meeting
decided on a programme with a new performance based structure based on
­performance shares. For more information, see note 9d on page 80.­
Performance shares and employee stock options cannot be sold nor pledged,
which means that they do not have any market value. However, the calculated
­value for the 2006 programme at the time of the allotment was SEK 65 per perfor-
mance share. The calculated value for allotted performance shares to the Presi-
dent is SEK 2,849,990 (1,832,318) and to the GEC excluding the President SEK
10,255,765 (10,428,200). The allotted performance shares that can be exercised
will depend on two predetermined performance criteria, the real increase in earn-
ings per share, 50 per cent, and the total shareholder return compared to SEB´s
competitors, 50 per cent.
Pension and severance pay
Under the pension agreement of the President, Mrs Falkengren, pension is pay-
able from the age of 60. The pension plan is defined benefit-based and inviolable.
Pension is paid at the rate of 65 per cent of the pensionable income. Pensionable
income consists of base salary plus 50 per cent of the average variable salary
during the last three years, however limited to a maximum amount. Termination
of employment by the Bank is subject to a 12-month period of notice and entitles
to a severance pay of 12 months’ salary.
As regards pension benefits and severance pay the following is applicable to
the members of the Group Executive Committee excluding the President. The pen-
sion plans are inviolable and defined benefit-based except for one that is ­de­fined
contribution-based. Pension is payable from the age of 60 at the rate of maximum
70 per cent of pensionable income up to the age of 65 and at maximum 65 per
cent thereafter. Pensionable income consists of base salary plus 50 per cent of
the average variable salary during the last three years.
Termination of employment by the Bank is subject to a maximum 12-month ­period
of notice and entitles to a severance pay of maximum 24 months’ salary. The Bank
has the right to make deductions from such severance pay of any cash payments that
the Executive may receive from another employer or through his/her own business.

Compensation to the Group Executive Committe, SEK1)

Variable
Base salary salaries Benefits Total
2006 24,530,107 16,152,859 2,201,993 42,884,959
2005 23,632,355 19,150,333 1,370,168 44,152,856
1) Excluding the President. The number and persons partly differ between the years.

Pension costs (service costs and interest costs)

President, President,
Annika Falkengren Lars H Thunell GEC1) Total
2006 4,091,930 15,426,555 19,518,485
2005 531,007 5,060,439 14,067,058 19,658,504
1) Group Executive Committee excluding the President. The number and persons partly differ between the years.

Outstanding number of Employee stock options/Performance shares to the President and the Group Executive Committtee
2006 2005
President GEC1) Total President GEC1) Total
2000: Employee stock options 103,333 103,333
2001: Employee stock options 79,412 124,001 203,413 79,412 222,507 301,919
2002: Employee stock options 191,177 164,720 355,897 191,177 289,485 480,662
2003: Employee stock options 132,353 216,220 348,573 132,353 305,485 437,838
2004: Employee stock options 132,353 322,877 455,230 132,353 379,759 512,112
2005: Performance shares 62,000 161,100 223,100 62,000 185,400 247,400
2006: Performance shares 43,846 157,781 201,627
Total 641,141 1,146,699 1,787,840 597,295 1,485,969 2,083,264
1) Group Executive Committee excluding the President. The number and persons partly differ between the years.

SEB annual report 2006 79

Notes to the financial statements

Note 9 c ctd. Compensation to the top management and the Group Executive Committee

Related party disclosures*

Group
Loans to conditions on the market 2006 2005
Top management and the Group Executive Committee 41,234,852 27,246,248
Other related parties 2,208,218 4,380,984
Total 43,442,800 31,627,232
* For information about related parties such as Group companies and Associated companies see note 47.

9 d Share-based payments

2006 2005
Programmes Programmes
Employee stock options/Performance shares LTI 1999–2004 LTI 1999–2004
Outstanding at the beginning of the year 1,781,400 21,137,906 27,624,223
Granted 1,477,327 1,789,100
Forfeited –141,048 –343,6731) –7,700 –466 1801)
Exercised –7,975,0442) –6 020 1372)
Outstanding at the end of the year 3,117,679 12,819,189 1,781,400 21,137,906
of which exercisable 7,224,509 9,510,911
1) Weighted average exercise price SEK 83.82 (107.07).
2) Weighted average exercise price SEK 97.30 (104.23) and weighted average share price at exercise SEK 185.70 (137.91).

Total Long-term incentive programme

Original no No of No of out­ No of out­ A-share per Exercise First date of
of holders 3) issued standing 2006 standing 2005 option/share price Validity exercise
1999: Employee stock options 12 953,997 85,000 1.121) 82.41) 1990–2006 02-02-15
2000: Employee stock options 368 4,816,456 254,554 1,587,397 1 91.5 2000–2007 03-03-01
2001: Employee stock options 874 6,613,791 1,858,166 3,651,776 1 118 2001–2008 04-03-05
2002: Employee stock options 1,029 6,790,613 2,306,220 4,186,738 1 106.2 2002–2009 05-03-07
2003: Employee stock options 792 6,200,000 2,805,569 5,778,883 1 81.3 2003–2010 06-02-27
2004: Employee stock options 799 6,200,000 5,594,680 5,848,112 1 120 2004–2011 07-04-02
2005: Performance shares 537 1,789,100 1,684,534 1,781,400 1 10 2005–2012 20082)
2006: Performance shares 513 1,477,327 1,433,145 1 10 2006–2013 20092)
Total 34,841,284 15,936,868 22,919,306
1) After recalculation for SEB’s rights issue in 1999.
2) The fifth banking day falling after the Annual accounts for the financial year 2007 and 2008 respectively are made public.
3) In total 1,624 individuals have participated in all programmes.

Long-term incentive programme
The first long-term incentive programme was installed in 1999 in the form of an
employee stock option programme. Further employee stock option programmes
have been issued for 2000–2004. All programmes have a maximum term of ­seven
years, a vesting period of three years and are settled with SEB Series A shares.
The 1999 programme matured in 2006. According to the terms and conditions for
the year 2004 programme, the value of each option for the option holders is limit-
ed to SEK 100. The Bank shall prematurely terminate the programme if the market
price (based on the closing listed price on the Nordic Exchange) for the SEB class
A-shares during the exercise period (2 April–1 April 2011) is equal to or above the
limit market price of SEK 220. At premature termination the holders are entitled to
purchase a recalculated number of shares for the price SEK 120 per share.
The Long Term Incentive programmes issued during 2005 and 2006 have a new
performance based structure compared with the programmes from 1999–2004.
These programmes are based on performance shares The maximum term and vest-
ing are the same but the allotted performance shares that can be exercised will de-
pend on two predetermined performance criteria, the real increase in earnings per
share, 50 per cent, and the total shareholder return compared to SEB’s competitors,
50 per cent. After the vesting period the performance share holder is compensated
for the dividend by recalculating the number of A-shares that the performance share
entitles on an annual basis during the exercise period after the Annual General Meet-
ing has been held each year. Performance shares are not securities that can be
sold, pledged or transferred to another party. However, an estimated value per per-
formance share has been calculated for 2006 to SEK 65 (46) (based upon closing
price of one SEB Series A share at grant). Other inputs to the options pricing model
are; exercise price SEK 10 (10); volatility 33 (36) (based on historical values); ex-
pected dividend approximately 3.25 (3.50) per cent; risk free interest rate 3.16
(3,17) and expected early exercise termination of employment of 3 (3) per cent per
annum. In the value of the option the expected outcome of earnings per share and
total shareholders return compared to SEB’s competitors are taken into account,
meaning that 40 per cent of the performance shares are expected to be vested.
Since earnings per share is a non-market condition, changes to the expected out-
come under the vesting period, if any, influence the costs accounted for under that
period. Further details of the outstanding programmes are found in the table above.

9 e Sick leave rate

Sick leave rate by gender and age group in parent company, %
Long term sick leave Total sick leave
2006 Men Women Total Men Women Total
–29 years 0.0 1.0 0.6 1.5 3.4 2.5
30–49 years 0.9 3.2 2.1 2.2 5.2 3.7
50– years 2.2 5.0 3.6 3.6 7.3 5.5
Total 1.3 3.5 2.4 2.5 5.6 4.1

2005
–29 years 0.1 1.6 1.0 1.7 3.8 2.9
30–49 years 0.9 3.8 2.5 2.1 5.8 4.2
50– years 2.5 5.4 4.1 3.8 7.6 6.0
Total 1.2 4.1 2.8 2.5 6.2 4.6

80 SEB annual report 2006

 Notes to the financial statements

9 f Number of employees

Average number of full time equivalents

Group Parent company*
Division 2006 2005 2006 2005
SEB Merchant Banking 3,188 3,392 2,356 2,326
Nordic Retail & Private Banking 4,730 4,657 3,589 3,649
German Retail & Mortgage Banking 2,918 2,969
Eastern European Banking 5,278 4,787 11 9
SEB Asset Management 580 450 187 224
SEB Trygg Liv 1,051 1,089 4 4
Shared Services och IT 1,563 1,328 1,536 212
Staff units 364 276 363 275
Total 19,672 18,948 8,046 6,699

Number of hours worked 13,913,143 11,687,075

Average number of employees
Group Parent company*
2006 Men Women Total Men Women Total
Sweden 4,239 4,976 9,215 3,190 3,983 7,173
Norway 290 252 542 89 49 138
Denmark 432 383 815 95 57 152
Finland 147 166 313 59 56 115
Estonia 387 1,265 1,652
Latvia 445 1,128 1,573 20 32 52
Lithuania 512 1,221 1,733
Germany 1,874 1,831 3,705 58 11 69
Poland 26 16 42 5 5 10
Ukraine 151 246 397
China 5 5 10 5 5 10
Great Britain 130 82 212 111 70 181
France 6 15 21 4 14 18
Ireland 7 11 18
Luxembourg 106 101 207
Russia 20 57 77 2 2
Singapore 36 49 85 29 48 77
United States 43 16 59
Other1) 9 4 13 2 1 3
Total 8,865 11,824 20,689 3,669 4,331 8,000

2005
Sweden 4,222 5,083 9,305 2,809 3,876 6,685
Norway 279 203 482 87 46 133
Denmark 427 388 815 70 45 115
Finland 145 158 303 46 47 93
Estonia 382 1,152 1,534
Latvia 417 967 1,384
Lithuania 471 1,076 1,547
Germany 1,852 1,810 3,662
Poland 18 13 31
Ukraine 82 142 224
China 2 2 4 2 2 4
Great Britain 132 77 209 100 61 161
France 6 18 24 4 15 19
Ireland 7 9 16
Luxembourg 95 84 179
Russia 2 2 2 2
Singapore 34 46 80 34 46 80
United States 43 15 58
Other2) 9 4 13 1 1 2
Total 8,625 11,247 19,872 3,155 4,139 7,294
1) 2006: Switzerland and Brazil.
2) 2005: Spain, Switzerland and Brazil.
* SEB IT and Enskilda Securities merged with the Parent company in 2006.

SEB annual report 2006 81

Notes to the financial statements

10 Other expenses
Group Parent company
2006 2005 2006 2005
Costs for premises1) –1,572 –2,510 –896 –1,452
Data costs –1,848 –1,703 –1,611 –1,600
Stationery –186 –176 –22 –139
Travel and entertainment –503 –469 –278 –205
Postage and telecommunications –440 –442 –233 –166
Consultants –678 –655 –433 –334
Marketing –784 –650 –340 –255
Information services –319 –336 –231 –155
Other operating costs –1,468 –1,442 –620 –362
Total –7,798 –8,383 –4,664 –4,668
1) Of which rental costs –1,269 –1,775 –639 –1,180

Fees and expense allowances to appointed auditors and audit firms1) 2)

PricewaterhouseCoopers –46 –46 –10 –8
BDO –3 –2 –1 –1
Audit assignments –49 –48 –11 –9

PricewaterhouseCoopers –10 –13 –1 –2

Other assignments –10 –13 –1 –2

Total –59 –61 –12 –11

1) The audit has been performed in a mutual process with the internal audit team of SEB. The cost for internal audit is SEK 121m (110).
2) The parent company includes the foreign branches.

11 Net deferred acquisition costs

Group
2006 2005
Capitalisation of brokerage commissions 654 465
Capitalisation of staff costs 257 339
Amortisation of deferred acquisition costs –404 –327
Total 507 477

12 Depreciation, amortisation and impairments of tangible and intangible assets

Group Parent company
2006 2005 2006 2005
Depreciation tangible assets –689 –730 –382 –334
Amortisation intangible assets –191 –159 –17 –2
Impairment tangible assets –3 –10
Impairment goodwill –2
Total –883 –901 –399 –336

Office equipment is depreciated according to plan, which specifies that personal computers and similar equipment are depreciated over three years and other office
equipment over five years. Properties are depreciated according to plan.

82 SEB annual report 2006

 Notes to the financial statements

13 Gains less losses from tangible and intangible assets

Group Parent company
2006 2005 2006 2005
Properties 92 61 3 8
Other tangible assets 5 11 1 1
Capital gains 97 72 4 9

Properties –18 –3
Other tangible assets –9 –10
Capital losses –27 –13

Total 70 59 4 9

14 Net credit losses incl changes in value of seized assets

Group Parent company
2006 2005 2006 2005
Net credit losses –703 –900 –134 –79
Change in value of seized assets –15 –14 –9
Total –718 –914 –134 –88

Net credit losses (Impairments)

Provisions:
Net collective provisions –108 403 –138 114
Specific provisions –888 –1,286 –46 –191
Reversal of specific provisions no longer required 544 438 36 53
Net provisions for contingent liabilities 31 –6 5
Net provisions –421 –451 –148 –19

Write-offs:
Total write-offs –1,308 –1,532 –265 –217
Reversal of specific provisions utilized for write-offs 704 756 182 93
Write-offs not previously provided for –604 –776 –83 –124
Recovered from previous write-offs 322 327 97 64
Net write-offs –282 –449 14 –60

Total –703 –900 –134 –79

Change in value of seized assets

Properties taken over 2
Other assets taken over 4 –3
Realised change in value 4 –1

Properties taken over –14 –5 –1

Other assets taken over –5 –8 –8
Unrealised change in value –19 –13 –9

Total –15 –14 –9

SEB annual report 2006 83

Notes to the financial statements

15 Appropriations
Parent company
2006 2005
Recovery of imputed pension premiums 345 284
Compensation from pension funds, pension disbursements 708 726
Pension disbursements –710 –726
Pension compensation 343 284

Appropriations to/utilisation of untaxed reserves

Accelerated tax depreciation –688 –1,342
Appropriations –688 –1,342

Total –345 –1,058

16 Income tax expense

Group Parent company
Major components of tax expense 2006 2005 2006 2005
Current tax –2,342 –2,132 –667 –630
Deferred tax –1,234 –610 –491 367
Tax for current year –3,576 –2,742 –1,158 –263
Current tax for previous years 637 –28 467 –30
Income tax expense –2,939 –2,770 –691 –293

Relationship between tax expenses and accounting profit

Net profit 12,623 8,421 4,162 2,559
Discontinued operations 32
Income tax expense 2,939 2,770 691 293
Accounting profit before tax 15,562 11,223 4,853 2,852

Current tax at Swedish statutory rate of 28 per cent –4,357 –3,142 –1,356 –799
Tax effect relating to other tax rates in other jurisdictions –47 36
Tax effect relating to not tax deductible expenses –475 –177 –546 –157
Tax effect relating to non taxable income 1,072 823 672 701
Tax effect relating to a previously recognised tax loss,
tax credit or temporary difference 1,390 264 563 –375
Tax effect relating to a previously unrecognised tax loss,
tax credit or temporary difference 75 64
Current tax –2,342 –2,132 –667 –630

Tax effect relating to origin and reversal of tax losses,

tax credits and temporary differences –1,390 –256 –491 367
Tax effect relating to changes in tax rates or the imposition
of new taxes –11 –3
Tax effect relating to a previously unrecognised tax loss,
tax credit or temporary difference 158 –337
Tax effect relating to impairment or reversal of previous
­impairments of a deferred tax asset 9 –14
Deferred tax –1,234 –610 –491 367

Current tax for previous years 637 –28 467 –30

Income tax expense –2,939 –2,770 –691 –293

See also note 28 for current and deferred tax assets and note 34 for current and deferred tax liabilities.

Deferred tax income and expense recognised in income statement

Accelerated tax depreciation –332 –467
Unrealised profits in financial assets at fair value –662 –491 388
Other temporary differences –240 –143 –21
Total –1,234 –610 –491 367
1) For SEB Group the effect is included in other temporary differences in 2005.

84 SEB annual report 2006

 Notes to the financial statements

17 Earnings per share

Group
2006 2005
Net profit attributable to equity holders, SEKm 12,605 8,401
Weighted average number of shares, millions 673 668
Basic earnings per share, SEK 18.72 12.58

Net profit attributable to equity holders, SEKm 12,605 8,401

Weighted average number of diluted shares, millions 680 674
Diluted earnings per share, SEK 18.53 12.47

Net profit from continuing operations attributable to equity holders, SEKm 12,605 8,433
Weighted average number of shares, millions 673 668
Basic earnings per share from continuing operations, SEK 18.72 12.63

Net profit from continuing operations attributable to equity holders, SEKm 12,605 8,433
Weighted average number of diluted shares, millions 680 674
Diluted earnings per share from continuing operations, SEK 18.53 12.52

The dividend paid 2006 was SEK 4.75 per share.

18 Risk disclosures

Disclosures about risks and the management of risks is found under the section Risk and Capital Management (page 38–44 of the Report of the directors), which
also form part of the financial statements.

19 Cash and cash balances with central banks

Group Parent company
2006 2005 2006 2005
Cash 4,184 4,013 1,430 1,549
Balances with foreign Central Banks 7,130 23,532 398 4,488
Total 11,314 27,545 1,828 6,037

SEB annual report 2006 85

Notes to the financial statements

20 Loans to credit institutions

Group Parent company
2006 2005 2006 2005
Remaining maturity
– payable on demand 62,437 43,251 87,366 76,629
– maximum 3 months 88,317 79,049 102,177 119,791
– more than 3 months but maximum 1 year 5,773 20,735 15,626 30,362
– more than 1 year but maximum 5 years 15,196 20,454 143,242 99,798
– more than 5 years 7,616 14,103 12,317 4,871
Total 179,339 177,592 360,728 331,451
of which repos 82,867 71,676 77,281 52,535

Average remaining maturity (years) 0.76 1.27 1.60 1.15

21 Loans to the public

Group Parent company
2006 2005 2006 2005
Remaining maturity
– payable on demand 152,061 154,055 55,048 39,956
– maximum 3 months 199,393 159,420 111,843 96,419
– more than 3 months but maximum 1 year 94,501 89,974 27,138 28,663
– more than 1 year but maximum 5 years 257,114 262,512 89,932 85,352
– more than 5 years 243,574 235,300 49,168 41,471
Total 946,643 901,261 333,129 291,861
of which repos 112,425 85,278 112,210 85,210

Average remaining maturity (years) 3.48 3.57 2.38 2.40

Financial leases
Book value 62,761 57,771
Gross investment 77,728 71,544
Present value of minimum lease payment receivables 63,673 56,966
Unearned finance income 14,967 13,773
Reserve for impaired uncollectable minimum lease payments –105 –70

Group, 2006 Group, 2005

Gross Gross
Book value investment Present value Book value investment Present value
Remaining maturity
– maximum 1 year 5,678 6,784 5,712 4,467 5,345 4,367
– more than 1 year but maximum 5 years 29,455 35,353 29,854 29,714 35,606 29,269
– more than 5 years 27,628 35,591 28,107 23,590 30,593 23,330
Total 62,761 77,728 63,673 57,771 71,544 56,966

The largest lease engagement amounts to 5.5 billion SEK (5.6).

86 SEB annual report 2006

 Notes to the financial statements

22 Financial assets at fair value

Group Parent company
2006 2005 2006 2005
Securities held for trading 340,879 286,243 285,313 247,291
Derivatives held for trading 65,212 115,768 63,001 112,441
Derivatives used for hedging 2,660 2,998 1,290 2,365
Fair value changes of hedged items in a portfolio hedge 283 2,810
Financial assets – policyholders bearing the risk 120,524 96,148
Insurance assets designated at fair value 79,942 88,711
Other financial assets designated at fair value 1,445 928 160 139
Financial assets at fair value 610,945 593,606 349,764 362,236

The category Financial assets at fair value comprises of financial instruments either classified as held for trading or financial assets designated to this category upon
initial recognition. These financial assets are recognised at fair value and the value change is recognised through profit and loss.

Securities held for trading

Equity instruments 31,637 38,200 22,634 28,144
Eligible debt instruments1) 108,900 74,818 51,424 28,425
Other debt instruments1) 200,342 173,225 211,255 190,722
Total 340,879 286,243 285,313 247,291
1) See note 41 for maturity and note 42 for issuers.

Derivatives held for trading

Positive replacement values of interest-related derivatives 38,634 77,149 37,399 75,469
Positive replacement values of currency-related derivatives 25,053 34,896 24,187 34,240
Positive replacement values of equity-related derivatives 1,525 3,723 1,415 2,732
Total 65,212 115,768 63,001 112,441

Derivatives used for hedging

Fair value hedges 1,506 1,658 877 1,146
Cash flow hedges 413 1,219 413 1,219
Portfolio hedges for interest rate risk 741 121
Total 2,660 2,998 1,290 2,365

Insurance assets designated at fair value

Equity instruments 18,010 21,685
Other debt instruments1) 61,932 67,026
Total 79,942 88,711
1) See note 41 for maturity and note 42 for issuers.

Other financial assets designated at fair value

Equity instruments 704 569 160 139
Eligible debt instruments1) 42
Other debt instruments1) 699 359
Total 1,445 928 160 139
1) See note 41 for maturity and note 42 for issuers.

To significantly eliminate inconsistency in measurement and accounting the Group has chosen to designate financial assets and financial liabilities, which the unit
linked insurance business give rise to, at fair value through profit or loss. This implies that changes in fair value on those investment assets (preferably funds), where
the policy-holder bear the risk and the corresponding liabilities are recognised in profit or loss. Fair value on those assets and liabilities are set by quoted market price
in an active market. The fair values on those liabilities, designated at fair value to profit or loss, have not been affected by changes in credit risk. See also note 31.

SEB annual report 2006 87

Notes to the financial statements

23 Available-for-sale financial assets

Group Parent company
2006 2005 2006 2005
Equity instruments at cost 439 999 439 377
Equity instruments at fair value 1,838 1,154 879 818
Eligible debt instruments1) 84,085 73,535 5,907 3,592
Other debt instruments1) 29,078 17,531 14,818 14,273
Seized shares 42 46 14 14
Total 115,482 93,265 22,057 19,074
1) See note 41 for maturity and note 42 for issuers.

Equity instruments measured at cost do not have a quoted market price in an active market. Further, it has not been possible to reliably measure the fair values of
those equity instruments. Most of these investments are held for strategic reasons and are not intended to be sold in the near future.

24 Held-to-maturity investments
Group Parent company
2006 2005 2006 2005
Eligible debt instruments1) 1
Other debt instruments1) 2,207 16,502 3,820 3,483
Total 2,208 16,502 3,820 3,483
1) See note 41 for maturity and note 42 for issuers.

25 Investments in associates
Group Parent company
2006 2005 2006 2005
Strategic investments 395 398 369 365
Venture capital holdings 690 820 690 795
Total 1,085 1,218 1,059 1,160

Strategic investments Assets Liabilities Revenues Profit or loss Book value Ownership, %
Bankomatcentralen AB, Stockholm 0 22
Bankpension AB, Stockholm 4 40
BDB Bankernas Depå AB, Stockholm 4 20
BGC holding AB, Stockholm 409 139 861 162 4 33
Föreningen Bankhälsan i Stockholm, Stockholm 4 33
Haugerud Regnskap A/S, Honefoss 58 34 70 4 16 49
IBX Integrated Business Exchange, Stockholm 259 81 251 4 66 22
Information Mosaic Ltd, Dublin 26 125 69 –31 48 20
Privatgirot AB, Stockholm 57 37 124 0 24
SSI Search Ltd, Sutton 141 134 4 1 17 50
Upplysningscentralen UC AB, Stockholm 110 42 251 19 0 27
VPC Holding AB, Stockholm 1,595 189 712 –50 206 25
Parent company holdings 369

Holdings of subsidiaries 26

Group holdings 395

88 SEB annual report 2006

 Notes to the financial statements

Note 25 ctd. Investments in associates

2006 2005
Venture capital holdings Book value Ownership, % Book value Ownership, %
3nine AB, Stockholm 19 27 17 25
Ascade Holding AB, Stockholm 46 41 31 35
Askembla Growth Fund KB, Stockholm 115 25 95 25
Capres A/S, Copenhagen 18 22 19 22
Cobolt AB, Stockholm 37 40 26 34
Crossroad Loyalty Solutions AB, Gothenburg 13 30 13 30
Datainnovation i Lund AB, Lund 18 39 11 28
Emers Holdings AB, Huddinge 39 19
Fält Communications AB, Kalix 23 46 23 46
InDex Diagnostics AB, Stockholm 23 25
InDex Pharmaceuticals AB, Stockholm 15 45 20 17
Interpeak AB, Stockholm 19 27
Kreatel Communication AB, Linköping 58 32
LightUp Technologies AB, Huddinge 34 33
Matrix AB, Stockholm 16 47 12 40
Neoventa Medical AB, Gothenburg 45 33 50 39
Novator AB, Stockholm 49 48
NuEvolution A/S, Gothenburg 34 46 43 25
Oligovation AB, Uppsala (former Quiatech) 35 23 34
PhaseIn AB, Stockholm 34 42 29 41
Prodacapo AB, Örnsköldsvik 16 16 26 16
ProstaLund AB, Lund 65 31 42 13
Sanos Bioscience A/S, Herlev 34 28 31 28
SBL Holding AB, Solna 14 39
Scandinova Systems AB, Uppsala 16 26 13 26
Scibase AB, Stockholm 22 27 15 32
Tail-f Systems AB, Stockholm 17 32 17 30
Time Care AB, Stockholm 21 38 21 38
XCounter AB, Danderyd 44 10
Zealcore Embedded Solutions, Västerås 4 16
Parent company holdings 690 795

Group adjustments 25

Group holdings 690 820

Information about the corporate registration numbers and numbers of shares of the associates is available upon request.

Strategic investments in associates are in the Group accounted for using the
­equity method.
Investments in associates held by the venture capital organisation of the
Group have in accordance with IAS 28 been designated as at fair value through
profit or loss. Therefore, are these holdings accounted for under IAS 39.
Some entities where the bank has an ownership of less than 20 per cent, has
been classified as investments in associates. The reason is that the bank is rep-
resented in the board of directors and participating in the policy making processes
of those entities.
All financial assets within the Group’s venture capital business are managed and
its performance is evaluated on a fair value basis in accordance with document-
ed risk management and investment strategies.
Fair values for investments listed in an active market are based on quoted
market prices. If the market for a financial instrument is not active, fair value is
established by using valuation techniques based on discounted cash flow analy-
sis, valuation with reference to financial instruments that is substantially the
same, and valuation with reference to observable market transactions in the
same financial instrument.

SEB annual report 2006 89

Notes to the financial statements

26 Shares in subsidiaries
Parent company
2006 2005
Swedish subsidiaries 25,696 27,032
Foreign subsidiaries 29,610 30,349
Total 55,306 57,381
of which holdings in credit institutions 40,655 42,096

2006 2005
Swedish subsidiaries Book value Dividend Ownership, % Book value Dividend Ownership, %
Aktiv Placering AB, Stockholm 38 100 0 100
Enskilda Juridik AB, Stockholm 100 0 100
Enskilda Kapitalförvaltning SEB AB, Stockholm 100 0 100
Enskilda Securities AB, Stockholm 1,181 159 90
Försäkringsaktiebolaget Skandinaviska Enskilda Captive, Stockholm 100 100 100 100
Repono Holding AB, Stockholm 5,407 100 6,588 11 100
SEB AB, Stockholm 6,076 100 6,076 100
SEB Baltic Holding AB, Stockholm 13 100 13 100
SEB BoLån AB, Stockholm 9,881 100 8,881 100
SEB Fastigheter Region Väst AB, Stockholm 2 100
SEB Fastighetsservice AB, Stockholm 100 0 100
SEB Finans Holding AB, Stockholm 145 300 100
SEB Finans AB, Stockholm 145 100
SEB Fonder AB, Stockholm 642 100 642 100
SEB Förvaltnings AB, Stockholm 5 100 5 100
SEB Internal Supplier AB, Stockholm 12 100 12 100
SEB IT AB, Stockholm 10 100
SEB Kort AB, Stockholm 2,260 100 2,260 54 100
SEB Portföljförvaltning AB, Stockholm 1,115 30 100 1,115 30 100
SEB Strategic Investments AB, Stockholm 1 100 1 100
Skandinaviska Kreditaktiebolaget, Stockholm 100 0 100
Team SEB AB, Stockholm 1 100 1 100
Total 25,696 30 27,032 554

Foreign subsidiaries
FinansSkandic Leasing (SEA) Pte Ltd, Singapore 100 0 100
Interscan Servicos de Consultoria Ltda, São Paulo 100 0 100
OJSC SEB Bank, Kiev 270 100
Osprey Mortage Securities (No 10) Ltd, Jersey
PetroEnergoBank, St Petersburg 126 100
Scandinavian Finance BV, Amsterdam 9 100
SEB AG, Frankfurt am Main 19,292 770 100 19,788 1,114 100
SEB Asset Management America Inc, Stamford 23 100 30 100
SEB Asset Management Fondmæglerselskab A/S, Copenhagen 128 100 138 100
SEB Asset Management Norge AS, Oslo 11 100
SEB Eesti Ühispank, AS, Tallinn 1,348 100 1,476 100
SEB Enskilda ASA, Oslo 522 100
SEB Enskilda Inc., New York 18 100
SEB Fund Service S.A., Luxembourg 22 100 4 100
SEB Gyllenberg AB, Helsinki 492 51 100 510 47 100
SEB Hong Kong Trade Services Ltd, Hong Kong 100 0 99
SEB Investment Management AG, Zürich 0 100
SEB IT Partner Estonia OÜ, Tallinn 65
SEB Latvijas Unibanka, AS, Riga1) 617 100 724 100
SEB NET S.L., Barcelona 100 0 100
SEB Privatbanken ASA, Oslo 1,281 34 100 1,443 100
SEB Strategic Investments.B.V., Amsterdam 1 100 1 100
SEB TFI SA (Towarzystwo Funduszy Inwestycyjnych), Warsaw 24 31 100 27 100
SEB Vilniaus Bankas, AB, Vilnius1) 1,777 100 1,811 100
Skandinaviska Enskilda Banken South East Asia Ltd, Singapore 68 100 149 100
Skandinaviska Enskilda Banken A/S, Copenhagen 1,662 100 2,033 100
Skandinaviska Enskilda Banken Corporation, New York 121 100 147 100
Skandinaviska Enskilda Banken S.A., Luxembourg 1,218 153 100 1,284 150 100
Skandinaviska Enskilda Ltd, London 657 211 100 775 100
Three Crowns Funding, New York
Total 29,610 1,318 30,349 1,311
Information about the corporate registration numbers and numbers of shares of the subsidiaries is available upon request.
1) In 2006 SEB initiated a compulsory redemption process for the remaining shares.
The note includes two entities, Osprey and Three Crowns, which according to AACS not are regarded as subsidiaries since an ownership is lacking. These entities
are special purpose entities (SPE:s), which are created to accomplish a narrow and well-defined objective. Osprey and Three Crowns are included in the consolidated
­accounts of the Group, since the parent company controls these entities.

90 SEB annual report 2006

 Notes to the financial statements

27 Tangible and intangible assets

Group Parent company
2006 2005 2006 2005
Goodwill 11,668 11,773 523
Deferred acquisition costs 2,845 2,334
Other Intangible assets 1,059 1,089 111 68
Intangible assets 15,572 15,196 634 68

Office, IT and other tangible assets 1,411 1,463 202 76

Equipment leased to clients1) 14,552 14,952
Properties for own operations 805 1,725 9 7
Properties taken over for protection of claims 86 119
Property and equipment 2,302 3,307 14,763 15,035

Investment properties recognised at cost 629 925

Investment properties recognised at fair value
through profit and loss 4,411 4,046
Investment properties 5,040 4,971

Total 22,914 23,474 15,397 15,103

1) Equipment leased to clients are recognised as financial leases and presented as loans in the Group.

Goodwill
Opening balance 11,773 11,165
Acquisitions during the year 80 643
Current year’s impairments –2
Reclassifications –18 –216
Sales during the year –15
Exchange rate differences –167 198
Total 11,668 11,773

Deferred acquisition costs

Opening balance 2,334 1,792
Capitalisation of acquisition costs 911 804
Amortisation of acquisition costs –404 –327
Reclassifications 9 62
Exchange rate differences –5 3
Total 2,845 2,334

Goodwill and intangible assets with indefinite lives Acquisitions 2005

Cash generating units with significant carrying amounts of goodwill and intangible
assets with indefinite lives are SEB Kort with SEK 1,122m (1,194) in goodwill and
SEK 119m (119) in intangible assets with indefinite lives and Enskilda Securities
with SEK 904m (857) in goodwill. Goodwill in connection with the Trygg Hansa
­acquisition, SEK 5,721m (5,721), generates cash flows in Retail Banking Sweden,
SEB Asset Management Sweden and SEB Trygg Liv Sweden. The goodwill has
been allocated to these units for impairment testing. The carrying amounts of
goodwill for Retail Banking Sweden is SEK 775m, SEB Asset Management Sweden
SEK 2,769m and SEB Trygg Liv Sweden SEK 2,021m. leader within life insurance in its country. ABB Credit Oy, a Finnish company with a
The impairment tests for the entities specified above have been based on their
value in use with forecasted cash flows for a period of five years. The cash flows
are determined based on historical performance and market trends for key as-
sumptions such as growth and cost/income ratio. The growth rates used after
five years are principally the expected long-term inflation rate, SEB Kort 2 per
cent and Enskilda Securities 4 per cent and for the Trygg Hansa goodwill 3 per
cent. The discount rate used for SEB Kort is 9 per cent, Enskilda Securites 8 per
cent and the Trygg Hansa goodwill 9 per cent. The assumptions here specified
are for impairment test purposes only. A sensitivity analysis where the discount
rate and growth rate, respectively, were changed with one percentage point did
not result in calculated recoverable amounts below the carrying amounts.
Acquisitions 2006
During 2006 only two minor acquisitions were made, PetroEnergoBank, Russia
and PrimeManagement, Denmark. The purchase price was SEK 130m and good-
will was SEK 80m. close to the book value. The depreciation is done by the straight line method and
Four acquisitions were done during the year. Their total purchase price was SEK
5,780m resulting in a goodwill of SEK 643m whereof Privatbanken SEK 541m which
mainly relates to expected synergies. Customer lists were valued at SEK 42m.
Privatbanken in Norway was acquired to 98 per cent as at 14 September 2005.
A week later SEB owned Privatbanken to 100 per cent. It is a bank for private cus-
tomers with high demands. Bank Agio, a full scale bank in the Ukraine market, was
acquired 1 January 2005 to 92 per cent, at the end of the year the share was 99
per cent. Balta Life in Latvia was acquired 3 August 2005. The company is market
large leasing portfolio, was acquired on 30 November 2005. The acquired compa-
nies have contributed with SEK 69m to the operating profit. The acquired main
asset was Loans to the public SEK 19.1bn whereof Privatbanken 8.6 and ABB
Credit Oy 10.5 and the main liability was Deposits and borrowings of 13.1bn
whereof Privatbanken 8.3 and ABB Credit Oy 4.3. A minor fair value adjustment
was made to the Loans to the public with SEK –70m in the acquisition analysis.
Investment property
The fair value model is used for valuation of investment property held in the insur-
ance business. The cost model is used for other investment properties. Invest-
ment property recognised at fair value through profit and loss is owned by SEB
Pension in Denmark. The valuation of the portfolio is done by independent valuers
with experience in the market. The investment property valued at costs is held in
Germany and the Baltic countries. The valuation is done at costs due to uncertain
market conditions. The best possible estimation is that the market value would be
is ranging over 20 to 50 years depending on classification as building or improve-
ments to the building.

SEB annual report 2006 91

Notes to the financial statements

Note 27 ctd. Tangible and intangible assets

Group Parent company

Other intangible assets 2006 2005 2006 2005
Opening balance 2,810 2,155 157 105
Acquisitions during the year 201 302 60 52
Group adjustment 38
Reclassifications 280
Sales during the year –11 –18
Exchange rate differences –94 53
Acquisition value 2,906 2,810 217 157

Opening balance –1,721 –1,464 –89 –87

Current year’s depreciations –191 –159 –17 –2
Group adjustment –14
Reclassifications –62
Accumulated depreciations on current year’s sales 6 13
Exchange rate differences 59 –35
Accumulated depreciations –1,847 –1,721 –106 –89

Total 1,059 1,089 111 68

Office, IT and other tangible assets

Opening balance 7,132 7,072 1,993 1,983
Acquisitions during the year 620 573 114 26
Group adjustment/Merger 5 14 360
Reclassifications 24 56
Sales during the year –511 –746 –16
Exchange rate differences –154 163
Acquisition value 7,116 7,132 2,467 1,993

Opening balance –5,669 –5,562 –1,917 –1,890

Current year’s depreciations –619 –649 –79 –36
Current year’s impairments –5
Group adjustment/Merger –2 –14 –270
Reclassifications –18 –23
Accumulated depreciations on current year’s sales 484 699 9
Exchange rate differences 119 –115 1
Accumulated depreciations –5,705 –5,669 –2,265 –1,917

Total 1,411 1,463 202 76

Equipment leased to clients1)

Opening balance 16,557 14,721
Acquisitions during the year –98 1,836
Acquisition value 16,459 16,557

Opening balance –1,605 –1,321

Current year’s depreciations –302 –284
Accumulated depreciations –1,907 –1,605

Total 14,552 14,952

1) Equipment leased to clients is depreciated in annuities, based on a conservatively estimated residual value at the end of the contract period. For leased equipment that cannot be sold in
a functioning market, the scheduled residual value is zero at the end of the contract period. Any surplus resulting from the sale of leased equipment is reported under Other income.

92 SEB annual report 2006

 Notes to the financial statements

Note 27 ctd. Tangible and intangible assets

Group Parent company

Properties for own operations 2006 2005 2006 2005
Opening balance 2,310 2,107 8 9
Acquisitions during the year 59 264 2
Group adjustment 8 25
Reclassifications –860 –39
Sales during the year –189 –135 –1
Exchange rate differences –80 88
Acquisition value 1,248 2,310 10 8

Opening balance –585 –530 –1 –1

Current year’s depreciations –42 –47
Group adjustment –1 –9
Reclassifications 110 12
Accumulated depreciations on current year’s sales 54 10
Exchange rate differences 21 –21
Accumulated depreciations –443 –585 –1 –1

Total 805 1,725 9 7

Tax value, real properties 5 7 5 7
of which, buildings 3 3 3 3
Tax value refers only to properties in Sweden.

Properties taken over for protection of claims

Opening balance 119 106 1
Acquisitions during the year 3 18
Current year’s impairments –15 –1
Sales during the year –17 –8
Exchange rate differences –4 3
Total 86 119

Net operating earnings from properties taken over for protection of claims
External income 3 5
Operating costs –2 –4
Total 1 1

Investment properties recognised at cost

Opening balance 1,206 1,136
Acquisitions during the year 2 113
Group adjustment
Reclassifications –210 62
Sales during the year –89 –151
Exchange rate differences –38 46
Acquisition value 871 1,206

Opening balance –281 –226

Current year’s depreciations –28 –35
Current year’s impairments –3 –6
Group adjustment
Reclassifications 29 –6
Accumulated depreciations on current year’s sales 31 1
Exchange rate differences 10 –9
Accumulated depreciations –242 –281
Total 629 925

Investment properties recognised at fair value through profit and loss

Opening balance 4,046 3,916
Acquisitions during the year 428 79
Group adjustment
Revaluation at fair value 222 166
Sales during the year –137 –265
Exchange rate differences –148 150
Total 4,411 4,046

Net operating earnings from investment properties

External income 287 292
Operating costs1) –107 –81
Total 180 211
1) Direct operating expenses arising from investment property that did not generate rental income amounts to SEK 7m (10).

SEB annual report 2006 93
Notes to the financial statements

28 Other assets
Group Parent company
2006 2005 2006 2005
Current tax assets 2,568 1,637 1,485 636
Deferred tax assets 1,121 1,209 35
Trade and client receivables 11,277 21,910 9,694 23,702
Other assets 27,356 29,114 17,747 19,038
Other assets 42,322 53,870 28,961 43,376

Current tax assets

Other 2,568 1,637 1,485 636
Recognised in profit and loss 2,568 1,637 1,485 636

Total 2,568 1,637 1,485 636

Deferred tax assets

Tax effect of changes in accounting principles (IFRS)
Unrealised losses in financial assets at fair value 18 176
Tax losses carry forwards 544 459
Other temporary differences1) 579 595 35
Recognised in profit and loss 1,141 1,230 35

Unrealised losses in cash flow hedges

Unrealised losses in available-for-sale financial assets –20 –21
Recognised in Shareholders’ equity –20 –21

Total 1,121 1,209 35

1) Temporary differences are differences between the carrying amount of an asset or liability in the balance sheet and its tax base. Taxable temporary differences give rise to deferred tax
­assets and liabilities.

Tax losses carried forward in the SEB Group for which the tax asset are not recognized in the balance sheet amounts gross to SEK 3,661m (3,715). These are not
recognized due to the uncertainty of possibility to use them. This includes losses where the amount only can be used for trade tax. The potential tax asset not recog-
nized is SEK 578 m (594).

Trade and client receivables

Trade receivables 463 502
Client receivables 10,814 21,408 9,694 23,702
Total 11,277 21,910 9,694 23,702

Other assets
Pension plan assets, net 4,146 3,467
Reinsurers share of insurance provisions 670 633
Accrued interest income 9,959 9,882 6,910 5,777
Other accrued income 1,600 1,705 820 1,085
Prepaid expenses 436 510
Other 10,545 12,917 10,017 12,176
Total 27,356 29,114 17,747 19,038

29 Deposits by credit institutions

Group Parent company
2006 2005 2006 2005
Remaining maturity
– payable on demand 113,978 95,982 126,836 120,710
– maximum 3 months 211,752 249,742 185,401 181,260
– more than 3 months but maximum 1 year 18,283 29,146 16,736 42,884
– more than 1 year but maximum 5 years 7,395 9,270 213 115
– more than 5 years 14,572 15,354 3,185 541
Total 365,980 399,494 332,371 345,510
of which repos 59,467 38,337 61,909 44,888

Average remaining maturity (years) 0.56 0.58 0.20 0.16

94 SEB annual report 2006

 Notes to the financial statements

30 Deposits and borrowing by the public

Group Parent company
2006 2005 2006 2005
Deposits 575,315 515,011 300,749 261,443
Borrowing 66,443 54,990 88,378 63,276
Total 641,758 570,001 389,127 324,719

Deposits1)
Remaining maturity
– payable on demand 382,215 327,440 300,749 261,443
– maximum 3 months 122,093 113,034
– more than 3 months but maximum 1 year 14,138 21,380
– more than 1 year but maximum 5 years 26,861 30,175
– more than 5 years 30,008 22,982
Total 575,315 515,011 300,749 261,443
1) Only account balances covered by the Deposit Guarantee are reported as deposits. The amount refers to the total account balance without considering the limitation in terms of amount that
is applicable to the Deposit Guarantee and fee bases.

Average remaining maturity (years) 0.70 0.68

Borrowing
Remaining maturity
– payable on demand 15,865 16,050 24,494 15,791
– maximum 3 months 30,969 24,948 39,010 32,183
– more than 3 months but maximum 1 year 4,899 2,995 5,703 3,604
– more than 1 year but maximum 5 years 3,128 2,402 4,103 3,123
– more than 5 years 11,582 8,595 15,068 8,575
Total 66,443 54,990 88,378 63,276
of which repos 37,500 17,606 37,494 34,018

Average remaining maturity (years) 1.99 1.78 1.94 1.60

31 Liabilities to policyholders
Group
2006 2005
Liabilities to policyholders – investment contracts1) 120,127 96,178
Liabilities to policyholders – insurance contracts 83,592 89,185
Total 203,719 185,363
1) Designated at fair value through profit and loss.

Liabilities to policyholders – investment contracts*

Opening balance 96,178 67,427
Transfer of portfolios through divestments –706
Reclassification from Long-term insurance contracts 117
Premiums received 22,380 22,097
Change in value of investment funds 11,039 19,025
Fees deducted from account balances –951 –738
Provisions released for payments, surrender and other terminations –6,968 –11,508
Policyholders tax deducted from account balances –580 –609
Other technical costs –96 –39
Change in unallocated premiums –1 –19
Other change in provisions 10 82
Exchange rate differences –295 460
Total 120,127 96,178
* Insurance provisions where the policyholders are carrying the risk.

SEB annual report 2006 95

Notes to the financial statements

Note 31 ctd. Liabilities to policyholders

Group
Liabilities to policyholders – insurance contracts 2006 2005
Opening balance 4,541 2,405
Transfer of portfolios through acquisitions 1,258
Reclassification of Reinsurers’ share 16
Reclassification to/from Long-term insurance contracts –71 384
Change in provisions 155 405
Exchange rate differences –105 89
Short–term insurance contracts (non-life) 4,536 4,541

Opening balance 84,644 73,713

Transfer of portfolios through divestments/acquisitions –241 2,192
Reclassification to Investment contracts –117
Reclassification from/to Short-term insurance contracts 71 –384
Change in collective bonus provisions 411 2,208
Change in other insurance contract provisions1) –2,768 4,086
Exchange rate differences –2,944 2,829
Long–term insurance contract provisions (life) 79,056 84,644

Total 83,592 89,185

1) Include mainly premiums received during the year, allocated guaranteed interest less payments to policyholders.

32 Debt securities
Group Parent company
2006 2005 2006 2005
Bond loans 259,191 234,180 54,767 47,730
Other issued securities 129,631 119,025 117,521 90,308
Total 388,822 353,205 172,288 138,038

The Group issues equity index linked bonds, which contains both a liability and an
equity component. The Group has chosen to designate issued equity index linked
bonds, with fair values amounting to SEK 6,873m, as at fair value through profit
or loss, since they contain embedded derivatives. This choice implies that the
­entire hybrid contract is measured at fair value in profit or loss. Fair value for
those financial instruments is calculated using a valuation technique, exclusively
based on quoted market prices. Fair value on these financial liabilities has not
been affected by changes in credit risk. This has been concluded by evaluating
the bank’s rating which has been stable.

Bond loans
Remaining maturity
– maximum 1 year 86,315 49,001 15,007 26,099
– more than 1 years but maximum 5 years 162,779 174,879 38,805 20,680
– more than 5 years but maximum 10 years 7,501 9,723 571 374
– more than 10 years 2,596 577 384 577
Total 259,191 234,180 54,767 47,730

Average remaining maturity (years) 2.41 2.71 2.45 1.50

Other issued securities

Remaining maturity
– payable on demand 2,128 6,032 2,124 1,967
– maximum 3 months 67,059 73,903 55,214 51,567
– more than 3 months but maximum 1 year 53,541 35,166 53,358 34,070
– more than 1 year but maximum 5 years 6,903 3,924 6,825 2,704
– more than 5 years
Total 129,631 119,025 117,521 90,308

Average remaining maturity (years) 0.48 0.36 0.52 0.42

96 SEB annual report 2006

 Notes to the financial statements

33 Financial liabilities at fair value

Group Parent company
2006 2005 2006 2005
Trading derivatives 60,343 119,592 60,693 115,012
Derivatives used for hedging 5,894 8,901 1,386 1,023
Trading liabilities 84,762 72,563 79,422 71,498
Fair value changes of hedged items in portfolio hedge –147 718
Total 150,852 201,774 141,501 187,533
Financial liabilities designated at fair value through profit or loss is specified in note 31 and 32.

Trading derivatives
Negative replacement values of interest-related derivatives 33,637 79,277 35,608 76,830
Negative replacement values of currency-related derivatives 24,690 34,312 23,865 33,697
Negative replacement values of equity-related derivatives 1,976 6,003 1,220 4,485
Negative replacement values of other derivatives 40
Total 60,343 119,592 60,693 115,012

Derivatives used for hedging

Fair value hedges 3,080 4,453 1,284 922
Cash flow hedges 111 101 102 101
Portfolio hedges for interest rate risk 2,703 4,347
Total 5,894 8,901 1,386 1,023

Trading liabilities
Short positions in equity instruments 3,746 9,714 3,744 9,630
Short positions in debt instruments 81,016 62,849 75,678 61,868
Total 84,762 72,563 79,422 71,498

34 Other liabilities
Group Parent company
2006 2005 2006 2005
Current tax liabilities 1,036 1,193 226 20
Deferred tax liabilities 9,099 8,358 473 112
Trade and client payables 12,479 26,120 10,900 23,979
Other liabilities 47,914 40,415 34,567 25,970
Total 70,528 76,086 46,166 50,081

Current tax liabilities

Other 1,036 1,193 –407 –678
Recognised in profit and loss 1,036 1,193 –407 –678

Group contributions 633 698

Recognised in Shareholders’ equity 633 698
Total 1,036 1,193 226 20

Deferred tax liabilities

Accelerated tax depreciation 6,831 6,499
Unrealised profits in financial assets at fair value 311 –192 249 –280
Pension plan assets, net 1,111 971
Other temporary differences 534 696
Recognised in profit and loss 8,787 7,974 249 –280

Unrealised profits in cash flow hedges 180 343 143 318

Unrealised profits in available-for-sale financial assets 132 41 81 74
Recognised in Shareholders’ equity 312 384 224 392
Total 9,099 8,358 473 112

Temporary differences are differences between the carrying amount of an asset or liability in the balance sheet and its tax base. Taxable temporary differences give
rise to deferred tax ­assets and liabilities.
In Estonia no income tax is paid unless profit is distributed as dividend. No deferred tax liability is recognised related to possible future tax costs on dividends
from Estonia. Tax rate applicable to dividends are 22 (23) per cent.

SEB annual report 2006 97

Notes to the financial statements

Note 34 ctd. Other liabilities

Group Parent company

Trade and client payables 2006 2005 2006 2005
Trade payables 361 834
Client payables 12,118 25,286 10,900 23,979
Total 12,479 26,120 10,900 23,979

Other liabilities
Accrued interest expense 10,490 9,418 5,101 4,143
Other accrued expense 2,764 3,000 1,171 914
Prepaid income 2,198 1,626
Other 32,462 26,371 28,295 20,913
Total 47,914 40,415 34,567 25,970

35 Provisions
Group Parent company
2006 2005 2006 2005
Restructuring reserve 143 346 7 24
Reserve for off-balance-sheet items 215 268 4 4
Pensions and other post retirement benefit obligations (note 9b) 58 145
Other provisions 1,650 2,057 405 626
Total 2,066 2,816 416 654

Restructuring reserve
Opening balance 346 635 24 62
Amounts used –190 –309 –17 –38
Exchange differences –13 20
Total 143 346 7 24
The restructuring reserve mainly regards the German business and is expected to be used mainly in 2007.

Reserve for off-balance-sheet items

Opening balance 268 255 4 8
Additions 41
Amounts used –46 –36 –4
Acquisitions through business combination 3
Exchange differences –7 5
Total 215 268 4 4
The reserve for off-balance sheet items is mainly referring to the German market and its corporate sector. A minor part is expected to be used during 2007 while the
remaining part have a substantially longer life.

Other provisions
Opening balance 2,057 598 626
Additions 47 1,442 626
Amounts used –399 –1 –221
Unused amounts reversed –15
Other movements –18
Exchange differences –22 18
Total 1,650 2,057 405 626

The other provisions consists of three main parts, unutilised premises in connection with the integration of SEB’s different business units in Sweden, the Nordic coun-
tries, Germany and U.K. expected to be used between 5 and 10 years, unsettled claims in the U.K. market to be settled within 7 years and provisions linked to property
funds and guarantees given in Germany for a maximum of 5 years.

98 SEB annual report 2006

 Notes to the financial statements

36 Subordinated liabilities
Group Parent company
2006 2005 2006 2005
Debenture loans 22,858 23,835 21,687 22,681
Debenture loans, perpetual 21,516 20,618 21,516 20,618
Debenture loans, hedged positions –925 –250 –925 –250
Total 43,449 44,203 42,278 43,049

Original nom. Rate of

Debenture loans Currency amount Book value interest, %
1994/2009 USD 200 1,355 6.875
2002/2012 EUR 500 4,527 5.625
2003/2015 EUR 500 4,520 4.125
2004/2014 EUR 750 6,768 1)

2005/2017 EUR 500 4,517 1)

Total Parent company 21,687

Debenture loans issued by SEB AG 1,083

Debenture loans issued by other subsidiaries 88
Total Group 22,858

Debenture loans, perpetual

1995 JPY 10,000 576 4,400
1996 GBP 10 9,040
1996 USD 150 8,125
1996 USD 50 1)

1997 JPY 15,000 864 5,000

1997 USD 150 763 7,500
2000 USD 100 14 1)

2004 USD 500 3,429 4,958

2005 USD 600 4,114 1)

2005 GBP 500 6,718 5,000

2006 GBP 375 5,038 5,500
Total 21,516
1) FRN, Floating Rate Note

37 Untaxed reserves1)
Parent company
2006 2005
Excess depreciation of office equipment/leased assets 12,085 11,397
Other untaxed reserves 4 5
Total 12,089 11,402
1) In the balance sheet of the Group untaxed reserves are reclassified partly as deferred tax liability and partly as restricted equity.

Parent company
Excess Other untaxed
depreciation reserves Total
Opening balance 10,055 4 10,059
Appropriations 1,342 1,342
Reversals
Exchange rate differencies 1 1
Closing balance 2005 11,397 5 11,402

Appropriations 688 688

Reversals
Exchange rate differencies –1 –1
Closing balance 2006 12,085 4 12,089

SEB annual report 2006 99

Notes to the financial statements

38 Memorandum items
Group Parent company
2006 2005 2006 2005
Collateral and comparable security pledged for own liabilities 354,694 316,425 231,121 168,014
Other pledged assets and comparable collateral 189,730 143,042 70,051 48,846
Contingent liabilities 60,156 57,891 55,721 51,188
Commitments 346,517 283,830 233,895 197,283

Collateral and comparable security pledged for own liabilities

Lending1) 98 178 98 146
Bonds 173,347 165,197 132,405 105,374
Repos 98,618 62,494 98,618 62,494
Assets in insurance business 82,631 88,556
Total 354,694 316,425 231,121 168,014
1) Of which SEK 98m (146) refers to the parent company’s pledging of promissory notes for the benefit of the Swedish Export Credit Corporation.

Other pledged assets and comparable collateral

Shares in insurance premium funds 119,679 95,957
Securities loans 70,051 47,085 70,051 48,846
Total 189,730 143,042 70,051 48,846

Contingent liabilities
Guarantee commitments, credits 7,586 7,240 7,523 11,187
Guarantee commitments, other 42,543 39,917 40,700 32,184
Own acceptances 1,048 678 1,024 645
Total 51,177 47,835 49,247 44,016

Approved, but unutilised letters of credit 8,979 10,056 6,474 7,172

Total 60,156 57,891 55,721 51,188

Other contingent liabilities

The parent company has pledged to the Monetary Authority of Singapore to en- The parent company has issued a deposit guarantee for SEB AG in Germany to
sure that its subsidiary bank in Luxembourg’s branch in Singapore is able to fulfil the Bundesverband deutscher Banken e.V.
its commitments. The parent company has granted a capital contribution to SEB AG.

Commitments
Deposits in other banks 20 2,256
Granted undrawn credit 166,674 155,174 109,491 108,151
Unutilised part of approved overdraft facilities 96,565 77,009 54,901 40,286
Securities loans 82,592 47,343 69,503 48,846
Other commmitments 666 2,048
Total1) 346,517 283,830 233,895 197,283
1) Commitments for future payments are from 2006 not regarded as memorandum items. 2005 have been restated accordingly.

100 SEB annual report 2006

 Notes to the financial statements

39 Current and non-current assets and liabilities

Group

2006 2005
Non-current Non-current
Assets Current assets assets Total Current assets assets Total
Cash and cash balances with central banks 11,314 11,314 27,545 27,545
Loans to credit institutions 156,527 22,812 179,339 143,035 34,557 177,592
Loans to the public 445,955 500,688 946,643 403,449 497,812 901,261
Securities held for trading 90,346 250,533 340,879 84,820 201,423 286,243
Derivatives held for trading 65,212 65,212 115,768 115,768
Derivatives used for hedging 2,660 2,660 2,998 2,998
Fair value changes of hedged items in a portfolio
hedge 283 283 2,810 2,810
Financial assets – policyholders bearing the risk 120,524 120,524 96,148 96,148
Other financial assets designated at fair value 20,245 61,142 81,387 24,634 65,005 89,639
Financial assets at fair value 299,270 311,675 610,945 327,178 266,428 593,606
Available-for-sale financial assets 14,880 100,602 115,482 10,629 82,636 93,265
Held-to-maturity investments 470 1,738 2,208 16 16,486 16,502
Discontinued operations/Assets held for sale 2,189 2,189 1,405 1,405
Investments in associates 1,085 1,085 1,218 1,218
Intangible assets 595 14,977 15,572 486 14,710 15,196
Property and equipment 661 1,641 2,302 815 2,492 3,307
Investment properties 5,040 5,040 4,971 4,971
Tangible and intagible assets 1,256 21,658 22,914 1,301 22,173 23,474
Current tax assets 2,568 2,568 1,637 1,637
Deferred tax assets 1,121 1,121 1,209 1,209
Trade and client receivables 11,277 11,277 21,910 21,910
Other assets 27,356 27,356 29,114 29,114
Other assets 41,201 1,121 42,322 52,661 1,209 53,870
Total 973,062 961,379 1,934,441 967,219 922,519 1,889,738

2006 2005
Current Non-current, Current Non-current
Liabilities ­liabilities liabilities Total ­liabilities liabilities Total
Deposits by credit institutions 344,013 21,967 365,980 374,870 24,624 399,494
Deposits and borrowing from the public 570,179 71,579 641,758 505,847 64,154 570,001
Liabilities to policyholders – investment contracts 7,004 113,123 120,127 11,508 84,670 96,178
Liabilities to policyholders – insurance ­contracts 4,536 79,056 83,592 4,541 84,644 89,185
Liabilities to policyholders 11,540 192,179 203,719 16,049 169,314 185,363
Debt securities 209,043 179,779 388,822 164,102 189,103 353,205
Trading derivatives 60,343 60,343 119,592 119,592
Derivatives used for hedging 5,894 5,894 8,901 8,901
Trading liabilities 84,762 84,762 72,563 72,563
Fair value changes of hedged items in ­portfolio hedge –147 –147 718 718
Financial liabilities at fair value 150,852 150,852 201,774 201,774
Current tax liabilities 1,036 1,036 1,193 1,193
Deferred tax liabilities 9,099 9,099 8,358 8,358
Trade and client payables 12,479 12,479 26,120 26,120
Other liabilities 47,914 47,914 40,415 40,415
Other liabilities 61,429 9,099 70,528 67,728 8,358 76,086
Provisions 2,066 2,066 1,303 1,513 2,816
Subordinated liabilities 43,449 43,449 44,203 44,203
Total 1,347,056 520,118 1,867,174 1,331,673 501,269 1,832,942

SEB annual report 2006 101

Notes to the financial statements

40 Financial assets and liabilities by class

Group 2006

Classes of financial assets and liabilities

Loans and Equity Debt Derivative Investment Insurance
Financial assets deposits ­instruments ­instruments instruments contracts contracts Other Total
Cash and cash balances with central banks (note 19) 11,314 11,314
Loans to credit institutions (note 20) 179,339 179,339
Loans to the public (note 21) 946,643 946,643
Financial assets at fair value (note 22) 32,341 309,983 67,872 120,524 283 531,003
Available-for-sale financial assets (note 23) 2,319 113,163 115,482
Held-to-maturity financial assets (note 24) 2,208 2,208
Investments in associates (note 25) 1,085 1,085
Trade and client receivables (note 28) 11,277 11,277
Financial assets 1,125,982 35,745 425,354 67,872 120,524 22,874 1,798,351
Other assets (non-financial) 79,942 56,148 136,090
Total 1,125,982 35,745 425,354 67,872 120,524 79,942 79,022 1,934,441

Financial liabilities
Deposits by credit institutions (note 29) 365,980 365,980
Deposits and borrowing from the public (note 30) 641,758 641,758
Liabilities to policyholders (note 31) 120,127 120,127
Debt securities (note 32) 388,822 388,822
Financial liabilities at fair value (note 33) 3,746 81,016 66,238 -148 150,852
Trade and client payables (note 34) 12,479 12,479
Subordinated liabilities (note 36) 43,449 43,449
Financial liabilities 1,007,738 3,746 513,287 66,238 120,127 12,331 1,723,467
Other liabilities (non-financial) 83,592 60,115 143,707
Total equity 67,267 67,267
Total 1,007,738 3,746 513,287 66,238 120,127 83,592 139,713 1,934,441

Group 2005

Classes of financial assets and liabilities

Loans and Equity Debt Derivative Investment Insurance
Financial assets deposits ­instruments ­instruments instruments contracts contracts Other Total
Cash and cash balances with central banks (note 19) 27,545 27,545
Loans to credit institutions (note 20) 177,592 177,592
Loans to the public (note 21) 901,261 901,261
Financial assets at fair value (note 22) 38,769 248,402 118,766 96,148 2,810 504,895
Available-for-sale financial assets (note 23) 2,199 91,066 93,265
Held-to-maturity financial assets (note 24) 16,502 16,502
Investments in associates (note 25) 1,218 1,218
Trade and client receivables (note 28) 21,910 21,910
Financial assets 1,078,853 42,186 355,970 118,766 96,148 52,265 1,744,188
Other assets 88,711 56,839 145,550
Total 1,078,853 42,186 355,970 118,766 96,148 88,711 109,104 1,889,738

Financial liabilities
Deposits by credit institutions (note 29) 399,494 399,494
Deposits and borrowing from the public (note 30) 570,001 570,001
Liabilities to policyholders (note 31) 96,178 96,178
Debt securities (note 32) 353,205 353,205
Financial liabilities at fair value (note 33) 9,714 62,849 128,493 718 201,774
Trade and client payables (note 34) 26,120 26,120
Subordinated liabilities (note 36) 44,203 44,203
Financial liabilities 969,495 9,714 460,257 128,493 96,178 26,838 1,690,975
Other liabilities (non-financial) 89,185 52,782 141,967
Total equity 56,796 56,796
Total 969,495 9,714 460,257 128,493 96,178 89,185 136,416 1 889,738
SEB has grouped its financial instruments by class taking into account the characteristics of the instruments:
Loans and deposits includes financial assets and liabilities with fixed or determinable payments that are not quoted in an active market. These are further specified in
note 43 and 44.
Equity intruments includes shares, rights issues and similar contractual rights of other entities.
Debt instruments includes contractual rights to receive or obligations to deliver cash on a predetermined date. These are further specified in note 41, 42 and 43.
Derivative instruments includes options, futures, swaps and other derived products held for trading and hedging purposes. These are further specified in note 45.
Investment contracts includes those assets and liabilities in the Life insurance operations where the policyholder is carrying the risk of the contractual agreement
(is not qualified as an insurance contract under IFRS 4). The Life insurance operations are further specified in note 51.
Insurance contracts includes those assets and liabilities in the Life insurance operations where SEB is carrying the insurance risk of a contractual agreement
(is qualified as an insurance contract under IFRS 4). The Life insurance operations are further specified in note 51.
Other includes other financial asset and liabilities recognised in accordance with IAS 39.

102 SEB annual report 2006

 Notes to the financial statements

Note 40 ctd. Financial assets and liabilities by class

Parent 2006

Classes of financial assets and liabilities

Loans and Equity Debt Derivative
Financial assets deposits instrumens instruments instruments Other Total
Cash and cash balances with central banks (note 19) 1,828 1,828
Loans to credit institutions (note 20) 360,728 360,728
Loans to the public (note 21) 333,129 333,129
Financial assets at fair value (note 22) 22,794 262,679 64,291 349,764
Available-for-sale financial assets (note 23) 1,332 20,725 22,057
Held-to-maturity financial assets (note 24) 3,820 3,820
Investments in associates (note 25) 1,059 1,059
Shares in subsidiaries (note 26) 55,306 55,306
Trade and client receivables (note 28) 9,694 9,694
Financial assets 693,857 80,491 287,224 64,291 11,522 1,137,385
Other assets (non-financial) 34,664 34,664
Total 693,857 80,491 287,224 64,291 46,186 1,172,049

Financial liabilities
Deposits by credit institutions (note 29) 332,371 332,371
Deposits and borrowing from the public (note 30) 389,127 389,127
Debt securities (note 32) 172,288 172,288
Financial liabilities at fair value (note 33) 3,744 75,678 62,079 141,501
Trade and client payables (note 34) 10,900 10,900
Subordinated liabilities (note 36) 42,278 42,278
Financial liabilities 721,498 3,744 290,244 62,079 10,900 1,088,465
Other liabilities (non-financial) 35,682 35,682
Total equity and untaxed reserves 47,902 47,902
Total 721,498 3,744 290,244 62,079 94,484 1,172,049

Parent 2005

Classes of financial assets and liabilities

Loans and Equity Debt Derivative
Financial assets deposits instruments ­instruments instruments Other Total
Cash and cash balances with central banks (note 19) 6,037 6,037
Loans to credit institutions (note 20) 331,451 331,451
Loans to the public (note 21) 291,861 291,861
Financial assets at fair value (note 22) 28,283 219,147 114,806 362,236
Available-for-sale financial assets (note 23) 1,209 17,865 19,074
Held-to-maturity financial assets (note 24) 3,483 3,483
Investments in associates (note 25) 1,160 1,160
Shares in subsidiaries (note 26) 57,381 57,381
Trade and client receivables (note 28) 23,702 23,702
Financial assets 623,312 88,033 240,495 114,806 29,739 1,096,385
Other assets 35,438 35,438
Total 623,312 88,033 240,495 114,806 65,177 1,131,823

Financial liabilities
Deposits by credit institutions (note 29) 345,510 345,510
Deposits and borrowing from the public (note 30) 324,719 324,719
Debt securities (note 32) 138,038 138,038
Financial liabilities at fair value (note 33) 9,630 61,868 116,035 187,533
Trade and client payables (note 34) 23,979 23,979
Subordinated liabilities (note 36) 43,049 43,049
Financial liabilities 670,229 9,630 242,955 116,035 23,979 1,062,828
Other liabilities (non-financial) 26,756 26,756
Total equity and untaxed reserves 42,239 42,239
Total 670,229 9,630 242,955 116,035 92,974 1,131,823

SEB annual report 2006 103

Notes to the financial statements

41 Debt instruments by maturities

Eligible debt instruments

1<3 3 months 1<5 5 < 10

Group 2006 < 1 month months < 1 year years years 10 years < Total
Securities held for trading (note 22) 2,298 5,717 17,823 42,370 27,273 13,419 108,900
Other financial assets at fair value (note 22) 42 42
Available-for-sale financial assets (note 23) 1,673 1,613 8,243 32,826 27,426 12,304 84,085
Held-to-maturity financial assets (note 24) 1 1
Total 3,971 7,330 26,066 75,197 54,741 25,723 193,028

Group 2005
Securities held for trading (note 22) 3,925 2,217 11,838 34,148 14,730 7,960 74,818
Available-for-sale financial assets (note 23) 3,633 1,547 2,778 31,907 23,573 10,097 73,535
Total 7,558 3,764 14,616 66,055 38,303 18,057 148,353

Parent 2006
Securities held for trading (note 22) 2,607 10,941 19,615 9,093 9,168 51,424
Available-for-sale financial assets (note 23) 1,027 4,880 5,907
Total 1,027 2,607 10,941 19,615 9,093 14,048 57,331

Parent 2005
Securities held for trading (note 22) 2 1,759 3,239 7,407 10,273 5,745 28,425
Available-for-sale financial assets (note 23) 3,592 3,592
Total 2 1,759 3,239 7,407 10,273 9,337 32,017

Other debt instruments

1<3 3 months 1<5 5 < 10

Group 2006 < 1 month months < 1 year years years 10 years < Total
Securities held for trading (note 22) 6,726 4,457 21,688 74,734 17,953 74,784 200,342
Insurance assets (note 22) 102 32 1,264 12,064 46,613 1,857 61,932
Other financial assets at fair value (note 22) 1 12 120 242 314 10 699
Available-for-sale financial assets (note 23) 606 206 220 10,003 5,974 12,069 29,078
Held-to-maturity financial assets (note 24) 470 1,371 230 136 2,207
Total 7,435 4,707 23,762 98,414 71,084 88,856 294,258

Group 2005
Securities held for trading (note 22) 2,542 9,661 16,437 86,422 13,994 44,169 173,225
Insurance assets (note 22 2,287 13,402 49,434 1,903 67,026
Other financial assets at fair value (note 22) 11 82 149 48 69 359
Available-for-sale financial assets (note 23) 94 94 284 2,185 3,840 11,034 17,531
Held-to-maturity financial assets (note 24) 16 1,276 2,676 12,534 16,502
Total 2,663 9,755 19,090 103,434 69,992 69,709 274,643

Parent 2006
Securities held for trading (note 22) 5,009 4,573 29,151 79,977 17,786 74,759 211,255
Available-for-sale financial assets (note 23) 878 1,918 12,022 14,818
Held-to-maturity financial assets (note 24) 300 151 775 2,458 136 3,820
Total 5,009 4,873 29,302 81,630 22,162 86,917 229,893

Parent 2005
Securities held for trading (note 22) 2,862 13,418 19,940 94,343 13,734 46,425 190,722
Available-for-sale financial assets (note 23) 636 2,721 10,916 14,273
Held-to-maturity financial assets (note 24) 16 750 1,216 1,264 237 3,483
Total 2,878 13,418 20,690 96,195 17,719 57,578 208,478

104 SEB annual report 2006

 Notes to the financial statements

42 Debt instruments by issuers

Eligible debt instruments

Other
Swedish Swedish Foreign foreign
Group 2006 State municipalities States issuers Total
Securities held for trading (note 22) 31,642 931 23,633 52,694 108,900
Other financial assets at fair value (note 22) 8 34 42
Available-for-sale financial assets (note 23) 1,077 10,456 72,552 84,085
Held-to-maturity financial assets (note 24) 1 1
Total 32,719 931 34,097 125,281 193,028

Group 2005
Securities held for trading (note 22) 15,094 2 13,963 45,759 74,818
Available-for-sale financial assets (note 23) 60 42,782 30,693 73,535
Total 15,154 2 56,745 76,452 148,353

Parent 2006
Securities held for trading (note 22) 31,642 931 16,934 1,917 51,424
Available-for-sale financial assets (note 23) 1,027 4,314 566 5,907
Total 32,669 931 21,248 2,483 57,331

Parent 2005
Securities held for trading (note 22) 15,096 2 13,327 28,425
Available-for-sale financial assets (note 23) 3,354 238 3,592
Total 15,096 2 16,681 238 32,017


Other debt instruments
Other Swedish Other Swedish
Swedish issuers – non- issuers – other Other
Swedish ­m ortgage financial financial Foreign foreign
Group 2006 State ­institutions ­c ompanies ­c ompanies States issuers Total
Securities held for trading (note 22) 42,696 2,586 2,657 1,599 150,804 200,342
Insurance assets (note 22) 2,387 389 118 4,313 54,725 61,932
Other financial assets at fair value (note 22) 17 208 474 699
Available-for-sale financial assets (note 23) 89 219 28,770 29,078
Held-to-maturity financial assets (note 24) 838 1,369 2,207
Total 2,387 43,923 2,704 2,763 6,339 236,142 294,258

Group 2005
Securities held for trading (note 22) 49,153 2,286 1,813 429 119,544 173,225
Insurance assets (note 22) 2,403 833 12 23,372 40,406 67,026
Other financial assets at fair value (note 22) 7 2 63 287 359
Available-for-sale financial assets (note 23) 300 17,231 17,531
Held-to-maturity financial assets (note 24) 1,035 4,756 10,711 16,502
Total 2,403 51,021 2,293 1,827 28,920 188,179 274,643

Parent 2006
Securities held for trading (note 22) 50,113 2,586 2,657 155,899 211,255
Available-for-sale financial assets (note 23) 14,818 14,818
Held-to-maturity financial assets (note 24) 975 100 2,745 3,820
Total 51,088 2,686 2,657 173,462 229,893

Parent 2005
Securities held for trading (note 22) 49,153 2,286 1,813 137,470 190,722
Available-for-sale financial assets (note 23) 14,273 14,273
Held-to-maturity financial assets (note 24) 1,725 100 1,658 3,483
Total 50,878 2,386 1,813 153,401 208,478

SEB annual report 2006 105

Notes to the financial statements

43 Repricing periods

Group 2006

1<3 4<6 7 < 12 1<3 4<5

Assets < 1 month months months months years years 5 years < No interest Insurance Total
Loans to credit institutions 123,831 30,456 3,059 5,002 10,577 3,007 2,739 668 179,339
Loans to the public 479,414 129,537 60,900 37,396 114,761 53,827 70,808 946,643
Financial assets 99,211 134,029 112,618 4,047 59,810 16,699 22,340 102,392 201,165 752,311
Other assets 13,111 –1,898 1,944 51 185 29 –86 30,900 11,912 56,148
Total 715,567 292,124 178,521 46,496 185,333 73,562 95,801 133,292 213,745 1,934,441

Liabilities and equity

Deposits by credit institutions 328,792 20,640 5,951 7,914 2,348 –953 1,288 365,980
Deposits and borrowing from ­
the public 510,568 51,477 14,094 11,637 26,189 7,084 20,709 641,758
Issued securities 106,758 100,397 50,041 15,559 96,976 34,521 28,019 432,271
Other liabilities 3,628 522 17,064 1,469 20,748 7,280 30,176 140,396 205,882 427,165
Total equity 67,267 67,267
Total 949,746 173,036 87,150 36,579 146,261 47,932 80,192 207,663 205,882 1,934,441

Interest rate sensitivity, net –234,179 119,088 91,371 9,917 39,072 25,630 15,609 –74,371 7,863
Cumulative interest rate sensitivity –234,179 –115,091 –23,720 –23,720 25,269 50,899 66,508 –7,863

Group 2005

1<3 4<6 7 < 12 1<3 4<5

Assets < 1 month months months months years years 5 years < No interest Insurance Total
Loans to credit institutions 124,366 26,555 3,500 4,418 6,987 7,022 4,036 708 177,592
Loans to the public 424,454 136,231 61,802 37,637 118,153 57,984 65,000 901,261
Financial assets 135,342 122,675 28,668 28,966 44,413 39,846 –2,268 122,992 185,362 705,996
Other assets 91,443 13,446 104,889
Total 684,162 285,461 93,970 71,021 169,553 104,852 66,768 214,435 199,516 1,889,738

Liabilities and equity

Deposits by credit institutions 325,771 28,955 20,340 13,294 9,663 1,471 399,494
Deposits and borrowing from ­
the public 468,761 42,927 13,429 6,321 13,437 8,177 16,949 570,001
Issued securities 59,272 114,476 30,304 19,853 89,274 47,253 36,976 397,408
Other liabilities 8,015 3,978 1,616 2,912 20,073 9,067 10,895 218,750 190,733 466,039
Total equity 56,796 56,796
Total 861,819 190,336 65,689 42,380 132,447 65,968 64,820 275,546 190,733 1,889,738

Interest rate sensitivity, net –177,657 95,125 28,281 28,641 37,106 38,884 1,948 –61,111 8,783
Cumulative interest rate sensitivity –177,657 –82,532 –54,251 –25,610 11,496 50,380 52,328 –8,783

106 SEB annual report 2006

 Notes to the financial statements

44 Loans and loan loss provisions

Group Parent company
2006 2005 2006 2005
Loans to credit institutions 179,339 177,592 360,728 331,451
Loans to the public 946,643 901,261 333,129 291,861
Total 1,125,982 1,078,853 693,857 623,312

Loans
Normal loans 1,123,860 1,076,822 693,909 623,194
Non-performing impaired loans 7,123 7,957 1,033 1,236
Performing impaired loans 1,403 1,144 15 45
Loans prior to reserves 1,132,386 1,085,923 694,957 624,475

Specific reserves –4,234 –4,787 –678 –874

Collective reserves –2,170 –2,283 –422 –289
Reserves –6,404 –7,070 –1,100 –1,163

Total 1,125,982 1,078,853 693,857 623,312

Loans by category of borrower

Credit­ Property­ Public

Group 2006 institutions Corporates management sector Households Total
Normal loans 179,320 358,430 146,128 115,667 324,315 1,123,860
Non-performing impaired loans 56 2,888 2,398 8 1,773 7,123
Performing impaired loans 246 1,015 142 1,403
Loans prior to reserves 179,376 361,564 149,541 115,675 326,230 1,132,386

Specific reserves –37 –1,994 –1,717 –3 –483 –4,234

Collective reserves –2,170
Reserves –37 –1,994 –1,717 –3 –483 –6,404

Total 179,339 359,570 147,824 115,672 325,747 1,125,982

Group 2005
Normal loans 177,568 305,843 150,070 148,258 295,083 1,076,822
Non-performing impaired loans 71 2,927 3,354 5 1,600 7,957
Performing impaired loans 574 541 29 1,144
Loans prior to reserves 177,639 309,344 153,965 148,263 296,712 1,085,923

Specific reserves –47 –2,294 –1,955 –2 –489 –4,787

Collective reserves –2,283
Reserves –47 –2,294 –1,955 –2 –489 –7,070

Total 177,592 307,050 152,010 148,261 296,223 1,078,853

Parent company 2006

Normal loans 360,728 250,330 30,627 27,153 25,071 693,909
Non-performing impaired loans 22 571 270 170 1,033
Performing impaired loans 15 15
Loans prior to reserves 360,750 250,916 30,897 27,153 25,241 694,957

Specific reserves –22 –446 –204 –6 –678

Collective reserves –422
Reserves –22 –446 –204 –6 –1,100

Total 360,728 250,470 30,693 27,153 25,235 693,857

Parent company 2005

Normal loans 331,451 210,208 31,596 28,035 21,904 623,194
Non-performing impaired loans 24 787 258 167 1,236
Performing impaired loans 29 14 2 45
Loans prior to reserves 331,475 211,024 31,868 28,035 22,073 624,475

Specific reserves –24 –637 –190 –23 –874

Collective reserves –289
Reserves –24 –637 –190 –23 –1,163

Total 331,451 210,387 31,678 28,035 22,050 623,312

SEB annual report 2006 107

Notes to the financial statements

Note 44 ctd. Loans and loan loss provisions

Loans by geographical region1)

The Nordic The Baltic

Group 2006 region Germany region Other Total
Normal loans 688,014 284,927 108,779 42,140 1,123,860
Non-performing impaired loans 1,303 4,854 694 272 7,123
Performing impaired loans 18 1,365 19 1 1,403
Loans prior to reserves 689,335 291,146 109,492 42,413 1,132,386

Specific reserves –532 –3,151 –368 –183 –4,234

Collective reserves –2,170
Reserves –532 –3,151 –368 –183 –6,404

Total 688,803 287,995 109,124 42,230 1,125,982

Group 2005
Normal loans 614,348 339,036 77,544 45,894 1,076,822
Non-performing impaired loans 1,467 5,740 449 301 7,957
Performing impaired loans 63 796 285 1,144
Loans prior to reserves 615,878 345,572 78,278 46,195 1,085,923

Specific reserves –735 –3,525 –325 –202 –4,787

Collective reserves –2,283
Reserves –735 –3,525 –325 –202 –7,070

Total 615,143 342,047 77,953 45,993 1,078,853

Parent company 2006

Normal loans 658,014 35,895 693,909
Non-performing impaired loans 647 386 1,033
Performing impaired loans 1 14 15
Loans prior to reserves 658,662 36,295 694,957

Specific reserves –426 –252 –678

Collective reserves –422
Reserves –426 –252 –1,100

Total 658,236 36,043 693,857

Parent company 2005

Normal loans 576,849 46,345 623,194
Non-performing impaired loans 823 413 1,236
Performing impaired loans 31 14 45
Loans prior to reserves 577,703 46,772 624,475

Specific reserves –606 –268 –874

Collective reserves –289
Reserves –606 –268 –1,163

Total 577,097 46,504 623,312

1) Breakdown based on where the business is carried out.

108 SEB annual report 2006

 Notes to the financial statements

Note 44 ctd. Loans and loan loss provisions

Group Parent company

Loans against collateral 2006 2005 2006 2005
Mortgage, real property 436,818 400,492 31,840 32,291
Securities and deposits 24,827 19,909 21,420 17,346
State, central bank or municipality1) 114,285 150,475 27,055 37,007
Credit institutions1) 95,539 100,601 291,939 255,722
Unsecured loans 165,622 162,971 111,358 102,609
Other2) 100,004 94,519 21,854 26,000
Loans prior to reserves 937,095 928,967 505,466 470,975
Repos 195,291 156,956 189,491 153,500
Reserves –6,404 –7,070 –1,100 –1,163
Loans, net 1,125,982 1,078,853 693,857 623,312
1) Including guarantees from and loans to
2) Including floating charges, factoring, leasing, guarantees etc

Loans restructured current year

Book value of loans prior to restructuring 12 30 7 24
Book value of loans after restructuring 12 20 7 14

Loans reclassified current year

Book value of impaired loans which have regained normal status 915 1,159 3 74

Impaired loans
Non-performing impaired loans1) 7,123 7,957 1,033 1,236
Performing loans 1,403 1,144 15 45
Impaired loans gross 8,526 9,101 1,048 1,281
Specific reserves –4,234 –4,787 –678 –874
of which reserves for non-performing loans –3,630 –4,183 –663 –842
of which reserves for performing loans –604 –604 –15 –32
Collective reserves –2,170 –2,283 –422 –289
Impaired loans net 2,122 2,031 –52 118
Reserves not included in the above:
Reserves for off-balance sheet items –215 –268 –5 –4
Total reserves –6,619 –7,338 –1,105 –1,167
1) Loans past due by more than 60 days and with insufficient collateral.

Level of impaired loans 0.22% 0.22% –0.01% 0.02%

Reserve ratio for impaired loans 75.1 77.7 105.0 90.8
Non-performing loans not determined to be impaired
(sufficient collateral) 172 145
Out of the total volume of impaired loans more than 40 per cent is collateralized by real property.

SEB annual report 2006 109

Notes to the financial statements

Note 44 ctd. Loans and loan loss provisions

Credit exposure by sector*

Loans and leasing Contingent liabilities Derivative instruments Total
Group 2006 2005 2006 2005 2006 2005 2006 2005
Banks1) 102,315 103,979 24,637 60,233 40,679 33,589 167,631 197,801

Finance and insurance 15,912 16,793 13,488 26,013 6,504 15,978 35,904 58,784
Wholesale and retail 35,377 30,327 29,530 27,880 211 305 65,118 58,512
Transportation 33,245 32,148 10,100 10,324 560 468 43,905 42,940
Other service sectors 30,746 38,948 23,299 25,795 784 1,330 54,829 66,073
Construction 9,741 6,439 6,962 5,571 34 86 16,737 12,096
Manufacturing 49,305 44,227 71,899 64,402 1,963 3,474 123,167 112,103
Other 69,009 60,820 52,677 45,250 1,298 1,804 122,984 107,874
Corporate 243,335 229,702 207,955 205,235 11,354 23,445 462,644 458,382

Property management 149,541 151,469 20,704 19,214 986 1,465 171,231 172,148

Public sector2) 115,675 148,261 21,155 28,741 2,728 3,231 139,558 180,233

Housing loans3) 269,630 239,880 269,630 239,880

Other 56,599 56,314 48,035 23,222 18 23 104,652 79,559
Households 326,229 296,194 48,035 23,222 18 23 374,282 319,439

Credit portfolio 937,095 929,605 322,486 336,645 55,765 61,753 1,315,346 1,328,003

Credit institutions 82,867 71,677

General Public 112,424 85,279
Repos 195,291 156,956

Debt instruments 487,300 422,516

Total 1,997,937 1,907,475

1) Including National Debt Office.
2) Including state- and municipality-owned companies.
3) Derivatives are reported after netting agreements have been taken into account. The exposure is calculated according to the market value method, i.e. positive market value and estimated
amount for possible change in risk.

* Before provisions for possible credit losses.

110 SEB annual report 2006

 Notes to the financial statements

45 Derivative instruments
Group Parent company
2006 2005 2006 2005
Interest-related 40,918 80,142 38,169 77,834
Currency-related 25,053 34,900 24,706 34,240
Equity-related 1,901 3,723 1,416 2,732
Other
Positive closing values or nil value 67,872 118,765 64,291 114,806

Interest-related 39,532 87,926 36,427 77,852

Currency-related 24,690 34,564 24,428 33,697
Equity-related 2,016 6,003 1,224 4,485
Other
Negative closing values 66,238 128,493 62,079 116,034

Positive closing values or nil value Negative closing values

Group, 2006 Nom. amount Book value Nom. amount Book value
Options 215,536 5,734 106,267 3,063
Futures 1,409,077 2,846 1,409,984 2,314
Swaps 2,154,719 32,338 2,207,635 34,155
Interest-related 3,779,332 40,918 3,723,886 39,532
of which, cleared 652,984 27 525,113 5

Options 425,506 2,675 437,408 1,937

Futures 401,208 2,450 389,193 3,686
Swaps 2,379,878 19,928 2,390,038 19,067
Currency-related 3,206,592 25,053 3,216,639 24,690
of which, cleared 2,472 32 12,664 238

Options 3,084 1,087 4,813 1,321

Futures 233
Swaps 6,448 581 14,965 695
Equity-related 9,532 1,901 19,778 2,016
of which, cleared

Total 6,995,456 67,872 6,960,303 66,238

of which, cleared 655,456 59 537,777 243

Group, 2005
Options 67,772 1,270 57,459 1,097
Futures 1,007,703 1,020 1,003,342 1,131
Swaps 2,510,823 77,852 2,586,416 85,698
Interest-related 3,586,298 80,142 3,647,217 87,926
of which, cleared 26,361 147 26,879 153

Options 591,786 3,589 597,837 2,468

Futures 322,773 2,631 314,801 2,632
Swaps 2,374,644 28,680 2,374,221 29,464
Currency-related 3,289,203 34,900 3,286,859 34,564
of which, cleared

Options 17,599 3,542 25,386 4,840

Futures 13,180 180 4,602 10
Swaps 2,699 1 1,153
Equity-related 33,478 3,723 29,988 6,003
of which, cleared 14,921 831 17,227 924

Total 6,908,979 118,765 6,964,064 128,493

of which, cleared 41,282 978 44,106 1,077

SEB annual report 2006 111

Notes to the financial statements

Note 45 ctd. Derivative instruments

Positive closing values or nil value Negative closing values

Parent company 2006 Nom. amount Book value Nom. amount Book value
Options 193,218 5,515 88,993 5,701
Futures 773,519 2,835 913,433 2,320
Swaps 2,105,992 29,819 2,105,052 28,406
Interest-related 3,072,729 38,169 3,107,478 36,427
of which, cleared 650,007 525,168

Options 441,087 2,613 440,100 1,898

Futures 371,378 1,804 372,483 3,265
Swaps 2,421,327 20,289 2,419,098 19,265
Currency-related 3,233,792 24,706 3,231,681 24,428
of which, cleared

Options 601 531

Futures 233
Swaps 10,244 582 10,244 693
Equity-related 10,244 1,416 10,244 1,224
of which, cleared

Total 6,316,765 64,291 6,349,403 62,079

of which, cleared 650,007 525,168

Parent company 2005

Options 53,266 973 33,951 850
Futures 995,420 1,014 995,691 1,127
Swaps 2,441,827 75,847 2,422,522 75,875
Interest-related 3,490,513 77,834 3,452,164 77,852
of which, cleared 12,971 17,903

Options 594,088 3,581 598,533 2,446

Futures 293,494 2,146 293,033 2,246
Swaps 2,419,692 28,513 2,420,514 29,005
Currency-related 3,307,274 34,240 3,312,080 33,697
of which, cleared

Options 13,315 2,560 11,160 3,332

Swaps 172 1,153
Equity-related 13,315 2,732 11,160 4,485
of which, cleared

Total 6,811,102 114,806 6,775,404 116,034

of which, cleared 12,971 17,903

112 SEB annual report 2006

 Notes to the financial statements

46 Fair value information

Group 2006 Group 2005
Book value Fair value Book value Fair value
Cash and cash balances with central banks 11,314 11,314 27,545 27,545
Loans to credit institutions 179,339 179,481 177,592 178,534
Loans to the public 946,643 950,497 901,261 911,372
Securities held for trading 340,879 340,879 286,243 286,243
Derivatives held for trading 65,212 65,212 115,768 115,768
Derivatives used for hedging 2,660 2,660 2,998 2,998
Fair value changes of hedged items in a portfolio hedge 283 283 2,810 2,810
Financial assets – policyholders bearing the risk 120,524 120,524 96,148 96,148
Other financial assets designated at fair value 81,387 81,387 89,639 89,639
Financial assets at fair value 610,945 610,945 593,606 593,606
Available-for-sale financial assets 115,482 115,482 93,265 93,265
Held-to-maturity investments 2,208 2,205 16,502 16,607
Discontinued operations/Assets held for sale 2,189 2,189 1,405 1,405
Investments in associates 1,085 1,085 1,218 1,218
Intangible assets 15,572 15,572 15,196 15,196
Property and equipment 2,302 2,302 3,307 3,307
Investment properties 5,040 5,040 4,971 5,016
Tangible and intagible assets 22,914 22,914 23,474 23,519
Current tax assets 2,568 2,568 1,637 1,637
Deferred tax assets 1,121 1,121 1,209 1,209
Trade and client receivables 11,277 11,277 21,910 21,910
Other assets 27,356 27,356 29,114 29,114
Other assets 42,322 42,322 53,870 53,870
Total assets 1,934,441 1,938,434 1,889,738 1,900,941

Deposits by credit institutions 365,980 366,315 399,494 400,063

Deposits and borrowing from the public 641,758 642,713 570,001 573,384
Liabilities to policyholders – investment contracts 120,127 120,127 96,178 96,178
Liabilities to policyholders – insurance contracts 83,592 83,592 89,185 89,185
Liabilities to policyholders 203,719 203,719 185,363 185,363
Debt securities 388,822 388,453 353,205 355,000
Trading derivatives 60,343 60,343 119,592 119,592
Derivatives used for hedging 5,894 5,894 8,901 8,901
Trading liabilities 84,762 84,762 72,563 72,563
Fair value changes of hedged items in portfolio hedge –147 –147 718 718
Financial liabilities at fair value 150,852 150,852 201,774 201,774
Current tax liabilities 1,036 1,036 1,193 1,193
Deferred tax liabilities 9,099 9,099 8,358 8,358
Trade and client payables 12,479 12,479 26,120 26,120
Other liabilities 47,914 47,914 40,415 40,415
Other liabilities 70,528 70,528 76,086 76,086
Provisions 2,066 2,066 2,816 2,816
Subordinated liabilities 43,449 43,467 44,203 44,325
Total liabilities 1,867,174 1,868,113 1,832,942 1,838,811

The above calculation comprises balance sheet items at fixed rates of interest during fixed periods. This means that all items subject to variable rates of interest,
i.e. deposit/lending volumes for which interest terms are market-related, have not been recalculated; the nominal amount is considered to equal a fair value.
When calculating fair values for fixed-interest rate lending, future interest income is discounted with the help of a market interest curve, which has been adjusted for
applicable margins on new lending. Correspondingly, fixed-interest rate-related deposits/lending are discounted with the help of the market interest curve, adjusted
for relevant margins.
In addition to fixed-rate deposits/lending, adjustments have also been made for surplus values in properties and certain shareholdings.
One effect of this calculation method is that the fair values arrived at in times of falling margins on new lending will be higher than book values, while the opposite
is true in times of rising margins. It should furthermore be noted that this calculation does not represent a market valuation of the Group as a company.

SEB annual report 2006 113

Notes to the financial statements

47 Related party disclosures*

Group companies Associated companies Total
Assets/­ Assets/ Assets/
Parent company 2006 Liabilities Interest ­Liabilities Interest ­Liabilities Interest
Loans to credit institutions 241,583 5,585 241,583 5,585
Loans to the public 30,474 1,563 148 1 30,622 1,564
Bonds and other interest-bearing securities 18,852 591 16 18,868 591
Other assets 5,048 –20 4 5,052 –20
Total 295,957 7,719 168 1 296,125 7,720

Deposits by credit institutions 53,616 –1,868 53,616 –1,868

Deposits and borrowings from the public 8,047 –263 69 –1 8,116 –264
Issued securities 919 –3 919 –3
Other liabilities 3,101 –4 3,101 –4
Total 65,683 –2,138 69 –1 65,752 –2,139

Parent company 2005

Loans to credit institutions 212,338 3,561 212,338 3,561
Loans to the public 23,129 1,032 12 23,141 1,032
Bonds and other interest-bearing securities 22,278 482 22,278 482
Other assets 5,655 24 5,655 24
Total 263,400 5,099 12 263,412 5,099

Deposits by credit institutions 59,869 –1,697 4 59,873 –1,697

Deposits and borrowings from the public 9,783 –240 18 9,801 –240
Issued securities 1,377 –6 1,377 –6
Other liabilities 4,042 –38 4,042 –38
Total 75,071 –1,981 22 75,093 –1,981
* For information about Top management, The Group Executive Committee and Other related parties see note 9c.

48 Future minimum lease payments for operational leases*

Group Parent company
2006 2005 2006 2005
Year 2006 1,456 702
Year 2007 1,298 1,307 647 591
Year 2008 1,147 1,275 544 579
Year 2009 989 1,213 459 536
Year 2010 835 1,063 361 441
Year 2011 and later 3,016 3,436 2,385 2,470
Total 7,285 9,750 4,396 5,319
* Leases for premises and other operational leases.

114 SEB annual report 2006

 Notes to the financial statements

49 Capital adequacy
Financial group of undertakings1) Parent company
Calculation of capital base 2006 2005 2006 2005
Shareholders equity in the balance sheet 67,267 56,796 35,813 30,837
Proposed dividend to be decided by the Annual General Meeting –4,070 –3,177 –4,070 –3,177
Deductions from the financial group of undertakings2) –2,622 –1,730
Shareholders equity in the capital adequacy 60,575 51,889 31,743 27,660

Untaxed reserves 8,701 8,206

Core capital contribution 7,543 7,962 7,000 4,869
Minority interest3) 780
Goodwill3) 4) –5,342 –6,265 –524
Other intangible assets –712 –697 –110
Deferred tax assets –1066 –1,208 –70
Adjustment for hedge accounting 51 966 64
Unrealised value change on available-for-sale financial assets –387 –352 –212
Core capital (tier 1) 60,662 53,075 46,662 40,665

Dated subordinated debts 22,770 23,802 21,687 22,681

Deductions for remaining maturity –1,288 –973 –813 –628
Deductions for core capital constraints5) –1,720
Perpetual subordinated debts 13,973 12,655 14,515 15,748
Deduction for pension assets in excess of related liabilities 381 217
Supplementary capital (tier 2) 35,836 35,484 35,606 36,081

Deductions for investments in insurance companies 4) –10,500 –11,682 –206 –6,894

Deductions for other investments outside
the financial group of undertakings –465 –537
Deductions for pension assets in excess of related liabilities –611
Capital base 84,922 76,340 82,062 69,852

SEB annual report 2006 115

Notes to the financial statements

Note 49 ctd. Capital adequacy

Financial group of undertakings1) Parent company

Calculation of capital requirement for different credit risks 2006 2005 2006 2005
Balance sheet items
Group A (0%) 233,333 317,499 374,183 359,660
Group B (20%) 136,464 139,880 35,577 36,935
Group C (50%) 293,345 256,460 12,910 11,891
Group D (100%) 426,507 422,078 158,516 152,105
Total investments 1,089,649 1,135,917 581,186 560,591

Group A (0%)
Group B (20%) 25,384 27,976 7,115 7,387
Group C (50%) 146,673 128,230 6,455 5,946
Group D (100%) 426,507 422,078 158,516 152,105
Risk-weighted amount 598,564 578,284 172,086 165,438

Off-balance-sheet items
Group A (0%) 126,131 125,984 16,378 13,867
Group B (20%) 310,626 330,440 115,405 167,843
Group C (50%) 25,172 11,666 3,196 4,029
Group D (100%) 144,054 135,722 190,796 169,824
Nominal amount 605,983 603,812 325,775 355,563

Group A (0%) 8,713 7,551 8,314 7,076

Group B (20%) 15,601 14,469 10,503 9,619
Group C (50%) 1,052 784 3,135 3,526
Group D (100%) 75,395 70,568 56,479 50,194
Converted amount 100,761 93,372 78,431 70,415

Group A (0%)
Group B (20%) 3,120 2,894 2,101 1,924
Group C (50%) 526 392 1,568 1,763
Group D (100%) 75,395 70,568 56,479 50,194
Risk-weighted amount 79,041 73,854 60,148 53,881

Total risk-weighted amount for credit risks 677,605 652,138 232,234 219,319

Calculation of capital requirements for market risks

Risk-weighted amount for interest rate risks 42,732 32,601 35,168 25,714
of which, for specific risks 36,889 27,440 31,062 23,141
of which, for general risks 5,843 5,161 4,106 2,573
Risk-weighted amount for equity-price risks 1,027 833 678 13
of which, for specific risks 612 400 499 13
of which, for general risks 415 433 179
Risk-weighted amount for liquidation risks 263 1,358 98
Risk-weighted amount for counterparty risks and other risks 15,495 14,836 11,777 12,404
Risk-weighted amount for currency-related risks 3,391 2,859 3,047 2,184
Total risk-weighted amount for market risks 62,908 52,487 50,768 40,315

Calculation of total capital ratio

Total capital base 84,922 76,340 82,910 69,852
Total risk-weighted amount for credit and market risks 740,513 704,625 283,002 259,634
Total capital ratio % 11.47 10.83 29.30 26.90

1) The Capital adequacy analysis comprise the financial group of undertakings which include non-consolidated associated companies and exclude insurance companies.
2) The deduction from shareholders equity in the consolidated balance sheet consists mainly of non-restricted equity in subsidiaries (insurance companies) that are not consolidated
in the financial group of undertakings.
3) The minority interest and goodwill that is included in the capital base differ from the amounts stated in the balance sheet due to the inclusion of companies in the capital adequacy
­calculation that are not consolidated in the Group’s balance sheet.
4) G oodwill includes only goodwill from acquisitions of companies in the financial group of undertakings, i.e. not insurance companies. Goodwill from acquisitions of insurance companies
is deducted from the capital base.
5) Dated subordinated debts must not exceed an amount corresponding to half of the core capital.

116 SEB annual report 2006

 Notes to the financial statements

50 Assets and liabilities distributed by main currencies

Group Parent company
2006 2005 2006 2005
SEK 35,643 34,641 144,358 124,589
EUR 47,130 55,119 104,130 105,370
USD 56,450 50,362 56,797 54,077
GBP 688 632 1,637 1,323
DKK 34,144 31,178 33,753 30,462
NOK 1,265 2,339 6,430 8,125
Other currencies 4,019 3,321 13,623 7,505
Loans to credit institutions 179,339 177,592 360,728 331,451

SEK 448,799 402,275 199,669 174,421

EUR 344,094 363,653 48,204 36,852
USD 36,347 41,440 30,273 32,979
GBP 9,915 8,579 8,386 6,571
DKK 29,102 24,656 27,759 24,707
NOK 33,047 23,336 16,247 10,340
Other currencies 45,339 37,322 2,591 5,991
Loans to the public 946,643 901,261 333,129 291,861

SEK 232,672 190,323 161,885 139,866

EUR 250,095 206,971 126,448 112,695
USD 60,011 62,776 47,538 47,269
GBP 19,665 14,456 15,285 8,832
DKK 132,132 158,605 48,707 67,641
NOK 21,520 61,262 25,232 59,627
Other currencies 13,625 11,603 6,911 8,065
Financial assets 729,720 705,996 432,006 443,995

SEK 27,201 15,673 17,562 27,030

EUR 15,728 32,303 539 11,576
USD 4,208 4,179 9,415 3,066
GBP 1,570 11,185 4,959 1,480
DKK 17,267 24,451 4,564 19,533
NOK 2,100 6,629 958 1,013
Other currencies 10,665 10,469 8,189 818
Other assets 78,739 104,889 46,186 64,516

Total assets 1,934,441 1,889,738 1,172,049 1,131,823

SEK 744,315 642,912 523,474 465,906

EUR 657,047 658,046 279,321 266,493
USD 157,016 158,757 144,023 137,391
GBP 31,838 34,852 30,267 18,206
DKK 212,645 238,890 114,783 142,343
NOK 57,932 93,566 48,867 79,105
Other currencies 73,648 62,715 31,314 22,379
Total assets 1,934,441 1,889,738 1,172,049 1,131,823

SEB annual report 2006 117

Notes to the financial statements

Note 50 ctd. Assets and liabilities distributed by main currencies

Group Parent company

Liabilities, provisions and shareholders’ equity 2006 2005 2006 2005
SEK 83,119 61,525 90,122 66,710
EUR 93,904 127,716 70,333 76,902
USD 82,133 118,542 71,236 117,111
GBP 11,958 11,930 11,477 8,878
DKK 40,796 57,239 40,135 56,983
NOK 22,072 10,944 22,236 11,375
Other currencies 31,998 11,598 26,832 7,551
Deposits by credit institutions 365,980 399,494 332,371 345,510

SEK 271,801 232,340 269,361 230,945

EUR 222,427 224,800 35,452 34,571
USD 45,434 37,139 38,396 26,714
GBP 13,758 6,408 13,264 8,269
DKK 19,350 11,170 15,518 8,208
NOK 21,141 21,916 14,783 15,130
Other currencies 47,847 36,228 2,353 882
Deposits and borrowing from the public 641,758 570,001 389,127 324,719

SEK 281,546 261,029 93,886 83,858

EUR 152,444 153,991 28,051 29,341
USD 148,024 93,518 134,920 78,639
GBP 15,922 33,986 –1,346 28,423
DKK 128,952 135,997 45,838 48,952
NOK 12,268 55,572 11,317 54,540
Other currencies 4,237 6,249 1,123 1,818
Financial liabilities 743,393 740,342 313,789 325,571

SEK 19,294 24,775 11,157 5,488

EUR 15,595 17,926 4,925 17,453
USD 19,474 10,028 16,540 2,151
GBP 2,680 1,362 2,241 100
DKK 10,966 19,513 9,837 23,494
NOK 2,401 2,648 951 322
Other currencies 2,184 2,650 931 1,727
Other liabilities 72,594 78,902 46,582 50,735

SEK 10
EUR 21,337 22,385 20,254 21,289
USD 9,345 12,093 9,345 12,093
GBP 11,460 8,199 11,460 8,199
NOK 94 117 59
Other currencies 1,203 1,409 1,219 1,409
Subordinated liabilities 43,449 44,203 42,278 43,049

SEK 67,267 56,796 46,472 40,755

EUR 951 1,177
USD 56
GBP 307
NOK 423
Other currencies
Shareholders’ equity and untaxed reserves 67,267 56,796 47,902 42,239

Total liabilities and equity 1,934,441 1,889,738 1,172,049 1,131,823

SEK 723,037 636,465 510,998 427,756

EUR 505,707 546,818 159,966 180,733
USD 304,410 271,320 270,493 236,708
GBP 55,778 61,885 37,096 54,176
DKK 200,064 223,919 111,328 137,637
NOK 57,976 91,197 49,710 81,426
Other currencies 87,469 58,134 32,458 13,387
Total liabilities and equity 1,934,441 1,889,738 1,172,049 1,131,823

118 SEB annual report 2006

 Notes to the financial statements

51 Income statements – Life insurance operations

Group
2006 2005
Net insurance premium revenue 5,643 5,319
Income investment contracts
Own fees including risk gain/loss 951 746
Commissions from fund companies 927 706
1,878 1,452

Net investment income 1,385 8,996

Other operating income 397 373
Total income, gross 9,303 16,140

Net insurance benefits and claims –5,847 –13,174

Total income, net 3,456 2,966

Of which from other units within the SEB group 795 563
Expenses for acquisition of investment and insurance contracts
Acquisition costs –1,512 –1,445
Change i deferred acquisition costs 507 479
–1,005 –966
Administrative expenses –869 –910
Other operating expenses –62 –117
Total expenses –1,936 –1,993

Operating profit 1,520 973

Change in surplus values in life insurance operations

Present value of new sales1) 2,545 2,278
Return on existing policies 1,085 816
Realised surplus value in existing policies –1,258 –892
Actual outcome compared to assumptions2) –210 –445
Change in surplus values from ongoing business, gross 2,162 1,757

Capitalisation of acquisition costs –893 –800

Amortisation of capitalised acquisition costs 391 323
Change in surplus values from ongoing business, net3) 1,660 1,280

Change in assumptions4) –72

Financial effects due to short term market fluctuations5) 528 1,651
Total change in surplus values6) 2,116 2,931

The calculation of surplus values in life insurance operations is based upon assumptions concerning the future development of
written insurance contracts and a risk-adjusted discount rate. The most important assumptions are:

2006 2005
Discount rate 8% 8%
Surrender of endowment insurance, contracts signed 5 year / thereafter 6% / 12% 10% / 10%
Lapse rate of regular premiums, unit-linked 10% 10%
Growth in fund units 6% 6%
Inflation CPI / Inflation expenses 2% / 3% 2% / 3%
Right to transfer policy (unit-linked) 1% 1%
According to the According to
Mortality Group’s experience industry experience

1) Sales defined as new contracts and extra premiums in existing contracts.

2) The reported actual outcome of contracts signed can be placed in relation to the operative assumptions that were made.
Thus, the value of the deviations can be estimated. The most important components consist of extensions of contracts as
well as cancellations. However, the actual income and administrative expenses are included in full in the operating result.
3) Deferred acquisition costs are capitalised in the accounts and amortised according to plan. The reported change in surplus
values is therefore adjusted by the net result of the capitalisation and amortisation during the period.
4) In 2005 the surrender rate in the UK business was changed from 7.5 to 10 per cent. In Sweden the surrender rate was also
changed to 10 per cent and administrative costs per policy were adjusted. In 2006 the assumption of a 1% transfer of ITPK
policies was introduced in Sweden with a negative effect. The surrender rate was changed from 10 per cent to 6 or 12 per
cent depending on years past since signement of contracts. Administrative costs per policy were also adjusted with a
positive effekt.
5) Assumed annual unit growth is 6 per cent. Actual growth results in positive or negative financial effects.
6) Calculated surplus values are not included in the SEB Group’s consolidated accounts.

SEB annual report 2006 119

Notes to the financial statements

52 Assets in unit-link operations

Within the unit-linked business SEB holds, for its customer’s account, a share of more than 50 per cent in 30 (29) funds, where it is the investment manager.
The total value of those funds amounted to SEK 79 122m (60 901) of which SEB, for its customer’s account, holds SEK 54 967m (42 023).

53 Discontinued operations/Assets held for sale

Group Parent company
Discontinued operations 2006 2005 2006 2005

Profit and loss

Investment in associates recognised through the equity method 47
Impairments of financial assets –65
Current tax –14
Total 0 –32 0 0

Earnings per share

Net profit from discontinued operations attributable to equity holders, SEKm –32
Weighted average number of shares, millions 668
Basic earnings per share from discontinued operations, SEK –0.05

Net profit from discontinued operations attributable to equity holders, SEKm –32
Weighted average number of diluted shares, millions 674
Diluted earnings per share from discontinued operations, SEK –0.05

Balance sheet
Investments in associates 889 661
Other assets 516
Total 0 1,405 0 661

Group
Assets held for sale 2006 2005

Balance sheet
Investment properties 923
Credit portfolio 1,266
Total 2,189 0

In line with the Group’s property strategy there is an ongoing process in selling the properties in Estonia, Latvia
and Lithuania within the division Eastern European Banking. The sale is estimated to be closed in the first half
of 2007. Further SEB AG in Germany (division German Retail & Mortgage banking) sells its non-performing retail
claim portfolio currently administrated by Union Inkasso GmbH. The transaction will be closed in the first
quarter of 2007.

120 SEB annual report 2006

 Five-year summary

The SEB Group

Profit and Loss accounts
SEKm 2006 2005 20041) 20032) 2002 2)
Net interest income 14,281 14,282 13,551 13,782 13,719
Net fee and commission income 16,146 13,559 11,704 10,555 10,305
Net financial income 4,036 3,392 2,176 2,084 2,409
Net life insurance income 2,661 2,352 1,401 1,037 951
Net other income 1,623 642 1,163 833 925
Total operating income 38,747 34,227 29,995 28,291 28,309

Staff costs –14,363 –13,342 –11,579 –11,005 –10,854

Other expenses –7,798 –8,383 –7,190 –6,838 –7,681
Net deferred acquisition costs 507 477 316 222 103
Depreciation, amortisastion and impairment –883 –901 –932 –855 –964
Total operating expenses –22,537 –22,149 –19,385 –18,476 –19,396

Gains less losses from tangible and intangible assets 70 59 100 108
Net credit losses –718 –914 –701 –1,006 –828
Operating profit 15,562 11,223 10,009 8,809 8,193

Income tax expense –2,939 –2,770 –2,662 –2,247 –2,057

Net profit from continued operations 12,623 8,453 7,347 6,562 6,136

Discontinued operations –32 35

Net profit 12,623 8,421 7,382 6,562 6,136

Attributable to minority interests 18 20 17 12 37

Attributable to equity holders 12,605 8,401 7,365 6,550 6,099
Net profit 12,623 8,421 7,382 6,562 6,136
1) Restated to IFRS except for IAS 32 and IAS 39.
2) Not prepared under IFRS, only major groups of income and expenses have been reclassified in line with 2005. Previous goodwill amortisations are brought back. Full IFRS compliance would
require revaluations of assets and ­liabilities and further reclassifications.­

Balance sheets
SEKm 2006 2005 20041) 20032) 2002 2)
Loans to credit institutions 179,339 177,592 208,226 179,308 150,380
Loans to the public 946,643 901,261 783,355 707,459 680,206
Financial assets 672,369 665,335 532,401 345,221 352,291
Other assets 136,090 145,550 82,569 47,405 58,235
Total assets 1,934,441 1,889,738 1,606,551 1,279,393 1,241,112

Deposits by credit institutions 365,980 399,494 370,483 246,852 234,289

Deposits and borrowing from the public 641,758 570,001 516,513 494,036 499,542
Liabilities to policyholders 203,719 185,363 145,730 59,615 48,644
Financial liabilities 552,153 581,099 419,686 309,419 305,231
Other liabilities 60,115 52,782 71,572 96,746 82,384
Subordinated liabilities 43,449 44,203 30,804 24,261 25,326
Total equity 67,267 56,796 51,763 48,464 45,696
Total liabilities, provisions and shareholders’ equity 1,934,441 1,889,738 1,606,551 1,279,393 1,241,112
1) Restated to IFRS except for IAS 32 and IAS 39.
2) Not prepared under IFRS, only major groups of assets and liabilities have been reclassified in line with 2005. Full IFRS compliance would require revaluations of assets and liabilities and
­f urther reclassifications.

Key ratios
SEKm 2006 2005 20041) 20032) 2002 2)
Return on equity, per cent 20.8 15.8 14.7 14.2 13.7
Basic earnings per share, SEK 18.72 12.58 10.83 9.44 8.71
Cost/Income ratio 0.58 0.65 0.65 0.65 0.69
Credit loss level, per cent 0.08 0.11 0.10 0.15 0.13
Level of impaired loans, per cent 0.22 0.22 0.31 0.52 0.47
Total capital ratio, per cent 11.5 10.8 10.3 10.2 10.5
Core capital ratio, per cent 8.2 7.5 7.8 8.0 7.9
1) Restated to IFRS except for IAS 32 and IAS 39.
2) Not prepared under IFRS.

SEB annual report 2006 121

Five-year summary

Skandinaviska Enskilda Banken

Profit and Loss accounts
SEKm 2006 2005 20041) 20032) 2002 2)
Net interest income 4,711 4,885 5,047 5,790 5,744
Net commission income 7,163 5,081 4,813 4,216 4,142
Net result of financial transactions 3,515 2,558 1,778 1,570 1,734
Other income 3,515 2,884 2,235 2,234 1,550
Total operating income 18,904 15,408 13,873 13,810 13,170

Administrative expenses –13,073 –10,854 –9,791 –9,271 –9,627

Depreciation and write-downs –399 –336 –310 –340 –291
Total operating costs –13,472 –11,190 –10,101 –9,611 –9,918

Profit before credit losses 5,432 4,218 3,772 4,199 3,252

Lending losses and changes in value –134 –88 –42 –121 –83
Write-downs of financial fixed assets –100 –220 –392 –416 –405
Operating profit 5,198 3,910 3,338 3,662 2,764

Appropriations including pension compensation –345 –1,058 3,654 –943 –661

Taxes –691 –293 –1,978 –435 –476
Net profit for the year 4,162 2,559 5,014 2,284 1,627
1) Restated to IFRS except for IAS 32 and IAS 39.
2) Not prepared under IFRS. Full IFRS compliance would require revaluations of assets and liabilities.

Balance sheets
SEKm 2006 2005 20041) 20032) 2002 2)
Loans to credit institutions 360,728 331,451 290,448 228,077 226,682
Loans to the public 333,129 291,861 251,857 219,643 231,531
Financial assets 443,528 473,073 350,434 293,796 297,508
Other assets 34,664 35,438 53,466 32,390 38,226
Total assets 1,172,049 1,131,823 946,205 773,906 793,947

Deposits by credit institutions 332,371 345,510 290,247 197,619 234,673

Deposits and borrowing from the public 389,127 324,719 310,145 302,822 295,057
Financial liabilities 324,689 349,550 225,590 131,726 141,835
Other liabilities 35,682 26,756 51,774 79,421 61,625
Subordinated liabilities 42,278 43,049 29,296 21,567 22,245
Shareholders’ equity and untaxed reserves 47,902 42,239 39,153 40,751 38,512
Total liabilities, provisions and shareholders’ equity 1,172,049 1,131,823 946,205 773,906 793,947
1) Restated to IFRS except for IAS 32 and IAS 39.
2)Not prepared under IFRS, only major groups of assets and liabilities have been reclassified in line with 2005. Full IFRS compliance would require revaluations of assets and liabilities and
­f urther reclassifications.

122 SEB annual report 2006

 Definitions

Definitions
Return on equity
Net profit attributable to equity holders for the year as a percent-
age of average shareholders equity, defined as the average of
equity at the opening of the year and at the close of March, June,
September and December, respectively, adjusted for dividends
paid during the year, repurchase of own shares and rights issues.
Return on business equity
Operating profit reduced by a standard tax per division, divided
by allocated capital.
Return on total assets
Net profit as a percentage of average assets, defined as the aver-
age of total assets at the opening of the year and at the close of
March, June, September and December.
Core capital ratio
Core capital as a percentage of the risk-weighted assets. Core
capital consists of shareholders’ equity, adjusted according to the
capital adequacy rules.
Total capital ratio
The capital of the financial group of undertakings adjusted
according to the capital adequacy rules as a percentage of the
risk-weighted assets. Total capital consists of core capital and
supplementary capital minus holdings of shares in unconsolidated
companies and proposed dividend as well as deferred tax and
intangibles. Supplementary capital includes subordinated
debenture loans plus reserves and capital contributions, after
approval by the Financial Supervisory Authority. Supplemen­tary
capital must not exceed the amount of core capital.

Return on risk-weighted assets Lending loss level

Net profit as a percentage of average risk-weighted assets, defined
as the average of risk-weighted assets at the opening of the year
and at the close of March, June, September and December.
Cost/Income-ratio
Total operating expenses divided by total operating income.
Earnings per share
Net profit for the year divided by the average number of shares.
Adjusted shareholders’ equity per share
Shareholders’ equity as per the balance sheet plus the equity
portion of any surplus values in the holdings of interest-bearing
securities and surplus value in life insurance operations divided
by the number of shares at year-end.
The lending loss level is defined as lending losses and value
changes in assets taken over divided by lending to the general
public and credit institutions (excluding banks), assets taken
over and loan guarantees at the opening of the year.
Reserve ratio for impaired loans
Reserve for probable loan losses as a percentage of impaired
loans, gross.
Level of impaired loans
Impaired loans (net) divided by loans to the general public and
credit institutions (excluding banks) and equipment leased to
clients (net).

Risk-weighted asset
The book value of the assets as per the balance sheet and the off
balance-sheet commitments are valued in accordance with the
capital adequacy rules.
All figures within brackets refer to 2005 unless otherwise stated.
­Percentage changes refer to comparisons with 2005 unless otherwise
stated. Re-classification of the figures for 2005 has been made in relation
to the 2006 form of presentation.

Exchange rates for SEB’s main markets

Profit and loss account Balance sheet
2006 2005 Change, % 2006 2005 Change, %
Dkk 1.241 1.246 0 1.213 1.258 –4
Eek 0.591 0.593 0 0.578 0.600 –4
Eur 9.254 9.281 0 9.041 9.388 –4
Nok 1.151 1.159 –1 1.098 1.177 –7
Ltl 2.680 2.688 0 2.617 2.720 –4
Lvl 13.292 13.332 0 12.969 13.487 –4
Sek 1.000 1.000 0 1.000 1.000 0

SEB annual report 2006 123

Proposal for the distribution of profit

Proposal for the distribution of profit

Standing at the disposal of the Annual General Meeting in The Board’s motivation of the dividend is found on page 25.
accordance with the balance sheet of Skandinaviska Enskilda The board proposes that, following approval of the balance sheet
Banken, SEK 15,558,362,358. of Skandinaviska Enskilda Banken for the financial year 2006, the
Annual General Meeting should distribute the abovementioned
SEKm unappropriated funds as follows:
Retained profits 11,396
Result for the year 4,162 declare a dividend of SEK
Non-restricted equity 15,558 SEK 6.00 per Series A-share 3,978,024,738
SEK 6.00 per Series C-share 144,915,048
and bring forward to next year 11,435,422,572

The Board of Directors and the President hereby certify that, to the best of our knowledge, the annual accounts have been prepared in
accordance with good accounting practices for a stock market company, that the information presented is consistent with the actual
­conditions and that nothing of material value has been omitted that would affect the picture of the Bank presented in the Annual Report.

Stockholm 23 February, 2007

Marcus Wallenberg
Chairman

Jacob Wallenberg Gösta Wiking

Penny Hughes Urban Jansson Ulf Jensen

Tuve Johannesson Hans-Joachim Körber Jesper Ovesen Carl Wilhelm Ros Göran Lilja

Annika Falkengren
President

124 SEB annual report 2006

 Auditors’ Report

Auditors’ report
To the annual meeting of the shareholders of Skandinaviska Enskilda Banken AB (publ);
Corporate registration number 502032-9081

We have audited the annual accounts, the consolidated accounts,
the accounting records and the administration of the board of
directors and the managing director of Skandinaviska Enskilda
Banken AB (publ) for the year 2006. The company’s annual
accounts are included in the printed version of this document on
pages 20–44 and 55–124. The board of directors and the managing
director are responsible for these accounts and the administration
of the company as well as for the application of Annual Accounts
Act for Credit Institutions and Securities Companies when pre-
paring the annual accounts and the app­lication of international
financial reporting standards IFRSs as adopted by the EU and
Annual Accounts Act for Credit Institutions and Securities Com-
panies when preparing the ­consolidated accounts. Our responsi-
bility is to express an opinion on the annual accounts, the con-
solidated accounts and the administration based on our audit.
We conducted our audit in accordance with generally accept-
ed auditing standards in Sweden. Those standards require that
we plan and perform the audit to obtain reasonable assurance
that the annual accounts and the consolidated accounts are free
of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
accounts. An audit also includes assessing the accounting princi-
ples used and their application by the board of directors and the
managing director and significant estimates made by the board
of directors and the managing director when preparing the
annual accounts and consolidated accounts as well as evaluating
the overall presentation of information in the annual accounts and
the consolidated accounts. As a basis for our opinion concerning
discharge from liability, we examined significant decisions,
actions taken and circumstances of the company in order to be
able to determine the liability, if any, to the company of any board
member or the managing director. We also examined whether
any board member or the managing director has, in any other
way, acted in contravention of the Companies Act, Banking and
Financing Business Act, Annual Accounts Act for Credit Institu-
tions and Securities Companies or the Articles of Association.
We believe that our audit provides a reasonable basis for our
opinion set out below.
The annual accounts have been prepared in accordance with
Annual Accounts Act for Credit Institutions and Securities Com-
panies and give a true and fair view of the company’s financial
position and results of operations in accordance with generally
accepted accounting principles in Sweden. The consolidated
accounts have been prepared in accordance with international
financial reporting standards IFRSs as adopted by the EU and
Annual Accounts Act for Credit Institutions and ­Securities Com-
panies and give a true and fair view of the group’s financial
position and results of operations. The statu­tory administration
report is consistent with the other parts of the annual accounts
and the consolidated accounts.
We recommend to the annual meeting of shareholders that the
income statements and balance sheets of the parent company and
the group be adopted, that the profit of the parent company be
dealt with in accordance with the proposal in the administration
report and that the members of the board of directors and the
managing director be discharged from liability for the financial
year.

Stockholm 23 February, 2007

PricewaterhouseCoopers AB

Peter Clemedtson Peter Nyllinge Ulf Davéus

Authorised Public Accountant Authorised Public Accountant Authorised Public Accountant
Partner in charge Appointed by the Financial Supervisory Authority

SEB annual report 2006 125

Board of Directors
Marcus Wallenberg
Tuve Johannesson
Marcus Wallenberg 2) 5) 7)
Born 1956; elected 2002, B. Sc. of
­Foreign Service.
Chairman since 2005
Other assignments: Chairman of Saab and
ICC (International Chamber of Commerce).
Deputy Chairman of Ericsson. Board
­member of AstraZeneca, Electrolux, Stora
Enso, Thisbe AB and the Knut and Alice
Wallenberg Foundation.
Background: Marcus Wallenberg joined
Investor in 1993 as Executive Vice President
and was appointed President and Group
Chief Executive 1999. Prior to that he worked
at Stora Feldmühle in Germany for three
years. Marcus Wallenberg began his career
at Citibank in New York 1980, followed by
various positions at Deutsche Bank in
­Germany, S G Warburg Co Ltd in London
and Citicorp in Hong Kong. He joined SEB in
1985 and worked there until 1990.
Own and closely related persons’
shareholding: 105,638 Series A-shares
and 1,473 class C-shares.
Independent in relation to the bank and
management, non-independent in relation
to major shareholders.
Jacob Wallenberg
Born 1956; elected 1997, B. Sc. (Econ)
and MBA. Deputy Chairman since 2005
(Chairman 1998–2005).
Other assignments: Chairman Investor.
Deputy Chairman Atlas Copco and SAS.
Director ABB, the Knut and Alice Wallen-
berg Foundation, the Nobel Foundation,
Thisbe AB and Stockholm School of Eco-
nomics.
Background: Jacob Wallenberg joined SEB
in London in 1984. Thereafter he held vari-
ous positions in SEB in Singapore, Hong
Kong and primarily in Sweden. In 1990 he
joined Investor as Executive Vice President
and in 1993 he rejoined SEB.
126 SEB annual report 2006
Magdalena Olofsson Jacob Wallenberg
Carl Wilhelm Ros
In 1997 he was appointed President and
Group Chief Executive of the SEB Group
and in 1998 Chairman of the Board.
Jacob Wallenberg began his banking
career at JP Morgan in New York in 1981.
Own and closely related persons’
shareholding: 19,772 class A-shares and
3,408 class C-shares.
Independent in relation to the bank and
management, non-independent in relation
to major shareholders (Chairman Investor).
Gösta Wiking 4)
Born 1937; elected 1997.
Deputy Chairman since 1997.
Other assignments: Chairman Angio-
genetics. Director XCounter and Grycksbo.
Background: In 1972 Gösta Wiking joined
Perstorp where he held various senior posi-
tions. He was appointed President and CEO
in 1991 when he also became a board
member. In 1997 he was appointed Chair-
man of the Board of Perstorp. He was
Chairman of Trygg Hansa until the merger
with SEB.
Own and closely related persons’
shareholding: 4,300 class A-shares.
Independent in relation to the bank and
management, independent in relation to
major shareholders.
Penny Hughes 6)
Born 1959; elected 2000, B. Sc.
­(Chemistry)
Other assignments: Director Reuters,
GAP Inc, Bridgepoint Capital (Advisory
Board) and Home Retail Group Plc.
Background: Penny Hughes began her
career at Procter & Gamble in 1980. In
1984 she joined Coca-Cola and was
appointed President of Coca Cola UK Ltd
1992. She left the company in 1994 and
has since then held several directorships.
Urban Jansson
Jesper Ovesen
Own and closely related persons’
shareholding: 500 class A-shares.
Independent in relation to the bank and
management, independent in relation to
major shareholders.
Urban Jansson 1)
Born 1945; elected 1996, Higher bank
degree (Skandinaviska Banken).
Other assignments: Chairman AB Elspi-
raler, Jetpak Group, Rezidor Hotel Group
and Siemens AB. Deputy Chairman Ahlstrom
Corp. Director Addtech, Wilh. Becker, Cap-
Man, Clas Ohlson, Eniro, Ferd A/S, HMS
and Stockholm Stock Exchange Listing
Committee.
Background: Urban Jansson joined SEB
in 1966 where he held various management
positions between 1972 and 1984. In 1984
he joined HNJ Intressenter (former subsidiary
of the Incentive Group) as President and
CEO. In 1990 Urban Jansson was appointed
Executive Vice President of the Incentive
Group. In 1992 he was appointed President
and Group Chief Executive of Ratos. He left
the company in 1998 and has since then
held several board directorships.
Own and closely related persons’
shareholding: 9,000 class A-shares.
Independent in relation to the bank and
management, independent in relation to
major shareholders.
Ulf Jensen
Tuve Johannesson 8)
Born 1943; elected 1997, B. Sc. and
MBA.
Other assignments: Chairman Ecolean
International A/S, IBX Integrated Business
Exchange AB and CJS Chumak, Ukraine.
Director Gambro AB, Cardo AB and Meda
AB. Advisor to JCB Excavators Ltd.
Background: Tuve Johannesson began
his career at Tetra Pak in 1969 where he
held various senior positions in South Africa,
Australia and Sweden. In 1983 he was
appointed Executive Vice President of Tetra
Pak. He became President of VME, presently
Volvo Construction Equipment, in 1988.
He then became President of Volvo Car
Corporation in 1995 a position he held
until 2000. Vice Chairman of the Board of
Volvo Car Corporation 2000–2004.
Own and closely related persons’
shareholding: 20,000 class A-shares.
Independent in relation to the bank and
management, independent in relation to
major shareholders.
Dr Hans-Joachim Körber
Born 1946; elected 2000; Dr.
Other assignments: President and Chief
Executive Officer (CEO) Metro AG. Director
Air Berlin Plc, Bertelsmann AG and Loyalty
Partner Holding GmBH.
Background: Hans-Joachim Körber joined
Metro AG in 1985 and was appointed
Member of the Management Board Metro
AG in 1996 and President and Group Chief
Executive in 1999. He began his career as
Senior Controller at the Oetker Group in
1975.
Own and closely related persons’
shareholding: 0
IIndependent in relation to the bank and
management, independent in relation to
major shareholders.

Göran Lilja
Gösta Wiking
Jesper Ovesen 3)
Born 1957, elected 2004, Bachelor of
Commerce Degree (Econ) and MBA.
Other assignments: Chief Executive Offic-
er (CEO) KIRKBI Group. Director, FLSmidth
& Co A/S and Merlin Entertainments Group
Luxembourg S.a.r.l.
Background: January 1 2007, Jesper
Ovesen took office as Chief Executive
Officer of the KIRKBI Group, coming from a
position as CFO at LEGO Holding A/S which
he assumed in 2003. Prior to that, he held
the position as CFO of Den Danske Bank
during five years. Between 1994 and 1998
he joined Novo Nordisk as Vice President
and Head of Finance. Jesper Ovesen began
his career at Price Waterhouse where he
worked between 1979 and 1989. Thereafter
he joined Baltica Bank as Vice President,
later on as Group Chief Executive.
Own and closely related persons’
shareholding: 480 class A-Shares
Independent in relation to the bank and
management, independent in relation to
major shareholders.
Carl Wilhelm Ros 9)
Born 1941, elected 1999, M.Sc. (Econ).
Other assignments: Director Anders Wil-
helmsen & Co AS, Bonnier, Camfil, INGKA
(Ikea) Holding and Bisnode.
Background: Carl Wilhelm Ros worked at
Astra between 1967 and 1975. In 1975 he
joined Alfa Laval where he was appointed
Group Controller in 1978. 1985 he joined
Ericsson as Senior Executive Vice President.
He left the company 1999 and has since
then held several directorships.
Own and closely related persons’
shareholding: 4,529 class A-shares and
38 class C-shares.
Independent in relation to the bank and
management, independent in relation to
major shareholders.
Annika Falkengren
Penny Hughes
Annika Falkengren 3)
Born 1962; elected 2005 (effective as of
1 January 2006), SEB employee since
1987; B. Sc. (Econ).
President and Group Chief Executive as of
10 November 2005.
Other assignments: Director Securitas,
Ruter Dam and the Mentor Foundation.
Background: Annika Falkengren started
as an SEB trainee in 1987 and worked in
Trading & Capital Markets 1988–2000.
She was appointed Global Head of Fixed
Income in 1995, Global Head of Trading in
1997, Head of Merchant Banking in 2000.
In 2001 she became Head of the Corporate
& Institutions division and Executive Vice
President of SEB.
Own and closely related persons’
shareholding: 31,000 class A-shares,
535,295 employee stock options and an
initial allotment of 105,846 performance
shares.
Non-independent in relation to the bank and
management (President and Group Chief
Executive SEB), independent in relation to
major shareholders.
Directors appointed by the employees
Ulf Jensen
Born 1950; appointed 1997 (1995), uni-
versity studies economics and law. Chair-
man Financial Sector Union of Sweden SEB
Group. Director Financial Sector Union of
Sweden.
Background: Ulf Jensen joined SEB in 1977
where he held various positions. He was
elected Chairman of Financial Sector Union
of Sweden Stockholm City in 1989 and
Financial Sector Union of Sweden SEB
Group in 1999.
Own and closely related persons’
shareholding: 0
Board of Directors
Hans-Joachim Körber Göran Arrius
Göran Lilja Magdalena Olofsson is also a Director of
Born 1963; appointed 2006, Higher bank the European Works Council SEB Group.
degree. Vice chairman Financial Sector Own and closely related persons’
Union of Sweden SEB Group. Chairman shareholding: 0
Regional Club Väst of the same union.
Director of the European Works Council
SEB Group in 2006. 1) 
Chairman of Risk and Capital ­Committee
Background: Göran Lilja joined SEB in of the Board of Directors.
1984 where he held various positions. 2)
Deputy

Chairman of Risk and Capital
He was elected vice Chairman of Financial Committee of the Board of Directors
Sector Union of Sweden Group and Chair- 3)
Member

of Risk and Capital Committee
man Regional Club Väst of the same union of the Board of Directors.
in 2006. 4)
Chairman

of Audit and Compliance
Own and closely related persons’ ­Committee of the Board of Directors.
shareholding: 540 class A-shares. 5)
Deputy

Chairman of Audit and
­Compliance ­Committee of the Board of
Directors.
Deputy Directors appointed by 6)
Chairman

of Remuneration and HR
the employees ­Committee of the Board of Directors.
7)
Deputy

Chairman of Remuneration and
Göran Arrius HR Committee of the Board of Directors.
Born 1959; appointed 2002, Naval Officer. 8)
Member

of Remuneration and HR
Chairman Association of University Gradu- ­Committee of the Board of Directors.
ates at SEB and JUSEK’s Section for Bank 9)
Member

of the Audit and Compliance
and Insurance. Committee of the Board of Directors.
Background: Göran Arrius began his career
as a Naval Officer. In 1988 he joined Trygg
Hansa Liv and has since then held various
positions in the life insurance business.
Göran Arrius works today as Product
­Specialist for occupational pensions at
SEB Trygg Liv.
Own and closely related persons’
shareholding: 0
Magdalena Olofsson
Born 1953; appointed 2003.
Director Financial Sector Union of Sweden
SEB Group. Vice Chairman Regional Club
Stockholm & Öst of the same union. Director
Financial Sector Union of Sweden.
Background: Magdalena Olofsson joined
SEB in 1974 and has since then held vari-
ous positions in the SEB Group, including
twelve years at SEB BoLån AB. Since 2002
SEB annual report 2006 127
Group Executive Committee and Auditors
Annika Falkengren
Anders Mossberg
Annika Falkengren
Born 1962; SEB employee since 1987;
B. Sc. (Econ).
President and Group Chief Executive as of
10 November 2005.
Other assignments: Director Securitas,
Ruter Dam and the Mentor Foundation.
Background: Started as SEB trainee and
worked in Trading & Capital Markets 1988–
2000. Appointed Global Head of Fixed
Income in 1995, Global Head of Trading in
1997 and Head of Merchant Banking in
2000. Head of the Corporate & Institutions
division and Executive Vice President 2001.
Own and closely related persons’ share-
holding: 31,000 class A-shares, 535 295
employee stock options and an initial allot-
ment of 105,846 performance shares.
Per-Arne Blomquist
Born 1962; SEB employee since 2001; B.
Sc. (Econ).
Executive Vice President, Chief Financial
Officer since 1 October 2006.
Background: Joined SEB as Head of Group
Finance. Between 1997 and 2000, with Telia,
e.g. as President at Telia Företag. Per-Arne
Blomquist started his career at Alfa Laval.
Own and closely related persons’ share-
holding: 1,500 class A shares, 87,234
employee stock options and an initial allot-
ment of 17,850 performance shares.
Fredrik Boheman
Born 1956; SEB employee since 1985; M.A.
Executive Vice President, Head of Wealth
Management since 1 January 2007.
Other assignments: Director Teleopti.
Background: Started as SEB trainee. SEB
in Sao Paulo and Branch Manager in Hong
Kong 1994–1998. Thereafter Head of Cor-
porate Clients and Head of Trade and
Project Finance. 2002–2006 in Germany,
first as Head of Merchant Banking, thereaf-
ter as CEO of SEB AG. Head of Asset Man-
agement since October 2006.
Own and closely related persons’ share-
holding: 8,127 class A-shares, 25,000
employee stock options and an initial allot-
ment of 31,346 performance shares.
128 SEB ANNUAL REPORT 2006
Magnus Carlsson
Hans Larsson
Magnus Carlsson
Born 1956; SEB employee since 1993;
M. Sc.
Executive Vice President, Head of Mer-
chant Banking since 2005.
Background: Bank of Nova Scotia 1980–
93, holding several leading positions in Lon-
don. Head of Project & Structured Finance,
SEB Merchant Banking in 1996, Head of
Corporate Clients in 1999, later on Deputy
Head of SEB Merchant Banking and Head
of the SEB Merchant Banking division and
Executive Vice President of SEB in 2005.
Own and closely related persons’ share-
holding: 5,000 class A shares, 84,324
employee stock options and an initial allot-
ment of 60,623 performance shares.
Hans Larsson
Born 1961; SEB employee since 1984; B.
Sc. (Econ).
Head of SEB Group Staff since 1 October
2006.
Background: Started in SEB within Trading
& Capital Markets, Head of Fixed Income
1986. TCM in New York 1988–92. Head of
Debt Capital Markets from 1994. In 2002
appointed Deputy Global Head of Client
Relationship Management. Head of SEB’s
Business Development and the CEO-office
2005–06.
Own and closely related persons’ share-
holding: 446 class A shares, 17 series C
shares, 40,000 employee stock options
and an initial allotment of 14,500 perform-
ance shares.
Bo Magnusson
Born 1962; SEB employee since 1982;
Higher bank degree.
Executive Vice President, Head of Retail
Banking since 1 January 2007.
Other assignments: Director Nordic Cen-
tral Securities Depository and Swedish
Bankers’ Association.
Background: Started his career at SEB
Trading & Capital Markets, holding several
leading positions as Head of Accounting
and Controller within both Trading & Capital
Markets, SEB Group Finance and Enskilda
Securities. Chief Financial Officer of SEB
Merchant Banking in 1998, Head of Staff
Bo Magnusson
Per-Arne Blomquist
Functions in 2000. Later on Global Head of
Cash Management & Securities Services in
2003 and Deputy Head of SEB Merchant
Banking in 2005. In 2005 appointed Head
of Nordic Retail & Private Banking.
Own and closely related persons’ share-
holding: 3,500 class A shares, 58,000
employee stock options and an initial allot-
ment of 39,123 performance shares.
Anders Mossberg
Born 1952; SEB employee since 1985.
Executive Vice President, Head of Life
since 1997.
Other assignments: Director Sveriges
Försäkringsförbund.
Background: Head of the bank’s life insur-
ance operations in 1990. Head of SEB
Trygg Liv since 1997. In 1998 Executive
Vice President of SEB and Head of the then
Asset Management & Life division. Anders
Mossberg started his career at Skandia
Försäkring AB in 1981.
Own and closely related persons’ share-
holding: 7,008 class A-shares, 368,809
employee stock options and an initial allot-
ment of 63,385 performance shares.
Mats Kjær
Born 1950; SEB employee since 1971.
Executive Vice President, Head of Eastern
European Banking and member of Group
Executive Committee between 2004 and
2006.
Own and closely related persons’ share-
holding: 2,000 class A-shares, 111,118
employee stock options and an initial allot-
ment of 51,231 performance shares.
Fredrik Boheman
Nils-Fredrik Nyblæus
Born 1951; SEB employee since 2004, B.
Sc. (Econ).
Head of Group Staff and IT (since 2004)
and CFO (since 2005) until 1 October
2006. Executive Vice President and mem-
ber of Group Executive Committee
between 2004 and 2006.
Own and closely related persons’ share-
holding: 400 class A-shares, 53,333
employee stock options and an initial
allotment of 40,823 performance shares.
Appointments to the Group Executive
Committee in 2007
Ingrid Engström, formerly with Eniro, has
been appointed as Executive Vice President
and Head of HR & Organisational Develop-
ment as from 26 March 2007.
David Smith, formerly with Citigroup, has
been appointed Executive Vice President
and Head of Business Support with responsi-
bilities including Group IT, Group Operations
and SEB Way as from 8 February 2007.
AUDITORS
Auditors elected by the
Annual General Meeting
PricewaterhouseCoopers
Peter Clemedtson
Born 1956; Signing auditor in SEB as of
2006.
Authorised Public Accountant, auditor in
charge as of 2006.
Peter Nyllinge
Born 1966; co-signing auditor in SEB as
of 2006.
Authorised Public Accountant.
Auditor appointed by the
Financial Supervisory Authority
Ulf Davéus
Born 1949; auditor in SEB as of 2004.
Authorised Public Accountant, BDO
Contents SEB’s financial information is Addresses
available on www.sebgroup.com
Head Office

2006 in brief 1 Group Executive Committee

Chairman’s statement 2 Postal Address: SE-106 40 Stockholm

President’s statement 3 Visiting Address: Kungsträdgårdsgatan 8

SEB today 4 Telephone: +46 771 62 10 00

+46 8 22 19 00 (management)
Markets, competition and customers 8 Financial information during 2007
SEB’s employees 14
Publication of annual accounts 9 February
SEB’s role in society 16
Publication of Annual Report on the Internet 6 March
The SEB share 18
Divisions
Annual General Meeting 28 March
Interim report January–March 4 May Merchant Banking
Report of the Directors
Financial Review of the Group 20 Interim report January–June 19 July Postal Address: SE-106 40 Stockholm
Result and profitability 20 Interim report January–September 26 October Visiting Address: Kungsträdgårdsgatan 8
Financial structure 23
Telephone: +46 771 62 10 00
Divisions
SEB Merchant Banking 26 For further information please contact:
Nordic Retail & Private Banking 28 Retail Banking
SEB in Gemany (SEB AG Group) 30 Postal Address: SE-106 40 Stockholm
Per-Arne Blomquist
German Retail & Mortgage Banking 31
Chief Financial Officer Visiting Address: Sergels Torg 2
Eastern European Banking 32
Telephone +46 8 22 19 00 Telephone: +46 771 62 10 00
SEB Asset Management 34
E-mail: per-arne.blomquist@seb.se
SEB Trygg Liv 36
Risk and Capital Management 38 Wealth Management
Ulf Grunnesjö
Head of Investor Relations Postal Address: SE-106 40 Stockholm
Corporate Governance within SEB 45
Telephone +46 8 763 85 01 Visiting Address: Sveavägen 8
Board report on the internal
E-mail: ulf.grunnesjo@seb.se Telephone: +46 771 62 10 00
control of the financial reporting for 2006 54

Annika Halldin
Financial Statements 55 Life
Financial Information Officer
SEB Group Postal Address: SE-106 40 Stockholm
Telephone +46 8 763 85 60
Income statements 56
E-mail: annika.halldin@seb.se Visiting Address: Sergels Torg 2
Balance sheets 57
Statement of changes in equity 58 Telephone: +46 771 62 10 00
Cash flow statements 59
Skandinaviska Enskilda Banken
Income statements 60
Balance sheets 61
Statements of changes in equity 62
Cash flow statements 63
Notes to the financial statements 64
Skandinaviska Enskilda Banken AB’s
Five-year summary 121 corporate registration number: 502032-9081
Definitions 123
Proposal for the distribution of profit 124
Auditors’ report 125

Board of Directors 126

Group Executive Committee and Auditors 128

Addresses
 Annual Report

Production: SEB and Intellecta Communication AB • Photos: Mats Lundqvist, Bruno Ehrs • Printing: Elanders • R:5056
Annual General Meeting

ANNUAL REPORT 2006

The Annual General Meeting will be held on Wednesday
28 March, 2007 at 2 p.m. (Swedish time) at Stockholm
Concert Hall.

2006
Notices convening the General Meeting including an agenda for the Meeting will be
published in the major Swedish daily newspapers and on www.sebgroup.com on
26 February 2007. Shareholders wishing to attend the Annual General Meeting shall
– both be registered in the shareholders’ register kept by VPC (the Swedish Securities
Register Centre) on Thursday 22 March, 2007.
– and notify the Bank in writing under address Skandinaviska Enskilda Banken AB,

■ Robust business climate and high customer interaction

Box 47011, SE-100 74 Stockholm, or by telephone 0771-23 18 18 between
9.00 a.m. and 4.30 p.m. in Sweden or, from abroad, at +46 771 23 18 18 or via
Internet on www.sebgroup.com, not later than 1 p.m. on Thursday 22 March, 2007.
■ Improved efficiency and continued organic growth
Dividend
The Board proposes a dividend of SEK 6.00 per share. The share is traded ex dividend ■ Operating profit SEK 15,562m (11,223)
on Thursday 29 March, 2007. Monday 2 April, 2007 is proposed as record date for the
dividend. If the Annual General Meeting resolves in accordance with the proposals, dividend ■ Earnings per share SEK 18.72 (12.58)
is expected to be distributed by VPC on Thursday 5 April, 2007.
■ Return on equity 20.8 per cent (15.8)
■ Focused strategy and new organisation as from 2007

www.seb.se