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Press conference 25 October 1999 PowerPoint PPT Presentation


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Press conference 25 October 1999. Jacob Wallenberg Chairman of the Board, SEB. Main strategies. Active participation in the growing savings markets of Northern Europe. Leading corporate bank in the Nordic region. Merchant Banking. Asset Management. Enskilda Securities. Trygg Liv.

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Press conference 25 October 1999

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Press conference

25 October 1999


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Jacob Wallenberg

Chairman of the Board, SEB


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Main strategies

Active participationin the growingsavings markets of Northern Europe

Leading

corporate

bank in theNordic region

Merchant

Banking

Asset

Management

Enskilda

Securities

Trygg Liv

Financial Services

Retail Distribution

INTERNET


Internet l.jpg

Internet

  • Second generation of Internet Service

  • Log ins > branch visits

  • SEB’s Travel Plaza (e-commerce)

Internetcustomers

  • SEB Trading Station

  • 25% stake in Self Trade

300,000

  • E-commerce payment solution

250,000

  • Internet office for small businesses

200,000

150,000

  • Internet service for individuals

100,000

50,000

0

Dec 1996

Dec 1997

Dec 1998

Oct 1999


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Assets under management

50% compounded annual growth

BfG Germany

ABB Investment Management

Gyllenberg Finland

Codan

Denmark

EUR 83bn

SEK 720bn

Trygg-Hansa Sweden

Asset management Norway

Dec 96Jan 00

EUR 22bn

Sweden93%65%

Other countries7%35%

SEK 194bn

Dec 1996

Dec 1997

Dec 1998

Aug 1999

Jan 2000


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Lars H Thunell

President and Group Chief Executive, SEB


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SEB January – September 1999

  • Total result excluding non-life insuranceSEK 4,859 (SEK 2,505) million

  • Income increase 7%

  • Costs increase 12%

  • Recovered lending losses SEK 231 million (lending losses SEK 2,034) million

  • Return on equity 14.5 % (13.4 %)

  • Prioritised areas show good development

  • Sale of Trygg-Hansa completed

  • Expanded ownership in the Baltic region


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Focused growth

INTERNET

Sweden

Nordic countries

Baltic

countries

Activeparticipationin the growingsavings markets of Northern Europe

Leading corporate bankin the Nordic region

Germany

Euroland


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Internet strategy

  • Build on first mover advantage from Sweden

  • Develop Paneuropean IT platform

  • Access to local

    • banking infrastructure

    • customers

  • Multichannel strategy with Internet focus

  • Build up financial services gateway through e-commerce


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Market size

Inhabitants, million

5.2

8.9

4.5

7.7

5.3

82.0


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Germany high growth potential

Total personal financial assets, 1997

Shares of assets held in equities

EUR billion

%

UK

3,938

20

Germany

2,699

9

France

2,354

34

Sweden

304

20

187

9

Denmark

115

9

Finland

Large market sizeand low penetration

111

14

Norway


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German mutual funds market

Compared to GDP

32%

29%

15%

Large market sizeand low penetration

Large market sizeand low penetration

Germany

Sweden

UK


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German Internet market

Internet users

Internet banking accounts

Penetration

Millions of users

Millions

1999 Q1

2000E

Germany

16.0

20%

0.8

UK

14.9

25%

N/A

France

0.1

11.8

20%

Sweden

4.5

50%

0.7

Large market size and low penetration

Source: JP Morgan


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Germany – 3,000 banks

Market share by deposits

Other banks 26%

Savings &Landesbank

39%

BfG 1%

Deutsche Bank6%

HypoVereinsbank4%Dresdner Bank3%

Commerzbank2%

Co-operative banks 19%

Highly fragmented market

Source: Deutsche Bundesbank, June 1999


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Thorough due diligence process

First phase

  • Asset quality review

  • Financial performance and potential review

  • Tax review

  • Assess current Internet systems and development potential

  • Portfolio review

    Confirmatory due diligence September-October

  • “Audit” of the accounts by PWC

  • Examination of loan book and leasing portfolio

  • Valuation of real estate by external real estate evaluator

  • Examination of Treasury and Trading


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SEB acquires BfG

  • BfG will become a 100% subsidiary of SEB

  • Purchase priceSEK 13.9 (DEM 3.1, EUR 1.6) billion

  • Contract signed, share transfer on3 January, 2000


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BfG in brief

SEB+

1998 EUR billionBfG SEBBfG

Total assets 4284126

Assets undermanagement*137083

Customers millions1.01.52.5

Employees 5,30011,70017,000

Branches177260437

**

**

*1999 Q3

**Excluding Baltic banks


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BfG assets under management

EUR billion19981999 (August)

FundsMutual, special, real estate810

OtherPortfolio management,investment centres,BfG Luxembourg33

1113

> 70 % in funds


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28.3%

German

Market

BfG

22.8%

17.3%

15.9%

15.9%

15.5%

13.5%

6.8%

1996

1997

1998

19996 months

BfG mutual funds growth


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Transaction rationale

  • Fits well with SEB’s strategic goals as regards asset gathering and Internet banking

  • Attractive financial terms

  • Access to the German market with high growth potential in asset gathering

  • Strengthens SEB’s position for further growth in Internet banking


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Karl-Heinz Hülsmann

President, BfG


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BfG change programme

  • Restructuring

  • New position

  • New customers

  • New services

  • Competitivemarketing

“Old BfG”

1991

“New BfG”

1999


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Kiel

Neumünster

Rostock

Bad Schwaren

Wismar

Lübeck

Wilhelmshaven

Norderstedt

Bremerhaven

Schwerin

Hamburg

Harburg

Emden

Oldenburg

Bremen

Berlin

Wolfsburg

Potsdam

Hanover

Osnabrück

Minden

Braunschweig

Hildesheim

Herford

Magdeburg

Hamelin

Cottbus

Bielefeld

Münster

Salzgitter

Gütersloh

Bocholt

Masl

Duxlaken

Lunen

Recklingh.

Hamm

Gelsenk.

C-Rauxel

Bergkommen

Meers

Oberh.

Dortmund

Herne

Duisburg

Gottingen

Bochum

Essen

Mülheim

Halle

Krefeld

Witten

Wuppertal

Hagen

Ratingen

Leipzig

Neuss

Düsseldorf

Lüdenscheid

Kassel

  • Dresden

Solingen

Remscheld

Mönchen-

gladbach

Langenfeld

Leverkusen

Köln

Erfurt

Siegen

Brühl

Düren

  • Chemnitz

Aachen

Bonn

Bad Godesberg

Gießen

Zwickau

Wetzlar

Neuwied

Koblenz

Bad Homburg

Sulzbach

Frankfurt

Hanau

Wiesbaden

Offenbach

Mainz

Heusersramm

Schweinfurt

Neu Isenburg

Rüsselsheim

Aschaffenburg

Trier

Würzburg

Darmstadt

Worms

Mannheim

Heidelberg

Mannheim

Kaiserslautern

Ludwigshafen

Saarbrücken

Pirmasens

Heilbronn

Karlsruhe

Regensburg

Pforzheim

Stuttgart

Sindelfingen

Göppingen

Ingolstadt

Esslingen

Reutlingen

Offenburg

Ulm

Augsburg

Albstadt

Munich

Schaffhausen

Freiburg

Geveesried

Konstanz

Kempten

Friedrichshafen

Lörrach

BfG’s geographic coverage

  • 177 branches in120 towns and cities

Local reach 62% of total population


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BfG today

5,300 employees per December 1998

Service, IT, Central Staff 1,408

Retail 1,923

Trading/Treasury 129

Institutional 98

Plus subsidiaries

1,332

Real estate 111

Corporate 299


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BfG new customer growth

240,000

200,000

160,000

100,000

Unique selling position

1996

1997

1998

1999 Oct


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BfG customers

Age structure

Salary structure

(net DEM/month)

  • Younger

  • Higher income

  • Higher education

  • More frequent Internet users

15%

> 64

20%

> 5,000

35%

45-64

50%

2,500-5,000

43%

20-44

30%

< 2,500

7%

< 20


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BfG customers used to direct channels

Internet

- 16,000 customers

- 60,000 transactions/month

Advanced usage compared with other German institutions

Telephone bank

- 130,000 customers

- 145,000 transactions/month

Online

- 49,000 customers

- 92,000 transactions/month


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BfG - satisfied and loyal customers

Customer satisfaction

BfG

69%

Big four banks*

58%

Customer loyalty

BfG

85%

Big four banks*

72%

92% of Germans know BfG**

* Deutsche Bank, Commerzbank, Dresdner Bank, Hypo Vereinsbank

** ICON Werbetracking 95-98


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BfG mission statement

”We are a sales-driven bank.

Offering qualified advice proactively is imperative to sell our excellent products and services.

Excellent business results are the objective.

Our yardstick and key to success are customer and staff satisfaction.”


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Lars H Thunell

President and Group Chief Executive, SEB


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SEB’s intentions

  • Build on BfG’s existing clients and infrastructure

  • Distribute savings products through BfG’s distribution channels

  • Expand our leading position in Internet banking to the German market

  • Strategic review of other areas


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SEB and BfG management resources

BfG

Management

Team

  • Karl-Heinz Hülsmann President

  • Lars Lundquist

  • DeputyPresident

Chairman of the Supervisory Board

Lars H Thunell

SEB

Project Teams

SEB

Change/Integration Support Team


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Lars Lundquist

Executive Vice President and Head of SEB Asset Management


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Cost synergies

  • EUR 15 (SEK 130) million/year from 2002

  • Treasury and Trading integrated with group functions

  • BfG’s and SEB’s German corporate banking reviewed, focused and integrated

  • BfG’s investment management co-ordinated with SEB Asset Management

  • BfG Bank Luxembourg mergedwith SEB Luxembourg

  • Faster development of BfG Internet


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Continued improved cost efficiency

  • EUR 30 (SEK 260) million/year from year 2002

  • Review of

    • back-office operations

    • organisational structure

    • credit processes

  • Migration to direct channels

  • Improved management reporting system


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Other synergies

  • Enhanced asset management growth by supplementing BfG product range withSEB products EUR 10 (SEK 90) millionfrom 2005

  • Funding synergies owing to SEB’s increased presence in local German market and access to BfG’s deposit surplus EUR 5 (SEK 45) million first year


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Growth potential

  • Internet banking and further asset management growth by extending upscale and institutional customer baseEUR 60 (SEK 520) million per year by 2005


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Total profit improvement until 2005

EUR million

Cost synergies15

Further operational improvement30

Other synergies15

Growth potential60

120

SEB target ROE 15%


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Lars H Thunell

President and Group Chief Executive, SEB


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Favourable transaction terms

  • Purchase price SEK 13.9 (DEM 3.1, EUR 1.6) billion for 100 % of BfG´s equity

    • Values BfG at approximately 0.8 times adjusted equity

  • Restructuring reserve SEK 3.0 (DEM 0.7, EUR 0.35) billion

  • Marginal increase in earnings per share year 2000 thereafter stronger growth in earnings per share

* As of June 30, 1999


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Rights issue of SEK 4.1 billion

Agreements regarding hybrid capital (core capital/subordinated debt)

SEB intends to raise subordinated debt (total SEK 5.8, EUR 0.7 billion) in order to strengthen its capital adequacy

Decrease of risk/weighted volume by SEK 36 (EUR 4) billion before closing the deal

Financing


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SEB after BfG acquisition

Leading corporate bank in the Nordic region

Major step in PaneuropeanInternet strategy

Euroland platform for further expansion in Asset Management


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