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SEB Interim / Quarterly Report 2011
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Interim / Quarterly Report
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AB SEB BANK
CONSOLIDATED SEMI-ANNUAL REPORT FOR THE 6 MONTHS PERIOD 2011
(All amounts in LTL thousand, unless indicated otherwise)
AB SEB BANK
CONSOLIDATED SEMI-ANNUAL REPORT FOR THE 6 MONTHS PERIOD 2011
- Reporting period covered by the Consolidated Semi-Annual Report
The Report has been drawn up for the first half of the year 2011.
- Issuer Group companies, contact details and types of their core activities.
| Issuer's name | AB SEB Bank |
|---|---|
| Authorised capital | LTL 1,034,575,341 |
| Legal address | Gedimino av.12, LT-01103 Vilnius |
| Telephone | (8 5) 2682 800 |
| Facsimile | (8 5) 2682 333 |
| E-mail address | [email protected] |
| Legal form | Public limited company |
| Registration date and place | 29 November 1990, the Bank of Lithuania |
| Company code | 112021238 |
| Company registration number | AB90-4 |
| Website address | www.seb.lt |
AB SEB Bank (hereinafter the 'Bank'), a public limited company, is a credit institution operating on share capital basis and is licensed to engage in such types of activities as acceptance of deposits and other refundable means from non-professional market participants and funds lending, also, it is entitled to engage in offering other financial services and assumes relevant related risks and liability.
At the end of the reporting period, the AB SEB Bank Group in Lithuania (hereinafter the 'Group') consisted of three subsidiary companies: UAB SEB Investicijų Valdymas, AB SEB Lizingas and UAB SEB Venture Capital.
| Name | AB SEB Lizingas |
|---|---|
| Type of core activities | Finance lease |
| Legal form | Private limited company |
| Registration date and place | 19 April 1995, Vilnius |
| Company code | 123051535 |
| Registered and office address | Saltoniškių str. 12, LT-08105 Vilnius |
| Telephone | (8 5) 2390 490 |
| Fax | (8 5) 2390 450 |
| E-mail address | [email protected] |
| Website address | www.elizingas.lt |
| Name | UAB SEB Venture Capital |
| --- | --- |
| Type of core activities | Own asset investment into other companies' equity and asset management on trust basis |
| Legal form | Private limited company |
| Registration date and place | 16 October 1997, Vilnius |
| Company code | 124186219 |
| Registered address | Gedimino av. 12, LT-01103 Vilnius |
| Office address | Jogailos str. 10, LT-01116 Vilnius |
| Telephone | (8 5) 2682 407 |
| Fax | (8 5) 2682 402 |
| E-mail address | [email protected] |
| Website address | http://www.seb.se/venturecapital |
| Name | UAB SEB Investicijų Valdymas |
| --- | --- |
| Type of core activities | Various investment management services, consultancy services |
| Legal / organisational form | Private limited company |
| Registration date and place | 3 May 2000, Vilnius |
| Company code | 125277981 |
| Registered address | Gedimino av. 12, LT-01103 Vilnius |
| Office address | Gedimino av. 20, LT-01103 Vilnius |
| Telephone | (8 5) 2681 594 |
| Fax | (8 5) 2681 575 |
| E-mail address | i:[email protected] |
| Website address | www.seb.lt |
- Agreements between the Issuer and securities' public offering agents
The Bank in the process of a public issue of bonds must execute an agreement with the selected public offering agent for the protection of the owners' of any relevant issue of bonds interests in accordance with the procedure established by the Company Law of the Republic of Lithuania.
As of 30 June 2011, the Bank had 23 effective agreements with UAB FM[ Orion Securities, a brokerage firm (legal entity code 122033915, legal address A. Tumėno str. 4, 9 floor, LT-01109 Vilnius) and 54 agreements with AB bank Finasta (legal entity code 301502699, legal address Maironio str. 11, LT-01124, Vilnius).
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AB SEB BANK
CONSOLIDATED SEMI-ANNUAL REPORT FOR THE 6 MONTHS PERIOD 2011
(All amounts in LTL thousand, unless indicated otherwise)
4. Data on trade in the Issuer Group securities in the regulated markets
Shares of SEB Bank are not listed in either the main or secondary list of Nasdaq OMX Vilnius exchange or in trading lists of other regulated markets and listing hereof is not planned in the nearest future.
As of 30 June 2011, 3 securities issues of AB SEB Bank were listed in the debt securities list of Nasdaq OMX Vilnius exchange.
| Issue | |
|---|---|
| ISIN code | LT0000431025 |
| Number of securities (units) | 31,850 |
| Nominal value per unit | 100.00 litų |
| Total nominal value | 3,185,000.00 litų |
| Effective date of the issue | 2010 12 21 |
| Redemption date | 2014 01 23 |
| Issue | |
| --- | --- |
| ISIN code | LT0000431157 |
| Number of securities (units) | 37,257 |
| Nominal value per unit | 100.00 litų |
| Total nominal value | 3,725,700.00 litų |
| Effective date of the issue | 2010 12 21 |
| Redemption date | 2014 01 23 |
| Issue | |
| --- | --- |
| ISIN code | LT0000405060 |
| Number of securities (units) | 46,575 |
| Nominal value per unit | 100.00 litų |
| Total nominal value | 4,657,500.00 litų |
| Effective date of the issue | 2011 05 17 |
| Redemption date | 2016 06 13 |
Securities of the Bank subsidiary companies are not traded in the regulated markets.
5. Objective overview of the Issuer Group's financial standing, performance and business development, description of major risks and uncertainties
Lithuanian economic recovery trends that became apparent in the second half of 2010 have been even more apparent over the first half of 2011. They had a decisive effect also on the result of our bank: the improving customer financial standing and resulting subsequent provisions for bad loans have determined performance of the bank at profit and an increase in the scope of banking business.
Bank's proactive policy to give a chance for promising companies recover, which faced serious problems during the economic downturn, has helped to decrease provisions as well - today most of these companies are recovering and are successfully renewing their activities. Currently there is a recovery not only in the Lithuanian exports, but the first signals of revival in the domestic market as well, and an improvement in the expectations of both the population and businesses.
Unaudited net profit earned over the first half-year of the year 2011 by AB SEB bankas is LTL 199.5 million (EUR 57.8 million) and by AB SEB bankas Group is LTL 356.5 million (EUR 103.2 million). The result has been calculated in accordance with the requirements set by the acts of the Bank of Lithuania and legal acts of the Republic of Lithuania. Over the first half-year of the year 2010, unaudited net loss suffered by AB SEB bankas totalled LTL 77.0 million (EUR 22.3 million) and by the Bank's Group - LTL 160.9 million (EUR 46.6 million). The result of the first half-year of the year 2011 of AB SEB bankas includes sale profit resulting from transfer of shares of the Bank's subsidiary company UAB "SEB Enskilda" to SEB Group.
The result of the first half-year of the year 2011 of the AB SEB bankas Group doesn't include the result of UAB "SEB Enskilda".
SEB Bank Group's assets as of 30 June 2011 were LTL 23.1 mln (as of 30 June 2010 LTL 24,8 mln). As of 30 June 2011, SEB Bank Group's total equity was LTL 2,2 billion. As of 30 June 2011, SEB Bank's capital adequacy ratio calculated according to the requirements of the Bank of Lithuania was 14.64 per cent (all requirements are met). SEB Bank's liquidity ratio for the period ended 30 June 2011 was 39.35 per cent (the requirement is 30 percent).
During the first half of 2011, the Bank Group's operating expenses decreased by 7 per cent and were LTL 160 mln. (LTL 149.2 mln over a relevant period in 2010).
For the end of the first half of 2011, SEB Bank Group's had the largest credit and leasing portfolio in Lithuania, with net value of LTL 18,7 billion, which over a half a year decreased by 3 per cent (as of 31 December 2010 portfolio was LTL 19,2 billion).
The SEB Bank Group's total deposit and investment portfolio over a half a year decreased by 4 per cent and was worth LTL 12.2 billion (as of 31 December 2010 LTL 12.6 billion).
Being responsible in assessing the entire business risk, the bank has continued financing various new business needs, issued loans to private individuals, offered new banking services that meet up-to-date customer needs.
Rapid growth in export development has already revealed its positive impact on the local domestic market by preconditioning, among other things, future growth of employment level, income of private individuals and consumption.
This will also have an impact on the activities of banks short-term, on the other hand, a higher leap in consumption is not likely, as inflation is increasing, whereas growth in income of the population and businesses remains moderate.
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AB SEB BANK
CONSOLIDATED SEMI-ANNUAL REPORT FOR THE 6 MONTHS PERIOD 2011
(All amounts in LTL thousand, unless indicated otherwise)
The SEB Bank Group manages its risks in a centralised way. The main types of risks managed by the bank are credit, liquidity, market risks, which include currency rate fluctuations, interest rate risk and share price risk, as well as operational risk. Risk is managed adhering to the internal and the prudential requirements of the Bank of Lithuania. In 2009, the Bank met all the prudential requirements of the Bank of Lithuania.
Issuer risk. The Bank's obligations against investors are not additionally secured by any guarantee and/or in any other manner, therefore investor accepts the Bank's (operational) risk related to political, economic, technical and technological as well as social factors.
Credit risk. The Group assumes credit risk, i.e., the risk of another counterparty being unable to duly meet its obligations against the Bank.
The risk is assessed based on credit equivalents calculated depending on the type of a financial deal. The Group Credit Policy is applied adhering to the principle that any lending transaction may be executed only subject to credit analysis. Taking into consideration the complexity of the deal and customer's creditworthiness, various credit risk management measures are applied.
The Group loans are assessed individually as well as in total, taking into account its total portfolio. Assessment of the portfolio of homogeneous loan groups with similar risk characteristics, i.e. natural persons' mortgage loans, consumer loans, payment card account overdraft limits, also, loans to small enterprises, is performed. Special provisions for homogeneous loans are formed by applying statistical methodology based on historical data on any defaults of the borrowers and sustained losses within the corresponding homogeneous loan group. Individually assessed borrowers are assigned to a relevant risk class, based on which special provisions requirement is established. The Group classifies its individually assessed borrowers based on 16 risk classes.
Risks are managed by carrying out regular analysis of the borrower's ability to meet its obligations: to repay the loan and pay interest. The Group establishes credit risk limits per single borrower, a group of borrowers or per economic activities. Borrower credit risk, taking into consideration the risk class assigned to the borrower, is revised on a regular basis, no less than once a year. Analysis of the borrower, borrower group and industry sector risks is also performed on regular basis.
Applied credit portfolio concentration risk limits are as follows:
- maximum exposure per single borrower must not exceed 25 per cent of the Bank's/ Group's equity, and the total amount of large exposures may not exceed 800 per cent of the Bank's/ Group's equity;
- total loans issued by the bank to other subsidiary companies of the parent company or the bank's subsidiary companies per single borrower may not exceed 75 per cent of the bank's equity, if the Bank of Lithuania performs consolidated supervision of the entire financial group. If the Bank of Lithuania does not perform any consolidated supervision of the entire financial group, the maximum exposure per each SEB Group company may not exceed 25 per cent of the bank's equity.
Below is the information on the Bank's individually assessed credit losses, on changes in the total value and the ratio to the credit portfolio over periods of historic financial information.
| 31.12.2010* | 30.06.2011* | |
|---|---|---|
| Individually assessed client credits, which value has impaired, gross amount (impaired loans), in LTL'000 | 2,936,736 | 2,485,469 |
| Client credit portfolio (without special provisions), in LTL'000 | 17,144,657 | 16,693,813 |
| Ratio (in per cent) | 17.13 % | 14.89 % |
- According to Official Letter of the Credit Institutions Supervision Department of the Bank of Lithuania No. 1203-310, dated 10 June 2008
Impairment losses on loan portfolio (LTL'000) according to the IFRS:
| 31.12.2010 | 30.06.2011 | |
|---|---|---|
| Impairment losses on loans to customers (special provisions) | 1,463,927 | 1,286,238 |
| Impairment losses on loans to credit and financial institutions as of year end (special provisions) | 40 | 36 |
| Balance of impairment losses on loans to credit and financial institutions as of year end (special provisions) | 1,463,967 | 1,286,274 |
| Special provisions to loan portfolio ratio | 8.29 % | 7.56 % |
Market risk. It is the risk of a loss of future net income due to changes in interest rates, foreign exchange rates and share prices (including the price risk in case of sales of assets or closing of positions).
Interest rate risk is managed by forecasting market interest rates and making relevant adjustments so that there is no mismatch in the assets and liabilities within the revaluation periods. The Bank applies interest rate risk management methodologies that help to measure the Group's sensitivity to interest rate changes by computing the impact to yearly net interest income (ΔNII) and net effect on the market value of shareholders equity (delta 1%) in case of a parallel shift by one percentage point in the yield curve.
Foreign exchange risk exposure is defined by two measures: single open foreign currency position against the and aggregate open currency position - the larger one of all summed-up long and short open currency positions. Foreign exchange risk measures include net exposure of spot and forward positions, FX futures, including gold, the delta equivalent position of FX options and other balance sheet items. The currency risk control is ensured by monitoring the risk exposure against the limits established for single open currency position. The bank adheres to the open currency position limits established by the Bank of Lithuania: 1) maximum open single currency position may not exceed 15 per cent of equity; 2) maximum total open position may not exceed 25 per cent of equity.
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AB SEB BANK
CONSOLIDATED SEMI-ANNUAL REPORT FOR THE 6 MONTHS PERIOD 2011
(All amounts in LTL thousand, unless indicated otherwise)
Changes in the Group's maximum open position during the recent years is shown in the table below.
| The Group | 31.12.2010 | 30.06.2011 |
|---|---|---|
| Maximum open single currency position | 83.87 % | 111.40 % |
| Maximum aggregate open currency position | 0.36 % | 0.50 % |
Share price risk is managed by establishing limits that describe acceptable share price risk, taking into consideration any possible losses related to market price volatility, by establishing the structure of the share portfolio.
Liquidity risk. Liquidity risk is the risk that the bank may be unable to timely meet its financial obligations and/or, aiming to meet them, it may have to sell its financial assets and/or close positions and will sustain losses due to a lack of liquidity in the market.
The Group adheres to conservative liquidity risk management policy that ensures adequate fulfilment of its current financial obligations, the level of obligatory reserves with the Bank of Lithuania, liquidity ratio higher than that established by the Bank of Lithuania and solvency capacity under unforeseen unfavourable circumstances. The liquidity risk management system is based on the analysis of actual and forecasted cash flows.
Changes in the Bank's liquidity ratio over recent years are shown in the table below.
| Ratio | Bank | |
|---|---|---|
| 31.12.2010 | 30.06.2011 | |
| Liquidity ratio (at least 30%) | 35.88 % | 39.35 % |
Operational risk. Operating risk is defined as 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-compliance with external and internal rules, other deficiencies in internal controls).
The Bank has got the permission from the regulators to use an AMA (Advanced Measurement Approach) model in operational risk assessment process and for the regulatory capital calculation for operational risk starting from the beginning of 2008.
The Bank has developed the several operational risk management tools: Operational risk policy, ORSA (Operational Risk Self Assessment) RTSA (Rogue Trading Self Assessment) instructions, Insurance policy, Contingency plans, mechanism of Internal Controls, New Product Approval Process to minimize the operational risks in all bank units and activities.
Bank has implemented SEB Group wide IT solution called ORMIS designed to identify, analyze, report and mitigate the risk. Operational risk self assessments (ORSA, RTSA and internal controls) are performed in business units and major business processes on a regular basis. Operational risk management system enables all staff of the Group to register all operational risk incidents and the management at all levels is able to assess, monitor and mitigate risks and compile prompt and timely reports.
Two other systems - NAMIS and LDRPS - help with managing operational risk in respectively areas like New Product Approval and Business Continuity Planning.
In addition to that there is Operational risk committee which ensures cooperation between Risk managers (1st line-of-defense) and 2nd line-of-defense units (audit, risk control, security, compliance, legal). Board members every quarter are introduced with report about new identified risks and follow-up on earlier identified issues.
Business risk. It is the risk of a decrease in income due to any unforeseen shortage of regular income that is usually determined by a drop in business volumes, price pressure or competition. Business risk also includes reputation risk, which is a risk of a decrease in income from ordinary activities and which may arise due to any adverse rumours about the bank or about the banking sector generally.
Strategy risk. It is the risk caused by unfavourable or erroneous business solutions, improper implementation of decisions or insufficient response to any political changes or changes in the regulatory acts or the banking sector.
Capital adequacy. Lithuanian banks are required to maintain capital adequacy ratio (capital base compared to risk-weighted assets). During the internal capital adequacy assessment process for 2011 the target capital adequacy ratio was set at close to 12 per cent.
On 26 July 2007, the Board of the Bank of Lithuania allowed SEB Bank to include into its Tier II capital a subordinated loan of EUR 45,000,000 (which is equal to LTL 155,376,000) obtained after Swedish bank Skandinaviska Enskilda Banken AB paid up SEB Bank's issued subordinated debt bonds. After the subordinated loan was included in the Bank's eligible capital, there was a 0.75 percentage point improvement in the Bank's capital adequacy ratio - it was 9.45 per cent, and the Group's capital adequacy ratio improved by 0.87 percentage points and was 10.41 per cent.
On 15 May 2008, the Board of the Bank of Lithuania allowed SEB Bank to prepay, that is to repay before maturity fixed under subordinated loan agreement dated 30 June 2000, namely, on 30 June 2008, a subordinated loan of EUR 15,000,000 (which is equal to LTL 51,792,000) obtained from Skandinaviska Enskilda Banken AB. SEB Bank availed of the possibility to terminate the agreement aiming at cutting the Bank's borrowing costs and maintaining the Bank's capital adequacy level. After the repayment of the loan, the Bank's capital adequacy ratio was 11.98 per cent and that of the Group was 10.48 per cent.
The SEB Group strengthened SEB Bank's capital base in October and December 2009 and March 2010, covering losses through additional contributions of shareholders.
On March 2010 the Board of the Bank of Lithuania granted a permission to SEB Bank to include the issue of undated subordinated notes worth EUR 100,000,000 (LTL 345,280,000) into the bank's Tier II capital. The issue of undated subordinated notes has been acquired by SEB Bank's parent bank Skandinaviska Enskilda Banken AB (publ).
During year 2011 two subordinated loans (EUR 20 mln and EUR 40 mln) were repayed.
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AB SEB BANK
CONSOLIDATED SEMI-ANNUAL REPORT FOR THE 6 MONTHS PERIOD 2011
(All amounts in LTL thousand, unless indicated otherwise)
Changes in the bank and the Group capital adequacy ratios during recent years are presented in the table below.
| Group | Ratio | Bank | ||
|---|---|---|---|---|
| 31.12.2010 | 30.06.2011 | 31.12.2010 | 30.06.2011 | |
| 15.95 % | 14.21 % | Capital adequacy ratio | 16.43 % | 14.64 % |
Securities. As of 30 December 2011, the number of effective issues of securities of SEB Bank was 114, their total nominal value being LTL 598.38 million.
6. Analysis of the Issuer Group financial and non-financial activity results
Volume and changes of the Bank Group activity are partially reflected by the data below based on the financial position and income statements prepared in accordance with the International Financial Reporting Standards (IFRS):
| LTL million | 31 December 2010 | 30 June 2011 |
|---|---|---|
| Loans | 15,725 | 15.429 |
| Investment | 1,884 | 1.736 |
| Lease receivables | 1,695 | 1.812 |
| Deposits | 9,643 | 9.278 |
| Amounts owed to credit and financial institutions | 9,296 | 10.326 |
| Equity | 1,859 | 2.221 |
| Assets | 22,558 | 23.109 |
The Bank Group's income structure during the recent years was as follows:
| LTL million | 30 June 2010 | 30 June 2011 |
|---|---|---|
| Net interest income (loss) after impairment losses | (195.1) | 473.6 |
| Other income before operating expenses, net | 149.3 | 86.7 |
| Result before operating expenses | (45.8) | 560.3 |
| Operating expenses | (149.2) | (159.5) |
| Net life insurance income | - | - |
| Impairment losses on intangible assets | (195) | 400.8 |
| Profit (loss) before profit tax from continues activities | (160.7) | 356.5 |
| Net profit (loss) from continues activities | (195.1) | 473.6 |
Main ratios of the bank activities are included in the below table:
| Group | Ratio | Bank | |||
|---|---|---|---|---|---|
| 31.12.2010 | 30.06.2011 | 31.12.2010 | 30.06.2011 | ||
| 15.95 % | 14.21 % | Capital adequacy ratio | 16.43 % | 14.64 % | |
| (0.07 %) | 3.17 % | Return on Assets | (0.05 %) | 1.91 % | |
| (1.04 %) | 34.97 % | Return on Equity | (0.73 %) | 21.42 % | |
| 37.35% | 41.01 % | Bank liquidity ratio | 35.88 % | 39.35 % | |
| (1.15) | 23.09 | Earnings per share, LTL | (0.78) | 12.92 | |
| 120.40 | 143.82 | Book value per share, LTL | 114.06 | 127.23 |
7. References and additional comments on data included in the consolidated financial statements
All key financial data is included in the consolidated financial statements of the Bank.
8. Major events since the end of reporting period
On 14 July 2011, the Bank announced that according to preliminary data, unaudited net profit earned over the first half-year of the year 2011 by AB SEB bankas is LTL 199.5 million (EUR 57.8 million) and by AB SEB bankas Group is LTL 356.5 million (EUR 103.2 million). The result has been calculated in accordance with the requirements set by the acts of the Bank of Lithuania and legal acts of the Republic of Lithuania. Over the first half-year of the year 2010, unaudited net loss suffered by AB SEB bankas totalled LTL 77.0 million (EUR 22.3 million) and by the Bank's Group - LTL 160.9 million (EUR 46.6 million). The result of the first half-year of the year 2011 of AB SEB bankas includes sale profit resulting from transfer of shares of the Bank's subsidiary company UAB "SEB Enskilda" to SEB Group. The result of the first half-year of the year 2011 of the AB SEB bankas Group doesn't include the result of UAB "SEB Enskilda".
Page 5 of 11
AB SEB BANK
CONSOLIDATED SEMI-ANNUAL REPORT FOR THE 6 MONTHS PERIOD 2011
(All amounts in LTL thousand, unless indicated otherwise)
9. Issuer Group activity plans and forecasts
The main focus of the SEB Bank Group in Lithuania will remain customer excellence. By offering modern services in a convenient and professional way, trying to satisfy each customer's needs, the Group will further implement its goal of becoming the most trusted bank in after crisis world.
The SEB Bank's Group seeking to implement the above vision and taking into consideration the SEB Group's goals will follow the below main trends:
-
Risk management. In this area the bank has performed a significant number of actions: improved current processes and procedures; organized risk assessment training for client executives. In future, the bank plans pay greater attention to this field, by using accumulated experience and by giving an opportunity for its employees to continuously improve.
-
Operational efficiency restoration. Seeking to retain operational efficiency and competitive edge, the bank will focus on the below major areas:
-
prevention of income downward trend by using target marketing: clearly define competitive advantages in various client segments and prepare growth plans,
-
precise assessment of costs necessary for implementation of selected goals.
-
Customer loyalty improvement. The bank's goal in this area is to become the Home bank (the main bank) for its clients by retaining the existing customer base and to attracting new customers:
-
by offering flexible solutions to customers facing financial difficulties that may survive during the decline with the bank's assistance,
-
by developing new, attractive concepts, services and products for successfully operating customers so that they feel the bank's attention.
-
The best employer's image retention. The bank will continue creating the environment of trust and respect in which employees may improve their skills and use every possibility.
The bank expects that proper solutions in each the above specified area will increase client and employee satisfaction as well as their loyalty to the organisation.
10. Financial risk management objectives
The Group manages its financial risks as described in the consolidated financial statements.
11. Data on the acquisition of own shares by the Issuer
During the year 2011, SEB Bank did not acquire or redeem its own shares. The Bank's subsidiary companies have not acquired the Bank's shares. During the reporting period, the Bank and its subsidiary companies did not redeem or sell their own shares.
12. Information on the Issuer branches and representative offices
As of 30 June 2011, the Bank had a customer service network of 57 branch offices (7 branches and 50 branch offices) all over Lithuania.
13. The Issuer's authorised capital
Authorised capital registered with the Enterprise Register (amount, structure by share type and class, total nominal value) is as follows:
| Type of shares | ISIN code | Number of shares | Nominal value (LTL) | Total nominal value | Share within authorized capital (in per cent) |
|---|---|---|---|---|---|
| Ordinary registered shares | LT0000101347 | 15,441,423 | 67 | 1,034,575,341 | 100.00 |
| Total | - | 15,441,423 | - | 1,034,575,341 | 100.00 |
All shares of SEB Bank are paid up and there are no restrictions assigned for transfer of securities.
14. Shareholders
On 19 November 2010, the squeeze-out procedure of SEB Bank's shares was finalized. 100 % of shares of SEB Bank is owned by company Skandinaviska Enskilda Banken AB (publ), registered in the Kingdom of Sweden.
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AB SEB BANK
CONSOLIDATED SEMI-ANNUAL REPORT FOR THE 6 MONTHS PERIOD 2011
(All amounts in LTL thousand, unless indicated otherwise)
15. Employees
As of 30 June 2011, the SEB Bank Group in Lithuania (AB SEB Bank, UAB SEB Investicijų Valdymas, AB SEB Lizingas and UAB SEB Venture Capital), had 2,036 regular employees (working under labour contracts with and without a fixed term, including those on maternity/paternity leave). As of 30 June 2011, the number of actually working employees (excluding those on maternity/paternity leave) was 1,732.
The number of SEB Bank regular employees (working under labour contracts with and without a fixed term, including those on maternity/paternity leave) alone was 1,979 and the number of SEB Bank's actually working employees (excluding those on maternity/paternity leave) was 1,685.
| The Bank | The Group | |||
|---|---|---|---|---|
| 31.12.2010 | 30.06.2011 | 31.12.2010 | 30.06.2011 | |
| Regular employees (working under labour contracts with and without a fixed term, including those on maternity/paternity leave) | 2,009 | 1,979 | 2,078 | 2,036 |
| Actually working employees (excluding those on maternity/paternity leave) | 1,730 | 1,685 | 1,788 | 1,732 |
Tables below contain information on the Bank's employees' educational background and average monthly wages (before tax).
| Number of employees | Average monthly wages (in LTL) | |||
|---|---|---|---|---|
| 31.12.2010 | 30.06.2011 | 31.12.2010 | 30.06.2011 | |
| Senior management staff | 275 | 264 | 9,921 | 10,450 |
| Specialists | 1,726 | 1,697 | 3,341 | 3,389 |
| Service staff | 8 | 18 | 2,069 | 2,033 |
| In total | 2,009 | 1,979 | - | - |
| Number of employees | University education | College education | ||
| --- | --- | --- | --- | --- |
| number | per cent | number | ||
| Senior management staff | 264 | 252 | 95.5 | 6 |
| Specialists | 1,697 | 1,301 | 76.7 | 116 |
| Service staff | 18 | 6 | 33.3 | 5 |
| In total | 1,979 | 1,559 | 78.78 | 127 |
Policy for the establishment of variable remuneration for the Bank and the bank group employees
In 2010, the remuneration policy approved by SEB Bank's Supervisory Council on 30 April 2010 was abided by within SEB Bank.
According to said policy, the variable remuneration package consists of extras and bonuses, the amount of which depends on an employee's individual input into the results of his/her subdivision and the entire group. The aim of the variable remuneration system is to motivate employees towards achieving the group's set long-term objectives and rewarding them for the results achieved.
Motivation of employees of the Bank's branches and sub-branches by quarterly extras for the results of sales by a relevant sub-branch or a relevant individual employee is regulated by resolutions of the Management Board of SEB Bank and by the performance and development requirements for the branches and employees.
With the aim to acknowledge each employee's input towards the achievement of the group's long-term objectives, annual bonuses may be paid for positive results, however, only in case if the bank's financial standing is sustainable. The amount of an employee's bonus depends on the achievement of the group's overall objectives, on the performance of the subdivision in which the employee works and on the annual performance and development appraisal results. For an objective appraisal of an employee's activities and for his/her fair relevant reward, it is not only the objectives achieved that are taken into account, but also the employee's attitude and ethics. Appraisal during the annual PDD includes appraisal whether the employee's personal competence is in line with the requirements for his/her function, whether the employee in his/her activities adheres to SEB values, ethics, etc. The bonus is not a guaranteed payment.
It is aimed to determine the variable remuneration taking relevant risk level into account. In case employees who can assume significant risk in the name of the group and have a major effect on decision-taking, 60% of their salary is deferred for a three-year period. The group may refrain from paying part or all of the variable salary, if the activities of a relevant person, business subdivision or the group are at a loss.
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AB SEB BANK
CONSOLIDATED SEMI-ANNUAL REPORT FOR THE 6 MONTHS PERIOD 2011
(All amounts in LTL thousand, unless indicated otherwise)
16. Procedure for amending the Issuer Articles of Association
The Company Law of the Republic of Lithuania establishes that amendment of articles of association is an exclusive right of the annual meeting of shareholders. A 2/3 qualified majority of votes of the general meeting of shareholders participating at the meeting is required for adopting a resolution on amending the articles of association.
The Bank Law of the Republic of Lithuania establishes that the amendment of a bank's articles of association regarding i) the bank's name or domicile, ii) the amount of the authorised (share) capital, iii) the number of shares, the number of shares by their class, nominal value as well as the rights granted, iv) the competence of the Bank's management bodies as well as the method of electing and revoking the management bodies, can be registered with the Enterprise Register exclusively after the permission of a supervisory authority, i.e. the Bank of Lithuania, has been obtained.
17. Management bodies of the Issuer
- The General Meeting of Shareholders of the bank (hereinafter referred to as the 'Meeting')
- The Supervisory Council of the Bank (hereinafter referred to as the 'Council')
- The Management Board of the Bank (hereinafter referred to as the 'Management Board')
- Head of the Bank administration (President) (hereinafter referred to as the 'President')
The Board and the President are the bank's management bodies.
The Council is a collegiate supervisory body carrying out the function of supervision over the bank's activities. The Council consisting of 5 members is elected by the Meeting. The Council elects the Management Board members and revokes them from their positions, supervises over the activities of the Management Board and the President and has other rights and duties attributed to its competence by acts of law of the Republic of Lithuania and Articles of Association of the bank.
The Management Board is a collegiate management body of the bank consisting of 5 members and is elected by the Council. The Management Board manages the bank, handles daily matters, represents the Bank's interests and is liable for the financial services according to the procedure established by law. The Management Board elects (appoints) and revokes the President and his deputies and has other rights and duties attributed to its competence by acts of law of the Republic of Lithuania and Articles of Association of the bank.
The President acts in the name of the bank, organizes the bank's day-to-day activities and has other rights and duties attributed to its competence by acts of law of the Republic of Lithuania and Articles of Association of the bank.
18. Information on members of collegiate bodies, Chief Executive Office and Chief Financial Officer of the company
THE BANK SUPERVISORY COUNCIL (as of 30 June 2011)
KNUT JONAS MARTIN JOHANSSON
Head of SEB Baltic Division. Education: university degree, specialisation – economics. No shares of the Bank are hold by the Member.
Member of the Supervisory Council elected by an extraordinary meeting of shareholders of SEB Bank held on 29 October 2009, Chairman of the Supervisory Council since 13 November 2009.
MARK BARRY PAYNE
Head of Finance of SEB Baltic Division. Education: university degree, specialisation – economics. No shares of the Bank are hold by the Member.
Member of the Supervisory Council elected by an extraordinary meeting of shareholders of SEB Bank held on 29 October 2009.
CARL STEFAN DAVILL
Head of Human Resources of SEB Baltic Division. Education: university degree, specialisation – economics. No shares of the Bank are hold by the Member.
Member of the Supervisory Council elected by an extraordinary meeting of shareholders of SEB Bank held on 29 October 2009.
STEFAN STIGNÄS
Head of Corporate Banking of SEB Baltic Division. Education: university degree, specialisation – economics. No shares of the Bank are hold by the Member.
Member of the Supervisory Council elected by an extraordinary meeting of shareholders of SEB Bank held on 29 October 2009.
TED TONY KYLBERG
Head of Legal of SEB Baltic Division. Education: university degree, specialisation – law. No shares of the Bank are hold by the Member.
Member of the Supervisory Council elected by an annual general meeting of shareholders of SEB Bank held on 25 March 2010.
The term office of all Supervisory Council Members expires on 29 October 2013.
Page 8 of 11
AB SEB BANK
CONSOLIDATED SEMI-ANNUAL REPORT FOR THE 6 MONTHS PERIOD 2011
(All amounts in LTL thousand, unless indicated otherwise)
THE BANK MANAGEMENT BOARD (30 June 2011)
RAIMONDAS KVEDARAS
Chairman of the Management Board and President of SEB Bank since 19 October 2009. Elected to the Management Board as its Member of on 4 February 2004. Education: higher, specialisation – international finance. No shares of the Bank are hold by the Member.
AIVARAS ČIČELIS
Vice President and Head of Corporate Banking Division of SEB Bank. Member of the Management Board since 19 October 2009. Education: higher, specialisation – economics. No shares of the Bank are hold by the Member.
ROBERTS BERNIS
Vice President and Head of Credit and Risk Management Division of SEB Bank. Member of the Management Board since 19 October 2009. Education: higher, specialisation – engineering. No shares of the Bank are hold by the Member.
VIRGINIJUS DOVEIKA
Vice President and Head of Retail Banking Division of SEB Bank. Elected to the Management Board as its member on 8 June 2010. Education: higher, specialisation – business administration. No shares of the Bank are hold by the Member.
JONAS IRŽIKEVIČIUS
Vice President and Head of Business Support Division and Chief Financial Officer of SEB Bank.
Member of the Management Board since 11 April 2011. Education: higher, specialisation – business administration. No shares of the Bank are hold by the Member.
The term office of all Members of the Management Board expires on 4 February 2012.
CHIEF EXECUTIVE OFFICER
RAIMONDAS KVEDARAS – Chairman of the Management Board and President of SEB Bank since 19 October 2009. Elected to the Management Board as its member on 4 February 2004.
CHIEF FINANCIAL OFFICER
JONAS IRŽIKEVIČIUS – Vice President and Head of Business Support Division and Chief Financial Officer of SEB Bank. Member of the Management Board since 11 April 2011.
Information on disbursements to members of the Management Board during the first half year is provided in the table below.
| | Amounts calculated
over a year in
connection with
employment relations | | Property assigned
gratis | | guarantees issued
in the name of the
company | |
| --- | --- | --- | --- | --- | --- | --- |
| | 2011
January
1- June
30 | 2010
January
1- June
30 | 2011
January
1- June
30 | 2010
January
1- June
30 | 2011
January
1- June
30 | 2010
January
1- June
30 |
| Amounts calculated for all members of
the Management Board (LTL'000),
before taxes, in total of which: | 1,716 | 1,725 | - | - | - | - |
| amounts in connection with
employment relations (LTL'000) | 1,315 | 1,317 | - | - | - | - |
| Annual bonus for the previous year
(LTL'000) | - | - | - | - | - | - |
| Employer's social security contributions
(LTL'000) | 401 | 408 | - | - | - | - |
| Other disbursements, including the
employer's social security
contributions (LTL'000)**: | 338 | 1,036 | - | - | - | - |
| Per member of the Management Board
on average (LTL'000) before taxes: * | 343 | 344 | - | - | - | - |
| Amounts in connection with employment
relations (LTL'000) | 263 | 263 | - | - | - | - |
| Annual bonus for the previous year
(LTL'000) | - | - | - | - | - | - |
| Employer's social security contributions
(LTL'000) | 80 | 81 | - | - | - | - |
- The bank Management Board consists of 5 members.
** Employment termination compensation, daily allowances, exceeding approved rates, and one-off payment in 2010 due to new core banking system roll-out project implementation.
Page 9 of 11
AB SEB BANK
CONSOLIDATED SEMI-ANNUAL REPORT FOR THE 6 MONTHS PERIOD 2011
(All amounts in LTL thousand, unless indicated otherwise)
19. Significant arrangements, the Issuer being a party thereto, which arrangements, in case of any effective changes in the Issuer’s controlling stake, would change or terminate
Such significant arrangements are envisaged under loan agreements; however, the contracting parties and relevant terms and conditions are deemed confidential information with regard to both the bank and other parties.
20. Agreements between the Issuer and its management bodies or employees
On 11 February 2010, the administration of SEB Bank and representatives of the bank employees signed a two-year collective bargaining agreement. The collective bargaining agreement regulates labour relations as well as terms and conditions, defines mutual obligations of the employer and the employees, additional incentive measures for the employees as well as other labour relations terms and conditions on which the employees and the employer have mutually agreed, for instance, on a sum-total working hours time, calculation of the employment record, additional vacations, etc. The collective bargaining agreement has been signed by and between the administration of SEB Bank and representative of the Labour Council with a two-year tenure. The Labour Council of SEB Bank consists of 15 employees of the bank elected by secret vote holding different positions at the bank. The collective bargaining agreement includes the terms and conditions of work and the aspects on which it may be directly agreed with the employer.
One of the main activities of the Labour Council is consultations with the Bank’s management. During these activities members of the Labour Council were introduced with the new remuneration system, additional disbursements were discussed. The Labour Council periodically meets with the President of the Bank. During the meetings implementation of collective bargaining agreement, future changes, employees’ questions and reviews are discussed.
21. Information on compliance with the Corporate Governance Code
SEB Bank in substance adheres to the recommendatory-character Corporate Governance Code on the management of companies listed by Vilnius Securities Exchange.
22. Data on information in public domain
The Issuer, whose securities are admitted for trading the regulated market of the Republic of Lithuania, provides the operator of the regulated market, where the Issuer’s securities are traded in, i.e. Nasdaq OXM Vilnius, as well as the Lithuanian Securities Commission with the information on each material event in accordance with the procedure established by the Lithuanian Securities Commission. Information on each material event has to be made publicly available and provided to the central database of regulated information.
Over the reporting period, the bank announced the following information on material events:
On 12 January 2011, the Bank announced that Aušra Matusevičienė, the member of the management board of SEB Bank, to take new position in SEB Group. She will be responsible for Baltic IT and Operations, as well as for coordination and development of SEB branches in Riga and Vilnius in SEB Group Operations and IT. She will take her new position from March 15, 2011. Accordingly, A. Matusevičienė will no longer be a member of the management board of SEB Bank from the said date.
On 4 February 2011, the Bank announced that According to preliminary data, unaudited net loss suffered over the year 2010 by SEB Bank is LTL 12,1 million (EUR 3,5 million) and by SEB Bank Group - LTL 18,0 million (EUR 5,2 million). The result has been calculated in accordance with the requirements set by the acts of the Bank of Lithuania and legal acts of the Republic of Lithuania. Over the year 2009, audited net loss suffered by the Bank totaled LTL 1 546,2 million (EUR 447,8 million) and by the Group - LTL 1 427,5 million (EUR 413,43 million). The result of the year 2010 of SEB Bank includes sale profit resulting from the transfer of shares of the Bank’s subsidiary companies SEB Gyvybės Draudimas and Litectus to SEB Group concluded in the first quarter of 2010. The result of the year 2010 of SEB Bank Group includes the result of Litectus in January and February; the result of SEB Gyvybės Draudimas is not included.
On 3 March 2011, the Bank announced that on 3 March 2011 SEB Bank has transferred 100 % of the shares of its subsidiary company SEB Enskilda UAB to the parent company of SEB Bank Skandinaviska Enskilda Banken AB (publ). Taking in consideration that SEB Enskila UAB has a licence for securities brokerage and according article 10 of the Law on Markets of Financial Instruments of Republic of Lithuania prior to the transfer of shares the approval of Securities Commission of Republic of Lithuania has been received. The shares of SEB Enskilda (Latvia) and SEB Enskilda (Estonia) were transferred simultaneously. The reason of the share transfer is the intention to integrate all investment banking services in the Merchant Banking division of Skandinaviska Enskilda Banken AB (publ). It is expected that integration will improve uniform handling and coordination of the activities in the international SEB group. This change will not affect the clients of SEB Enskilda UAB.
On 14 March 2011, the Bank announced that AB SEB bankas corrects the information announced on 12 January 2011 about the date when Aušra Matusevičienė, the member of the management board of AB SEB bankas, will take her new position; Aušra Matusevičienė will start working in her new position starting from 11 April 2011. Within the SEB Group’s Operations and IT subdivision, Aušra Matusevičienė will be responsible for IT and operations in the Baltic banks and for coordination and development of the activities of SEB branches in Riga and Vilnius. Taking the above stated into account, Aušra Matusevičienė will hold the position of a member of the management board of AB SEB bankas until 8 April 2011 (instead of the previously announced 15 March 2011).
Page 10 of 11
AB SEB BANK
CONSOLIDATED SEMI-ANNUAL REPORT FOR THE 6 MONTHS PERIOD 2011
(All amounts in LTL thousand, unless indicated otherwise)
On 17 March 2011, the Bank announced that on the 30th of March 2011, the Annual General Meeting of Shareholders of AB SEB bankas will take place. The Annual General Meeting is initiated and convened by the Board of the Bank. 100 % of shares of the Bank is owned by Skandinaviska Enskilda Banken AB. Issues on the agenda:
-
- Regarding the Annual Report of the Bank;
-
- Regarding the Report of the Auditor of the Bank;
-
- Regarding the comments and proposals of the Supervisory Council of the Bank;
-
- Regarding approval of the Consolidated Financial Statements of the Bank for the Year 2010;
-
- Regarding distribution of the Year 2010 profit (loss) of the Bank.
The Board of the Bank also approved the draft decisions of the Annual General Meeting of Shareholders of the Bank.
On 25 March 2011, the Bank announced that the Supervisory Council of AB SEB bankas has resolved to appoint Jonas Iržikevičius as a new management board member of AB SEB bankas from the 11th April 2011. Jonas Iržikevičius will take his new position as member of the Management Board of AB SEB bankas not earlier than upon approval by the Bank of Lithuania.
On 31 March 2011, the Bank announced that on 30 March 2011 the Annual General Meeting of Shareholders of AB SEB bankas took place and decisions on all issues on the agenda were adopted:
-
- Consolidated Annual Report of AB SEB bankas has been familiarized with;
-
- Report of the auditor of AB SEB bankas has been familiarized with;
-
- Comments and Proposals of the Supervisory Council of AB SEB bankas have been familiarized with;
-
- Year 2010 Consolidated Financial Statements of AB SEB bankas and AB SEB bankas Group were approved;
-
- Distribution of the year 2010 profit (loss) of AB SEB bankas was approved;
On 3 May 2011, the Bank announced that according to preliminary data, unaudited net profit earned over the first quarter of the year 2011 by AB SEB bankas is LTL 97,6 million (EUR 28,3 million) and by AB SEB bankas Group is LTL 174,1 million (EUR 50,4 million). The result has been calculated in accordance with the requirements set by the acts of the Bank of Lithuania and legal acts of the Republic of Lithuania. Over the first quarter of the year 2010, unaudited net loss suffered by AB SEB bankas totalled LTL 59,4 million (EUR 17,2 million) and by the Bank's Group - LTL 80,3 million (EUR 23,3 million). The result of the first quarter of the year 2011 of AB SEB Bankas includes sale profit resulting from transfer of shares of the Bank's subsidiary company UAB "SEB Enskilda" to SEB Group. The result of the first quarter of the year 2011 of the AB SEB bankas Group doesn't include the result of UAB "SEB Enskilda".
Over the reporting period the bank also made 10 announcements of additional (as per Item 5 of Article 25 of the Law of the Republic of Lithuania on Securities), 3 announcements of period information (as per Article 20 of the Law of the Republic of Lithuania on Securities) and 1 announcement in category "Prospects".
President of SEB Bank
Head of Business Support Division and Chief Financial Officer of SEB Bank
Acting Director of Finance Department of SEB Bank
Vilnius
3 August 2011
