1

Changing strategy

Lars MørchCEO, Danske Bank Sweden

24 April 2012

2

Content

Change Management

• Our bank and position – at a glance

• The environment – macro and competitors

• Our strategy 2010 –

• Status – hard and soft

• Lessons learned

3

HistoryFounded by a bishop in 1837 – accelerated by Danske Bank in 1997 Selected milestones

1837 Östgöta Enskilda Bank founded by bishop Johan Jacob Hedrén

1920 Office in Stockholm

1994 Acquisition of Bohusbanken in Gothenburg and opening of the first provincial banks in Halmstad, Örebro and Karlstad

1997 Östgöta Enskilda is acquired by Danske Bank

Utilising the idea of provincial banks with high level of decision power and local “boards” as a differentiator

2004 HQ moved to Stockholm

2011 Full-service bank with a solid platform

Single brand - All provincial banks rebranded to Danske Bank

Our bank and position – at a glance

4

Why do we change?

• The world is changing• Weak and uncertain economc recovery• New regulations• Customer behavior is changing

• Big potential• Improve profitability• Improve the way we work• Growing with improved business mix

Our bank and position – at a glance

5

History and positioningStronger and weaker = different and new possibilities

Situation

Pre crisis - GROWTH• Strong growth• Vision: “Double the bank”• Branch mangers: “The power hub”• Top customer satisfaction and most satisfied employees• Low profitability and business mix not in balance

During crisis - ADJUSTMENT• Bottom-up model ineffective• Declining employee and customer satisfaction (08 and 09)• Reduced lending (SEK 255 bn to SEK 228 bn)• Profitability in line with competitors

Lending volumes (SEKbn)

C/I ratio: 2007-2011

0

50

100

150

200

250

300

2008 2009 20112010Danske Bank Sweden incl CIB

Danske Bank Sweden incl CIB

2007

Q3-20

0720

08

Q3-20

0820

09

Q3-20

0920

10

Q3-20

1020

11

Q3-20

1140

45

50

55

60

65

70

Our bank and position – at a glance

6

History and positioningStronger and weaker = different and new possibilities

SituationPre crisis - GROWTH• Strong growth• Vision: “Double the bank”• Branch mangers: “The power hub”• Top customer satisfaction and most satisfied employees• Low profitability and business mix not in balance

During crisis - ADJUSTMENT• Bottom-up model ineffective• Declining employee and customer satisfaction (08 and 09)• Reduced lending (SEK 255 bn to SEK 228 bn)• Profitability in line with competitors

Post crisis - DEVELOPMENT• Better financial results than ever – also on a comparative basis• More customers, higher volumes than prior to crisis (2007)• High customer satisfaction in priority segments• Stronger platform than ever (branding, product and integration)• Funding limits possibilities• Less attractive “contract” for some employees and customers

than before crisis: Less local “freedom” on some matters, e.g. price and processes. However, no loss of key people and EOS again significantly above industry

Lending volumes (SEKbn)

C/I ratio: 2007-2011

0

50

100

150

200

250

300

2008 2009 20112010Danske Bank Sweden incl CIB

Danske Bank Sweden incl CIB

2007

Q3-20

0720

08

Q3-20

0820

09

Q3-20

0920

10

Q3-20

1020

11

Q3-20

1140

45

50

55

60

65

70

Our bank and position – at a glance

7

MediaLending to the public, 1998-2011 (SEK bn)

Lending – 4 banks with 76% market share

Competitive landscape Many banks, four dominate and only one full scale challenger

Deposits – 4 banks with 74% market share

• Swedbank and SEB in serious trouble during 2008-2009. However, criticism has almost totally disappeared during 2010

• Nordea now being heavily criticised for ROE target (15%)

• Late 2011 banks again heavily criticised: “greedy”

Source: SCB

24%

16%

22%

14%

6%

20%Other

20%

18%

20%

16%

5%

21%Other

1998 2002 2006 2011

The environment – macro and competitors

0

500

1000

1500

2000

2500

Bank Mortgage Deposit

8

Other competitors – market share of 20% (lending) and 21 % (deposits)

Competitive landscapeSuccessful “new” entrants – agile and popular, but with limitations

5510

2513

252

Selected “international” competitors

314

10048

511

1007

2632

244

129

Selected local competitors

Lending SEK bnDeposits SEK bn

The environment – macro and competitors

9

Some key challenges Addressed in 2010 strategyLending/deposit ratio – challenge for Swedish banks

Customer satisfaction advantage continuously eaten up

Allocated capital and economic profit per segment BASE

Portfolio can tilt towards real estate – easily

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

0

2

4

6

8Pesonal Customers

Corporate Customers

Relative to peers – 3-year moving average (SKI)

76 80 73

020406080

100

Private Real estate Business -otherUtilised volumes, excluding LCC, as of 31 December 2010

0

200

400

600

800

1 000

1 200

1 400

1 600

0 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 4 500 5 000 5 500 6 000

Allocated capital

Ec

on

om

ic P

rofi

t

Business VIP: 744

CIB: 362

Business - Kärn: 183

Business - Service 87

Private Banking: 23

Personal - Favör -26

Personal - Bas: -63

Personal - Premium: -76

1,234

5,9

59

[SEK MM]

[SEK MM]

SEKbn

SH

B

DB

SE

Sw

ed

b

Nord

ea

UniC

red

i tS

EB

Santa

nd

er

Com

merz

b

RB

S

Barc

lays

BN

P

Deuts

che

HS

BC

UB

S

Cre

dit

S

Funding, cost and availability

Our strategy 2010 -

10

Three imperatives in 2010-2014 strategy

Implementation in progress

• Getting the result up

• Change in key focus: From quantity to quality

• On credits

• On customer service

• Rewire the platform to enable new growth and improved results

• New attractive and efficient customer service concepts tailored for most attractive (bigger and stronger) customers – build on group platform

• New vision – “number one for our customers” (=cross selling and customer satisfaction)

• Rebrand for efficiency in multichannel setup and attractiveness for “right customers”

• Clear premium brand positioning

• Organisational model: customer perspective and channel integration

• Improved funding position

Valu

e p

rop

osi

tion

Customer sizeLow segments

High segments

Premium

Potential to position ourselves as a premium bank and to focus our marketing efforts etc on the higher

value segment

Basic

Customer and value dimensions

Our strategy 2010 -

11

Vision: Number 1 for our customers

Goal:Balanced growth

Strategy:Targeted customer concepts

Position: Premium Bank

Motto: Ambition welcome

Our strategy 2010 -

12

A shared vision for all employees

”Nr 1” means:• The Bank where our customers do

most of their business • The Bank that our customers like

most

for our customersNr 1”for our customers” means• Existing customers • Customers that we want

How? Our employees' expertise and commitment to our

customers The ability to do the right skills available Commitment to deliver the small but very valuable,

additional Focus on customers who want premium quality - regardless

of channel

Our strategy 2010 -

13

Strategy implementation according to planVision and position set to be fully achieved by 2014

New strategy

Launch Organisational change Implementation

• Internal launch of new Vision and Strategy

• Performance management optimised

• New customer concepts

• Incentive programme

• Slimming of branches

• Positioning

• Name change

• Governance

• Changes in management

• New management forums from four to two

• Organisational Change

• Shift to segment structure

• All positions appointed

• Deliveries of concepts

• All customer concepts implemented

• Vision accomplished

2009 2010 2011- 2012 2014

• Visiting branches and Finance centres to gather information

• Establish working groups – management team at the wheel

• Decision on New Strategy

Our strategy 2010 -

Communication - Mgt Conference

Communication – Road shows

Communication – Management info

Communication - Headlines

ANALYSIS STRATEGY STRUCTURE AND IMPLEMENTATION

ACCOUNTABILITY

14

New Strategy - owned by Management - open for organisation

• Strategy assessment in Brand Ex Co

• Intensive meeting schedule (branches, shared entities etc)

• Road show

Our strategy 2010 -

Nr 1 for our

customers__________

Premiumposition

15

Launch

• Approved by Advisory Board (May 2010)

• Communicated at Management Conference (Sep 2010)

• Strategy Book

• Road Show

• First implications

Our strategy 2010 -

16

Private Banking

Jonas Predikaka

Head of Global Sales, SEB PB

CIB

Joacim Nässén

Head of Large Corporates, SHB

Organisational change - People, structure and implementation

Danske Capital

André Vatsgar

Executive VP, Fokus Bank

SkandiaMäklarna

Liza Nyberg

Managing Director, Emric AB

Danske Markets

Berit Behring

Head of Regional Sales , DM SE

Communications

Heléne Wernstedt

Partner, Kreab Gavin Anderson

Russell Reynolds: “The recent hires have significantly strengthened the management team, bringing a fresh perspective, new competences and a high level of professionalism.”

Our strategy 2010 -

17

OperationsJohan Löfgren *

Two Management Teams:

** Country Management: All Heads of Danske Bank Business entitles and Heads of Resource and control areas* Executive Management: Executive management team of the retail bank

CEOLars Mørch**

Business BankingAnn Krumlinde**Stf Anders Rex**

Private BankingJonas Predikaka**

Gro

up Fu

nctio

ns

Business DevelopmentLars Sjögren **

Personal Banking Branches

Personal BankingLiza Nyberg **

Contact Centers Customer Service

Business Banking Branches

Finance CenterMid Market

Danske Direct Business

Danske Markets*CIB*

Danica*Danske Capital*SkandiaMäklarna

Internal Audit(vacant)

Wealth Management

Private Banking onFinance Center

Danske Direct Personal

Danske Bocenter

FinanceCarina Jahn**

CreditsJan Enmark**

LegalArne Peterson*

CommunicationHeléne Wernstedt*

HRIng-Marie Frithiof*

Other units

Organisation, 1 January 2012

Our strategy 2010 -

18

Raising awareness and profile

Our strategy 2010 -

19

Implementation - project in place

• Customer concept

• Results etc

• Vision accomplished

Our strategy 2010 -

20

197544

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

EBT FTE

Branches and Finance centres

Profit and employeesVolumes

30

0

45

4

0

10

20

30

40

50

60

Branches Finance centres

11 12

248

117

0

50

100

150

200

250

300

Lending Deposits

3,267

1,332

SEKbn SEKm/#

1 2

1. Including parent company Östgöta Enskilda Bank and subsidiaries Consensus Fondkommission AB and Östgöta Enskilda Fastighetsbolag AB2. Danske Bank A/S, Danmark, Sweden branch (Retail, CIB and Danske Markets).

1996 2011

History and developmentRapid growth, now earning more than the acquisition price once a year

(#)

#

Status– hard and soft

21

Dansk

e Ban

kSE

B

Hande

lsba

nken

Swed

bank

Norde

a0%

5%

10%

15%

20%

25%

Dansk

e Ban

kSE

B

Hande

lsba

nken

Swed

bank

Norde

a25%

30%

35%

40%

45%

50%

Better, relative to peers than ever (Banking Activities

Sweden)

RoE* Deposits/Lending 2011 (average)

Profit before credit losses index 2011/ 2008C/I - 2011

* Profit after credit losses/risk-weighted, Basel I *8%

RoE* - Q1-Q2 2011

Dansk

e Ban

kSE

B

Norde

a

Swed

bank

Hande

lsba

nken

30%

60%

90%

120%

150%

Status– hard and soft

Source: Company data, BASE+CIB

Dansk

e Ban

kSE

B

Hande

lsba

nken

Swed

bank

Norde

a20%30%40%50%60%70%80%

22

Cross sales – Business advisory

Increased cross sales on corporate and personal customersCash Management penetration key to cross sales

Cross sales – Personal advisory

2,00

2,10

2,20

2,30

2,40

2,50

2,502,602,702,802,903,003,10

VIP/Premium

VIP/Premium/Favör

Status– hard and soft

23

Customer development – Business advisory1

Customer development – positive trendLost corporate customers mainly in commercial property business

Customer development – Personal advisory2

+3,000 business customers since Q4 20083

+8,000 personal customers since Q4 20084

1. VIP(49) and Kärn (39). 2. VIP (03) and Premium (09). 3. All business customers. 4. All personal customers.

30 000

32 000

34 000

36 000

38 000

2009 20112010190 000

195 000

200 000

205 000

210 000

2009 20112010

Status– hard and soft

-750

-500

-250

0

250

500

750

1000

1250

1500

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

-750

-500

-250

0

250

500

750

1000

1250

1500

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

24

Business advisory1

Customer satisfactionOnly bank to improve on both corporate and personal (Swedish Quality Index)

Personal – all customers

1. VIP(49) and Kärn (39). Internal surveys.

Greenwich Midcorp 1. SEB2. Danske3. Nordea4. Handelsbanken5. Swedbank

Swedish Quality Index• 2nd place in 2011

(-with margin)

Private BankingMystery shopping • 2010: 9/9• 2011: 4/9

(Nordea only large bank ahead)

Swedish Quality Index• 2nd place in 2011

(-just)

Status– hard and soft

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

7.57.67.77.87.9

88.18.28.3

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

7.57.67.77.87.9

88.18.28.3

Relative to peers: Improved customer service and image. Satisfaction with prices develops negatively.

25

Our people: highly educated, loyal and happy by local standards...

DBSE 2011 Industry

Satisfaction and motivation 73 +5

Loyalty 79 +4Image 77 +1

Immediate superior 78 +7

Senior management 73 +6

Cooperation 82 +4

Daily work 77 +4

Remuneration 69 0

Development 70 +6

Churn rate 5.4%

Main

Sco

reExpla

nato

ry

fact

ors

54% with academic degree – 38% women in management

Status– hard and soft

26

Lessons learned

Communication is key for successEnough timeFind ambassadors

• Background analysis is crucial

• Communication is key for success

• Recurring information to staff

• Think ahead and plan stages

- not all can be done at the same time

• Find ambassadors in the organisation

27

28

Deliveries and must wins

Deliveries Essential releases

• Regularly meetings are held to discuss different solutions

• Suggestions on solutions must always be approved by the Sponsors

• Deliveries are made monthly to gather all information from the projects to facilitate for the receivers (account managers)

• Communication is responsible for all information regarding deliveries in the projects

• Role descriptions, staffing and education are the corner stones for adapting the new way of working

• It is central to build a platform for solutions required from all or several sub projects.

• Cooperation agreement between concept and special & business supporting units.

• Accomplish the transfer of customers – start with customers to the Direct concepts.

Focus

• Role descriptions and staffing

• Platform for business process – first up is Premium Banking

• Cooperation agreements – first up is Mid Market

• Packaging of products – first up is Premium Banking

29

Many benefits has already been seen, with expectation on more to come

We see

• A strengthened management team

• A flatter organisation

• A clearer focus on implementation of

customer concepts

• A clearer structure - one bank

• Less bureaucracy – from 4 to 2 management forums

• All staff functions to be shared

Resulting in

Quicker time to market Improved customer

satisfaction

Enhanced platform to attract new customers

Increasing profit in all segments