Capital Market Day, Copenhagen, 29 June 2000

Fokus Bank -Den Danske Bank in Norway

Svein SivertsenManaging Director of Fokus Bank

Fokus Bank

Agenda

� Introducing Fokus Bank

� The Norwegian banking industry

� Fokus Bank as part of Den Danske Bank

Fokus Bank

Introducing Fokus Bank:

Facts and history

u A regionally based commercial bank

u Total assets of NOK 45.7 billionu Fully privatised in 1995 - acquired by Den Danske Bank in 1999

u Ten Region Banks and 66 branchesu Established in 1987 as the result of a merger between seven regional

commercial banks

u Operates in markets where the bank has long traditions and a strongmarket position

u Emphasises long-term customer relationshipsu Aims to offer a broad range of financial services and solutions

Fokus Bank

Introducing Fokus Bank:

Strategic elements

• Being or having the possibility to become the leading commercial bank in each target region• Professional and regionally based banking are to give growth and strengthened market positions

• Combining a decentralised organisation and local decision making powers with a broad and international product range• Sales-oriented organisation in order to retain and develop the customer base and attract new customers

• Customer contact in the region banks• Adapted and available competence locally and regionally• Access to international solutions and competence• Financial strength and stability - Nordic group

• Clearly defined roles - market operation, back-office and production, management, control and development• In the forefront in using IT in order to gain advantages in terms of quality and cost-efficiency

Regional banking

Relationship banking throughcombining decentralised customer

contact and a broad product range

Professional and internationalthrough adapted and available

competence

Low costs through clearly definedroles and being in the forefront in

the use of IT

Fokus Bank

Introducing Fokus Bank:

Strong regional market positions

Share of Share of Region Bank corporates individuals

Tromsbanken 20.3 10.8

Nord-Trøndelagsbanken 36.0 21.2

Forretningsbanken 33.1 17.7

NordVestbanken 13.0 10.4

Vestlandsbanken 17.2 17.2

Vestlandsbanken Bergen n.a. n.a.

Sunnhordlandsbanken 19.2 12.4

Rogalandsbanken 15.4 8.2

Telemarksbanken 25.2 13.4

Bøndernes Bank 1.6 3.6

Share of Share of Region Bank corporates individuals

Tromsbanken 20.3 10.8

Nord-Trøndelagsbanken 36.0 21.2

Forretningsbanken 33.1 17.7

NordVestbanken 13.0 10.4

Vestlandsbanken 17.2 17.2

Vestlandsbanken Bergen n.a. n.a.

Sunnhordlandsbanken 19.2 12.4

Rogalandsbanken 15.4 8.2

Telemarksbanken 25.2 13.4

Bøndernes Bank 1.6 3.6

Fokus Bank

Introducing Fokus Bank:

The restructuring of Fokus Banku New strategy in 1991

u Cost reductionsu Concentrating the operation to regions where the bank had a

leading market position

u Cultivate the Region Banks as units for sales and marketing -centralisation of back-office and production

u Expanding the product range - capital markets, assetmanagement and insurance

u Management and controlu New credit organisation and credit policy

u Improve risk management and Management InformationSystems

Fokus Bank

Introducing Fokus Bank:

Development of main Balance Sheet items

1991 1992 1993 1994 1995 1996 1997 1998 1999

Customer depositsNet lending

Total assets0

5000

10000

15000

20000

25000

30000

35000

40000

45000

Fokus Bank

Introducing Fokus Bank:

Operating principles

u All customer contact in the Region Banks

u All back-office functions and production to beperformed centrally

u Centralised corporate development as well asmanagement and control

u The subsidiaries’ main task is to support the RegionBanks’ operations with products, services and expertise

u Offer a broad range of financial solutions to corporatesand individuals in the targets regions

Fokus Bank

Introducing Fokus Bank:

Organisation - roles and tasks

Sales and customer contact

Production andback-officefunctions

Management, control and

development

Region Banks

Fokus Service Centre

Top Management/Group Staff

Market focusthroughdecentralisation

Low coststhroughcentralisation

Strong managementand control

Fokus Bank

Introducing Fokus Bank:

The Norwegian operation

The Norwegian Market

Den Danske Bank

Region Banks

Investment Banking

FokusAsset

Management

FokusCapitalMarkets

Nordenfjeldskeforsikring

Fokus Finans AS Danske

Securities

Wholesale Banking

FokusKreditt AS

Den DanskeBank Oslo

Fokus Bank

Introducing Fokus Bank:

Current position

u Customersu 20,000 corporate customersu 200,000 private customers

u Productsu Broad product range

u Distributionu Emphasis on development of web-based banking services for

individuals and corporates

u Competenceu Invested in building formal competence

ð A good foundation to build on

Fokus Bank

The Norwegian Banking industry:

The Norwegian banking market

0

5

10

15

20

25

30Dn

B/Po

stban

ken CBK

UBN

*

Spare

bank

1/Vå

r

Foku

s Ban

k

* Including co-operating banks

u DnB/Postbanken, Christianiaog Union Bank of Norway arethe three dominating bankinggroups in Norway with almost65 per cent of the market(measured as share of totalassets)

u Norway is predominantly aretail banking market

Fokus Bank

The Norwegian Banking industry:

Macroeconomic development

u Marked upturn in Norwegianeconomyu Higher net export - oilu Higher market growth

abroad gives higher exportu Mainland demand is

growing

u Low level of investments in2000u 2000 will be the bottom

yearu Investments will grow in

2001 - both in the oilsector and in the mainlandeconomy

0100999897969594939291908988878685

6

4

2

0

-2

6

4

2

0

-2UKEFOKUS.KNR0011nok$

Marked upturn in aggregated demand... % y/y

GDP

Private consumption

010099989796959493

30

20

10

0

-10

-20

30

20

10

0

-10

-20UKEFOKUS.KNR0012nok$

..and investment bottoms out this year% y/y

Total investment

Investment in mainland industry

Fokus Bank

The Norwegian Banking industry:

Macroeconomic development

u Higher general pressure in theNorwegian economyu Tight labour marketu High credit growthu Weak kroneð Inflationary pressure

u Increased interest ratesu More aggressive

monetary policyu Too expansive

budgetary policy willlead to further tightenedmonetary policy

009998

9.00

8.80

8.60

8.40

8.20

8.00

112

110

108

106

104

102

NOK/EUR Index

NW.KALLE.VALUTA.KURS$

Weaker krone adds to inflationary pressure..

Trade-weightedexchange rate>>

<< NOK/EUR

20001999

7.5

7.0

6.5

6.0

5.5

5.0

7.5

7.0

6.5

6.0

5.5

5.0

% %

NW.KALLE.VALUTA.FOLIO$

..and central bank tightens up

Deposit rate

New forecast

Previous forecast

Fokus Bank

The Norwegian Banking Industry:

International developmentsu Increased internationalisation and globalisation - international

flow of goods and capitalu EMU amplifies the development - Norway will have to adjustu Cross-border competition - the demand for high yield on

investments is high and rising - reflected in the equity and bondsmarkets

u Norwegian banks experience increased competition from foreignplayers - the competitive climate has changed - reduced interestmargins

u Increased economies of scale and new IT enable mass productionof financial services and lower-cost distribution

u Mergers between financial institutions give larger entitiesinternationally

u Market domination is becoming increasingly more important

Fokus Bank

The Norwegian Banking Industry:

The Banks’ role

u The banking industry is an important part of the corporateinfrastructure

u An internationalisation of the corporates demands aninternationalisation of the Norwegian banking industry

u A global economy demands banks that are characterised by:u Professionalismu Competence regarding the Norwegian market combined with

international solutions, competence and networku Information technology expertise

Fokus Bank

The Norwegian banking industry:

Consolidation necessary

u The largest Norwegian banks are becomingincreasingly smaller compared to their Nordic andEuropean counterparts

u Difficult to compete in markets where size mattersu Wholesale bankingu Investment bankingu Asset managementu International cash management

u Retail banking is still highly profitable - requires strongmarket positionsu Regional consolidationu Norway is overbanked

Fokus Bank

Fokus Bank as a part of Den Danske Bank:

A new phase for Fokus Banku Fokus Bank is at the beginning of a new phase

ð 1987-1991: Strategic aim to become nation-wide,Norwegian economy in difficulties, banking industrycrisis

ð 1992-1995: Survival strategy, trimming andcultivation of the operation

ð 1995-1999: Privatisation, strong regional bankingfocus, structural activities in order to solve futurechallenges

ð New phase: Fokus Bank is to strengthen its position in theNorwegian market

Fokus Bank

Fokus Bank as a part of Den Danske Bank:

The work so far

u Fokus Bank has been a part of Den DanskeBank Group for thirteen months

u The integration has so far focused onu Routinesu Reportingu Risk Managementu Introducing group values and cultureu Joint designu IT-integration - joint platform from October 2001

Fokus Bank

Fokus Bank as a part of Den Danske Bank:

Increased income and efficiency

u Preparing for a new growth phaseu Product range

u Asset managementu Corporate and retail real estateu Internet banking - corporate and retail

u Geographical expansionu Areas with high population density and high level of

economic activity

ð In the short term - increased costsð In the long term - increased income and efficiency

Fokus Bank

Fokus Bank as a part of Den Danske Bank:

International solutions combined withregional market focus

Den Danske Bank hasü International networkü Broad range of products and

solutions for corporatesü International cash management

solutionsü Strength within the capital markets

and asset managementü Modern and customer-oriented IT-

solutions

Internationally competitive product range combined with regional and local distribution and market focus equals

a strong banking partner

Fokus Bank hasü Long traditions as banking

partner for the regionalcorporates

ü Local competence and decision-making

ü Local and regional market focusü Focused marketing strategy

emphasising the strong relationsbetween customer and bank

Fokus Bank

Fokus Bank as a part of Den Danske Bank:

Cost of distributionThe development of new distribution channels must be financed through reduced cost of traditional channels.

Express banking

Other face-to-face

Telephone

ATM/PC based

Branch

Challenge

Total distribution cost

Cost

1995 2005

(Source: Coopers & Lybrand, illustrative)

Fokus Bank

Fokus Bank as a part of Den Danske Bank:

Future challenges and growth areasu Strengthen regional market positions

u Gain market shares within traditional bankingu Develop the Region Banksu Emphasis on the large markets in Greater Oslo, Bergen and Stavanger

u Enter new marketsu New geographical areas

u Strengthen our position within asset managementu The main growth area in the Norwegian marketu Combine international and Nordic products with domestic distribution

u Develop and market competitive WEB solutionsu Use Den Danske Bank Group solutions where applicable

u Establish core values as an integral part of the organisational identityand culture, develop a communication platform and increase themarketing effort