Jyske Bank Annual Report 2008
You can view the annual report on Jyske Bank's website www.jyskebank.info
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| MANAGEMENT'S REVIEW |
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| 5-year summary |
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| Summary |
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| Results and outlook |
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| The Jyske Bank Share |
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| Risk and capital management |
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| MANAGEMENT'S STATEMENT AND AUDITORS' REPORTS |
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| Statement by Management on the Annual Report |
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| Auditors' reports |
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| ANNUAL ACCOUNTS |
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| Annual accounts |
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| Accounting policies |
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| Income Statement |
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| Balance Sheet |
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| Statement of Changes in Equity |
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| Cash Flow Statement |
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| Notes |
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| The Jyske Bank Group |
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| 5-year summary of Jyske Bank A/S |
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| Directorships |
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Jyske Bank A/S
Vestergade 8-16
DK-8600 Silkeborg
Tel. : +45 89 89 89 89
Fax :+45 89 89 19 99
E-mail jyskebank@jyskebank.dk
www.jyskebank.dk
CVR no. 17 61 66 17
Prepress and printing: Scanprint, Aarhus
To view the Summary of income statement, Balance sheet, end of period and
Selected data and financial ratios tables please visit Jyske Bank's website
www.jyskebank.info.
Summary
PROFIT BEFORE CONTRIBUTION TO THE DANISH PRIVATE CONTINGENCY ASSOCIATION: DKK
1,522M
Contribution to the Danish Private Contingency Association: DKK 231m.
Pre-tax profit: DKK 1,291m.
Core earnings before loan impairment charges and provisions for guarantees DKK
2,400m.
Loan impairment charges and provisions for guarantees under core earnings: DKK
975m.
Core earnings: DKK 1,425m.
Profit on investment portfolios net of funding costs: DKK 97m.
Profit before tax equates to a return of 13.3% on opening equity.
Liquidity reserve: more than DKK 38bn.
Solvency ratio: 12.7% (Tier 1: 11.0%).
For 2009, core earnings before loan impairment charges and provisions for
guarantees are expected to be on level with those of 2008.
For 2009, loan impairment charges and provisions for guarantees are expected to
correspond to about 1% of loans, advances and guarantees.
The Group's results for 2008 were affected by the financial crisis and the
economic slowdown, which followed years of solid growth. The effect was slower
growth in gross earnings and a higher risk of loss on the Group's loans and
advances. Because of losses on structured credits and corporate bonds, the own
securities portfolio did not perform satisfactorily. Moreover, profit was
reduced by the contribution to the Danish Private Contingency Association.
Throughout the year, the Group's liquidity and capital situation was robust.
To view the Profit before tax chart, please visit Jyske Bank's website
www.jyskebank.info
The Group's gross earnings were adversely affected by the financial crisis and
the economic slowdown in Denmark and abroad. The rise in the business volume
slowed over the year, and the financial crisis resulted in lower earnings on
investment-related activities because of lower activity in the financial markets
as well as falling equity prices. At the same time, turbulence in the interbank
market led to rising funding costs for the Group and to losses on structured
credits and corporate bonds. The interest-rate margin, on the other hand, showed
a favourable development.
Over recent years the Group has made considerable investments in market
positioning and in advanced risk and management tools. Focus in coming years
will be on rationalisation and on improving efficiency, among other things
through the renovation of basic IT systems and improvement of processes.
The slowdown of the Danish economy caused the financial situation of our
customers to deteriorate, and there have been shifts in the Group's credit
portfolio, which nevertheless remains at a satisfactory level.
In 2008, the Jyske Bank share was affected by the turmoil in the equity markets,
and it generated a negative return of 69.5%. For the past ten years, the average
annual return was 7.7%.
In spite of the financial crisis and the weak equity markets, the number of
shareholders at end-2008, at 251,000, was largely unchanged in comparison with
end-2007.
Group equity amounted to DKK 10.7bn at end-2008 and the capital base to DKK
13.4bn. The solvency ratio was 12.7%; Tier 1 11.0%. The core capital ratio
exclusive of hybrid capital was 9.5%.
In 2008, the international credit rating agencies Moody's and Standard & Poor's
confirmed Jyske Bank's ratings, but they changed the outlook to negative because
of the economic situation in Denmark. The ratings reflect Jyske Bank's strong
domestic retail and commercial banking franchise, current good asset quality,
strong capitalisation, and strong risk management.
The financial crisis and the slowdown of the Danish economy have increased
uncertainty about the prospects for the coming years. Against that background,
Jyske Bank focuses on consolidation and optimisation of risk-adjusted items.
Similarly, the Group's earnings prospects for 2009 are very uncertain. For 2009,
core earnings before loan impairment charges and provisions for guarantees are
expected to be on level with those of 2008.
In the fourth quarter of 2008, the contribution to the Danish Private
Contingency Association was recognised as DKK 122m charged to operating
expenses, depreciation and appreciation and DKK 109m to loan impairment charges
and provisions for guarantees.
In January 2009, the government decided to introduce a credit package which,
under certain circumstances, gives banks access to taking up hybrid core
capital. Jyske Bank will over the coming months consider whether to apply for
capital under the package.
Results and outlook
Consolidated profit before tax for 2008 amounted to DKK 1,291m, corresponding to
a return of 13.3% on opening equity.
The results were influenced by the following general trends:
the activity level fell in the course of the year;
bank deposits increased by 4%: deposits from Danish personal customers increased
by 8%, deposits from Danish corporate customers were unchanged, while deposits
from private-banking activities fell considerably;
bank lending fell by 4%: loans and advances to corporate customers rose by 3%
and loans and advances to personal customers were unchanged in comparison with
end-2007. The falling business volume within private-banking activities resulted
in a fall in bank lending overall;
gross earnings showed a 2% rise;
underlying expenses rose by 4%; inclusive of one-off items, which in 2007
reduced expenses by about DKK 200m and in 2008 increased expenses by about DKK
50m, the rise was 12%;
core earnings before loan impairment charges and provisions for guarantees: DKK
2,400m.;
loan impairment charges and provisions for guarantees rose from a historical low
to 0.7% of loans, advances and guarantees;
core earnings: DKK 1,425m;
profit on investment portfolios net of funding costs: DKK 97m;
contribution to the Danish Private Contingency Association: DKK 231m.
For 2009, core earnings before loan impairment charges and provisions for
guarantees are expected to be on level with those of 2008.
For 2009, loan impairment charges and provisions for guarantees are expected to
correspond to about 1% of loans, advances and guarantees.
The results are in line with the forecasts made in the course of 2008.
To view the Profit before tax 2004-2008 table, please visit Jyske Bank's website
www.jyskebank.info
Financial crisis
2008 was the year when the international financial markets, banks and financial
institutions across the world were severely affected by the global financial
crisis. The crisis originated in the US housing market. After years of sharply
rising housing prices, the proportion of troubled home owners began to rise fast
in early 2007. It developed into what became known as the sub-prime crisis, when
large international banks had to announce considerable losses on their
portfolios of loans related to the US housing market. Developments affected
confidence in banks, and the banks found it increasingly difficult to obtain
funding in the international capital markets. The central banks intervened by
making liquidity available to the markets, but this had no appreciable effect on
financing terms and conditions. In September 2007 we saw the first run on a
British bank in recent times. The crisis escalated while the international
rating agencies downgraded the ratings of bond issues based on the US housing
market. Other central bank initiatives had little effect, and the turbulence
continued until September 2008 when the crisis accelerated. Large US investment
banks and credit institutions were on the verge of bankruptcy and were either
nationalised, taken over by other banks or declared bankrupt. Also a number of
minor Danish banks ran into problems. After years of uninterrupted growth, also
the Danish real property market was hit. Banks which had lent large sums for
major real property projects ran into trouble. In the course of 2008, also
Danish banks had to be absorbed into other banks or they were taken over by the
government's winding-up company.
At end-2008, global real property prices had plunged, prices in the equity
markets had also fallen sharply, and the real economies across the globe were
either in recession or heading that way. There was still a crisis of confidence
among the banks - low confidence kept funding costs high, and many banks were
short of capital. Internationally, a string of stimulus packages were
introduced, which have so far failed to stabilise the situation.
The crisis made conditions for banking in Denmark much more difficult, and this
state of affairs must be expected to continue for the next year or two. Banks
still have to operate in ailing financial markets where funding costs are high
and it is difficult to obtain capital. Add to this an economy in recession which
in itself puts a damper on banks' earnings.
The government guarantee scheme
In October 2008, the government and the banks agreed to set up a guarantee
scheme to insure against loss on deposits held with Danish financial
institutions and all unsecured claims on them. Through its membership of the
Danish Private Contingency Association, Jyske Bank is included in the scheme,
which runs for two years to the end of the third quarter of 2010. The Group's
payment to the guarantee scheme in the fourth quarter of 2008 was DKK 122m. To
this should be added a payment of DKK 109m to the Danish Private Contingency
Association.
In January 2009, the government decided to introduce a credit package which,
under certain conditions, gives banks access to taking up hybrid core capital.
Jyske Bank will over the coming months consider whether to apply for capital
under the package.
To view Core earnings and profit on investment portfolios etc. 2008 table,
please visit Jyske Bank's website www.jyskebank.info
Core earnings
Core earnings are the Group's earnings on customer-related transactions. Core
earnings are exclusive of the Group's profit on the sale of Totalkredit and
exclusive of the contribution to the Private Contingency Association.
The Group's customer-related activities are undertaken by four units. Retail and
Commercial Banking, Denmark is responsible for business with the Group's
domestic personal and corporate customers. Jyske Markets is responsible for
activities relating to securities and currency transactions, asset management
and large corporate customers. Private Banking provides investment advice to the
Group's international clients. Jyske Finans offers solutions within leasing and
financing. Finally, there are a number of Group non-financial business areas.
To view Core earnings table, please visit Jyske Bank's website
www.jyskebank.info
Business volume
The business volume with corporate and private customers reflected the slowdown
in the Danish economy. At end-2007, the business volume was still growing
relatively fast, whereas developments in 2008 resulted in what amounts largely
to zero growth.
Bank lending fell by 4% to DKK 119bn. Repo lending was unchanged at DKK 10bn.
The fall in lending was caused by a fall in loans and advances for investment
purposes. The growth rate of loans and advances to corporate customers for the
year as a whole was 3%. Lending to personal customers grew at the rate of 15%
until the second half of 2008 when the rate fell because of the slowing real
economy, the falling house prices and the financial crisis. The growth rate for
Group lending to personal customers for 2008 as a whole was 0%.
Bank loans increased by 4% to DKK 106bn. Deposits from personal customers rose
by 8%. Deposits from Danish corporate customers and institutional customers
grew, whereas deposits from foreign corporate and personal customers fell.
To view Bank loans and deposits table, please visit Jyske Bank's website
www.jyskebank.info
Activities in the securities and foreign-exchange markets were characterised by
very difficult market conditions. As a result of the global fall in equity
prices, activities within asset management overall resulted in a fall to DKK
52bn in the Group's private banking activities, investment pools and portfolio
management, which compares with DKK 75bn at end-2007.
To view Breakdown of funds under management graph, please visit Jyske Bank's
website www.jyskebank.info
Assets under management within the field of private banking amounted at end-2008
to DKK 25bn against DKK 41bn at end-2007. Under the Group's investment pools,
assets under management amounted to DKK 11bn against DKK 15bn at end-2007, and
the portfolio management agreements to DKK 16bn against DKK 19bn at end-2007.
Jyske Bank is the custodian bank of the investment fund group Jyske Invest. The
falling equity prices across the globe resulted in considerable loss of assets
under management by investment funds. Assets under management by Jyske Invest at
end-2008 amounted to DKK 40bn against DKK 62bn at end-2007.
To view Funds under management with JyskeInvest chart, please visit Jyske Bank's
website www.jyskebank.info
Gross earnings
Gross earnings on customer-related transactions rose by 2%.
Net interest income under core earnings amounted to DKK 3,355m, up by 7%. Over
the past five years the lending margin for loans and advances to corporate and
personal customers had been more than halved due to historically low credit loss
rates and keener competition. In anticipation of rising loan loss rates as the
real economies slowed down, margins widened in 2008. Pulling in the opposite
direction, funding costs have risen due to the strained liquidity situation in
the financial markets. Moreover, net interest income was adversely affected by
foreign currency translation adjustment of profit in the international units and
by higher loan impairment charges and provisions for guarantees in 2008.
At DKK 2,701m, fee and other income showed a fall of 3%. The development is
mainly due to the special market conditions caused by the financial crisis.
Trading activities within securities and foreign exchange were reduced
significantly. Correspondingly, the lower activity in the housing market
depressed earnings from this field.
To view Breakdown of fee income table, please visit Jyske Bank's website
www.jyskebank.info
Operating expenses, depreciation and amortisation
Operating expenses, depreciation and amortisation came to DKK 3,661m. The
underlying rise was 4%. Inclusive of one-off items, which in 2007 reduced
expenses by about DKK 200m and in 2008 increased expenses by about DKK 50m,
expenses was up by 12%.
After years with focus on and large investment in market differentiation and
risk management, the Group's development capacity is now directed particularly
at rationalising business procedures. The underlying rise in expenses was
therefore lower than for the preceding years.
To view Breakdown of expenses table, please visit Jyske Bank's website
www.jyskebank.info
The number of full-time employees was 4,112. Over the past two years, the number
of employees fell by almost 100 in the administrative units. In the
customer-serving units, the number of employees showed a small fall, whereas in
the IT development functions the number rose. Given the strong focus on
rationalisation, the number of employees will, other things being equal,
continue to fall in coming years.
To view Number of full-time employees chart, please visit Jyske Bank's website
www.jyskebank.info
Core earnings before loan impairment charges and provisions for guarantees
Core earnings before loan impairment charges and provisions for guarantees
amounted to DKK 2,400m against DKK 2,656m in 2007. The net profit is in line
with the forecasts made in the course of 2008.
Loan impairment charges and provisions for guarantees
For 2008, a net amount of DKK 975m was recognised as an expense under core
earnings for loan impairment charges and provisions for guarantees corresponding
to 0.7% of total loans, advances and guarantees. The balance of loan impairment
charges and provisions amounted to DKK 1,537m, which compares with DKK 878m at
end-2007.
For further information on the breakdown of and trend in Group credit risks, see
the section Credit Risk 2008.
To view Loan impairment charges and provisions for guarantees chart, please
visit Jyske Bank's website www.jyskebank.info
Note: figures for 2004 are based on earlier accounting standards, whereas
figures for 2005 and later are stated in accordance with IFRS.
Core earnings
Core earnings amounted to DKK 1,425m against DKK 2,579m in 2007.
Profit on investment portfolios
For 2008 there was a gain of DKK 97m on the investment portfolios against a loss
of DKK 306m for 2007.
In 2008, the return on the Group's own securities portfolio was negative at DKK
240m. The result was mainly affected by the falling value of structured credits
and corporate bonds caused by the wide price swings in the market.
In the fourth quarter of 2008, Jyske Bank made use of the possibility of
re-classifying parts of the trading portfolio, which are now recognised at
amortised cost instead of at market value, cf the Corporate Announcement of 3
November 2008. Add to this new investment in the held-to-maturity portfolio.
Altogether, this resulted in a difference of DKK 490m between the carrying
amount and the fair value and a fall of DKK 368m in equity at end-2008.
Subordinated debt and issued bonds showed a difference of DKK 3,5bn between the
carrying amount and the fair value. A gain of DKK 42m was recognised after the
buy-back of such notes with a face value of DKK 283m.
For further information and a breakdown of Group market risk, read the section
Market risk and instrument-based credit risk 2008.
To view Profit on investment portfolios chart, please visit Jyske Bank's website
www.jyskebank.info
The strategy behind the Group's own securities portfolio rests on a long-term
view and takes into account the Group's total risk positions. The return on the
Group's own securities portfolio varies widely from year to year.
The Danish Private Contingency Association
In the fourth quarter of 2008, DKK 122m was charged to operating expenses,
depreciation and appreciation and DKK 109m to loan impairment charges and
provisions for guarantees with relation to the Danish Private Contingency
Association.
The guarantee scheme will be in force for two years from October 2008. Jyske
Bank's direct contribution is expected to be about DKK 450m annually.
Overall results
The Group pre-tax profit amounted to DKK 1,291m against DKK 2,273m in 2007. This
corresponds to an annual return of 13.3% on opening equity.
To view Profit before tax table, please visit Jyske Bank's website
www.jyskebank.info
Calculated tax was DKK 303m. Profit after tax amounted to DKK 988m, of which
minority interests accounted for DKK 15m.
Capital
At end-2008, Group equity amounted to DKK 10.7bn and the capital base to DKK
13.4bn. The solvency ratio was 12.7%; Tier 1: 11%. The core capital ratio net of
hybrid capital was 9.5%.
The Group's capital planning and capital management objectives have been adapted
to the prevailing economic situation and to the legislation in force, under
which share buy-back and dividend distribution are prohibited and Danish banks
are subject to a number of quantitative restrictions with regard to lending etc.
The Group therefore focuses on the following objectives:
maximum consolidation;
optimisation of risk-adjusted items with due regard to the business strategy,
the risk targets of the Group and the economic situation.
The Group's capital structure is comfortable. The next redemption of
supplementary capital is in 2016.
The Supervisory Board finds that the company's capital and share structure still
meet the shareholders' and the company's interests.
Outlook for 2009
Core earnings before loan impairment charges and provisions for guarantees are
expected to be on level with those in 2008. Loan impairment charges and
provisions for guarantees are expected to be around 1% for 2009. Uncertainty is
high about the Group's earnings in 2009 because of the slowdown of the Danish
economy and the crisis in the financial markets.
The Jyske Bank share
For 2008 the return on the Jyske Bank share amounted to -69.5%. At end-2008, the
share price was DKK 122.5, corresponding to a market capitalisation of DKK 6.6bn
against DKK 22.5bn at year-end 2007. Earnings per share were DKK 18.55 against
DKK 31.05 for 2007. At end-2008, the book value per share was DKK 202, and the
price/book value was 0.60.
To view Trend in market prices graph, please visit Jyske Bank's website
www.jyskebank.info
Over the past ten years, the average annual return on the Jyske Bank share was
7.7%, compared with an average return of 5.5% on 10-year Danish government bonds
over the past ten years.
To view 10 year return, moving average chart, please visit Jyske Bank's website
www.jyskebank.info
At end-2008, the share capital amounted to DKK 540m. It consisted of 54 million
shares at a nominal value of DKK 10 (one class of shares). All the shares are
listed on NASDAQ OMX Copenhagen A/S. The shares are freely negotiable, but no
single shareholder is allowed to acquire 10% or more of the share capital
without the prior consent of the Bank, cf. Art.3 of the Bank's Articles of
Association. Each share represents one vote. No shareholder can cast more than
4,000 votes on his own behalf. According to Art.4 of the Articles of
Association, the Supervisory Board is authorised to increase the share capital
by DKK 1,000m. Subject to a resolution passed at the Annual General Meeting, the
Supervisory Board is authorised to acquire Jyske Bank shares for a sum not
exceeding 1/10 of the share capital.
At the Annual General Meeting the Supervisory Board will propose a dividend rate
of 0 for 2008 as for preceding years; this is in conformity with the agreement
between the Danish Private Contingency Association and the government about
state guarantee for deposits and unsecured creditors.
In 2008, the Bank cancelled two million of its shares, and at 31 December 2008
the Bank held 1,203,871 own shares, corresponding to 2.2% of the share capital
and a market value of about DKK 150m.
In spite of the change in the market price of the Bank's shares, the number of
shareholders at end-2008, at 251,382, was largely unchanged in comparison with
end-2007. 40.9% of the share capital is owned by shareholders holding fewer than
1,000 shares each. At end-2008, Nykredit Copenhagen held 8.62% of the shares of
Jyske Bank. The voting share corresponded to 0.01%, and by agreement the voting
rights may be exercised by Jyske Bank's Supervisory Board.
To view Breakdown of share capital chart, please visit Jyske Bank's website
www.jyskebank.info
Salary packages (gross salary schemes)
The Group offers its employees bonds and shares as part of an optional
remuneration package covering the period from 1 January 2009 to 31 December
2009.
The members of the Executive Board participate in the schemes on the same terms
as the other employees.
Election of shareholders' representatives and members of the Supervisory Board
Members of the Shareholders' Representatives of Jyske Bank are elected for a
term of three years by the shareholders attending the Annual General Meeting.
There are three geographical regions, and the representatives elected in each
geographical region stand for election alternately every three years. Among the
Representatives of the region up for election, the Shareholders' Representatives
subsequently appoint the new members of the Bank's Supervisory Board, also for a
term of three years. Members of the Shareholders' Representatives representing
the Eastern Division are up for election at the Annual General Meeting in 2009.
Amendments of the Articles of Association
To be adopted, motions to amend the Articles of Association must be approved by
¾ of the votes cast at the Annual General Meeting as well as by ¾ of the voting
share capital represented at the Annual General Meeting. This presupposes that
no less than 90% of the share capital is represented at the Annual General
Meeting. Where less than 90 per cent of the voting share capital is represented
at the General Meeting, but the motion obtained both ¾ of the votes cast and ¾
of the voting capital represented at the meeting, and provided the motion was
proposed by the Shareholders' Representatives and/or the Supervisory Board of
Jyske Bank, the motion can be adopted at an extraordinary general meeting by the
said qualified majority irrespective of the proportion of the share capital
represented. The same rules apply to motions to wind up Jyske Bank voluntarily
or merge it with other financial institutions where Jyske Bank will not be the
surviving company.
Annual General Meeting
The Annual General Meeting of Jyske Bank will be held in Silkeborg on 10 March
2009.
Corporate governance
The Supervisory Board of Jyske Bank has gone through NASDAQ OMX Copenhagen A/S's
recommendations for good corporate governance, cf. S.36 of Rules for Issuers. We
are still of the opinion that in all material respects Jyske Bank follows the
guidelines - with the following important exceptions, distributed on the eight
main sections about corporate governance:
I. The role of the shareholders and their interaction with the management of
the company
Where a take-over bid is presented, Jyske Bank's Supervisory Board reserves its
legal right to make such arrangements as it deems appropriate under current
legislation and the Bank's Articles of Association to defend the Bank's goal of
remaining an independent bank domiciled in Silkeborg, Denmark.
III. Openness and transparency
The Supervisory Board has not adopted an information and communication policy,
but procedures have been prepared which ensure that all material information is
published at once in Danish and English and made available at the Bank's
homepage.
V. The composition of the supervisory board
The members of the Supervisory Board are elected by the Shareholders'
Representatives, who are elected at the Annual General Meeting. The
Shareholders' Representatives elect members of the Supervisory Board from
amongst themselves and therefore know the profiles and competences of the
candidates for election to the Supervisory Board.
Members of the Supervisory Board are elected on the basis of the competences of
the candidates and their aptitude for taking part in the duties of the
Supervisory Board. Gender and age will not be explicitly considered.
Jyske Bank does not disclose the number of Jyske Bank shares held by individual
members of the Supervisory Board. Material changes in the number of Jyske Bank
shares held by Supervisory Board members are disclosed to NASDAQ OMX Copenhagen
A/S as and when they occur.
The frequency of Supervisory Board meetings is not disclosed.
Members of the Supervisory Board come up for election by rotation. Board members
elected by the shareholders are elected for a term of three years, and employee
representatives for a term of four years. Every year, two members of the
Supervisory Board are up for election to ensure balanced renewal and continuity.
The Supervisory Board has set up a remuneration committee for the purpose of
determining the remuneration and pension terms of the Executive Board. The
Supervisory Board has not set up any nomination committee.
VI. Remuneration of the members of the Supervisory Board and the Executive
Board
Jyske Bank does not disclose the remuneration paid to any individual; this
information being regarded as a personal matter. The remuneration of the members
of the Supervisory Board is determined by the Shareholders' Representatives,
whose remuneration is determined by the shareholders in general meeting. Jyske
Bank does not operate any incentive or bonus schemes for management or employees
in general.
VIII. Audit
The Supervisory Board does not determine a general framework every year of
auditors' non-audit services, since such services provided by external auditors
mainly refer to frequently asked questions relating to taxation or accounting.
The Supervisory Board has set up an audit committee in compliance with new
legislation in that respect.
Risk and capital management
The economic situation
The current economic situation (a result of the financial crisis) has made it
more difficult to assess the value of assets and liabilities. The essential item
in this respect is the Group's balance of loan impairment charges and provisions
for guarantees, but the higher uncertainty also affects the Group's assessment
of what constitutes the adequate capital base. The uncertain situation is
expected to last throughout 2009.
In the current economic situation it is difficult to assess customers'
creditworthiness. The Group addresses this by collecting the latest possible
data about its customers. A customer's account history and financial statements
are of great value, and our advisers keep a look-out for certain danger signals
which are taken into account in our assessment of creditworthiness. Moreover,
our risk management setup and capital planning address the uncertainty about
creditworthiness by means of conservative capital targets and a cautious
approach to risk. The Group's report on risk and capital management describes
this in detail. We would like to point to the following:
- a large part of the Group's loan impairment charges are made for individual
loans, which are followed closely, with the borrower's situation being evaluated
in depth; these evaluations are subject to well-established procedures for
validation, control and impartiality;
- basically, the Group's collective loan impairment charges are not subject to
calculation manually, but they are subsequently considered by the management of
Treasury, Finance and Risk Management and by the Group's relevant experts;
- an important part of the Group's assessment of the capital requirement relates
to stress-testing with a view to determining the importance of alternatives
(some of them very conservative alternatives) for the Group's risk profile,
expected losses, etc. The outcome of this work is used to define the adequate
capital base and is reported to the Group Risk Committee and the Supervisory
Board at least once a quarter.
Management concludes that the balance of loan impairment charges and provisions
for guarantees as well as the assessment of the Group's solvency offer a true
and fair view - even under the current market conditions.
Overall, the Group is in a good position to tackle the higher degree of
uncertainty, particularly because of the work that has been done for almost ten
years to implement advanced risk management. The Group is in a position to
monitor all main risk components dynamically, and the necessary committees are
in place to address Group risk, just as risk-based decision-making tools have
been established throughout the organisation. The validity of those tools is
followed closely, and management is comfortable about their adequacy.
For further information, see 'Risk and Capital Management - Jyske Bank 2008'.
Capital management
The objective of capital management is to manage the Group's aggregate risk in
relation to the capital available to the Group. The description below is based
on the Group's overall capital management objectives and on the capital
measurements used for the purpose.
In the following section about economic capital we describe the quantitative
methods used to reach Jyske Bank's own assessment of the most important risks.
Capital management objective
Jyske Bank's capital management objective is a solvency ratio sufficient for the
Group to continue its lending activities during a period of difficult business
conditions. The available capital must be such that regulatory capital
requirements are met during such a situation, and it must be possible to weather
heavy unexpected losses. For that purpose, a higher capital reserve is held than
required by law.
The Group's capital planning and capital management objectives are adapted to
the prevailing economic situation and to the legislation in force, under which
share buy-back is prohibited and Danish banks are subject to a number of
quantitative restrictions with regard to lending etc. The Group therefore
focuses on the following objectives:
- maximum consolidation;
- optimisation of risk-adjusted items with due regard to the business strategy,
the risk targets of the Group and the economic situation.
Capital management concepts
This section describes the concepts used in the calculation of Jyske Bank's
capital. Basically, the Group's activities generate a requirement for capital.
The requirement is determined partly by regulation, partly by the Group's
capital objective. The requirement for capital and the capital available to the
Group, i.e., the capital base, are balanced and matched in the capital planning
of the Group. The chart below illustrates the most important capital concepts.
To view Capital consepts chart, please visit Jyske Bank's website
www.jyskebank.info
Capital concepts
The capital base reflects the capital available to the Group; it must at all
times be higher than the adequate capital base and the minimum capital
requirement.
The minimum capital requirement is the amount of capital that the Group must
hold to maintain its banking licence. The calculation of the minimum capital
requirement is based on regulatory formulas which prescribe how risk-adjusted
assets must be calculated. The minimum capital requirement is 8% of the
risk-adjusted assets.
The adequate capital base expresses the Group's own assessment of the capital
requirement given the Group's risk profile. This calculation rests on three
elements:
the first element is a model which calculates risk for a one-year horizon for
the Group's most important risks;
the second element is an evaluation of other circumstances - such as the need
for a precautionary buffer, and any risks which the model for economic capital
is deemed unable to quantify appropriately;
the third element is a buffer to meet cyclical changes, which should look at a
wider horizon and at the effects on risk as well as earnings.
These capital concepts are described in more detail in the following paragraphs.
In addition to the three capital concepts, capital requirement is often
mentioned. The capital requirement is the bigger of the adequate capital base
and the minimum capital requirement. Currently the minimum capital requirement
is higher than the adequate capital base of the Group. The capital buffer is the
difference between the capital requirement and the capital base. Finally, the
required solvency need describes the adequate capital base in per cent of
risk-adjusted assets.
Capital base
The capital base consists of core capital and supplementary capital. The size of
the core capital depends, among other things, on the profit for the year,
subordinated loan capital and the Group's dividend and share buy-back policies.
The Group's solvency ratio is the capital base as a percentage of risk-adjusted
assets.
To view Capital Base table, please visit Jyske Bank's website www.jyskebank.info
The consolidation basis for accounting objectives meets the provisions about
consolidation laid down in S.12 of the Danish Financial Business Act. Fast
transfer of capital resources or repayment of claims between the parent and its
subsidiaries can be made, to the extent allowed by the solvency and liquidity
situation of the subsidiaries.
Minimum capital requirement
The calculation of the minimum capital requirement rests on the risk types
credit, market and operational risk. At Jyske Bank the minimum capital
requirement to cover credit risk accounts for by far the greatest part, cf. the
table below.
To view Minimum capital requirement table, please visit Jyske Bank's website
www.jyskebank.info
Jyske Bank has been approved for the advanced internal rating-based method. The
approval extends to the application of advanced methods for calculating the
minimum capital requirement for the bulk of the Group's credit portfolio.
To view Minimum capital requirement by exposure categoty, credit (CRD) table,
please visit Jyske Bank's website www.jyskebank.info
The comparatively big changes in the distribution of retail exposures on
sub-categories is mainly due to a change in the distribution methodology in
2008, so the changes do not reflect actual shifts in the credit portfolio
composition. Moreover, the increase under securitisation was solely caused by a
reclassification of part of the Group's trading portfolio in 2008. The rise was
thus not caused by new positions.
Credit exposure calculated according to the AIRB approach accounts for 67%,
while 33% of the exposure is calculated according to the standard approach, cf.
the chart below. 70% of the exposure according to the standard approach refers
to exposure to central governments and institutions.
To view Exposure by approach table, please visit Jyske Bank's website
www.jyskebank.info
Note: out of Real property (AIRB), retail exposure accounts for DKK 22,922m
(73%) and small corporates for DKK 8,452m (27%), and out of Other retail (AIRB),
retail exposure accounts for DKK 12,554m (67%) and small corporates for DKK
6,177m (33%).
The application of the advanced approach means that the capital calculation
reflects to a higher degree than earlier the credit risk that applies
specifically to Jyske Bank's credit portfolio. Switching to the AIRB approach
caused a reduction of 29% in Jyske Bank's minimum capital requirement for credit
risk at end-2008. Among other things, this is because by far the largest part of
the Jyske Bank Group's credit exposure is to customers with high credit ratings,
cf. the chart below. Moreover, Jyske Bank's credit portfolio has a high
proportion of personal customers, and extensive collateral has been provided.
Jyske Bank's credit portfolio is described in detail in the section about credit
risk.
To view Exposure by credit ratings 2008 table, please visit Jyske Bank's website
www.jyskebank.info
Note: the creditworthiness of Jyske Bank's customers is rated on a scale from 1
to 14.
Plans have been agreed with the Danish Financial Supervisory Authority about the
gradual implementation of the AIRB approach for the credit portfolio of the
subsidiary Jyske Finans, which accounts for 5.1% (EAD) of the Jyske Bank Group's
exposure.
Market risk is calculated according to the standard approach for calculating the
minimum capital requirement and operational risk according to the standard
indicator approach. Additional internal advanced methods have been prepared for
the calculation of both of these risk types. These methods are used, inter alia,
for calculating the adequate capital base.
Adequate capital base
Because of the new Capital Requirement Directive (CRD), Jyske Bank has initiated
an Internal Capital Adequacy Assessment Process (ICAAP) which rests on and
challenges existing risk valuations, measurements and assessments. The
objective is to determine Jyske Bank's adequate capital base (the solvency
requirement). This means that all material risks must be considered, including
risks beyond the one-year horizon used for determining economic capital, and
stress scenarios for the economic development should also be considered.
Under current regulation, Group exposure must be assessed in relation to
seventeen risk types. The mapping between those seventeen risk types and the
five risk types which Jyske Bank uses is illustrated in the chart below.
Chart of risk types
To view the Chart of risk types, please visit Jyske Bank's website
www.jyskebank.info
Every year an exhaustive assessment of the seventeen risk types is made with the
object of determining Jyske Bank's adequate capital base. The results are
summarised in an ICAAP report. Reassessment is made at least every quarter.
Economic Capital
As described earlier, economic capital is the core element in the management of
the Group's risk and capital structure and is a central element of day-to-day
risk management.
Economic capital is the minimum capital required to support the Group's risk
target at a 12-month horizon. For the Group, economic capital covers 99.97% of
unexpected losses over a 12-month horizon, corresponding to the level of an
AA-rated bank.
One of the benefits of economic capital is the fact that it comes up with an
aggregate figure for all risk types, products and business units, which takes
into consideration correlation effects at various levels. It thus produces one
unified risk figure expressed in a single unit of value.
Since 2002 when economic capital and RAROC principles were introduced in the
Group, we have made amendments to address the changed risk circumstances and
know-how in that respect. The main point is that the capital reflects the
Group's risk for the next year.
The overall risk position of the Group
The Group pursues the objective that the economic capital must accommodate all
material risks. The risk picture of the Group is therefore assessed
continuously, and it is considered whether additional risks should be quantified
in the economic capital. Moreover, all risks expressed in the capital are tested
and validated to ensure that risk is at all times reflected accurately.
Economic capital includes advanced quantification of the four main risk types
which the Group is exposed to: credit risk, market risk, operational risk and
business risk. Each main type comprises various other risk types. Credit risk
includes concentration risk, migration risk as well as counterparty risk, and
market risk covers interest-rate, currency, commodity and equity risk. Under
operational risk, the Group's image and control risks are dealt with.
Diversification is taken into account within individual risk types and between
risk types. However, the Group's calculation of the adequate capital base does
not yet take into account diversification between risk types.
Risk management and capital management
RAROC is the Group's principal performance measurement tool. It is also a
management tool for calculating the risk-adjusted return on capital, economic
capital being used as a measure of risk.
The Group now uses RAROC-based methodology at all levels, from profitability
assessment of single transactions to profitability assessment at customer,
branch, division, business unit and Group level.
Reporting
Economic capital is allocated to the Group's various divisions and business
units with due respect for the overall management of Group activities.
RAROC calculations give a strategic overview of the risk and profitability
involved in the Group's various activities. Developments in the general credit
quality of the portfolio, concentration risk, collateral values etc. are
examined carefully in this regard.
Economic capital and RAROC at division and business unit level are calculated
quarterly and reported to the Group Risk Committee and to the managements of
business units who determine activities for follow-up and any initiatives to
reduce risk. If Group risk changes materially, this is reported immediately to
the Executive Board or the Group Risk Committee.
Customer profitability
RAROC is also applied at customer and product level to measure profit and to
assess profitability as well as for pricing new loans. It is therefore essential
that the Group is able to calculate economic capital at customer and facility
level.
RAROC calculations and the facilities for price fixing are made available in a
customer profitability system where relevant employees and managers have access
to current risk-adjusted profitability calculations at various levels.
The profitability system takes into account the composition of the Group's
credit portfolio, which means that concentration effects and diversification
effects are reflected directly in the profitability calculations of new loans.
If the Group grants loans to customers in sectors and countries which are
already strongly represented in the Group's credit portfolio, a higher economic
capital and therefore lower profitability will, other things being equal, be
assigned.
Moreover, the system incorporates fixed and variable costs as well as funding
costs. The funding costs depend, among other things, on the term of individual
loans.
Development in economic capital
Group economic capital at end-2008 was calculated at DKK 6.8bn against DKK 6.2bn
at end-2007, up by 10%. The capital consisted of 74% for credit risk, 13% for
market risk, 4% for operational risk and 9% for business risk.
To view Development in economic capital table, please visit Jyske Bank's website
www.jyskebank.info
The increase in the economic capital was mainly caused by higher credit and
market risks, primarily due to the financial turbulence which prevailed during
the second half of 2008.
The financial turbulence has affected credit risk in three respects. First, the
general credit quality has deteriorated (rising probability of loss), secondly
the value of collateral has fallen - particularly the collateral value of
financial instruments - and finally the credit exposure (measured by EAD) has
risen, mainly because of rising counterparty risk and the calculated exposure to
loan commitments. Moreover, the development of the economic capital for credit
risk was affected by the fact that Jyske Bank implemented a new advanced model
setup in the fourth quarter, for the purpose of determining the value of
guarantees. Guarantees are now recognised as collateral and their collateral
value is determined under consideration of the merits of each guarantee and the
relevant guarantor's circumstances. The effect of this has offset the fall in
the value of other collateral types. Therefore the aggregate value of the
Group's collateral rose slightly in 2008.
Development in economic capital, credit exposure
To view Development in economic capital, credit exposure chart, please visit
Jyske Bank's website www.jyskebank.info
Note: index 100: economic capital for credit risk, end-2007
The market risk capital rose by 16% in 2008 as a result of the strong increase
in market volatility. For equity and currency risks the risk level has been
lowered, while the interest-rate risk level has remained moderate.
Group operational risk fell in the course of 2008. However, the fall masks
changes in the model basis which, in isolation, caused a reduction in the
economic capital. Moreover, the capital fell because of improved controls and
bought insurance cover. In certain areas, operational risk rose thanks to market
developments and stricter rules about the provision of advisory service.
Credit risk 2008
The loan portfolio is monitored currently at Group level as are the risk profile
and the collateral provided for single commitments and for the loan portfolio in
general. As part of the Bank's credit risk management, customers are categorised
into 14 rating classes, 1 indicating the lowest and 14 the highest risk of loss.
A breakdown of Jyske Bank's credit portfolio is shown in the chart below, which
indicates a satisfactory credit quality. The development in the portfolio seen
in 2008 reflected the change in the economic trend in Denmark and the financial
crisis.
To view Exposures by credit rating chart, please visit Jyske Bank's website
www.jyskebank.info
Note: the chart shows the expected exposure at default (EAD). The chart is for
Jyske Bank and is exclusive of exposures to banks and central governments, whose
rating is typically 1 or 2. EAD for defaulted customers classified by Jyske Bank
as representing high or full risk is not distributed on the 14 rating classes.
Exposure to those customers accounts for 1.8% of Jyske Bank's aggregate
exposure. The unrated part of the exposure (not shown) at Jyske Bank accounts
for 4.0%.
The average credit rating was affected by these movements and rose to 5.0
exclusive of banks and central governments, the same level as at end-2006.
Inclusive of banks and central governments, the average credit rating was 4.5 at
end-2008 against 4.2 at end-2007.
To view Average rating table, please visit Jyske Bank's website
www.jyskebank.info
The trend within rating classes 1-5, which equate to the 'Investment Grade'
rating of international rating agencies, shows that the proportion of customers
within this range is still high, although it fell in 2008. Loans and advances to
corporate customers showed the biggest change.
To view Ratings 1-5 table, please visit Jyske Bank's website www.jyskebank.info
The number of customers with the highest risk of default (ratings 12-14) rose,
with loans and advances to corporate customers showing the highest rise.
To view Ratings 12-14 table, please visit Jyske Bank's website
www.jyskebank.info
Overall, the trend of the portfolio was still satisfactory, although the
slowdown in the Danish economy was felt - most distinctly in the corporate
customer segment, which was the first to be affected by the changed economic
trends in Denmark.
Loan impairment charges and provisions for guarantees
To view Losse, impairment charges and provisions on guarantees table, please
visit Jyske Bank's website www.jyskebank.info
A net amount of DKK 1,082m was charged as write-offs, loan impairment charges
and provisions for guarantees for 2008; for 2007 the item was DKK 74m. The rise
mainly reflects the change in the economic trends in Denmark, just as also the
global financial crisis had a negative effect on developments. Out of the net
charge of DKK 1,082m, DKK 109m referred to the Danish Private Contingency
Association.
Both individual and collective loan impairment charges rose. The Group's
individual loan impairment charges rose by 68% in 2008. Recognised losses rose
from DKK 176m to DKK 662m. This was to some extent caused by a write-off of a
large exposure for which impairment charges had been made earlier. The rise in
the Group's collective impairment charges was mainly due to risk-class
migrations.
To view Total loan impairment charges and provisions as percentage of loans,
advances and guarantees graph, please visit Jyske Bank's website
www.jyskebank.info
The balance of impairment charges and provisions was DKK 1,537m or 1.08% of
consolidated loans, advances and guarantees, cf. the chart above. In a
historical perspective, the level is still relatively low. After adjustment for
the contribution to the Danish Private Contingency Association, the impairment
ratio was 1.00%.
The balance of exposures with objective evidence of impairment, cf. Note 15, was
just over 23% higher than at end-2007.
Market risk and instrument-based credit risk 2008
Value at Risk
Market risk measured as Value at Risk increased moderately throughout 2008.
At end-2008, the Group's aggregate interest-rate, currency and equity risk -
expressed as Value at Risk - amounted to DKK 33m (calculated with a time frame
of one day and 99% probability). At end-2007, Value at Risk amounted to DKK 30m.
The increase was due to the sharp rise in volatility levels. In stress
scenarios, however, market risk was reduced - particularly where currencies and
equities were concerned.
To view Value at Risk, DEaR, as a percentage of equity at end of quarter graph,
please visit Jyske Bank's website www.jyskebank.info
Interest-rate risk
The acceptable level of the Group's global interest-rate risk is determined on
the basis of an assessment of the economic prospects. The second half of 2008
saw a marked fall in interest rates internationally due to the sharply
deteriorating prospects of growth. Expecting a recession in 2009, the Group
maintained a moderate long interest-rate position throughout the year. At the
turn of the year, interest-rate risk was dominated by risk in relation to DKK,
since the potential for lower Danish interest rates is considered to be high.
To view Interest-rate risk 1 as a percentage of equity at end of quarter graph,
please visit Jyske Bank's website www.jyskebank.info
Currency risk
The Group's currency risk was reduced over 2008. Nevertheless, Value at Risk was
higher at end-2008 because of significant fluctuations in the market. Positions
were lowered because of earlier imbalances in the market: the financial crisis
has put a stop to carry trades.
Equity risk
At end-2008, the Group's aggregate equity risk A was still very low.
Position-taking was still cautious because of the uncertainty about corporate
earnings.
The Group's traditional position-taking in the equity market in the form of
spread transactions at various levels was reduced as the year progressed.
To view Equity risk as a percentage of equity at end of quarter graph, please
visit Jyske Bank's website www.jyskebank.info
Commodity risk
Since 2007, Treasury has held limited strategic commodity positions. The
positions consisted mainly of spread transactions between products and
maturities and were only to a very limited degree the result of outright
positions. The Group's limits restrict the risk level considerably.
Exposure to credit risk on financial instruments
The credit risk of Treasury is treated under the section on market risk, since
the risk is held in the form of negotiable bonds.
Throughout the year, the international credit markets have been under pressure
from the deteriorating business trends and investors' low risk tolerance and
capacity to take on risk.
Closure of positions and falling market values considerably reduced the
positions in lower-rated CDOs, while the position in AAA-rated CDOs was stable.
The position in senior bank issues increased moderately over the year.
To view Credit portfolio graph, please visit Jyske Bank's website
www.jyskebank.info
The table below is a breakdown of the portfolio on sectors and ratings.
To view Credit portfolio - sectors and rating table, please visit Jyske Bank's
website www.jyskebank.info
Liquidity risk
Liquidity risk is the risk of Jyske Bank not being able to generate or obtain
sufficient liquidity at a reasonable price to meet its payment obligations or
ultimately being unable to meet its obligations as they fall due.
Liquidity risk occurs when there is a maturity mismatch between the Group's
liabilities and assets. Management determines the liquidity risk acceptable to
the Group, expressed as the balance between the risk level and Jyske Bank's
costs of managing liquidity risk.
The Group's liquidity reserve
Jyske Bank's total holdings of securities consist of a trading portfolio held by
Jyske Markets, and Treasury's portfolio of securities. The trading portfolio is
a function of the customer-related business of Jyske Markets and operational
liquidity management. Treasury's holding of securities consists of a portfolio
of securities with market risk positions and a strategic portfolio of liquid
securities. The liquidity portfolio is to ensure that the Group's strategic
liquidity risk profile is observed and to even out swings in the Group's market
risk positions.
At end-2008 the Group's liquidity reserve amounted to almost DKK 38bn inclusive
of the Group's syndicated loan facility of EUR 500m - at end-2007 the reserve
was DKK 36bn. Certificates of deposit with the Danish central bank amounted to
DKK 12bn; and the remainder of the reserve consisted of highly liquid Danish
mortgage bonds.
The Group's liquidity reserve covers more than twelve months' run-off of funding
in the capital markets defined as the interbank market, commercial paper and
EMTN issues. Also without refinancing via capital-market funding, the Bank will
be able to finance normal growth in the balance-sheet total for more than twelve
months. The run-off profile and the development of the Bank's liquidity position
is illustrated by the chart below:
Liquidity position and run-off
To view Liquidity position and run-off graph, please visit Jyske Bank's website
www.jyskebank.info
Jyske Bank had no difficulty at any time in meeting the stress-based internally
delegated limits and guidelines.
The Group's liquidity reserve according to S.152(1)(2) of the Danish Financial
Business Act has constantly been high. At end-December, the liquidity ratio was
19.9%, corresponding to a liquidity surplus of 99.9%; at end-2007 the surplus
was 102.1%.
Funding
Jyske Bank's primary source of funding is deposits from customers. The Group has
a sound and well-diversified customer deposit base, and at end-2008 bank
deposits funded 89% of the bank loan portfolio against 78% at end-2007.
The Group's sources of funding include the inter-bank market, the wholesale
fixed-term market, bilateral agreements, the markets for commercial paper and
European medium-term notes.
To view Funding programmes table, please visit Jyske Bank's website
www.jyskebank.info
The French-regulated CP programme was established to strengthen the
diversification and depth of our short- and medium-term liquidity procurement so
as to meet the Group's liquidity requirement. Funding under the facility will
typically have a maturity of 3-6 months. The maximum maturity is one year. At
end-2008, funds drawn under the facility amounted to DKK 8.9bn (EUR 1.2bn).
Since the programme was launched, Jyske Bank has generated a wide knowledge of
the Group's CP programme among investors. The general CP market was hit by the
crisis in the international financial and money markets. Even so, the Group's
funding under the programme was maintained at a satisfactory level during 2008.
To view CP programme graph, please visit Jyske Bank's website www.jyskebank.info
For long-term funding in the international capital markets, the Group has
utilised a Euro Medium Term Note Programme (EMTN) since 1999. The typical
maturity of senior debt is between two and ten years. At end-2008, the Group had
issued notes for a total of DKK 30.6bn (USD 5.6bn) under the programme. The
primary investor segment for bonds issued under the Bank's EMTN programme is
well diversified throughout Europe. The Group works continuously to maintain its
investor base and to increase investor awareness of Jyske Bank well in advance
of a possible need to raise funds. At end-2008, Jyske Bank had five outstanding
benchmark bonds in the market:
To view Benchmark issues at 31 December 2008 table, please visit Jyske Bank's
website www.jyskebank.info
Despite the money-market crisis in 2008, Jyske Bank has been able to use the
EMTN programme for long- and medium-term funding in the international capital
markets. In 2008, the Group's funding requirement in the international capital
markets was fully covered by means of minor private placements.
Credit ratings
The Group's credit ratings are material to the price of liquidity and capital as
well as to funding flexibility in the form of access to a broad investor base.
Standard and Poor's as well as Moody's left the Group's ratings unchanged in
2008, although they changed the outlook from stable to negative in September and
November, respectively, mainly as a result of their view on the Danish economy.
To view Credit ratings table, please visit Jyske Bank's website
www.jyskebank.info
Statement by Management on the Annual Report
We have today reviewed and approved the Annual Report 2008 of Jyske Bank A/S.
The consolidated financial statements have been presented in accordance with
International Financial Reporting Standards as approved by the EU, and the
Annual Report of the parent has been prepared in accordance with the Danish
Financial Business Act. Further, the Annual Report has been prepared in
accordance with additional Danish disclosure requirements for annual reports of
listed financial companies.
The management's review includes a fair presentation of the development in the
Group's and the parent's activities and financial position as well as a
description of the most material risks and elements of uncertainty that may
affect the Group and the parent.
We consider the accounting policies appropriate for the Annual Report to provide
a true and fair view of the Group's and parent's assets and liabilities and
financial position at 31 December 2008 as well as the result of the Group's and
parent's activities and the Group cash flow for the financial year 2008.
We recommend the Annual Report for adoption at the Annual General Meeting.
Silkeborg, 17 February 2009
Executive Board
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| Anders Dam | Jørgen | Leif F. Larsen | Per Munkholm |
| Managing | Christensen | | Poulsen |
| Director and CEO | | | |
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| | | | /Jens Borum |
| | | | Manager, Accounting |
| | | | and Tax |
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Supervisory Board
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| Sven Buhrkall | Niels Erik | Philip Baruch | Jens A. Borup |
| Chairman | Carstens | | |
| | Deputy Chairman | | |
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| | Kurt Brusgaard | Keld Norup | |
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| Lars Aarup Jensen | Haggai Kunisch | Marianne Lillevang |
| Employee Representative | Employee Representative | Employee Representative |
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Auditors' reports
Internal Auditors' report
To the management of Jyske Bank A/S
We have audited the Annual Report of Jyske Bank A/S for the financial year 1
January - 31 December 2008 including management's review, statement by
management on the Annual Report, the accounting policies, Income Statement,
Balance Sheet, Statement of Changes in Equity and notes to the consolidated as
well as the parent company accounts and the Group Cash Flow Statement. The
consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted by the EU, and the parent
financial statements have been prepared in accordance with the Danish Financial
Business Act. In addition, the annual report has been prepared in accordance
with additional Danish disclosure requirements for annual reports of listed
financial companies.
Management's responsibility for the annual report
Management is responsible for the preparation of an annual report which offers a
true and fair view in accordance with International Financial Reporting
Standards as adopted by the EU with respect to the consolidated financial
statements and in accordance with the Danish Financial Business Act with respect
to the annual report of the parent company and additional Danish disclosure
requirements for annual reports of listed financial companies.
The responsibility of the Internal Audit Department, and the audit performed
Our responsibility is to express an opinion on the Annual Report based on our
audit. We conducted our audit in accordance with the Statutory Order of the
Danish Financial Supervisory Authority on Auditing Financial Enterprises, etc.
and Financial Groups and in accordance with Danish Auditing Standards.
Our audit was planned and performed with the object of obtaining a high level of
assurance that the Annual Report is free of material misstatements. From an
assessment of the internal control procedures relevant for the preparation and
presentation of an annual report, and the risk of material misstatement in the
annual report, we have on a test basis verified amounts and other information in
the Annual Report. The audit comprised all material and risky fields and also
included assessing whether the accounting policies used and significant
accounting estimates made by management are reasonable, as well as an evaluation
of the overall presentation in the Annual Report.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Our audit has not resulted in any qualification.
Opinion
In our opinion, the Annual Report gives a true and fair view of the Group's
assets, liabilities and financial position at 31 December 2008 as well as the
results of the Group's activities and cash flows for the financial year 1
January to 31 December 2008 in accordance with the International Financial
Reporting Standards as adopted by the EU and the additional Danish disclosure
requirements for annual reports of listed financial companies.
In addition, in our opinion, the Annual Report gives a true and fair view of the
parent company's assets, liabilities and financial position at 31 December 2008
and of the results of the parent company's activities and cash flows for the
financial year 1 January to 31 December 2008 in accordance with the provisions
of the Danish Financial Services Act and additional Danish disclosure
requirements for annual reports of listed financial companies.
Silkeborg, 17 February 2009
Internal Audit
Henning Sørensen Karsten Dahl
Head of Division Head of the Audit Department
Independent auditors' report
To the shareholders of Jyske Bank A/S
We have audited the Annual Report of Jyske Bank A/S for the financial year 1
January - 31 December 2008. The annual report comprises the Management's review,
the statement by Management on the annual report, the accounting policies, the
income statement, the balance sheet, the statement of changes in equity and the
notes to the financial statements for both the Group and the parent and the cash
flow statement for the Group. The consolidated financial statements have been
prepared in accordance with International Financial Reporting Standards as
adopted by the EU, and the parent financial statements have been prepared in
accordance with the Danish Financial Business Act. In addition, the annual
report has been prepared in accordance with additional Danish disclosure
requirements for annual reports of listed financial services companies.
Management's responsibility for the annual report
Management is responsible for the preparation and fair presentation of an annual
report in accordance with International Financial Reporting Standards as adopted
by the EU in respect of the consolidated financial statements, in accordance
with the Danish Financial Business Act in respect of the parent financial
statements, and additional Danish disclosure requirements for listed financial
companies. This responsibility includes: designing, implementing and maintaining
internal control relevant to the preparation and fair presentation of an annual
report that is free from material misstatement, whether due to fraud or error,
selecting and applying appropriate accounting policies, and making accounting
estimates that are reasonable in the circumstances.
Auditor's responsibility and basis of opinion
Our responsibility is to express an opinion on this annual report based on our
audit. We concluded our audit in accordance with Danish and international
Standards on Auditing. Those Standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance
whether the annual report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the annual report. The procedures selected depend on
the auditor's judgement, including the assessment of the risks of material
misstatement of the annual report, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control relevant to the
entity's preparation and fair presentation of an annual report in order to
design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the entity's
internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by
Management, as well as evaluating the overall presentation on the annual report.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Our audit has not resulted in any qualification.
Opinion
In our opinion, the annual report gives a true and fair view of the Group's
financial position at December 2008 and of its financial performance and its
cash flows for the financial year 1 January to 31 December 2008 in accordance
with International Financial Reporting Standards as adopted by the EU and
additional Danish disclosure requirements for annual reports of listed financial
service companies.
In addition, in our opinion, the annual report gives a true and fair view of the
parent's financial position at 31 December 2008 and of its financial performance
for the financial year 1 January to 31 December 2008 in accordance with the
Danish Financial Business Act and additional Danish disclosure requirements for
annual reports of listed financial services companies.
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| Silkeborg, 17 February 2009 |
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| Deloitte |
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| State-authorised Firm of Accountants |
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| Erik Holst Jørgensen | Hans Trærup |
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| State-authorised Public | State-authorised Public Accountant |
| Accountant | |
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| ANNUAL ACCOUNTS |
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| Accounting policies |
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| Income Statement |
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| Balance Sheet |
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| Statement of Changes in Equity |
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| Cash Flow Statement |
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| Notes |
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| Income Statement |
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| Balance Sheet |
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| Credit risk |
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| Market risk |
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| Derivatives |
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| Other |
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| The Jyske Bank Group |
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| 5-year summary of Jyske Bank A/S |
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| Directorships |
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Accounting policies
Basis of accounting
The consolidated accounts have been prepared in accordance with the
International Financial Reporting Standards (IFRS) as adopted by the EU. The
accounts of the parent company have been presented in accordance with the Danish
Financial Business Act, including the Danish Executive Order on Financial
Reports for Credit Institutions, Stockbrokers, etc. Furthermore, the Annual
Report has been prepared in accordance with the Danish disclosure requirements
for annual reports of listed financial institutions.
Additional Danish reporting requirements for the consolidated accounts are laid
down in the executive order on IFRS relating to financial institutions in
accordance with the Danish Financial Business Act and the rules laid down by
NASDAQ OMX Copenhagen A/S, and for the parent company accounts in accordance
with the Danish Financial Business Act and the rules laid down by NASDAQ OMX
Copenhagen A/S.
The rules applying to recognition and measurement within the parent company are
consistent with IFRS with the exception of the measurement of the book value of
associates and group enterprises, where IFRS stipulates measurement at cost or
fair value.
Information required in accordance with IFRS and other relevant Danish
regulations is set out in the notes and the Management's Review, which are
integral parts of the Annual Report.
Figures in the Annual Report are in Danish kroner. The krone is considered the
base currency of the Group's activities and the functional currency of the
parent company. Amounts have been rounded off to the nearest million in the
Management's Review and to the nearest thousand in the consolidated and parent
company accounts.
The accounting principles are identical to those applied to the Annual Report
2007.
On 15 October 2008, the EU approved the amendments to IAS 39 proposed by IASB,
under which bonds etc. may in rare circumstances be reclassified and no longer
be recognised in the trading book. Owing to a considerable distortion of the
pricing of a number of bonds, the Jyske Bank Group has chosen to adopt this
possibility, and with effect from 1 July 2008, a trading portfolio of DKK 4.5bn
was reclassified and measured at amortised cost instead of at fair value. If
this reclassification had not been made, and certain investments made after 1
July 2008 had not been classified as 'hold-to-maturity' at amortised cost,
profit before tax would have been DKK 490m lower, and profit for the year and
equity at the end of 2008 would have been DKK 368m lower. Comparative figures
have not been adjusted, in accordance with the amendment of IAS 39.
The presentation of 'Profit on investments in associates and group enterprises'
was changed and the item presented before tax instead of after tax. Earlier, the
tax payable by associates was stated together with the tax payable by the
parent. The change affects neither the profit for the year, the balance sheet
nor equity. Comparative figures have been restated accordingly. The consolidated
accounts remain unchanged.
Accounting standards and interpretations that have not come into force
At the time of publication of this Annual Report, a number of new or amended
standards and interpretations had not come into force yet and were consequently
not implemented in this Annual Report. Management finds that the future
implementation of these standards and interpretations will not have any material
effect on the Annual Report. In the following are set out the standards and
interpretations which are expected to affect the Jyske Bank Group's accounts
IFRS 8 'Operating Segments' was issued in November 2008. The standard regulates
the distribution on segments and sets out what details must be made available
about individual segments. The standard to be implemented in the accounts for
2009 will result in changes in the segment information in the accounts.
An amendment to IAS 1, 'Presentation of financial statements: A Revised
Presentation' was issued in September 2007. The standard regulates the
presentation of the income statement including income and expenses which are not
recognised in the income statement The standard will result in a minor change in
the presentation of the accounts.
In January 2008, amendments of IFRS 3 'Business Combinations' and IAS 27
'Consolidated and Separate Financial Statements' were issued. The standards
regulate the recognition and reporting of business combinations and minority
interests. The amendments will solely affect business combinations made after
January 2010.
Recognition and measurement
Assets are recognised in the Balance Sheet when it is deemed probable that
future economic benefits will flow to the Group and the asset value can be
measured reliably. Liabilities are recognised in the Balance Sheet when they are
deemed probable and can be measured reliably.
At initial recognition, assets and liabilities are measured at fair value.
Subsequently, assets and liabilities are measured as described for each item
below.
Recognition and measurement take into account gains, losses and risks which
occurred prior to the presentation date of the Annual Report and which confirm
or disprove conditions which existed on the balance sheet date.
Income is recognised in the Income Statement as earned. Incurred expenses which
relate directly to the generation of the year's earnings are recognised in the
Income Statement. Value adjustment of financial assets, liabilities and
derivatives is recognised in the Income Statement with the exception of value
adjustment of instruments entered into with a view to hedging net investment in
associates and group enterprises abroad. The latter value adjustment is
recognised directly in equity.
Financial instruments are recognised at the date of settlement.
Accounting estimates
Measurement of the carrying amount of certain assets and liabilities requires an
estimate of the influence of future events on the value of such assets and
liabilities on the balance sheet date. Estimates, which are of material
importance to the presentation of the accounts, are among other things based on
the impairment of loans and advances, the fair value of unlisted financial
instruments and provisions already made.
The estimates are based on assumptions which management finds reasonable, but
which are inherently uncertain. Furthermore, the Group is subject to risks and
uncertainties which may cause results to differ from those estimates. Key
assumptions and any specific risks to which the Group is exposed are stated in
the Management's Review and the notes.
Impairment charges for loans and advances and other receivables are subject to
significant estimates as regards the quantification of the risk that future
payments may not all be received. Where it is established that not all future
payments will be received, anticipated payments, including the estimated
realisable value of security provided and anticipated dividend payments by
estates are also subject to significant estimates. Moreover, provisions for
losses on guarantees are subject the uncertainty of assessing the extent to
which guarantees may be called upon as a consequence of the financial collapse
of the debtors.
The measurement of the fair value of unlisted financial instruments is subject
to significant estimates. Fair value is recognised on the basis of market prices
in liquid markets and recognised value assessment techniques, which include
discounted cash flow models and models for the pricing of options. Input
variables in value assessment methods include non-listed yield curves, exchange
rates and curves which indicate the volatility of the underlying asset and the
ensuing uncertainty about fair value. Unlisted shares are recognised at an
estimated fair value on the basis of the available budget and accounting figures
of the issuer in question or at management's best estimate.
Provisions for defined benefit pension plans, etc. are subject to significant
estimates with regard to the determination of future employee turnover, discount
rate, the rate of wage and salary increase, and the return on associated assets.
Provisions for pension liabilities, etc. are based on actuary calculations and
estimates.
The consolidated accounts
The consolidated accounts comprise the accounts of Jyske Bank A/S and the
undertakings in which the Bank holds a direct or indirect interest of more than
50% of the voting rights or by other means holds a controlling interest. A
controlling interest is assumed where the Bank is authorised to manage the
controlled company's financial and operational decision-making process with a
view to generating a profit from its activities. Enterprises are included in
the Group accounts on a pro rata basis, where the Bank holds at least 20% of the
voting shares or the capital, and where the enterprise is operated jointly with
others.
Enterprises acquired by the Bank with a view to temporary ownership for the
purpose of liquidation of commitments or for the restructuring of the
enterprise, and which are expected to be sold within one year, are not
consolidated into the Group accounts.
The consolidated accounts have been prepared by adding up the annual accounts
of Jyske Bank A/S and those of its subsidiaries, which were prepared in
accordance with the Group's accounting policies. Intra-group credit and debit
items, intra-group share holdings, commitments and guarantees have been
eliminated. Pro rata consolidation reflects the degree to which the Group owns
shares in a particular enterprise.
Business combinations
Upon acquisition, the assets, liabilities and contingent liabilities of
subsidiaries are measured at fair value on the date of acquisition. A positive
difference between the cost of the acquired investment and the fair value of the
identifiable net assets is recognised as goodwill. A negative difference
between the cost of the acquired investment and the fair value of the
identifiable net assets is recognised in the Income Statement on the date of
acquisition. Minority interests are recognised as the proportionate share of
the fair value of assets and liabilities.
The results of subsidiaries acquired or disposed of are recognised in the
consolidated Income Statement at the time when the controlling interest is
transferred to the Group, and cease to be consolidated from the time when the
controlling interest ceases to exist.
Intra-group transactions
Intra-group transactions are entered into on an arm's length basis or at cost.
Investments in associates
An associate is an enterprise in which the Group holds a significant but not
controlling interest, by participating in the company's financial and
operational decision-making process, and which does not qualify as a subsidiary
or joint venture. Enterprises in which the Group holds between 20% and 50% of
the voting rights are regarded as associates.
Investments in associates are recognised and measured in the consolidated
accounts and the accounts of the parent company according to the equity method.
Accordingly, investments are measured at the pro rata share of the associate's
equity value calculated in accordance with the Group's accounting policies
less/plus unrealised intra-group profits and losses plus the carrying amount of
goodwill.
The pro rata share of the associates' results after tax and elimination of
unrealised intra-group profit and loss less write-down for impairment of
goodwill is recognised in the Income Statement. The pro rata share of all
transactions and events recognised directly in the equity of the relevant
associate is recognised in Group and parent company equity.
Holdings in group enterprises
A group enterprise is an enterprise in which the Group holds a controlling
interest, cf. the paragraph on consolidation.
Investments in group enterprises are recognised in the parent company accounts
according to the equity method. A positive difference between cost and the fair
value of net assets at the time of acquisition of a group enterprise is
recognised as goodwill under intangible assets.
Investments in joint ventures
A joint venture is a contractual relationship whereby the Group and other
interested parties undertake a commercial activity of which they have joint
control. The Group presents its investment in joint ventures as consolidated on
a pro rata basis.
Where the Group trades with a joint venture, any unrealised gains and losses
compared with the Group's interest in the relevant joint venture are eliminated,
except in the event that unrealised losses reflect an impairment of the assets
transferred.
Goodwill
Goodwill is the amount by which the cost of an acquired subsidiary or joint
venture exceeds the Group's share of the fair value of identifiable assets,
liabilities and contingent liabilities at the time of acquisition.
Goodwill is recognised as an asset and allocated to cash flow-generating units
corresponding to the level at which management monitors the relevant
investment. Goodwill is not amortised, but is tested for impairment at least
once annually. Goodwill is written down to the recoverable amount. Write-downs
are recognised in the Income Statement and are not reversed later.
Goodwill in connection with the acquisition of an associate is included in the
carrying amount of the relevant associate.
Upon the sale of a subsidiary, associate or joint venture, the carrying amount
of goodwill is included in gain or loss.
Translation of foreign currency amounts at consolidation
Balance-sheet items relating to the Bank's foreign subsidiaries are translated
at year-end exchange rates for Balance Sheet items and at average exchange rates
for Income Statement items. Changes in the value of opening equity due to
exchange-rate movements during the year are recognised in equity under currency
translation reserve. Differences between translation at year-end and at average
exchange rates are included in equity under currency translation reserve.
Foreign currency transactions
Transactions in currencies other than Danish kroner are translated at the
official exchange rates on the day of the transactions. Unsettled monetary
transactions in foreign currency on the balance-sheet date are translated at the
official exchange rates on the Balance Sheet date. The Danish central bank's
official rates are applied where possible. For unquoted currencies are used
estimated rates of exchange.
Non-monetary assets and liabilities acquired in a foreign currency, which are
not restated at fair value, are not subject to translation adjustments. In
connection with a non-monetary asset, the fair value of which exceeds that
stated in the Income Statement, translation differences are recognised in the
Income Statement.
Foreign exchange gains and losses are included in the profit of the year, with
the exception of exchange-rate differences related to non-monetary assets and
liabilities, where changes in the fair value are recognised directly in equity,
and exchange rate hedging of net investments in international subsidiaries where
the exchange rate adjustment is recognised in equity as well.
Leases
Leases are classified as finance leases when substantially all risks and rewards
of ownership of an asset are transferred to the lessee. All other leases are
classified as operating leases.
Amounts due from lessees under finance leases are recognised as advances equal
to the Group's net investment in the leases. Income from finance leases is
recognised regularly over the term of a lease to reflect a continual periodic
return on the Group's outstanding net investment in the leases.
Leased assets under operating leases where the Group acts as the lessor are
recognised under equipment and depreciated along with the Group's other
equipment. Income from operational leases is recognised on a straight-line basis
over the relevant leasing period under Other operating income.
Tax
Jyske Bank is assessed for Danish tax purposes jointly with its subsidiaries.
Tax on the year's income is divided among the Danish enterprises according to
the full costing method. Domestic corporation tax is paid in accordance with the
Danish tax prepayment scheme.
Tax comprises calculated tax and any change in deferred tax as well as the
readjustment of tax for previous years. Calculated tax is based on the year's
taxable income. Deferred tax is recognised and measured in accordance with the
balance-sheet liability method on the basis of the difference between the
carrying amounts and tax values of assets and liabilities. Overall, deferred tax
liabilities are recognised on the basis of temporary differences, and deferred
tax assets are recognised to the extent that it is deemed probable that taxable
income exists against which deductible temporary differences may be offset. Such
assets and liabilities are not recognised where the temporary difference is due
to goodwill. Provisions are not made in the Balance Sheet for tax payable on the
sale of an investment in subsidiaries or associates, if the investment is not
expected to be disposed of within a short period of time, or if a sale is
planned so that there is no tax liability.
Deferred tax is calculated at the tax rates applicable during the financial year
in which the liability is settled, or the asset is realised. Deferred tax is
recognised in the Income Statement, unless it is associated with items which are
carried as expenses or income directly in equity, in which case deferred tax is
recognised in equity as well. Deferred tax assets and liabilities are offset
where attributable to tax levied by the same tax authority, and where it is the
intention of the Group to net its current tax assets and liabilities.
Financial instruments, trading portfolio
Financial instruments included in the trading portfolio are instruments which
have been acquired with a view to generating a profit from short-term price or
margin fluctuations, or instruments included in a portfolio characterised by
short-term profit-taking. Assets in the trading portfolio comprise money-market
instruments, other instruments of debt including acquired loans and equity
instruments held by the Group. Liabilities in the trading portfolio comprise
liabilities to deliver money market instruments, other debt instruments and
equity instruments sold short by the Group to a third party. Upon initial
recognition, financial instruments are measured at fair value with subsequent
value adjustment in the Income Statement.
For initial and subsequent recognition, shares in sector-owned companies are
measured at fair value. In compliance with the Bank's investment strategy,
unrealised gains and losses caused by changes in fair values are recognised at
fair value in the Income Statement in accordance with the IAS 39 fair value
option.
Shares whose fair value cannot be reliably measured are recognised at cost less
any impairment. Gains and losses upon disposal or repayment and unrealised gains
and losses as a result of a change in fair value are recognised in the Income
Statement.
Derivatives are recognised initially and subsequently at fair value. The
positive and negative fair value of derivatives is recognised under Other
assets/Other liabilities. The fair value of derivatives is calculated on the
basis of market data and generally accepted valuation models. Certain contracts
are subject to terms and conditions similar to those of derivatives. Such
embedded derivatives are under specific assumptions recognised separately at
fair value.
Held-to-maturity investments
Held-to-maturity investments include investments whose price is listed in an
active market and which were acquired with the object of earning a return until
maturity. Held-to-maturity investments are measured the first time at fair value
corresponding to the sum paid plus directly attributable transaction costs and
are subsequently measured at amortised cost.
Impairment charges are made in the same way as for loans and advances.
Held-to-maturity investments include both a reclassified trading portfolio at 1
July 2008 and certain investments made after 1 July 2008.
Balances due from credit institutions and central banks
Initially, balances due from credit institutions and central banks are
recognised at fair value plus directly attributable transaction costs less fees
and commissions received which are directly associated with the amount due.
Subsequently, balances due from banks and central banks are measured at
amortised cost in accordance with the effective interest method.
Loans and advances
Initially, loans and advances are recognised at fair value plus directly
attributable transaction costs, less fees received which are directly associated
with the granting of loans. Subsequently, loans and advances are measured at
amortised cost in accordance with the effective interest method.
All loans and advances are assessed for impairment. Significant loans and
advances as well as loans and advances for which loss has been identified are
assessed individually, and other loans and advances subject to uniform
characteristics (ratings) are reviewed collectively. Where on the basis of
actual events, objective evidence of impairment is found, and those events
affect the size of anticipated future payments, an impairment charge is made.
The impairment charge is calculated as the difference between the carrying
amount of the loan and the present value of anticipated future payments. The
estimated future cash flow is based on an assessment of the likely outcome.
Probability weightings are updated regularly so that they reflect, at every
financial reporting date, the estimated loss to the Bank of individual
commitments, and the time horizon of the risk is estimated. The probability
weightings are distributed on a number of scenarios and are determined on the
basis of an expert opinion which, in addition to the risk profile, also
estimates the influence of various future events on the risk.
Subsequent changes of amounts and timing of anticipated future payments compared
with previous assessments are recognised under impairment charges for loans and
advances, and provisions. Where a loan or advance is deemed to be uncollectible
or is forgiven in part or in full, the uncollectible part of it is written off.
Repos and reverse repos
Securities sold under repurchase agreements (repos) remain in the Balance Sheet
under securities, carry interest and are subject to value adjustment. Amounts
received are recognised as balances due to or from credit institutions.
Securities bought under reverse repurchase agreements (reverse repos) are
recognised as loans and advances or balances due from credit institutions, and
interest income and dividends are recognised under interest income.
Property, plant and equipment
Land and buildings are recognised in the Balance Sheet at the restated value
corresponding to the fair value on the date of the revaluation less subsequent
write-offs and depreciation. Revaluation is made at a frequency deemed adequate
to ensure that the carrying amount is not materially different from the presumed
fair value on the balance sheet date. A reduction in the carrying amount as a
result of the revaluation of land and buildings is charged to the Income
Statement to the extent that the amount exceeds revaluation reserves under
equity attributable to past revaluation of the asset. Any increase in value at
revaluation of land and buildings is included in Revaluation reserve unless the
increase offsets an impairment charge made earlier for the same asset which was
previously recognised as an expense.
The valuation of selected land and buildings is carried out with the assistance
of external experts.
At the regular valuation of land and buildings, the value of a building is
recognised on the basis of the return method in accordance with generally
accepted standards. The value of the building is recognised at cash value before
interest and depreciation. The operating income from the property includes
rental income less maintenance costs, administrative costs and other operating
costs. The required rate of return on a property is determined to best reflect
the transactions undertaken until the date of valuation. The required rate of
return on property is discussed with local and national estate agents. The
required rate of return is between 5% and 9%. Once a year, spot checks are made
of a number of properties with the assistance of an external appraiser.
The depreciation of revalued buildings is recognised in the Income Statement.
Upon the subsequent sale of a revalued building, any relevant revaluation
reserves are transferred directly to Retained earnings.
Equipment is recognised at cost less accumulated impairment and depreciation.
Property, plan and equipment are depreciated on a straight-line basis over the
estimated useful lives of the assets to the estimated residual value. Land is
not depreciated. The following depreciation periods apply:
Buildings Max. 50 years
Equipment and leasehold improvements Max. 5 years
Residual value of buildings
Max. 75%
Methods of depreciation, useful lives and residual values are reviewed annually.
Investment properties
Investment properties held for rental income and/or capital gain are recognised
at fair value on the Balance Sheet date. Gains and losses attributable to
changes in the fair value of investment properties are included in the result
for the period during which they arise.
Intangible assets
Goodwill is recognised at cost less accumulated impairment at the recoverable
amount.
IT development costs are recognised at cost less accumulated amortisation and
impairment. Amortisation is provided on a straight-line basis over an estimated
useful life of max. three years.
Internally generated intangible assets are charged in the year of acquisition,
as the conditions for capitalisation are not deemed to be fulfilled.
Due to credit institutions and central banks
Balances due to credit institutions and central banks are recognised at fair
value equal to payments received less directly attributable transaction costs
incurred. Subsequently, the item is measured at amortised cost according to the
effective interest method.
Issued bonds and subordinated debt
Issued bonds and subordinated debt are recognised at fair value equal to
payments received less directly attributable, transaction costs incurred.
Subsequently, issued bonds and subordinated debt are measured at amortised cost
according to the effective interest method.
Provisions
Provisions are recognised when the Group has a legal or constructive obligation
as a result of past events, where resources embodying financial benefits are
required to settle an obligation, and where a reliable estimate of the
obligation can be made.
Provisions are measured as the best estimates of the cost of meeting liabilities
on the balance sheet date. Provisions for debt expected to be payable later than
12 months after the balance sheet date are measured at present value, if of
material importance, otherwise at cost.
Provisions for pension liabilities and the like are based on the actuarial
present value of the expected benefit payments. The present value is calculated,
among other things, on the basis of expected employee turnover, discount rate
and rate of wage increase as well as the return on associated assets. The
difference between the expected and the actual development in pension benefits
will generate actuarial loss and gain which will be recognised in the Income
Statement.
Hedge accounting
The Group hedges the net interest-rate risk on a portfolio of assets and
liabilities as well as the foreign currency translation risk of its
subsidiaries.
The fair value and subsequent value adjustments of derivatives, which are
classified as and meet the requirements for hedging the fair value of a
recognised asset or liability, are recognised in the Income Statement together
with the value adjustment of the hedged asset or liability, independent of
interest rate levels. In 2007 and 2008, Jyske Bank did not apply hedge
accounting to its net interest-rate risk.
The fair value and the subsequent value adjustment of derivatives applied
towards the hedging of net investments in international subsidiaries, and which
effectively offer protection against exchange rate fluctuations in respect of
those enterprises, are recognised directly in equity under a separate currency
translation reserve. The inefficient part is recognised in the Income Statement
at once. If the foreign enterprise is disposed of, the accumulated changes in
value are transferred to the Income Statement.
Equity
Share capital is classified as equity where there is no obligation to transfer
cash or other assets.
A proposed dividend is recognised as a liability when the motion has been
approved at the Annual General Meeting. Dividend for the year is stated
separately under equity.
The currency translation reserve includes translation differences which are the
result of translating results and net investments in foreign units into Danish
kroner. It also includes the foreign currency translation adjustment of
financial liabilities for the hedging of net investments in international units.
The revaluation reserve relates to the revaluation of property, plant and
equipment less deferred tax on the revaluation. A reserve is dissolved once the
assets are sold or cease to be recognised.
Reserves according to the equity method include value adjustment of investments
in associates and group enterprises. The reserve is reduced by the distribution
of dividend to the parent company and by other changes in equity in associates
and group enterprises.
Retained earnings include non-distributed dividends from previous years.
Minority interests equal the carrying amount of the share of the net assets of
associates which is not owned by Jyske Bank A/S.
Own shares
Acquisition costs, consideration and dividend on own shares are recognised
directly in retained earnings under equity. Capital reduction by cancellation of
own shares reduces the share capital by an amount equal to the nominal value of
the cancelled shares at the time of the registration of the capital reduction.
Interest
Interest income and expenses on all interest-bearing instruments are recognised
in the Income Statement according to the accruals principle at the effective
interest rate based on the expected useful life of the relevant financial
instrument. For floating-rate assets and liabilities the rate of interest
applied is the rate that applies until the next interest-fixing date.
Interest includes amortised fees which are an integral part of the effective
return on a financial instrument, including front-end fees.
Loans and advances are written down to the recoverable amount, and interest
income is then recognised in proportion to the rate of interest at which future
cash flows were discounted for the purpose of measuring the recoverable amount.
Fees
Income related to services rendered over a given period of time accrues over the
service period. This includes guarantee commission and portfolio management
fees. Other fees are recognised in the Income Statement once the transaction has
been completed. This includes securities transaction and safe-custody fees as
well as money transfer fees.
Pension plans and other long-term employee benefits
The Group has entered into defined contribution pension plans with the majority
of its employees.
Under defined contribution pension plans, the Group makes fixed contributions to
an independent pension fund, etc. The Group is under no obligation to make
further contributions. Contributions are included in the Income Statement over
the vesting period.
Under defined benefit pension plans, the Group is obliged to pay a certain
benefit when an employee retires. Liabilities in connection with defined benefit
plans are automatically calculated by actuarially discounting pension
liabilities to present value. The present value is calculated on the basis of
assumptions relating to the future trend in interest rates, inflation, mortality
and disablement.
Anniversary bonuses are recognised as the present value of the part of the
overall liability which relates to the term during which the employees have been
employed with the Group. Due consideration is paid to staff turnover, etc. The
liability is recognised under Provisions for pensions, etc.
Earnings per share
This ratio is calculated by dividing the profit for the year exclusive of
minority shareholders' interests by the weighted average number of shares in
circulation during the financial year.
Diluted earnings per share are calculated in the same manner as earnings per
share, but the decisive factors are adjusted to reflect the effect of all
diluted share capital.
Segment information
Information on business sector and geographical areas is stated for primary and
secondary segments in accordance with IAS 14. Geographical segments are
determined according to where transactions are booked. Segment information is
prepared in accordance with Group accounting policies.
Cash Flow Statement
The Cash Flow Statement shows Group cash flows relating to operating, investing
and
financing activities for the year, changes in cash and cash equivalents for the
financial year, and cash and cash equivalents at the beginning and end of the
year. The Cash Flow Statement is presented in accordance with the indirect
method based on the profit for the year.
Cash flows derived from operating activities are calculated as the profit for
the year adjusted for non-cash operating items, changes in operating capital and
paid corporate tax. Cash flows relating to investing activities include the
purchase and sale of enterprises and non-current assets. Cash flows relating to
financing activities include distribution and movements in equity and
subordinated debt.
Cash and cash equivalents include cash and free balances due from credit
institutions and central banks with an original time to maturity of less than
three months.
To view Cash-flow statement table, please visit Jyske Bank's website
www.jyskebank.info
Standard terms
Personal customers
The Bank's standard notice of termination for floating-rate loans and credit
facilities is three months. Fixed-rate loans are uncallable. Customers can
terminate their commitment with the Bank without notice or, in the case of
fixed-rate credit facilities, at two business days' notice. In case of default,
the Bank can terminate any agreement without notice.
As a main rule, the debtor undertakes to disclose financial information to the
Bank. The Bank may dispense with such undertaking where other information on the
commitment, the repayment record and the collateral provided is deemed adequate
to assess the credit risk.
Small and medium-sized corporate customers
The Bank's standard notice of termination for floating-rate loans and credit
facilities is four weeks. Fixed-rate loans are uncallable. In case of default,
the customer relationship can be terminated without notice.
Unless security has been provided in full, the borrower is obliged to submit
financial information to the Bank.
It is the Bank's policy that the majority shareholder personally guarantees
commitments in part or in full.
Large corporate customers
Terms of notice are agreed upon on an ad-hoc basis and may correspond to the
general terms applicable to other corporate customers. For facilities that
cannot be terminated at short notice, covenants regarding financial ratios and
material adverse change in the position of the borrower are standard.
Generally, financial information is submitted quarterly.
Typically, an ISDA agreement or an agreement about transactions involving
financial instruments, a negative pledge or a pari passu agreement is entered
into.
To view the tables, please visit Jyske Bank's website www.jyskebank.info
Defined contribution pension plans
A large part of the Group's pension schemes are defined contribution plans under
which payments are made into pension funds, primarily Bank/Pension. These
payments are charged to the Income Statement as they occur.
Defined benefit plans
Retirement remuneration equalling a maximum of one year's salary is paid to
employees on retirement. In 2008, a total of DKK 316.8m (2007: DKK 368.6m) was
recognised in the Balance Sheet, recognised as the present value of the overall
liability relating to the employees' term of employment with the Group.
Employees employed not later than on 31 August 2005 are offered participation in
the retirement remuneration plan.
Jyske Bank (Gibraltar) operates defined benefit plans. These plans are managed
by independent pension funds, which invest the funds contributed to cover the
liabilities. At year-end 2008, provisions amounting to DKK 0m (2007: DKK 10.0m)
were calculated as the present value of obligations of DKK 13.9m (2007: DKK
28.3m) less the fair value of the assets, of DKK 13.9m (2007: DKK 18.3m).
Jyske Bank A/S's Pensionstilskudsfond is a fund which offers supplementary
pensions to current and former members of Jyske Bank's Executive Board and their
surviving relatives. At year-end 2008, provisions amounting to DKK 67.2m (2007:
DKK 16.8m) were calculated as the present value of the liabilities of DKK 131.7m
(2007: DKK 124.5m) less the fair value of the assets, of DKK 64.5m (2007: DKK
107.7m).
The expected return on the assets of the schemes has been based on the weighted
expected return on the various assets of the plans.
Long-term employee benefits
An anniversary bonus equalling one month's salary is paid when an employee has
worked for the Group for 25 years and 40 years. At year-end 2008, provisions
amounted to DKK 42.0m (2007: DKK 52.7m), calculated as the present value of the
aggregate liability.
Other long-term employee benefits relate to other salary- and pension-related
benefits paid to employees on retirement. Provisions totalling DKK 11.1m (2007:
DKK 13.8m) have been made.
To view the table, please visit Jyske Bank's website www.jyskebank.info
The Bank is a party to a number of legal disputes arising from its business
activities. The Bank estimates the risk involved in each individual case and
makes any necessary provisions which are recognised under contingent
liabilities. There are no other significant contingent liabilities which have
not been adequately recognised in the Balance Sheet.
To view the table, please visit Jyske Bank's website www.jyskebank.info
Hybrid core capital has no contractual maturity date. Subject to the approval of
the Danish Financial Supervisory Authority, the notes may be redeemed by the
issuer, Jyske Bank, but not earlier than 10 years after the date of issue. The
holders have no right to call for the redemption of the notes. Interest payments
on hybrid core capital may be deferred in the event that the issuer does not
meet the solvency requirements. Under such circumstances, dividend payments and
buy-back of issued shares are subject to certain restrictions. The rate of
interest is floating, but capped at 9% p.a. for the EUR 120.5m loan and at 8%
p.a. for the EUR 100m loan.
To view the table, please visit Jyske Bank's website www.jyskebank.info
Notes to credit risk
To view the table, please visit Jyske Bank's website www.jyskebank.info
Guarantees
Basis of accounting
Jyske Bank's credit review of the guarantee applicant takes into consideration
the risk on the guarantee.
Financial guarantees are primarily payment guarantees, and the risk equals that
involved in credit facilities.
Guarantees for losses on mortgage loans are typically provided as security for
the most risky part of mortgage loans to personal customers and to a limited
extent in relation to loans secured on commercial properties. Guarantees for
residential properties are within 80%, and for commercial property within
60-80%, of the property value as assessed by a professional expert.
Registration and remortgaging guarantees are granted in connection with the
registration of new and refinanced mortgages. Such guarantees involve an
insignificant degree of risk.
Other contingent liabilities include other forms of guarantees involving varying
degrees of risk. Approx 35% refer to performance guarantees. The risk involved
is deemed to be less than the risk involved in e.g. credit facilities subject to
flexible drawdown.
As from 2007, loans channelled to Totalkredit by Jyske Bank are comprised by an
agreed right of set-off against future current commissions, which Totalkredit
can invoke in the event of default on the loans arranged.
To view the table, please visit Jyske Bank's website www.jyskebank.info
Other commitments comprise solely committed loans and credit facilities with a
term longer than twelve months as defined by the Danish Financial Supervisory
Authority.
To view the table, please visit Jyske Bank's website www.jyskebank.info
Conditions for satisfaction by repossession
Where in the event of default an agreement to enforce security cannot be
reached, the customer is given adequate notice - typically at least 8 days -
before repossession, unless there is a risk of irretrievable impairment.
Where security has been provided for loans and credit facilities whose proceeds
are invested in securities, individual limits are agreed upon for the provision
of additional security or for a forced sale of assets. Typically, a forced sale
will be executed where the market value of the security provided amounts to
105%-110% of the credit risk.
The Group's strategy is to convert repossessed assets into liquid funds as soon
as possible.
To view the table, please visit Jyske Bank's website www.jyskebank.info
In addition, collateral has been provided for loans and advances of DKK 4,047m
under a number of other guarantee types.
In 2008 a new system was developed for the calculation of the collateral value
of guarantees. Consequently no comparative data for 2007 are available. In 2007,
collateral had been received in the form of guarantees for loans and advances in
the amount of DKK 35,463m and DKK 2,188m for guarantees.
The total value of collateral held by the Bank has fallen because of the
agreements made with the Bank's main mortgage business partners involving the
right to set off mortgage guarantees. A large amount of collateral consequently
ceased to be carried in 2007.
Collateral values are recognised according to the following principles:
Residential property:
The collateral value of a property is typically within 80%-95% of the market
value less any senior mortgages. Collateral values are assessed individually
depending on the characteristics of the property in question, inter alia its
location and size.
Commercial property:
The collateral value of a property is typically within 65%-90% of the market
value less any senior mortgages. Collateral values are assessed individually
depending on the characteristics of the property in question, inter alia its
location and size, or by an independent assessment or the public land
assessment.
The value of properties is assessed statistically on the basis of the price
trend of comparable properties.
Personal property:
The Bank's model is based on our historical loss experience of various asset
types. Collateral value is reduced in accordance with the diminishing-balance
method, which involves write-off of typically 10%-50% on acquisition and annual
depreciation and amortisation, typically of 10%-50% of the asset value, during
the useful life of the asset.
Highly liquid securities:
Basically, the Bank applies the official listed price adjusted, where necessary,
for marketability, currency of denomination, maturity, etc
Guarantees:
The value of guarantees is calculated by means of a "double-default" model which
takes into account that the Bank only risks a loss if both the debtor and the
guarantor default at the same time. The effect of this is recognised by
calculating an equivalent collateral value.
To view the tables, please visit Jyske Bank's website www.jyskebank.info
The carrying amount of credit exposures which would have been past due or
impaired if the attached terms and conditions had not been renegotiated,
amounted to DKK 168m in 2008. The note was changed in 2008 and is now calculated
at Group level. Comparative figures for 2007 have been restated to be
comparable.
To view the tables, please visit Jyske Bank's website www.jyskebank.info
The note was changed in 2008 and is now calculated for the Bank. The note no
longer refers to amounts due from credit institutions and central banks.
Comparative figures for 2007 have been restated to be comparable.
The sector code 'property administration, property transactions and business
service' consists of two sub-codes, 'property administration and property
transactions', and 'business service', and the rise from 2007 to 2008 was mainly
due to an increase under the sub-code 'business service'.
To view the tables, please visit Jyske Bank's website www.jyskebank.info
Notes to market risk
For further comments on risk developments, see the section Market risk and
instrument-based credit risk 2008.
To view the table, please visit Jyske Bank's website www.jyskebank.info
Notes to derivatives
Both the Bank's customers and the Bank itself use derivatives to hedge against
and manage market risks. Market risk on financial instruments is included in the
Bank's recognition of market risk. Credit risk in connection with derivatives is
calculated for each counterparty and is included in the Bank's overall credit
risk management. Subject to specific bilateral agreement, netting of the credit
risk associated with derivatives is undertaken for each counterparty.
To view the tables, please visit Jyske Bank's website www.jyskebank.info
The Bank obtains collateral for all exposures including credit risk originating
from counterparty risk. Counterparty risk is marked to market and is included in
credit risk at netted positive market values plus the weighted value of the
underlying instrument or commodity.
Specific risk is covered through Credit Support Annex (CSA) Agreements. On 31
December 2008 Jyske Bank had received margin under CSA agreements for DKK 2,732m
(2007: DKK 949m) and provided margin for DKK 1,170m (2007: DKK 38m).
To view the table, please visit Jyske Bank's website www.jyskebank.info
Financial assets and liabilities
The recognised value and the fair value of assets classified as held-for-trading
amounted to DKK 68.8bn at end-2008: at end-2007 the figure was DKK 57.0bn. The
recognised value and the fair value of liabilities classified as
held-for-trading amounted to DKK 23.7bn at end-2008: at end-2007 the figure was
DKK 19.6bn. The recognised value and the fair value of assets classified as
held-to-maturity amounted to DKK 14.1bn and DKK 13.6bn, respectively, at
end-2008: at end-2007 the figure was DKK 0bn. The Group does not hold assets
classified as available-for-sale.
The table shows the fair value of financial assets and liabilities and their
recognised values.
Bonds, shares, etc., assets linked to investment pools, and financial
instruments are measured at fair value to the effect that recognised values
equal fair values.
Loans and advances are recognised at amortised cost. The difference to fair
value is assumed to be fees and commissions received plus
interest-rate-dependent value adjustment calculated by comparing current market
rates with markets rates at the time when the loans were established. Changes in
credit quality are assumed to be included under impairment charges both for
recognised values and fair values.
Issued bonds and subordinated debt are maesured at amortised cost. The
difference to fair value is assumed to be the interest-rate-dependent value
adjustment calculated by comparing current market rates with market rates at the
time when the issues were made. Changes in fair values due to changes in the
Bank's own credit rating are not taken into account.
Deposits are recognised at amortised cost. The difference to fair value is
assumed to be the interest-rate-dependent value adjustment, calculated by
comparing current market rates with market rates at the time when the deposits
were made.
Balances with credit institutions are recognised at amortised cost. The
difference to fair value is assumed to be the interest-rate/dependent value
adjustment calculated by comparing current market rates with market rates at the
time when the transaction was made. Changes in the credit quality of balances
with credit institutions are also assumed to be included under impairment
charges for loans and advances, and other receivables. Changes in the fair
values of balances due to credit institutions because of changes in the Bank's
own credit rating are not taken into account.
The re-statement at fair value of financial assets and liabilities shows a
non-recognised unrealised gain of DKK
3,014.5m at end-2008: at end-2007 the figure was a gain of DKK 218.6m.
Unrealised gains and losses as a result of a change in the fair value of shares
in sector-owned undertakings are recognised in the Income Statement in
accordance with the fair value option. The value of such shares recognised in
the Balance Sheet 2008 amounted to DKK 779m (2007: DKK 778m), and the value
recognised in the Income Statement amounted to DKK 4m (2007: DKK 87m).
For further information on fair values, see Accounting Policies.
To view the table, please visit Jyske Bank's website www.jyskebank.info
All commitments have been established on an arm's length basis, including the
rates of interest and commission charges. In 2008, the rate of interest charged
on loans to members of the Executive Board and related parties was 5.6% (2007:
5.60%-6.10%); on loans to members of the Supervisory Board and related parties
4.90% - 9.30% (2007: 3.88%-11%). The members of the Executive Board are not
offered any incentive programmes. No member of the Executive Board or the
Supervisory Board is specifically remunerated as a member of the board in any
associated undertaking or group enterprise. Jyske Bank pays compensation to
members of the Executive Board if they resign or are dismissed for no valid
reason or their position is discontinued as a result of a take-over bid.
To view the table, please visit Jyske Bank's website www.jyskebank.info
The Group's customer-related activities are undertaken by the business units.
Retail and Commercial Banking, Denmark is responsible for business with the
Group's domestic personal and corporate customers. Jyske Markets is responsible
for activities relating to securities and currency transactions as well as large
corporate customers. Private Banking is responsible for investment services in
relation to the Group's international clients. Jyske Finans offers solutions
within leasing and financing. The Group has a number of non-financial units.
Treasury is responsible for the Bank's own securities portfolio as well as asset
and liability management and risk management.
To view the tables, please visit Jyske Bank's website www.jyskebank.info
Directorships held by members of the Supervisory Board in Danish limited
liability companies at 31 December 2008
Svend Buhrkall, Rødding
Board member, Hedorf Holding A/S
Board member, H.P. Therkelsen A/S
Kurt Brusgaard, Klampenborg
Chairman of the Supervisory Board, Ray & Berndtson A/S
Chairman of the Supervisory Board, Pointer A/S
Board member and Managing Director, DV 8 A/S
Niels Erik Carstens, Vestbjerg
Board member, Henning Olsen Holding A/S
Board member, H.O. Maskinudlejning A/S
Board member, Thomas Christensen Aalborg A/S
Jens Aksel Borup, Skagen
Chairman of the Supervisory Board, Handels Kompagniet Fiskerne A/S
Philip Baruch, Attorney-at-law, Charlottenlund
Chairman of the Supervisory Board, Distributions Service A/S
Chairman of the Supervisory Board, Zimmer Group A/S
Chairman of the Supervisory Board, Ottensten A/S
Chairman of the Supervisory Board, Ottensten Holding A/S
Board member, Scanax International A/S
Board member, Scanax Holding A/S
Board member, Futura København A/S
Board member, OutCom A/S Ledelses og Kommunikationsrådgivning
Board member, NRG Scandinavia A/S
Board member, Atlantis Denmark A/S
Board member, HK Tools A/S
Board member, Melitek A/S
Keld Norup, Attorney-at-Law, Vejle
Chairman of the Supervisory Board, Henrik Frimodt Pedersen A/S
Chairman of the Supervisory Board, Holmskov & Co. A/S
Chairman of the Supervisory Board, Holmskov Invest A/S
Chairman of the Supervisory Board, Holmskov Finans A/S
Chairman of the Supervisory Board, Mølleåens Bryghus A/S
Chairman of the Supervisory Board, Sevenoaks A/S
Chairman of the Supervisory Board, PED Invest A/S
Board member, Centrum Pæle A/S
Board member, C.P. Test A/S
Board member, David Super-Light A/S
Board member, ETS Holding A/S
Board member, Frederik Andersens Maskinfabrik A/S
Board member, FAM Ejendomme A/S
Board member, Olaf Ryes Holding A/S
Board member, Stejlbjerg Holding A/S
Board member, Bøje & Brøchner A/S
Board member, Claus Heede Holding A/S
Board member, Heede Bolcher A/S
Board member, G.H. Bolcher A/S
Board member, G.H. Ejendomme A/S
Board member, E.J. Badekabiner Holding A/S
Board member, E.J. Badekabiner A/S
Board member, Sole Minkfoder A/S
Board member, Sole Ejendomme A/S
Board member, Sole Minkfarm A/S
Board member, Vesterby Minkfarm A/S
Board member, Ejendomsselskabet Tværvej A/S
Board member, H & P Frugtimport A/S
Board member, Murermester Ove Larsen A/S
Board member and Managing Director, Ejendomsaktieselskabet Centrum
Board member and Managing Director, Bent Skov & Partnere Advokataktieselskab
Haggai Kunisch, Senior Programmer, Viborg
Board member, Kobæk Strand Konferencecenter A/S
Directorships held by members of the Executive board in commercial enterprises
and financial undertakings at 31. December 2008
Anders Dam
Chairman of the Supervisory Board, Jyske Banks Almennyttige Fond
Chairman of the Supervisory Board, Jyske Banks Almennyttige Fonds Holdingselskab
A/S
Board member (deputy chairman), PRAS A/S
Board member, DLR Kredit A/S
Jørgen Christensen
Board member, JSNFA Holding A/S
Board member, Jyske Finans A/S
Leif F. Larsen
Chairman of the Supervisory Board, Gl. Skovridergaard A/S
Chairman of the Supervisory Board, Jyske Banks Medarbejderfonds Holdingselskab
A/S
Chairman of the Supervisory Board, Letpension, Livs- og
Pensionsforsikringsselskab A/S
Chairman of the Supervisory Board, Letpension Holding A/S
Chairman of the Supervisory Board, Letpension IT A/S
Chairman of the Supervisory Board, Silkeborg Data A/S
Chairman of the Supervisory Board, Sundbyvesterhus A/S
Chairman of the Supervisory Board, Jyske Banks Medarbejderfond
Board member (deputy chairman), JN Data A/S
Board member, E-Nettet A/S
Board member, E-Nettet Holding A/S
Per Munkholm Poulsen
Chairman of the Board of Directors, Jyske Global Asset Management
Fondsmæglerselskab A/S
Chairman of the Supervisory Board, Bankpension
Board member, Berben's Effectenkantoor B.V.
Board member, JN Data A/S
Board member, Jyske Bank (Schweiz)
Board member, Jyske Bank (Gibraltar) Ltd.
Board member, Nordisk Factoring A/S
Members of the Supervisory Board at 31 December 2008
--------------------------------------------------------------------------------
| Name | Age | Appointed a Board |
| | | member |
--------------------------------------------------------------------------------
| Sven Buhrkall | 59 years | 1998 |
| Niels Erik Carstens | 66 years | 1998 |
| Philip Baruch | 55 years | 2006 |
| Jens A. Borup | 53 years | 2005 |
| Kurt Brusgaard | 66 years | 2000 |
| Keld Norup | 55 years | 2007 |
| Employee representatives | 40 years | 1998 |
| Lars Aarup Jensen | 57 years | 2002 |
| Haggai Kunish | 43 years | 2006 |
| Marianne Lillevang | | |
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