SEB unveils EUR 1.4b rights issue to boost capital base

Swedish bank SEB has unveiled a SEK 15 bn (EUR 1.4 bn) rights issue and plans to skip the 2008 dividend in a bid to strengthen its capital base by SEK 19.5 bn. The rights issue is fully committed and underwritten, SEB said in a statement on Thursday.

Commenting on the capital-raising operation, SEB board chairman Marcus Wallenberg said: 'The proposed capital measures should be seen in the light of today's turbulent markets. The capital measures will provide a comfortable buffer well above the Board's increased long-term Tier 1 capital target ratio of 10%, which is essential in the effort to maintain prudent capital management in the current market environment.'

Annika Falkengren, SEB's CEO and president, noted that the measures will make SEB, a major property financier, one of the most strongly capitalised banks in the Nordic region. 'We are expecting a continuation of subdued levels of economic activity, but with the measures taken we are prepared for much more severe economic outcomes,' she said.

Investor AB, Trygg-Stiftelsen, Alecta, AFA Försäkring, Fjärde AP-Fonden, Knut och Alice Wallenbergs Stiftelse, Andra AP-Fonden and SEB-Stiftelsen, representing in aggregate 43.7% of SEB's shares outstanding, have committed to subscribe for and to guarantee 50.8% of the rights issue. The remainder is underwritten by Goldman Sachs International, Morgan Stanley and UBS Investment Bank. The rights issue is subject to approval by SEB's annual general meeting, which will be held on 6 March, 2009.

Separately, SEB reported operating profit for the fourth quarter of 2008 amounted to SEK 4 bn, up 59% on the previous quarter but down 12% on the year-earlier period. Operating profit for full-year 2008 came in at SEK 12.5 bn. Fourth-quarter net profit totalled SEK 3.5 bn.