External factors
• In 2005, the national economy of Poland recorded a growth. According to the preliminary
assessment of the Chief Statistical Office, the annual rate of GDP growth was 3.2%. Although such a rate of growth is smaller in comparison to experts’ expectations, a certain acceleration is visible:
estimated rate of growth in the fourth quarter is 4.3% (Q3: 3.7%, Q2: 2.8%; Q1: 2.1%), increasing due to accelerated rate of growth of consumption and investments. Consumer expenses arise from the drop in an unemployment rate, as well as the growth of the volume of loans granted to private individuals (mortgage loans, loans for the purchase of white goods). Export still constitutes an important source of economic growth.
• Unemployment rate dropped from 19.1% as at the end of to around 17.6% in December 2005.
Taking into consideration seasonal fluctuations, the situation in the labour market seems to improve.
• Comparing to 2004, the year of so called ”EU shock”, in 2005, the growth of prices stabilised at the average of 2.1%. The year-to-year index (December 2005/December 2004) was 0.7% and was much below the range defined by the Monetary Policy Council as a direct inflation target of NBP (2.5%±1%). Strengthening zloty compensated for the growth of fuel prices in the international markets, whereas restrictions imposed by Russia on food import from Poland contributed to the significant growth of stock in the domestic market followed by the drop in food prices. A still relatively high unemployment rate effectively counteracted an excessive growth of salaries, although as a result of employment growth, household incomes and a consumption rate increased.
• In 2005, the Monetary Policy Council made a decision to decrease interest rates of the National Bank of Poland five times, totally by 2 percentage points (2.25 points in the case of secured loans).
Interest rates on the zloty money market also dropped by a similar percentage, which contributed to narrowing interest margins. The fourth quarter of 2005 was the period of interest rate stabilisation in spite of uncertain political situation relating to parliamentary and president election, as well as the establishment of a governing coalition. Since, in the meantime, interest rates of American dollar grew by 2 percentage points after a series of raises, whereas average rates in the European market grew by around 0.25 percentage point, interest rates in the domestic and international market seem to converge significantly.
• After temporary weakening in the first quarter, zloty strengthened in relation to the single European currency. As at 31.12.2005, the PLN/EUR exchange rate was 3.8598, whereas at the same time in 2004 it was 4.0790. In the meantime, strengthening American dollar in relation to euro in the international markets contributed to the opposite change of the PLN/USD exchange rate: growth from 2.9904 to 3.2613 in the same time. Such a general strengthening trend is especially visible in comparison to foreign exchange rates recorded in 2004. The trend is supported by positive macroeconomic forecasts, information on successes in EU fund absorption, and Poland’s joining the European Monetary System in future.
• Decreasing interest rate together with the obligatory tax on interest income of private individuals cause that demand for bank deposits is much smaller than in previous years. Whereas, the demand for consumer loans and loans taken to finance housing construction industry increases. The situation in the case of corporate customers is opposite. Positive economic situation contributed to the growth of income kept in bank accounts and reduced demand for business activity finance from external sources (bank loans).
Internal factors
1. In the opinion of the Management Board, activities taken by the Bank in 2005 brought about the following benefits:
a) Stronger market position
The Bank increased its assets and the scope of its activity. It is one of the biggest entity providing financial services in the Polish market through its network of 26 branches and 17 other outlets (Customer Service Points (POB)) offering bank products and services in the major cities of Poland. This allows it to compete efficiently with other banks of a similar scale. Thanks to its geographical range, the Bank is able to serve customers all over Poland. The list below presents business units of Nordea Bank Polska S.A. as at 31.12.2005 by regions:
CENTRAL REGION WIELKOPOLSKI REGION Customer Service Pointj
1. Gdynia Branch 1
b) Broader product and service offer
The Bank introduced new products and analysed customer satisfaction in order to expand its offer and promote long-term customer relations. It especially introduced such products like
”bankassurance”, TFI units (including the distribution of own funds of the Nordea Group) and new electronic banking products (for more information, see: item 1 part B).
2. Co-operation with the Majority Shareholder – Nordea Bank AB (publ)
Nordea Bank AB (publ) is the international financial institution coming within the Nordea Group.
Nordea is the biggest financial group in region of Scandinavia and the Baltic Sea. As at 31.12.2005, its assets amounted EUR 325 billion. It is a leader in Internet banking and e-commerce operations serving 4.4 million customers. Nordea has got a strong position in the Nordic banking service market.
In all its business areas, the Nordea Group serves over 10 million customers through 1,150 bank outlets and highly advanced telephone and Internet channels, as well as international outlets. Nordea is also a leader of asset management in the Nordic financial markets.
The first Nordea’s investment in Poland was the purchase of shares of Bank Komunalny w Gdyni S.A. and BWP-Unibank S.A. In Poland, apart from Nordea Bank Polska S.A., Nordea is the owner of an insurance company, a lease company and a pension company (acquisition of SAMPO PTU S.A. in June 2005). After the merger with LG Petro Bank S.A., the position of Nordea BP S.A. in the structure of the Capital Group of Nordea improved.
Strategy and development of the Bank and its Capital Group
Development perspectives of Nordea Bank Polska S.A. are strictly connected with the policy of the Nordea Group concerning markets of the Baltic states and Poland. The Nordea Group considers these states as belonging to Nordea home market. In Poland, the Nordea Group intends to achieve a leading position in the sector of Nordic customers and become of the leading banks in selected market segments by 2007.
As at 31 December 2005, investments of the Nordea Group in Poland comprised:
• 98.85% share in Nordea Bank Polska S.A.,
• 100 % share in Nordea Polska Towarzystwo Ubezpieczeń na Życie S.A.,
• 100 % share in Nordea Finance Polska S.A.,
• share in Inwestycje Kapitałowe S.A. through 100% share of Nordea Bank Polska S.A. in this company,
• 100% share in Sampo Powszechne Towarzystwo Emerytalne S.A. and Sampo Towarzystwo Ubezpieczeń na Życie S.A. (both companies were taken over by the Nordea Group in June 2005).
One of strategic goals of the Nordea Group is to carry on its expansion in the region of the Baltic Sea.
Nordea Bank Polska S.A. is one of banks from this region. The development of activity in Poland comprises:
Distribution – strategically located branches in the major cities and use of advanced distribution channels, like Internet, telephone banking, cards and third-party distributors.
Customers – Scandinavian and international companies, the best Polish companies and municipalities, employees of our companies and up-scale individual customers willing to use new and advanced forms of banking services.
Products – a standard offer of products and customer approach that succeeded in other countries of the Nordea Group.
Position – an important entity operating in selected segments of the Polish banking market.
The Nordea Group defined the following long-term goals for the Polish market:
• To be an important player and show superior and profitable growth in segments where we choose to be present:
– Nordic and international corporates – Best local corporates
– Municipalities and state entities – Employees of our corporate customers – High income earners
– Private individuals with preference for house loans, cards and consumer finance
• To have an expanding and innovative multichannel distribution and a high level use of our e-services. To ensure low fixed costs and a cost income ratio under 50%:
– Optimal number of advisory centres, branches and sales outlets – Agents
– E-Banking – Contact centres
– Cards and co-branded cards – ATM network and cash back
• To work with a modern and standard product assortment with standard customer concepts that have a successful track record in Nordea.
13. Changes in basic management procedures applied by the Bank and its Capital Group
In 2005, the Bank did not implement any changes to its basic management procedures.
Nordea Bank Polska S.A. operates within the territorially dispersed structure based on three business centres in the Tri-City area, Łódź and Warsaw. Its business units in the Tri-city area are in charge of banking product and service development. In Łódź, the Bank established its production centre developing mortgage products, making credit operations and verifying loans granted, as well as developing IT tools. The Warsaw centre is responsible for contacts with main corporate customers, including especially Nordic customers, through the Nordic Banking Department operating in the capital city. Thanks to such a division into three equivalent centres, Bank management is more effective. A decision to locate the Head Office of Nordea Bank Polska S.A. in Gdynia is consistent with the development concept of the Nordea Group providing for an important role of the area around the Baltic Sea.
14. Changes in the composition of the Bank’s management and supervisory bodies; Principles for appointment and dismissal of management staff and its rights, especially including a right to make decisions on the issue or redemption of shares
As at 31.12.2005, the Management Board of Nordea Bank Polska S.A. was composed of:
Włodzimierz Kiciński – President of the Management Board
Members of the Management Board: Asbjörn Høyheim, Jacek Kalisz, Kari Ojala, Anna Rudnicka, Sławomir Żygowski
Changes in the composition of the Bank Management Board during the reporting period:
Due to sudden death of Kazimierz Głowacki on 21.10.2005, his mandate of the Bank Management Board Member expired.
Principles for appointing and dismissing Management Board members:
Principles for appointing and dismissing Management Board members are defined in the Bank’s Articles of Association and the By-law of the Management Board of Nordea Bank Polska S.A.
The Bank Management Board is composed of 3 to 7 members (including the President) appointed by the Bank Supervisory Board for three years from among persons recommended by the President of the Bank Management Board. Members of the Bank Management Board are dismissed by the Bank Supervisory Board at a request of the President of the Bank Management Board.
At first, the Bank Supervisory Board appoints the President and then other members of the Management Board.
Mandates of the Management Board members expire:
1) on the date of the General Shareholders Meeting approving the Statement of the Management Board from the Bank’s activity and the financial statement for the last full financial year during which a given Management Board member performed his/her function;
2) on the death of the Management Board member;
3) on the date of the Management Board member dismissal;
4) on the date of a written resignation submitted to the Chairman of the Supervisory Board.
Rights of Management Board members, especially including a right to make decisions on the issue or redemption of shares:
The Bank Management Board acts on the basis of the By-law approved by the Supervisory Board as provided in the Bank’s Articles of Association. The By-law sets forth detailed competencies of the Bank Management Board and issues that have to be reviewed jointly and adopted in the form of a resolution of the Bank Management Board. Competencies of the Management Board cover all issues not reserved to the General Shareholders Meeting or the Bank Supervisory Board.
Pursuant to the Bank’s Articles of Association, a right to make decisions on the issue or redemption of the Bank’s shares comes within the competencies of the General Shareholders Meeting, and not the competencies of the Bank Management Board.
As at 31.12.2005, the Supervisory Board of Nordea Bank Polska S.A. was composed of:
Wojciech Rybowski – Chairman of the Supervisory Board Thomas Neckmar – Vice-chairman of the Supervisory Board Members of the Supervisory Board:
Emilia Osewska-Mądry Maciej Dobrzyniecki Marek Głuchowski Paweł Miller Esa Tuomi Rauno Päivinen
Henrik Bernhard Winther Henrik Mogensen Eugeniusz Kwiatkowski
Changes in the composition of the Supervisory Board during the reporting period:
On 12 May 2005, the General Shareholders Meeting appointed the Supervisory Board of the 6th term composed of the above members.
Till 12.05.2005, the Supervisory Board was composed of: Wojciech Rybowski, Thomas Neckmar, Tadeusz Aziewicz, Maciej Dobrzyniecki, Marek Głuchowski, Paweł Miller, Claes Östberg, Rauno Päivinen, Michael Rasmussen, Eugeniusz Kwiatkowski.
15 Agreements concluded between the Bank and Management Board members providing for compensation in the case of their resignation or dismissal from their function without an important reason, or in the case their dismissal results from the Bank’s merger via acquisition:
The Bank signed agreements with Polish members of the Management Board providing for a competition ban and compensation.
The agreements provide for compensation payable after the termination of employment.
The compensation shall be paid only in cash. The amount paid to a given person shall differ and depend on a number of factors, including a function of a given person in the Management Board. The compensation shall be payable after the termination of employment for 6 to 12 months.
16. Total number and nominal value of all shares of the Bank, and stocks and shares in units of the Bank’s Capital Group held by members of management and supervisory authorities (each person separately)
As at 31.12.2005, the total number of shares of Nordea Bank Polska S.A. was 33,617,833 of the nominal value of PLN 5.00 each.
Number of shares of Nordea Bank Polska S.A. held by members of the Company’s management and supervisory authorities, for each person separately:
No. Full name Function
Number of shares of Nordea
BP S.A. (as at 31.12.2005)
1. Wojciech Rybowski Chairman of the Supervisory Board 1
2. Thomas Neckmar Vice-chairman of the Supervisory Board 0
3. Emilia Osewska-Mądry Supervisory Board Member 0
4. Maciej Dobrzyniecki Supervisory Board Member 100
5. Marek Głuchowski Supervisory Board Member 0
6. Paweł Miller Supervisory Board Member 0
7. Esa Tuomi Supervisory Board Member 0
8. Rauno Päivinen Supervisory Board Member 0
9. Henrik Bernhard Winther Supervisory Board Member 0
10. Henrik Mogensen Supervisory Board Member 0
11. Eugeniusz Kwiatkowski Supervisory Board Member 0
12. Włodzimierz Kiciński President of the Management Board 0
13. Anna Rudnicka Management Board Member 0
14. Asbjörn Høyheim Management Board Member 0
15. Jacek Kalisz Management Board Member 0
16. Kari Ojala Management Board Member 0
17. Sławomir Żygowski Management Board Member 0
Composition of the Bank Management Board and Supervisory Board as at 31.12.2005.
As at 31.12.2005, the Capital Group of Nordea Bank Polska S.A. in Gdynia was composed of:
Nordea Bank Polska S.A. – parent entity Inwestycje Kapitałowe S.A. – subsidiary.
The authorised capital of Inwestycje Kapitałowe S.A. in Gdynia is divided into 189,440 ordinary bearer’s shares of the nominal value of PLN 10.00 each.
As at 31.12.2005, members of the management and supervisory authorities of Nordea Bank Polska S.A.
did not hold any shares of the company coming within the Bank’s Capital Group.
Nordea Bank Polska S.A. is the only shareholder of the company, i.e. it holds 100% share in its authorised capital and 100% votes at GSM.
17. Total value of remuneration, awards and additional benefits paid or due to members of the Bank’s management and supervisory authorities, separately by persons and separately by their functions performed in the authorities of the Bank’s subsidiaries
Remuneration, awards or benefits paid or due to members of the management and supervisory authorities:
Management Board of the Bank:
No. Full name Function 01.01-31.12.2005 Comments
1. Włodzimierz Kiciński Management Board President 1 067.5
2. Asbjorn Hoyheim Management Board Member 902.2
3. Kari Ojala Management Board Member 465.0
4. Głowacki Kazimierz Management Board Member 456.6 till 20.10. 2005
5. Jacek Kalisz Management Board Member 534.9
6. Anna Rudnicka Management Board Member 463.1
7. Sławomir Żygowski Management Board Member 575.2
8. Lundgren Stefan Management Board Member 68.8 till 31.12.2004
TOTAL 4 533.3
Supervisory Board of the Bank:
No. Full name Function 01.01-31.12.2005 Comments
1. Wojciech Rybowski Supervisory Board Chairman 94.7
2. Emilia Osewska-Mądry Supervisory Board Member 26.8 since 12.05.2005
3. Maciej Dobrzyniecki Supervisory Board Member 41.1
4. Marek Głuchowski Supervisory Board Member 41.1
5. Eugeniusz Kwiatkowski Supervisory Board Member 41.1
6. Tadeusz Aziewicz Supervisory Board Member 14.4 till 12.05.2005
TOTAL 259.2
Other members of the Supervisory Board did not receive any remuneration due to their functions.
Management Board of the Bank:
No. Full name Function 01.01-31.12.2004 Comments
1. Włodzimierz Kiciński Management Board President 1 008.8
2. Asbjorn Hoyheim Management Board Member 968.7
3. Lundgren Stefan Management Board Member 678.2
4. Głowacki Kazimierz Management Board Member 424.5
5. Jacek Kalisz Management Board Member 132.0 since X. 2004
6. Anna Rudnicka Management Board Member 461.5
7. Sławomir Żygowski Management Board Member 479.7
TOTAL 4 153.4
Supervisory Board of the Bank:
No. Full name Function 01.01-31.12.2004 Comments
1. Wojciech Rybowski Supervisory Board Chairman 88.8
2. Tadeusz Aziewicz Supervisory Board Member 38.0
3. Maciej Dobrzyniecki Supervisory Board Member 38.0
4. Marek Głuchowski Supervisory Board Member 38.0
5. Eugeniusz Kwiatkowski Supervisory Board Member 22.9 since VI. 2004
TOTAL 225.7
Other members of the Supervisory Board did not receive any remuneration due to their functions.
The total amount of remuneration, awards and benefits paid or due is the gross value of remuneration paid, bonuses and additional benefits.
The members of the Management Board of Nordea Bank Polska S.A. do not receive any remuneration for performing a function of members of the Supervisory Board of the Bank’s subsidiary.
As at 31.12.2005, the Supervisory Board of the Bank’s subsidiary, i.e. Inwestycje Kapitałowe S.A., was composed of: Asbjorn Hoyheim – Management Board Member (based on Resolution No. 3 of
the Extraordinary Shareholders Meeting of 30.11.2005), Kari Ojala – Management Board Member and Sławomir Żygowski – Management Board Member. They do not receive any remuneration for performing functions of members of the company’s Supervisory Board.
18. Shareholders holding, directly or indirectly through subsidiaries, at least 5% of the total number of votes at the General Shareholders Meeting of the Bank
As at 31 December 2005
Total number of votes: 33,617,833 Total number of shares: 33,617,833
Shareholder Votes in total % of votes at
GSM Number of votes Share in capital
Nordea Bank AB (publ) 33 231 110 98.85% 33 231 110 98.85%
19. Agreements, known to the Bank, which may contribute in future to changes in proportions of shares held by the existing shareholders
The Bank does not know any agreements that in future may contribute to changes in proportions of shares held by the existing shareholder of the Bank, Nordea Bank AB (publ). The Strategic Partner intends, through the Bank, to carry out its long-term strategy of banking activity expansion in Poland. One of elements of this strategy was the merger with BWP-Unibank S.A. (2001) and the merger with LG Petro Bank S.A. (2003).
20. Holders of all securities that give special control rights in relation to the Bank, including the description of such rights
Shares and bonds issued by NORDEA Bank Polska S.A. do not give any special control rights in relation to the Bank, apart from the control package of shares held by the Majority Shareholder entitling to 98.85%
share in the equity and votes at the Bank’s GSM.
21. Any limitations to the transfer of ownership rights to the Bank’s securities and limitations to rights of votes accompanying the Bank’s shares
There are no limitations as to the transfer of ownership rights relating both to the shares, as well as bonds of NORDEA Bank Polska S.A. and rights of votes to be exercised at the Bank’s General Shareholders Meeting.
22. Sources of finance for the Bank’s operations, especially including the share of particular banking activities in the finance of the total activity of the Bank, including territorial structure
As at 31.12.2005, the basic sources of finance of the Bank’s activity comprised:
• equity,
• funds acquired in the interbank market,
• deposits.
For more information on the share of the above elements of own funds and payables in the
For more information on the share of the above elements of own funds and payables in the