Corporate Governance in Danske BankCommunicating with a diversified investor base

Frederik ReumertChief governance officer &Head of Operational Risk

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Agenda

1) Danske Bank�s corporate identity2) Why good governance?3) Danske Bank�s governance infrastructure4) Relevant codes5) Governance initiatives

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Danske Bank�scorporate identity

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Danske Bank�s corporate identity

MissionTo be the best local financial partner

VisionOne platform � exceptional brands

Core ValuesIntegrity � Accessibility � Value creation � Expertise � Commitment

One Group �One System

Effective Governance and Risk Management

Corporate Citizenship

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Financial targets and Group ratings

� Solvency ratio of 9.0%-10.0%� Core (tier 1) capital ratio of 5,5%-6.0%� Hybrid core capital of 1.0%-1.5%� Payout ratio of 30%-50%

Group ratings

Short-term p-1 A-1+ F1+

Long-term Aa1 AA� AA�

Mortgage bonds Aaa AAA -

Life insurance - AA� -

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Why good governance?

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Financial symptoms have set the agenda

However, NOT at Danish phenomenon!

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The results of governance malpractice�

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The value of good corporate governance

� Value creating as it can reduce the cost of capital� Institutional investors are willing to pay a premium for good

governance practices

Governance premium, %

An overwhelming majority of investors are prepared to pay a premium for companies exhibiting high governance standards

Source: McKinsey & Co. Global Investor Opinion Survey

20-25%

12-14%

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15

20

25

30

North America andWestern Europe

Asia and LatinAmerica

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Danske Bank�sgovernance infrastructure

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Danish statutory provisions

� The Danske Bank Group is managed in accordance with Danish statutory provisions

� The Group�s corporate governance must therefore be understood in the framework of that legislation� Danish Companies Act� Danish Financial Business Act� Danish stock exchange rules

� The ownership structure of Danske Bank is global� Thus, Danske Bank�s corporate governance must also be

understood internationally

� versus international ownership

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Two-tiered governance structure is in place

Board committees

AuditCredit

Salary & BonusNominationInternal

Audit Department

Banking Activities Danske Markets

Mortgage Finance Other Business Areas

Danica Pension Resource Areas

Executive Committee15 members

Executive Board4 members

Board of Directors15 directors

Board of Directors Secretariat

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International ownership structure

� Danske Bank holds about 300,000 shareholders� 1/3 of the shares are held outside of Denmark

Geographical shareholder breakdown

� Governance framework:� The Sarbanes-Oxley Act� EU recommendations� The Combined Code� OMX Nordic Exchange

Recommendations� Governance Metrics International

Danmark50%

Øvrige18%

USA/Canada12%

Storbritannien10%

Øvrige Europa9%

Asien1%

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Effective governance at Danske Bank

An effective, independent BoardProactive work within

relevant committees

Effective risk andcapital management

Clear, enforcedpolicies and procedures

Effective measurementand accountability

Core values forethical behaviour

An objectiveinternal audit function

A sound internalcontrol framework

Transparent disclosure,effective communication

Independent,external audit

Incentive programmes

Good governance

Rules of procedure forExecutive management

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Ambition and disclosure

� The goal is �Best in Class�� Annual report important, but�� An extensive website� Planning cycle

� A designated teamhandles all day-to-day governance communications

� extensive use of website

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Relevant codes

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Relevant codes � a comparative analysis

CSE Committee Sarbanes-Oxley Combined Code

Board structure Two-tiered One-tiered One-tiered

Board tasks and responsibilities

IndependenceFormal evaluation

procedure

Corporate responsibility for financial reports

IndependenceFormal evaluation and

nomination procedures

Board committees Charter specifications if applied

Audit committee appoints auditor

Smith Guidance on Audit Committees

Management remuneration

Full disclosure on individual basis

Transaction disclosures

Prohibition on loans

Full disclosure on individual basis

Internal controls A supplement to current legislation

Management assessment (COSO)

Audit Committee evaluates controls

Risk management Risk identification and risk planning

Corporate and criminal fraud accountability

Board evaluates risk management

Disclosures Openness and transparency

Real time disclosure on material changes

Focus on AGM and Investor Relations

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Corporate governance in Denmark

� With very few exceptions Danske Bank complies with the OMX recommendations and have already issued a �comply-or-explain�-statement� Shareholders� and stakeholders� role� Openness and transparency� Board tasks and responsibilities� Management remuneration� Risk management and audit

�Copenhagen Stock Exchange Recommendations

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The Sarbanes-Oxley Act

� Sarbanes-Oxley codifies certain standards of �good governance� into specific requirements

� A number of the requirements in the Sarbanes-Oxley Act are covered by Danish statutory provisions

� The Bank�s website compares selected aspects of the legislation with Danish legislation and Danske Bank�s practice� Auditors� independence� Management�s assessment� Internal controls� Analysts� conflicts of interest

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The Combined Code

� By virtue of its compliance with Danish law, Danske Bank automatically fulfils a number of the recommendations in the Combined Code

� The Bank�s website compares selected aspects of the code with Danish legislation and Danske Bank�s practice� Board responsibilities� Board composition and independence� Election� Performance evaluation� Board remuneration� Responsibility and auditing

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Governance initiatives

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To comply or not to comply...

� International developments in corporate governance provide ideas and background information for the Danske Bank Group management

� Compliance is not a one-off proposition� Compliance requires ongoing and constant enforcement

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Core governance initiatives by the Bank

� Publication of the rules of procedures� New Board committee structure with expanded charters� Publication of remuneration policy� Expanded information on the remuneration and salaries of

the individual directors and the members of the Executive Board, including individual shareholdings

� Launch of separate risk and capital management website� Webcast of Chairman�s report at AGM� Amendment to the Articles of Association

reducing the board members� term of service to two years

www.danskebank.com/cg