SEB chairman Jacob Wallenberg talks to Karina Robinson about family business Investor AB and about the many strategic ventures that SEB has tried out.

Jacob Wallenberg does not like the word flip-flop to describe his bank's strategy. In fact, he comes back to that word three times in the interview. But he does so in such a charming, jolly way, that by the end of the interview in the forbidding headquarters of Sweden's third largest bank by assets, Skandinaviska Enskilda Banken (SEB) of which he is chairman, I am (almost) a convert.

This man is a leader. He breezes in, fresh-faced and blue-eyed, and in his American-accented English with a hint of Swedish, says: "Super. Let's roll!" I can imagine him inspiring the sailors during his stint in the navy, as well as bank staff and employees in Investor AB, the holding company in which the Wallenberg family groups its stakes in blue-chip Swedish multinationals, including companies like Ericsson, AstraZeneca and ABB.

Bank's best interests

With the same cheerful, upfront attitude, 46-year old Mr Wallenberg answers the awkward family-related questions. For example, whether Investor - of which he is vice-chairman - would be willing to dilute its 20% stake in the bank if it was in the best interests of the bank, say in a merger?

"The two are not married. Investor will do what is right for the bank," he says. He and his cousin are, in any case, the only two Investor representatives on the bank's board, he says, and there is already evidence of the family doing what they think is right for the company, as in its support for its pharmaceutical company Astra's merger with Zeneca, despite the dilution in ownership this represented.

Does he owe his current position as chairman of the board of SEB to his name? "I'm used to it [the accusation]. I would rather take it directly to my face. The only way to prove it is not relevant is to work harder and be better than anyone else," he says.

After an early morning gym session, he works from 7:30am to at least 8pm, often has business engagements in the evening and, if there is any time left, works until midnight. He also works at least one day at the weekend.

Yet this is the father of three who says that he is a "firm believer in parents participating in children's education. It is key that fathers go to class meetings and appraisals and not only mothers. It did not used to be seen to be very manly to do these things. It is also good if senior people communicate it, it is part of management and leadership."

However, he blushes deeply when I say I have heard that his children used to interrupt board meetings "like a version of the Sound of Music but with a more benevolent father", according to a colleague. He denies it, saying they are only around sometimes at weekends.

As for the other two problematic family-related questions, he seems unconcerned at Investor's steep discount to net asset value, a perennial bugbear to asset managers. He insists that what is important to investors is being able to sell the shares for more than they bought them a year ago and, in any case, even Warren Buffett's Berkshire Hathaway investment trust suffers from a discount.

Working with family

And he denies that he and his cousin Marcus, president of Investor, are locked in a battle for supremacy. "I think it is extremely simple. We work as partners. I don't think we will ever view one of us being on top of another. We think we are much stronger if we work together," he says.

To be fair, most observers say the partnership appears to work. "Jacob and Marcus may not have taken the empire to greater heights than the strong inheritance they received," says a former colleague. "But look around at the peer group and see who has lasted as well and with such quiet efficiency. Only the Botins in Spain seem to come close with [Italian tycoons] the Agnellis." As for the bank, critics say SEB's strategy has been muddled. From dominating corporate Sweden as it did in the 1980s, it was going to be the big internet bank all over the world; then it was looking abroad for a merger and ignoring Sweden; then it tried to merge with local rival Swedbank; and now it is focusing on cost-cutting, its retail customers and cross-selling in its home markets.

Mr Wallenberg disputes this. "There are many ways of describing an organisation's development. We went for asset management in 1997, then we broadened the client base when we expanded into northern Europe. In parallel with that, we had the internet," he says. "We left Sweden as the main focus 10 years ago but with Swedbank the idea was to become more efficient at home to create a stronger base from which to continue expanding abroad."

SEB's strengths

The bank's main strengths are its corporate client list and its private banking. It is the leader in foreign exchange trading, cash management, export finance and international payments in the Swedish corporate market. It also has a strong position in mergers and acquisitions involving Nordic companies and in the Nordic stockmarkets. Its Skr723bn ($79.8bn) in assets under management makes it one of the largest private asset managers in the Nordic region (see page 38). In the late 1980s, however, it dominated Sweden, a position it no longer holds. To a certain extent, competition from US and other global investment banks was bound to erode its corporate market share, especially due to the large number of Swedish companies expanding abroad.

Nor is it unique in falling for the myth of internet-only banks, as Mr Wallenberg admits. "We did try to grow the internet bank into England. Of course, we tooted the horn. At the end of the day the decision on whether to make the investments coincided with the drop in the market in spring 2000. We concluded we would not inject more capital. We closed it, as large organisations do from time to time. If you want to call it a flip-flop that is fine," he says. Now, like most banks, SEB is using the internet to cut costs in the bank, while 30% of its retail clients use internet banking.

Cost-cutting is one of the three strands of its new strategy. Like many banks specialising in corporate and private banking, high costs were assumed to come with the territory. Now, the bank is well on the way to its stated goal of cutting a net Skr2.5bn by the beginning of 2003.

It is too early to say whether the other two aims - increasing retail customer satisfaction, which had fallen deeply, and cross-selling - have been fully taken on board. But in the nine months to September, SEB had the largest improvement in the Swedish Quality Index of the major banks concerning customer satisfaction, albeit from the lowest base. "At the moment they are consciously trying to be a boring bank," says a local observer.

SEB's foreign ventures include expanding in Poland and the Baltic states and buying BfG Bank in Germany, which is responsible for 30% of gross income and is suffering from the anaemic state of the market.

"It will take some time [to improve results there] but we got it at below book value and we have a better return than other banks," says Mr Wallenberg. "There are always risks in conducting business. We did not expect the German market to go down. From time to time you have to take steps, otherwise you just sit on your hands."

Where he uses the word steps others might use the word risks. This tallies with his preference for downhill skiing over cross-country. He is also a "no-nonsense" leader, in his words, although another colleague has called him "ruthless" in getting rid of executives who are not up to the task. After all, as a prince in a dynasty, firing as well as choosing the right advisers is crucial.

You are very enthusiastic, I say. "Well, why not!" he replies, and dashes off to his next meeting.

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