Corporate Governance and the Compliance Challenges on the Global Marketplace

Tonny Thierry Andersen, Danske BankCFO and Executive Committee MemberReykjavik, April 5, 2006

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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 6.0%-6.5%� Hybrid core capital of 0.5%-1.0%� 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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Financial highlights 2005

� Record-high profit and substantial investments� Strong fundamentals and net reversal of credit loss expenses� EPS up 42% to DKr 20.4 (04: DKr 14.4)� ROE up 33% to 18.5% (04: 13.9%)

DKr m 2004 2005 Index

Income 29,187 34,891 120

Expenses 15,393 18,198 118

Profit before credit expenses 13,794 16,693 121

Credit loss expenses 759 -1,096 -

Profit before tax 13,035 17,789 136

Tax 3,718 4,967 134Net profit for the year 9,317 12,822 138

Dividend per share (DKr) 7.85 10.00 127

DKr bn (end-period) 2004 2005 Index

- Corporate loans 294 380 129

- Retail loans 177 241 136

Bank loans ex repos 470 620 132

Repo loans 145 210 145

Mortgage loans 524 569 109

Trading portfolio 423 445 105

Deposits 488 631 129

Shareholders' equity 67 75 111Total assets 2,053 2,432 118

Risk-weighted assets 808 944 117

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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

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25

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North America andWestern Europe

Asia and LatinAmerica

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Improved governance at Danske Bank� has reduced cost of capital significantly

GMI rating history relative to industry peers Danske Bank share price volatility

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Feb 2004 Feb 2006

Industry peers

Danske Bank A/S

10%

20%

30%

40%

2002 2003 2004 2005

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Danske Bank�sgovernance infrastructure

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Danish statutory provisions� versus international ownership

� 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

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Two-tiered governance structure is in place

InternalAudit Department

Banking Activities Danske Markets

Mortgage Finance Other Business Areas

Danica Pension Resource Areas

Executive Committee14 members

Executive Board2 members

Board of Directors17 directors

Board of Directors Secretariat

Board committees

AuditCredit

Salary & BonusNomination

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International ownership structure

� Danske Bank holds about 290,000 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� Copenhagen Stock Exchange

Recommendations� Governance Metrics International

Non-identified (incl. retail)

22%

Euro-zone12%

USA12%

Denmark54%

Other countries 1%

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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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The World�s best financial IR website

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Relevant codes

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Relevant codes � a comparative analysis�Danish and Icelandic similarities are evident

CSE Committee Iceland Sarbanes-Oxley Combined Code

Board structure Two-tiered Two-tiered

IndependenceFormal evaluation

procedure

Audit and remuneration

Full disclosure on individual basis

Audit Committee evaluates controls

Audit Committee evaluates risk management

Board evaluates financial reporting

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�Copenhagen Stock Exchange Recommendations

� As of 2006 Copenhagen Stock Exchange requires �comply-or-explain�

� With very few exceptions Danske Bank complies 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

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Codes and principles in Iceland

� Icelandic guidelines take among others Danish reports on corporate governance into consideration� Board evaluation and assessment of independence� Sub-committees of the Board

� Audit and remuneration� Stock option plans

� ICEX-requirement as to �comply-or-explain�� Additional recommendations

� Investor Relations focus� Internet transmissions� Dissemination of investor information� Similar Danish initiatives

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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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2005 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� More formal Board evaluation procedure� Webcast of Chairman�s report at AGM� Amendment to the Articles of Association

reducing the board members� term of service to two years

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Specific governance rating� a way to increase external credibility?

www.danskebank.com/cg