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1 Annual Report Union Bank of Norway 20012 Contents Financial Summary Financial summary 1 Highlights Gjensidige NOR 3 Un...

Annual Report Union Bank of Norway

2001

Contents Financial summary

Financial Summary KEY FIGURES FROM THE ANNUAL ACCOUNTS 2001

1 Highlights 2001 2 Gjensidige NOR 3 Union Bank of Norway 4 President & CEO and Deputy President 5 Report of the Group Executive Board 8 Report of the Board of Directors 17 2001 Financial Statements 54 Key figures 56 Equity and ownership 58 New structure for Gjensidige NOR 59 The Gjensidige NOR brand 60 Decentralised structure 62 Core area Payment, Settlement & Banking Services 63 Cresco 64 Gjensidige NOR Merchant Bank 66 Savings and investment 68 Subsidiaries 70 Governing bodies 72 Management and key contacts

2000

1999

1998

1997

Net interest income 5 527 5 347 4 648 2 909 2 512 Capital gains 272 262 211 167 157 Other operating income 1 917 1 669 1 483 1 352 1 605 Operating expenses 4 544 4 106 4 055 2 915 2 936 Operating profit before losses 3 172 3 172 2 287 1 513 1 338 Losses (gains) on loans 426 215 201 128 ( 46) Losses (gains) on long-term financial assets (232) ( 746) ( 386) ( 255) 92 Operating profit 2 978 3 703 2 472 1 640 1 292 Net profit 2 161 2 688 1 784 1 185 916 Return on equity 16.1% 22.6% 17.3% 15.4% 13.7% Interest margin 2.5% 2.6% 2.6% 2.1% 2.0% Effective yield on primary capital ceritificates 13% 47% 33% (18%) 36% Earnings per primary capital certificate (in NOK) 32.65 41.69 28.34 28,07 20.11 RISK amount (in NOK, as at 1 Jan. subsequent year) Approx. 17.50 28.11 20,18 12,29 20.84 Growth in lending 9.5% 7.8% 36.2% 10.8% 18.9% Growth in deposits 9.5% 7.1% 31.5% 6.1% 0.4% Total assets 231 209 206 917 195 608 147 500 132 484 Losses (gains) on loans 0.2% 0.1% 0.1% 0.1% (0.0%) Capital (eligible) 19 264 18 191 15 958 14 554 10 973 Capital ratio 11.0% 11.3% 10.8% 13.1% 11.4% Of which: core (tier 1) capital 7.4% 7.4% 7.2% 8.5% 6.9% Amounts in NOK million. See p. 54 for further key figures and definitions.

KEY FIGURES FOR UNION BANK OF NORWAY'S PRIMARY CAPITAL CERTIFICATE (PCC)

Financial calendar for 2002 13 February 2002 Preliminary results for 2001 20 March 2002

Meeting of Committee of Representatives

21 March 2002

Ex dividend date

9 April 2002

Dividend paid

7 May 2002

1st quarter 2002

15 August 2002

2nd quarter 2002

7 November 2002 3rd quarter 2002

2001

2000

1999

1998

1997

PCC price at 31.12 (value for tax purposes) Market value at 31.12 (NOK million)

273 12 801

257.50 12 074

185 8 674

147.50 6 916

260 6 773

No. of outstanding PCCs (in thousands) Average no. of PCCs No. of PCCs at 31.12

46 889 46 889

30 103 46 889

26 049 26 049

32.65 17 8.36 6.2%

41.69 17 6,18 6.6%

28.34 14 6.53 7.6%

28.07 11.50 5.25 7.8%

20.11 12.15 12.93 4.7%

219 1.24

204 1.26

177 1.04

161 0.92

155 1.36

Ratios Earnings per PCC*(NOK) Dividend per PCC - adjusted* (NOK) P/E Direct yield Book equity per PCC (incl. allocation to dividend)* (NOK) Price/book value*

* Figures for 1997 are adjusted by a factor of 0.8103 as a result of the par issue in October 1998.

Highlights 2001

Highlights 2001 SAVINGS BANKS ASSOCIATION IN FAVOUR

ESTABLISHES MERCHANT BANK

A majority of the Board of the Savings Banks Association decides on 4 April not to oppose a conversion of Union Bank of Norway into a limited company. Five regional conferences held ahead of the Board's decision show that banks representing almost 80 per cent of the savings banks’ total assets favour a general right of conversion.

In the autumn Gjensidige NOR assembles some of its corporate customer and capital market services in a new unit called Gjensidige NOR Merchant Bank. The new unit is an amalgamation of the business areas Corporate Customers and Markets in Union Bank of Norway, along with the subsidiary Gjensidige NOR Equities ASA.

BETTER TERMS FOR YOUNG PEOPLE

GROUP-WIDE INTERNET PORTAL

First-home loans are launched by Union Bank of Norway on 2 May. Only first-time home buyers are eligible, and up to 90 per cent of the asking price can be borrowed at the bank's best mortgage rate. Loans of up to 100 per cent of the asking price are also available. First-home loans rapidly gain popularity, and by year-end total loans disbursed come to NOK 3 200 million.

On 13 November Gjensidige NOR launches a group-wide Internet portal. At www.gjensidigenor.no customers and other visitors can find their way around Gjensidige NOR's many products and services. The ambition is to increase crosssales of products between the insurance arm and the banking/savings arm of Gjensidige NOR.

SELLS IN DENMARK

RECOMMENDS CONVERSION

Union Bank of Norway signs an agreement on 20 July to sell its credit card business in Denmark, AcceptFinans A/S, to GE Capital for DKK 573 million in cash. The sale produces a pre-tax gain of NOK 205 million, equivalent to NOK 2.23 per primary capital certificate after tax.

On 7 December the government presents Kredittmeldingen, a review of events in the financial market, in which it puts forward principles for a law change that will enable savings banks to be converted into limited companies. After the Storting endorses this document, the Ministry of Finance initiates the legislative process needed to permit conversion.

MAJOR IT PROBLEMS On 2 August problems at EDB Business Partner cause stoppages in several banks' IT systems, leaving Union Bank of Norway's customers without banking services for several days. No data are lost, but almost a week passes before all systems are reestablished.

GENUINE E-COMMERCE In October the Credit Card Division Cresco (formerly Accept Card) launches a fully integrated e-commerce solution in conjunction with, among others, Visa. This is the first-ever launch of a solution that automates everything from order-placing and order-receipt to invoicing and bookkeeping.

PCC PRICE TREND Over the year the price of Union Bank of Norway's primary capital certificate rises from NOK 257.50 to NOK 273.00. This gives a return of 13 per cent, when dividend received in 2001 is taken into account. At year-end 48 per cent of the bank's primary capital certificates are in foreign hands, and the number of PCC holders totals 21 611.

Gjensidige NOR

This is Gjensidige NOR ■

■

Gjensidige NOR was formed in 1999 by the amalgamation of Union Bank of Norway with the Gjensidige group. Today Gjensidige NOR is the second largest financial conglomerate in Norway.

■

Gjensidige NOR's main constituent companies are Union Bank of Norway, Gjensidige NOR Forsikring and Gjensidige NOR Spareforsikring.

■

Union Bank of Norway and Gjensidige NOR Spareforsikring are seeking to achieve conversion to limited company status under a new joint holding company, Gjensidige NOR ASA. Gjensidige NOR Forsikring will continue operations as a mutually owned company under a wide-ranging cooperation agreement with, and stake in, the new holding company.

Gjensidige NOR's mission is to be a leading financial services group in Norway, and to meet customers' needs for everyday banking, insurance, savings and investment, loans and financing, real estate agency and security services.

■

In aggregate the three main companies in Gjensidige NOR manage capital totalling NOK 355.9 billion.

■

Gjensidige NOR has a fine-meshed branch network and attaches great importance to maintaining close proximity to its customers. Gjensidige NOR has more than 400 branches and offices.

■

Gjensidige NOR has cooperation agreements with 20 fire insurance companies, four regional and several local savings banks in areas of the country where the group as such does not maintain a presence. Gjensidige NOR's products are also available via the Internet and telephone.

■

In 2001 Gjensidige NOR and its partners managed capital totalling NOK 416.5 billion. Permanent employees of the group and its subsidiaries number 7 800.

GROUP EXECUTIVE BOARD GJENSIDIGE NOR

PRESIDENT & CEO

BOARD OF DIRECTORS

SAVINGS BANK

LIFE INSURANCE

NON-LIFE INSURANCE

Union Bank of Norway

This is Union Bank of Norway Union Bank of Norway is the country's largest savings bank and the second largest retail bank with more than 800 000 retail customers. The bank aims to be the natural first choice for retail customers and local businesses throughout the country. The bank distributes its products nationwide via 164 branches and in close collaboration with regional savings banks. Its products are also distributed via Gjensidige NOR Forsikring's branch network. The bank has ambitions to expand its market shares in new regions, based primarily on customer relationships across the Gjensidige NOR group. Gjensidige NOR as a whole has more than two million customers. This represents a strategic advantage, offering sales potentials across all business segments in Gjensidige NOR. Accessibility is crucial for a distributor of a broad range of financial services. The

bank is devoting substantial resources to developing a multi-channel strategy that enables the customer to choose the type of service that suits him or her best. The multichannel strategy is based on an active interplay between Internet-based services and personal advice. Our local presence remains our most important channel for developing personal relationships with customers. Union Bank of Norway desires a leading position in the market for small and medium-sized businesses. In the corporate customer market the aim is to be the best provider of selected products and services.

With the establishment of Gjensidige NOR Merchant Bank, the bank will come across as a highly visible and quality-conscious player in the capital market. Union Bank of Norway has a clear-cut ambition to expand its sales of savings and investment products, both its own products and those of external providers. Gjensidige NOR shall be perceived as a total provider that caters to a wide range of customers' needs and expectations. Union Bank of Norway's market ambitions underpin its owners’ requirements and expectations. The bank aims for a post-tax return on equity of 15 per cent, a requirement that all business units shall meet in due course.

GROUP EXECUTIVE BOARD GJENSIDIGE NOR Chairman Hans Bø

BOARD OF DIRECTORS

PRESIDENT & CEO

Chairman Bjørn Sund

Olav Hytta

DEPUTY PRESIDENT

GROUP FINANCE

Øyvind Birkeland

Karl-Olav Hovden

STAFF DIVISION

INFORMATION AND PUBLIC AFFAIRS Frode Helgerud

Rein Øsebak

CORE AREA PAYMENT, SETTLEMENT & BANKING SERVICES Bente A. Landsnes

GJENSIDIGE NOR MERCHANT BANK Øyvind Birkeland

CORE AREA OSLO/AKERSHUS/ ØSTFOLD Åsmund Skår

CORE AREA ØSTLANDET/KYSTEN Bjørn Walle

President & CEO and Deputy President

Computer power and local expertise In its coverage of Union Bank of Norway over the past year, the financial press has focused largely on our effort to secure savings banks the right to convert into limited companies. We need a change in the law to if the bank and the group are to continue to evolve, and the senior management have devoted much time and effort to bringing about this change in our parameters. Fortunately a broad-based understanding of our needs now appears to be in evidence in political quarters along with an almost equally broad-based political will to take the necessary decisions. Gjensidige NOR does not live on changed parameters. We live on our ability to offer our customers products and services at a price and a level of service that are fully equal to the best of our competitors. In 2001 changes were made in the overall operation of the bank that we are certain will help to strengthen our competitive power in the years ahead. Players in the financial sector are aces at copying each other's products and, if truth be told, it is no easy matter for the market to see any major differences between us and our competitors based on how we put ourselves across in advertisem*nts, brochures and other promotional material. Moreover, most types of money transfer services in Norway are coordinated to provide the customer with a highly efficient, reasonably priced facility. Add to this the fact that all high street banks in Norway run Internet operations offering much the same services, and one can ask oneself how a bank is to mark itself out and put over its products and services in a way that sets it apart from its competitors. Our bank has almost a million customers. They use the bank in a number of different ways via a variety of distribution channels. At Gjensidige NOR we are convinced that our distribution system gives us a comparative advantage that cannot be copied. Partly because our staff cannot be cloned: substantial resources have been devoted to making our staff even more skilled in handling customers. And partly because we have

a local-level distribution system that has evolved through decades of adjustment and relationship building with the community at large, whether urban or rural. No matter how much market needs change, we are sure that our local knowledge and local contacts will serve our business well. The latest addition to our local distribution system is the extensive expertise we have built up in savings and investment. Moreover, our branch network is benefiting from new technological solutions that enable us to sell standardised insurance products in a sound, effective manner. We have systematically supplemented the savings bank's local and traditional

Øyvind Birkeland Deputy President, Union Bank of Norway

mode of distribution with new distribution channels based on the possibilities offered by new technology. In recent years we have built up excellent solutions for event-based marketing and sales in which a combination of computer power and a local presence is an important recipe for success. We take pride in having presented www.gjensidigenor.no - the first total supplier of financial services in Norway - towards the end of 2001. This Internet portal will evolve on a continual basis. Along with these innovations, customer service centres are now in place to answer enquiries from our Internet customers and others needing rapid assistance. Upgrading our distribution system has required substantial investment. We are convinced that this will produce returns in the form of improved customer-handling and more cost-effective operation. It is gratifying to note the sound financial results we have achieved in a year of substantial investment and a strong management focus on conversion and restructuring of the group.

Olav Hytta President & CEO, Gjensidige NOR

Report of the Group Executive Board

Report of the Group Executive Board INTRODUCTION Gjensidige NOR achieved an aggregate pretax profit of NOK 1.5 (2000: 3.4) billion in 2001. Given the underlying conditions, the Group Executive Board is pleased with the Group's overall financial performance. The companies making up Gjensidige NOR enjoyed a buoyant market trend over the year. Gjensidige NOR Spareforsikring is now the market leader in the retail segment and achieved greatest expansion in the municipal market. The bank reported a sound trend in deposits and a 13 per cent increase in loans to the private market. Growth in lending to business customers was deliberately kept down, partly due to a tight equity capital situation and partly because of the higher loss risk inherent in an uncertain economic climate. Gjensidige NOR Forsikring maintained its market position in a period where the chief focus was on profitability. Important tasks for Gjensidige NOR in 2001 were to strengthen brand identity, increase cross-sales, continue the coordination processes in the group and to prepare for a restructuring of the Gjensidige NOR in which the banking and life insurance arms are set to be converted to limited companies under a stock-exchange-listed holding company - Gjensidige NOR ASA. These tasks will be at centre-stage in the current year, as previously.

FINANCIAL PERFORMANCE Union Bank of Norway recorded a profit of NOK 2 978 (3 703) million. Gains on disposals of long-term financial assets came to NOK 232 (746) million. The post-tax profit was NOK 2 161 (2 688) million, producing a return on equity of 16.1 (22.6) per cent. At year-end the bank's capital adequacy ratio was 7.4 per cent. In the second half-year the bank was affected by serious problems with data delivery from EDB Fellesdata. The Group Executive Board has asked the administration to put forward proposals to reduce the Group's dependence on the computer systems of a single company.

Return on capital invariably affects financial results in the insurance industry. Last year's weak trend on world bourses contributed heavily to the weak performance of Gjensidige NOR Forsikring and Gjensidige NOR Spareforsikring. Gjensidige NOR Forsikring posted a negative return on capital of 0.7 (+3.7) per cent, and Gjensidige NOR Spareforsikring a positive return of 1.8 (+9.0) per cent. Gjensidige NOR Forsikring brought a wide-ranging profitability enhancement programme to completion in 2001. One of its aims was to reduce costs to 25 per cent of premiums earned in 2001. The actual outcome was 24.4 per cent. The number of FTEs was reduced by about 400 under the programme. Norway has enjoyed a favourable economic climate for a number of years. Based on historical experience, a booming economy is accompanied by high claims payments. Such payments rose by 5.2 per cent in 2001, resulting in a claims ratio of 85, while the combined ratio was reduced from 115 to 108 in 2001. Due to the increase in claims payments, the combined ratio target of 105 was not fully achieved. The Gjensidige NOR Forsikring Group recorded an overall negative operating result of NOK 965 (-376) million. Gjensidige NOR Spareforsikring reported a negative operating result of NOK 115 (+335) million after customer allocations and before tax. Value-adjusted return was 0.0 (4.2) per cent and book return 1.8 (9.0) per cent. Return was negatively affected by 0.3 per cent by hedging transactions carried out early in 2001 to prevent a difficult equity situation arising for the company in the event of a further decline in security markets. As a result of the share market slump no return is being paid on customer assets beyond the guaranteed minimum. Buffer capital was reduced during the year from NOK 8 223 million to NOK 5 893 million. Embedded value (the sum of equity capital and present value of future profits accruing to equity capital based on existing business) at year-end came to NOK 4 104 (3 870) million. The post-tax result was a negative NOK 21 million. A more detailed review of the three main companies in the Gjensidige NOR Group can be found in the annual report published by each company.

MARKETING AND DISTRIBUTION STRATEGY Almost two million customers, the country's best financial distribution system and a strong financial brand image are three key factors behind Gjensidige NOR's success in the market. Gjensidige NOR's operations are essentially based on the Norwegian market. Much of Gjensidige NOR's growth potential in the years ahead entails increasing the number of products sold to existing business and retail customers in the group. Substantial investments and organisational measures were carried through in 2001 to increase cross-sales and further strengthen distributive power. Moreover, the group is currently implementing technological measures with a view to efficient and effective cross-sales of standardised banking and insurance products across the branch networks. Gjensidige NOR has obtained a licence to establish a group-wide data warehouse. This will increase the opportunities for additional sales across the group. The group's technology and competence as regards event-based sales of financial products and services is top-flight. Gjensidige NOR is a one-stop provider of financial services. The breadth of the product range provides excellent opportunities to further develop existing loyalty programmes, and to develop new such programmes and product packages for various customer segments. In November 2001 Gjensidige NOR launched its group Internet portal. The portal is already one of the most visited websites in the country, and will be an increasingly important distribution channel for the group's total range of products and services. Savings is a growth area where customers have a substantial need for advice. At the end of 2001 29 investment centres were in place nationwide offering sales and advisory services to savers and investors. Substantial effort and resources were devoted to enhancing brand awareness among Gjensidige NOR's employees and their awareness of the part they themselves play in further developing the group's brand image.

Report of the Group Executive Board

NEW FORMS OF OWNERSHIP - NEW GROUP STRUCTURE The main companies making up Gjensidige NOR have very limited access to fresh core capital from the market. For Union Bank of Norway, primary capital certificates are no longer a useful equity capital instrument. Gjensidige NOR Spareforsikring and Gjensidige NOR Forsikring are both organised as mutual companies. The shortage of fresh capital available to the bank and the life company restricts these companies' freedom of action. With a view to gaining access to the equity capital market on a par with the group's main competitors, the governing bodies of Gjensidige NOR resolved unanimously in their second round of consideration of the issue on 22 and 23 March 2001 to ask the authorities for permission to convert both companies to limited companies. Banking and the savings business are closely related and well suited to tight

integration, while general insurance is essentially another profession. For this reason the group sought permission for the banking and life insurance/savings arms to be organised, after conversion, under a joint stock-exchange-listed holding company - Gjensidige NOR ASA. Gjensidige NOR Forsikring is a very solid company, with no need for fresh equity capital, and will be taken forward as a mutual company in a separate group. Thereafter the two groups within the Gjensidige NOR Group will be tied together via a far-reaching strategic cooperation agreement entailing a joint brand identity, joint distribution and mutual board representation. A condition for the cooperation agreement is that Gjensidige NOR Forsikring owns at least 10 per cent of the shares of Gjensidige NOR ASA. A mutual insurance company is presently entitled to convert into a limited company; a savings bank cannot do so unless the law

is changed. The government advocated changing the law in a white paper (Report to the Storting No. 8 (2001-2002)), and the Storting came out in support of the principles underlying the government's proposal. Provided a Bill is tabled in the near future, Gjensidige NOR will hopefully be admitted to stock exchange listing around mid-year in parallel with the planned restructuring of Gjensidige NOR.

STAFF, MANAGEMENT, ORGANISATION A common labour market has been established in Gjensidige NOR. This will continue after the group is restructured. At year-end group employees numbered 7,489 (7,541) FTEs. Each year the group conducts a staff satisfaction survey, after which action is taken to remedy any shortcomings. Although staff satisfaction was marginally lower than in the previous year, the results for 2001 were satisfactory.

Front row, from left: Olav Hytta, Stig Harald Trygstad and Harald Schjoldager. Middle row: Roar Arntzen, Norunn Tveiten Benestad, Hans Bø and Jorund Stellberg. Back row: Odd Kr. Hamborg, Tor Ivar Bråten, Amund Skarholt, Ingjerd Skjeldrum, Berit Wenaas and Marianne Hagen.

Report of the Group Executive Board

Comprehensive management development measures were implemented throughout the group in 2001. Substantial changes were made in the composition of the management teams to improve intra-group cooperation under the current structure. In parallel with this the group staffs were heavily cut back. Gjensidige NOR is essentially operated through the individual companies in the group. A joint company - Gjensidige NOR DriftsPartner AS - has been set up to exploit economies of scale. This company is responsible for the majority of the group's office premises and for purchasing a number of services. Another joint company - Gjensidige NOR Markedsstøtte AS- has been set up to optimise marketing cooperation. This company is responsible for developing the group's brand image, the group portal and the data warehouse. It will be owned jointly by Gjensidige NOR Forsikring and

Gjensidige NOR ASA. Regional liaison committees comprising senior regional managers of the group companies have been set up to ensure optimal cooperation on marketing campaigns. Environmental issues and prospects for the future are dealt with in the annual reports of the respective main companies.

A WORD OF THANKS 2001 was marked by adjustments to accommodate customers' ever changing needs and expectations, and by extensive adjustments designed to exploit a number of the synergy effects promised by the establishment of Gjensidige NOR. Alongside its focus on operations, the entire organisation has keenly followed the progress made in the conversion issue. The Group Executive Board would like to extend a wholehearted thank you to each and every staff member for their unstinting efforts for Gjensidige NOR again in 2001.

Oslo, 6 March 2002 The Group Executive Board of Gjensidige NOR

Hans Bø Chairman

Harald Schjoldager Deputy Chairman

Roar Arntzen

Norunn Tveiten Benestad

Tor Ivar Bråten

Marianne Hagen

Odd Kr. Hamborg

Amund Skarholt

Ingjerd Skjeldrum

Jorund Stellberg

Stig Harald Trygstad

Berit Wenaas

Olav Hytta President & CEO

Report of the Board of Directors

Buoyant operations in core business Good market positions and a competitive cost level in the respective business areas are the main factors contributing to the buoyant performance. Alongside the core business, the special-financing company Elcon Finans and the credit card operation Cresco delivered solid results in 2001, as in the previous year. The same applies to real estate agency and the bank's mortgage company. Asset management produced lower earnings due to the weak trend in share markets. The bank kept a close eye on profitability of money transfer services. As in the previous year, income generated by these services increased in 2001 despite tough competition in the retail market. Increase in net interest income Net interest income grew in total by NOK 180 million in 2001 compared with the previous year. Net interest income was however debited with a NOK 146 million higher levy to the Savings Banks Guarantee Fund. The increase in net interest income was due to higher lending and deposit volumes which were, however, countervailed by a reduced customer spread (2.9 per cent as against 3.1 per cent the

Increase in other operating income Other operating income was NOK 258 million higher than in 2000. After the purchase of a further 20 per cent of the company's shares in the fourth quarter, discretionary asset management income at Gjensidige NOR Kapitalforvaltning contributed to income growth of NOK 87 million. Share dividend rose by NOK 86 million, mainly due to returns on fixed income funds. Income from stockbroking increased by NOK 70 million, inasmuch as Gjensidige NOR Equities (formerly Karl Johan Fonds) is again consolidated as a wholly-owned subsidiary as from the second quarter of 2001. Income from real estate agency business rose by NOK 48 million, of which NOK 26 million is due to increased grossing of income and expenses. When this is corrected for, income growth comes to 9 per cent. Commission income from the life insurance business increased by NOK 45 million after the takeover of the distribution function from Gjensidige NOR Spareforsikring. Capital gains totalled NOK 272 million compared with the 2000 figure of NOK 262 million. Of this figure, currency trading gains accounted for NOK 228 million and losses on shares and primary capital certificates for NOK 25 million. Income from money transfer services increased by NOK 32 million (4 per cent). The growth rate was down from the previous year as a result of the reduction in prices on money transfer services as from

NOKm 4 000 3 500 3 000 2 500 2 000 1 500 1 000 500 0

2001

2000

1999

1998

1997

-1 000

1996

-500 1995

Deposit and lending growth Particularly in the fourth quarter of 2000, but also in 2001, the bank pursued an active approach to asset-liability management with moderate growth in lending to corporate customers. Parent-bank lending to this sector rose by 6 per cent compared with 9.5 per cent the previous year, while lending to retail customers rose 13 per cent, i.e. by a somewhat higher margin than in the banking market as a whole. Lending volumes showed twelve-month growth of 9.6 per cent, while customer deposits with the parent bank showed twelve-month growth of 11.2 per cent.

Operating profit before and after losses

1994

previous year). Net interest income now measures 2.46 per cent of average total assets, compared with 2.63 per cent in 2000.

1993

Union Bank of Norway posted a pre-tax profit of NOK 2 978 million in 2001 compared with NOK 3 703 million the previous year. Operating profit before losses and disposal gains came to NOK 3 172 million, showing no change on the previous year. The gain on the disposal of AcceptFinans in Denmark contributed NOK 205 million in 2001, while the disposal of the Fellesdata shares produced a gain of NOK 741 million in 2000. The post-tax result was NOK 2 161 million, corresponding to a return on equity of 16.1 per cent. Earnings per primary capital certificate were NOK 32.65 compared with NOK 41.69 in 2000. In June 2000 the Board announced its desire for conversion to limited company status, and Gjensidige NOR ASA is expected to be admitted to listing on Oslo Børs around mid-2002. The organisation has succeeded in keeping markets and customers in focus throughout a long-lasting, demanding process.

1992

HEALTHY PROFIT IN 2001

1991

Operating profit before losses Operating profit

Cost/income ratio 0,8

0,7

0,6

0,5

0,4

1997

1998

1999*

2000

2001

* Excluding provision for restructuring/co-ordination costs

Report of the Board of Directors

Moderate increase in loan losses Losses were somewhat higher than in 2000, but the increase is moderate and losses and defaults remain at a low level. Losses of 0.22 per cent of gross outstanding loans are lower than estimated losses in a normal situation. Losses totalled NOK 426 million compared with NOK 215 million the previous year. Net defaults rose by NOK 230 million compared with end-2000 (adjusted for the

Deposit growth, parent bank % 20

Jan. 01

July 01

July 00

Jan. 00

July 99

Jan. 99

July 98

Jan. 97

-5

Jan. 98

July 97

Union Bank of Norway Other banks

MARKET ADJUSTMENT

Lending growth, parent bank % 20

Union Bank of Norway Other banks

July 01

Jan. 01

July 00

Jan. 00

July 99

Jan. 99

-5

July 98

Jan. 98

The savings bank concept Recent years have seen rapid changes in the way customers use their bank. In parallel with the development of electronic services, far-reaching adjustments have been made to improve the quality and efficiency of customer service in response to changes in customer behaviour. The role of the branch network has been extended to sales and advisory services for the broad retail market and small businesses. Retail customers with more demanding private finances now benefit from improved facilities afforded by the establishment of investment centres nationwide. Eighteen centres were established in 2000 and a further 11 in 2001. Mediumsize businesses are serviced at the local level by business centres established in most large towns in the bank's market areas. Local-level customer contact is supplemented with telephony-based customer service centres and Internet-based services. The bank's multi-channel strategy allows the customer to choose how (s)he wishes to use the bank. Outward customer contact is through the sales offices, investment centres and sales centres. Union Bank of Norway took over Fokus Bank's local operations in Bø and Vinje in Telemark. The portfolio comprises 3 700 customers. This strengthens the bank's position in the local market and demonstrates a desire for a strong presence in the regions. Young adults are a focal area for the bank, and the introduction of loans on special terms for first-home buyers was enthusiastically received in the market.

July 97

Operating expenses Operating expenses totalled NOK 4 544 (2000: 4 106) million in 2001. Expenses were NOK 438 million higher than in 2000. NOK 49 million of the rise in expenses referred to the takeover of Gjensidige NOR Spareforsikring's retail market portfolio, and NOK 32 million to Elcon's new operations in Sweden and Denmark. The consolidation of Gjensidige NOR Equities as a whollyowned subsidiary raised operating expenses by NOK 82 million in 2001, while the same process at Gjensidige NOR Kapitalforvaltning raised expenses by 51 million. A switch to accounting on a gross basis at Gjensidige NOR Eiendom raised expenses by NOK 26 million, while increased goodwill depreciation amounted to NOK 57 million. The introduction of VAT on services as from 1 July raised expenses by NOK 50 million in the second half-year. The sale of AcceptFinans in Denmark brought a NOK 80 million reduction in expenses compared with the previous year. When the above factors are corrected for, comparable expenses rose by NOK 171 million (4.5 per cent), the bulk of which comprised higher personnel and administration expenses, but also an increase of NOK 27 million in write-downs of fixed assets. A close watch will continue to be kept on expenses in the Group. Expenses measured 59 per cent of income compared with 56 per cent in 2000.

sale of AcceptFinans) but still measure a mere 0.7 per cent of gross outstanding loans. Gross losses amounted to NOK 571 million (0.29 per cent of the loan portfolio) compared with NOK 418 million (0.23 per cent) in 2000. Losses of NOK 117 million referred to industrial customers and NOK 58 million to the financing business, which were the most loss-prone segments in 2001. Net loss on retail customers came to NOK 34 million. Unspecified loss provisions increased by NOK 56 million. Net defaults on loans to corporate customers rose by NOK 57 million in 2001 and net defaults on loans to retail customers by NOK 173 million. Net provisioned performing loans rose by NOK 134 million, while loss provisioning on these commitments rose by NOK 140 million. A large portion of the increase in specified loss provisions thus refers to commitments not yet in default.

Jan. 97

the start of the second quarter. Income from automated services such as bank cards and electronic money transfers rose, while income from paper-based giro services fell. After external expenses, net income was on a par with 2000. Income from Avanse Forvaltning was down NOK 102 million (24 per cent), due to weaker share prices and a shift from equity funds to fixed income funds which confer lower management fees. The volume of equity funds under management shrank by NOK 5 100 million (25 per cent), mainly due to weaker share prices, while fixed income funds under management grew by NOK 2 100 million (21 per cent).

Report of the Board of Directors

Customer spread, parent bank % 4

Total customer spread Spread of loans Spread of deposits

Payment, Settlement & Banking Services Union Bank of Norway has for many years played a proactive role in developing infrastructure for cash management products, and the bank needs to strengthen its capacity in this area ahead. The core area

Front row, from left: Vermund Lyngstad, Torkel Wetterhus, Arnt Moe, Bjørn Sund, Lisbeth Lindberg and Per Otterdahl Møller Back row, from left: Hans-Kristian Sætrum, Per Myklebust, Hans Aug. Hanssen, Sverre Finstad and Per Terje Vold. Stephen Gravlie Kunz was not present when the picture was taken.

Jan. 01

July 01

July 00

Jan. 00

July 99

Jan. 99

July 98

Jan. 98

Gjensidige NOR Merchant Bank The new core area for banking and capital market products was established in the autumn of 2001 under the name Gjensidige NOR Merchant Bank. The core area is an agglomerate of the business areas Corporate Customers and Markets at Union Bank of Norway and the subsidiary Gjensidige NOR Equities. The establishment of the new core area reflects a strong will to develop Gjensidige NOR's position in the capital products market. With Gjensidige NOR

Merchant Bank in place, the group is well positioned to take a larger share of the market ranging from day-to-day banking services and credits to securities and equity capital products. Substantial business opportunities are present in the fact that more and more companies are meeting their capital needs through a combination of securities issues and bank borrowing, and that transaction numbers are increasing given the frequent structural changes in industry. The Board take a positive view of the development of business areas with good earning potentials and requiring limited tie up of capital. Gjensidige NOR Equities has throughout been a step ahead with share trading solutions for the retail market, and the brokerage unit has built up a solid position in Internet-based share trading based on the technology employed in the Internet bank.

Jan. 97

Business market The bank has enhanced its servicing of business customers by offering tailored concepts and drawing a clearer distinction between the mass market and the intermediate market. It has managed to maintain its position in the market for small and medium-size enterprises and concurrently boosted its earnings in these segments. Corporate customers are serviced partly by the business segment sections in the core area Oslo/Akershus/Østfold and partly by the new core area Gjensidige NOR Merchant Bank.

July 97

Report of the Board of Directors

Payment, Settlement & Banking Services was established to this end with effect from 1 January 2001. A central aim of the new core area is is to strengthen the bank's position in new electronic channels used for money transfers. The bank plays an active part in joint projects between banks related to BankID, small-change cards, and payment solutions via the Internet and mobile phones. A dedicated in-house project organisation, e-Vision, drawing participants from relevant staff and business areas, was established in 2001. The new core area is also central to the effort to implement the plans for a full-service Internet bank. New Internet portal and full-service Internet bank The companies making up Gjensidige NOR launched a joint Internet portal in November 2001. The portal assembles most of Gjensidige NOR's products. The direct banking facility Parat24 has been Gjensidige NOR's technical spearhead for customer service based on the Internet and telephony. Experiences with Parat24 showed that customers who use the bank's Internet-based services also desire personal advice. The concept, which builds on interplay between Internet-based services and telephony-based customer centres, is being further developed with a view to making it available to all customers of the savings bank in the first half of 2002. By hooking up customer centres directly to the Internet bank, Gjensidige NOR intends to take the first step towards a full-service banking facility on the Internet. Cross-sales New solutions were developed last year for the bank's administrative routines for referral sales of non-life insurance products at bank branches. System solutions were likewise developed for referral of bank products to insurance offices. For the bank this entails new income sources via sales commissions and new customers via referrals from insurance offices in areas where the bank is weakly represented. In addition to the increased income potentials, a broader product range instils greater customer loyalty. The establishment of a joint customer database promises major opportunities for cross-sales through direct marketing and event-based customer follow-up.

Other business areas The credit card division Cresco (previously Accept Card) performed well, both in terms of lending and transaction volumes. Credit card loans now total NOK 4 857 million, and lending growth in 2001 was at 21 per cent. A close focus on risk resulted in relatively low losses. Cresco remains the leader in the Norwegian private market, and is positioning itself in the corporate market with travel and purchase cards. Cresco launched a fully integrated e-commerce solution in conjunction with, among others, Visa in October 2001. After the sale of AcceptFinans in Denmark to GE Capital, a natural step was to find a new name for the credit card operation in Norway. Cresco is an established brand name in the credit card market and was therefore a natural choice. Elcon Finans maintained its position as market leader in its main products of factoring, car financing and leasing. Profits were at the same solid level as in the previous year despite the costs of setting up operations in Sweden and Denmark in 2001. Elcon aspires to become one of the three leading companies in Scandinavia in the course of the next three years, and intends to maintain its sound profit performance. Collaborating banks The collaboration agreements with Sparebanken Møre and Sandnes Sparebank were terminated in 2001, although collaboration is continuing on a limited basis. In order to establish a presence in Rogaland the bank opened an investment centre in Stavanger in 2001, and decided to set up a regional branch in Stavanger in 2002.

FINANCIAL INDUSTRY CHANGING Gjensidige NOR is Norway second largest financial conglomerate and has a leading position in most market areas. The bank's and life company's current ownership structure provides inadequate access to equity capital markets in relation to the group's growth ambitions. It also limits the opportunities to carry out structural changes. Foreign, and in particular Nordic, banks have in recent years established a strong market position in Norway after Fokus Bank was taken over by Danske Bank and Christiania Bank by Nordea. In 2001 the Finnish Sampo made an unsuccessful attempt to take over Storebrand. After Skandiabanken launched its Internet bank

Net defaulted loans NOKm 1 500

% 1.5

1 000

1.0

500

0.5

4. Q. 1997

4. Q. 1998

4. Q. 1999*

Net defaulted loans As per cent of net loans * Included Gjensidige Bank from 1999

4. Q. 2000

4. Q. 2001

Report of the Board of Directors

Economies of scale and shared brand identity The new group structure entails that the Gjensidige NOR Group will comprise two separate groups, Gjensidige NOR ASA and Gjensidige NOR Forsikring. The latter will continue as a mutual company. To ensure successful utilisation of a common brand identity and a common database a joint company for marketing support, Gjensidige NOR Markedsstøtte, was established in 2001. This will help to achieve the full effect of potential cross-sales inherent

OPERATIONAL PROBLEMS AT EDB FELLESDATA In August the bank was hit by a breakdown of deliveries from EDB Fellesdata (an IT services provider to the banking and finance market). As a result of this serious event much of the Norwegian banking industry was unable to provide normal customer service for an entire week. Although Union Bank of Norway was quick to put in place systems able to handle the most critical customer needs, the event must be described as very serious. In the aftermath the bank took the necessary steps to ensure that the bank and its customers escaped financial loss. A major effort was initiated in conjunction with the provider to ensure that such incidents are not repeated. Concurrently work was started on evaluating alternative service providers.

CHANGES IN THE REGULATORY FRAMEWORK The VAT reform entailed higher future costs for the bank as from 1 July 2001. While financial services will remain exempt from VAT, the bank will have to pay VAT on a number of new services such as postage, fees, IT consultants, hired help, substitutes, computer services (exc. money transfer services) and travel. VAT on these services will entail cost increases of about NOK 100 million on an annual basis. Our customers are affected by VAT on services in the areas of real estate agency, debt collection, securities management, safety deposit box rentals as well as advisory services provided independently of sales of financial solutions.

FTEs 4 600 4 400 4 200 4 000 3 800 3 600 3 400 3 200 3 000

Union Bank of Norway Included Gjensidige Bank

31.12.01

31.12.00

31.12.99

31.12.98

31.12.97

31.12.96

2 800 31.12.95

In 2000 Gjensidige NOR started work on changing the group structure, and on converting Union Bank of Norway and Gjensidige NOR Spareforsikring to limited companies owned by a stock-exchange-listed holding company, Gjensidige NOR ASA. The bank's Committee of Representatives, like the highest governing bodies of the other group companies, came out in support of the moves in the first round of consideration in September that year and in the second round in March 2001. Conversion of Union Bank of Norway into a limited company requires a change in the law, either in the form of special legislation or of a general right for savings banks to convert to limited companies. In April 2001, after the Savings Banks Association thoroughly debated the conversion issue, a majority of the association's board decided not to oppose savings banks being allowed to convert to limited companies. In the Kredittmelding, an annual report of events in the financial market, the Ministry of Finance announced in December its intention to set the stage for the legislation needed for conversion to be enacted during the Storting's spring session in 2002. After debating this report, the Storting voted by a large majority in favour of a principled motion to open the way for conversion of savings banks. The Board expects the licence application to be dealt with in the spring, allowing Gjensidige NOR ASA to be admitted to listing around mid-year.

Staffing

31.12.94

CHANGE IN GROUP STRUCTURE

in Gjensidige NOR's almost two million customer relationships. Gjensidige NOR Markedsstøtte is also responsible for a new group Internet portal, for sponsorship activity at group level and production of customer magazines and other printed matter. Gjensidige NOR has more than 8 000 employees and over 400 branches and offices nationwide. Annual purchases total just over NOK 4 billion. Collaborating banks and fire insurance companies also participate in joint purchasing. In order to exploit economies of scale in the group, purchasing, real estate management and other operational functions have been assembled in a joint company set up in 2001. This company, Gjensidige NOR Driftspartner, will ensure that the economies of scale taken out by the companies in Gjensidige NOR are built on and further developed.

31.12.93

concept in 2000, a further Internet-based niche player, Bankia Bank, entered the Norwegian banking market last year. Customer flight from the established banks was limited, although the newcomers have intensified competition on prices. The structure of the Norwegian savings bank system remains unchanged since Norwegian savings banks are with few exceptions assembled in three groupings: Sparebank1-Gruppen, Terra-Gruppen and Gjensidige NOR plus collaborating banks.

31.12.92

Report of the Board of Directors

Weighting of home loans The capital adequacy regulations' riskweighting requirements for home loans between 60 per cent and 80 per cent of property valuation were reduced from 100 to 50 per cent with effect from 1 April 2001. The rule changes reduced the bank's calculation base by NOK 2 956 million, equivalent to an improvement of 0.12 percentage points in core capital adequacy and of 0.19 percentage points in overall capital adequacy.

ORGANISATION AND ENVIRONMENT Six bank branches were robbed in 2001, the same number as in 2000. The bank was also affected by the robbery of a security van. The bank's safety deposit box vault at Bryn in Oslo was broken into, affecting more than 600 customers. Much effort and resources have been devoted to securing money consignments and branches against robbery in recent years. The bank has a well-developed counselling facility for all affected employees in the aftermath of an attack, which customers are also invited to attend. AS Kontanthåndtering was established by Union Bank of Norway in conjunction with Norges Bank, Den norske Bank, Sparebank1 Gruppen, Terra Gruppen and Fokus Bank. A joint effort of this kind enables safe and secure cash handling to be further improved in a cost-effective manner. Sickness absence in 2001 came to 4.6 per cent. Thirteen minor injuries to staff were recorded during working hours in 2001. Much work was done in the health, environment and safety field over the year. The bank has conducted a wide-ranging customer satisfaction survey each year since 1994. The survey is an integral part of the bank's managerial follow-up and forms the basis for plans and measures in all divisions of the bank. Union Bank of Norway employed 2 910 full-time equivalents (FTEs) at last year-end compared with 2 889 one year previously. When subsidiaries are included, the number of FTEs rises to 3 864 compared with 3 807 one year previously. Adjusted for changes in group composition, group staffing was reduced by 27 FTEs or 0.7 per cent. The number of FTEs rose by 82 when Gjensidige NOR Equities became a whollyowned subsidiary. Seventy-one were added with the take over of Gjensidige NOR Spareforsikring's retail market portfolio as from 1 January 2001, while 66 FTEs came with Gjensidige NOR Kapitalforvaltning's consolidation as a subsidiary. The sale of AcceptFinans brought a reduction of 119 FTEs.

Union Bank of Norway's operations do not pollute the external environment to any appreciable extent.

Loans by retail market Home mortgage loans < 80 % of fair value 86%

RISK AND RISK MANAGEMENT The bank attaches great importance to risk monitoring and management. A moderate overall risk on operations is aimed at. Accordingly credit risk is given high priority, market risk is kept low and there is an emphasis on sound managerial follow-up of day-to-day operations. The bank's principal profit yardstick is a sound return on equity. Risk management is designed to ensure that this is attained, both by exploiting commercial opportunities and by limiting potentially negative result effects. All units are measured on the basis of risk-corrected results, and risk pricing is a central theme when processing loan applications. The Board of Directors views the bank's financial risk as relatively moderate. The greatest risk in today's profit picture lies in the customer spread (the difference between lending and deposit rates). This remains the bank's most important source of income and is greatly affected by market and competitive conditions. The bank's customer spread was on a marginally falling trend in 2001. The table below shows what profit effects the bank would have experienced in 2001 given changes in the most critical premises (all else being equal):

Risk factor

Margin on lending reduced by 0.25% Margin on deposits reduced by 0.25% Loan losses increased by 0.25% Operating expenses increased by 3% Staff increase of 100 FTEs 20% price fall on share portfolio 2% increase in bond rates

Credit risk Credit risk is the bank's main risk area. Lending is managed under a credit policy adopted by the Board of Directors and in accordance with rules governing procedures and documentation that ensure a proper basis for lending decisions. Administrative appropriations are granted within an authorisation structure based mainly on personal authorisations. Where credit applications in excess of a certain size and risk category are concerned, the routines entail that two or more persons make a recommendation or confer before a decision is taken.

Net other retail market loans 6%

Credit card loans 5%

Home mortgage loans > 80 % of fair value 3%

Profit effect (NOKm)

Effect on ROE (%)

-490 -270 -490 -140 -70 -60 -100

-2.6% -1.5% -2.6% -0.8% -0.4% -0.3% -0.6%

Report of the Board of Directors

The risk trend in the loan portfolio is mapped with the help of classification models that uncover the likelihood of default and compute loss in the event of default. For retail customers the likelihood of default is computed on the basis of customers' servicing ability. Retail customers' servicing ability has been stable and sound in recent years. For corporate commitments the likelihood of default is measured using various types of models depending on the type and size of the commitment. The main models used are internationally recognised as being state-of-the-art in the credit area. The risk profile of the parent bank's corporate portfolio over the past five years is as follows: 2001

Low risk Medium High risk

1999

1998 1997

42% 50% 43% 50% 44% 50% 8% 6% 7%

2000

57% 57% 38% 36% 5% 7%

The risk profile of the bank's corporate portfolio has shown a marginally negative development over the past year. The Board of Directors considers the overall risk in both corporate and retail customer commitments to be at a low level. At year-end overall defaults in the portfolio (customers exceeding the due date by more than 90 days) measured 0.7 per cent of outstanding loans, showing no change on the previous year. The bank has computed annual normalised losses in a long-term perspective at 0.46 per cent of the loan portfolio (2000: 0.40 per cent) based on the current portfolio mix. Market risk Market risk affects results through value changes in the derivatives, foreign currency and securities portfolios. The bank's positions are managed by a small number of specialist departments. These are subject to reporting routines and position limits established by the Board of Directors. The limits are well within the ceilings set by the authorities, and altogether market risk represents only a modest share of the bank's overall risk. The bank continued its work on a measuring system for market risk in 2001. The system, developed by Reuters, measures Value at Risk (VaR) on the majority of the bank's market positions. The bank's hope is that the VaR model will be approved and certified for use in reporting capital requirements for market risk during 2002.

Liquidity risk Changes in customers' saving behaviour along with relatively high demand for bank loans has heightened banks' dependence on other source of capital in recent years. The bank's (and subsidiaries') borrowings from Norwegian and international capital markets totalled just over NOK 85 billion at the end of 2001. In order to maintain financial freedom of action and low liquidity risk, the bank has chosen to give its borrowings a good spread across instruments, markets and maturities. The bulk of loans to customers are financed using stable long-term funds such as deposits from customers, bonds with a long maturity, and equity and the capital base. In order to further reduce liquidity risk, a substantial reserve is maintained in the form of bonds that are mortgageable in Norges Bank. Operational risk Operational risk means risk other than credit risk, market risk and liquidity risk. It includes sources of loss inherent in the day-to-day operation of the bank such as failure of systems and routines, faults on the part of external service providers, errors due to lack of expertise or various forms of attack on the bank, customers or staff. Technological developments and clear evidence of increasing crime in society make combating operational risk more important than ever. The bank places a premium on measures to prevent and reduce operational risk, but also on regular updating of contingency plans to handle crisis situations. Basel II A body of international capital adequacy rules is due to be finalised in the course of 2002 and to take effect in 2005. This will bring changes in the regulatory framework for Norwegian banks, and will impose appreciable demands on their risk systems and risk management. Union Bank of Norway aims to adapt to the new requirements well before their introduction.

Loans by customer sector Retail market 52%

Other sectors 25%

Foreign 3%

Real estate management 20%

Report of the Board of Directors

Return on equity

APPLICATION OF PROFIT FOR THE YEAR The Board of Directors recommends the following application of the parent bank's profit for the year:

Dividend per PCC, NOK 17 (2000: 17; 1999: 14) Allocation to dividend adjustment reserve Allocation to saving bank’s reserve Total allocation (in NOKm)

% 30

2001

2000

1999

797 822 666 2 285

797 1 274 777 2 848

656 756 484 1 896

20 Target 15%

This application of the net profit means that PCC holders have received a share of the profit corresponding to their share of the equity capital. This is in keeping with the bank's dividend policy. RISK regulation for 2001 is calculated at about NOK 17.50 per PCC. This confers on Norwegian PCC holders an increase of NOK 4.90 in the tax-related value of each PCC when sold. The removal of dividend tax is a further positive factor for our PCC holders. This has a positive effect of up to about NOK 23 million for our owners. The accounts are presented on the assumption of continued operations.

EQUITY At year-end the bank's primary-capitalcertificate capital totalled NOK 4 689 million. The price of the PCC rose from NOK 257.50 as at 31 December 2000 to NOK 273 as at 31 December 2001. This entails a return of 13 per cent including dividend received in 2001, in a year when the Oslo Børs OSEBX index declined by 16 per cent. Union Bank of Norway's market capitalisation was NOK 12.8 billion at the end of 2001, making it the ninth largest company on Oslo Børs in market value terms. Union Bank of Norway is also among the most traded companies listed on Oslo Børs. Foreign investors owned 48 per cent of the bank's primary capital certificates as at 31 December 2001, an increase of 13 percentage points on one year previously. An effort will be made to ensure that Gjensidige NOR ASA's shares are weighted 100 per cent in the OSEBX index as soon as possible after conversion. Gjensidige NOR ASA is expected to be the fourth largest company in the OSEBX index. Capital adequacy At year-end the group's capital adequacy was 11 per cent compared with 11.3 per cent at the end of 2000. The capital base totalled NOK 19 264 million, of which core capital accounted for NOK 12 929 million (7.4 per cent) after a deduction of NOK 902 million for book intangible assets.

Target for return on equity Union Bank of Norway's target for return on equity is set at 15 per cent after tax. This target is set with a basis in the market's requirements and expectations, and is designed to ensure the group's owners a competitive return. By that means effective access is also sought to Norwegian and foreign equity capital markets. Capital structure and financial strategy In 2000 the Board of Directors decided on a 7 per cent target for core capital adequacy and a 10 per cent target for overall capital adequacy for the period to 2002. In so doing, the bank will seek to exploit its capital base to the best advantage taking due account of market potentials and risk. Union Bank of Norway decided not to issue hybrid tier 1 capital in 2001. When Gjensidige NOR ASA and subsidiaries are established, the capital structure of the new group will be reviewed and the merits of employing hybrid tier 1 capital as part of the group's core capital will be considered

BOARD OF DIRECTORS AND BANK MANAGEMENT With effect from 1 April, the composition of the bank's senior management was changed to adapt to the imminent changes in Gjensidige NOR's group structure. The regions are now organised in two core areas, Oslo/Akershus/Østfold and Østlandet/Kysten which includes other regions. At the start of the year the core area Payment, Settlement & Banking Services was established and in September the core area Gjensidige NOR Merchant Bank, comprising the Corporate Customer Division, Markets and Gjensidige NOR Equities. The head of Gjensidige NOR's savings companies also attends meetings of the new management team, as does the head of non-life insurance and a representative for the collaborating banks. Olav Hytta took up duties as President and CEO in January 2001 after being appointed to that position ad interim in May 2000.

1997

1998

1999

2000

Return on equity Return on equity before goodwill

2001

Report of the Board of Directors

OUTLOOK FOR THE FUTURE The prospects for achieving conversion of the bank and the life company into limited companies and for establishing a new group structure around mid-2002 are good. The Ministry of Finance announced in the Kredittmelding in December its intention to set the stage for the legislation needed for conversion to be enacted during the Storting's spring session in 2002. Since then a majority of the Storting Committee on Financial Affairs has come out in support of the principle of savings banks' right of conversion.

The macroeconomic parameters are somewhat more uncertain than at the start of 2001. The bank expects the changes in the economic climate to bring a moderate increase in losses after a long period of very low losses. The bank is currently seeing a healthy influx of new customers, and will continue to prioritise credits on the basis of required return on equity. The Board has high expectations of the focus on savings and investment. The bank is well equipped to meet steadily growing competition in the Norwegian market. The Board anticipates another sound performance in 2002.

A WORD OF THANKS The Board would like to thank all staff for the considerable effort they made in the course of 2001. In view of the sound profit performance in 2001 and the staff's contribution to this, the Board has decided to allocate NOK 48 million to the employee fund. The fund is largely invested in Union Bank of Norway's primary capital certificates.

Oslo, 6 March 2002 The Board of Directors of Union Bank of Norway

Bjørn Sund Chairman

Per Otterdahl Møller Deputy Chairman

Sverre Finstad

Hans Aug. Hanssen

Stephen Gravlie Kunz

Lisbeth Lindberg

Vermund Lyngstad

Arnt Moe

Per Myklebust

Hans-Kristian Sætrum

Per Terje Vold

Torkel Wetterhus

Union Bank of Norway 2001 Financial Statements

2001 Financial Statements Profit and loss account

Balance sheet

Accounting policy

NOTES Note 1

Changes in group structure

Note 2

Gjensidige NOR ASA Group - pro forma accounts

Note 3

Interest income and expenses

Note 4

Other operating income, net

Note 5

Personnel expenses

Note 6

Pension costs and pension commitments

Note 7

Operating expenses

Note 8

Losses on loans and guarantees

Note 9

Losses (gains) on long-term financial assets

Note 10

Selected figures for core areas and group companies

Note 11

Tax

Note 12

Assets

Note 13

Credit risk

Note 14

Defaulted, doubtful and non-accrual loans

Note 15

Commitments, by sector and industry

Note 16

Loss provisions

Note 17

Joint ventures and associated companies

Note 18

Fixed assets

Note 19

Real estate and repossessed assets

Note 20

Liabilities and equity

Note 21

Customer deposits, by sector and industry

Note 22

Maturity structure of bond issues and subordinated loan capital

Note 23

Total equity – earnings per PCC

Note 24

Capital adequacy

Note 25

Liquidity risk/residual maturity

Note 26

Interest rate risk/period to interest rate adjustment

Note 27

Financial derivatives

Note 28

Foreign currency position and risk

Note 29

Commitments, guarantees and contingent liabilities

Note 30

Union Bank of Norway’s 20 largest PCC holders

Note 31

Information on related parties

Note 32

Investments in securities

Note 33

Shareholdings

Cash flow statement

Auditors’ report for 2001/Statement by the Control Committee

Union Bank of Norway 2001 Financial Statements

Profit and loss account NOK million

PARENT BANK 2001

2000

GROUP 1999

16 463 11 946 4 517 790 1 356 445 270 31 2 002 6 519 1 569 315 763 2 647 270 331 79 0 410 3 327 3 192 320 ( 232) 3 104 819 2 285

13 850 9 593 4 257 665 1 316 400 247 36 1 864 6 121 1 442 325 697 2 464 215 318 60 0 378 3 057 3 064 94 ( 828) 3 798 950 2 848

10 970 7 551 3 419 564 1 097 328 212 42 1 587 5 006 1 346 293 612 2 251 181 272 82 111 465 2 897 2 109 118 ( 171) 2 162 266 1 896

797 822 666 2 285

797 1 274 777 2 848

656 756 484 1 896

Note

Interest income 3 Interest expenses 3 Net interest income Dividends and similar income 4 Commission income 4 Commission expenses 4 Capital gains 4 Other operating income 4 Other operating income, net Operating income Personnel expenses 5,6 IT and development costs 7 Other administrative expenses 7 Personnel and administrative expenses Depreciation and write-downs 7 Properties and premises 7 Other operating expenses 7 Co-location costs, Gjensidige Bank/Union Bank of Norway 7 Other operating expenses Operating expenses Operating profits before losses (gains) Losses (gains) on loans and guarantees 8,15 Losses (gains) on long-term financial assets 9 Operating profit Tax 11 Net profit

2001

2000

1999

18 303 12 776 5 527 158 1 827 532 272 464 2 189 7 716 2 136 367 1 033 3 536 463 336 209 0 545 4 544 3 172 426 ( 232) 2 978 817 2 161

15 941 10 594 5 347 87 1 701 504 262 385 1 931 7 278 1 937 369 923 3 229 365 340 172 0 512 4 106 3 172 215 ( 746) 3 703 1 015 2 688

13 890 9 242 4 648 150 1 414 444 211 363 1 694 6 342 1 852 368 848 3 068 345 284 208 150 642 4 055 2 287 201 ( 386) 2 472 688 1 784

32.65

Approx. 17.50

41.69 28.11

28.34 20.18

Allocation of profit Dividend on primary capital certificates Transferred to dividend adjustment reserve Transferred to savings bank’s reserve Total allocations Earnings per primary capital certificate (in NOK) RISK amount (in NOK) at 1 Jan. in subsequent year

Union Bank of Norway 2001 Financial Statements

Balance Sheet NOK million

PARENT BANK

GROUP

2001

2000

1999

2 185 33 275 155 653 839 1 095 153 719 4 15 934 1 450 430 3 616 410 852 4 066 215 941

3 363 28 617 140 758 680 1 055 139 023 5 11 435 1 448 461 3 264 339 891 3 286 192 132

4 481 20 728 130 314 952 996 128 366 5 12 018 377 398 3 421 292 809 3 809 174 704

26 128 108 087 56 920 5 305 2 552 3 854 202 846 4 689 4 689 4 049 4 357

25 626 98 468 44 235 6 133 1 397 4 666 180 525 4 689 4 689 3 383 3 535

34 578 92 252 27 761 4 557 1 300 4 755 165 203 4 689 4 689 2 592 2 220

8 406 13 095 215 941

6 918 11 607 192 132

4 812 9 501 174 704

Assets Note Cash and deposits in Central Bank of Norway Deposits in and loans to credit institutions 12 Gross loans to customers 12, 13, 14, 15 Specified loan loss provisions 14, 15, 16 Unspecified loan loss provisions 16 Net loans to customers 10 Repossessed assets 19 CDs and bonds 12, 32 Shares and mutual fund units 12, 32, 33 Associated companies/joint ventures 12, 17 Group companies 12, 31 32, 33 Intangible assets 12, 18 Fixed assets 12, 18, 19 Other assets and accruals 12 Total assets

2001

2000

1999

2 247 8 877 196 710 906 1 386 194 418 83 15 782 1 545 565 0 877 2 227 4 588 231 209

3 364 6 249 179 675 897 1 389 177 389 61 11 349 1 534 659 0 503 2 325 3 484 206 917

4 484 5 893 166 897 1 131 1 314 164 452 51 12 338 407 724 187 598 2 328 4 146 195 608

Liabilities and equity Loans and deposits from credit institutions Customer deposits CDs and bonds Other liabilities, accruals and allocations Dated subordinated loan capital Perpetual subordinated loan capital Total liabilities Primary-capital-certificate capital Called-up capital Savings bank's reserve Dividend adjustment reserve Group equity in subsidiaries Earned equity Total equity Total liabilities and equity

29 914 108 697 65 724 6 676 2 602 3 854 217 467 4 689 4 689 4 049 4 357 647 9 053 13 742 231 209

29 699 99 309 51 989 7 410 1 448 4 666 194 521 4 689 4 689 3 383 3 535 789 7 707 12 396 206 917

38 585 92 712 41 228 6 457 1 350 4 755 185 087 4 689 4 689 2 592 2 220 1 020 5 832 10 521 195 608

Interest rate and liquidity risk, financial derivatives Foreign currency exposure and off-balance sheet liabilities Related parties

20 20, 21 20, 22 20 22, 24 22, 24 23 23 23 23

25, 26, 27 28, 29 31

Oslo, 6 March 2002 Group Executive Board of Union Bank of Norway

Hans Bø Chairman

Harald Schjoldager Deputy Chairman

Roar Arntzen

Norunn Tveiten Benestad

Tor Ivar Bråten

Marianne Hagen

Odd Kr. Hamborg

Amund Skarholt

Ingjerd Skjeldrum

Jorund Stellberg

Stig Harald Trygstad

Berit Wenaas

Olav Hytta President & CEO

Union Bank of Norway 2001 Financial Statements

Accounting policy GENERAL The accounts have essentially been prepared in accordance with the accounting policy underlying the bank's annual accounts for 2000. All amounts are stated in NOK million and apply to the Group, unless otherwise specifically stated.

CONSOLIDATION The consolidated accounts include Union Bank of Norway and companies in which ownership is regarded as long term, and where the bank alone or jointly with subsidiaries holds more than 50 per cent of the share capital and/or has a deciding influence on the company's operations. These companies are shown in Note 33. Subsidiaries bought or sold in the course of the year are consolidated up to, or as from, the quarter that they were part of the Group. Acquisitions are accounted for by the pooling-of-interest method. All identifiable assets and liabilities are recorded in the balance sheet at fair value as at the time of acquisition. If the cost price of the shares exceeds fair value of identifiable assets less acquired debt, and this is due to expectations of future earnings, the difference is recorded in the balance sheet as goodwill and amortised over the asset's expected lifetime, normally five years. Minority interests are calculated on after-tax profit. Assets and liabilities and all profit and loss items are shown inclusive of minority interests' share in the consolidated accounts. Minority interests are included in the Group's equity. Intra-Group balances, gains, interest and dividend as well as other income and expenses are eliminated. Where consolidation of foreign subsidiaries is concerned, profit and loss accounts and balance sheet items are translated at the middle rates in effect on 31 December. Translation differences are added/ charged directly to Group equity. Companies acquired or established to secure loans are not regarded as long-term investments and are therefore not consolidated. Shares in subsidiaries are valued at cost in the parent bank's accounts.

ASSOCIATED COMPANIES AND JOINT VENTURES Associated companies are companies in which the bank holds an ownership interest of between 20 per cent and 50 per cent, and where this interest provides a basis for influence and is a long-term investment forming a natural part of the Group's business. These companies are shown in Note 17 and 33. Joint ventures are companies which Union Bank of Norway for the most part owns jointly with Gjensidige NOR Forsikring/Gjensidige NOR Spareforsikring where both parties own 50 per cent. These companies are also shown in Note 17 and 33. These companies are consolidated using the equity method. Under this method, the Group's share of said companies’ net profit is consolidated. The shareholdings are shown in the balance sheet at historical cost, adjusted for the Group's share of profit and dividend received. At the time of acquisition, the pooling-of-interest method is applied to associated companies and joint ventures (see «Consolidation» above). In the parent bank's accounts, investments in associated companies and joint ventures are valued at historical cost, and otherwise valued in line with other fixed assets.

RECOGNITION OF INCOME AND EXPENSES Interest and commissions are recorded in the profit and loss account as and when they accrue in the case of income or incurred in the case of expenses. When arrangement fees on loans are deemed to cover the costs of arranging the loans, they are recorded as income in full in the year the loans are established. Commission income over and above this is dealt with on an accrual basis over the lifetime of the loan. Group contributions received from subsidiaries are classified as dividend when deemed to be return on invested capital. Share dividends are recorded as income in the year they are received. However, share dividends and group contributions from subsidiaries and some associated companies/ joint ventures are recorded as income in the receiving company the year the allocation is made by the contributor company. Group contributions to subsidiaries are recorded as called-up equity and are added to the cost price of the shares in question.

Gains on sales of assets are recorded only when there has been a transfer of risk to the buyer. Gains/losses on sales of securities are calculated on the basis of the average cost price of securities sold. Purchases and sales of securities are recorded on the settlement date.

FOREIGN CURRENCY Assets and liabilities in foreign currency are translated at the middle rates in effect on 31 December. Income and expenses in foreign currency are translated into NOK at the exchange rates in effect on the transaction date.

FINANCIAL DERIVATIVES Financial derivatives are agreements with customers or financial institutions to fix future interest rates, exchange rates or share prices. These agreements include forward exchange contracts, interest rate and/or currency swaps, interest rate options (caps, floors), currency options, FRAs (forward rate agreements), interest rate futures, options on interest rate futures and share options. Financial derivatives are classified either as trading or hedging transactions when entered into. Contracts entered into for own account with a view to resale in order to exploit price or interest rate movements in the short term are included in the trading portfolio. Other contracts are included in the hedging portfolio. Outstanding contracts in the trading portfolio are recorded at market values as at 31 December. Changes in market value are recorded net in the profit and loss account as capital gain (loss) on foreign currency and financial derivatives. The hedging portfolio comprises contracts designed to neutralise an existing or expected interest rate and/or currency risk in the balance sheet. Hence a considerable degree of negative correlation is required between the change in value of the hedging contract and the hedged item. Financial derivatives employed to hedge the bank's balance sheet items or other financial instruments are valued jointly with the hedged item. Income and expenses from these contracts are recorded jointly with the hedged items. Transfers between the trading and hedging portfolios are made at market prices, and internal gains and losses are not eliminated.

Union Bank of Norway 2001 Financial Statements

BONDS, CDS, SHARES AND UNITS Stock exchange listed bonds, CDs and shares included in a trading portfolio are recorded at fair value (market value). To be included in a trading portfolio, an investment must be made with a view to resale to achieve gains on short-term fluctuations. Furthermore, the financial instrument must be traded on a stock exchange or other regulated market, and have a good ownership spread and liquidity. Bonds and CDs (apart from the trading portfolio) that are classified as current assets, are valued on a portfolio basis at acquisition cost or market value, whichever is lowest. Short-term share investments (apart from the trading portfolio) are, likewise, valued on a portfolio basis at acquisition cost or market value, whichever is lowest. Portfolio valuation is employed since the portfolios are managed on a collective basis. Bonds - hedging transactions. Bonds are classified as hedging transactions based on the following criteria: ■ Items that are hedging transactions must be clearly defined, either individually or on a portfolio basis. ■ There must be a high degree of negative correlation in value change between the hedging transactions and the hedged items. Income or expenses referring to bonds that are hedging instruments are recorded in the profit and loss account jointly with the hedged items. Long-term shareholdings are shown at acquisition cost. Should the value of the shares fall substantially below cost price and the drop in value is not expected to be of a transient nature, the shares are written down. Where the basis for the write-down has permanently lapsed, the write-down is reversed.

LOANS AND LOAN LOSSES Loans are shown at nominal values. Loans and other commitments where the repayment terms are breached are classified as defaults. Defaults. The bank treats a loan as being in default at the latest when a payment is 90 days overdue or 90 days after an unauthorised overdraft arose. Loans where bankruptcy proceedings or debt negotiations have started are also defined as defaults. Specified loss provisions. Where the bank has identified a loan as doubtful as a result of bankruptcy or debt negotiations, debt collection proceedings, distress, distraint or other default, a specified loss provision is made.

Probable loan losses are also assessed in other customer circ*mstances, such as deterioration of liquidity, capital strength or earning power, or a change in the value of the collateral furnished. The requisite specified loss provision is made if there is a preponderant likelihood that a loss will arise in the relatively near future. In the event of bankruptcy, composition with creditors or debt settlement negotiations, the loss valuation is based on the value of the collateral furnished. Collateral is assessed at market value. In the event of other kinds of default, the customer's financial situation, including debt-servicing capacity, is taken into account, in addition to the value of the collateral, when assessing the loss. Unspecified loss provisions are intended to cover losses, which circ*mstances on the balance sheet date indicate are likely to be incurred, on loans for which specified loss provisions have not been made. Unspecified loss provisions are intended to cover categories of loans that, based on evidence on the balance sheet date, represent a manifest loss risk (e.g. in high risk branches of industry, risk category or geographical location, historical loss patterns, open project risk etc.). Changes in the size of the loan portfolio are taken into account. Realised loan losses. Loan losses realised through bankruptcy, confirmed composition with creditors, unsuccessful distraint, court judgement, cessation of enforcement by the bank, or where the bank has otherwise relinquished the loan or parts of it, are recorded as realised losses by the bank. Non-accrual loans. Interest, commissions, and fees on defaulted loans cease to be recorded as income if expected to be lost. Concurrently, unpaid interest, commissions and fees that have been recorded as income in the current year are reversed. Reclassification. A loan previously subject to loss provisioning is reclassified once this has been rectified, i.e. when the applicable repayment schedule has been resumed and the loan is no longer regarded as nonperforming. To ensure that reclassification is justified, there is normally a six-month delay from the date the loan receives a clean bill of health until the date of reclassification while at the same time the bank expects the borrower to continue to follow the agreed repayment plan. Where previous loss provisions are reversed in full, interest not previously recorded as income is also booked to income.

Union Bank of Norway 2001 Financial Statements

LEASING AND FACTORING Leasing contracts are treated as financial leasing, i.e. the present value of future payments is recorded in the accounts as loans to customers. Lease receipts are taken to income based on the annuity method. Ordinary depreciation for the year is recorded as a deduction to interest on loans in the profit and loss account. Ordinary depreciation includes accrued depreciation of prepaid rent received from the lessee, as well as annuity depreciation in accordance with the depreciation schedule. In the case of factoring, purchased accounts receivable are recorded as loans. The unfunded portion of the accounts receivable (the margin) is recorded as debt to factoring customers. Hence, net lending is the difference between accounts receivable and the margin.

FIXED ASSETS - INTANGIBLE ASSETS Fixed assets are recorded at acquisition cost plus any revaluation, less any write-down and straight-line ordinary depreciation. The Union Bank of Norway Group applies the following rates of depreciation: Fixed asset Annual depreciation Sites, art work 0% Buildings 2% Fixtures and fittings 10% Vehicles 20 - 25% Machinery/IT equipment 25% Intangible asset Goodwill Software

Annual amortisation

12.5 - 20% 20 - 33%

Where the true value of a fixed asset, or of a portfolio of assets, is substantially lower than book value, and the decline is not expected to be of a transient nature, the asset is written down to its fair value. As a general rule, the need to make a write-down is assessed for each asset individually. In the case of real property, however, any need for write-downs of bank premises is assessed on a portfolio basis, due to the premises' close tie-in with the bank's operations, and the fact that the premises are managed as a group of properties. Expenses on IT development and procurement of IT programs are recorded and classified as intangible assets if their value is deemed to be substantial (more than NOK 1 million) and is expected to be longterm. Where development of IT programs is concerned, internal resources employed as well as expenses on preliminary planning, requirements specifications, training and implementation are expensed. Software

carried on the balance sheet is written down over its expected economic lifetime - a maximum of five years. Such software is written down if the value of expected economic benefits is lower than the recorded value. Expenses on re-establishing or maintaining the economic value of IT systems and solutions are classified as maintenance and are expensed as and when incurred.

FIXED-INTEREST BOND LOANS/ ISSUED BONDS Premiums/discounts upon disbursem*nt of loans, upon issue of debt instruments, upon early redemption of loans, and upon repurchase of debt instruments are recorded in the balance sheet. Income/expenses are recognised on an accruals basis as an adjustment to current interest income/ expenses over the period to the next interest rate adjustment date or, in the case of fixedinterest loans, over the entire loan term. Direct costs incurred in raising long-term loans are recorded as reductions in the loan amounts and amortised systematically over the period to the next interest rate adjustment date or maturity date.

TAX The tax charge in the profit and loss account comprises tax payable on the year's income, the parent bank's capital tax, and the year's change in deferred tax. Deferred tax is calculated on the basis of temporary differences between accounting and tax-related values at the end of the accounting year. Tax-reducing temporary differences are offset against (any) taxincreasing temporary differences that are reversed in the same period. Tax-reducing differences that remain after off-setting are recorded in the balance sheet as deferred tax benefits, to the extent that the latter are likely to be realised. Deferred tax and deferred tax benefits are shown net in the balance sheet and are recorded at nominal values.

PENSION COSTS AND PENSION COMMITMENTS The Union Bank of Norway Group follows the Norwegian Accounting Standard for pension expenses. This standard’s basis is the present value of projected future pension benefits. The estimated accrued commitment, both regarding pensions covered through operations and pensions covered by a pension fund or insurance company, is compared with the value of the pension plan assets. The difference, adjusted for variances in estimates and effects of changed assumptions, is shown as debt in

the balance sheet. Variances in estimates and effects of changed parameters and pension plans are amortised over the employees' expected residual term of employment. The pension cost is recorded in the profit and loss account under personnel expenses.

Union Bank of Norway 2001 Financial Statements

Notes 1

CHANGES IN GROUP STRUCTURE COMPLETED TRANSACTIONS Acquisition of portfolios from Core Area Savings Union Bank of Norway took over servicing and appurtenant commission rights for part of the private portfolio of savings and investment products from Gjensidige NOR Spareforsikring, Gjensidige NOR Fondsforsikring and Avanse Forvaltning as from 1 January 2001. NOK 30.7 million was paid to Gjensidige NOR Spareforsikring for the commission rights. Union Bank of Norway took over 71 staff in connection with the transaction. A reorganisation provision of NOK 19 million has been made in connection with the acquisition to cover costs of integration and coordination with the bank. Furthermore, goodwill was booked in connection with the purchase in an amount of NOK 49.7 million, which will be amortised over a period of four years, corresponding to the duration of the current commission agreement. Union Bank of Norway has received about NOK 45 million in commissions from 2001 in connection with the acquisition. The takeover of staff will entail increased expenses of about NOK 49 million. Goodwill amortisation accounts for a further NOK 12 million per year. Purchase of shares in Avanse Forvaltning In the first quarter of 2001 Union Bank of Norway offered to buy the shares of minority shareholders of Avanse Forvaltning at a price of NOK 459.41 per share, valuing the company at NOK 1,500 million. Seven shareholders accepted the offer, and UBN has purchased 166 045 shares for NOK 76 million. This corresponds to an amount of NOK 73 million in excess off book equity, which will be treated as goodwill and will be amortised over five years. As at 31 December 2001, UBN owns 70.8 per cent of the shares of Avanse Forvaltning, as against 65.7 per cent at the end of 2000. Purchase of shares in Gjensidige NOR Equities - (formerly Karl Johan Fonds) In connection with the formation of Gjensidige NOR Merchant Bank, Union Bank of Norway purchased on 31 March 2001 the remaining 50 per cent of the shares of Gjensidige NOR Equities for NOK 198 million. This corresponds to an amount of NOK 177 million in excess of book equity, which will be treated as goodwill. It will be amortised over five years as from the second quarter of 2001. Disposal of AcceptFinans A/S in Denmark On 20 July 2001 Union Bank of Norway signed an agreement to sell its credit card business in Denmark, AcceptFinans A/S, to GE Capital for DKK 573 million, equivalent to NOK 616 million. The sale produced a pre-tax profit of NOK 205 million, equivalent to NOK 2.23 per primary capital certificate after tax. AcceptFinans A/S has 143 employees and returned a profit of NOK 16 million in the first half of 2001, compared with NOK 35 million for the full year 2000. Total lending at year-end 2000 came to NOK 1 400 million. Inclusive of the net profit stemming from the transaction, UBN’s capital ratio was improved by 0.25 percentage points. Acquisition of banks in Telemark In June 2001, an agreement was signed by Fokus Bank and Union Bank of Norway, according to which Union Bank of Norway was to take over Fokus Bank's branch offices in Bø and Vinje in Telemark. The portfolio comprises about 3 700 customers with loans totalling NOK 317 million and deposits of NOK 264 million. In addition, six Fokus employees, (5.65 FTEs) were taken on by UBN. The takeover was carried out in November 2001. The final purchase price was NOK 32 million in excess of net book value of the assets, and is treated as goodwill and will be amortised over five years. Purchase of shares in Gjensidige NOR Kapitalforvaltning With settlement on 8 October 2001, Union Bank of Norway purchased 20 per cent of the shares of Gjensidige NOR Kapitalforvaltning from Gjensidige NOR Forsikring for NOK 66 million. The settlement represents an amount of NOK 51 million in excess of book equity, and will be treated as goodwill and amortised over five years. As from the fourth quarter of 2001, UBN accordingly owns 70 per cent of Gjensidige NOR Kapitalforvaltning. The company is incorporated in the UBN group accounts as a subsidiary as from the same quarter. PLANNED TRANSACTIONS Formation of Gjensidige NOR ASA In the interest of an efficient and effective group structure and clarity as regards value creation, ownership interests in some companies will be combined upon the establishment of the new Group, or at a later stage. Company

Avanse Forvaltning Gjensidige NOR Kapitalforvaltning Gjensidige NOR Fondsforsikring

Assessed value (NOKm)

Gjensidige NOR Spareforsikring’s stake

1 500 350 300

26.5% 30.0% 50.0%

The above values were established as of 30 June 2000, and are a basis for interest calculation, while equity transfers after that date will be corrected in the purchase price. Under current accounting rules, whereby gains on sales by life insurance companies in a financial group are not eliminated, a goodwill amount of NOK 604 million will materialise in the new group. Any such goodwill amount is expected to be amortised over a period of five years. See note 10 and 17 for accounting figures for the companies affected. Financing and design of the transactions have yet to be finalised.

Union Bank of Norway 2001 Financial Statements

GJENSIDIGE NOR ASA GROUP - PRO FORMA ACCOUNTS The Group Executive Board voted on 23 June 2000 to apply to Norwegian regulatory authorities for a license to establish Gjensidige NOR ASA as a holding company for Union Bank of Norway and Gjensidige NOR Spareforsikring. Below are shown pro forma group accounts for Gjensidige NOR ASA. From the profit and loss account Net interest income Net other operating income Net result - Life insurance Total income Operating expenses Operating profit before losses Loan losses Losses (gains) on long-term financial holdings Operating profit Taxes Net profit

2001

2000

5 527 2 189 (21) 7 695 4 544 3 151 426 ( 232) 2 957 817 2 140

5 347 1 931 297 7 575 4 106 3 469 215 ( 746) 4 000 1 015 2 985

1999(* )

4 976 1 718 297 6 991 4 310 2 681 234 ( 386) 2 833 706 2 127

(*) Incl. pro forma figures Gjensidige Bank first quarter.

From the balance sheet Assets Deposits with and loans to credit institutions Loans and leasing Certificates and bonds Shares and equity interests Life insurance assets Real estate Other assets Total assets

11 019 194 418 15 782 2 110 2 630 1 262 6 513 233 734

9 508 177 389 11 349 2 193 2 653 1 277 5 096 209 465

10 272 164 452 12 338 1 318 2 523 1 367 5 756 198 026

Equity and liabilities Equity Subordinated debt Deposits from customers Loans and deposits from credit institutions Certificates and bonds Other liabilities Total equity and liabilities

16 267 6 456 108 697 29 914 65 724 6 676 233 734

14 944 6 114 99 309 29 699 51 989 7 410 209 465

12 939 6 105 92 712 38 585 41 228 6 457 198 026

Capital adequacy figures Capital adequacy Core capital Calculation base

10.7 % 7.1 % 205 933

10.9 % 7.2 % 191 204

The following factors were taken into account when preparing the pro forma figures: Union Bank of Norway and Gjensidige NOR Spareforsikring are involved in differing types of business activity and hence apply fundamentally different rules to the presentation of their accounts. Owing to the rules governing profit sharing between shareholders and policyholders, consolidation is not fully implemented for accounting purposes. The item "Net result - Life insurance" in the pro forma accounts constitutes that portion of the profit of Gjensidige NOR Spareforsikring which is calculated to accrue to the Gjensidige NOR Group (100%). The pooling-of-interests method has been applied to joint ventures included in these accounts. Expenses related to the founding of the Gjensidige NOR ASA Group are expected to amount to approx. NOK 105 million, and will be charged to equity in the company upon the establishment of the group. This is reflected in the above pro forma accounts. Changes in group structure described in Note 1 are not reflected in the above pro forma accounts. Pro forma figures for 1999 take into account the acquisition of Gjensidige Bank. Union Bank of Norway's shareholders will receive 78% , and Gjensidige NOR Spareforsikring's shareholders 22 %, of the shares in the new holding company. The gain realised on the disposal of Fellesdata shares is reflected in the agreed conversion ratio, and did not provide a basis for dividend payments for 2000. Normal dividend was paid by Union Bank of Norway for 2001, while the result recorded by Gjensidige NOR Spareforsikring did not provide a basis for payment of dividend. Gjensidige NOR Spareforsikring will employ a management fee on a par with competitors in the Norwegian market. The above pro forma accounts do not reflect a market-based fee for 2000 and 1999. Pro forma key figures for shares In the table below, the shares of the owners of Union Bank of Norway (78% of the shares in the holding company) are allocated between PCC holders and the Bank Foundation based on the PCC holder fraction, i.e. 69.1 / 30.9 at 31.12.01, 70.9 / 29.1 at 31.12.00 and 72.7 / 27.3 at 31.12.99. The number of shares outstanding has been fixed in such a way that the PCC holders' overall fraction equals the actual number of PCCs at the three dates. Par value for the new shares is set at NOK 100 per share. Likewise, the shares belonging to the owners of Gjensidige NOR Spareforsikring (22% of the shares in the holding company) are allocated between the insurance company and the Life Insurance Foundation based on their overall share of the equity in the company, i.e. 58.3 / 41.7 at 31.12.01, 57.8 / 42.2 at 31.12.00 and 59.6 / 40.4 at 31.12.99. Continued on next page

Union Bank of Norway 2001 Financial Statements

Note 2 continued

As of 31.12.2001

As of 31.12.2000

As of 31.12.1999

Number of shares (1 000)

Fraction

Number

Fraction

Number

Fraction

Number

PCC holders Bank Foundation Insurance Company Life Insurance Foundation

53.9% 24.1% 12.8% 9.2%

46 889 20 968 11 158 7 981 86 996

55.3% 22.7% 12.7% 9.3%

46 889 19 245 10 782 7 872 84 788

56.7% 21.3% 13.1% 8.9%

46 889 17 608 10 842 7 350 82 689

Book equity Book equity per share (NOK) - excl. dividend payment Book equity per share (NOK) - incl. dividend payment Net profit Net profit per share (NOK) Market price at 31 December Price/book value - excl. dividend payment Price/book value - incl. dividend payment

16 267 187 196

14 944 176 186

12 939 156 164

2 140 24.60

2 985 35.21

2 127 25.72

273.00 1.46 1.39

257.50 1.46 1.38

185.00 1.17 1.13

GJENSIDIGE NOR SPAREFORSIKRING – GROUP ACCOUNTS From the Profit and Loss Account Premium income Income from financial assets etc., (net) Claims and transfers (premium reserves) Change in technical reserves Operating expenses related to underwriting Result of technical accounts before allocations Allocations to policyholders, incl. supplementary reserves Result of technical accounts From supplementary reserves Other expenses Extraordinary income Tax charge Net profit

2001

2000

1999

5 905 682 4 157 3 034 489 (1 093) 25 (1 118) 1 059 56 0 ( 94) ( 21)

5 574 4 746 4 565 2 802 469 2 484 2 094 390 0 55 0 38 297

4 808 3 648 3 887 2 642 555 1 372 1 390 ( 18) 0 247 428 ( 134) 297

From the Balance Sheet Assets Buildings and real estate Shares and interests Mortgage loans Other financial assets Other assets Total assets

7 802 15 781 3 256 31 066 4 414 62 319

6 655 17 335 3 442 30 426 4 161 62 019

6 533 17 321 4 699 27 699 3 611 59 863

Equity and liabilities Equity Subordinated loan capital Unrealised gains Underwriting provisions for own account Other liabilities Total equity and liabilities

2 630 1 362 0 57 700 627 62 319

2 653 1 106 1 176 56 150 934 62 019

2 523 1 013 3 751 51 586 990 59 863

GJENSIDIGE NOR SPAREFORSIKRING (PARENT COMPANY) From the Profit and Loss Account Interest result Risk result Administration result Other allocations to reserves Undistributed profit Allocations to policyholders, incl. supplementary reserves Transferred from supplementary reserves Operating profit Taxes Net profit

(1 116) ( 84) ( 92) ( 143) (1 149) ( 25) 1 059 ( 115) ( 94) ( 21)

2 813 ( 33) ( 100) 251 2 429 (2 094) 0 335 38 297

(*) 2 049 ( 68) ( 106) 360 1 515 (1 390) 0 125 ( 131) 256

1.8% 0.0% (0.8%) 9.8%

9.0% 4.2% 11.6% 8.6%

8.0% 13.3% 14.5% 11.2%

Key ratios Book return, annualised Value-adjusted return incl. additional value on bonds held to maturity Return on equity after tax Capital adequacy (*) Proforma

Union Bank of Norway 2001 Financial Statements

INTEREST INCOME AND EXPENSES PARENT BANK 2001 2000

3 269 12 150 61 983 16 463 2 273 6 156 3 033 332 152 11 946 4 517

2001

GROUP 2000

1999

1 721 15 536 61 985 18 303 2 506 6 199 3 584 335 152 12 776 5 527

1 663 13 400 87 791 15 941 2 013 4 973 3 134 468 6 10 594 5 347

631 12 566 49 644 13 890 2 078 4 391 2 348 357 68 9 242 4 648

1999

2 810 881 10 186 9 372 87 49 767 668 13 850 10 970 1 780 1 706 4 935 4 202 2 406 1 229 466 350 6 64 9 593 7 551 4 257 3 419

Interest on deposits with and loans to credit institutions Interest on loans to customers Net interest income on loans previously written off Interest on CDs and bonds Interest income Interest on loans from credit institutions Interest on customer deposits Interest on CDs and bond loans Interest on subordinated loan capital Levy to Savings Banks' Guarantee Fund (*) Interest expenses Net interest income

(*) The levy payable by Union Bank of Norway to the Savings Banks' Guarantee Fund for 2002 will be NOK 162 million.

AVERAGE INTEREST RATE FOR LOANS TO AND DEPOSITS FROM CUSTOMERS PARENT BANK Interest amount

GROUP

Average capital

Average rate

12 150 156 778 6 156 103 766

7.75% 5.93%

Loans to customers Deposits from customers

Interest amount

Average capital

Average rate

15 536 6 199

196 823 104 592

7.89% 5.93%

The parent bank's rates shown above are based on actual interest rates in the profit and loss account in relation to the day-to-day average capital computed in the bank's general ledger.

OTHER OPERATING INCOME, NET 2001

PARENT BANK 2000 1999

110 105 575 790 88 46 775 96 0 49 77 42 183 1 356 54 233 158 445 46 ( 25) 221 28 270 1 1

24 45 596 665 80 49 743 121 0 55 32 43 193 1 316 64 198 138 400 35 ( 24) 190 46 247 1 4

20 50 494 564 59 56 637 87 0 35 29 42 152 1 097 62 187 79 328 34 92 145 ( 59) 212 0 2

29 31 2 002

31 36 1 864

40 42 1 587

2001

Share dividends (*) 110 Income from ownership interests in associated companies/joint ventures 48 Income from ownership interests in subsidiaries Share dividends and other profit income 158 Guarantee commissions 88 Interbank fees 46 Money transfer fees 775 Mutual funds management fees 331 Discretionary asset management fees 87 Securities broking activities 125 Life insurance (Gjensidige NOR Spareforsikring) 77 Fees on safe deposit boxes/night depositories 42 Miscellaneous commissions and fees 256 Commission income 1 827 Interbank fees 54 Money transfer fees - external costs 233 Other commissions and fees 245 Commission expenses 532 Capital gains on bonds and CDs 41 Capital gains (losses) on shares and PCCs ( 25 ) Foreign currency gains 228 Gains (losses) on financial derivatives 28 Capital gains (losses) 272 Operating income, real estate 32 Gains on disposals of fixed assets 44 Real estate agency commissions 284 Additional operating income 104 Other operating income 464 Other operating income, net 2 189

(*) Includes return on money market mutual fund units totalling NOK 84 (2000: 3; 1999: 4) million.

GROUP 2000

24 63 87 80 49 743 433 0 55 32 43 266 1 701 64 198 242 504 38 ( 24) 200 48 262 34 17 236 98 385 1 931

1999

21 123 6 150 60 64 646 330 0 35 30 42 207 1 414 64 194 186 444 34 92 137 ( 52) 211 45 13 218 87 363 1 694

Union Bank of Norway 2001 Financial Statements

PERSONNEL EXPENSES 2001

PARENT BANK 2000

1 099 131 291 48 1 569

1 024 100 268 50 1 442

1999

949 109 243 45 1 346

Salaries Pensions Other benefits Allocation to employee fund Personnel expenses

2001

GROUP 2000

1999

1 550 154 384 48 2 136

1 399 120 368 50 1 937

1 332 129 346 45 1 852

REMUNERATION TO GOVERNING BODIES / CEO / AUDITORS Gjensidige NOR was established on 22.06.99 with a Group Executive Board and President and CEO common to Gjensidige NOR's main companies. Four deputy presidents were also appointed. A Board of Directors was appointed for Union Bank of Norway. Boards of directors were similarly established for Gjensidige NOR Forsikring and Gjensidige NOR Spareforsikring. Expenses on the Group Executive Board and President/CEO are apportioned in equal shares on the three main companies. The information on remuneration states the sum total of remuneration to the individual Board of Directors and the President. Remuneration can be summarised as follows (all figures in NOK): 2001

Group Executive Board, Gjensidige NOR (from 22.06.99) Board of Directors, Union Bank of Norway Committee of Representatives, Union Bank of Norway Control Committee, Union Bank of Norway

2 098 000 1 337 000 267 000 398 000

2000

1999

2 080 000 772 900 1 335 000 1 310 402 396 000 424 000 397 500 302 120

No agreement has been entered into regarding special compensation in connection with the termination of the position of chairman of the Group Executive Board, chairman of the Board of Directors or chairman of the Committee of Representatives. Olav Hytta (58), President and CEO, received a salary of NOK 2 000 000 in 2001 (2000: NOK 1 816 000). In January 2002 Mr Hytta received a one-time supplement of NOK 150 000 in recognition of his extraordinary efforts in 2001. Benefits in kind were estimated at NOK 100 000. He is entitled by agreement to retire at the age of 60. His pension will constitute 70% of his final salary. Costs in connection with Mr Hytta's pension scheme totalled NOK 1 766 000 in 2001. He is also entitled by agreement to retain his salary in the unlikely event that he is assigned other tasks before retirement. Mr Hytta's total loans with Union Bank of Norway came to NOK 111 000 at 31.12.2001. Deputy President Øyvind Birkeland (47) is entitled by agreement to retire at the age of 60. His pension will constitute 70% of his final salary. Mr Birkeland's total loans with Union Bank of Norway came to NOK 1 766 000 at 31.12.2001. Under a compensation agreement with the bank, Deputy President Karl-Olav Hovden will, in the event that the bank terminates his employment contract, receive full pay for two years after retirement. He also has an agreement with the bank entitling him to retire at the age of 60. His pension will equal 70% of his salary at the time of his retirement. Mr. Hovden’s total loans with Union Bank of Norway came to NOK 598 000 at 31.12.2001. Fees paid to external auditors have been expensed in an amount of NOK 1 299 000 (2000: NOK 1 032 000; 1999: NOK 1 405 000) in the parent bank and NOK 3 468 000 (2000: NOK 3 480 000; 1999: NOK 5 001 000) in the group. The parent bank purchased consulting services totalling NOK 1 474 000 (2000: 942 000; 1999: NOK 728 500) from external auditors, while the corresponding figures for the group are NOK 2 629 000 (2000: NOK 4 744 000; 1999: NOK 1 784 000). The figure for 2001 includes NOK 311 000 spent on consultative reports dealing with conversion of Union Bank of Norway into a limited company.

LOANS TO EMPLOYEES AND MEMBERS OF GOVERNING BODIES 2001

PARENT BANK 2000

2 443 7

2 462 8

1999

1 905 47

Loans to employees Loans to members of governing bodies

2001

GROUP 2000

1999

2 471 8

2 475 8

1 943 48

Of total loans to employees as at 31.12.2001, loans to parent bank retirees came to NOK 169 (2000: 128; 1999: 144) million. One of the 12 members of the Group Executive Board had loans outstanding with the bank totalling NOK 0.9 million. One of the 12 members of the Board of Directors had outstanding loans with the bank totalling NOK 0.2 million. None of the loans was on terms other than general terms applied to employees. One member of the Control Committee had loans outstanding of less than NOK 0.1 million with Union Bank of Norway at 31.12.2001. As at 31.12.2001 guarantees totalling NOK 0.2 million were in effect for employees. As at 31.12.2001 Union Bank of Norway had issued no guarantees or other form of security in respect of members of its governing bodies. In terms of the standard interest rate set by the Norwegian parliament for tax purposes, employees of the parent bank have enjoyed no interest subsidy on floating rate loans from the employer over the past three years.

STAFFING 2001

2 910 3 241 3 239

PARENT BANK 2000

2 889 3 239 3 301

1999

3 070 3 355 3 174

Full-time position equivalents as at 31.12 Employees as at 31.12 Average no. of employees

2001

GROUP 2000

1999

3 843 4 282 4 310

3 807 4 277 4 290

4 078 4 475 4 121

Union Bank of Norway 2001 Financial Statements

PENSION COSTS AND PENSION COMMITMENTS Union Bank of Norway has its own pension fund for ordinary retirement and disability pensions, i.e. for salaries up to 12 times the basic amount («G») available under the National Insurance Scheme, and a retirement age of 67 years. The bank also has non-funded pension commitments in respect of employees earning in excess of 12 times the basic amount, as well as early retirement and discretionary pensions which have been provided for in the accounts. Provision has also been made for the bank's commitments related to the AFP (early retirement) programme. Pension fund assets are valued at their market value as at 31 December. Pension commitments are computed on the basis of the premises listed below. In the case of funded commitments, employment tax contributions are expensed upon payment to the pension fund. In the case of non-funded commitments, provision has been made for the capitalised value of employment tax contributions on commitments taxable, at a rate of 14.1%. Employment tax contributions are classified as other long-term liabilities. Discount rate Expected return Salary increases Increases in basic amount

2001

2000

1999

7% 8% 4% 3%

PARENT BANK 2001 2000 Funded Non-funded

68 118 ( 134) 4

2000

1999

GROUP 1999

Total

PENSION COSTS Present value of accrued pension commitments Interest costs on accrued pension commitments Expected return on pension resources Amortisation of effect of plan change New early retirees Variance actual/projected values Net pension expenses

136 ( 130) 5

129 ( 107 )

1 8 12 78

152 ( 134) 5 8 9 131

6 100

5 109

204 211 415

3 510 1 558 5 068

3 516 1 589 5 105

3 674 1 586 5 260

No. of active members No. of retirees Total no. of persons covered

1 553 1 841 288

529 529

1 553 2 370 817

1 662 2 111 449

1 599 2 001 402

( 333)

( 199)

( 532)

( 179)

( 117 )

( 45) 0 45 ( 45)

330 330

285 330 45 285

270 270 0 270

285 285 0 285

Pension funds at market value Estimated pension commitment Net pension commitment Variance not booked to profit and loss account (*) Net pension commitment in balance sheet Pension commitment in balance sheet Excess funding in balance sheet Net pension commitment

( 3) 53

2001

Pension increases 3% 2% 2% Voluntary departure Standard reductions Fraction taking early retirement 54% 54% 54% Improved basis, disability pensions K93 K93 K93

2001

2000

1999

Total

113

102

100

36 1 8 13 85

167 ( 150) 5 8 11 154

145 137 ( 139) ( 115) 5 7 120

7 129

4 120 1 426 5 546

243 213 456

4 363 1 639 6 002

4 242 1 606 5 848

4 356 1 601 5 957

1 773 2 050 277

570 570

1 773 2 620 847

1 773 2 246 473

1 691 2 124 433

( 348)

( 209)

( 557)

( 191) ( 132)

( 71) 6 77 ( 71)

361 361

290 367 77 290

Funded Non-funded

86 131 ( 150) 4 ( 2) 69

NUMBER OF PERSONS 3 306 1 347 4 653

PENSION COMMITMENTS

330

361

282 302 20 282

301 315 14 301

(*) Variances not booked to the profit and loss account will be expensed over the average residual service period, which is about 15 years. The variances increased in 2001 by NOK 352 million in relation to the previous year. For the funded scheme, the increase in the variance is due in part to a shortfall of NOK 181 million in relation to expected return, and in part a deficit of NOK 80 million in the pension fund. Moreover, an assumed increase from 2 to 3 per cent in pension growth resulted in a 2001 estimate variance of NOK 57 million for the funded scheme and an estimate variance of NOK 20 million for the non-funded scheme. Since the bank has its own pension fund, the negative trend in financial markets is fully taken into account in determining the size of the pension fund assets as at 31.12.2001, and is therefore included in variances not booked to the profit and loss account.

Union Bank of Norway 2001 Financial Statements

OPERATING EXPENSES 2001

PARENT BANK 2000

1999

1 569 315 55 151 235 122 200 1 078 2 647 52 186 32 270 1 330 331 24 55 79 0 410 3 327

1 442 325 42 149 216 94 196 1 022 2 464 38 166 11 215 1 317 318 21 39 60 0 378 3 057

1 346 293 46 123 203 79 161 905 2 251 29 151 1 181 1 271 272 20 62 82 111 465 2 897

Personnel expenses IT and development costs Office supplies Telecommunications, postage Fees, substitute personnel, other services Travel, staff training Marketing Administrative expenses Personnel and administrative expenses Amortisation of goodwill Ordinary depreciation Write-downs Amortisation, depreciation and write-downs Operating expenses, real estate Rental and operating expenses, rented premises Properties and premises Expensed fixed assets Miscellaneous operating expenses Additional operating expenses Co-location costs, Gjensidige Bank/Union Bank of Norway Other operating expenses Operating expenses

2001

GROUP 2000

1999

2 136 367 68 188 322 151 304 1 400 3 536 156 269 38 463 47 289 336 42 167 209 0 545 4 544

1 937 369 54 198 261 122 288 1 292 3 229 99 255 11 365 54 286 340 25 147 172 0 512 4 106

1 852 368 68 169 245 109 257 1 216 3 068 76 253 16 345 74 210 284 28 180 208 150 642 4 055

Rental commitments Union Bank of Norway operates through a large number of branches and offices. The great majority of these premises are under rental agreements. At 31.12.2001 the Group's overall annual external rental commitments totalled NOK 148 (2000: 131, 1999: 62) million. The rental agreements vary in duration; the average residual term is 5 years (2000: 5 years, 1999: 5 years). Price and volume agreements with EDB Fellesdata Union Bank of Norway has standing price and volume agreements with EDB Fellesdata for the purchase of computer power, system maintenance and operation of applications, which amount to approx. NOK 140 (2000: 150; 1999: 133) million. For 2002, the agreement is worth about NOK 143 million. Other agreements in effect are based on variable demand. Total purchases from EDB Fellesdata in 2001 came to NOK 200 (2000: 217; 1999: 221) million.

LOSSES ON LOANS AND GUARANTEES 2001

79 73 278 430 5 68 73 78 41 320 113

PARENT BANK 2000

76 49 117 242 35 79 114 93 59 94 369

1999

49 66 153 268 19 67 86 100 36 118 109

Realised losses exceeding previous years' specified loss provisions Increase in specified loss provisions New, specified loss provisions Gross losses Reduction in specified loss provisions due to reduced risk Reversal of specified loss provisions due to reclassification Reduction in and reversal of specified provisions Recovered on previously realised loan losses Increase in unspecified loss provisions Losses on loans and guarantees Realised losses (additional) covered by specified provisions from previous years

Of total losses in 2000, the 20 largest losses amounted to NOK 248 (2000: 106; 1999: 179) million. Of losses on loans and guarantees, AcceptFinans accounted for NOK 35 (2000:80; 1999: 35) million.

2001

GROUP 2000

1999

166 92 301 571 18 80 98 103 56 426 119

184 80 154 418 44 95 139 138 74 215 378

128 91 186 405 43 67 110 151 57 201 139

Union Bank of Norway 2001 Financial Statements

LOSSES (GAINS) ON LONG-TERM FINANCIAL ASSETS 2001

PARENT BANK 2000 1999

50 0 0

0 0

1 51

Write-down on shares in subsidiaries Vigar AS/Elcon Securities Write-downs on other long-term shareholdings Miscellaneous Total write-downs

GROUP 2000

0 0

( 797) ( 4)

( 741) ( 4)

( 828) ( 828)

Losses (gains) on disposal of other long-term shareholdings Sale of NOS Holding ASA Miscellaneous Net loss (gain) Losses (gains) on long-term financial assets

( 1) ( 746) ( 746)

( 5) ( 22) ( 42)

61 ( 5) ( 281)

( 22) ( 2) ( 222) ( 171)

1999

Losses on disposals of shares in/liquidation of subsidiaries/associated companies Disposal of AcceptFinans AS ( 205) Disposal of NOR Forsikring AS Liquidation of Greåker Industripark AS Liquidation of NOR Forsikrings Holding AS Liquidation of Gjensidige Bank AS Liquidation of Gran Eiendom AS Disposal of shares in Linstow ASA Disposal of shares in Fellesdata AS Disposal of shares in Lillehammer Presse- og Informasjonssenter AS

( 163)

( 232) ( 232)

2001

1 51

( 283)

( 151)

( 27) ( 232) ( 232)

( 3) ( 437) ( 386)

Sale of AcceptFinans A/S in Denmark On 20 July 2001 Union Bank of Norway signed an agreement to sell its credit card business in Denmark, AcceptFinans A/S, to GE Capital for DKK 573 million, equivalent to NOK 616 million. The sale produced a pre-tax gain of NOK 205 million, corresponding to NOK 2.33 per primary capital certificate after tax.

SELECTED FIGURES FOR CORE AREAS AND GROUP COMPANIES ABSTRACT FROM THE PROFIT AND LOSS ACCOUNT Net interest income

Amounts in NOK million

Oslo/Akershus/Østfold Østlandet/Kysten Merchant Bank (1) Other parent bank Parent bank (2) Elcon Finans Sparebankkreditt UBNI Luxembourg Avanse forvaltning GN Kapitalforvaltning (3) GN Equities (4) GN Eiendom AcceptFinans (5) Associated companies/ joint ventures Other group companies (6) Group Continued on next page

Other operating income

Operating expenses

Operating profit before losses and taxes

Net loss on loans and long-term securities

Operating profit before taxes

2001

2000

2001

2000

2001

2000

2001

2000

2001

2000

1 616 1 684 270 947 4 517 665 202 56 6 1 ( 2) 7 141

1 594 1 623 318 722 4 257 627 172 56 6

349 313 347 313 1 322 106

356 326 331 210 1 223 78 35 219

875 913 166 1 103 3 057 360 36 42 165

236 7

212 165

1 076 1 037 446 ( 47) 2 512 381 168 40 17 37 ( 7) 33 58

1 075 1 036 483 ( 171) 2 423 345 136 49 60 0 0 27 131

65 53 102 ( 132) 88 65 6

28 161 87 77 284 2

889 960 171 1 307 3 327 390 34 44 150 51 82 258 85

( 24) 1 011 9 984 29 344 ( 748) 85 ( 734) 2 424 44 316 ( 3) 162 40 17 37 ( 3) 33 80 23

1 099 1 027 454 577 3 157 301 139 49 60 0 0 27 51

( 66) 5 527

( 63) 5 347

48 74 2 189

63 70 1 931

123 4 544

69 4 106

48 ( 115) 3 172

63 ( 62) 3 172

4 194

48 82 ( 119) ( 531) 2 978

63 ( 144) 3 703

3 289

( 4)

2001

2000

Union Bank of Norway 2001 Financial Statements

Note 10 continued

BALANCE SHEET/KEY FIGURES Net loans to customers

Amounts in NOK 1,000 million

2001

Oslo/Akershus/Østfold 54.6 Østlandet/Kysten 64.7 Merchant Bank (1) 15.0 Other parent bank 19.4 Parent bank (2) 153.7 Elcon Finans 20.4 Sparebankkreditt 16.5 UBNI Luxembourg 4.7 Avanse forvaltning GN Kapitalforvaltning (3) GN Equities (4) GN Eiendom AcceptFinans (5) Associated companies/ Joint ventures Other group companies (6) (0.9) Group 194.4

Customer deposits/ managed funds

Net loss in % of gross loans

Managed assets

Return on equity after taxes

Cost ratio

2000

2001

2000

2001

2000

2001

2000

2001

2000

2001

2000

49.1 58.9 14.2 16.8 139.0 17.9 15.4 4.4

48.8 40.0 10.6 8.7 108.1 0.3

46.2 33.1 10.4 8.8 98.5 0.5

(0.04) 0.02 0.20 0.39 0.07 0.24 (0.02)

0.5 30.6

52.6 50.6 16.5 72.4 192.1 18.3 16.0 7.9 30.6

0.14 0.08 0.68 0.46 0.21 0.31 0.04

0.5 27.6 76.0 0.4

59.3 62.5 16.6 77.5 215.9 21.4 16.9 8.2 27.6 76.0 0.4

45 47 26 118 56 51 21 46 73

89 56

22.2 17.6 12.3 19.7 18.2 14.1 9.6 11.4 15.0 63.6 (2.4) 35.5 13.1

26.0 20.8 20.9 35.1 26.4 13.9 8.8 13.9 44.7

4.75

45 48 28 104 57 51 17 52 90 65 105 89 59

0.12

(neg.) 16.1

(neg.) 22.6

1.4

1.5

(0.7) 177.4

1.8 (0.2) 212.7

74.1 (0.1) 130.0

(31.6) 336.6

(28.8) 311.7

0.22

40.3 13.3

(1) Excl. Gjensidige NOR Equities. (2) Excl. group contribution and share dividend from group companies. (3) On 08.10.2001 Union Bank of Norway bought a further 20% of the shares of Gjensidige NOR Kapitalforvaltning. The company is included as a subsidiary (70% owned) as from the fourth quarter of 2001. (4) On 31.03.2001 Union Bank of Norway bought the remaining 50% of the shares of Gjensidige NOR Equities, and the company is included as a subsidiary (100% owned) as from the second quarter of 2001. (5) Sold in the third quarter of 2001. (6) Includes other subsidiaries and group eliminations.

STAFFING/BRANCHES/CUSTOMERS/ACCOUNTS Staffing

Oslo/Akershus/Østfold (1) Østlandet/Kysten (2) Merchant Bank (3) Other parent bank (4) Parent bank Elcon Finans Sparebankkreditt UBNI Luxembourg Avanse forvaltning (5) GN Kapitalforvaltning (6) GN Equities (7) GN Eiendom AcceptFinans (8) Other group companies Group (1) (2) (3) (4) (5) (6) (7) (8)

2001

2000

964 1 055 111 780 2 910 408 30 36 43 66 82 248

990 1 052 111 736 2 889 397 34 34 64

41 3 864

234 119 36 3 807

Change in staffing

2001-2000

(26) 3 0 44 21 11 ( 4) 2 ( 21) 66 82 14 ( 119) 5 57

Customers (1 000)

Branches

Accounts (1 000)

2001

2000

2001

2000

2001

2000

64 93

65 93

157

158

443 402 3 59 907

442 393 3 61 899

859 824 12 134 1 829

848 792 15 126 1 781

Figures for 2001 include 28 insurers taken over from Gjensidige NOR Spareforsikring. Figures for 2001 include 43 insurers taken over from Gjensidige NOR Spareforsikring, and 6 FTEs taken over from Fokus Bank in Bø and Vinje. Excl. Gjensidige NOR Equities. Figures for 2001 include four FTEs taken over from Staff in the Gjensidige NOR Group. For 2001, a further 565' (2000: 502') customers should be included for Cresco. 18 FTEs were transferred to Gjensidige NOR Spare- og Investeringstjenester AS) in the second quarter of 2001. This is a newly established company owned by Avanse Forvaltning and Gjensidige NOR Spareforsikring (50% each). Eight FTEs have been transferred to Gjensidige NOR Kapitalforvaltning. Subsidiary as from the fourth quarter of 2001. Fully-owned subsidiary as from the second quarter of 2001. Sold in the third quarter of 2001.

Union Bank of Norway 2001 Financial Statements

TAX 2001

PARENT BANK 2000

3 104 ( 35)

3 798 ( 77)

( 192) 147 3 024 847

( 220) 196 3 697 1 035

1999

2 162 ( 32) ( 844) ( 372) ( 248) 666 186

24 29 56 56

71 95

216 245

11 35 330 181 557 ( 501) ( 140)

24 270 156 450 ( 355) ( 99)

285 114 405 ( 160) ( 45)

847 ( 41) 806 10 3 819

1 035 ( 55) 980 13 ( 43) 950

186 70 256 23 ( 13) 266

3 104 869

3 798 1 063

2 162 605

( 10)

( 22)

( 54) 806

( 62) 980

( 9) ( 236) ( 104) 256

26%

12%

2001

Tax base Pre-tax profit Permanent differences Tax-related loss, Gjensidige Bank Dividends received Changes in temporary differences Tax base Tax payable Tax-increasing temporary differences Fixed assets Securities Revaluation and premiums on acquisitions Other tax-increasing differences Total tax-increasing differences Tax-reducing temporary differences Fixed assets Securities Pension commitments Other tax-reducing differences Total tax-reducing differences Net tax-increasing/(-reducing) differences Deferred tax (net) Tax charge Income tax Change in deferred tax Total tax charge Capital tax Too little/(much) provision for tax previous year Total tax charge Reconciliation of income tax charge against pre-tax profit Pre-tax profit Expected income tax at nominal rate (28 %) Adjustment for tax rates abroad Tax effect of permanent differences Tax effect, liquidation of Gjensidige Bank Tax effect of received dividends Total income tax charge Effective tax rate

GROUP 2000

1999

2 978 116

3 703 85

2 472 136

( 74) 668 3 688 995

( 86) 804 4 506 1 270

( 150) ( 393) 2 065 568

151 158 126 212 647

223 160 168 273 824

236 184 177 845 1 442

29 42 367 739 1 177 ( 530) ( 142)

9 25 302 291 627 197 64

11 315 129 455 987 286

995 ( 187) 808 10 ( 1) 817

1 270 ( 225) 1 045 13 ( 43) 1 015

568 110 678 23 ( 13) 688

2 978 834 4 32 ( 42) ( 21) 808

3 703 1 037 8 24 ( 24) 1 045

( 42) 692

27%

28%

2 472 692 4 38

Dividends/Group contributions Union Bank of Norway will receive NOK 578 (2000: 552; 1999: 655) million in group contributions/dividends from its subsidiaries. The parent bank has taken this amount to income as share dividend since it is to be regarded as return on invested capital. Union Bank of Norway will also receive NOK 25 million in dividend from Eksportfinans, which the parent bank has also taken to income as share dividend. The bank received NOK 75 million in extraordinary dividend from Eksportfinans in 2001. Final distribution of dividend, Gjensidige Bank In 2001, Union Bank of Norway received its final dividend in connection with the winding up of Gjensidige Bank in 1999. At the time of winding up, a provision was made for unresolved VAT and tax issues. These issues were settled in 2001, with the result that the final distribution was NOK 42 million higher than the provision shown in the balance sheet. The parent bank has taken this amount to income as a gain on disposal of fixed assets. For the group, the final distribution reduced the tax charge. RISK calculation for Union Bank of Norway's PCC holders (applies only to PCC holders who are liable for tax in Norway) Tax-related value comprises cost price of the PCC plus accumulated RISK. The table below shows accumulated RISK for Union Bank of Norway's PCCs at various times of purchase. Accumulated RISK for the year is used to calculate taxable gains on any sales in 2002. RISK as at 01.01.2002 is the bank's estimate. If the estimate is at variance with finally determined RISK, the variance must be corrected for.

Purchase year

1992 and previously 1993 1994 1995 1996 1997

Year’s RISK as at 01.01

0.00 ( 18.24 ) ( 2.31 ) 4.39 21.98

Accumulated RISK for purchase year

104.74 104.74 122.98 125.29 120.90 98.92

Dividend paid

18.00 15.00 15.00 15.00

(*) Recommended dividend; ex dividend date: 21 March 2002.

Purchase year

1998 1999 2000 2001 2002

Year’s RISK as at 01.01

Accumulated RISK for purchase year

20.84 12.29 20.18 28.11 Approx. 17.50

78.08 65.79 45.61 17.50

Dividend paid

15.00 11.50 14.00 17.00 17.00 (*)

Union Bank of Norway 2001 Financial Statements

ASSETS 2001

2 185 500 32 780 5 33 275 0 0 0 10 165 2 729 142 759 0 155 653 839 1 095 153 719 4 220 15 714 15 934 1 434 16 0 1 450 345 85 430 2 589 1 027 3 616 270 140 0 410 840 12 0 852 569 2 004 2 573 1 257 45 191 1 493 215 941

PARENT BANK 2000 1999

3 363 340 28 282 5 28 617 0 0 0 9 500 2 298 128 960 0 140 758 680 1 055 139 023 5 3 221 8 214 11 435 1 439 9 0 1 448 254 207 461 2 698 566 3 264 240 99 0 339 878 13 0 891 0 1 562 1 562 1 495 0 229 1 724 192 132

4 481 414 20 350 36 20 728 0 0 0 8 509 2 042 119 763 0 130 314 952 996 128 366 5 4 686 7 332 12 018 368 9 0 377 254 144 398 2 685 736 3 421 278 14 0 292 797 12 0 809 309 2 277 2 586 1 072 0 151 1 223 174 704

2001

Cash and deposits in Central Bank of Norway Deposits at call in credit institutions Term deposits in and loans to credit institutions Specified loan loss provisions Deposits in and loans to credit institutions Receivables, factoring Loans, factoring Leasing finance contracts Overdrafts and working capital facilities Construction loans Instalment loans Other loans Loans to and receivables from customers Specified loan loss provisions Unspecified loan loss provisions Net loans to customers Repossessed assets CDs and bonds issued by the government CDs and bonds issued by others CDs and bonds etc. with fixed return Shares, equity interests and primary capital certificates Interests in general partnerships Other securities Shares and equity interests with variable return Owner interests in associated credit institutions Owner interests in other associated companies/joint ventures Owner interests in associated companies/joint ventures Owner interests in group company credit institutions Owner interests in other group companies Owner interests in group companies Goodwill Deferred tax benefit Other intangible assets Intangible assets Machinery, fixtures and vehicles Buildings and other real property Other fixed assets Fixed assets Financial derivatives Other assets Other assets Income accrued, not received Excess funding of pension commitments Other prepaid unaccrued costs Prepayments and accrued income Total assets

2 247 929 7 953 5 8 877 99 1 116 12 497 10 036 2 729 170 205 28 196 710 906 1 386 194 418 83 324 15 458 15 782 1 526 18 1 1 545 491 74 565 0 0 0 689 143 45 877 897 1 262 68 2 227 569 1 899 2 468 1 821 77 222 2 120 231 209

GROUP 2000

3 364 869 5 385 5 6 249 49 971 10 802 11 191 2 298 154 332 32 179 675 897 1 389 177 389 61 3 366 7 983 11 349 1 521 11 2 1 534 449 210 659 0 0 0 494 0 9 503 976 1 277 72 2 325 0 1 183 1 183 1 979 20 302 2 301 206 917

1999

4 484 721 5 208 36 5 893 10 1 083 9 809 8 300 2 042 145 550 103 166 897 1 131 1 314 164 452 51 4 880 7 458 12 338 395 12 0 407 442 282 724 0 187 187 594 0 4 598 889 1 367 72 2 328 309 2 111 2 420 1 450 14 262 1 726 195 608

Union Bank of Norway 2001 Financial Statements

CREDIT RISK There is a close link between risk classification and the pricing of loans and guarantees. The bank takes into account expected losses on credits when fixing prices. «Expected losses» means the loss that the bank can expect to incur in the long term on credits of the type in question. Equity is assigned to credits, commitments and portfolios of credits based on the risk the credits are calculated to represent. Profitability is computed based on the risk-adjusted equity requirement. Expected losses are a product of likelihood of default and calculated open credit after realisation of collateral and final dividends received (if any). The likelihood of default in the case of low risk commitments is negligible. The average likelihood of default for commitments classified as medium risk is 10 times greater than for low risk commitments. The average likelihood of default for high risk commitments is five times greater than for medium risk commitments. In the retail market, pricing is determined primarily on the basis of product and collateral. In the corporate segment, price matrices have been developed, based on expected losses and equity requirements computed for the individual commitments. The bank employs various classification models depending on type of customer. KMV's Credit Monitor and Private Firm Model are employed for large enterprises, an accounts analysis model based on financial key ratios for medium sized enterprises, and credit points for small enterprises and commitments below NOK 1 million. Retail customers are classified primarily by applying a statistical model. For credit cards, all holders receive credit lines on the basis of credit application scores. Based on the current portfolio mix, the bank puts annual normalised losses in a long-term perspective at 0.46% of the loan portfolio. Average expected annual losses on the corporate portfolio are calculated at 0.69%, and on the retail portfolio at 0.23%. Retail customers' debt-servicing ability has been stable in recent years. The lending portfolio’s risk profile showed a marginally negative development in 2001. Due to changes in the risk classification model from 2000 to 2001, figures for 2000 are not fully comparable and are therefore not shown in the table below. CREDIT RISK IN THE PARENT BANK Commitment category

Gross loans, corporate sector Gross loans, retail market Guarantees Unutilised line/potential exposure Total commitments Relative share

Low

Risk category Medium High

Defaults

Total

17 204 43 405 4 676 10 866 76 151

38 724 48 746 4 365 6 914 98 749

4 261 1 967 1 008 1 515 8 752

632 957 45 93 1 727

60 821 95 075 10 094 19 388 185 378

41.1%

53.3%

4.7%

0.9%

100.0%

2001

Specified loan loss provision

516 324 23 863

2000

Retail market Home mortgage loans < 80% of fair value Home mortgage loans > 80% of fair value Total retail market home mortgage loans

NOKm

81 841 2 573 84 414

86.1% 2.7% 88.8%

72 925 2 293 75 218

86.9% 2.7% 89.6%

Loans against credit cards/Cresco Other loans to retail market, net Total retail market loans

4 857 5 804 95 075

5.1% 6.1% 100.0%

4 009 4 684 83 911

4.8% 5.6% 100.0%

CREDIT RISK IN SUBSIDIARIES The subsidiaries make their own analyses of credit risk. Elcon Finans and Sparebankkreditt employ their own risk classification models. Credit risk for their corporate sector comitments is shown below. Sparebankkreditt's loans are largely for property financing purposes. Commitment

Gross loans to corporate sector, Elcon Finans Relative share Gross loans to corporate sector, Sparebankkreditt Relative share

Low

9 453 75.8% 16 051 98.6%

Risk category Medium High

2 479 19.9% 146 0.9%

376 3.0% 49 0.3%

Defaults

Total

156 1.3% 26 0.2%

12 464 100.0% 16 272 100.0%

Specified loan loss provision

24 15

Union Bank of Norway 2001 Financial Statements

DEFAULTED, DOUBTFUL AND NON-ACCRUAL LOANS 2001

PARENT BANK 2000 1999

1998

957 306 651 32%

753 263 490 35%

731 273 458 37%

462 152 310 33%

632 242 390 38%

575 259 316 45%

687 520 167 76%

591 448 143 76%

1 589 548 1 041 34%

1 328 522 806 39%

1 418 793 625 56%

1 053 600 453 57%

598 296 302 49%

345 163 182 47%

414 195 219 47%

457 204 253 45%

DOUBTFUL LOANS Doubtful loans Specified loss provisions Net doubtful loans Level of provisions, doubtful loans

195 153 348 896

181 199 380 902

222 25 247 1 040

142 75 217 817

NON-ACCRUAL LOANS Net non-accrual retail loans Net non-accrual corporate loans Net non-accrual loans (**) Gross non-accrual loans (**)

DEFAULTED LOANS Retail market Gross defaulted loans Specified loss provisions Net defaults, retail market Level of provisions, retail market Corporate market Gross defaulted loans Specified loss provisions Net defaults, corporate market Level of provisions, corporate market Total loans Gross defaulted loans Specified loss provisions Net defaults Level of provisions, all loans

2001

2000 *

GROUP 2000

1999

1998

1 117 329 788 29%

901 286 615 32%

1 117 448 669 40%

998 427 571 43%

486 160 326 33%

814 268 546 33%

769 280 489 36%

925 538 387 58%

629 456 173 72%

1 931 597 1 334 31%

1 670 566 1 104 34%

1 886 728 1 158 39%

1 923 965 958 50%

1 115 616 499 55%

682 313 369 46%

408 173 235 42%

408 174 234 43%

472 202 270 43%

522 216 306 41%

309 279 588 1 185

276 347 623 1 189

330 347 677 1 405

288 114 402 1 205

154 100 254 870

(*) Excl. AcceptFinans. (**) Net and gross non-accrual loans are included in the table «Defaulted loans».

At year-end the bank has a default portfolio of NOK 1 579 million under surveillance by Lindorff. In 2001 this portfolio produced incomings of NOK 78 million on previously realised losses.

COMMITMENTS, BY SECTOR AND INDUSTRY Gross loans

Sector/Industry

Retail market Public administration Agriculture, forestry, fishing and hunting Manufacturing Construction, power and water supply Retailing, hotel and restaurant trade Shipping Real estate management Financing Transportation and other services Foreign Total commitments to customers Credit institutions - domestic Credit institutions - foreign Total commitments Increase in unspecified loan loss provisions Guarantee losses Losses on loans and guarantees

2001

Losses

2000

2001

102 545 90 501 850 1 136 4 429 3 724 8 632 8 142 6 234 5 577 10 318 9 931 3 572 3 274 39 549 35 840 7 072 8 238 7 976 7 188 5 533 6 124 196 710 179 675 2 008 1 301 1 653 227 200 371 181 203

34 1 7 117 28 26 14 30 58 11 37 363 0 0 363 56 7 426

2000

( 42) 1 2 26 19 ( 7) 31 ( 2) 3 14 102 147 0 ( 6) 141 74 0 215

Guarantees

2001

118 0 178 782 1 574 947 1 610 1 078 1 612 875 1 246 10 020 147 0 10 167

2000

Undrawn credit facilities

2001

2000

98 2 382 0 704 21 641 764 3 357 1 177 1 278 843 3 378 1 624 1 840 857 5 235 958 961 736 639 1 323 1 051 8 401 21 466 760 292 0 43 9 161 21 801

1 421 744 586 2 839 1 797 3 122 1 907 5 462 1 055 913 424 20 270 174 0 20 444

See note 10 for the distribution of net loans and losses on core areas and subsidiaries, and note 29 for guarantees specified by type. Continued on next page

Union Bank of Norway 2001 Financial Statements

Note 15 continued Defaulted loans

Sector/Industry

Doubtful loans

Specified loss provision

2001

2000

2001

2000

2001

2000

1 117 3 48 98 69 92 36 214 141 80 27 1 925 6 1 931

901 0 32 89 73 103 123 140 100 47 272 1 880 6 1 886

39 0 8 232 28 59 4 234 61 17 0 682 0 682

48 0 10 50 1 70 16 192 8 13 0 408 0 408

338 1 3 182 39 53 31 97 123 28 11 906 4 910

311 0 6 74 21 47 71 82 71 27 187 897 5 902

GROUP 2000

1999

LOSS PROVISIONS 2001

PARENT BANK 2000

1999

700 113

1 006 369

809 109 159

281 868

63 700

147 1 006

SPECIFIED LOSS PROVISIONS Provisions as at 01.01 Reversals on realisation of losses Addition on purchase of Gjensidige Bank Reduction on sale of AcceptFinans Provisions (net) Provisions as at 31.12 (*)

2001

917 121

1 185 378

837 192 286

162 300 934

110 917

254 1 185

(*) Of which NOK 5 (2000: 5; 1999: 36) million refers to loans to credit institutions and NOK 23 (2000: 15; 1999: 18) million refers to guarantees.

2001

PARENT BANK 2000

1999

1 055

996

835 125

40 1 095

59 1 055

36 996

UNSPECIFIED LOSS PROVISIONS Provisions as at 01.01 Addition on purchase of Gjensidige Bank Reduction on sale of AcceptFinans Provisions (net) Provisions as at 31.12

2001

GROUP 2000

1999

1 389

1 314

931 326

59 56 1 386

75 1 389

57 1 314

JOINT VENTURES AND ASSOCIATED COMPANIES PROFITS IN JOINT VENTURES GROUP Operating income Operating expenses Operating profit Net profit Union Bank of Norway's share (50%) Amortisation of goodwill Net profit to Union Bank of Norway 2001 Net profit to Union Bank of Norway 2000 Managed assets 31.12.2001 Managed assets 31.12.2000

GN Equities (1)

31 28 3 2 1 1 0 1

GN Fondsforsikring

705 435 270 ( 6) ( 3) 4 ( 7) ( 6) 1 787 1 487

GN Kapitalforv. (2)

108 79 29 24 12 15 ( 3) 8

GN Driftspartner

577 580 ( 3) 0 0 0 0 0

Total joint ventures

1 421 1 122 299 20 10 20 ( 10) 3

72 602

(1) On 31.03.2001 Union Bank of Norway acquired the remaining 50% of the shares of Karl Johan Fonds (now Gjensidige NOR Equities), and the company is incorporated as a consolidated subsidiary (100% owned) as from the second quarter of 2001 (cf. notes 1 and 10). (2) On 08.10.2001 Union Bank of Norway acquired a further 20% of the shares of Gjensidige NOR Kapitalforvaltning. The company is incorporated as a consolidated subsidiary (70% owned) as from the fourth quarter of 2001 (cf. notes 1 and 10).

Continued on next page

Union Bank of Norway 2001 Financial Statements

Note 17 continued

VALUES IN JOINT VENTURES PARENT Book value at 01.01 BANK Book value at 31.12 Bank's receivables from joint ventures Bank's debt to joint ventures GROUP Book value at 01.01 Additions (disposals) Share of profit after tax Amortisation of goodwill Book value at 31.12 Ownership interest

GN Equities

31 (31) 1 1 0

PROFITS IN ASSOCIATED COMPANIES GROUP Operating income Operating expenses Operating profit Net profit Union Bank of Norway's share Amortisation of goodwill Net profit to Union Bank of Norway 2001 Net profit to Union Bank of Norway 2000 Managed assets 31.12.2001 Managed assets 31.12.2000 VALUES IN ASSOCIATED COMPANIES PARENT Book value at 01.01 BANK Book value at 31.12 Bank's debt to associated companies GROUP Book value at 01.01 Additions (disposals) Share of profit after tax Dividend received Amortisation of goodwill Book value at 31.12 Ownership interest

GN Fondsforsikring

GN Kapitalforvaltning

GN Driftspartner

77 77

122

8 8 10 4 7

90 71 (1) 4 66 50.0%

100 (97) 12 15 0

GN Eiendom Haugalandet AS

Sandnes Eiendom AS

4 4 0 0 0

10 9 1 1 0

0 0

GN Eiendom Haugalandet AS

Sandnes Eiendom AS

0 50.0%

1 50.0%

7 50.0%

Total joint ventures

207 85 10 94 209 ( 128) 12 20 73

Eksport- Total associated finans ASA companies

464 121 343 249 56 1 55 53 85 128 79 305

478 134 344 250 56 1 55 53 85 128 79 305

Eksport- Total associated finans ASA companies

254 345 138 449 92 56 105 1 491 20.4%

254 345 138 450 92 56 105 1 492

FIXED ASSETS PARENT BANK

GROUP

Machinery, fixtures, vehicles

Buildings and other properties

1 662 175

83 1 754 777 185 32 80 914 840

18 5 1

6 12

Machinery, fixtures, vehicles

Acquisition cost at 01.01 Additions Additions (disposals) of group companies Other disposals Acquisition cost at 31.12 Ordinary depreciation at 01.01 Ordinary depreciation Additions (disposals) of ordinary depreciation, group companies Write-down, closed branches Disposals, ordinary depreciation Ordinary depreciation at 31.12 Book value at 31.12

INVESTMENTS AND SALES OVER THE PAST 5 YEARS 397 1 Investments 5 7 Sales 392 2 Investments 9 3 Sales 189 0 Investments 4 0 Sales 256 3 Investments 2 1 Sales 175 0 Investments 5 1 Sales Continued on next page

1997 1998 1999 2000 2001

1 894 206 ( 78) 92 1 930 911 216 ( 40) 32 86 1 033 897 440 7 411 11 231 9 313 10 206 9

Buildings and other properties

1 825 84 4 62 1 851 476 47 5 7 521 1 330 345 316 93 32 52 73 54 92 84 54

Union Bank of Norway 2001 Financial Statements

Note 18 continued

GOODWILL Goodwill at 01.01 Amortisation at 01.01 Book value at 01.01 Additions Disposals Ordinary amortisation Book value at 31.12 Amortisation schedule

Credit card portfolio Cresco

GN Spareforsikring portfolio

Branches Bø and Vinje

Avanse Forvaltning

206 62 144 73

13 37 4 years

1 31 5 years

56 161 5 years

307 67 240

38 202 8 years

Credit card portfolio AcceptFin.

GN Kapitalforvaltning

Gjensidige NOR Equities

138 30 108

97 25 72 51

32 21 11 177

8 6 2

22 101 5 years

32 156 5 years

1 1

99 9 0 8 years

Other

Total goodwill

788 211 577 383 99 172 689

In addition, goodwill totalling NOK 18 million in connection with the purchase of shares in joint ventures and associated companies, is included. Goodwill on credit cards and other customer portfolios is amortised over the portfolios' estimated residual maturity at the time of purchase. Goodwill on the portfolio from Gjensidige NOR Spareforsikring is amortised over the same period as that of the commission agreement. INTANGIBLE ASSETS Goodwill Deferred tax benefit Other intangible assets Total intangible assets

2001

2000

1999

689 143 45 877

494 0 9 503

594 0 4 598

Other intangible assets refer to computer software shown in the balance sheet. This is amortised over a conservatively estimated lifetime - a maximum of 5 years.

REAL ESTATE AND REPOSSESSED ASSETS 2001 Property category

Bank buildings Commercial properties Total commercial properties (2) Sites Homes, holiday homes etc. Repossessed assets (3) Miscellaneous properties

2000

1999

Annual rent (1)

1 000 sq.m.

Price per sq.m.

Book value

126 0 126

150 1 151

7 947 3 000 7 914

1 192 3 1 195 40 10 83 85 1 413

1 213 3 1 216 41 11 61 81 1 410

1 277 27 1 304 46 10 51 79 1 490

Total

(1) Rent paid in the accounting year, excl. shared expenses. (2) Of which, intra-group rent accounts for NOK 98 (2000: 89, 1999: 109) million. (3) NOK 79 million comprises repossessed leasing items at Elcon Finans (NOK 73 million is capital goods and NOK 6 million is cars). These have been repossessed from customers who have defaulted on their leasing contracts. Repossessed items are put on the market.

OCCUPANCY RATES FOR RENTAL PROPERTIES (All areas in 1 000 sq.m.) Property category

Bank buildings Commercial properties Total commercial properties

BANK BUILDINGS Kirkegata 18, Oslo Øvre Slottsgate 3, Oslo Tollbugata 30, Oslo Storgata 3, Gjøvik Kirkegata 17, Oslo Other bank buildings Total bank buildings

2001 Group internal rentals

Group external rentals

Vacant

98 0 98

34 1 35

18 0 18

Book value

1 000 sq.m.

259 115 95 67 54 602 1 192

18 6 6 7 6 107 150

2000

1999

Vacancies in %

12% 0% 12%

13% 0% 13%

10% 0% 10%

Union Bank of Norway 2001 Financial Statements

LIABILITIES AND EQUITY 2001

PARENT BANK 2000

1999

3 785 22 343 26 128 101 748 6 339 108 087 7 077 0 53 010 3 167 56 920 0 602 857 797 1 273 3 529 1 423 330 0 23 0 353 3 854 2 552 6 406 202 846 4 689 4 689 4 049 4 357

3 055 22 571 25 626 69 862 28 606 98 468 6 768 0 38 706 1 239 44 235 631 994 1 048 799 729 4 201 1 647 270 0 15 0 285 4 666 1 397 6 063 180 525 4 689 4 689 3 383 3 535

2 943 31 635 34 578 68 045 24 207 92 252 5 365 7 23 420 1 017 27 761 0 1 277 188 673 575 2 713 1 541 285 0 18 0 303 4 755 1 300 6 055 165 203 4 689 4 689 2 592 2 220

8 406 13 095 215 941

6 918 11 607 192 132

4 812 9 501 174 704

Liabilities and equity Deposits at call from credit institutions Term deposits and loans from credit institutions Deposits and loans from credit institutions Call deposits from customers Term deposits from customers Deposits from customers CDs issued - Own unamortised CDs Bonds issued - Own unamortised bonds CD and bond debt Financial derivatives Cheques, giros etc. Provision for tax Dividend and group contribution allocations Miscellaneous liability items Other debts Accrued expenses Pension commitments Deferred tax Specific provision for guarantee liability Other accrued expenses Total provision for commitments/accrued expenses Perpetual subordinated loan capital Dated subordinated loan capital Subordinated loan capital Total liabilities Primary-capital-certificate capital Paid-up capital Savings bank's reserve Dividend adjustment reserve Group equity in subsidiaries Earned equity Total equity Total liabilities and equity

2001

GROUP 2000

1999

3 369 26 545 29 914 101 990 6 707 108 697 7 077 0 63 800 5 153 65 724 0 602 1 031 797 1 886 4 316 1 872 367 0 23 98 488 3 854 2 602 6 456 217 467 4 689 4 689 4 049 4 357 647 9 053 13 742 231 209

2 850 26 849 29 699 70 339 28 970 99 309 6 973 0 48 959 3 943 51 989 631 994 1 274 797 1 118 4 814 2 129 302 64 15 86 467 4 666 1 448 6 114 194 521 4 689 4 689 3 383 3 535 789 7 707 12 396 206 917

2 447 36 138 38 585 68 199 24 513 92 712 9 283 207 36 818 4 666 41 228 0 1 277 326 656 1 266 3 525 2 275 315 286 18 38 657 4 755 1 350 6 105 185 087 4 689 4 689 2 592 2 220 1 020 5 832 10 521 195 608

CUSTOMER DEPOSITS, BY SECTOR AND INDUSTRY 2000

1999

Deposits

2001 Share

Deposits

53 824 7 901 1 449 2 540 4 617 5 933 409 7 385 12 124 10 625 1 890 108 697

49.5% 7.3% 1.3% 2.3% 4.2% 5.5% 0.4% 6.8% 11.2% 9.8% 1.7% 100.0%

48 755 6 258 1 227 3 766 4 742 5 565 476 6 075 10 823 9 249 2 373 99 309

46 172 4 326 1 500 2 615 3 972 5 264 1 194 5 022 11 285 9 126 2 236 92 712

Sector/Industry

See note 10 for distribution of customer deposits on core areas and subsidiaries.

Union Bank of Norway 2001 Financial Statements

MATURITY STRUCTURE OF BOND ISSUES AND SUBORDINATED LOAN CAPITAL BOND ISSUES PARENT BANK NOK

529 4 332 557 1 994 1 585 386 ( 16) ( 41) 9 326

GROUP

Foreign currency

Sum

5 787 4 596 10 561 9 642 6 780 3 198

6 316 8 928 11 118 11 636 8 365 3 584 ( 16) ( 41) ( 47) 49 843

( 47) 40 517

Matures in

NOK

2002 2003 2004 2005 2006 2007 and later Premium, own holding Accrued discount Capitalised expenses Book value

Foreign currency

2 291 7 299 557 3 603 1 592 2 845 ( 16) ( 41) ( 47) 18 130

5 787 4 596 10 561 9 642 6 780 3 198

40 517

Total

8 078 11 895 11 118 13 245 8 372 6 043 ( 16) ( 41) ( 47) 58 647

The bank's repurchased bonds have been deducted. As of 31.12.2001 the nominal value of bond debt (including subordinated loans) totalled NOK 63 722 (2000: 55 982; 1999: 43 728) million, gross. The nominal value of repurchased bonds totalled NOK 5 409 (2000: 4 227; 1999: 5 168) million, the market value of repurchased bonds totalled NOK 5 437 (2000: 4 222; 1999: 5 129) million, while the book value of repurchased bonds came to NOK 5 409 (2000: 4 244; 1999: 5 165) million. SUBORDINATED LOAN CAPITAL Year raised

Currency Amount

Interest terms*

Dated 1997 1997 1998 2001

USD NOK USD USD

3 month LIBOR + 0.35% 6,10 % 3 month LIBOR + 0.35% 3 month LIBOR + 0.75%

Perpetual 1996 1996 1998 1998 1999 2000

USD JPY USD USD JPY USD

75 300 50 125

105 10 000 150 ( 30) 10 000 50

7.65% p.a. 4.00% p.a. 7.35% p.a. 7.35% p.a. (repurchased) 4.51% p.a. 8.61% p.a.

Maturity Borrower

2007 2007 2008 2011

Call date

Parent bank Parent bank Parent bank Parent bank Capitalised costs UBNI

2002 2002 2003 2006

Parent bank Parent bank Parent bank Parent bank Parent bank Parent bank

2006 2011 2003 2003 2029 2005

Book value

676 300 451 1 128 ( 3) 947 687 1 353 ( 271) 687 451 Total

Total

2 552 50

3 854 6 456

(*) Varying FRN terms apply to all loans after the call date.

All amounts are invested in the same currency as they were borrowed in, or swapped to USD and invested in USD. Hence no exchange rate gains or losses have arisen on the loan capital. Fixed-interest borrowings have been swapped to floating rate terms. In addition, Sparebankkreditt, Elcon Finans and UBNI have received subordinated loans of, respectively, NOK 600 million, NOK 350 million and NOK 15 million from Union Bank of Norway.

TOTAL EQUITY – EARNINGS PER PCC 2001

11 607

PARENT BANK 2000

9 501 31

1999

8 215 46

822 666

25 1 274 776

756 484

13 095

11 607

9 501

4 689 4 357

4 689 3 535

4 689 2 220

4 049 13 095

3 383 11 607

2 592 9 501 (*)

Continued on next page

2001

Equity as at 31 Dec. previous year Adjustments re previous years Correction SparebankKreditt Dividend from Eksportfinans for 1999 Added to dividend adjustment reserve from year's profit Added to savings bank's reserve from year's profit Addition (reduction) other equity from year's profit Net addition from mergers/demergers Addition from acquisitions Dividend paid to minority interests Translation difference Equity as at 31.12 which breaks down as follows: Primary-capital-certificate capital Dividend adjustment reserve Group equity in subsidiaries (*) Savings bank's reserve Equity Of which minority interests Minority interests in the profit

GROUP 2000

1999

12 396 ( 20)

10 521 ( 20)

9 393

822 666 ( 124)

1 274 776 ( 159)

756 484 ( 112) 2

23 ( 19) ( 2) 13 742

4 12 396

( 2) 10 521

4 689 4 357 647 4 049 13 742 37 11

4 689 3 535 789 3 383 12 396 25 15

4 689 2 220 1 020 2 592 10 521 25 9

Union Bank of Norway 2001 Financial Statements

Note 23 continued

EARNINGS PER PCC The purpose of calculating earnings per PCC is to present an earnings measure for holders of the bank's primary capital certificates. The calculations shown below comply with «Preliminary Norwegian Accounting Standard for earnings per share». Earnings per share are calculated by dividing the profit accruing to PCC holders by a time-weighted average of the number of outstanding PCCs. A

B C

D E F G H

Primary-capital-certificate capital at 1.1 Dividend adjustment reserve at 31.12 previous year + Items entered directly to equity Adjusted dividend adjustment reserve at 1.1 Adjusted PCC capital at 1.1 (A+B) Savings bank's reserve at 31.12 previous year + Items entered directly to equity Adjusted savings bank's reserve at 1.1 Total adjusted equity, parent bank, at 1.1 (C+D) PCC holders' share at 1.1 (C/E) Number of PCCs entitled to dividend Net profit Earnings per certificate (H*F/G)

2001

2000

4 689 3 535 0 3 535 8 224 3 383 0 3 383 11 607 70.9% 46 889 356 2 161 32.65

4 689 2 220 42 2 262 6 951 2 592 14 2 606 9 557 72.7% 46 889 356 2 688 41.69

CAPITAL ADEQUACY GROUP Primary-capital-certificate capital Dividend adjustment reserve Savings bank's reserve Group equity in subsidiaries (excl. minority int.) Tier 1 hybrids in Eksportfinans Excess funding of pension commitments Goodwill and other intangible assets Core capital (Tier 1) Additional capital (Upper Tier 2) Supplementary capital (Lower Tier 2) Other items (net) Capital base Calculation base (*)

4 689 4 357 4 049 610 184 ( 58) ( 902) 12 929 3 808 2 769 ( 242) 19 264 175 615

PARENT BANK Primary-capital-certificate capital Dividend adjustment reserve Savings bank's reserve Excess funding of pension commitments Goodwill and other intangible assets Core capital (Tier 1) Additional capital (Upper Tier 2) Supplementary capital (Lower Tier 2) Other items (net) Capital base Calculation base (*)

4 689 4 357 4 049 ( 32) ( 410) 12 653 3 808 2 509 ( 231) 18 739 142 683

2001

2000

7.4% 2.2% 1.6% (0.2%) 11.0%

4 689 3 535 3 383 764 177 ( 18) ( 602) 11 928 4 666 1 718 ( 121) 18 191 161 160

2001

1999

7.4% 2.9% 1.1% (0.1%) 11.3%

2000

8.9% 2.7% 1.7% (0.2%) 13.1%

4 689 3 535 3 383 0 ( 339) 11 268 4 666 1 397 ( 104) 17 227 129 919

4 689 2 215 2 591 984 161 ( 18) ( 23) 10 599 3 933 1 526 ( 100) 15 958 147 856

7.2% 2.7% 1.0% (0.1%) 10.8%

1999

8.7% 3.6% 1.1% (0.1%) 13.3%

4 689 2 215 2 591 0 ( 14) 9 481 3 933 1 231 ( 100) 14 545 116 718

8.1% 3.4% 1.1% (0.1%) 12.5%

(1) With effect from 1 April 2001, the capital adequacy regulations' requirement for risk-weighting of home loans between 60% and 80% of property valuation was reduced from 100% to 50%. At 31.12.2001, NOK 8 400 million of Union Bank of Norway's home loans were in excess of 60% of prudent valuation. The change in the rules reduced the bank's calculation base by NOK 2 956 million, and improved its core capital adequacy by 0.12 percentage points and overall capital adequacy by 0.19 percentage points. Continued on next page

Union Bank of Norway 2001 Financial Statements

Note 24 continued

SPECIFICATION OF THE CALCULATION BASE 0%

Nominal amounts by risk class 10% 20% 50%

Banking portfolio Cash and bank deposits 2 296 Short-term investments in securities 137 155 Loans 2 821 6 Other receivables 90 Fixed assets 1 117 5 Total assets 6 461 166 Interest rate and foreign exchange instruments 5 Other off-balance sheet items 362 Total off-balance sheet items Total banking portfolio Trading portfolio incl. foreign exchange risk Deductions for: Loss provisions and capital in other financial institutions Total calculation base

2001

2000

1999

100%

Risk weighted volume

Riskweighted volume

1 705 5 054 147 433 2 817 2 994 160 003

1 655 3 466 137 949 2 171 2 983 148 224

1 407 3 023 131 376 2 478 2 990 141 275

551 11 802 12 353 172 356 5 820

323 10 172 10 495 158 719 4 866

396 5 505 5 901 147 176 3 280

2 561 175 615

2 425 161 160

2 600 147 856

8 526 20 841 13 504 681 661 44 213

93 830

871 98 317 2 180 2 861 104 229

2 698 1 185

22 314

11 408

92 829 1 001

SUBORDINATED LOANS' CONTRIBUTION TO MEETING CAPITAL REQUIREMENTS IN THE NEXT 6 YEARS Current subordinated loans 20% reduction Eligible as equity

2001

2002

2003

2004

2005

2006

2007

6 369 0 6 369

6 369 193 6 176

6 369 474 5 895

6 369 754 5 615

6 369 1 036 5 333

5 405 575 4 830

To illustrate the effect of differing scenarios for repayment of capital under current loan agreements, two sets of calculations have been prepared. In the first model, which excludes calls, the bank does not exercise its right to call subordinated loans. The calculation base employed is the one in effect at the end of 2001, profit from 2002 has been set at nil, and no change has been assumed in other equity items not affected by stepwise reductions. EQUITY, EXCLUDING CALLS Capital base Capital ratio

2001

2002

2003

2004

2005

2006

2007

19 264 11.0%

19 071 10.9%

18 790 10.7%

18 508 10.5%

18 227 10.4%

17 725 10.1%

Applying the assumptions outlined above, but in a scenario in which the bank exercises its right to call subordinated loans as specified in the loan agreement, the development will be as shown below. Call is also an option for the bank's perpetual subordinated loans (see Note 22). EQUITY, INCLUDING CALLS Capital base Capital ratio

2001

2002

2003

2004

2005

2006

2007

19 264 11.0%

18 300 10.4%

16 795 9.6%

16 353 9.3%

14 318 8.2%

Union Bank of Norway 2001 Financial Statements

LIQUIDITY RISK/RESIDUAL MATURITY Liquidity risk In simplified terms, liquidity risk can be defined as the risk that Union Bank of Norway will be unable to meet its commitments as they fall due. There is currently no internationally accepted method for a definite and quantifiable measure of actual liquidity risk in a financial institution's balance sheet. Three factors are particularly important, however. The first is the bank's balance sheet structure. A large mismatch in turnover rate and time to maturity of asset and liability items produces a continual need to refinance. The second is market liquidity. The third is the bank's credit rating, which affects the bank's access to liquidity in the market. Important rating criteria are financial soundness, earnings, risk profile and portfolio quality. Union Bank of Norway is rated on a par with Den norske Bank, but somewhat lower than the largest Scandinavian banking groups. In February 2000, the Basle Committee published new, updated guidelines for managing liquidity risk in banks. In the course of 2001, Union Bank of Norway further developed the overarching framework for liquidity management in keeping with Basle Committee's recommendations. As a result, the group has established maximum limits for short-term funding and a minimum required period for the bank to remain liquid without access to market funding. As a rule, short-term financing can constitute 15% of out-standing loans. As of 31.12.2001 Union Bank of Norway had drawn NOK 4 000 million on a fixed-interest borrowing facility with Central Bank of Norway. The bank's overall borrowing facility (overnight and fixed-interest) with Central Bank of Norway equals the collateral the bank has deposited with Central Bank of Norway . As of 31.12.2001 Union Bank of Norway had deposited collateral equivalent to NOK 15 000 million with Central Bank of Norway . At year-end the parent bank's deposits-to-loans ratio was 69% (2000: 70%; 1999: 71%), which is in line with other central players in the Norwegian market. The group's deposits-to-loans ratio at year-end was 55% (2000: 55%; 1999: 56%). RESIDUAL MATURITY Cash and deposits in Central Bank of Norway

NOK For.curr. Deposits in and loans to credit institutions NOK For.curr. Gross loans to customers (*) NOK For.curr. Loan loss provisions NOK For.curr. CDs and bonds NOK For.curr. Other assets NOK For.curr. Total assets NOK For. curr. Loans and deposits from credit institutions NOK For.curr. Customer deposits NOK For.curr. CDs and bonds NOK For.curr. Other liabilities NOK For.curr. Subordinated loan capital NOK For.curr. Equity NOK For.curr. Total liabilities and equity NOK For. curr. Net liquidity exposure on balance sheet items NOK For.curr. Off-balance sheet financial derivatives NOK For.curr. Net total, all items NOK For. curr.

Up to 1 month

1-3 months

3-12 months

1 408 0 2 452 1 644 16 813 2 056 0 0 5 0 2 035 305 22 713 4 005 7 746 5 703 105 406 1 834 300 1 071 2 468 548 0 0 0 0 115 920 9 156 (93 207) (5 151) 5 532 (5 532) (87 675) (10 683)

0 0 495 455 3 893 1 863 0 0 111 31 91 17 4 590 2 366 1 369 8 045 357 57 2 240 2 776 857 0 0 0 0 0 4 823 10 878 ( 233) (8 512) (21 269) 21 269 (21 502) 12 757

0 0 1 107 1 337 14 484 3 525 0 0 171 1 382 591 8 16 353 6 252 665 5 523 64 46 3 914 4 750 1 516 0 0 0 0 0 6 159 10 319 10 194 (4 067) (8 166) 8 166 2 028 4 099

1-5 years

Over 5 years

Unspecified

Total

0 0 656 2 064 0 0 183 183 60 840 0 4 954 416 71 0 3 923 45 790 99 416 79 180 475 5 965 1 390 1 436 16 235 0 0 (2 189) (2 189) 0 0 ( 103) ( 103) 5 364 1 110 0 6 761 7 507 101 0 9 021 127 165 5 712 8 721 2 0 832 1 164 51 341 101 531 4 258 200 786 13 890 1 562 2 348 30 423 0 0 0 9 780 863 0 0 20 134 932 0 0 106 759 1 0 0 1 938 12 495 3 401 0 22 350 31 578 3 199 0 43 374 194 383 620 6 038 0 0 90 638 0 300 0 300 2 480 3 676 0 6 156 0 0 13 539 13 539 0 0 203 203 13 621 4 084 14 159 158 766 34 922 6 875 293 72 443 37 720 97 447 (9 901) 42 020 (21 032) (5 313) 2 055 (42 020) (14 980) ( 943) 0 (39 826) 14 980 943 0 39 826 22 740 96 504 (9 901) 2 194 (6 052) (4 370) 2 055 (2 194)

(*) Overdraft facilities and construction loans are included in the interval "up to 1 month."

The above table was compiled in accordance with regulations issued by the Ministry of Finance. It does not show the actual liquidity risk incurred by the group and does not form part of the group's liquidity management.

Union Bank of Norway 2001 Financial Statements

INTEREST RATE RISK/PERIOD TO INTEREST RATE ADJUSTMENT Interest rate risk Interest rate risk results from the fact that the fixed-interest periods for the bank's assets and liabilities (on- and off-balance sheet) do not match. The group's interest rate risk is managed via risk limits set by the bank's Board of Directors upon delegation from the Group Executive Board. The bank's Board of Directors has adopted a risk limit of NOK 350 million, of which NOK 200 million may be held in foreign currency. The limit, which has been unchanged in the years 1998-2001, is defined as the maximum negative profit effect that the bank is permitted to incur in the event of an unfavourable general interest rate movement of 1 percentage point for all fixed-interest periods. Exposures are continuously monitored to ensure that the limits are observed. In 2001 the bank introduced a new framework for interest rate risk that takes yield curve risk into account. In addition to the overall risk limit, a new maximum limit was set for positioning within the individual time interval in the interest rate curve. All interest rate positions within each interval are aggregated, and the largest of the gross aggregates is now reported as interest rate risk. Exposures within the individual time interval may not exceed twice the overall limit. At year-end 29% of the maximum limit for interest rate risk was utilised, compared with 27% in 2000 (1999: 42%), and the average for the year was 24% compared with 14% in 2000 (1999: 35%).

Up to 1 month

Cash and deposits in Central Bank of Norway

NOK For.curr. Deposits in and loans to credit institutions NOK For.curr. Gross loans to customers (*) NOK For.curr. Loan loss provisions NOK For.curr. CDs and bonds NOK For.curr. Other assets NOK For.curr. Total assets NOK For.curr. Loans and deposits from credit institutions NOK For.curr. Customer deposits NOK For.curr. CDs and bonds NOK For.curr. Other liabilities NOK For.curr. Subordinated loan capital NOK For.curr. Equity NOK For.curr. Total liabilities and equity NOK For.curr. Net liquidity exposure on balance sheet items NOK For.curr. Off-balance sheet financial derivatives NOK For.curr. Net total, all items NOK For.curr.

1 408 0 2 005 1 497 25 161 4 612 0 0 1 156 2 801 1 455 93 31 185 9 003 7 746 5 826 106 080 1 808 2 629 14 634 1 635 548 0 2 210 0 0 118 090 25 026 (86 905) (16 023) 4 790 (4 593) (82 115) (20 616)

1-3 months

0 0 2 643 718 123 911 7 791 0 0 1 618 5 581 152 0 128 324 14 090 1 369 8 581 177 52 2 191 20 095 1 279 0 0 1 635 0 0 5 016 30 363 123 308 (16 273) (16 012) 39 103 107 296 22 830

3-12 months

0 0 211 1 272 7 406 3 594 0 0 221 309 157 0 7 995 5 175 665 5 523 427 46 9 852 4 821 101 0 300 2 262 0 0 11 345 12 652 (3 350) (7 477) (38 366) 81 (41 716) (7 396)

1-5 years

0 0 60 436 16 308 238 0 0 3 176 330 86 0 19 630 1 004 0 204 75 0 4 872 3 624 0 0 0 0 0 0 4 947 3 828 14 683 (2 824) 6 780 4 930 21 463 2 106

Over 5 years

Unspecified

0 0 35 0 7 689 0 0 0 590 0 0 0 8 314 0 0 0 0 0 2 806 200 69 0 0 49 0 0 2 875 249 5 439 ( 249) 2 982 885 8 421 636

656 183 0 0 0 0 (2 189) ( 103) 0 0 6 871 1 071 5 338 1 151 0 0 0 32 0 0 2 954 90 0 0 13 539 203 16 493 325 (11 155) 826 0 0 (11 155) 826

Total

2 064 183 4 954 3 923 180 475 16 235 (2 189) ( 103) 6 761 9 021 8 721 1 164 200 786 30 423 9 780 20 134 106 759 1 938 22 350 43 374 6 038 638 300 6 156 13 539 203 158 766 72 443 42 020 (42 020) (39 826) 40 406 2 194 (1 614)

(*) Overdraft facilities and construction loans are included in the interval "up to 1 month."

The above table was compiled in accordance with regulations issued by the Ministry of Finance. It does not show the actual interest rate risk incurred by the group and does not form part of the group's internal interest rate risk management.

Union Bank of Norway 2001 Financial Statements

FINANCIAL DERIVATIVES Financial derivatives are traded in order to cover liquidity and market risk arising from the bank's ordinary activities (banking portfolio). The bank also employs financial derivatives in own-account trading (trading portfolio). Forward exchange contracts: FRAs:

Contracts to exchange foreign currencies on a specified future date at a fixed price. Interest rate agreements for a future period for a fixed amount. When the contract expires, only the difference between the agreed interest rate and the market interest rate is exchanged. Interest rate options: Contracts giving the buyer the right to demand payment of the difference between the interest rate in the money market and the interest rate agreed to by the seller. The difference is calculated on a fixed amount for a specified period. Currency options: Agreements giving the buyer the right to buy or sell a specific quantity of a foreign currency on a future date at a fixed price. Interest rate swaps: Contracts to exchange interest payment obligations on a fixed amount for a specified period. Interest rate futures: Standardised contracts to exchange specific interest rate instruments for fixed amounts and on specific future dates. The contracts are traded on the stock exchange. The value of interest rate futures follows the price trend on underlying interest rate instruments. Interest rate and currency swaps: Contracts in which both currency and interest payments on a specified amount for a specified period are exchanged. Nominal values The nominal amount for forward exchange contracts is calculated as the sum of currencies (including NOK) bought and sold, based on the foreign exchange rates in effect on 31 December 2001. The nominal amount for the other derivatives is the sum of the nominal amounts of contracts entered into (contracts in foreign currencies are translated at the exchange rates in effect on 31 December 2001). PARENT BANK Nominal 31.12.2001 Average 2001

1 104 648 641 904 1 254 1 747 806

1 056 621 504 643 1 186 1 562 450

71 866 18 434 90 300

71 331 14 825 86 156

GROUP

Fair value 31.12.2001 Average 2001

( 14) ( 89)

4 378

( 103)

382

74 267 341

94 184 278

Type of derivative

Trading portfolio Interest rate related Foreign currency related (*) Equity related Total trading portfolio Banking portfolio Interest rate related Foreign currency related (*) Total banking portfolio

Nominal 31.12.2001 Average 2001

1 104 648 641 904 1 254 1 747 806

1 056 621 504 643 1 186 1 562 450

72 685 23 243 95 928

71 786 20 272 92 058

Fair value 31.12.2001 Average 2001

( 14) ( 89)

4 378

( 103)

382

79 267 346

96 184 280

(*) Incl. interest rate and currency swaps

Financial derivatives in the trading portfolio are valued and booked at market value (fair value). Market prices from independent sources are used to compute market values. Some market prices are calculated by interpolating and extrapolating available prices. Financial derivatives that are hedging transactions are valued in accordance with the hedged item. The banking portfolio’s fair value (market value) has an equivalent NOK value on the balance sheet. Isolated gains/losses on financial instruments do not occur in the banking portfolio. In the case of open positions in forward exchange transactions, interest rate swaps, currency and interest rate swaps and currency options, the bank runs a risk of changes both in the conversion rate (currency risk) and market interest rates (interest rate risk) between the currencies involved. The bank's trading activity in this area is mainly interest rate related. Positions in the other derivatives entail risk of interest rate changes (interest rate risk). The bank is exposed to counterparty risk (credit risk) with all types of derivatives except futures. Credit risk is the risk that a counterparty will fail to meet his contractual obligations. The bank sets internal limits to its exposure to counterparties. Monthly reports are prepared on credit risk represented by counterparties. The bulk of Union Bank of Norway's credit risk exposure is in the ordinary loan portfolio. Agreements exist on netting (set-off) of contracts with most contractual partners.

FOREIGN CURRENCY POSITION AND RISK CURRENCY - ASSETS AND LIABILITIES 2001

30 533 70 696 363 254 322 972

PARENT BANK 2000

20 419 66 119 206 562 160 861

Continued on next page

1999

12 338 50 837 193 311 154 970

On-balance sheet foreign currency assets On-balance sheet foreign currency liabilities Foreign currency forward contracts, purchases Foreign currency forward contracts, sales

2001

GROUP 2000

1999

33 579 75 841 365 679 325 348

25 032 70 732 209 611 163 789

16 312 55 363 195 078 155 820

Union Bank of Norway 2001 Financial Statements

Note 28 continued

NET POSITIONS, BY CURRENCY, AT 31.12.2001: PARENT BANK SEK

EUR

16 1 244 853

38 351 1 103 93 5 442 451 7 292 2 257 375 17 349 8

JPY

GROUP USD

Other

27 9 254 4 658 2 2 895 27 16 859 9 507 807 24 878 920 4 715

97 900 1 450 8 392 154 2 985 5 269 124 1 020 48

SEK

Cash 16 158 Receivables from credit institutions 733 1 118 Loans to customers 966 Loss provisions Bonds / CDs 6 2 Other assets 8 2 119 1 278 Total assets 1 723 356 1 141 Borrowings from credit institutions 596 501 12 Deposits from customers 536 Securities debt 32 3 Other debt 52 1 374 Subordinated loan capital Equity 889 19 989 2 530 40 827 6 461 Total liabilities and equity 1 184 1 230 (12 697) (1 252) (23 968) (3 476) Net total, balance sheet items 539 2 189 22 121 3 986 326 448 8 510 Forward currency purchases 2 206 3 437 9 342 2 756 302 366 5 071 Forward currency sales 3 573 ( 18) 82 ( 22) 114 ( 37) Net total, all items ( 828)

EUR

38 398 1 456 93 5 705 483 7 987 2 959 421 17 349 113 49 222 21 113 (13 126) 22 496 9 376 ( 6)

JPY

USD

Other

1 172 3 252

63 1 374

27 7 000 5 242 2 2 940 30 15 237 9 331 860 24 878 977 4 715

97 1 264 3 162 8 488 199 5 202 7 138 476 1 020 70 15

4 286 ( 856) 4 256 3 866 ( 466)

40 761 (25 524) 327 605 302 392 ( 311)

8 719 (3 517) 9 116 6 141 ( 542)

5 3 430 2 837 12

Currency risk Currency risk can be defined as the bank's risk of loss due to changes in exchange rates. The bank's Board of Directors has established limits for the bank's overnight foreign currency position. The limit for the parent bank is NOK 1 500 million. Routines are in place to ensure day-to-day monitoring of the bank's foreign currency exposure. A situation report is presented at each meeting of the board. Forward exchange contracts (see table above) are employed to hedge foreign currency positions on the balance sheet. At 31.12.2001, the net aggregate foreign currency position was NOK 186 (2000: 41, 1999: 31) million. The average for 2001 was NOK 256 (2000: 110, 1999: 185) million. The highest foreign currency position was NOK 693 (2000: 273, 1999: 545) million, corresponding to 3.7% (2000: 1.6%, 1999: 3.7%) of the parent bank's capital base. The maximum limit set by Central Bank of Norway for Union Bank of Norway's foreign currency position is NOK 5 622 million.

COMMITMENTS, GUARANTEES AND CONTINGENT LIABILITIES 2001

26 390 26 390 1 187 2 817 0 3 457 589 61 2 130 10 241 15 034 0 15 034 (*)

PARENT BANK 2000

23 418 23 418 900 2 529 0 3 680 672 0 1 453 9 234 8 999 0 8 999

1999

19 458 19 458 902 2 174 712 2 336 622 0 898 7 644 10 981 0 10 981

Undrawn credit facilities Commitments Payment guarantees Contract guarantees Funding guarantee, Eksportfinans Other loan guarantees Guarantees for taxes Guarantee to Savings Banks' Guarantee Fund (*) Other guarantees for customers Contingent liabilities Pledged CDs, bonds and mutual fund units (**) Pledged assets, book value Pledged assets

2001

GROUP 2000

1999

21 801 21 801 1 194 2 817 0 3 461 589 61 2 045 10 167 15 034 0 15 034

20 444 20 444 907 2 529 0 3 685 672 0 1 368 9 161 8 999 0 8 999

11 266 11 266 902 2 174 712 2 336 622 0 857 7 603 10 992 72 11 064

As at 01.01.2002, the Savings Banks' Guarantee Fund had a shortfall of NOK 942 (2001: 575; 2000: 0) million. The full levy for 2002 will cover NOK 465 (2001: 411) million of this sum. The remaining deficit of NOK 477 (2001:164; 2000: 0) million will be covered by guarantees from member banks. Union Bank of Norway's share of the guarantee liability for 2002 amounts to NOK 166 (2001: 61; 2000: 0) million.

(**) Refers to the parent bank's borrowing facility with Central Bank of Norway. The securities' nominal value amounts to NOK 15 071 (2000: 9,038; 1999: 10 987) million, and the liability for which they are furnished as collateral amounts to NOK 4 000 (2000: 1 000; 1999: 2 600) million.

DISPUTES The bank is involved in no court cases in excess of NOK 10 million. Where other legal disputes are concerned, the bank is negotiating with Fellesdata on a claims settlement following the data processing breakdown in the autumn of 2001, and is involved in negotiations on some major defaults by corporate borrowers where both the amount at issue and legal basis are still under consideration. This is not assumed to be of major consequence for the bank's profits.

Union Bank of Norway 2001 Financial Statements

UNION BANK OF NORWAY'S 20 LARGEST PCC HOLDERS (Figures in 1 000)

Holder

Morgan Stanley* State Street Bank* JP Morgan Chase Bank* Folketrygdfondet Brown Brothers Harrisman, Fidelity Frank Mohn A/S Goldman Sachs International* Orkla ASA JP Morgan Chase Bank* The Northern Trust*

Number

Holder

3 146 2 375 1 346 1 300 1 250 1 006 853 833 798 758

6.7% 5.1% 2.9% 2.8% 2.7% 2.1% 1.8% 1.8% 1.7% 1.6%

Brown Brothers Harrisman, Putnam Gjensidige NOR Sparebank, employees‘ fund Citibank* Fidelity Funds Bank of New York, MSF-Mutual Trond Mohn Morgan Stanley* Deutsche Bank AG London* Gjensidige NOR Forsikring Euroclear Bank S.A.*

Number

740 705 702 642 635 597 585 517 457 433

1.6% 1.5% 1.5% 1.4% 1.4% 1.3% 1.2% 1.1% 1.0% 0.9%

(*) Registrar

The 20 biggest owners altogether hold 19 678 000 primary capital certificates, i.e. 42% of all outstanding PCCs. The number of PCCs held by members of the Group Executive Board, Board of Directors, Committee of Representatives and senior staff of Gjensidige NOR is shown on p. 70.

INFORMATION ON RELATED PARTIES Remuneration paid to the Group Executive Board and to the President and CEO, is shown in Note 5. Values in and results of joint ventures and associated companies are shown in Note 17. Subsidiaries consolidated in the Union Bank of Norway Group are listed in Note 33. In accordance with the Financial Institutions Act, all intra-group transactions are conducted on ordinary commercial terms and principles. INTRA-GROUP TRANSACTIONS AND BALANCE WITH CONSOLIDATED SUBSIDIARIES Profit and loss account

2001

PARENT BANK 2000 1999

Income Interest on loans 61 Interest on deposits with credit inst. 1 694 Interest on bonds and CDs 35 Dividend/group contr. received (*) 575 Other income 111 Total income 2 476 Expenses Interest on customer deposits 21 Interest on deposits from credit inst. 60 Rent/share of joint expenses 106 Other expenses 4 Total expenses 191

58 1 279 26 595 145 2 103

69 338 103 494 87 1 091

12 74 95

22 49 250

181

321

Balance sheet

2001

Assets Loans 889 Deposits with credit institutions (*) 26 816 Bonds and CDs 556 Other receivables 621 Total assets 28 882 Liabilities Deposits from customers 192 Deposits from credit institutions 1 813 Other liabilities 30 Total liabilities 2 035 Commitments and guarantees 152

PARENT BANK 2000

1999

766 24 227 557 571 26 121

949 16 929 332 322 18 532

135 1 525

179 1 014

1 660 119

1 193 90

(*) Of which NOK 915 (2000: 415; 1999: 250) million subordinated loan capital.

(*) Dividends and Group contributions from: SparebankKreditt 161 Elcon Finans 315 NOR Forsikrings Holding Union Bank of Norway International 19 Avanse Forvaltning 8 Finax FinansService Gjensidige NOR Eiendomsmegling 33 Gjensidige NOR Kapitalforvaltning 35 Miscellaneous 4 Total 575

138 288 20 28 79 24 18 595

73 146 216 18 18

Group contributions paid to: Sparebankgårdene Vigar Total

0 0 0

0 2 2

12 4 16

19 4 494

Gjensidige NOR Gjensidige NOR has made a number of changes in the structure of its subsidiaries. Ordinary vendor guarantees are issued in connection with the transactions involved. At end-2001, Gjensidige NOR Spareforsikring held 192 200 PCCs in Union Bank of Norway at a market value of NOK 52 million, and Gjensidige NOR Forsikring held 457 100 PCCs worth NOK 125 million. As at year-end, Union Bank of Norway had the following outstanding accounts with Gjensidige NOR Forsikring and Gjensidige NOR Spareforsikring: Gjensidige NOR Forsikring

Deposits from customers Other liabilities Total liabilities Continued on next page

Gjensidige NOR Spareforsikring

2001

2000

1999

2001

2000

1999

256 10 266

602 16 618

334 16 350

221 6 227

345 2 347

452 3 455

Union Bank of Norway 2001 Financial Statements

Note 31 continued

Union Bank of Norway has paid its share of group expenses in Gjensidige NOR in an amount of NOK 57 (2000: 28; 1999: 13) million. This corresponds to about 54 per cent of aggregate group overhead. As part of the effort to co-ordinate and improve the efficiency of operations in the Gjensidige NOR Group, a set of agreements has been drawn up for the rendering of operations services between various areas of the Group. The services are supplied at cost, so the service provider only has actual fixed and variable costs covered. The agreements specify which services are to be rendered and the prices agreed upon. A list of operating agreements that Union Bank of Norway has entered into with other companies in the Gjensidige NOR Group follows below: Services received Marketing services Telephony services Telephony services Purchasing and logistics services Salary payment services Salary payment services Office operations services Office operations services Security services

Seller Gjensidige NOR Markedsstøtte Gjensidige NOR Driftspartner Gjensidige NOR Forsikring Gjensidige NOR Driftspartner Gjensidige NOR Driftspartner Gjensidige NOR Spareforsikring Gjensidige NOR Forsikring Elcon Finans Gjensidige NOR Driftspartner

Services rendered Personnel services Personnel services Legal services Purchasing services Purchasing services Purchasing services Telephony services Telephony services Office operations services Office operations services Operation of factoring system

Buyer Gjensidige NOR Spareforsikring Elcon Finans Gjensidige NOR Spareforsikring Gjensidige NOR Forsikring Gjensidige NOR Spareforsikring Lindorff Gjensidige NOR Forsikring Gjensidige NOR Spareforsikring Gjensidige NOR Forsikring Gjensidige NOR Equities Elcon Finans

Agreed price

2002

2001

2000

41 24 1 13 9 7

4 1 2

10 8 5 2

8 2 1 17 4 1 5

9 2

Collaborating banks Union Bank of Norway has established a mutually binding and strategic collaboration with four regional and nine local savings banks. The banks distribute Gjensidige NOR products in the areas of savings, insurance and other financial products. The collaboration also includes development of products, services and systems, as well as extensive collaboration on purchasing. Refunds of IT expenses from collaborating banks have been deducted from the bank's operating expenses in an amount of NOK 29 (2000: 34; 1999: 16) million.

INVESTMENTS IN SECURITIES TRADING PORTFOLIO CDs Goverment and government-guaranteed Other Total CDs Bonds Goverment and government-guaranteed Credit institutions Other Norwegian Foreign Subordinated loans Total bonds Stock exchange listed Unlisted Total CDs and bonds Shares (1) Norwegian (short term) Units in mutual funds Primary capital certificates Stock exchange listed Unlisted Total shares and units Stock exchange listed Unlisted Total securities in trading portfolio Continued on next page

2001

Book value

2000

1999

2001

Market value

2000

1999

Acquisition cost

0 5 5

473 5 478

0 0 0

0 5 5

473 5 478

0 0 0

0 5 5

157 540 145 5 5 852 830 27 857

1 448 283 136 0 1 1 868 2 341 5 2 346

36 77 12 0 2 127 127

1 448 283 136 0 1 1 868 2 341 5 2 346

36 77 12 0 2 127 127

127

157 540 145 5 5 852 830 27 857

127

157 538 145 5 5 850 828 27 855

37 103 125 162 103 265 992 130 1 122

30 134 136 166 134 300 2 507 139 2 646

21 128 84 105 128 233 232 128 360

37 103 125 162 103 265 992 130 1 122

30 134 136 166 134 300 2 507 139 2 646

21 128 84 105 128 233 232 128 360

48 146 122 170 146 316 998 173 1 171

Union Bank of Norway 2001 Financial Statements

Note 32 continued

BANKING PORTFOLIO Investment in

Risk weighting

CDs Government and government-guaranteed 0% Other 20% Other 100% Total CDs Bonds (2) Government and government-guaranteed 0% Credit institutions 20% Other Norwegian 10% Other Norwegian 100% Foreign 0% Foreign 20% Foreign 100% Subordinated loans 100% Total bonds Stock exchange listed Unlisted Total CDs and bonds Shares (1) Norwegian (short term) 100% Norwegian (long term) 20% Norwegian (long term) 100% Foreign (long term) 20% Foreign (long term) 100% Units in mutual funds (3) 20% Units in mutual funds (3) 100% Stock exchange listed Unlisted Total shares and units Associated companies 20% 100% Total associated companies Group companies 100% Stock exchange listed Unlisted Total securities, banking portfolio

2001

Book value

2000

1999

2001

Market value

2000

1999

Acquisition cost

0 0 0 0

1 093 150 0 1 243

1 239 5 866 125 7 230

0 0 0 0

1 094 150 0 1 244

1 240 5 866 125 7 231

0 0 0 0

104 7 999 417 46 5 5 704 16 634 14 925 14 861 64 14 925

146 3 626 837 99 4 2 420 16 612 7 760 8 705 298 9 003

485 3 262 389 83 4 0 180 578 4 981 5 975 6 236 12 211

104 8 002 417 46 5 5 705 22 634 14 935 14 870 65 14 935

146 3 567 837 98 4 2 420 15 612 7 699 8 644 299 8 943

495 3 215 389 82 4 0 196 573 4 954 5 935 6 250 12 185

104 7 999 417 46 5 5 704 16 634 14 925 14 861 64 14 925

0 55 80 15 0 1 079 130 0 1 359 1 359 557 8 565 0 14 861 1 988 16 849

0 22 58 15 6 1 000 131 0 1 232 1 232 520 139 659 0 8 705 2 189 10 894

1 22 59 11 6 0 74 1 172 173 442 281 723 187 5 976 7 318 13 294

1 079 130

1 001 134

0 85

0 55 80 15 0 1 079 130 0 1 359 1 359

Securities are specified by important currencies in Note 28. (1) See Note 33 for list of individual shares. (2) Hedged bonds in the portfolio have a book value NOK 62 million kroner higher than market value. (3) Incl. earned interest/units at 31.12.2001 in an amount of NOK 80 million.

Union Bank of Norway 2001 Financial Statements

SHAREHOLDINGS Amounts in NOK 1 000

Company’s capital

SHARES HELD AS CURRENT ASSETS Parent bank Vestfold Sparebank (1) 50 000 Sparebanken Rana (1) 50 935 Sparebanken Møre (1) 552 615 Sandnes Sparebank (1) 390 000 Sparebanken Pluss (1) 125 000 Sparebanken Rogaland (1) 753 819 Sparebanken Vest (1) 250 000 Sparebanken Midt-Norge (1) 609 943 Sparebanken Nord-Norge (1) 659 702 Sparebanken Øst (1) 363 680 Bolig- og Næringsbanken ASA 487 710 MLIM UBN European Opportunities MLIM UBN World Technology MLIM UBN World Energy MLIM UBN World New Energy Avanse Helse Avanse Japan Avanse Nord Amerika Avanse Telecom Avanse Obligasjon III (2) Avanse Kort Likviditet III (2) Misc. shares held as current assets Price adjustments, trading portfolio Shares held by parent bank as current assets Remaining group Northern Offshore Petroleum Geo-Services Statoil ASA Ultiman Systems Inc A.N.N. Systems ASA MLIM UBN European Opportunities MLIM UBN World Technology MLIM UBN World New Energy Avanse Obligasjon II Avanse Kort Likviditet II Misc. shares held as current assets Total shares held by remainder of group as current assets Total shares held by Union Bank of Norway as current assets SHARES HELD BY PARENT BANK AS LONG-TERM ASSETS Parent bank Shares/units in subsidiaries Sparebankenes Kredittselskap AS 825 000 Sparebankgårdene AS 204 920 Avanse Forvaltning AS 3 265 Gjensidige NOR Equities ASA (3) 13 266 Gjensidige NOR Kapitalforvaltning ASA 50 000 Gjensidige NOR Eiendomsmegling Holding AS 39 100 Elcon Finans AS 1 195 011 Hafjell Alpinsenter AS 26 330 Vigar AS 1 015 Kjøpekonto AS 50 Norgeskortet AS 50 Telerent AS 50 UBN Reinsurance S.A., Luxembourg NOK ('000) 11 000 Union Bank of Norway Int. S.A., Luxembourg EUR ('000) 17 352 Total shares/units held by parent bank in subsidiaries

No. of shares

Ownership in %

Nominal value

1 000 40 100 117 238 73 000 104 800 17 060 53 900 126 750 128 050 96 050 102 000 25 000 25 000 25 000 25 000 471 106 254 896 196 787 437 461 6 014 107 854

0.2 79 2.1 1.9 8.4 0.2 2.2 2.1 1.9 2.6 1.0

100 4 010 11 724 7 300 10 480 1 706 5 390 12 675 12 805 9 605 5 100 2 500 2 500 2 500 2 500 47 111 25 490 19 679 43 746 60 139 1 078 537

483 000 42 700 25 000 31 200 44 000 14 735 15 320 14 754 2 728 38 420

Market value

100 5 742 19 116 9 704 16 023 3 987 6 336 24 809 21 829 12 874 19 211 2 500 2 500 2 500 2 500 47 181 25 490 19 679 43 812 57 675 1 078 949 6 074 ( 43 876) 1 384 715

147 4 732 23 448 9 490 14 672 4 171 6 279 25 287 22 473 12 967 18 972 2 447 2 598 2 437 2 442 43 184 12 592 17 642 19 317 57 675 1 078 949 2 795 1 384 716

2 413 2 978 1 531 2 886 1 100 1 442 1 593 1 441 28 741 38 376 5 155 87 656 1 472 371

2 413 2 978 1 531 2 886 1 100 1 442 1 593 1 441 29 045 38 877 5 155 88 461 1 473 177 Share of total equity

8 250 000 204 920 2 310 836 402 000 35 000 1 955 1 195 011 2 633 10 150 50 50 500 10 999

100.0 100.0 70.8 100.0 70.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

825 000 204 920 2 311 13 266 35 000 39 100 1 195 011 26 330 1 015 50 50 50 10 999

952 552 213 914 308 219 211 936 188 840 44 200 1 497 884 12 400 49 907 46 44 32 10 999

1 200 010 450 976 51 264 39 423 37 353 49 903 1 574 230 58 205 24 184 46 44 32 24 380

70 000

100.0

17 352

138 439 3 629 412

202 633 3 712 683

(1) Primary capital certificates. (2) Incl. earned interest/units as at 31.12.2001 in an amount of NOK 80 million. (3) Owned by Union Bank of Norway (50%) and Vigar AS (50%). Continued on next page

Book value

Union Bank of Norway 2001 Financial Statements

Note 33 continued Comany’s capital

No. of shares

Ownership in %

Nominal value

Book value

Share of total equity

Shares in associated companies/joint ventures Eksportfinans ASA 1 593 533 30 997 Gjensidige NOR Fondsforsikring AS 128 000 64 000 Gjensidige NOR Driftspartner AS 15 000 7 500 Total shares held by parent bank in associated companies/joint ventures

20.4 50.0 50.0

325 469 64 000 7 500

345 499 77 128 7 502 430 129

483 568 54 750 7 147 545 465

Amounts in NOK 1 000

The main subsidiaries’ results are shown in Note 10 and their registrered office addresses are shown on p. 72. Other shares etc., held as long-term assets Sikon Øst ASA 50 013 AS Globusgården (*) 1 300 AS Sparebankmateriell - Spama (*) 3 156 BBS/Bank-Axept Holding AS 165 000 NOK AS 50 000 Oslo Børs Holding ASA (**) 50 000 Buskerud Telemark Vestfold Investeringsfond AS 49 004 Visa Norge AS (*) 8 000 Norsk Tillitsmann AS 10 500 Grenland Investeringsfond AS 47 000 Viking Ship Finance Ltd. CHF ('000) 30 000 Misc. shares held as long-term assets Total other shares held by parent bank as long-term assets Total shares/units held by parent bank as long-term assets SHARES HELD BY REMAINDER OF GROUP AS LONG-TERM ASSETS Shares in subsidiaries Sparebankenes Kredittselskap A/S SK eiendom A/S 50 Karihaugen eiendom A/S 1 000 Gjensidige NOR Eiendomsmegling Holding A/S Gjensidige NOR Eiendomsmegling Oslo Akershus A/S 11 000 Gjensidige NOR Eiendomsmegling Follo A/S 250 Gjensidige NOR Eiendomsmegling Vestfold A/S 950 Gjensidige NOR Eiendomsmegling Oppland Hedmark A/S 2 000 Gjensidige NOR Eiendomsmegling Østfold A/S 2 000 Gjensidige NOR Eiendomsmegling Buskerud A/S 4 000 Gjensidige NOR Eiendomsmegling Bergen A/S 2 200 Gjensidige NOR Eiendomsmegling Telemark A/S 2 000 Total shares held by remainder of group in subsidiaries Shares in joint ventures Gjensidige NOR Eiendomsmegling Haugalandet AS 300 Sandnes Eiendom AS 1 960 Total shares in joint ventures held by remainder of group Other shares held as fixed assets by rest of group A/S Bøndenes Hus (*) 350 Kirkegt. 74 A/S (*) 500 Misc. shares held as fixed assets Total shares in joint ventures held by remainder of group

52 500 624 7 674 1 172 392 7 886 408 512 25 883 1 600 11 974 1 000 9 000

10.5 48.0 24.3 17.8 15.8 8.2 5.3 20.0 11.4 2.1 9.0

5 250 624 767 29 310 7 886 4 085 2 588 1 600 1 197 1 000 2 700

10 475 624 747 29 226 7 886 47 302 2 588 397 1 197 1 000 14 513 28 759 144 714 4 204 255

50 1 000

100.0 100.0

50 1 000

86 1 293

69 1 293

11 000 2 500 950 2 000 2 000 4 000 2 200 2 000

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

11 000 250 950 2 000 2 000 4 000 2 200 2 000

13 000 4 758 2 060 2 224 2 200 9 868 3 220 2 000 40 709

13 076 1 106 5 386 2 615 2 429 5 594 2 784 1 961 36 313

300 980

50.0 50.0

150 980

500 3 035 3 535

195 1 402 1 597

1 691 250

48.3 50.0

169 250

456 250 7 119 7 825

(*) Company not included by equity method since profit/loss elements are immaterial for Union Bank of Norway Group. (**) Market value at 31.12.2001: NOK 61.3 million. The following companies have left the group: Greåker Industripark (wound up) and AcceptFinans (sold). The following companies that were previously joint ventures are now subsidiaries: Gjensidige NOR Equities ASA (previously Karl Johan Fonds ASA) and Gjensidige NOR Kapitalforvaltning AS.

CHANGES IN HOLDINGS OF LONG-TERM FINANCIAL ASSETS 2001

96 33 0 129

PARENT BANK 2000 1999

93 3 0 96

101 ( 7) 1 93

Value in balance sheet at 01.01 Acquisitions (disposals) Write-downs Value in balance sheet at 31.12

2001

GROUP 2000

101 32 0 133

98 3 0 101

1999

106 ( 8) 0 98

Union Bank of Norway 2001 Financial Statements

Cash flow statement NOK million

2001

16 719

PARENT BANK 2000 1999

13 440

10 976

2001

GROUP 2000

1999

Interest receipts

18 546

15 406

13 853

12 250

9 460

6 927

Interest payments

13 147

10 422

8 099

2 025

1 859

1 178

Other receipts

2 170

2 002

1 642

2 942

2 998

2 703

Operating expenses

3 933

3 939

3 572

100

Recovered on losses previously written off

103

138

151

1 051

145

401

Tax paid

1 247

292

741

2 579

2 789

2 223

Net cash flow from operations

2 492

2 893

3 234

(15 098)

(10 856)

(27 178)

(45 194)

(1 113)

1 042

( 656)

(4 179)

( 543)

(4 658)

(17 573)

(13 314)

(Increase) reduction in other receivables

(1 702)

1 310

(1 038)

(3 231)

(Increase) in short-term securities

(4 443)

( 196)

(3 752)

(7 889)

(9 083)

(Increase) reduction in deposits with and loans to credit inst.

(2 628)

( 356)

3 407

(25 048)

(18 246)

(40 148)

(26 346)

(12 556)

( 175)

( 259)

( 189)

( 290)

( 367)

( 334)

(1 059)

( 100)

(4 436)

Reduction (increase) in other fixed assets

258

125

( 501)

1 027

3 310

Disposal of fixed assets

108

975

1 342

632 ( 602)

Net cash flow from current financial activities (Increase) in tangible assets

(1 315)

Net cash flow from investments

6 216

22 002

Increase in customer deposits

343

695

9 619

668

(Increase) lending

502

(8 952)

10 283

11 429

16 399

9 058

21 893

13 671

42 083

(1 178)

(1 118)

2 843

(46 577)

733

507

9 388

6 597

22 198

Increase in subordinated loan capital

342

690

(Reduction) increase in equity

( 18)

( 2)

Increase (reduction) in loans and deposits from credit institutions

215

(8 886)

9 548

Increase in other liabilities

12 734

10 086

13 248

Net cash flow from long-term financing activities

22 661

7 810

45 682

Net changes in liquid assets

(1 117)

(1 120)

2 846

3 363

4 481

1 638

Liquid assets at 1 January

3 364

4 484

1 638

2 185

3 363

4 481

Liquid assets at 31 December

2 247

3 364

4 484

Union Bank of Norway 2001 Financial Statements

Auditors’ report for 2001 TO THE GROUP COMMITTEE OF REPRESENTATIVES OF UNION BANK OF NORWAY We have audited the annual financial statements of Union Bank of Norway as of 31 December 2001, showing a profit of NOK 2 285 million for the parent bank and a profit of NOK 2 161 million for the group. We have also audited the information in the Board of Directors' report concerning the financial statements, the going concern assumption, and the proposal for the allocation of the profit. The financial statements comprise the balance sheet, the statements of income and cash flows, the accompanying notes and the group accounts. These financial statements are the responsibility of the Group Executive Board, the Board of Directors and the Group President and CEO. Our responsibility is to express an opinion on these financial statements and on other information according to the requirements of the Norwegian Act on Auditing and Auditors. We conducted our audit in accordance with the Norwegian Act on Auditing and Auditors and auditing standards and practices generally accepted in Norway. Those

standards and practices require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. To the extent required by law and auditing standards an audit also comprises a review of the management of the bank’s financial affairs and its accounting and internal control systems. We believe that our audit provides a reasonable basis for our opinion. In our opinion, • the financial statements have been prepared in accordance with the law and regulations and present the financial position of the bank and of the group as of 31 December 2001, and the results of its operations and its cash flows for the year then ended, in accordance with accounting standards, principles and practices generally accepted in Norway

• the bank's management has fulfilled its

•

duty to produce a proper and clearly set out registration and documentation of accounting information as required by law and accounting standards, principles and practices generally accepted in Norway. the information given in the Board of Directors' report concerning the financial statements, the going concern assumption, and the proposal for the allocation of the profit are consistent with the financial statements and comply with the law and regulations.

Oslo, 6 March 2002 PricewaterhouseCoopers DA Einar Westby State Authorised Public Accountant (Norway)

Note: This translation from Norwegian has been prepared for information purposes only.

Statement by the Control Committee TO THE GROUP COMMITTEE OF REPRESENTATIVES OF UNION BANK OF NORWAY The Group Control Committee has carried

out the commissions required by Section 13 of the Norwegian Savings Banks Act. The Group Control Committee has examined the financial statements and the auditor's

report and recommends that the presented profit and loss account and the balance sheet be adopted as the financial statement of Union Bank of Norway for 2001.

Oslo, 12 March 2002

Einar Amundsen

Geir Dege

Reidun Vestby Jensen

Key figures

Key figures, Union Bank of Norway Group Amounts in NOK million (unless otherwise specified) 2001

Profit and loss account Net interest income 5 527 Capital gains 272 Other operating income 1 917 Operating income 7 716 Operating expenses 4 544 Operating profit before losses 3 172 Losses (gains) on loans 426 Losses (gains) on long-term financial assets ( 232) Operating profit 2 978 Net profit 2 161 Balance sheet Loans, retail market 102 545 Loans, corporate market 94 165 Specified loan loss provisions 906 Unspecified loan loss provisions 1 386 Customer deposits 108 697 Total assets at 31 December 231 209 Average total assets (ATA) 225 000 Assets under management 336 615 Primary-capital-certificate capital 4 689 Savings bank's reserve 4 049 Dividend adjustment reserve 4 357 Group's equity in subsidiaries 647 Total equity 13 742 Operations and profitability Interest income (in % av ATA) 8.2% Interest expenses (in % av ATA) 5.7% Interest margin (in % av ATA) 2.5% Operating income (in % av ATA) 3.4% Operating income (excl. capital gains) - change from previous year 6.1% Cost ratio (in % av ATA) 2.0% Costs per NOK earned (1) 0.59 Costs per NOK earned excl. capital gains 0.61 Operating profit before losses and write-downs (in % av ATA) 1.4% Return on total assets (operating profit after taxes in % of ATA) 1.0% Return on equity (2) 16.1% Key figures, primary capital certificates Market price (assessed value) at 31.12. (NOK) 273 Book value (NOK) per PCC - including dividend allocated (9) 219 Price/book value 1.24 Effective yield on primary capital certificates (3) 13% PCC ownership percentage (4 ) 69.1% Earnings per PCC (NOK) (5,9) 32.65 Fully diluted earnings per PCC (NOK) (6,9) 32.65 Dividend per PCC (NOK) - actual 17.00 Dividend per PCC (NOK) - adjusted (9) 17.00 Direct yield (allocated dividend in % of market price at year-end) 6.2% Allocated dividend in per cent of PCC holders' share of profit 52% Pay-out ratio (gross) (7) 37% RISK amount (NOK) at 1 January in subsequent year Approx. 17.50 Balance sheet Growth in lending Growth in deposits Deposit: loan ratio (8) Growth in total assets

9.5% 9.5% 55% 11.7%

2000

1999

1998

1997

5 347 262 1 669 7 278 4 106 3 172 215 ( 746) 3 703 2 688

4 648 211 1 483 6 342 4 055 2 287 201 ( 386) 2 472 1 784

2 909 167 1 352 4 428 2 915 1 513 128 ( 255) 1 640 1 185

2 512 157 1 605 4 274 2 936 1 338 ( 46) 92 1 292 916

90 501 89 174 897 1 389 99 309 206 917 203 400 311 651 4 689 3 383 3 535 789 12 396

81 256 85 641 1 131 1 314 92 712 195 608 176 600 278 521 4 689 2 592 2 220 1 020 10 521

59 137 63 348 797 931 70 514 147 500 140 200 172 405 4 689 2 096 1 430 1 178 9 393

53 823 57 125 1 087 870 66 484 132 484 123 600 156 927 2 605 1 771 1 228 1 128 6 732

7.8% 5.2% 2.6% 3.6% 14.4% 2.0% 0.56 0.59 1.6% 1.3% 22.6%

7.8% 5.2% 2.6% 3.6% 43.9% 2.3% 0.64 0.66 1.3% 1.0% 17.3%

6.6% 4.5% 2.1% 3.2% 3.5% 2.1% 0.66 0.68 1.1% 0.8% 15.4%

5.6% 3.6% 2.0% 3.5% 10.1% 2.4% 0.69 0.71 1.1% 0.7% 13.7%

257.50 204 1.26 47% 70.9% 41.69 41.69 17.00 17.00 6.6% 41% 30% 28.11

185 177 1.04 33% 72.7% 28.34 28.34 14.00 14.00 7.6% 49% 37% 20.18

147.50 161 0.92 (18%) 74.5% 28.07 28.07 11.50 11.50 7.8% 63% 46% 12.29

260 155 1.67 36% 68.4% 20.11 20.06 15.00 12.15 4.7% 60% 42% 20.84

7.8% 7.1% 55% 5.8%

36.2% 31.5% 56% 32.6%

10.8% 6.1% 58% 11.3%

18.9% 0.4% 60% 15.6%

Key figures

Defaults, provisions and loan losses Defaults, gross Defaults, net Provision ratio on defaulted items Unspecified loss provisions in per cent of gross lending Losses on loans and guarantees in per cent of gross lending Capital adequacy Capital base (eligible) Calculation base Capital ratio Of which core capital No. of FTEs at 31.12

2001

2000

1999

1998

1.0% 0.7% 31% 0.7% 0.2%

1.0% 0.7% 39% 0.8% 0.1%

1.2% 0.6% 50% 0.8% 0.1%

0.9% 0.4% 55% 0.8% 0.1%

19 264 175 615 11.0% 7.4% 3 864

18 191 161 160 11.3% 7.4% 3 807

15 958 147 856 10.8% 7.2% 4 078

14 554 110 799 13.1% 8.5% 3 328

1997

1.6% 0.8% 52% 0.8% (0.04%) 10 973 96 672 11,4% 6.9% 3 304

Definitions (1) Ratio of operating expenses to operating income. (2) After-tax operating profit in per cent of quarterly reported average equity (incl. minority interests). (3) Dividend paid plus change in market price from 1 Jan. to 31 Dec., in per cent of market price on 1 Jan. (4) PCC holders' share of total equity at year-end. (5) PCC holders' share of after-tax operating profit divided by average number of PCCs entitled to dividend. (6) As (5) but where the numerator is adjusted for the reduced interest expense (after tax) and the denominator is adjusted for growth in PCC capital as a result of full subordinated loan conversion. (7) Dividend in per cent of after-tax operating profit. (8) Customer deposits in per cent of gross loans to customers at 31 December. (9) For purposes of comparison, figures for 1997 are adjusted by a factor of 0.8103 due to the issue of PCCs at par (below market value) in October 1998.

ANALYSIS OF KEY FIGURES Net interest income Net interest income came to NOK 5 527 million in 2001, or 2.46 per cent of average total assets. This compares with 2000 figures of NOK 5 347 million and 2.63 per cent. Net interest income rose in all by NOK 180 million, in spite of an increase of NOK 146 million in the levy to the Savings Banks' Guarantee Fund. Higher lending and deposit volumes and increased equity improved net interest income, while a reduced customer spread had a contrary effect. The bank's average customer spread (i.e. the difference between average customer borrowing and deposit rates) narrowed to 2.9 per cent from 3.1 per cent in 2000. The customer spread at end-2001 was also 2.9 per cent. In 2001 the bank's outstanding loan volume rose by 10.2 per cent, while customer deposits rose by 11.2 per cent. The share of group lending funded by deposits was maintained at 55 per cent. Other income Net other income increased by NOK 258 million (13.4 per cent) in 2001 compared with the previous year. Discretionary asset management income generated by Gjensidige NOR Kapitalforvaltning contributed, after purchase of a further 20 per cent of the company's shares in the fourth quarter, to an income growth of NOK 87 million. Share dividend increased by NOK 86 million, mainly due to

return on money market funds. Income generated by stockbroking activities rose by NOK 70 million after Gjensidige NOR Equities was once again consolidated as a fully-owned subsidiary as from the second quarter of 2001. Other income measured 28 per cent of total income compared with 27 per cent the previous year.

than 0.1 per cent of gross loans. Net loan defaults measured 0.7 per cent of aggregate loans, as last year. Unspecified loss provisions amounted to NOK 1 386 million or 0.7 per cent of gross loans.

Expenses Expenses amounted to NOK 4 544 million in 2001 compared with NOK 4 106 million the previous year. When adjusted for changes in group composition, Elcon's new business in Sweden, goodwill amortisation, the switch to accounting on a gross basis at Gjensidige NOR Eiendom and the introduction of VAT on services, expenses rose by NOK 171 million or 4.5 per cent. Expenses measured 2.0 per cent of average total assets, as in 2000. The most significant factor in the expenses picture was growth in personnel and administrative expenses. Expenses measured 59 per cent of earnings in 2001 compared with 56 per cent the previous year. That is, for each krone earned as net interest income and other operating income, 59 øre went to expenses. This left 41 øre to cover losses, taxes and servicing of equity.

Earnings for PCC holders Union Bank of Norway's PCC holders achieved a sound return on investment in 2001, as in the previous year. A price increase from NOK 257.50 to NOK 273, and a cash dividend of NOK 17, entail a return of 13 per cent. Oslo Børs's main index (OSEBX) showed a decline of some 16 per cent in the same year. Direct yield (dividend of NOK 17 per PCC as a ratio of the market price of NOK 273 per PCC) was 6.2 per cent, which is competitive compared with our biggest competitors among the commercial banks. The bank's earnings per PCC, based on PCC holders' owner share in the bank (70.9 per cent) was NOK 32.65. This entails a price-earnings ratio of 8.4. Owing to the disbursem*nt of cash dividend of NOK 17 per PCC for 2001, PCC holders' owner share in the bank was reduced from 70.9 per cent in 2001 to 69.1 per cent at the start of 2002.

Losses In 2001 the bank recorded a net loss of 0.2 per cent of its gross lending volume. Over the past five years, losses have averaged less

Profit Net profit in 2001 came to NOK 2 161 million, producing a return on equity of 16.1 per cent.

Equity and ownership

Equity and ownership Union Bank of Norway's market capitalisation came to about NOK 12.7 billion at the end of 2001, an increase of 5.8 per cent on the previous year. The Committee of Representatives of Union Bank of Norway set a dividend of NOK 17 per primary capital certificate. The foreign owner share had risen to 48 per cent by year-end.

UBN and Oslo Børs

120

110

Union Bank of Norway's objective is to achieve results that provide the basis for a return on the bank's equity capital that is competitive in the market. Of the annual net profit, the bank aims to distribute to primary capital certificate holders, in the form of cash dividend and allocation to the dividend-equalisation fund, a sum that reflects their share of the equity capital.

Primary-capital-certificate capital Union Bank of Norway's PCC capital was stable in 2001, and at year-end comprised 46 889 356 primary capital certificates at a nominal value of NOK 100 each. Each certi-

Dec. 01

Nov. 01

Dec. 01

Oct. 01

Nov. 01

Sep. 01

July 01

Aug. 01

June 01

Apr. 01

May 01

Mar. 01

Jan. 01

Feb. 01

UBN, adjusted for dividend Main index OSEBX Financial index

UBN and European banking index 120

110

100

UBN, adjusted for dividend European banking index

Oct. 01

Sep. 01

Aug. 01

July 01

June 01

May 01

Apr. 01

60 Mar. 01

Dividend tax removed In the autumn of 2001 the Storting decided to remove the tax on dividend that had been introduced in 2000. The decision affects those of the bank's PCC holders who are liable to personal tax in Norway. The preliminary RISK amount (RISK is the Norwegian acronym for Adjustment of Acquisition Value by Taxed Capital) for each primary capital certificate in Union Bank of Norway entails a positive adjustment of about NOK 17.50 based on the adopted accounts for 2001. The PCC's acquisition value is adjusted for that portion of the retained profit that accrues to the PCC holders, i.e. the portion transferred to the dividend-equalisation fund. The same adjustment rules will apply after the bank becomes a limited company.

Jan. 01

The company's owner and dividend policy will be reviewed in connection with the conversion to limited company status. On 20 March 2002 the Committee of Representatives adopted the Group Executive Board's recommendation to set Union Bank of Norway's ordinary dividend for the financial year 2001 at NOK 17 per primary capital certificate. This is in accordance with the established dividend policy. It entails a payout ratio of 52 per cent, and a direct return of 6.2 per cent. The ex dividend date was 21 March.

100

Feb. 01

Owner policy at Union Bank of Norway Union Bank of Norway's objective is to manage its resources in such a way as to ensure a return on equity that is competitive with comparable investments in the market. The bank's target for return on equity is set at 15 per cent after tax. The bank's owner and equity policy remains unchanged from previous years:

Priority will be given to distributing a sound annual cash dividend in order to ensure a direct return that is competitive with comparable investment mediums in the market. Variations may occur in the relative distribution of cash dividend and allocations to the dividend-equalisation fund in situations where particular importance needs to be attached to the use made of the bank's equity capital.

Dec. 00

Price trend Union Bank of Norway's primary capital certificate (PCC) was on a positive trend, rising by about 6 per cent from NOK 257.50 at end-2000 to NOK 273 at end-2001. The bank's PCC had its all-time high in 2001 on 17 August at NOK 275, and a low on 21 September of NOK 208 after the terrorist strikes in the US. Dividend-adjusted return for the bank's PCC was 13 per cent in 2001. Against the background of the financial market turbulence in 2001, the PCC showed a creditable trend compared with the Oslo Børs main index, OSEBX, which fell about 16 per cent, and the financial index, OSE40, which slipped about 12 per cent. The PCC index, which shows the price trend for all stock-exchange-listed savings banks, climbed 12 per cent in 2001. A relatively stable price for the bank's PCC compared with OSEBX and the financial index may have several reasons, among them the announced conversion to limited company status. Another is that the bank's results are in line with market expectations. In a turbulent share market a savings bank with its main focus on the private market and SMB sector in Norway is viewed as a relatively safe haven.

Dec. 00

Equity and ownership

ficate carries one vote in the PCC holders’ election meeting. PCCs are quoted on the Oslo Stock Exchange and feature in the PCC index. Union Bank of Norway's market capitalisation came to about NOK 12.7 billion at year-end, an increase of 5.8 per cent over the previous year, making the bank the ninth largest company on Oslo Børs. Upon conversion to a limited company, Gjensidige NOR ASA's market capitalisation will be about NOK 23 billion based on the price at end-2001. The new company will be one of the largest on Oslo Børs, and will feature on both OSEBX and OSEAX. What weighting is given to Gjensidige NOR ASA on the indices will be decided by the Oslo Børs Index Committee. Ownership structure At the end of 2001 Union Bank of Norway's PCC holders totalled 21 611. The share of primary capital owned by foreign investors rose from 35 per cent at end-2000 to 48 per cent at end-2001. It was above all Norwegian limited companies, non-life insurance companies and organisations (in the category «other») that reduced their owner share, by about 6 per cent, over the year. Norwegian institutional PCC holders were relatively stable, reducing their share from 8 per cent to 7 per cent in 2001. PCC capital owned by wage-earners/pensioners fell from 26 per cent to 22 per cent. The 64 largest holders in Union Bank of Norway owned about 60 per cent of the capital at the end of 2001. See note 30 in the accounts for an overview of the 20 largest PCC holders in Union Bank of Norway. On the date for conversion to limited company the new owner structure will be: PCC holders at Union Bank of Norway Bank foundation Gjensidige NOR Forsikring Life insurance foundation Turnover and liquidity Turnover of Union Bank of Norway's PCCs on Oslo Børs in 2000 came to NOK 38 million, equivalent to a daily average of 153 000 PCCs and a turnover rate for the year of 81.8 per cent. In monetary terms Union Bank of Norway's PCC was the 15th most traded security on Oslo Børs. Trading in ad hoc options in Union Bank of Norway's PCC is negligible.

Rating Union Bank of Norway is continually rated by Standard & Poors, Moody's and Fitch Ibca, the world's leading rating agencies. Rating agency

Agreement in effect since

Standard & Poor’s Moody’s Fitch Ibca

2000 1996 1987

Shortterm

Longterm

A-1 P-1 F1

A A-1 A+

Investor Relations The bank seeks to make clear the value of owner assets by pricing its PCC as correctly as possible. Correct pricing is achieved by providing timely and correct information to the financial market, ensuring good knowledge of the bank among national and international analysts, and maintaining an outgoing presence in trend-setting investor circles. Union Bank of Norway arranges presentations of its accounts and telephone conferences with foreign countries on a quarterly basis. It also aims to organise at least one capital markets day per year with a view to providing analysts and investors with even better knowledge of the company. Accounting reports, presentations, stock exchange notices and press releases are published on the bank's website at www.gjensidigenor.no/investor and posted on Oslo Børs’ electronic noticeboard. Quarterly reports and the investor magazine «Notert» are distributed to the bank's PCC holders on a quarterly basis.

No. shares

Percentage

46 889 356 20 968 000 11 254 000 7 885 000

53.9% 24.1% 12.9% 9.1%

Ownership structure UBN % 60

0 1998 Foreign owners Others Private individuals Institutional owners Savings banks

1999

2000

2001

New structure for Gjensidige NOR

New structure for Gjensidige NOR Gjensidige NOR decided in the summer of 2000 to seek to change the group structure, and to convert Union Bank of Norway and Gjensidige NOR Spareforsikring to limited companies owned by a stock-exchangelisted holding company, Gjensidige NOR ASA. Gjensidige NOR Forsikring will remain an autonomous, customer-owned company. A wide-ranging, strategic cooperation agreement on a shared brand identity and common distribution system will be entered into between the two groups. Gjensidige NOR Forsikring will be a substantial co-owner of Gjensidige NOR ASA. The rationale for the change is to strengthen Gjensidige NOR's competitive position, partly by simplifying the group structure, but primarily by ensuring Gjensidige NOR the same regulatory framework and access to equity capital as that enjoyed by its competitors. Gjensidige NOR ASA and Gjensidige NOR Forsikring together form the Gjensidige NOR Group. On the insurance front an extensive collaboration has been established with 20 fire insurance companies. A similar collaboration is in place with four regional and nine local savings banks in areas of the country where the bank lacks a branch network. The Gjensidige NOR Group and collaborating companies make up the Gjensidige NOR Alliance. Ownership structure of Gjensidige NOR ASA Based on recommendations and analyses provided by external financial advisers, Merrill Lynch International and Alfred Berg Norway, the Group Executive Board arrived

at an exchange ratio that values the bank at 78 per cent, and the savings business at 22 per cent, of the shares in the holding company Gjensidige NOR ASA. The shares will be distributed among Union Bank of Norway's PCC holders, the savings bank’s reserve, Gjensidige NOR Forsikring and Gjensidige NOR Spareforsikring's policyholders. Gjensidige NOR Forsikring's ownership interest on the date of conversion (13 per cent) emerges with the conversion of the company's PCC capital in Gjensidige NOR Spareforsikring to shares in the new holding company. Union Bank of Norway's present PCC holders will receive 54 per cent of the new company's shares. A foundation will be established to manage the shares whose basis is the assets currently held in Union Bank of Norway's surplus reserves. These reserves will constitute 24 per cent of the shares of Gjensidige NOR ASA. Gjensidige NOR Spareforsikring's customers have proprietary rights in the company.

These assets will be allocated to the customers as soon as possible after conversion, either in the form of shares or in the form of cash. Aggregate assets of customers of Gjensidige NOR Spareforsikring make up 9 per cent of the shares of Gjensidige NOR ASA. Ahead The highest governing bodies of Gjensidige NOR have unanimously come out in favour of a simpler group structure and conversion of two of the main companies of Gjensidige NOR. Current legislation does not permit a savings bank to convert into a limited company. In February 2002 the Storting took a fundamental stand in favour of a change in the law. The government has announced that a Bill will be tabled in the Storting in the near future allowing a law change to take effect during the spring session. The authorities attach much importance to substantive protection against undesired takeovers of converted savings banks. What form such protection would take will be clarified during the legislative process ahead. Special provisions for converted savings banks can be expected to refer to rules governing savings bank foundations. Conversion and reorganisation of the group needs prior official approval. Assuming there are no delays to this process, Gjensidige NOR ASA's shares could be admitted to stock exchange listing around mid-2002.

GJENSIDIGE NOR GROUP Gjensidige NOR ASA

Gjensidige NOR Forsikring

Holding company for Union Bank of Norway and Gjensidige NOR Spareforsikring.

Customer owned, mutual company. Co-owner of Gjensidige NOR ASA.

Collaboration agreement

OWNERS: Today’s PCC holders 54 %

Collaborating banks

Customers of Gjensidige NOR Spareforsikring 9%

OWNERS: Customers of Gjensidige NOR Forsikring

Savings bank foundation 24 %

100 %

Gjensidige NOR Forsikring 13 %

Subsidiaries

GJENSIDIGE NOR ALLIANCE

Fire insurance associations

The Gjensidige NOR brand

The Gjensidige NOR brand After the conversion of Union Bank of Norway and Gjensidige NOR Spareforsikring to limited companies, Gjensidige NOR will consist of two groups - Gjensidige NOR ASA and Gjensidige NOR Forsikring. To the world at large, however, the two groups will appear under the brand name Gjensidige NOR. A shared, strong brand image enables financial economies and positive spin-offs, for example via joint marketing. In 2001 a joint company was set up for the Gjensidige NOR Group designed to exploit this potential and to ensure that the opportunities for cross-sales inherent in a customer base of two million are turned to maximum account. In the spring of 2001 the brand name Gjensidige NOR was defined and anchored in the entire Gjensidige NOR Group. The core values can be summarised in the words helpful and accessible, and the group aims to be associated with personal characteristics such as leading, reliable and friendly. One of Gjensidige NOR's advantages is its fine-meshed network of sales and advisory offices. The interplay between the branch network and other distribution channels will be crucial to the group's success in maintaining its strong customer relationships, which are a feature of Gjensidige NOR, in a technologically more advanced world. Regardless of channel, Gjensidige NOR wants to come across to the customer as helpful and accessible. Concerted effort Since the amalgamation of the two leading brands Gjensidige and Sparebanken NOR in 1999, the effort to create a shared brand image has been at centre-stage in the

CUSTOMERS At year-end Union Bank of Norway had a total of 907 400 customers, all market areas included. Of this figure, 810 300 are retail customers. 100 000 customers are below the age of 14, and 350 000 are below 35. The agemix of the bank's retail customers has been stable in recent years.

organisation. Much of the work involved has consisted in mapping the existing brand image position, gauging the market's own perception of the brand, and defining core business. People are the true asset The values inherent in Gjensidige NOR's brand image are reflected in the people in the enterprise. Work on further developing and profiling the brand image internally and externally proceeded throughout the organisation in 2001. The aim is to make the brand image's values and personality features clear and visible to staff, customers and the market. Only when the customer has a clear perception of Gjensidige NOR as helpful and accessible have we succeeded in building a credible brand image. Helpful… Knowledge is needed in order to be helpful. Knowledge of customers, market and products. Helpfulness is on the customer's premises, taking a basis in his or her demands and wishes. Gjensidige NOR must always put the customer's needs first when communicating with the customer and developing products. …and accessible Coming across as accessible is a matter of something as banal as long opening hours, satisfactory follow-up of the customer and

being accessible and service-minded on the phone and in e-mails. Customers must to a greater degree be free to choose how and when to do their banking and insurance transactions. But accessibility is also about communicating in a comprehensible and simple way, whether it is matter of a damages settlement or the bank's interest rates. One voice A group-wide brand image presupposes that the Gjensidige NOR Group speaks with one voice and views the customer as a mutual responsibility. The benefits of being a Gjensidige NOR customer will become clearer with the development of new multirelationship-customer programmes targeting those who are both banking and insurance customers. Moreover, the group is continuing to coordinate communication with the market around a small number of joint marketing activities. The biggest task ahead will be to develop the organisation in accordance with the values underlying the brand image, so that the customer actually perceives Gjensidige NOR to be helpful and accessible.

Decentralised structure

Meeting the customer Union Bank of Norway has a decentralised organisational structure. The two large core areas Oslo/Akershus/Østfold and Østlandet/Kysten are based on the bank's geographical representation. Each area employs a multi-channel strategy in which sales and advisory offices work in a close interplay with the bank's other channels: the Internet bank, customer service centres and sales centres. In areas where Union Bank of Norway is not physically present, the bank has agreements with other savings banks. Vika Bank is Gjensidige NOR's Private Banking unit, targeting the top segment of the retail market.

OSLO/AKERSHUS/ØSTFOLD The core area Oslo/Akershus/Østfold enjoys a good position in the market. Competition is intense, and product development and new solutions are at a premium. Oslo/Akershus/Østfold reported an excellent result for 2001. Operating profit before losses and extraordinary items was NOK 1 076 million. Net losses in 2001 came to NOK 65 million and operating profit after losses and extraordinary items was NOK 1 011 million. Loans and deposits showed growth of 11 and 3 per cent respectively at year-end. The customer spread narrowed by 0.08 percentage points. At year-end this core area had 964 FTEs and 443 000 customers. The main objective for 2002 is a return on equity of at least 15 per cent after calculated losses. Objectives are also set for the cost ratio, customer satisfaction and staff satisfaction.

HOW CUSTOMERS USE THE BANK Electronic transactions accounted for 77 per cent and manual transactions for 23 per cent of all bill payments by retail customers in 2001. There were 2.9 million fewer manual transactions in 2001 than in the previous year. Use of postal giro fell 23 per cent, whereas use of standing-order giro mandates rose 47 per cent.

Ability to team-work The above objectives will be achieved by applying the bank's multi-channel strategy to distribution, an area where steps have been taken to upgrade skills and the ability to interact. Technical solutions will be put in place to support interplay between the distribution channels. On 29 October functions were reorganised to support the multi-channel strategy. The investment centres were unified under a joint leadership, and the retail market was divided into four areas. These service the retail market and parts of the small business segment together with Customer Service Centre and Sales Centre. The reorganisation will boost market power at the local level and sharpen the focus on savings and investment while customers will be free to choose their preferred mode of service. In the course of the year the direct banking facility, Parat24, joined the savings bank's multi-channel strategy, and is closely involved in realising the plans for a fullservice Internet bank. Parat24's organisation will be part of the core area Oslo/Akershus/ Østfold as from 1 March 2002. As a direct bank, Parat24 has accumulated substantial expertise in combining Internet-based services with sales and advice over the phone and web. The rapidly growing popularity of Internet-based services means that the bank's customers will come to

expect the same level of customer-handling as customers of the direct bank. Rather than develop two parallel distribution concepts, resources and competence are now brought together in a single channel. Corporate sector Corporate sector operations were reorganised in light of the establishment of Gjensidige NOR Merchant Bank and the associated distribution of functions. There are now eight business centres in this core area which service small and medium-size enterprises, and six customer sections responsible for the largest customers in their respective sectors, including customers in large organisations and the public sector.

ØSTLANDET/KYSTEN This core area services the bank's customers in the retail market, the regional business/ corporate sector and the public sector in the counties of Buskerud, Telemark, Oppland, Vestfold, Sør-Trøndelag, Troms and Finnmark. The bank is also represented in Bergen, Bodø and parts of Nord-Trøndelag. The area achieved excellent results in 2001. Operating profit before tax was NOK 984 million, on a par with the figure for 2000. When corrected for payment of the levy to the guarantee fund (no payment was levied in 2000), the result improves by NOK 52 million or about 5 per cent. Net losses for 2001 totalled NOK 53 million. At end-2001 customers numbered 402 000, equivalent to a net increase of 10 000 over the year. FTEs were reduced by 40 in 2001 to number 1 063 at year-end.

Decentralised structure

Rapid deposit growth This core area focused heavily on the savings and investment market in 2001. This generated substantial volume growth both in terms of ordinary bank saving and investment in fixed income funds. Investment in equity funds declined, however, due to events in the share market. The area's deposit portfolio was worth NOK 38.6 billion at end-2001, corresponding to an increase of as much as 20 per cent on an annual basis. Lending growth amounted to NOK 64.6 billion, or 10 per cent, as of December 2001. Growth was primarily in the retail market (13 per cent), while growth in the business and public sector markets came to 4 per cent. About two-thirds of the loan portfolio is in the retail market. Market position The bank is a substantial market player in the south-eastern counties with market shares of some 40 per cent in Oppland and Vestfold alike. Market share is appreciably lower in Bergen and in counties from Trøndelag northwards. The bank decided to establish a sales and advisory office in Stavanger in order to strengthen market positions in western Norway. Moreover, the bank signed an agreement to take over Gjensidige NOR Spareforsikring's investment centres and customer portfolios in Stavanger and Møre. The above moves are related to the termination of the cooperation agreement with Sandnes Sparebank and Sparebanken Møre, and the good customer relations that other business areas in Gjensidige NOR enjoy in this part of the country. In Bergen an innovation centre is being established which will be responsible for the growth industry fisheries and aquaculture.

ELECTRONIC MONEY TRANSFERS The number of Internet bank customers rose by 53 per cent in 2001, and by year-end 172 000 were using this service. The Internet bank at www.gjensidigenor.no averaged 23 000 loggers-on daily. Each customer carried out an average of 5.2 transactions per month.

COLLABORATING BANKS Union Bank of Norway operates a main agreement with four district savings banks. These banks are all leaders in their local markets, and cover geographical areas where Union Bank of Norway has no market presence. The four banks are: Sparebanken Hedmark, Sparebanken Sogn og Fjordane, Sparebanken Sør and Sparebanken Rana. The close relationship between Union Bank of Norway and the collaborating banks springs from IT cooperation. In recent years the collaboration has become more marketoriented, and key elements in the agreements are utilisation of a joint distribution network and cooperation on sales of Gjensidige NOR's entire product range. The main agreements also contain a market sharing principle whereby each collaborating bank, with some exceptions, is the brand holder for bank products within its particular geographical area. Union Bank of Norway also operates less wide-ranging agreements with nine local savings banks that cover municipalities/ districts where neither Union Bank of Norway nor collaborating banks have a market presence.

The year behind us Vika Bank was founded in 1996, and was turned into an internal company with its own board on 1 January 2001. Thus 2001 was its first year of operation as an organisational business unit in its own right. 2001 was a new growth year for the bank. Loans totalled NOK 1 548 million, deposits NOK 1 880 million and group investments NOK 602 million. Balance sheet assets expanded by around 18 per cent. By year-end the bank had the agreements in place needed to ensure a broadbased distribution of mutual fund products from a number of the best fund managers in Norway and abroad. This rounds off the bank's strategic aim of being a productneutral adviser to its customers. Market conditions The Private Banking market in Norway features vigorous expansion and a growing number of new players. This is a result of reorganisation of existing bank structures as well as of new establishments. Moreover, a number of foreign players have started private banking operations in Norway, and many non-bank players are offering investment services in this market.

VIKA BANK Vika Bank is Gjensidige NOR's Private Banking operation, and targets the top end of the retail market. Vika Bank is a fullservice bank for its segment and offers spearhead competence in advanced savings products, advanced financial and legal counselling and specialised financing solutions. Vika Bank provides impartial product advice and solutions and is characterised by very high service quality and close to its customer relations.

Mission and strategy Developing a complete range of investmentadvice and asset-management services, as well as financial solutions, advanced private financial counselling and everyday banking services, was a fundamental strategic policy choice for Vika Bank. By offering the customer complete financial solutions tied in with ordinary banking services, Vika Bank is taking its place as a one-stop provider. This substantially broadens the traditional definition of Private Banking. Vika Bank currently has a 20-strong staff and is located at Olav Vs gate 5 at Vika in Oslo.

Core area Payment, Settlement & Banking Services

Core area Payment, Settlement & Banking Services This core area is an innovation centre for development and delivery of financial and cash management services to Union Bank of Norway's customers. The core area is responsible for strategy, business and product development, infrastructure and sales support along with day-to-day operations and quality of service provision. The Internet has substantially changed the way customers utilise banking services. The Internet is widely used in Norway, and the number of Union Bank of Norway's customers that do their banking from home rose by 53 per cent in 2001. Customer's freedom of choice The Internet bank will be further developed into a top-flight service channel with a range of products, services and advice approximately equal to the bank's other service channels. Whereas some financial services will be automated, the customer is offered freedom of choice and access to customer advisers in specialist areas such as savings, investment and loans. For the business/corporate sector an Internet solution will provide an alternative to current solutions for this sector. For the customer it means an improved range of services as well as new and more flexible cash management solutions.

CASH DISPENSERS Union Bank of Norway had 200 cash dispensers deployed at year-end. In recent years the number of cash dispensers has been cut back due to changed customer behaviour. An average of 6 800 withdrawals were made from cash dispensers per month in 2001. A new offering from Gjensidige NOR enables customers to use cash dispensers to prepay mobile phone cards.

Collaboration on security Collaboration between Norwegian banks has brought Norway into the front line in terms of efficient and safe cash management. The development of a joint solution for reliable identification when making payments over the Internet (BankID) is a joint project that will prove its value in 2002. Union Bank of Norway will be a proactive contributor in this field. Focus on quality High quality services provided by skilled staff are a prerequisite for customer satisfaction. To this end we launched in 2001 the «Integrated Quality System» project. The market confirms that we are on the right track: the Custody area was ranked number one in its field in Norway by two international trade journals in 2001 on the basis of customer polls. Licensed in Sweden Union Bank of Norway was licensed as a settlement bank by the Swedish central bank in 2001. This means we can offer our customers full access to competitive services in Sweden's banking system without needing to establish branches in that country.

Customer trend Internet bank 2001 No. 200 000 180 000 160 000 140 000 120 000 100 000 80 000 60 000 40 000 20 000 0 1. Q.

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Cresco

Cresco With 19 credit and payment card concepts in the market, Cresco is one of Norway's key players in the field. Cresco's headquarters are in Trondheim and the credit card operation has several distribution channels, both directly in the mass market and indirectly via partners.

Customer trend No. 600 000

500 000

Cresco meets customers' cash-flow needs through short-term, unsecured credit. Earnings on its products derive from interest, commission from Visa/MasterCard and annual charges. Collaboration with commerce and trade and large organisations accounts for a large portion of Cresco's work.

market areas: the retail market, including all card concepts sold directly to private customers, the organisation market, corporate market and personal consumer loans. The latter includes unsecured loans sold via agents and directly to private customers. Cresco is one of the largest players in this market.

The year behind us 2001 was a fine year with sound growth and good results in all market areas. The main product, Kjøpekort, was redesigned and changed name to Accept Card Reserve. Its versatility was improved by a link-up with MasterCard. Shell Scala Card was launched, and an Internet bank for credit cards was introduced. ePurchasing, a fully electronic end-to-end commercial solution, was launched in conjunction with Tybring Gjedde. AcceptFinans, a company in the credit card business in Denmark, was sold in 2001. To avoid name confusion, the name of the credit card operation in Norway was changed from Accept Card to Cresco with effect from 1 January 2002.

Objectives and strategies Through their broad-based distribution, the bank and Cresco frequently meet as competitors. This is both natural and necessary. The bank covers customers' total needs for credit and payment cards in all sub-markets where we maintain a presence. Cresco's strategy is that its credit cards should be the «number two cards» for Union Bank of Norway's customers. There is a large potential here for additional sales. Use of cards continues to grow, and the distinction between payment and credit cards is being erased. In this market situation it will be imperative for Cresco to maintain a high-quality sales culture and effort. Cresco employs customer-satisfaction and staff-satisfaction surveys as a basis for improvements. This puts a focus on customer segmentation and concept development. Cresco will continue to be concerned with product innovation, and sales in the bank channel will be in focus in the year ahead. Cresco wishes to engage in aggressive customer recruitment within the framework of a prudent credit policy. The ambition is to make Cresco Norway's leading credit- and payment card player.

Market situation Cresco's share of the Norwegian market for unsecured credit to private individuals is 17 per cent. Outstanding loans totalled NOK 4.9 billion as at 31 December 2001. The year brought an increase of 21 per cent in the volume of lending. Cresco has more than 500 000 customers. Cresco's business comprises the following

LOANS Broken down by sector, statistics show that 52 per cent of Union Bank of Norway's loans are to households, while 20 per cent go to real estate management, 5 per cent to manufacturing and 2 per cent to primary sectors. Lending to retail customers rose by 13 per cent in 2001, while lending to business sector customers rose by 6 per cent.

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Loan portfolio NOKm. 4 500 4 000 3 500 3 000 2 500 2 000 1 500 1 000 500 0

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Gjensidige NOR Merchant Bank

Gjensidige NOR Merchant Bank Gjensidige NOR Merchant Bank was established in the autumn of 2001. The unit brings together the business areas Corporate Customers and Markets in Union Bank of Norway, and the subsidiary Gjensidige NOR Equities ASA. It reported an operating profit of NOK 341 million for 2001. It has a staff of 200 (FTEs). Gjensidige NOR Merchant Bank aims to be a leading provider of banking and capital market products to prioritised segments in the Norwegian business market, and of securities services to the institutional and private investor market. Through the establishment of Gjensidige NOR Merchant Bank, Gjensidige NOR demonstrates a determination to venture into the capital and securities market. Uniting expertise and competence in Gjensidige NOR Merchant Bank will give the unit's business environment added power both in the market and within the group. An important priority ahead will be to develop cross-sales and intra-group deliveries. Highly specialised competence across sectoral divides and good cooperation will bring to light cross-sales potentials which will then be exploited. Good cooperation on customers and sales with the remainder of Gjensidige NOR and with collaborating banks is crucial to success. The market for services to Gjensidige NOR Merchant Bank is expected to expand: more and more companies are meeting their capital needs through a combination of securities issues and bank borrowing. Moreover, transaction numbers are expected to increase as a result of restructuring. The Internet will be a highly important sales channel in the years ahead, particularly for Markets and Gjensidige NOR Equities. This will require a continual focus on Internetbased services.

CONSUMER PURCHASES BY DEBIT CARD Sixty million consumer purchases were paid using debit cards in 2001, 15 per cent more than in the previous year. The average amount per card payment was NOK 475. A cardholder survey by the Banks' Central Clearing House shows that 64 per cent of customers prefer to pay by card.

CORPORATE CUSTOMERS Corporate Customers delivers financial products and solutions to major Norwegian companies. Norwegian companies with capital market needs to whom Corporate Customers can provide several of the group's products, are key customers. The division has very high aspirations in terms of delivering competence and quality. The Corporate Customer Division has taken its place as a competitive provider in the majority of sectors, and strengthened its position in the corporate market in 2001. This is thanks to existing and new customer relationships, and to the fact that acquisitions and structural changes produced an appreciable increase in the number of complex and structured financing solutions. The division's service concept builds on close customer relationships, high expertise and tailored solutions. Specialist competence has been developed in specific sectors, while specialised environments deliver products in the field of cash management and syndication. Operations are organised in the business units manufacturing, commerce, energy, shipping as well as banking and finance. In the autumn of 2001 a section was established for information and communication technology (ICT) and media.

Gjensidige NOR Merchant Bank

Success is above all dependent on a competent organisation and top qualified, motivated staff. An extensive skills-building programme has been established.

GJENSIDIGE NOR EQUITIES ASA Gjensidige NOR Equities ASA (formerly Karl Johan Fonds ASA) is the group's stockbroker and adviser in the field of capital market products. The company is now wholly owned by Union Bank of Norway. In 2001 it reported a deficit of NOK 1 million compared with a profit of NOK 34 million the previous year. Gjensidige NOR Equities ASA further strengthened its capacity and competence in the field of analysis and advice in 2001. The company's analysis department now comprises 13 analysts who, together with an experienced stockbroking department, will play an important part in the continuing focus on the institutional investors market. The establishment of Gjensidige NOR Merchant Bank will give added focus to Gjensidige NOR Equities' business areas within the Gjensidige NOR Group and will make for increased potentials in the advisory field. Gjensidige NOR Equities ASA has a 4 per cent share of the secondary market at Oslo Børs in volume terms and about 7 per cent in terms of number of transactions. Thanks to Gjensidige NOR's distributive power the company has a substantial investment capability where major investments are concerned, which it turned to account in connection with the market debuts of Statoil and Telenor. The company aims to increase its share of trading at Oslo Børs. A combination of the company's own development and the establishment of Gjensidige NOR Merchant Bank will give Gjensidige NOR Equities ASA a position that more fully reflects the fact that the company is a part of Norway's second largest financial conglomerate. It will be imperative in this context to exploit the

CUSTOMER SPREAD The customer spread was a stable 2.9 per cent in 2001, 0.2 percentage points lower than the previous year. The customer spread represents the bank's earnings in the form of the net average lending rate and deposit rate. As of year-end the customer spread broke down to 1.3 per cent on lending and 1.6 per cent on deposits.

comparative advantage inherent in the Group's large private customer base.

GJENSIDIGE NOR MARKETS Gjensidige NOR Markets is responsible for Union Bank of Norway's operations in the areas of foreign currency, derivatives, fixed income products and bond markets. Markets primarily services Norwegian customers as well as a number of international customers. Operations in 2001 featured higher activity levels and reflected changes in financial markets resulting from the international economic downturn. The terrorist strikes in the USA on 11 September reinforced these tendencies. Currency and interest rate movements in 2001 faced business customers with a number of challenges. The year was marked by growing uncertainty and many customers were concerned to reduce their financial exposure. Gjensidige NOR Markets helped customers select products to hedge against undesired currency or interest rate fluctuations. This gave Markets the opportunity to put together product solutions that either produced added return or reduced financial risk, or both. Gjensidige NOR Markets' share of the certificate and bond market was on target. Where Norwegian fixed income products are concerned, the unit is among the three biggest players in the market and is making inroads into the currency product market. The main objective for 2002 is to enhance customer earnings. Gjensidige NOR Markets wishes to do this primarily by offering tailored customer solutions, and is further developing products to this end on both the lending and investment side.

Savings and investment

Savings and investment Avanse Forvaltning AS retained its position as Norway’s leading fund manager in 2001. The other savings companies in which Union Bank of Norway has a stake - Gjensidige NOR Kapitalforvaltning and Gjensidige NOR Fondsforsikring - also consolidated their market positions in a weak stockmarket year. Gjensidige NOR is well positioned in the market for savings and asset management, both as a distributor and product provider. Once Gjensidige NOR Spareforsikring and Union Bank of Norway have acquired limited company status, ownership of all the savings companies mentioned will be assembled in Gjensidige NOR ASA. The simplified group structure will reinforce Gjensidige NOR’s market power in the expanding savings and investment market. In the past two years Gjensidige NOR has established 29 investment centres, and in 2001 the bank took over the life company’s portfolio and distribution in the retail market. The life company Gjensidige NOR Spareforsikring is a customer-owned company which, like the savings bank, will be converted to a limited company owned by Gjensidige NOR ASA. Gjensidige NOR Spareforsikring leads the retail market in Norway, and reported a positive transfer balance in 2001. It was a particularly good year for sales of group pension schemes both to private firms and to local authorities and other public sector institutions. Nine local authorities, representing a transfer value of NOK 923 million, opted for Gjensidige NOR as their pensions provider. Although the company ran a deficit in 2001, it maintained a satisfactory capital adequacy ratio of 9.8 per cent.

TELEPHONE BANKING Telephone banking is the channel most used by customers for their day-to-day banking. Last year 91 000 calls were made per day to this facility on telephone number 815 00 200. In the full year customers carried out 9.2 million transactions via this channel. Union Bank of Norway also has six customer service centres providing personal service by phone.

In addition to ensuring distribution on behalf its own product providers, Union Bank of Norway has expanded its range of funds from external managers. This means a greater choice for customers, while the bank strengthens its position as a distributor and is seen as a neutral adviser to a greater degree. In parallel with this trend, Gjensidige NOR’s own product providers will be offering their products via a greater number of distribution channels.

AVANSE FORVALTNING AS Avanse Forvaltning AS is the country’s largest fund manager. It had NOK 27.6 billion under management at end-2001, and generated a pre-tax operating profit of NOK 15.4. At year-end Avanse managed 42 funds, of which 30 are managed internally, nine externally through fund-in-fund mutual funds, and four through advisory service agreements with Gjensidige NOR Kapitalforvaltning ASA. Union Bank of Norway owns 70.8 per cent of Avanse, Gjensidige NOR Spareforsikring 26.5 per cent. 63.5 per cent of investments in the company’s funds is via Union Bank of Norway and collaborating savings banks. The company reports to the core area Savings in Gjensidige NOR. The year behind us In the course of the year Avanse added six new funds to its range. Four of the funds invest in funds managed by Merrill Lynch,

while Gjensidige NOR Kapitalforvaltning ASA is adviser for one of the funds. In the autumn of 2001 Avanse signed an agreement with Fidelity Investments International to sell their funds. Gjensidige NOR wishes to cultivate its producer and distributor role, and by that means achieve a stronger focus on its core tasks. To this end the customer dialogue functions and distribution support in Avanse Forvaltning AS were outsourced to Gjensidige NOR Kapitalforvaltning ASA and Gjensidige NOR Spare- og Investeringstjenester AS. Market situation Major international players in the fund management industry have forged alliances with Norwegian distributors, and the range of mutual fund products available has expanded. As a part of this trend the public have gained greater awareness of the variety of investment mediums, and have easier access to them thanks to new technology. Avanse Forvaltning AS led the Norwegian market with a market share of 21.0 per cent at year-end, and had 430 887 customers at the same point. Objectives and strategies Avanse Forvaltning AS aims to be the best known mutual funds brand in Norway, and to achieve a pre-management-fee return among the best 25 per cent of comparable funds. A further aim is to achieve a better pre-management-fee return than the respective funds’ reference indices. It also aims to take the highest market share among members of the Norwegian Mutual Fund Association, and to be an attractive employer that recruits and retains qualified, motivated and experienced staff.

Savings and investment

GJENSIDIGE NOR KAPITALFORVALTNING ASA Gjensidige NOR Kapitalforvaltning ASA manages capital for large firms and institutions, as well as for organisations and private individuals. Profit before tax came to NOK 70.1 million in 2001. Gjensidige NOR Kapitalforvaltning had NOK 75,9 billion in assets under management at the end of 2001. It managed NOK 11.8 billion for customers outside Gjensidige NOR compared with NOK 8.5 billion at the start of the year. Union Bank of Norway owns 70 per cent of the company, Gjensidige NOR Spareforsikring 30 per cent. The company reports to the core area Savings in Gjensidige NOR. Gjensidige NOR Kapitalforvaltning meets the Global Investment Performance Standard (GIPS standard). The company’s management performance can thus be compared with leading managers across the world. The year behind us The results for 2001 are satisfactory and above expectations, despite a very difficult year in financial markets worldwide. New management agreements and enlargements of existing agreements were formalised in 2001 to a total value of NOK 5.7 billion. As previously, the company won mandates in the face of international competition and managed 52 mandates at year-end. The former corporate customer unit in Avanse Forvaltning was transferred to Gjensidige NOR Kapitalforvaltning ASA with effect from 1 April 2001. Over the year the company established an integrated markets department for the corporate customer segment.

SAVINGS AND INVESTMENTS Saving with a bank is the most widespread saving medium in Norway, apart from investing in real estate. Private saving for retirement, in shares or with an insurance company is increasing steadily. Saving in mutual funds has a history going back 35 years in Norway, and at yearend Union Bank of Norway's subsidiary Avanse had 430 900 unit holders.

Market situation The slump in world share markets in 2001 has not weakened the company’s belief that there is a strong underlying need in the market for increased saving for retirement.

Union Bank of Norway is employed for distribution in the private market. Gjensidige NOR Fondsforsikring AS now offers 24 different funds from three fund providers.

Objectives and strategy Gjensidige NOR Kapitalforvaltning's main aim is to be the leading management company for institutional customers in Norway. To achieve this the company will give added focus to product and business development. It will also seek to exploit the opportunities offered by changed parameters for the industry. Gjensidige NOR Kapitalforvaltning ASA has launched a fund management company in Dublin in Ireland. The establishment will make it possible to offer advanced management products. Extra return for customers, high staff satisfaction and good relationships with existing and new customers will remain the basis for the company’s evolution, and crucial for success in the market in the longer term.

The year behind us Last autumn the company launched a contributory pension product for the business sector where staff are given an investment choice for pension resources financed by the company. About 20 such agreements were signed in the year’s last quarter, and there are high expectations of this product ahead. Premium income totalled NOK 705 million compared with NOK 956 million the previous year. Customers saw a drop in the value of their investments averaging about 20 per cent in 2001, so that the company’s assets under management showed only a modest increase: from NOK 1 491 million in 2000 to NOK 1 787 million in 2001. The company experienced falling profit in 2001. This was attributable to a focus on the corporate market that is expected to generate healthy earnings in the longer term.

GJENSIDIGE NOR FONDSFORSIKRING AS Gjensidige NOR Fondsforsikring AS delivers unit-linked pension products to private individuals and the business/corporate sector. The company’s pre-tax profit came a negative NOK 5.7 following a loss of NOK 4.8 million in 2000. Union Bank of Norway and Gjensidige NOR Spareforsikring own the company on a 50/50 basis. The company reports to the core area Savings in Gjensidige NOR. «Unit-linked» means that the customer is responsible for the management of his/her pension resources by choosing from a mutual fund menu prepared by the company. Since 1 January 2001 Gjensidige NOR Fondsforsikring AS has been integrated with Gjensidige NOR Spareforsikring, and employs this company’s resources for sales purposes in the business market.

Market situation The retail market showed a 10-15 per cent decline in paid-in funds in 2001 compared with 2000. This market currently accounts for more than 95 per cent of sold volume. The reason for the market decline was the turbulence and value reductions in stockmarkets which prompted greater reticence among the public in relation to the company’s products. Objectives and strategy Gjensidige NOR Fondsforsikring AS aims to take a market share of about 20 per cent in its sector. The company also intends to provide a satisfactory return for its owners within three to four years.

Subsidiaries

ELCON FINANS AS ELCON Finans AS offers leasing, car financing and factoring. The company is the biggest finance company in the country. ELCON Finans has established operations in Sweden and Denmark, and achieved a profit of NOK 316 million in 2001. ELCON Finans’s business idea is to meet corporate and retail customers’ needs for capital-goods finance through leasing and lending, and to meet firms’ needs in terms of liquidity and improved efficiency through factoring. This is done through close collaboration with capital goods suppliers, car importers and car dealers. ELCON has assets totalling NOK 21 billion. It has 400 employees in Norway and 40 in Sweden/ Denmark. The year behind us The year 2001 was a good one for the company with a pre-tax return on equity of 21 per cent. The year’s result was achieved in a period of heavy establishment outlays in Sweden and Denmark. Concurrently substantial investments were made in new computer systems with a view to achieving a competitive edge and improved efficiency. The start-ups in Sweden and Denmark are a step in developing ELCON Finans into a Scandinavian player with a strong emphasis on distribution through the provider channel. The aim is to be one of the three leading players in Scandinavia in the next three years. Market situation Finance companies showed buoyant growth in 2001: overall sales growth is put at 20 per cent. Leasing products in particular rose sharply, although car financing and factoring also expanded appreciably. ELCON Finans largely followed the general market trend. Over the year the company signed several sub-

stantial real estate leasing contracts with, among others, public institutions. In the car financing field, increased competition is faced from captives (importer/producer-owned companies), specialised companies and Internetbased distribution channels. In this market situation ELCON is prioritising further development of webbased self-service solutions (ELCON24) for car dealers and Gjensidige NOR’s branch network. The company reinforced its international factoring operations over the year. Objectives and strategies ELCON Finans has established the following objectives: • to be Norway’s best finance company • to be the market leader in leasing, factoring and car financing • to be one of the top three companies in Scandinavia • to achieve a pre-tax return on equity of at least 20 per cent

Pre-tax profit NOKm 350 300 250 200 150 100 50 0

1997*

1998*

1999*

2000

2001

* Pro forma figures

ELCON Finans leads the field within its product areas. Expertise, good relationships and service quality will be crucial if the market is to perceive the company as the best in Norway. The operations in Sweden and Denmark are being rapidly developed. An aim is that these businesses should be among the three or four leaders in their areas in the course of three years.

GJENSIDIGE NOR EIENDOMSMEGLING HOLDING AS The number of property transaction brokered by Gjensidige NOR Eiendom rose and the company maintained its market share in 2001. It achieved an operating profit of NOK 33 million on gross sales income of NOK 284 million. Gjensidige NOR Eiendom is among Norway’s largest real estate agency firm. It operates traditional real estate agency activities, primarily in the residential and recreational property sectors. The company has 41 branches and 259 staff (FTEs). Property sales arranged in 2001 totalled 9 251, an increase of about 200 on the previous year. Market share was stable at about 10 per cent. The year behind us The company established new offices in Haugesund and in Økern in Oslo. Its focus on high quality services was confirmed by the financial magazine Dine Penger in a poll carried out by Norsk Gallup which singled out Gjensidige NOR Eiendom as the real estate agent with the highest proportion of satisfied customers. In 2001 a long-term agreement was signed with the CISA real estate agency to market Spanish holiday properties in Norway. CISA is a wholly owned subsidiary of the Spanish savings bank Bancaja Group.

Market situation Competition in the real estate agency sector is intense, and the franchise chains' ambition to expand is particularly noticeable. The number of real estate agency firms has risen substantially in the past few years. At the end of 2001 about 500 individual firms were registered in the country as a whole, with about 750 branches. More than half the properties sold via real estate agents in Norway are sold by firms that are owned or controlled by financial institutions. Objectives and strategies Gjensidige NOR Eiendom aims to maintain its position as a leading player in the real estate agency field in Norway. Almost all the company’s branches are colocated with Union Bank of Norway, and its aim is to be the preferred real estate agent for the financial group’s customers. Gjensidige NOR Eiendom will strengthen its venture into commercial-property and project broking. The company attaches great importance to developing new technological solutions, particularly via the Internet.

Properties brokered No. 10 000

8 000

6 000

4 000

2 000

1998

1999

2000

2001

Subsidiaries

SPAREBANKENES KREDITTSELSKAP AS (SPAREBANKKREDITT) Recent years’ improvement in profit performance continued in 2001. Operating profit before tax for 2001 was NOK 162 million, an increase of NOK 23 million over the previous year. Operating expenses were reduced to 0.21 per cent of total assets. Sparebankkreditt offers long-term property financing secured by mortgage on real property. It mainly finances commercial properties such office buildings, shopping centres, stocks and hotels. The company's operations cover the whole country, although the bulk of its lending is in metropolitan areas of southeastern Norway. Sparebankkreditt wishes to finance properties in areas where there is an active property market. The company distributes its loans itself, but funds its operations in cooperation with Union Bank of Norway. The year behind us The loan portfolio grew by 7 per cent in 2001 to reach NOK 16.6 billion at year-end. Just under 80 per cent of this figure comprised fixed interest loans, the remainder floating rate loans. Whereas the interest margin in the fixed interest portfolio was unchanged from the previous year, market conditions in some periods enabled somewhat higher margins to be taken out on loans carrying floating interest. Thanks to the favourable trend in the interest margin and higher loan volumes, net interest income rose from NOK 172 million in 2000 to NOK 202 million in 2001. The company's operating expenses were further reduced, and losses are limited. The result of ordinary

Results NOKm 200

operations before tax was NOK 162 million, corresponding to a pre-tax return on equity of 14.5 per cent. Market situation Sparebankkreditt is one of the three leading mortgage companies in the market for financing real estate, a market in which the commercial and savings banks are also substantial players. Intensified competition in this market in recent years is reflected in pressure on interest margins and loan disbursem*nts. After a decline in the number of mortgage companies in the early 1990s, several new companies have entered the market in the last few of years. Objectives and profit outlook Sparebankkreditt wishes to be a natural first choice for long-term financing of real estate with its high service quality and competence in property financing. Sparebankkreditt expects stable but moderate lending growth to continue in the years immediately ahead. Assuming unchanged margins and falling interest rates, the company’s net interest income will be on a par with the 2001 level. Assuming a continued reduction in the cost ratio and low book loan losses, the company will continue to deliver a satisfactory return on equity in the years ahead.

150

100

1997

1998

1999

2000

2001

Operating profit before losses Operating profit after losses

UNION BANK OF NORWAY INTERNATIONAL S.A. Union Bank of Norway is currently the only Norwegian bank operating in Luxembourg. The company achieved a pre-tax operating profit of NOK 42 million in 2001. Union Bank of Norway International S.A. (UBNI) was established in 1985 and is a wholly-owned subsidiary of Union Bank of Norway. UBNI comprises three departments. Private Banking offers retail banking services to Scandinavians residing abroad. Corporate Credit provides foreign currency loans, credit facilities and project finance to Scandinavian customers, and also participates in syndications. Treasury mainly serves the two above-mentioned departments. The year behind us Like 2000, 2001 featured high-quality banking operations, and the bank has incurred only negligible losses since 1990. The operating profit of NOK 42 million was about 14 per cent lower than in 2000. The share market slump explains this reduction. Return on equity was 17.5 per cent. Assets total NOK 8 100 million.

Market conditions Luxembourg provides a favourable setting for international private banking, but also requires a high standard of ethics. The bank has just under 1 000 private customers with a Nordic background, resident in more than 50 countries. Objectives and strategies UBNI's main objective is to increase the number of Scandinavian private customers (minimum initial capital is USD 200 000). The market, comprising welloff expatriate Norwegians, is growing and the need for private banking will entail an expansion for the company in this area. The focus is on asset management, and neither home-loans nor everyday banking services are offered. The bank extends loans to small and small-to-medium-size Nordic financial institutions and works closely with several savings banks in Norway.

Pre-tax profit NOKm 60

1997

1998

1999

2000

2001

Governing bodies

Governing bodies The figures in brackets show the number of primary

BOARD OF DIRECTORS

capital certificates held by the person indicated as

Bjørn Sund, Lysaker, Chairman (3 000)

at 31 December 2001. Certificates held by close family members and companies in which he or she has a decision-making position are included in the figures, in compliance with accounting regulations

Per Otterdahl Møller, Skien, Deputy Chairman, Norsk Hydros Pensjonskasse (180 190)*

issued by the NBISC.

Sverre Finstad, Moelv, (employee representative) (223)

GROUP EXECUTIVE BOARD GJENSIDIGE NOR

Stephen Gravlie Kunz, Oslo, Hafslund Invest (201 210)*

Hans Bø, Åsgårdstrand, Chairman (21 200)

Lisbeth Lindberg, Oslo (500)

Harald Schjoldager, Deputy Chairman

Arnt Moe, Lillehammer (9 000)

Hans August Hanssen, Melsomvik (100)

Roar Arntzen, Trondheim

Vermund Lyngstad, Degernes (500) Per Myklebust, Borgenhaugen

Norunn Tveiten Benestad, Kristiansand

Hans-Kristian Sætrum, Oslo, (employee representative) (901)

Tor Ivar Bråten, Knapper (10)

Per Terje Vold, Hosle

Marianne Hagen, Billingstad (137)

Torkel Wetterhus, Nore (1 820)

Odd Kr. Hamborg, Ås (10) Olav Hytta, Oslo (855) Amund Skarholt, Oslo (321) Ingjerd Skjeldrum, Drammen (828) Jorund Stellberg, Austrheim Stig Harald Trygstad, Trondheim (111) Berit Wenaas, Oslo

GROUP MANAGEMENT GJENSIDIGE NOR Olav Hytta, President & CEO (855) Lars Austin, Deputy President (111) Øyvind Birkeland, Deputy President (2 296) Karl-Olav Hovden, Deputy President (1 801) Bente Rathe, Deputy President (111) Frode Helgerud, Group Director (5 131) Jørgen Ringdal, Group Director (1 011)

* Primary capital certificates owned by the institution on whose behalf the representative is elected.

Governing bodies

Representatives elected by and among depositors

Employee representatives

Finn Mørch Andersen, Larvik (3 240)

Rune Bernbo, Drøbak (10)

Hans P. Bye, Prestfoss (50)

Kristin Ellingsen, Drammen (176) 1)

Vibecke Fjæstad, Notodden

Bjørn Vidar Fure, Sandefjord (28)

Representatives elected by holders of primary capital certificates

Sigrid Kristine Fyksen, Østre Gausdal

Erik Grøtting, Oslo (935)

Fredrik W. B. Gervad, Bjørnemyr

Widar Slemdal Andersen, Rælingen

Atle Heum, Tønsberg (236)

Arne H. Grøv, Bagn

Nils H. Bastiansen, Stabekk, Folketrygdfondet (1 300 000)*

Jon Sigurd Hjørnerød, Gressvik (122)

Ulrik Hoff, Veggli

Elin Horn, Oslo (347) 1)

Tore J. Høidahl, Oslo (100)

Bjørg Dalberg Karlstad, Ringebu (420)

Pål Jensen, Tistedal (153)

Vigdis Gardsteig Kaasa, Ytre Vinje (10)

Reidun V. Jensen, Vormsund

Eli Rusdal, Stabekk (101)

COMMITTEE OF REPRESENTATIVES Finn Mørch Andersen, Larvik, Chairman (3 240) Eva Lystad, Oslo, Deputy Chairman (341)

Svein Brustad, Hvalstad, Telespar (26 540)* Jan-Erik Dyvi, Oslo (20 000), Janera AS (36 000)* Klara Eriksen, Sandvika (6 120) Olaf Gohn, Bekkestua, Oslo Pensjonsforsikring AS (86 130)* Fred N. Johanssen, Gjettum, Haslum Industri (70 750)* Harry Konterud, Hamar, Sparebanken Hedmark (200 000)*

Sigrun Ballo, Vadsø (250)

Sten Sture Larre, Oslo

Kjell Rønningen, Dokka (678)

Thor Larsen, Holmestrand

Truls Sandvik, Lillestrøm

Eva Lystad, Oslo (341)

Tove Tveiten, Krokstadelva (28)

Øyvind Sandholt, Maura

Kari Vennesland, Skjeberg (87)

Terje Westby, Sarpsborg

1) Retired

Publicly appointed representatives

Erik Sture Larre sr., Oslo, Tonsenhagen Forr. sentrum AS (352 458)*

Kjell Berge, Gjerdrum

Helge Lem, Nesoddtangen, OBOS (1 000)*

Birgit Christenson, Edland

Trond Mohn, Paradis, (672 900), Frank Mohn (1 006 200)*

Turid Dankertsen, Oslo (285)

Marit Berger, Oslo

Inger S. Enger, Østre Gausdal

CONTROL COMMITTEE Einar Amundsen, Oslo, Chairman Geir Dege, Fredrikstad, Deputy Chairman Reidun V. Jensen, Vormsund

Einar W. Sissener, Oslo, estate of Kari Sissener (14 130)*

Bjørn Ole Gleditsch, Sandefjord

INDEPENDENT AUDITORS

Laila Gustavsen, Drammen

Tore B. Steen, Oslo (30 000)

Espen Johnsen, Lillehammer

Per Sindre Aas, Oslo, (250) Skogbrand Forsikringsselskap (10 000)*

Gry Mossikhuset, Råde

PricewaterhouseCoopers Einar Westby, State Authorised Public Accountant

Morten Aasheim, Bekkestua, Mustad Industrier AS (100 000)*

Inger Randem, Vestby

* Primary capital certificates owned by the institution on whose behalf the representative is elected.

May-Britt Nordli, Røyse Annette Smedshaug, Oslo Tove Lisbeth Vasvik, Helgeroa Ingrid Willoch, Fredrikstad Robert Wright, Oslo

Management and key contacts

Management and key contacts The figures in brackets show the number of primary

SPECIAL DIVISIONS

capital certificates held by the person indicated as

Cresco (Credit Card Division) Roar Dybvik, Managing Director Office address: Klæbuveien 194 Mailing address: N-7483 Trondheim Telephone: (+47) 73 58 79 00

at 31 December 2001. Certificates held by close family members and companies in which he or she has a decision-making position are included in the figures, in compliance with accounting regulations issued by the NBISC.

UNION BANK OF NORWAY Head-office: Kirkegata 18 Mailing address: P.O. Box 1172 Sentrum, N-0107 Oslo Telephone: (+47) 22 31 90 50 Telefax: (+47) 22 31 92 60 www.gjensidigenor.no

BANK MANAGEMENT President & CEO

Gjensidige NOR Merchant Bank (Capital Market Unit) Øyvind Birkeland, Deputy President Telephone: (+47) 22 31 90 50 Kristian Lund, Director, Gjensidige NOR Equities Telephone: (+47) 23 10 56 00 Anders Lægreid, Director, Corporate Customers Telephone: (+47) 22 31 86 73 Stein Gulbrandsen, Director, Markets Telephone: (+47) 22 31 98 55

Olav Hytta, Gjensidige NOR (855) Deputy Presidents Øyvind Birkeland, Gjensidige NOR Merchant Bank (2 296) Karl-Olav Hovden, Group Finance (1 801) Bente Rathe, Savings (111) Group directors Frode Helgerud, Information and Public Affairs (5 131) Bente A. Landsnes, Payment, Settlement & Banking Services (426) Åsmund Skår, Division Oslo/Akershus/Østfold (800) Bjørn Walle, Division Østlandet/Kysten (413) Rein Øsebak, Staff Division (1 560)

SUBSIDIARIES Avanse Forvaltning AS (Asset Management) Arnfinn Kirkenes, Managing Director Office address: Drammensveien 288, Lysaker Mailing address: P.O. Box 416, N-1327 Lysaker Telephone: (+47) 22 96 66 00 Elcon Finans AS (Special Finance) Erik Kongelf, Managing Director Office address: Strandveien 18, Lysaker Mailing address: P.O. Box 177, N-1325 Lysaker Telephone: (+47) 22 96 90 00 Gjensidige NOR Eiendom AS (Real Estate Agency) Svein Rønning, Managing Director Office address: Hegdehaugsveien 34, Oslo Mailing address: P.O. Box 5163 Majorstua, N-0302 Oslo Telephone: (+47) 22 31 88 71 Gjensidige NOR Equities ASA (Investment Company/Stockbroker) Kristian Lund, Managing Director Office address: Øvre Slottsgate 3, Oslo Mailing address: P.O. Box 1172 Sentrum, N-0107 Oslo Telephone: (+47) 23 10 56 00

Gjensidige NOR Kapitalforvaltning AS (Capital Management) Erik Garaas, Managing Director Office address: Drammensveien 288, Lysaker Mailing address: P.O. Box 276, N-1326 Lysaker Telephone: (+47) 22 96 80 00 Sparebankenes Kredittselskap AS (Long-Term Property Financing) Gunnar H. Gabrielsen, Managing Director Office address: Kirkegaten 15, Oslo Mailing address: P.O. Box 1167 Sentrum, N-0107 Oslo Telephone: (+47) 22 94 34 00 Union Bank of Norway International S.A. Luxembourg Øyvind Parnemann, Managing Director Office address: 22, Rue Jean-Pierre Brasseur Mailing address: P.O. Box 867, L-2018 Luxembourg Telephone: (+35) 245 49 451

INTERNATIONAL BUSINESS CONTACT PERSONS Accounting Department Roar Lie, Director Telephone: (+47) 22 31 93 30 Administration Kristin Skrede, Director/Company Secretary Telephone: (+47) 22 31 84 81 Credit Risk Management Steinar Ouren, Managing Director Telephone: (+47) 22 31 92 20 Custody Liv-Kari Kroken, General Manager Telephone: (+47) 22 31 97 41 Economics Nils Terje Furunes, Chief Economist Telephone: (+47) 22 31 87 91 Finance Arne Huser, Director/Division Secretary Telephone: (+47) 22 31 87 68 Financial Infrastructure, Settlement & Operations Dag Inge Flatraaker, General Manager Telephone: (+47) 22 31 92 23 Financial Controlling Department Bjørn Berg, Director Telephone: (+47) 22 31 93 45 Financial Institutions Egil Blakstad, Senior General Manager Telephone: (+47) 22 31 94 85 Bjørn Poetzsch, General Manager Telephone: (+47) 22 31 95 46 Group Finance Geir Bergvoll, Chief Financial Officer Telephone: (+47) 22 31 99 80 Group Market Risk Management Jan Otto Lahn, Director Telephone: (+47) 22 31 87 77 Internal Audit Thomas Winsnes, Internal Auditor Telephone: (+47) 22 31 85 64 International Banking Relations Rolf Nagel Dahl, Deputy General Manager Telephone: (+47) 22 31 99 40 International Cash Management Carl O. Sæland, Deputy General Manager Telephone: (+47) 22 31 85 67

International Operations and Domestic Payment Operations Aslaug Spilde, Director Telephone: (+47) 23 23 17 20 Investor Relations Ann-Kristin Sandvik, Deputy Director Telephone: (+47) 22 31 87 26 IT-development Tom Kranøy, Development Director Telephone: (+47) 22 31 91 23 Large Corporates Energy Sven Bakken, Deputy General Manager Telephone: (+47) 22 31 97 59 Information/Communication/Technology Trine Loe, General Manager Telephone: (+47) 22 31 87 43 Loan Syndication and Structured Finance Sven Hove, Deputy General Manager Telephone: (+47) 22 31 86 68 Manufacturing Industries Terje Straume, General Manager Telephone: (+47) 22 31 95 93 Shipping Hans Christer Elowsson, General Manager Telephone: (+47) 22 31 92 50 Trade/Real Estate Trine Sundt, Deputy General Manager Telephone: (+47) 22 31 84 74 Legal Affairs Helge Forfang, Attorney-at-law Telephone: (+47) 22 31 84 87 Long-Term Funding Helge Stray, Director Telephone: (+47) 22 31 81 09 Thor Tellefsen, Deputy Director Telephone: (+47) 22 31 85 41 Operations Tore V. Knudsen, Director Telephone: (+47) 22 98 44 19 Personnel Geir Nagel, Personnel Director Telephone: (+47) 22 31 88 26 Risk Management Jan Riiser, Director Telephone: (+47) 22 31 93 02 Security Bjørn Tore Saltvik, Security Director Telephone: (+47) 22 31 87 20

Design: Photography: Print: Circulation:

Aksent Kommunikasjon AS CF-Wesenberg Kampen Grafisk AS 6 000 (English edition)

Union Bank of Norway Kirkegata 18 P.O. Box 1172 Sentrum, N-0107 Oslo Telephone: (+47) 22 31 90 50 www.gjensidigenor.no/investor/english

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References