®) ROCKEFELLER & CO. NN Niljavan iO oancenm Lae binanesle A New Cour se Tor Fi nanciais Banks and insurance companies However, while new regulations through loan losses, further liti- play a vital role in our financial and legal settlements have placed gation expenses, and even more system, providing savings, fi- incremental financial burdens stringent regulations. We believe nancing, investment, and pay- on the financial services in- that through active stewardship, ment services to consumers and _ dustry, banks and insurers have we can continue to promote re- businesses of all sizes. Our mod- since made substantial progress sponsible practices among these ern economy requires a stable, to comply with new rules and companies. trustworthy, and efficient finan- adjusted their business models cial services industry to function accordingly. Balance sheets have — Going forward, we expect banks and grow. Active stewardship been reinforced with additional and other financial institutions can serve a role in maintaining a capital and liquidity, and tighter with adjusted business models, strong financial system. underwriting. While this may limit that exhibit greater stability in loan growth, it has also result- earnings and balance sheet qual- Bank managements should be ed in reduced risk costs in their ity to benefit financially in the motivated to pursue best practic- lending businesses. Banks have long run. A reduction of earnings es, having experienced the con- added headcount in their compli-__cyclicality should result in higher sequences of bad behavior long ance and risk control divisions in investor confidence in dividend after the Global Financial Crisis. | an effort to monitor and prevent —_ payouts over time, and financial Tighter regulations, enacted in future misconduct. stocks could see higher valuations the aftermath of the Global Fi- as a result. Swedish banks are nancial Crisis, including Basel III With a new administration in a prime example. Highly capi-