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April 5, 2013 6:02 pm
On a cold, blustery morning in Stockholm, Marcus Wallenberg, chairman of SEB (Skandinaviska Enskilda Banken) and former chief executive of Investor AB, points through a window of the family villa to the frozen waters below and an intriguing clue to the origins of one of Europe’s most powerful family-owned industrial groups: the ice.
“My great, great-grandfather, AO Wallenberg, was a naval officer. And in the winter, when the sea froze over at the Stockholm naval base, he took jobs on commercial sailing ships around the world. And at ports in Scotland and the US, he bought books on banking,” says Wallenberg, 56. “He came back to Sweden and started a bank.”
The result? SEB, founded in 1856 – and eventual major ownership in a slew of multinationals, many of which are household names: ABB, Atlas Copco, Electrolux, Ericsson, Saab ...
The bank gave initial seed money to budding firms, injecting fresh funds into several companies despite a financial crisis of the 1870s. “Sweden was one of the poorest countries ... The bank lent money to companies and stuck with them during bad times. Instead of letting them go bankrupt, we became shareholders and owners,” says Wallenberg, whose family-linked holdings now have a combined turnover of £120bn.
Investor AB was set up in 1916 as a separate holding company. “There was a law that banks had to split into two: one was a shareholding unit – that’s how Investor AB came about – and one was a bank,” says Wallenberg, adding that AO Wallenberg’s eldest son, KA Wallenberg, directed profits into a foundation.
Today, Wallenberg foundations give out £160m in annual grants. “KA had no children. So he and his wife created a foundation structure that ensured longevity of the holdings and put assets into science research and education. It was a good structure,” says Wallenberg, before offering a tour of the house.
Täcka Udden, a French Renaissance-style villa, was bought by KA Wallenberg in 1888 as a summer house on Djurgården, a recreational island made up of old royal hunting grounds on the edge of Stockholm. “He lived just a few miles away in town,” says Wallenberg. “They moved here in May and stayed until September.”
We walk into a perfectly preserved study, complete with a mahogany desk and naval mementoes. “This is KA’s study. [All the men] in this family have been in the naval academy. That’s why the room is marine-inspired.”
Wallenberg’s own birth was recorded in the old naval parish before it closed down. “It was a tradition in my family. When I was born, I was registered in the parish of Skeppsholmskyrkan,” he says.
The family villa, where floors are polished to such a high shine that they double as sliding areas for children at family parties, was the main residence for several Wallenberg generations. “In 1956, they rebuilt our house for the 100th jubilee of the bank, and that’s when my grandfather moved in. Now we are all in and out of the house,” says Wallenberg, who also has use of an apartment nearby.
As the fifth generation, Marcus and his cousin Jacob, now chairman of Investor AB, gradually took over from the family patriarch, Peter Wallenberg Sr, 86, and they work closely together.
“We made a shift a couple of years ago. We went on boards instead of day-to-day operations,” says Wallenberg, who is also chairman of the boards of Electrolux, Saab and LKAB.
The family has come under criticism for use of dual-class shares to retain firm control, though recent corporate governance studies, including some by a previously sceptical European Commission, now tout the benefits. “The result of dual shares is a very long-term commitment,” says Wallenberg. “Take Atlas Copco. We’ve been with them since the 1800s. And one company, now Stora Enso, pulp and paper, is the world’s oldest company. The earliest share certificate is from 1288. It’s now based in Helsinki and I’m still on the board.”
He leads me through a formal reception room, where portraits of KA and Alice Wallenberg hang over a sofa, and pause at a simple painting of a man swathed in black. “So here are our roots,” says Wallenberg. “This is the father of the founder, AO. He was bishop of Linköping, as you can see from the cross. The bishop wasn’t a businessman,” he says wryly.
As a business leader, Marcus Wallenberg, like his cousin, Jacob, also plays a role in several international organisations. He was chairman of the ICC (International Chamber of Commerce) from 2006 to 2008, and is involved in the B20, the business counterpart to the G20. Wallenberg views participation in policy making as a civic responsibility. The ICC, he says, started after the first world war as a way to try to halt conflict. “The ICC is the rule-setter in trade. Many trade terms come from it,” he says.
We reach a sun-dappled dining area, where breakfast has been laid out in a room that has moveable walls for work and family gatherings. Wallenberg, who has four children and four stepchildren, is married to Fanny Sachs, an architect who contributed to the refurbishment of Täcka Udden between 2002 and 2004. Sachs had the exterior repainted salmon-red after discovering the original colour in a painting of the house by Carl Larsson hanging in a guest room. “She found it in the family archives,” says Wallenberg, pointing through the window to a small building. “She had to convince a lot of people to change the colour.”
Over breakfast, Wallenberg explains how one family managed to seed so many multinationals. “Swedish companies are good at innovating ... the only way to stay competitive with open borders was to innovate. Innovate. Innovate,” says Wallenberg. “Our grandfather, chairman of Ericsson, was very involved in the economic development of Indonesia, of Mexico. Ericsson supplied phone operations in China, Brazil and Mexico in the late 19th century.”
Wallenberg, a graduate of Georgetown University, is also a vice-chairman of the IIF (Institute of International Finance), the powerful Washington-based association of financial institutions, which will host its own parallel event at the IMF/World Bank spring meetings, attracting most of the key political leaders attending the events. So with fresh revelations of wrongdoing appearing daily, from Libor rigging to the withholding of information from regulators, isn’t the job of defending banks a daunting one?
“Have the banks had a big role in what has gone wrong? Yes, no question,” says Wallenberg. “Did we need more regulation? Yes. Can we regulate away all risk? No. But the risk guys, the boards and executives, all have to take ultimate responsibility for the business we do.”
More sunshine floods into the dining room, lighting up green wallpaper that has been painstakingly restored to an ornate floral pattern. “We stripped away the old wallpaper and found it,” says Wallenberg. “Fanny took a piece to a lady in Långholmen, who reproduced it.”
We return to the topic of banking. Public exasperation with banks, says Wallenberg, also stems from the industry’s inaccessibility. “Banking is not a simple business. It’s very complex, often very technical; it is a business that touches all parts of society.”
In the end, the Wallenberg family story is a reminder that 600,000 global jobs today and countless innovations (including 30,000 patents from Ericsson alone) sprang from a single bank, founded more than 150 years ago on the icy periphery of Europe.
“We need a healthy banking system,” says Wallenberg, “to support individuals – and entrepreneurs.”
“This weekend I’m packing these skis into my car and driving north and up into the soft mountains on the Swedish border of Norway,” says Wallenberg, of a pair of battered skis. I ask if they are cross-country skis. “When you say cross-country, you mean on-track,” he replies. “These skis are made for off-track trekking. Fanny [Sachs, Wallenberg’s wife] has redesigned part of the lodge at Fjällnäs. So we put on rucksacks and head into the wilderness. It’s the sea and the mountains, my two favourite places – because of the vast expanse.”
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