The Wallenberg Grip

Four decades of Social Democrats have governed Sweden, but four generations of Wallenbergs have controlled much of it. In a country where socialism is as familiar as smorgasbord, the 202-year-old dynasty retains a remarkable grip: complete or partial control of 30 major Swedish firms, including nine of the country's 15 largest. For all the Wallenbergs' influence, the family bank, Stockholms Enskilda, is relatively small.

Last week the Wallenbergs announced the creation of a bank befitting the rest of their empire. On Jan. 1, Stockholms Enskilda will merge with Sweden's second largest commercial bank, Skandinaviska Banken, to form Skandinaviska Enskilda Banken. The new bank will have assets of $4.2 billion, not quite large enough to rank among FORTUNE'S top 50 foreign banks but supreme in a country of 8,000,000 people. The two merging banks will disappear; Marcus Wallenberg, 72, will be chairman of the new enterprise, and his 47-year-old son Marc will be assistant managing director. Lars-Erik Thunholm, head of Skandinaviska, will be managing director.

Despite the presence of Wallenbergs for top posts, the new bank's creation may signal a voluntary withdrawal of older members of the family from financial prominence. In dissolving 115-year-old Enskilda, the Wallenbergs will be dismantling the institution upon which their empire was founded. Only 7.3% of the stock of the new bank will be theirs; the rest will go to Skandinaviska and other Enskilda shareholders.

Though the Wallenbergs will own only a relatively small piece of the new bank, Swedish businessmen expect that the family will be responsible for much of its leadership. Instead of a small family merchant bank, they will have a big commercial bank capable of competing more effectively with such multinational giants as Britain's Barclays and France's Credit Lyonnais.

Unobtrusiveness is one of the reasons the Wallenbergs have been able to hold on to their empire in socialist Sweden. The family owns enough stock to control only a few firms directly, including the Providentia and Investor holding companies. But those companies, in turn, have controlling interests in a number of other firms, and so on. That technique of effective control, known in Sweden as the Wallenberg Grip, is the embodiment of the Wallenbergs' family motto, Esse non Videri (To be, not to be seen).

The Wallenbergs are now likely to become more powerful than ever. Skandinaviska, the other party to the bank deal, has interests in 28 major firms, which together employ some 100,000 Swedes. And one of those firms, Volvo, is the only industrial concern among Sweden's five largest that the Wallenbergs do not control.

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