The ice men cometh

by This email address is being protected from spam bots, you need Javascript enabled to view it on Sunday, 03 February 2008

zoom

We are basically a northern European bank, but then we've always had the vision and the ambition to be more," smiles Sigurdur Einarsson, taking off his glasses and sipping a glass of ice-cold mineral water.

"Now, we are the first Scandinavian bank to have a presence in the Middle East, and it is so far proving a very pleasant experience."

The executive chairman of Iceland's Kaupthing Bank - one of the fastest-growing financial groups in Europe - is in a good mood. He has spent the morning with ministers as part of a high-profile delegation to the UAE headed by President of Iceland Olafur Ragnar Grimsson, and is now turning his attention to Kaupthing's two hubs in the region, at Dubai International Financial Centre (DIFC) and the Qatar Financial Centre (QFC).

Story continues below ↓

"There are ample opportunities for us to facilitate both capital flow and business flow, and contacts between our home market and this region," he notes. "We've been well received by the local business community, we have already done some transactions and we have a decent pipeline of transactions to do. People down here seem to welcome foreigners and foreign companies, and like to do business with them."

Now, we are the first Scandinavian bank to have a presence in the Middle East, and it is proving a very pleasant experience.

One of the seven largest banks in the Nordic region in terms of market capitalisation, Kaupthing offers integrated financial services to companies, institutional investors and individuals.

These services include corporate banking, investment banking, capital markets services, asset management and comprehensive wealth management for private banking clients.

The bank operates in 12 countries, including all the Nordic countries, Luxembourg, Switzerland, the UK, US, Dubai and Qatar - although in the Middle East its focus will be primarily on investment banking on the advisory side, and then on asset management and wealth management.

"We are very focused and we've been fortunate in running a number of very high-profile mandates that we are in the process of executing right now," explains Umar Ali, managing director & CEO, MENA at Kaupthing. "The thing that we're very good at in the markets we are already operating in, is addressing entrepreneurs, and addressing them in a very holistic, comprehensive way. And as our clients have been successful, we've been successful - and that's a model that we very much want to replicate over here." That Kaupthing has enjoyed significant success is supported by even a cursory glance at the balance sheets. Through sound organic growth and strategic acquisitions such as the UK bank Singer & Friedlander in 2005 and FIH Erhvervsbank in Denmark in 2004, the bank had over 3000 employees and total assets of over US$82bn as of September 2007.

"I think there is a great opportunity for a firm that can provide a very high-quality service - not just in one particular product area but in a range of product areas - because I think the market is segmented between three types of client," Ali continues. "One is the very large corporates, the other is these traditional merchant families - these entrepreneurial companies where the second or third generation is taking the helm - and the third is the very small companies. "This middle segment offers a wealth of opportunities across the sectors in which we have particular expertise, and so I think the combination of our sector expertise and our product expertise across the range - from advisory, to financing, to treasury to asset management - can assist us in addressing this constituency very well."

The transferability of Kaupthing's expertise is enough that Einarsson claims the bank's business model in the region will not differ too strongly from that implemented elsewhere in the world. He insists that Kaupthing operates in a local fashion wherever it is - "entrepreneurs around the world are the same everywhere" - and that decision-making powers are as localised as possible.

"We have a very flat structure, and our decision-making lines are short," he says. "We are quick at making decisions without compromising on the quality of the decision-making, and people have access to decision-makers within the bank.

"Clients don't have to go through a lot of intermediaries, and as our clients over here are dealing with their own wealth typically or the wealth of their families, they like to deal with the people who make the decisions. This has been a crucial element of our success."

Another element that has undoubtedly contributed to Kaupthing's growth is that the bank is able to count on the support of a huge diversified network of sister operations, scattered all around the globe.

"Most banks will say the same thing, but we truly deliver on the promise that we provide cross-relationships and cross-selling," Einarsson insists. "We provide our clients with comprehensive financial services and advisory services, and we really truly act in the sense that our clients' success is our success."

Iceland ’06: a wake-up call

Kaupthing has significant liquidity on hand, as a result of the bank shoring up its finances in 2006 after weathering a financial crisis. Icelandic stocks tumbled, and the currency, the krona, plunged when investors withdrew from trades that had profited from the country's relatively high interest rates. However, Einarsson now looks back on those troubled times as almost a blessing in disguise.

"The strategy that we are following now is one that we made 10 years ago, but 2006 was still a serious wake-up call for us and other Icelandic financial institutions," he admits. "In retrospect it was very fortunate that that call came, as we are probably weathering the liquidity squeeze and the subprime crisis of today better than most other banks because of 2006.

"Around 80 to 85% of our income is generated outside Iceland, and that figure has jumped by around 15% just in the last year or so," reveals Einarsson. "We have always placed a lot of emphasis on risk diversification, in terms of geographical understanding, and in terms of products, and in terms of balance sheets. That said, of course we - as with all the international banks - are vulnerable to what happens in the market. If you meet a banker who says he's not taking any risks, then he's definitely not telling the truth."

Page 1 of 2

TOP IN MIDDLE EAST BANKING & FINANCE

ALSO IN MIDDLE EAST BANKING & FINANCE

LATEST MIDDLE EAST BUSINESS INTERVIEWS

USER COMMENTS (0 COMMENTS)
POST A COMMENT

CLICK HERE TO POST A COMMENT

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic.

Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country

Subject *

Comment *


Notify me of further comments
Security Code *
Please click post only once - your comment will not be published immediately.