Iceland review - 2006, Qupperneq 94

92 BUSINESS SUPPLEMENT
OUR NAME IS LANDSBANKI
Playing a leading role in the successful
economic progress of Iceland since the
Bank’s inception in 1886, Landsbanki is
Iceland’s oldest full-service commercial
bank. Landsbanki was the first issuer of
bank notes in Iceland and performed central
banking functions until the Central Bank of
Iceland was established in 1961. A public
limited company since 1998, Landsbanki
has a leading market share in virtually all
segments of the financial services sector in
Iceland, a position it has held for most of its
history. Landsbanki holds the largest share
of deposits in Iceland and is the country’s
leader in domestic lending and the second-
largest in terms of market capitalization.
Given Landsbanki’s success and strong footing
in the domestic market, the Bank has sought
further expansion overseas through organic
growth and by acquisitions of low-risk banking
assets. Focusing on small- and medium-sized
companies in Europe, Landsbanki has a well-
defined target group, to whom it provides
comprehensive corporate banking services,
including corporate advisory and asset-based
lending in addition to depository functions.
Landsbanki and its subsidiaries now have
offices operating in the major financial centers
of Europe, as well as representation in New York
and Halifax. Through this network Landsbanki
provides targeted financial services based on
local expertise.
OUR LANGUAGE IS BUSINESS
In addition to its full range of banking services in
Iceland, Landsbanki has developed a dynamic
pan-European platform to further develop
Landsbanki’s international product offering to
the small- and medium-sized market in Europe.
The focus of this expansion is to achieve
greater diversification of income sources,
sector and geographic risk, strengthening of
recurring revenue generation and benefit from
economies of scale. Landsbanki’s principal
objective in its international activities is to
continue to put its corporate banking and
securities expertise to good advantage in
offering small- and medium-sized European
companies a full range of banking services.
The needs of this market match the expertise
and experience of Landsbanki’s employees
and subsidiaries. Landsbanki’s acquisition
of established research-based securities
brokerages operating in Europe’s financial
centers is a key step in its strategy to
combine local client relationships and relevant
geographic and product core competencies
with Landsbanki’s financial strength, banking
expertise and enhanced product range.
Including the recent acquisitions on a pro forma
basis, Landsbanki’s international operations
now account for over 30 percent of core
income and 35 percent of lending is to clients
outside Iceland. Thus, Landsbanki’s objective
of deriving 50 percent of its operating income
from operations abroad is within close reach.
OUR CHARACTER
IS INTERNATIONAL
Today, Landsbanki and its subsidiaries have
operations in London, Paris, Frankfurt,
Amsterdam, Zurich, Milan, Madrid, Dublin,
Luxemburg, Reykjavík and New York as well as
a representation in Halifax, Canada. Realizing
early on the need to expand and diversify,
Landsbanki was the first Icelandic commercial
bank to make an acquisition outside Iceland
when it acquired the London-based Heritable
Bank in 2000. This marked the beginning of the
increasing operations of Landsbanki outside
Iceland. In 2005, three securities houses were
acquired – Teather & Greenwood, located
in London and Edinburgh; Kepler Equities,
headquartered in Paris; and Merrion Capital
Group in Dublin. Currently, these subsidiaries
deal in securities and prepare equity research
in London, Paris, Frankfurt, Zurich, Milan,
Madrid and Amsterdam. Landsbanki’s
branches in London and Amsterdam specialize
in corporate finance and asset-based lending
while Landsbanki Luxembourg handles private
banking and wealth management, as well as
corporate services.
Q&A with the leadership of Landsbanki,
Halldór J. Kristjánsson and Sigurjón Þ.
Árnason
Given the pace and success of
Landsbanki’s organic growth and overseas
expansion, how has this business model
affected the Bank’s credit ratings?
Halldór J. Kristjánsson: Landsbanki’s
strategy and international expansion has been
well-received by the rating agencies, as both