Iceland review - 2006, Síða 99

96 BUSINESS SUPPLEMENT BUSINESS SUPPLEMENT 97
What´s the thinking behind Kaupthing
Bank’s expanding presence in northern
Europe?
Some say that our overseas expansion is itself
a risky enterprise, but I look at it differently.
We are actually at less risk operating overseas.
Other banks have taken similar action and to
my knowledge they haven’t been labeled risk-
takers. It isn’t the actual size we seek, but
rather to increase revenue as much as possible
so that we’re able to improve services to our
customers. That’s how we grow. We’ve made
a lot of progress so far, and we have ambitious
goals for the future. But I want to reiterate,
we strive to increase revenue and improve the
quality of service; we feel this is the only way
to grow. Size isn’t an objective in itself. That’s
why it’s not necessarily imperative that we
become large, as long as we maintain profits
and our quality of service. We are already a
leading bank in terms of income per employee
and cost-to-income ratio.
The objective is to continue to expand through
organic growth, just as we’ve been doing all
along – it wouldn’t be accurate to say we’ve
grown through acquisitions alone.
Our opportunities consist of the demand for
our particular business model, so there really
are few limits on how much we can expand.
Many people are surprised that Kaupthing
Bank comes from a country as small as Iceland
– but success in business doesn’t depend on
the size of your home country. Holland is a
small country, yet three of the biggest banks
in the world are Dutch. Not to mention that
the largest shipping company in the world is
Danish.
Borrowings by Icelandic companies
abroad are a matter of concern for many.
Do you believe this will bring on a chain
reaction of debt?
Close to 80 percent of our business takes place
abroad so it’s not our money streaming into the
Icelandic economy. Chain reactions here don’t
have a significant effect on our business.
But these concerns are legitimate: Icelandic
businesses are to a large extent leveraged
– but they’re not unstable. Key statistics
on registered companies in Iceland are not
dissimilar to those in Oslo or Stockholm.
Doomsday predictions aren’t justified, but if
there is a dark cloud on the horizon, you could
say it’s the trade deficit.
What are Kaupthing’s primary risk factors?
Like others, we are dependent on international
economic developments and the global capital
markets, but otherwise there is no single factor
I can point to. There are no weaknesses in the
balance sheet, very few large loans or other
indications of weaknesses.
Iceland has been receiving considerable
media attention in the Nordic countries
and the UK recently. How are you
responding to this sudden interest and
some of the misleading statements that
have come in its wake?
As far as the media is concerned, the success of
Icelandic companies has garnered considerable
attention abroad, including our bank. The same
can be said of the Icelandic economy. But lately
this coverage has taken on a negative tone,
and I find that unwarranted. The expansion of
Icelandic companies overseas is a relatively
new phenomenon in the European market, and
I question how well the foreign media can truly
grasp what’s actually happening with these
companies or in the eonomy.
When Iceland joined the EEA in 1993, the
country transformed from a planned economy to
an open economy, and that’s when privatization
began. Regardless of any debates about the
right or wrong amounts of privatization, it set
the Icelandic economy free.
But the Icelandic economy is small and it needs
to expand overseas in order to grow. Breaking
out into foreign markets isn’t about aggressive
banking; it’s about keeping the economy alive.
Kaupthing Bank could just as well have settled
to stay in Iceland, in which case we would have
maybe around 120 employees right now. We
did well in Iceland alone, but being limited to
Iceland is like running a 400-yard dash with a
limp: you can’t get very far. We’ve entered the
world market and are eager to be judged on
these standards.
How would you describe Kaupthing Bank’s
strategy for the near future?
We publicize Kaupthing Bank by telling our
story. The best way to promote the bank is
simply to point out what we’ve been saying
all along and keep on underlining the bank’s
series of achievements to demonstrate that
we’ve been doing very well. We are frequently
asked about the secret behind the success and
our answer is invariably quite simple: there are
no secrets. As is the case with any successful
company, we focus on results for our clients. To
this end we strive to achieve the best outcome
possible by approaching our work differently.
Our strategy, to grow alongside our clients
and even share in their risks provided certain
conditions are met, has returned more than a
decade of good results. Instead of imitating
big banks in bulk transactions, we have been
successful in meeting client needs with tailor-
made solutions and integrated financing,
suitable for expanding medium-sized firms.
We believe that this business model has
substantial promise in Europe and the presence
we’ve established in northern Europe certainly
affirms our belief.
BUSINESS SUPPLEMENT
“The Icelandic
economy is small and
it needs to expand
overseas in order
to grow. Breaking
out into foreign
markets isn’t about
aggressive banking;
it’s about keeping the
economy alive.”